<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) November 5, 1996
-----------------------
Physicians Resource Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-13778 76-0456864
- ------------------------------ ----------- ------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Three Lincoln Centre, Suite 1540, 5430 LBJ Freeway, Dallas, TX 75240
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 982-8200
---------------------
<PAGE>
ITEM 5. OTHER EVENTS.
On November 5, 1996, Physicians Resource Group, Inc. (the "Company")
acquired the assets of the eye care division of EquiMed, Inc. (the "EquiMed
Acquisition"), a publicly held multispecialty physician practice management
company. On November 22, 1996, the Company acquired American Ophthalmic
Incorporated (the "AOI Acquisition"), a privately held physician practice
management company devoted solely to eyecare. The unaudited merger/significant
transactions pro forma consolidated statement of operations for the year ended
December 31, 1996, giving effect to the EquiMed Acquisition, the AOI Acquisition
and the other transactions described therein are attached hereto as Annex A.
Such pro forma information is not necessarily indicative of operating results
that would have been achieved had such transactions been consummated on the
dates presented and should not be construed as representative of future
operations.
ITEM 7. EXHIBITS.
Exhibit No. Description
- ----------- -----------
4.1 - Second Restated Certificate of Incorporation of Physicians
Resource Group, Inc.(1)
4.2 - Certificate of Designations, Preferences, Rights and Limitations
of Class A Preferred Stock of Physicians Resource Group, Inc.(2)
4.3 - Third Amended and Restated Bylaws of Physicians Resource Group,
Inc.(3)
4.4 - Form of Warrant Certificate(2)
4.5 - Rights Agreement dated as of April 19, 1996 between Physicians
Resource Group, Inc. and Chemical Mellon Shareholder Services(4)
4.6 - Form of certificate evidencing ownership of Common Stock of
Physicians Resource Group, Inc.(2)
4.7 - Certificate of Designations, Rights and Preferences of
Series B Convertible Preferred Stock of Physicians Resource
Group, Inc.(5)
99.1 - Amendment Two to the Physicians Resource Group, Inc. Employee
Stock Purchase Plan(5)
- --------------
(1) - Previously filed as an exhibit to the Company's Registration
Statement on Form S-4 (No. 333-19185) and incorporated herein by
reference.
(2) - Previously filed as an exhibit to the Company's Registration
Statement on Form S-1 (No. 33-91440) and incorporated herein by
reference.
(3) - 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.
(4) - Previously filed as an exhibit to the Company's Registration
Statement on Form S-1 (No. 333-3852) and incorporated herein by
reference.
(5) - Filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHYSICIANS RESOURCE GROUP, INC.
Date: September 3, 1997 By: /s/ RICHARD J. D'AMICO
-----------------------------------------
Richard J. D'Amico
Executive Vice President, Chief
Administrative Officer and Secretary
<PAGE>
ANNEX A
PHYSICIANS RESOURCE GROUP, INC. AND SUBSIDIARIES
UNAUDITED MERGER/SIGNIFICANT TRANSACTIONS
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(000'S, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRG & PURCHASED
POOLED POOLING ENTITIES & TOTAL
ENTITIES ADJUSTMENTS OTHER PRO FORMA
-------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Management service $167,565 $ - $ 64,305 B $286,052
74,473 C
(20,291) E
Medical services 77,245 - 3,122 B 97,344
16,977 C
Other 3,483 83 B 4,150
- 584 C
-------- ------- -------- --------
Total revenues 248,293 - 139,253 387,546
COSTS AND EXPENSES:
Salaries, wages, and expenses 115,200 (2,227) A 70,250 D 162,932
(20,291) E
Pharmaceuticals and supplies 30,919 - 15,215 D 46,134
General and administrative 62,353 - 47,609 D 108,374
(1,588) F
Depreciation and amortization 11,192 - 7,009 D 22,848
(2,664) G
7,311 G
Interest expense, net 1,304 - 3,940 D 7,516
2,272 H
Patent litigation 353 - - 353
Merger transaction expenses 12,030 - - 12,030
-------- ------- -------- --------
Total costs and expenses 233,351 (2,227) 129,063 360,187
-------- ------- -------- --------
INCOME BEFORE INCOME TAXES 14,942 2,227 10,190 27,359
PROVISION FOR INCOME TAXES 7,770 1,124 I 3,421 I 12,315
-------- ------- -------- --------
NET INCOME $ 7,172 $ 1,103 $ 6,769 $ 15,044 J
======== ======= ======== ========
NET INCOME PER SHARE $ 0.28 $ 0.49
======== ========
NUMBER OF SHARES USED IN NET
INCOME PER SHARE CALCULATION 25,365 30,552 K
======== ========
</TABLE>
See accompanying notes to unaudited merger/significant transactions proforma
statement of operations.
<PAGE>
PHYSICIANS RESOURCE GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED MERGER/SIGNIFICANT TRANSACTIONS
PRO FORMA STATEMENT OF OPERATIONS
(000'S, EXCEPT SHARE AMOUNTS)
PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS
The accompanying unaudited pro forma statement of operations for the year
ended December 31, 1996 assume that as of January 1, 1996, PRG had completed the
1996 Acquisitions, the EquiMed Acquisition, the AOI Acquisition, the 1996 Public
Offering, and the Convertible Debt Offering.
NOTES (A)-(H) REFER TO ADJUSTMENTS RELATING TO 1996 ACQUISITIONS, POOLINGS AND
OTHER
(A) Historical compensation to the owners has been reversed and pro forma
professional service fees properly recorded based upon contractual rates. The
previous owners of the entities which PRG acquired in pooling of interest
transactions will receive a professional service fee equal to 65% of income
before taxes as compensation for the service rendered by the physicians to the
clinic.
(B) Represents calculated management service revenues of PRG, determined in
accordance with the management service agreements applied to the historical
operating results of the 1996 Aqcusitions prior to the date of the acquisition
by PRG.
<TABLE>
<CAPTION>
Year Ended
Description 12/31/96
----------- ---------
<S> <C>
Management service revenues (1) $ 64,305
Revenues from ASC's (2) 3,122
Other revenue 83
</TABLE>
(1) Under the terms of its service agreements, PRG receives service revenues
based on certain operating and nonoperating expenses incurred on behalf of
the practice and a percentage of revenues relating to physician and certain
other medical services.
(2) With respect to several of the practices, PRG owns or operates ASCs and
receives the related revenues for certain nonphysician services.
Various of these services fees are subject to certain negotiated
performance and other adjustments. The negotiated adjustments vary on a
practice-by-practice basis and include adjustments that cap or otherwise align
the fees based on percentages of revenues at specified levels related to the
profitability of the practice. Additionally, certain of the service fees
based on percentages of revenues are adjusted based on the actual results of
the practices, resulting in lower service fee ratios for incremental practice
results over specified base levels.
(C) Reflects historical revenues in connection with the AOI Acquisition and
Equimed Acquisition.
(D) Represents an adjustment to reflect historical costs of the 1996
Acquisitions, EquiMed Acquisition and AOI Acquisition which will be assumed by
PRG in order to fulfill PRG's obligation under the applicable service
agreements. The components of the adjustment include the historical operating
costs of the acquisitions.
(E) Reflects the adjustment to remove compensation to former physician owners
from salaries, wages and benefits, and management service revenue for the
EquiMed Acquisition and AOI Acquisition, to conform to PRG's financial statement
presentations.
<PAGE>
PHYSICIANS RESOURCE GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED MERGER/SIGNIFICANT TRANSACTIONS
PRO FORMA STATEMENT OF OPERATIONS
(F) Reflects a reduction in corporate salaries for executives who were
required to resign in connection with the AOI Acquisition and EquiMed
Acquisition of $496 and $1,092, respectively.
(G) Reflects adjustment to reverse historical amortization of acquired
entities intangibles and record amortization on intangible assets of PRG for the
year ended December 31, 1996, of $1,316, $1,828, and $4,167 for (1)
amortization of work force, (2) amortization of goodwill related to the ASCs and
(3) amortization of intangibles related to the service agreements.
(H) Reflects an increase in interest expense associated with the Convertible
Debt Offering, net of a reduction in interest expense due to application of the
above proceeds towards $93,000 of outstanding lines of credit bearing interest
at 7.5%. In addition, the remaining proceeds of the Convertble Debt Offering,
net of AOI Acquisition and EquiMed Acquisition related costs of $3,000, has been
invested in securities bearing interest at approximately 6%.
<TABLE>
<CAPTION>
Interest
Rate 12/31/96
-------- ---------
<S> <C> <C>
Increase in interest expense 6% $ 7,500
Reduction of interest expense 7.50% (6,971)
Increase in interest income 6% 1,743
---------
$ 2,272
=========
</TABLE>
NOTE (I) REFERS TO INCOME TAXES
(I) Reflects federal and state income taxes that PRG would have incurred on
pro forma income before taxes.
NOTES (J)-(K) REFER TO THE PRO FORMA TOTALS
(J) The Company has decided to continue to apply the provisions of APB
Opinion 25 to its stock-based employee compensation arrangements.
(K) Weighted average shares outstanding used in the net income per share
calculation are summarized below:
<TABLE>
<CAPTION>
<S> <C>
Outstanding PRG shares 15,647,750
PRG stock options and warrants impact,
using the treasury stock method 862,586
PRG shares issued in the 1996 Acquisitions, AOI Acquisition
and Equimed Acquisition 6,027,160
PRG shares issued to Pooled Entities stockholders 3,636,999
PRG shares issued in connection with the 1996 Public Offering
offering during May, 1996 4,250,000
PRG shares issued in connection with stock options
exercised 127,024
----------
Total pro forma weighted average shares outstanding 30,551,519
==========
</TABLE>
<PAGE>
PHYSICIANS RESOURCE GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED MERGER/SIGNIFICANT TRANSACTIONS
PRO FORMA STATEMENT OF OPERATIONS
The following unaudited pro forma financial statements include the unaudited
pro forma statement of operations for the year ended December 31, 1996 as if the
transactions described below had occurred on January 1, 1996. The unaudited pro
forma statement of operations for the year ended December 31, 1996 give effect
to (i) the acquisition of certain assets from the consummation of service
agreements with 45 eye care practices by PRG (excluding the acquisitions of
Equimed and AOI) during the first, second, third, and fourth quarters of 1996
(the 1996 Acquisitions); (ii) and the acquisition of AOI and the Equimed-
Ophthalmology Business by PRG, including the acquisition of certain assets from
and consummation of service agreements with eye care practices during 1996 made
by Equimed and AOI prior to their respective transactions with PRG (the Equimed
Acquisition and AOI Acquisition); (iii) the issuance of 4,250,000 shares of PRG
in the public offering in May, 1996 (the 1996 Public Offering) and the
application of the net proceeds therefrom, and (iv) the issuance of $125,000,000
of convertible debentures at 6% in December, 1996 (the Convertible Debt
Offering) and the application of the proceeds therefrom.
The unaudited merger/significant transactions pro forma statement of
operations has been prepared by PRG based on the financial statements of (i)
PRG, (ii) Equivision, Inc. (which subsequent to its acquisition by Equimed,
became the Equimed-Ophthalmology Business), (iii) Equimed-Ophthalmology
Business, (iv) AOI, (v) the unaudited financial statements of practices acquired
by PRG during 1996, and (vi) the practices acquired by Equimed and AOI during
1996. This unaudited pro forma statement of operations may not be indicative of
the actual results had the above events and transactions occurred on the dates
indicated or of the actual results which may be realized in the future. Neither
expected benefits and cost reductions anticipated by PRG nor future corporate
costs and expenses related to the 1996 Acquisitions, the Equimed Acquisition, or
the AOI Acquisition have been reflected in the accompanying unaudited pro forma
statement of operations.
<PAGE>
EXHIBIT 4.7
CERTIFICATE OF DESIGNATIONS, RIGHTS AND PREFERENCES
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
PHYSICIANS RESOURCE GROUP, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Physicians Resource Group, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware, in accordance with Section
151 thereof, DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors in
accordance with the provisions of the Second Restated Certificate of
Incorporation, as amended, of said Corporation, the said Board of Directors on
March 25, 1997, adopted the following resolution creating a series of 200,000
shares of Convertible Preferred Stock designated as "Series B Convertible
Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of the
Second Restated Certificate of Incorporation, a series of Preferred Stock,
par value $.01 per share of the Corporation be and hereby is created, and
that designation and number of shares thereof and the voting and other
powers, preferences and relative participating, optional or other rights of
the shares of such series and the qualifications, limitations and
restrictions thereof are as follows:
SERIES B CONVERTIBLE PREFERRED STOCK
SECTION 1. DESIGNATION. The shares of such series shall be designated as
"Series B Convertible Preferred Stock," par value $.01 per share, and the number
of shares constituting such series shall be 200,000. Such number of shares may
be increased or decreased by resolution of the Board of Directors; provided that
no decrease shall reduce the number of shares of Series B Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series B Convertible Preferred Stock.
SECTION 2. DIVIDENDS. The holders of shares of Series B Convertible
Preferred Stock shall not be not entitled to dividends.
SECTION 3. VOTING RIGHTS. Except as provided by law, the holders of
Series B Convertible Preferred Stock shall have no voting rights and their
consent shall not be required for taking any corporate action.
<PAGE>
SECTION 4. REACQUIRED SHARES. Any shares of Series B Convertible
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Convertible Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance set
forth herein.
SECTION 5. REDEMPTION. The shares of Series B Convertible Preferred Stock
shall not be redeemable.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP. (a) The liquidation
value of shares of Series B Convertible Preferred Stock, in the case of
voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation, shall be $.01 per share.
(b) In the event of any dissolution, liquidation or winding up of
the affairs of the Corporation, the holders of shares of Series B Convertible
Preferred Stock shall be entitled to receive out of the net assets of the
Corporation, the liquidation value of such shares held by them in preference to
and in priority over distributions upon the Common Stock of the Corporation (the
"Common Stock"). Upon payment in full of the liquidation value to which the
holders of shares of Series B Convertible Preferred Stock are entitled, the
holders of shares of Series B Convertible Preferred Stock will not be entitled
to any further participation in any distribution of assets by the Company.
(c) Neither a consolidation or merger of the Company with or into
any other corporation, nor a merger of any other corporation with or into the
Company, nor a sale or transfer of all or any part of the Company's assets for
cash or securities or other property shall be considered a liquidation,
dissolution or winding-up of the Company within the meaning of this Section.
SECTION 7. CONVERSION RIGHTS. (a) Holders of shares of Series B
Convertible Preferred Stock will have the right, exercisable at any time, to
convert each share of Series B Convertible Preferred Stock into one share of the
Common Stock of the Corporation, subject to adjustment as described below (such
rate or adjusted rate being referred to herein as the "Conversion Rate").
(b) Any holder of shares of Series B Convertible Preferred Stock
electing to convert such shares or any portion thereof in accordance with
Section 7(a) shall deliver the certificates therefor to the principal office,
the Corporation or of any transfer agent for the Common Stock, with the form of
notice of election to convert endorsed on such certificates fully completed and
duly executed. The conversion right with respect to any such shares of Series B
Convertible Preferred Stock shall be deemed to have been exercised at the date
upon which the certificates therefor with such notice of election duly executed
shall have been so delivered, and the person or persons entitled to receive the
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder of such Common Stock upon said date.
<PAGE>
(c) No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon conversion of shares of Series B
Convertible Preferred Stock; any fractional interest that would result from
conversion shall be rounded up or down to the nearest whole share and there
shall be no cash paid by or to the Corporation in respect of such fractional
interest.
(d) If a holder converts shares of Series B Convertible Preferred
Stock, the Corporation shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of shares or Common Stock upon the conversion. The
holder, however, shall pay any such tax which is due because the shares are
issued in a name other than the name of such holder.
(e) The Corporation shall reserve out of its authorized but
unissued Common Stock or its Common Stock held in treasury enough shares of
Common Stock to permit the conversion of all of the shares of the Series B
Convertible Preferred Stock. For the purposes of this subsection (e), the full
number of shares of Common Stock then issuable upon the conversion of all
outstanding shares of the Series B Convertible Preferred Stock shall be computed
as if at the time of computation of such number of shares of Common Stock all
outstanding shares of the Series B Convertible Preferred Stock were held by a
single holder. The Corporation shall from time to time, in accordance with the
laws of the State of Delaware, increase the authorized amount of its Common
Stock if at any time the authorized amount of its Common Stock remaining
unissued shall not be sufficient to permit the conversion of all shares of the
Series B Convertible Preferred Stock at the time outstanding. If any shares of
Common Stock required to be reserved for issuance upon conversion of shares of
the Series B Convertible Preferred Stock hereunder require registration with or
approval of any governmental authority under any federal or state law before
such shares may be issued upon such conversion, the Corporation will in good
faith and as expeditiously as possible endeavor to cause such shares to be so
registered or approved.
All shares of Common Stock that may be issued upon conversion of
the shares of Series B Convertible Preferred Stock shall be validly issued,
fully paid and nonassessable.
In order that the Corporation may issue shares of Common Stock upon
conversion of the shares of Series B Convertible Preferred Stock, the
Corporation will endeavor to comply with all applicable federal and state
securities laws.
(f) The Conversion Rate in effect at any time shall be subject to
adjustment as follows:
If the Corporation:
1. pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
2. subdivides its outstanding shares of Common Stock into a
greater number of shares;
3
<PAGE>
3. combines its outstanding shares of Common Stock into a
smaller number of shares;
4. makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
5. issues by reclassification of its Common Stock any shares
of its capital stock;
then the conversion privilege and the Conversion Rate in effect
immediately prior to such action shall be adjusted so that the holder of shares
of Series B Convertible Preferred Stock thereafter converted may receive the
number of shares of capital stock of the Corporation that the holder would have
owned immediately following such action if the holder had converted the shares
of Series B Convertible Preferred Stock immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a holder of shares of Series B Convertible
Preferred Stock upon conversion of such shares may receive shares of two or more
classes of capital stock of the Corporation, the Corporation shall determine the
allocation of the adjusted Conversion Rate between the classes of capital stock.
After such allocation, the conversion privilege and the Conversion Rate of each
class of capital stock thereafter shall be subject to adjustment on terms
comparable to those applicable to Common Stock.
(g) If (i) the Corporation takes any action that would require an
adjustment in the Conversion Price pursuant to Section 6(f); or (ii) there is a
liquidation or dissolution of the Corporation, the Corporation shall mail to all
holders of Series B Convertible Preferred Stock a notice thereof stating the
proposed record date for the dividend or distribution or the proposed effective
date of the subdivision, combination or reclassification. The Corporation shall
mail the notice at least 15 days before such date. Failure to mail the notice
or any defect in it shall not affect the validity of the transaction.
(h) If the Corporation is a party to a transaction in which the
Corporation consolidates or merges with or into, or transfers or leases all or
substantially all of its assets to, any person, or a merger which reclassifies
or changes its outstanding Common Stock, upon consummation of such transaction
the shares of Series B Convertible Preferred Stock shall automatically become
convertible into the kind and amount of securities, cash or other assets which
the holder of shares of Series B Convertible Preferred Stock would have owned
immediately after the consolidation, merger, transfer or lease if the holder had
converted the shares of the Series B Convertible Preferred Stock immediately
before the effective date of the transaction.
4
<PAGE>
SECTION 8. OTHER RIGHTS. The shares of Series B Convertible Preferred
Stock shall not have any powers, preferences or relative participating, optional
or other, special rights, or qualifications, limitations or restrictions
thereof, other than as set forth herein. The Corporation may issue other shares
senior in right of preference or liquidation to the Series B Convertible
Preferred Stock.
IN WITNESS WHEREOF, the undersigned has executed this Certificate and does
affirm the foregoing as true under the penalties of perjury this 25th day of
March, 1997.
/s/ RICHARD J. D'AMICO
--------------------------------
RICHARD J. D'AMICO,
EXECUTIVE VICE PRESIDENT,
PHYSICIANS RESOURCE GROUP, INC.
5
<PAGE>
EXHIBIT 99.1
------------
AMENDMENT TWO TO THE
PHYSICIANS RESOURCE GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
(AMENDMENT EFFECTIVE SEPTEMBER 1, 1997)
Physicians Resource Group, Inc., a Delaware corporation (the
"Corporation"), adopts this amendment to the Physicians Resource Group, Inc.
Employee Stock Purchase Plan (the "Plan"), effective as of September 1, 1997.
WHEREAS, the Corporation is the employer and sponsor of the Plan; and
WHEREAS, the Corporation desires to amend the participation provisions of
the Plan; and
WHEREAS, Section 16 of the Plan authorizes the Corporation to amend the
Plan;
NOW, THEREFORE, Section 4(b) of the Plan is amended to read as follows:
"(b) Each eligible Employee may elect to participate in the Plan
with respect to an offer by filing a payroll withholding authorization
form with the Committee on or before the date determined by the
Committee from time to time in its sole discretion authorizing payroll
withholding (as set forth in paragraph 5) throughout the Offering
Period."
Except as provided above, the Plan remains unamended and in full force and
effect.
