Capital Stock

12 Months Ended

Dec. 31, 2011

Capital Stock [Abstract]

Capital Stock

Note 9 — Capital Stock

At December 31, 2011 and 2010, the Company’s authorized capital stock, including redeemable common securities, consisted of 10,000.00 shares of preferred stock, $0.01 par value, of which no shares were issued or outstanding, 40,000.00 shares of Class A Common Stock, $0.01 par value, of which 20,261.80 and 18,905.31 shares were issued and outstanding, respectively, and 15,200.00 shares of Class B Common Stock, $0.01 par value, of which 11,918.71 shares were issued and outstanding. At December 31, 2011 and 2010, 15,200 shares of Class A Common Stock, $0.01 par value, were reserved for issuance upon the conversion of Class B Common Stock., $0.01 par value.

The holders of common stock are entitled to vote as a single class on all matters upon which shareholders have a right to vote, subject to the requirements of applicable laws. Each share of Class A and Class B Common Stock entitles its holder to one vote and both classes participate equally in any dividend or distribution of earnings of the Company. For so long as at least 50% of the shares of Class B Common Stock issued at the effective time of the Second Amended and Restated Certificate of Incorporation remain outstanding, the holders of a majority of outstanding shares of Class B Common Stock must affirmatively vote or consent to sell, merge, consolidate, reorganize, liquidate or otherwise dispose of all or substantially all of the assets of the Company and, among other things and in certain instances, to incur indebtedness, to pay dividends or distributions and to effectuate a public offering of the Company’s Class A Common Stock.

Each share of Class B Common Stock is convertible into a share of Class A Common Stock on a one-for-one basis (i) upon transfer to a person or entity which is not a Permitted Transferee (as defined in the Second Amended and Restated Certificate of Incorporation), (ii) upon a Qualified Initial Public Offering (as defined in the Second Amended and Restated Certificate of Incorporation) and (iii) at such time as less than 20% of the 11,918.71 shares of Class B Common Stock are controlled or owned by Permitted Transferees.

Of the Class A Common Stock, 1,210.49 and 597.52 shares were redeemable at December 31, 2011 and 2010, respectively, and classified as “redeemable common securities” on the balance sheet, as described below.

Under the terms of the PCHI stockholders’ agreement dated April 30, 2004, as amended, the Company has an option to purchase all of the shares of common stock held by former employees and, under certain circumstances, former employee stockholders can require the Company to purchase all of the shares held by the former employees. The purchase price as prescribed in the stockholders’ agreement is to be determined through a market valuation of the minority-held shares or, under certain circumstances, based on cost, as defined therein. The aggregate amount that may be payable by the Company to certain employee stockholders, based on the estimated fair market value of fully paid and vested common securities, totaled $35,831 and $16,547 at December 31, 2011 and 2010, respectively, and is classified as redeemable common securities on the consolidated balance sheet, with a corresponding adjustment to stockholders’ equity. As there is no active market for the Company’s common stock, the Company estimates the fair value of its common stock based on a valuation model confirmed periodically by recent acquisitions or independent appraisals.

As explained in Note 15, in 2004, the CEO and the President exchanged vested options in a predecessor company for fully vested PCHI stock options (“Rollover Options”). Since these options vested immediately and can be exercised upon the death or disability of the officer and put back to the Company, such options are classified as redeemable common securities on the consolidated balance sheet. These options are Level 2 in the fair value hierarchy.

A summary of the changes in redeemable common securities for the years ended December 31, 2009, 2010 and 2011 follows:

	Redeemable
	Number of Rollover Stock Options			Number of Common Shares		Rollover Stock Options			Common Shares			Total Redeemable Common Securities
Balance as of December 31, 2008		61.18			585.15	$	1,582		$	16,589		$	18,171
Shares issued upon option exercise		—			7.69		—			218			218
Balance as of December 31, 2009		61.18			592.84		1,582			16,807			18,389
Shares issued upon option exercise		—			4.68		—			133			133
Dividends paid		—			—		(575	)		(5,617	)		(6,192	)
Revaluation of remaining options/shares		—			—		535			5,224			5,759
Balance as of December 31, 2010		61.18			597.52		1,542			16,547			18,089
Warrant exercise		—			544.75		—			15,090			15,090
Shares issued upon option exercise		(20.29	)		68.22		(550	)		2,001			1,451
Revaluation of remaining options/shares		—			—		116			2,193			2,309
Balance as of December 31, 2011		40.89			1,210.49	$	1,108		$	35,831		$	36,939

On December 30, 2008, the Company exchanged 544.75 warrants to purchase PCHI common stock at $.01 per share, valued at $28,350 per share, plus $500 in cash, to acquire the minority interest in PCFG common stock. As a result of this transaction, the Company charged $558 to goodwill. The warrants, which have a term of 10 years, were exercisable into PCHI common stock under certain conditions, with the right to require the Company to purchase the shares upon the death or disability of the employees and were classified on the balance sheet as a current liability under the provisions of ASC 480-10 Distinguishing Liabilities from Equity. Under those rules, any change in value of the warrants must be “marked to market” to reflect the change in liability, with an offsetting charge to compensation. These warrants are Level 2 in the fair value hierarchy. As the result of an independent appraisal performed in December 2010, these warrants were “marked to market” resulting in a charge to 2010 compensation expense of $4,763. For tax purposes, the warrants are not considered compensation and therefore this charge was not deductible for tax purposes. In February 2011, the warrants were exercised with the corresponding share issuance recorded as redeemable common stock.

In December 2010, in connection with the refinancing of the Company’s term loan agreement (see Note 8), the Company’s Board of Directors declared a one-time cash dividend of $9,400 per share of outstanding Common Stock, totaling $289,746, and similar distributions to the holders of vested common stock warrants, $12,083, and vested time options, $9,370. The distribution to vested time option holders resulted in a charge to stock compensation expense in 2010. In addition, holders of unvested time and performance options at the declaration date may also receive a distribution of $9,400 per share if, and when, the time and performance options vest. During 2011, certain time options vested and the Company recorded a $617 charge to stock compensation expense. At December 31, 2011, the aggregate potential distribution associated with unvested time and performance options is $17,875. Such amount will be recorded in stock compensation expense if, and when, the options vest.