-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Weo8W1hesuDnLXaQBk3wS9KlFI3QpVngIe4PZliOnWtFfTyY92b+1NzLMlNLsOaH 4cbOpFWBQZYADMf04HERJQ== 0000946489-97-000013.txt : 19970815 0000946489-97-000013.hdr.sgml : 19970815 ACCESSION NUMBER: 0000946489-97-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHERIDAN HEALTHCARE INC CENTRAL INDEX KEY: 0000946489 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 043252967 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26260 FILM NUMBER: 97661826 BUSINESS ADDRESS: STREET 1: 4651 SHERIDAN ST STREET 2: STE 400 CITY: HOLLYWOOD STATE: FL ZIP: 33021 BUSINESS PHONE: 3059875822 MAIL ADDRESS: STREET 1: 4651 SHERIDAN STREET STREET 2: SUITE 400 CITY: HOLLYWOOD STATE: FL ZIP: 33021 10-Q 1 10-Q UNITED STATES 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 June 30, 1997 [ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ---- ---- ****************************** Commission File Number 0-26806 SHERIDAN HEALTHCARE, INC. (Exact name of registrant as specified in its charter) Delaware 04-3252967 (State or other jurisdiction of (IRS Employer ID Number) incorporation or organization) 4651 Sheridan Street, Suite 400, Hollywood, Florida 33021 (Address of principal executive offices, including zip code) 954/987-5822 (Registrant's telephone number, including area code) 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 ---- ---- APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of outstanding shares of the issuer's classes of common stock as of the latest practicable date. As of August 1, 1997, there were 6,417,998 shares of the Registrant's voting Common Stock, $.01 par value, outstanding and 296,638 shares of the Registrant's non-voting Class A Common Stock, $.01 par value, outstanding. Part I: Financial Information Item 1: Financial Statements SHERIDAN HEALTHCARE, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)
June 30, December 31, 1997 1996 ------------- ------------- (unaudited) ASSETS Current assets: Cash and cash equivalents..................................................... $ --- $ --- Accounts receivable, net of allowances........................................ 20,494 18,717 Income tax refunds receivable................................................. --- 570 Deferred income taxes......................................................... 1,568 1,154 Other current assets.......................................................... 2,057 1,845 ------------- ------------- Total current assets........................................................ 24,119 22,286 Property and equipment, net of accumulated depreciation.......................... 3,342 3,730 Goodwill, net of accumulated amortization........................................ 49,922 46,111 Intangible assets, net of accumulated amortization............................... 1,671 1,281 ------------- ------------- Total assets.............................................................. $ 79,054 $ 73,408 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.............................................................. $ 363 $ 222 Amounts due for acquisitions.................................................. 553 558 Accrued salaries and benefits................................................. 2,698 2,798 Self-insurance accruals....................................................... 3,388 3,170 Refunds payable............................................................... 2,590 1,952 Accrued lease obligations..................................................... 704 971 Other accrued expenses........................................................ 4,019 3,090 Current portion of long-term debt............................................. 439 1,189 ------------- ------------- Total current liabilities................................................... 14,754 13,950 Long-term debt................................................................... 24,057 21,367 Amounts due for acquisitions..................................................... 1,865 2,133 Stockholders' equity: Preferred stock, par value $.01; 5,000 shares authorized, none issued......... --- --- Common stock, par value $.01; 21,000 shares authorized: Voting; 6,418 shares issued and outstanding................................. 64 64 Class A non-voting; 297 shares issued and outstanding...................... 3 3 Additional paid-in capital.................................................... 61,129 61,129 Excess purchase price distributed to management stockholders.................. (7,541) (7,541) Retained earnings (deficit)................................................... (15,277) (17,697) ------------- ------------- Total stockholders' equity ................................................. 38,378 35,958 ------------- ------------- Total liabilities and stockholders' equity................................ $ 79,054 $ 73,408 ============= =============
See accompanying notes. 2 SHERIDAN HEALTHCARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)
Three Months Ended June 30, ---------------------------- 1997 1996 ------------- ------------ Net revenue of consolidated and unconsolidated physician practices............... $ 24,605 $ 23,475 Less - amounts retained by unconsolidated practices.............................. (876) (275) ------------- ------------ Net revenue of the Company....................................................... 23,729 23,200 Operating expenses: Direct facility expenses...................................................... 16,486 16,636 Provision for bad debts....................................................... 950 915 Salaries and benefits......................................................... 1,893 1,684 General and administrative.................................................... 1,289 1,086 Amortization.................................................................. 475 638 Depreciation.................................................................. 153 274 ------------- ------------- Total operating expenses.................................................... 21,246 21,233 ------------- ------------- Operating income................................................................. 2,483 1,967 Interest expense................................................................. 583 651 ------------- ------------- Income before income taxes....................................................... 1,900 1,316 Income tax expense............................................................... 668 200 ------------- ------------- Net income....................................................................... $ 1,232 $ 1,116 ============= ============= Net income per share............................................................. $ .18 $ .16 Weighted average shares of common stock and common stock equivalents outstanding.......................................... 6,934 6,831
See accompanying notes. 3 SHERIDAN HEALTHCARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)
Six Months Ended June 30, ---------------------------- 1997 1996 ------------- ------------ Net revenue of consolidated and unconsolidated physician practices............... $ 47,923 $ 43,569 Less - amounts retained by unconsolidated practices.............................. (1,289) (515) ------------- ------------ Net revenue of the Company....................................................... 46,634 43,054 Operating expenses: Direct facility expenses...................................................... 32,485 31,082 Provision for bad debts....................................................... 1,875 1,590 Salaries and benefits......................................................... 3,723 3,234 General and administrative.................................................... 2,409 2,102 Amortization.................................................................. 912 1,189 Depreciation.................................................................. 296 484 ------------- ------------- Total operating expenses.................................................... 41,700 39,681 ------------- ------------- Operating income................................................................. 4,934 3,373 Interest expense................................................................. 1,184 1,204 ------------- ------------- Income before income taxes....................................................... 3,750 2,169 Income tax expense............................................................... 1,330 200 ------------- ------------- Net income....................................................................... $ 2,420 $ 1,969 ============= ============= Net income per share............................................................. $ .35 $ .30 Weighted average shares of common stock and common stock equivalents outstanding.......................................... 6,913 6,577
See accompanying notes. 4 SHERIDAN HEALTHCARE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
Six Months Ended June 30, ----------------------------- 1997 1996 ------------- ------------- Cash flows from operating activities: Net income.................................................................... $ 2,420 $ 1,969 Adjustments to reconcile net income to net cash provided by operating activities: Amortization................................................................ 912 1,189 Depreciation................................................................ 296 484 Provision for bad debts..................................................... 1,875 1,590 Deferred income taxes....................................................... (414) --- Changes in operating assets and liabilities: Accounts receivable......................................................... (4,622) (3,753) Other current assets........................................................ 258 (1,368) Other assets................................................................ (524) --- Accounts payable............................................................ 141 (156) Other accrued expenses...................................................... 1,265 841 ------------- ------------- Net cash provided by operating activities................................. 1,607 796 ------------- ------------- Cash flows from investing activities: Acquisitions of physician practices........................................... (273) (10,933) Investment in management agreements........................................... (6,258) --- Sale of physician practices................................................... 3,282 --- Capital expenditures.......................................................... (382) (939) ------------- ------------- Net cash (used) in investing activities................................... (3,631) (11,872) ------------- ------------- Cash flows from financing activities: Borrowings on long-term debt.................................................. 3,018 12,559 Payments on long-term debt.................................................... (994) (1,287) ------------- ------------- Net cash provided by financing activities................................. 2,024 11,272 ------------- ------------- Increase in cash and cash equivalents............................................ --- 196 Cash and cash equivalents: Beginning of period........................................................... --- --- ------------- ------------- End of period................................................................. $ --- $ 196 ============= =============
See accompanying notes. 5 SHERIDAN HEALTHCARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1997 (unaudited) (1) BASIS OF PRESENTATION --------------------- The interim consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to SEC rules and regulations; nevertheless, management believes that the disclosures herein are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly present the consolidated financial position of the Company at June 30, 1997, and the consolidated results of its operations and its consolidated cash flows for the periods shown in the interim consolidated financial statements, have been included herein. The results of operations for the interim periods are not necessarily indicative of the results for the full years. (2) GOODWILL -------- Approximately $29.0 million of the total amount of goodwill, net of accumulated amortization, at June 30, 1997 is related to the Company's acquisition of Sheridan Healthcorp, Inc. (the "Predecessor") in November 1994. Such goodwill represents the Company's market position and reputation, its relationships with its customers and affiliated physicians, the relationships between its affiliated physicians and their patients, and other similar intangible assets. The remaining $20.9 million of the total amount of goodwill at June 30, 1997 is related to several acquisitions of physician practices, and investments in management agreements with physician practices, which were completed from September 1994 to May 1997, some of which are included in the transactions discussed in Note 6 below. Such goodwill represents the general reputation of the practices in the communities they serve, the collective experience of the management and other employees of certain practices in managing health care services delivered under capitated arrangements, contracts with health maintenance organizations, relationships between the physicians and their patients, patient lists, and other similar intangible assets. (3) INTANGIBLE ASSET ---------------- Intangible assets consist primarily of the physician employee workforce, non-physician employee workforce, management team and computer software acquired in the Company's acquisition of the Predecessor and deferred loan costs. (4) AMOUNTS DUE FOR ACQUISITIONS ---------------------------- Amounts due for acquisitions includes obligations to the former stockholders of certain office-based physician practices acquired by the Company, which are being paid over the terms of the employment agreements between the Company and the former stockholders, which range from three to five years. It also includes termination benefits payable to the former stockholders of an acquired practice, which are payable beginning in 2001 or upon termination of their employment by the Company, whichever is later. 6 SHERIDAN HEALTHCARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (5) NET REVENUE ----------- Since the beginning of 1996, the Company has entered into several long-term management agreements with physician practices. Under the management agreements, the Company recognizes net revenue equal to the management fees received from the practices. Effective for the period ended June 30, 1997, the Company began presenting the total net revenue of all of its owned and managed physician practices and the net revenue of the company after deducting amounts retained by the managed practices in its results of operations, as shown on the accompanying consolidated statements of operations. The Company's management believes that this data provides readers with additional useful information about its operations. (6) ACQUISITIONS AND DIVESTITURES ----------------------------- During the period from January to October 1996, the Company made six acquisitions of physician practices for an aggregate of $12.4 million in cash and deferred payments and approximately 658,000 shares of the Company's common stock. During the period from March 1997 to May 1997, the Company also entered into long-term management agreements with three physician practices, in connection with which it acquired certain assets from the practices, and options to acquire the practices, for aggregate consideration of $6.2 million in cash. These acquisitions and management agreements were accounted for as purchases, and accordingly, the operations of each acquired practice, or the operations under each management agreement, are included in the Company's consolidated financial statements beginning on each respective date of acquisition, or the effective date of the management agreement, as applicable. In each transaction, the purchase price was allocated to the net assets acquired based on their estimated fair market values. The following table summarizes the pro forma consolidated results of operations of the Company as though all of the transactions discussed above had occurred at the beginning of the period presented. The pro forma consolidated results of operations shown below do not necessarily represent what the consolidated results of operations of the Company would have been if these transactions had actually occurred at the beginning of the period presented, nor do they represent a forecast of the consolidated results of operations of the Company for any future period.
Three Months Ended Six Months Ended June 30, June 30, --------------------------- -------------------------- 1997 1996 1997 1996 ----------- ----------- ----------- ----------- (in thousands, except per share data) Pro Forma Results of Operations: Net revenue of the Company................ $ 23,994 $ 24,690 $ 47,783 $ 48,932 Income before income taxes................ 1,910 1,371 3,757 2,484 Net income................................ 1,236 1,133 2,408 2,089 Net income per share...................... .18 .17 .35 .32
During the period from December 1996 to April 1997, the Company sold two primary care practices and two rheumatology practices which had generated an aggregate of $8.4 million of net revenue during the year ended December 31, 1996. 7 SHERIDAN HEALTHCARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (7) LONG-TERM DEBT -------------- Long-term debt consists of the following (in thousands):
June 30, December 31, 1997 1996 ----------- ------------ Revolving credit facility, maturing in March 2000, secured by substantially all assets of the Company.................... $ 23,000 $ --- Revolving credit facility, maturing in February 1997, secured by substantially all assets of the Company.................... --- 19,982 Capital lease obligations payable in various monthly installments, maturing at various dates through 2001.................. 1,496 1,809 Note payable, maturing in January 1997.................................. --- 765 ----------- ----------- Total................................................................ 24,496 22,556 Less current portion.................................................... (439) (1,189) ----------- ----------- Long-term debt...................................................... $ 24,057 $ 21,367 =========== ===========
On March 12, 1997, the Company established a new $35 million revolving credit facility, which was used to pay the outstanding balance under the previous credit facility. There are no principal payments due under the new credit facility until the maturity date of March 11, 2000. The new revolving credit facility contains various restrictive covenants that include, among other requirements, the maintenance of certain financial ratios, various restrictions regarding acquisitions, sales of assets, liens and dividends, and limitations regarding investments, additional indebtedness and guarantees. The Company was in compliance with the loan covenants in the new credit facility as of June 30, 1997. The additional amount that could be borrowed under the credit facility is potentially restricted by a leverage ratio defined in the credit agreement. Based on the value of this leverage ratio at June 30, 1997, the Company had the ability to borrow the entire unused portion of the credit facility, which was $12.0 million at June 30, 1997. (8) INCOME TAXES ------------ The Company's income tax expense was reduced by a loss carryforward from the prior year for the three months and six months ended June 30, 1997 and the three months and six months ended June 30, 1996. Without the loss carryforwards, income tax expense for the three months ended June 30, 1997 and 1996 would have been approximately $875,000 and $650,000, and income tax expense for the six months ended June 30, 1997 and 1996 would have been approximately $1,750,000 and $1,100,000. The Company had an unused loss carryforward of approximately $1.1 million for book purposes as of June 30, 1997. The tax effect of this loss carryforward is being allocated evenly among all four quarters in the year ending December 31, 1997. The Company had net deferred tax assets at June 30, 1997, which represent the tax effect of differences between the tax basis and the financial reporting basis of assets and liabilities on the Company's balance sheet. (9) LITIGATION ---------- In October 1996, the Company and certain of its directors, officers and legal advisors were named as defendants in a lawsuit filed in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida by certain former physician stockholders of the Predecessor, which was formerly named Southeastern Anesthesia Management Associates, Inc. The claim alleges that the defendants engaged in a conspiracy of fraud and deception for personal gain in connection with inducing the plaintiffs to sell their stock in the Predecessor to the Company, as well as legal malpractice and violations of Florida securities laws. The claim seeks damages of at least $10 million and the imposition of a constructive trust and disgorgement of stock and options held by certain members of the Company's management. The Company believes the lawsuit is without merit and intends to continue to vigorously defend against it. 8 SHERIDAN HEALTHCARE, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) (10) NET INCOME PER SHARE -------------------- Net income per share reflected in the accompanying consolidated statements of operations represents both primary earnings per share and fully diluted earnings per share, which are substantially the same for the Company. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share," ("SFAS 128"), which is effective for fiscal years ending after December 15, 1997. SFAS 128 simplifies the calculation of earnings per share and provides for the reporting of basic earnings per share and diluted earnings per share. Application of SFAS 128 to the accompanying consolidated financial statements would not have a material impact on the Company's earnings per share. (11) STOCKHOLDERS' EQUITY -------------------- In May 1997, the Company decreased the amount of its authorized common stock from 31,000,000 shares to 21,000,000 shares, which is retroactively reflected in the accompanying consolidated balance sheets. (12) STOCK OPTIONS ------------- The Company adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123") in 1996. The Company has elected to continue using Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," in accounting for employee stock options. Each stock option has an exercise price equal to the market price on the date of grant and, accordingly, no compensation expense has been recorded for any stock option grants. Stock option activity during the six months ended June 30, 1997 was as follows:
Weighted Average Number Exercise of Shares Price --------- --------- Balance, December 31, 1996................................................. 553,911 $ 5.73 Granted during period...................................................... 471,500 9.27 Forfeited during period.................................................... (6,975) 5.83 ----------- Balance, June 30, 1997..................................................... 1,018,436 $ 7.37 ===========
The following table summarizes the pro forma consolidated results of operations of the Company as though the fair value based accounting method in SFAS 123 had been used in accounting for stock options.
Six Months Ended June 30, 1997 ------------- (in thousands, except per share data) Pro forma results of operations: Net income.............................................................................. $ 1,693 Net income per share.................................................................... .24
9 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company's actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause such a difference include the following: fluctuations in the volume of services delivered by the Company's affiliated physicians, changes in the reimbursement rates for those services, uncertainty about the ability to collect the appropriate fees for those services, fluctuations in the cost and utilization rates of referral services used by patients that are subject to shared-risk capitation arrangements, the loss of significant hospital or third-party payor relationships, and changes in the number of patients using the Company's physician services. GENERAL The Company is a physician practice management company which provides specialist physician services at hospitals and ambulatory surgical facilities in the areas of anesthesia, neonatology, pediatrics, emergency services and obstetrics, and which owns and operates, or manages, office-based primary care and obstetrical practices. The Company derives substantially all of its revenue from the medical services provided by the physicians who are employed by the Company or whose practices are managed by the Company. The Company increased the number of physicians affiliated with it from approximately 145 at December 31, 1995 to approximately 210 at June 30, 1997 through several acquisitions of physician practices, several long-term management agreements with physician practices, and the addition of several new contracts for specialist physician services. The Company made several acquisitions of physician practices and entered into several long-term management agreements with physician practices, during the period from January 1, 1996 to June 30, 1997, as described in Note 6 to the accompanying consolidated financial statements. These transactions were accounted for as purchases and accordingly, the operations of each acquired practice, or the operations under each management agreement, are included in the Company's consolidated financial statements beginning on each respective date of acquisition, or the effective date of the management agreement, as applicable. The Company also sold certain physician practices during the period from December 1996 to April 1997, as described in Note 6 to the accompanying consolidated financial statements. RESULTS OF OPERATIONS The following table shows certain statement of operations data expressed as percentage of net revenue:
Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 1997 1996 1997 1996 --------- --------- --------- -------- (in thousands, except per share data) Net revenue of the Company........................... 100.0% 100.0% 100.0% 100.0% Operating expenses: Direct facility expenses........................ 69.5 71.7 69.7 72.2 Provision for bad debts......................... 4.0 3.9 4.0 3.7 Salaries and benefits........................... 8.0 7.3 8.0 7.5 General and administrative...................... 5.4 4.7 5.2 4.9 Amortization.................................... 2.0 2.7 1.9 2.8 Depreciation.................................... 0.6 1.2 0.6 1.1 --------- --------- --------- -------- Total operating expenses................... 89.5 91.5 89.4 92.2 --------- --------- --------- -------- Operating income..................................... 10.5% 8.5% 10.6% 7.8% ========= ========= ========= ========
10 Three Months Ended June 30, 1997 Compared To Three Months Ended June 30, 1996 Net revenue increased $529,000, or 2.3%, from $23.2 million in 1996 to $23.7 million in 1997. Net revenue from hospital-based services increased by $1.3 million, from $16.1 million in 1996 to $17.4 million in 1997. This increase was primarily due to the addition of several new contracts for hospital-based services during the past year. Net revenue from office-based practices decreased $800,000, from $7.1 million in 1996 to $6.3 million in 1997, primarily due to the sale of two primary care practices and two rheumatology practices during the period from December 1996 to April 1997. Direct facility expenses decreased $150,000, or 0.9%, from $16.6 million in 1996 to $16.5 million in 1997. Direct facility expenses include all operating expenses that are incurred at the location of the physician practice, including salaries, employee benefits, referral claims (in the case of shared-risk capitation business), office expenses, medical supplies, insurance and other expenses. The decrease in direct facility expenses, in spite of a $529,000 increase in net revenue, was primarily due to an increase in the percentage of the Company's total net revenue that is derived from hospital-based services, from 69.3% in 1996 to 73.5% in 1997. The Company's hospital-based operations have historically had a lower direct facility expense percentage than its office-based operations. Direct facility expenses as a percentage of net revenue ("direct facility expense percentage") decreased from 71.7% in 1996 to 69.5% in 1997, primarily due to a favorable change in the mix of the Company's business, as noted above. The provision for bad debts increased $35,000, or 3.8%, from $915,000 in 1996 to $950,000 in 1997. This increase was primarily due to a 2.3% increase in net revenue, as discussed above. As a percentage of net revenue, the provision for bad debts increased only slightly, from 3.9% in 1996 to 4.0% in 1997. Salaries and benefits increased $209,000, or 12.4%, from $1.7 million in 1996 to $1.9 million in 1997. Salaries and benefits includes salaries, payroll taxes and employee benefits related to employees located at the Company's central office, including employees related to hospital-based operations, office-based operations and general corporate functions. The increase in salaries and benefits was primarily due to employees added to various corporate functions to support future growth of the Company, to employees added to support the new contracts for hospital-based services noted above and to the accrual of physician incentives. As a percentage of net revenue, salaries and benefits increased from 7.3% in 1996 to 8.0% in 1997, primarily due to the increases noted above. General and administrative expense increased $203,000, or 18.7%, from $1.1 million in 1996 to $1.3 million in 1997. General and administrative expense includes expenses incurred at the Company's central office, including office expenses, accounting and legal fees, insurance, travel and other similar expenses. The increase in general and administrative expense was primarily due to an increase in legal fees due to the litigation discussed in Note 9 to the accompanying consolidated financial statements, and increases in various expenses to support the increase in the number of employees indicated in the preceding paragraph. As a percentage of net revenue, general and administrative expense increased from 4.7% in 1996 to 5.4% in 1997. Amortization expense decreased $163,000, or 25.5%, from $638,000 in 1996 to $475,000 in 1997. This decrease was primarily due to a decrease in amortization expense related to goodwill and intangible assets that were written down to their estimated realizable values during the fourth quarter of 1996, which was partially offset by amortization of the goodwill related to several acquisitions of physician practices, and management agreements with physician practices, completed from July 1996 to May 1997, which are included in the transactions discussed in Note 6 to the accompanying consolidated financial statements. Operating income increased $516,000, or 26.2%, from $2.0 million in 1996 to $2.5 million in 1997. This increase was primarily due to a decrease in the direct facility expense percentage from 71.7% in 1996 to 69.5% in 1997, which was primarily due to a favorable shift in the Company's mix of hospital-based and office-based operations, as discussed above. 11 Six Months Ended June 30, 1997 Compared To Six Months Ended June 30, 1996 Net revenue increased $3.5 million, or 8.3%, from $43.1 million in 1996 to $46.6 million in 1997. Net revenue from hospital-based services increased by $5.4 million, from $28.7 million in 1996 to $34.1 million in 1997. This increase was primarily due to the acquisition of a 43-physician hospital-based neonatology and pediatric practice in March 1996, and the addition of several new contracts for hospital-based services during the past year. Net revenue from office-based practices decreased $1.9 million, from $14.4 million in 1996 to $12.5 million in 1997, primarily due to the sale of two primary care practices and two rheumatology practices during the period from December 1996 to April 1997. Direct facility expenses increased $1.4 million, or 4.5%, from $31.1 million in 1996 to $32.5 million in 1997. The increase in direct facility expenses was primarily due to an 8.3% increase in net revenue, as noted above. The direct facility expense percentage decreased from 72.2% in 1996 to 69.7% in 1997, primarily due to an increase in the percentage of the Company's total net revenue that is derived from hospital-based services, from 66.7% in 1996 to 73.3% in 1997. The Company's hospital-based operations have historically had a lower direct facility expense percentage than its office-based operations. The provision for bad debts increased $285,000, or 17.9%, from $1.6 million in 1996 to $1.9 million in 1997. This increase was primarily due to an 8.3% increase in net revenue, as discussed above. As a percentage of net revenue, the provision for bad debts increased from 3.7% in 1996 to 4.0% in 1997. This increase was primarily due to an increase in the percentage of the Company's total net revenue that is derived from hospital-based services, which typically have a higher bad debt expense as a percentage of net revenue than the Company's office-based operations. Salaries and benefits increased $489,000, or 15.1%, from $3.2 million in 1996 to $3.7 million in 1997. The increase in salaries and benefits was primarily due to employees added to various corporate functions to support future growth of the Company, to additional employees to support the new contracts for hospital-based services noted above and to the accrual of physician incentives. As a percentage of net revenue, salaries and benefits increased from 7.5% in 1996 to 8.0% in 1997, primarily due to the increases noted above. General and administrative expense increased $307,000, or 14.6%, from $2.1 million in 1996 to $2.4 million in 1997. The increase in general and administrative expense was primarily due to an increase in legal fees due to the litigation discussed in Note 9 to the accompanying consolidated financial statements, and increases in various expenses to support the increase in the number of employees indicated in the preceding paragraph. As a percentage of net revenue, general and administrative expense increased from 4.9% in 1996 to 5.2% in 1997. Amortization expense decreased $277,000, or 23.3%, from $1.2 million in 1996 to $912,000 in 1997. This decrease was primarily due to a decrease in amortization expense related to goodwill and intangible assets that were written down to their estimated realizable values during the fourth quarter of 1996, which was partially offset by amortization of the goodwill related to several acquisitions of physician practices, and management agreements with physician practices, completed from July 1996 to May 1997, which are included in the transactions discussed in Note 6 to the accompanying consolidated financial statements. Operating income increased $1.5 million, or 46.3%, from $3.4 million in 1996 to $4.9 million in 1997. This increase was primarily due to a decrease in the direct facility expense percentage from 72.2% in 1996 to 69.7% in 1997, which was primarily due to a favorable shift in the Company's mix of hospital-based and office-based operations, as discussed above and the acquisition of a hospital-based neonatology practice completed in March 1996. 12 LIQUIDITY AND CAPITAL RESOURCES The Company's principal uses of cash during the six months ended June 30, 1997 were to finance investments in management agreements with physician practices ($6.3 million) and to finance increases in accounts receivable ($2.7 million). The Company met its cash needs during this period primarily through the sale of certain physician practices ($3.3 million), its net income plus non-cash expenses (amortization, depreciation and deferred income taxes) ($3.2 million), and net borrowings on long-term debt ($2.0 million). On March 12, 1997, the Company established a new $35 million revolving credit facility with NationsBank, National Association (South) ("NationsBank"). The new credit facility matures on March 11, 2000 and bears interest at the London interbank offered rate plus an applicable margin which is subject to quarterly adjustment based on a leverage ratio defined in the credit agreement. As of August 1, 1997, the applicable margin was 1.63%. The Company was in compliance with the loan covenants in the new credit facility as of June 30, 1997. There are no principal payments due under the credit facility until the maturity date of March 11, 2000. The outstanding balance under the credit facility increased from $20.0 million at December 31, 1996 to $23.0 million at June 30, 1997 primarily due to investments in management agreements in 1997, as discussed above. The amount that can be borrowed under the new credit facility is potentially restricted by a leverage ratio defined in the credit agreement. Based on the value of this leverage ratio at June 30, 1997, the Company had the ability to borrow the entire unused portion of the credit facility, which was $12.0 million at June 30, 1997. Certain conditions must be met, including the maintenance of certain financial ratios, and in certain circumstances, the approval of NationsBank must be obtained, in order to use the credit facility to finance acquisitions of physician practices or investments in management agreements. There can be no assurance that the Company will be able to satisfy such conditions in order to use its credit facility to finance any future acquisitions or investments in management agreements. In March 1996, the Company issued approximately 658,000 shares of its common stock as partial consideration for an acquisition of a hospital-based neonatology practice completed in March 1996, which is included in the acquisitions discussed in Note 6 to the accompanying consolidated financial statements. In order to provide funds necessary for the Company's future expansion strategies, it will be necessary for the Company to incur, from time to time, additional long-term bank indebtedness and/or issue equity or debt securities, depending on market and other conditions. There can be no assurance that such additional financing will be available on terms acceptable to the Company. Six Months Ended June 30, 1997 Compared To Six Months Ended June 30, 1996 Net cash provided by operating activities increased from $796,000 in 1996 to $1.6 million in 1997. This increase of $811,000 was due to several factors, the largest of which was an increase in deferred income tax assets of only $414,000 in 1997, compared to an increase of $1.4 million in 1996. Net cash used by investing activities decreased from $11.9 million in 1996 to $3.6 million in 1997. This decrease was primarily due to a decrease in cash used for physician practice acquisitions and investments in management agreements from $10.9 million in 1996 to $6.5 million in 1997, and proceeds of $3.3 million from the sale of physician practices in 1997. Net cash provided by financing activities decreased from $11.3 million in 1996 to $2.0 million in 1997. This decrease was primarily due to a decrease in net borrowings under the Company's revolving credit facility from $12.6 million in 1996 to $3.0 million in 1997, which is related to the decrease in cash used for physician practice acquisitions and investments in management agreements, and proceeds from the sale of physician practices, as discussed above. 13 PART II. OTHER INFORMATION ----------------- Item 1: Legal Proceedings From time to time, the Company is party to various claims, suits, and complaints. Currently, there are no such claims, suits or complaints which, in the opinion of management, would have a material adverse effect on the Company's financial position, liquidity or results of operations. Item 4: Submission of Matters to a Vote of Security Holders The Company held its Annual Meeting of Stockholders on May 15, 1997. At the Annual Meeting, the Company's stockholders voted (i) to re-elect Lewis D. Gold, M.D. and Henry E. Golembesky, M.D. to serve as Class II Directors of the Company until the 2000 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified; (ii) to approve an amendment to the Company's Third Amended and Restated Certificate of Incorporation to decrease the number of authorized shares of common stock of the Company from 31,000,000 to 21,000,000; and (iii) to approve an amendment to the Company's Second Amended and Restated 1995 Stock Option Plan to increase the total number of shares of common stock of the Company that may be issued thereunder from 750,000 to 1,350,000, each as described in the Company's Proxy Statement distributed to stockholders in connection with the Annual Meeting. Set forth below are the results of the stockholder votes at the Annual Meeting on the foregoing matters. Election of Class II Directors Nominee Votes in Favor Votes Withheld Broker Non-Votes - ------- -------------- -------------- ---------------- Lewis D. Gold, M.D. 5,632,304 7,750 N/A Henry E. Golembesky, M.D. 5,631,304 8,750 N/A Approval of Amendment to the Company's Third Amended and Restated Certificate of Incorporation Votes in Favor Votes Against Abstentions Broker Non-Votes - -------------- ------------- ----------- ---------------- 5,582,664 41,775 15,615 N/A Approval of Amendment to the Company's Second Amended and Restated 1995 Stock Option Plan Votes in Favor Votes Against Abstentions Broker Non-Votes - -------------- ------------- ----------- ---------------- 4,080,641 499,246 30,702 1,029,465 Item 6: Exhibits and Reports on Form 8-K (a) The following exhibits are filed as part of this report: 14 Exhibit Number Description - ------- ----------- 3.1 Third Amended and Restated Certificate of Incorporation of Sheridan Healthcare, Inc., as amended effective May 27, 1997. 10.1 Sheridan Healthcare, Inc. Second Amended and Restated 1995 Stock Option Plan, effective as of April 27, 1995, amended and restated as of July 27, 1995 and further amended as of February 26, 1997 and as of May 15, 1997. 11.1 Statement regarding computation of per share earnings. 27 Financial Data Schedule (for SEC use only). (b) No reports on Form 8-K have been filed during the quarter for which this report is filed. 15 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 thereunto duly authorized. SHERIDAN HEALTHCARE, INC. (Registrant) Date: August 14, 1997 By: /s/ Michael F. Schundler --------------------------- ------------------------ Michael F. Schundler Chief Financial Officer (principal financial officer) 16 EX-3.(I) 2 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF SHERIDAN HEALTHCARE, INC. Sheridan Healthcare, Inc., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), hereby certifies as follows: 1. The name of the Corporation is Sheridan Healthcare, Inc. The date of the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was October 27, 1994. The name under which the Corporation filed its original Certificate of Incorporation was SAMA Holdings, Inc. 2. This Third Amended and Restated Certificate of Incorporation amends, restates and integrates the provisions of the Second Amended and Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on October 30, 1995, as heretofore amended (the "Certificate of Incorporation"), and was duly adopted by the written consent of the stockholders of the Corporation, with written notice thereof having been given to all stockholders of the Corporation who have not given their written consent, all in accordance with the applicable provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware (the "DGCL"). 3. The text of the Certificate of Incorporation is hereby amended and restated in its entirety to provide as herein set forth in full. ARTICLE I NAME The name of the Corporation is Sheridan Healthcare, Inc. ARTICLE II REGISTERED OFFICE The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. ARTICLE III PURPOSES The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL. ARTICLE IV CAPITAL STOCK The total number of shares of capital stock which the Corporation shall have the authority to issue is Thirty-Six Million (36,000,000) shares of which (i) Thirty Million (30,000,000) shares shall be Common Stock, par value $.01 per share (the "Common Stock"), (ii) One Million (1,000,000) shares shall be Class A Common Stock, par value $.01 per share (the "Class A Common Stock" and together with the Common Stock, the "Common Shares") and (iii) Five Million (5,000,000) shares shall be Preferred Stock, par value $.01 per share (the "Preferred Stock"). As set forth in this Article IV, the Board of Directors or any authorized committee thereof is authorized from time to time to establish and designate one or more series of Preferred Stock, to fix and determine the variations in the relative rights and preferences as between the different series of Preferred Stock in the manner hereinafter set forth in this Article IV, and to fix or alter the number of shares comprising any such series and the designation thereof to the extent permitted by law. The number of authorized shares of the class of Preferred Stock may be increased or decreased (but not below the number of shares outstanding) by the affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock. The designations, powers, preferences and rights of, and the qualifications, limitations and restrictions upon, each class or series of stock shall be determined in accordance with, or as set forth below. Subject to any limitations prescribed by law, the Board of Directors or any authorized committee thereof is expressly authorized to provide for the issuance of the shares of Preferred Stock in one or more series of such stock, and by filing a certificate pursuant to applicable law of the State of Delaware, to establish or change from time to time the number of shares to be included in each such series, and to fix the designations, powers, preferences and the relative, participating, optional or other special rights of the shares of each series and any qualifications, limitations and restrictions thereof. Any action by the Board of Directors or any authorized committee thereof under this Article IV to fix the designations, powers, preferences and the relative, participating, optional or other special rights of the shares of a series of Preferred Stock and any qualifications, limitations and restrictions thereof shall require the affirmative vote of a majority of the Directors then in office or a majority of the members of such committee. The Board of Directors or any authorized committee thereof shall have the right to determine or fix one or more of the following with respect to each series of Preferred Stock to the extent permitted by law: 2 (a) The distinctive serial designation and the number of shares constituting such series; (b) The rights in respect of dividends or the amount of dividends to be paid on the shares of such series, whether dividends shall be cumulative and, if so, from which date or dates, the payment date or dates for dividends, and the participating and other rights, if any, with respect to dividends; (c) The voting powers, full or limited, if any, of the shares of such series; (d) Whether the shares of such series shall be redeemable and, if so, the price or prices at which, and the terms and conditions on which, such shares may be redeemed; (e) The amount or amounts payable upon the shares of such series and any preferences applicable thereto in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation; (f) Whether the shares of such series shall be entitled to the benefit of a sinking or retirement fund to be applied to the purchase or redemption of such shares, and if so entitled, the amount of such fund and the manner of its application, including the price or prices at which such shares may be redeemed or purchased through the application of such fund; (g) Whether the shares of such series shall be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation and, if so convertible or exchangeable, the conversion price or prices, or the rate or rates of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange; (h) The price or other consideration for which the shares of such series shall be issued; (i) Whether the shares of such series which are redeemed or converted shall have the status of authorized but unissued shares of Preferred Stock (or series thereof) and whether such shares may be reissued as shares of the same or any other class or series of stock; and (j) Such other powers, preferences, rights, qualifications, limitations and restrictions thereof as the Board of Directors or any authorized committee thereof may deem advisable. 3 A. COMMON SHARES ------------- 1. General. Except as herein otherwise expressly provided, all shares of Common Stock and Class A Common Stock shall be identical and shall entitle the holders thereof to the same rights and privileges. 2. Voting. Each holder of record shall be entitled to one vote for each share of Common Stock standing in his name on the books of the Corporation. The holders of Class A Common Stock shall not have any right to vote, except that, as to any matter on which holders of Class A Common Stock are required to have a vote under applicable law, (a) each holder of record shall be entitled to one vote for each share of Class A Common Stock standing in his name on the books of the Corporation and, (b) except as required by law, the holders of Common Stock and Class A Common Stock shall vote together as a single class on all matters as to which holders of Class A Common Stock are entitled to vote. 3. Dividends. Subject to applicable law, the holders of Common Shares shall be entitled to receive dividends out of funds legally available therefor at such times and in such amounts as the Board of Directors may determine in its sole discretion, with each share of Common Stock and each share of Class A Common Stock sharing equally, share for share, in such dividends, except that if dividends are declared which are payable in shares of Common Stock or Class A Common Stock, dividends shall be declared which are payable at the same rate in both classes of stock and the dividends payable in shares of Common Stock shall be payable to the holders of that class of stock and the dividends payable in shares of Class A Common Stock shall be payable to the holders of that class of stock. 4. Liquidation. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (a "Liquidation Event"), after the payment or provision for payment of all debts and liabilities of the Corporation and all preferential amounts to which the holders of preferred stock are entitled with respect to the distribution of assets in liquidation, the holders of Common Shares shall be entitled to share ratably in the remaining assets of the Corporation available for distribution. 5. Conversion of Class A Common Stock. (a) Right to Convert. Subject to and upon compliance with the provisions of this Section 5, each share of Class A Common Stock which is to be distributed, disposed of or sold in connection with a Class A Conversion Event (as defined below) shall be convertible, at the option of the holder thereof, into fully paid and non-assessable shares of Common Stock, effective upon the occurrence of (or the expected occurrence of) a Class A Conversion Event at the rate of one share of Common Stock for each share of Class A Common Stock so converted (the "Class A Common Conversion Rate"), subject to adjustment as provided in Section 7, provided that such 4 holder has given the Corporation notice of its intent to exercise its rights hereunder prior to the effectiveness of such Class A Conversion Event. A "Class A Conversion Event" shall mean (i) any sale in connection with any public offering or public sale of securities of the Corporation (including a public offering registered under the Securities Act of 1933, as amended (the "Securities Act")), and a sale pursuant to Rule 144 of the Securities and Exchange Commission or any similar rule then in force), (ii) any sale (including by way of a merger, consolidation or similar transaction) of securities of the Corporation to a person or group of persons (within the meaning of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) if, after such sale, such person or group of persons in the aggregate would own or control securities which possess in the aggregate the power to elect a majority of the Corporation's directors (provided that such sale has been approved by the Corporation's Board of Directors or a committee thereof), (iii) any sale (including by way of a merger, consolidation or similar transaction) of securities of the Corporation to a person or group of persons (within the meaning of the Exchange Act) if, after such sale, such person or group of persons in the aggregate would own or control securities of the Corporation (excluding any being converted and disposed of in connection with such Class A Conversion Event) which possess in the aggregate the power to elect a majority of the Corporation's directors, and (iv) any sale of securities of the Corporation to a person or group of persons (within the meaning of the Exchange Act) if, after such sale, such person or group of persons in the aggregate would not own, control or have the right to acquire more than two percent of the outstanding securities of any class of voting securities of the Corporation. The term, "person" shall include any natural person and any corporation, partnership, joint venture, trust, unincorporated organization, limited liability company, business association and any other entity or organization. (b) Notice of Conversion. Each holder of Class A Common Stock shall be entitled to convert shares of Class A Common Stock which are to be distributed, disposed of or sold in connection with a Class A Conversion Event, if such holder reasonably believes that such Class A Conversion Event will be consummated, and a written request for conversion from any holder of Class A Common Stock to the Corporation stating such holder's reasonable belief that a Class A Conversion Event shall occur shall be conclusive and obligate the Corporation to effect such conversion in a timely manner, so as to enable each such holder to participate in such Class A Conversion Event. The Corporation will not cancel the shares of Class A Common Stock so converted before the tenth day following such Class 5 A Conversion Event and will reserve such shares until such tenth day for reissuance in compliance with the next sentence. If any shares of Class A Common Stock are converted into Common Stock in connection with a Class A Conversion Event and such shares are not actually distributed, disposed of or sold pursuant to such Class A Conversion Event, such shares of Common Stock shall promptly be converted back into the same number of shares of Class A Common Stock. No share or shares of the Class A Common Stock acquired by the Corporation by reason of conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue. The Corporation may from time to time take such appropriate corporate action as may be necessary to reduce the authorized number of shares of the Class A Common Stock accordingly. (c) Surrender of Certificates. Each conversion of shares of Class A Common Stock into shares of Common Stock shall be effected by the surrender of the certificate or certificates representing the shares of Class A Common Stock to be converted, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto), at the principal executive office of the Corporation or the offices of the transfer agent for the Common Shares or such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the Class A Common Stock by the Corporation together with written notice by the holder of such Class A Common Stock stating that such holder desires to convert the shares, or a stated number of the shares, of Class A Common Stock represented by such certificate, into Common Stock, which notice shall also state the name or names (with addresses) and denominations in which the certificate or certificates for Common Stock shall be issued and shall include instructions for delivery thereof. Upon surrender of a certificate representing Class A Common Stock for conversion, the Corporation shall issue and send by hand delivery, by courier or by first class mail (postage prepaid) to the holder thereof or to such holder's designee, at the address designated by such holder, certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. In the event that there shall have been surrendered a certificate or certificates representing Class A Common Stock, only part of which are to be converted, the Corporation shall issue and send to such holder or such holder's designee, in the manner set forth in the preceding sentence, a new certificate or certificates representing the number of shares of Class A Common Stock which shall not have been converted. If the certificate or certificates for Common Stock are to be issued in a name other than the name of the registered holder of the stock surrendered for conversion, the Corporation shall not be obligated to issue or deliver any certificate unless and until the holder of the stock surrendered has paid to the Corporation the amount of any tax that may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Corporation that such tax has been paid. The issuance of certificates for Common Stock upon conversion of Class A Common Stock will be made without charge to the holders of such shares for any issuance tax in respect thereof or other costs incurred by the Corporation in connection with such conversion and the related issuance of such stock. (d) Effective Date of Conversion. Such conversion shall be deemed to have been effected as of the close of business on the date on which such certificate or certificates shall have been surrendered and such notice shall have been received by the Corporation and at such time the rights of the holder of such Class A Common Stock (or specified portion thereof) as to such converted shares shall cease and the person or persons in whose name or names any certificate or certificates for shares of Common Stock are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common Stock represented thereby. 6 (e) Reservation of Common Stock. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the conversion of the Class A Common Stock, such number of shares of Common Stock issuable upon the conversion of all outstanding shares of Class A Common Stock. (f) No Closing of Transfer Books. The Corporation shall not close its books against the transfer of Common Shares in any manner which would interfere with the timely conversion of any shares of Class A Common Stock. 6. Adjustments. (a) Changes in Common Stock. In the event the Corporation shall (i) pay a dividend in or make a distribution in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its shares of Common Stock any shares of the Corporation, the Class A Common Conversion Rate in effect immediately prior thereto shall be adjusted so that the holder of a share of Class A Common Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which it would have owned or have been entitled to receive after the happening of any of the events described above had such share of Class A Common Stock been converted on or immediately prior to the record date for such dividend or the effective date of such subdivision, combination or reclassification, as the case may be. (b) Changes in Class A Common Stock. In the event that the Corporation shall (i) pay a dividend in or make a distribution in shares of its Class A Common Stock, (ii) subdivide its outstanding shares of Class A Common Stock, (iii) combine its outstanding shares of Class A Common Stock into a smaller number of shares, or (iv) issue by reclassification of its shares of Class A Common Stock any shares of the Corporation, the Class A Common Conversion Rate in effect immediately prior thereto shall be adjusted so that the holder of a share of Class A Common Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which it would have owned or have been entitled to receive after the happening of any of the events described above had such share of Class A Common Stock been converted on or immediately prior to the record date for such dividend or the effective date of such subdivision, combination or reclassification, as the case may be. 7 (c) General. An adjustment made pursuant to this Section 6 shall become effective immediately after the record date (in the case of a dividend or distribution in shares of capital stock) and shall become effective immediately after the effective date, (in the case of a subdivision, combination or reclassification). No adjustment in accordance with this Section 6 shall be required unless such adjustment would require an increase or decrease in any conversion rate of at least 0.1%; provided, however, that any adjustments which by reason of this clause are not required to be made shall be carried forward and taken into account in any subsequent adjustment. Any calculations under this Section 6 shall be made to the nearest one-thousandth of a share. 7. Notices. In the event that the Corporation provides any notice, report or statement to any holder of Common Shares, the Corporation shall at the same time provide a copy of any such notice, report or statement to each holder of outstanding Common Shares. 8. Reclassification. (a) Effective November 3, 1995 (the "Effective Date"), each share of the Corporation's Class A Voting Common Stock, par value $.01 per share (the "Class A Voting Common Stock") issued and outstanding or held in treasury immediately prior to the Effective Date shall, without any action on the part of the respective holders thereof, be reclassified into one share of Common Stock, and each stock certificate that, immediately prior to the Effective Date, represented shares of Class A Voting Common Stock shall, from and after the Effective Date and without the necessity of presenting the same for exchange, represent one share of Common Stock. (b) Effective upon the Effective Date, each share of the Corporation's Class B Non-Voting Common Stock, par value $.01 per share (the "Class B Non-Voting Common Stock"), issued and outstanding or held in treasury immediately prior to the Effective Date shall, without any action on the part of the respective holders thereof, be reclassified into one share of Class A Common Stock, and each stock certificate that, immediately prior to the Effective Date, represented shares of the Corporation's Class B Non-Voting Common Stock shall, from and after the Effective Date and without the necessity of presenting the same for exchange, represent one share of Class A Common Stock. ARTICLE V STOCKHOLDER ACTION ------------------ Any action required or permitted to be taken by the stockholders of the Corporation at any annual or special meeting of stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders and may not be taken or effected by a written consent of stockholders in lieu thereof. 8 ARTICLE VI DIRECTORS --------- Section 1. General. -------------------- The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors except as otherwise provided herein or required by law. Section 2. Election of Directors. ---------------------------------- Election of Directors need not be by written ballot unless the By-laws of the Corporation shall so provide. Section 3. Terms of Directors. ------------------------------- The number of Directors of the Corporation shall be fixed by resolution duly adopted from time to time by the Board of Directors. The Directors, other than those who may be elected by the holders of any series of Preferred Stock of the Corporation, shall be classified, with respect to the term for which they severally hold office, into three classes, as nearly equal in number as possible. The initial Class I Directors of the Corporation shall be Robert W. Daly and Luis E. Lamela; the initial Class II Directors of the Corporation shall be Lewis D. Gold and Henry E. Golembesky; and the initial Class III Directors of the Corporation shall be Mitchel Eisenberg and Richard D. Tadler. The initial Class I Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 1996, the initial Class II Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 1997, and the initial Class III Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 1998. At each annual meeting of stockholders, the successor or successors of the class of Directors whose term expires at that meeting (other than Directors elected by any series of Preferred Stock) shall be elected by a plurality of the votes cast at such meeting and shall hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. The Directors elected to each class (other than Directors elected by any series of Preferred Stock) shall hold office until their successors are duly elected and qualified or until their earlier resignation or removal. Notwithstanding the foregoing, whenever, pursuant to the provisions of Article IV of this Third Amended and Restated Certificate of Incorporation, the holders of any one or more series of Preferred Stock shall have the right, voting separately as a series or together with holders of other such series, to elect Directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Third Amended and Restated Certificate of Incorporation and any certificate of designations applicable thereto, and such Directors so elected shall not be divided into classes pursuant to this Section 3. 9 During any period when the holders of any series of Preferred Stock have the right to elect additional Directors as provided for or fixed pursuant to the provisions of Article IV hereof, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of Directors of the Corporation shall automatically be increased by such specified number of Directors, and the holders of such Preferred Stock shall be entitled to elect the additional Directors so provided for or fixed pursuant to said provisions, and (ii) each such additional Director shall serve until such Director's successor shall have been duly elected and qualified, or until such Director's right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to such Director's earlier death, disqualification, resignation or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional Directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional Directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional Directors, shall forthwith terminate and the total and authorized number of Directors of the Corporation shall be reduced accordingly. Section 4. Vacancies. --------------------- Subject to the rights, if any, of the holders of any series of Preferred Stock to elect Directors and to fill vacancies in the Board of Directors relating thereto, any and all vacancies in the Board of Directors, however occurring, including, without limitation, by reason of an increase in size of the Board of Directors, or the death, resignation, disqualification or removal of a Director, shall be filled solely by the affirmative vote of a majority of the remaining Directors then in office, even if less than a quorum of the Board of Directors. Any Director appointed in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy occurred and until such Director's successor shall have been duly elected and qualified or until his or her earlier resignation or removal. Subject to the rights, if any, of the holders of any series of Preferred Stock to elect Directors, when the number of Directors is increased or decreased, the Board of Directors shall determine the class or classes to which the increased or decreased number of Directors shall be apportioned; provided, however, that no decrease in the number of Directors shall shorten the term of any incumbent Director. In the event of a vacancy in the Board of Directors, the remaining Directors, except as otherwise provided by law, may exercise the powers of the full Board of Directors until the vacancy is filled. Section 5. Removal. ------------------- Subject to the rights, if any, of any series of Preferred Stock to elect Directors and to remove any Director whom the holders of any such stock have the right to elect, any Director (including persons elected by Directors to fill vacancies in the Board of Directors) may be removed from office (i) only with 10 cause and (ii) only by the affirmative vote of at least two-thirds of the total votes which would be eligible to be cast by stockholders in the election of such Director. At least 30 days prior to any meeting of stockholders at which it is proposed that any Director be removed from office, written notice of such proposed removal shall be sent to the Director whose removal will be considered at the meeting. For purposes of this Third Amended and Restated Certificate of Incorporation, "cause," with respect to the removal of any Director shall include (i) conviction of a felony, (ii) declaration of unsound mind by order of court, (iii) gross dereliction of duty, (iv) commission of any action involving moral turpitude, or (v) commission of an action which constitutes intentional misconduct or a knowing violation of law if such action in either event results both in an improper substantial personal benefit and a material injury to the Corporation. ARTICLE VII LIMITATION OF LIABILITY ----------------------- A Director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except for liability (i) for any breach of the Director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which the Director derived an improper personal benefit. If the DGCL is amended after the effective date of this Third Amended and Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of Directors, then the liability of a Director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Any repeal or modification of this Article VII by either of (i) the stockholders of the Corporation or (ii) an amendment to the DGCL, shall not adversely affect any right or protection existing at the time of such repeal or modification with respect to any acts or omissions occurring before such repeal or modification of a person serving as a Director at the time of such repeal or modification. ARTICLE VIII AMENDMENT OF BY-LAWS -------------------- Section 1. Amendment by Directors --------------------------------- Except as otherwise provided by law, the By-laws of the Corporation may be amended or repealed by the Board of Directors. Section 2. Amendment by Stockholders ------------------------------------ The By-laws of the Corporation may be amended or repealed at any annual meeting of stockholders, or special meeting of stockholders called for such purpose, by the affirmative vote of at least two-thirds of the total votes 11 eligible to be cast on such amendment or repeal by holders of voting stock, voting together as a single class; provided, however, that if the Board of Directors recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of a majority of the total votes eligible to be cast on such amendment or repeal by holders of voting stock, voting together as a single class. ARTICLE IX AMENDMENT OF CERTIFICATE OF INCORPORATION ----------------------------------------- The Corporation reserves the right to amend or repeal this Third Amended and Restated Certificate of Incorporation in the manner now or hereafter prescribed by statute and this Third Amended and Restated Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation. No amendment or repeal of this Third Amended and Restated Certificate of Incorporation shall be made unless the same is first approved by the Board of Directors pursuant to a resolution adopted by the Board of Directors in accordance with Section 242 of the DGCL, and, except as otherwise provided by law, thereafter approved by the stockholders. Whenever any vote of the holders of voting stock is required, and in addition to any other vote of holders of voting stock that is required by this Third Amended and Restated Certificate of Incorporation or by law, the affirmative vote of a majority of the total votes eligible to be cast by holders of voting stock with respect to such amendment or repeal, voting together a single class, at a duly constituted meeting of stockholders called expressly for such purpose shall be required to amend or repeal any provisions of this Third Amended and Restated Certificate of Incorporation; provided, however, that the affirmative vote of not less than 80% of the total votes eligible to be cast by holders of voting stock, voting together a single class, shall be required to amend or repeal any of the provisions of Article VI or Article IX of this Third Amended and Restated Certificate of Incorporation. I, Mitchell Eisenberg, President of the Corporation, for the purpose of amending and restating the Corporation's Certificate of Incorporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is my act and deed on behalf of the Corporation this 3rd day of November, 1995. /s/ Mitchell Eisenberg ----------------------------- Mitchell Eisenberg, President 12 CERTIFICATE OF AMENDMENT OF THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF SHERIDAN HEALTHCARE, INC. Sheridan Healthcare, Inc., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), does hereby certify as follows: 1. The name of the Corporation is Sheridan Healthcare, Inc. 2. Article IV of the Third Amended and Restated Certificate of Incorporation of the Corporation is hereby amended and restated to read in its entirety as follows: ARTICLE IV CAPITAL STOCK ------------- The total number of shares of capital stock which the Corporation shall have the authority to issue is Twenty-Six Million (26,000,000) shares of which (i) Twenty Million (20,000,000) shares shall be Common Stock, par value $.01 per share (the "Common Stock"), (ii) One Million (1,000,000) shares shall be Class A Common Stock, par value $.01 per share (the "Class A Common Stock" and together with the Common Stock, the "Common Shares") and (iii) Five Million (5,000,000) shares shall be Preferred Stock, par value $.01 per share (the "Preferred Stock"). As set forth in this Article IV, the Board of Directors or any authorized committee thereof is authorized from time to time to establish and designate one or more series of Preferred Stock, to fix and determine the variations in the relative rights and preferences as between the different series of Preferred Stock in the manner hereinafter set forth in this Article IV, and to fix or alter the number of shares comprising any such series and the designation thereof to the extent permitted by law. The number of authorized shares of the class of Preferred Stock may be increased or decreased (but not below the number of shares outstanding) by the affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock. The designations, powers, preferences and rights of, and the qualifications, limitations and restrictions upon, each class or series of stock shall be determined in accordance with, or as set forth below. Subject to any limitations prescribed by law, the Board of Directors or any authorized committee thereof is expressly authorized to provide for the issuance of the shares of Preferred Stock in one or more series of such stock, and by filing a certificate pursuant to applicable law of the State of Delaware, to establish or change from time to time the number of shares to be included in each such series, and to fix the designations, powers, preferences and the relative, participating, optional or other special rights of the shares of each series and any qualifications, limitations and restrictions thereof. Any action by the Board of Directors or any authorized committee thereof under this Article IV to fix the designations, powers, preferences and the relative, participating, optional or other special rights of the shares of a series of Preferred Stock and any qualifications, limitations and restrictions thereof shall require the affirmative vote of a majority of the Directors then in office or a majority of the members of such committee. The Board of Directors or any authorized committee thereof shall have the right to determine or fix one or more of the following with respect to each series of Preferred Stock to the extent permitted by law: (a) The distinctive serial designation and the number of shares constituting such series; (b) The rights in respect of dividends or the amount of dividends to be paid on the shares of such series, whether dividends shall be cumulative and, if so, from which date or dates, the payment date or dates for dividends, and the participating and other rights, if any, with respect to dividends; (c) The voting powers, full or limited, if any, of the shares of such series; (d) Whether the shares of such series shall be redeemable and, if so, the price or prices at which, and the terms and conditions on which, such shares may be redeemed; (e) The amount or amounts payable upon the shares of such series and any preferences applicable thereto in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation; (f) Whether the shares of such series shall be entitled to the benefit of a sinking or retirement fund to be applied to the purchase or redemption of such shares, and if so entitled, the amount of such fund and the manner of its application, including the price or prices at which such shares may be redeemed or purchased through the application of such fund; (g) Whether the shares of such series shall be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation and, if so convertible or exchangeable, the conversion price or prices, or the rate or rates of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange; 2 (h) The price or other consideration for which the shares of such series shall be issued; (i) Whether the shares of such series which are redeemed or converted shall have the status of authorized but unissued shares of Preferred Stock (or series thereof) and whether such shares may be reissued as shares of the same or any other class or series of stock; and (j) Such other powers, preferences, rights, qualifications, limitations and restrictions thereof as the Board of Directors or any authorized committee thereof may deem advisable. A. COMMON SHARES ------------- 1. General. Except as herein otherwise expressly provided, all shares of Common Stock and Class A Common Stock shall be identical and shall entitle the holders thereof to the same rights and privileges. 2. Voting. Each holder of record shall be entitled to one vote for each share of Common Stock standing in his name on the books of the Corporation. The holders of Class A Common Stock shall not have any right to vote, except that, as to any matter on which holders of Class A Common Stock are required to have a vote under applicable law, (a) each holder of record shall be entitled to one vote for each share of Class A Common Stock standing in his name on the books of the Corporation and, (b) except as required by law, the holders of Common Stock and Class A Common Stock shall vote together as a single class on all matters as to which holders of Class A Common Stock are entitled to vote. 3. Dividends. Subject to applicable law, the holders of Common Shares shall be entitled to receive dividends out of funds legally available therefor at such times and in such amounts as the Board of Directors may determine in its sole discretion, with each share of Common Stock and each share of Class A Common Stock sharing equally, share for share, in such dividends, except that if dividends are declared which are payable in shares of Common Stock or Class A Common Stock, dividends shall be declared which are payable at the same rate in both classes of stock and the dividends payable in shares of Common Stock shall be payable to the holders of that class of stock and the dividends payable in shares of Class A Common Stock shall be payable to the holders of that class of stock. 4. Liquidation. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (a "Liquidation Event"), after the payment or provision for payment of all debts and liabilities of the Corporation and all preferential amounts to which the holders of preferred stock are entitled with respect to the distribution of assets in liquidation, the holders of Common Shares shall be entitled to share ratably in the remaining assets of the Corporation available for distribution. 3 5. Conversion of Class A Common Stock. ----------------------------------- (a) Right to Convert. Subject to and upon compliance with the provisions of this Section 5, each share of Class A Common Stock which is to be distributed, disposed of or sold in connection with a Class A Conversion Event (as defined below) shall be convertible, at the option of the holder thereof, into fully paid and non-assessable shares of Common Stock, effective upon the occurrence of (or the expected occurrence of) a Class A Conversion Event at the rate of one share of Common Stock for each share of Class A Common Stock so converted (the "Class A Common Conversion Rate"), subject to adjustment as provided in Section 7, provided that such holder has given the Corporation notice of its intent to exercise its rights hereunder prior to the effectiveness of such Class A Conversion Event. A "Class A Conversion Event" shall mean (i) any sale in connection with any public offering or public sale of securities of the Corporation (including a public offering registered under the Securities Act of 1933, as amended (the "Securities Act")), and a sale pursuant to Rule 144 of the Securities and Exchange Commission or any similar rule then in force), (ii) any sale (including by way of a merger, consolidation or similar transaction) of securities of the Corporation to a person or group of persons (within the meaning of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) if, after such sale, such person or group of persons in the aggregate would own or control securities which possess in the aggregate the power to elect a majority of the Corporation's directors (provided that such sale has been approved by the Corporation's Board of Directors or a committee thereof), (iii) any sale (including by way of a merger, consolidation or similar transaction) of securities of the Corporation to a person or group of persons (within the meaning of the Exchange Act) if, after such sale, such person or group of persons in the aggregate would own or control securities of the Corporation (excluding any being converted and disposed of in connection with such Class A Conversion Event) which possess in the aggregate the power to elect a majority of the Corporation's directors, and (iv) any sale of securities of the Corporation to a person or group of persons (within the meaning of the Exchange Act) if, after such sale, such person or group of persons in the aggregate would not own, control or have the right to acquire more than two percent of the outstanding securities of any class of voting securities of the Corporation. The term, "person" shall include any natural person and any corporation, partnership, joint venture, trust, unincorporated organization, limited liability company, business association and any other entity or organization. (b) Notice of Conversion. Each holder of Class A Common Stock shall be entitled to convert shares of Class A Common Stock which are to be distributed, disposed of or sold in connection with a Class A Conversion Event, if such holder reasonably believes that such Class A Conversion Event will be consummated, and a written request for conversion from any holder of Class A Common Stock to the Corporation stating such holder's reasonable belief that a Class A Conversion Event shall occur shall be conclusive and obligate the 4 Corporation to effect such conversion in a timely manner, so as to enable each such holder to participate in such Class A Conversion Event. The Corporation will not cancel the shares of Class A Common Stock so converted before the tenth day following such Class A Conversion Event and will reserve such shares until such tenth day for reissuance in compliance with the next sentence. If any shares of Class A Common Stock are converted into Common Stock in connection with a Class A Conversion Event and such shares are not actually distributed, disposed of or sold pursuant to such Class A Conversion Event, such shares of Common Stock shall promptly be converted back into the same number of shares of Class A Common Stock. No share or shares of the Class A Common Stock acquired by the Corporation by reason of conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue. The Corporation may from time to time take such appropriate corporate action as may be necessary to reduce the authorized number of shares of the Class A Common Stock accordingly. (c) Surrender of Certificates. Each conversion of shares of Class A Common Stock into shares of Common Stock shall be effected by the surrender of the certificate or certificates representing the shares of Class A Common Stock to be converted, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto), at the principal executive office of the Corporation or the offices of the transfer agent for the Common Shares or such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the Class A Common Stock by the Corporation together with written notice by the holder of such Class A Common Stock stating that such holder desires to convert the shares, or a stated number of the shares, of Class A Common Stock represented by such certificate, into Common Stock, which notice shall also state the name or names (with addresses) and denominations in which the certificate or certificates for Common Stock shall be issued and shall include instructions for delivery thereof. Upon surrender of a certificate representing Class A Common Stock for conversion, the Corporation shall issue and send by hand delivery, by courier or by first class mail (postage prepaid) to the holder thereof or to such holder's designee, at the address designated by such holder, certificates for the number of shares of Common Stock to which such holder shall be entitled upon conversion. In the event that there shall have been surrendered a certificate or certificates representing Class A Common Stock, only part of which are to be converted, the Corporation shall issue and send to such holder or such holder's designee, in the manner set forth in the preceding sentence, a new certificate or certificates representing the number of shares of Class A Common Stock which shall not have been converted. If the certificate or certificates for Common Stock are to be issued in a name other than the name of the registered holder of the stock surrendered for conversion, the Corporation shall not be obligated to issue or deliver any certificate unless and until the holder of the stock surrendered has paid to the Corporation the amount of any tax that may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Corporation that such tax has been paid. The issuance of certificates for Common Stock upon conversion of Class A Common Stock will be made without charge to the holders of such shares for any issuance tax in respect thereof or other costs incurred by the Corporation in connection with such conversion and the related issuance of such stock. 5 (d) Effective Date of Conversion. Such conversion shall be deemed to have been effected as of the close of business on the date on which such certificate or certificates shall have been surrendered and such notice shall have been received by the Corporation and at such time the rights of the holder of such Class A Common Stock (or specified portion thereof) as to such converted shares shall cease and the person or persons in whose name or names any certificate or certificates for shares of Common Stock are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common Stock represented thereby. (e) Reservation of Common Stock. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the conversion of the Class A Common Stock, such number of shares of Common Stock issuable upon the conversion of all outstanding shares of Class A Common Stock. (f) No Closing of Transfer Books. The Corporation shall not close its books against the transfer of Common Shares in any manner which would interfere with the timely conversion of any shares of Class A Common Stock. 6. Adjustments. ------------ (a) Changes in Common Stock. In the event the Corporation shall (i) pay a dividend in or make a distribution in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its shares of Common Stock any shares of the Corporation, the Class A Common Conversion Rate in effect immediately prior thereto shall be adjusted so that the holder of a share of Class A Common Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which it would have owned or have been entitled to receive after the happening of any of the events described above had such share of Class A Common Stock been converted on or immediately prior to the record date for such dividend or the effective date of such subdivision, combination or reclassification, as the case may be. (b) Changes in Class A Common Stock. In the event that the Corporation shall (i) pay a dividend in or make a distribution in shares of its Class A Common Stock, (ii) subdivide its outstanding shares of Class A Common Stock, (iii) combine its outstanding shares of Class A Common Stock into a smaller number of shares, or (iv) issue by reclassification of its shares of Class A Common Stock any shares of the Corporation, the Class A Common Conversion Rate 6 in effect immediately prior thereto shall be adjusted so that the holder of a share of Class A Common Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which it would have owned or have been entitled to receive after the happening of any of the events described above had such share of Class A Common Stock been converted on or immediately prior to the record date for such dividend or the effective date of such subdivision, combination or reclassification, as the case may be. (c) General. An adjustment made pursuant to this Section 6 shall become effective immediately after the record date (in the case of a dividend or distribution in shares of capital stock) and shall become effective immediately after the effective date (in the case of a subdivision, combination or reclassification). No adjustment in accordance with this Section 6 shall be required unless such adjustment would require an increase or decrease in any conversion rate of at least 0.1%; provided, however, that any adjustments which by reason of this clause are not required to be made shall be carried forward and taken into account in any subsequent adjustment. Any calculations under this Section 6 shall be made to the nearest one-thousandth of a share. 7. Notices. In the event that the Corporation provides any notice, report or statement to any holder of Common Shares, the Corporation shall at the same time provide a copy of any such notice, report or statement to each holder of outstanding Common Shares. 8. Reclassification. ----------------- (a) Effective November 3, 1995 (the "Effective Date"), each share of the Corporation's Class A Voting Common Stock, par value $.01 per share (the "Class A Voting Common Stock") issued and outstanding or held in treasury immediately prior to the Effective Date shall, without any action on the part of the respective holders thereof, be reclassified into one share of Common Stock, and each stock certificate that, immediately prior to the Effective Date, represented shares of Class A Voting Common Stock shall, from and after the Effective Date and without the necessity of presenting the same for exchange, represent one share of Common Stock. (b) Effective upon the Effective Date, each share of the Corporation's Class B Non-Voting Common Stock, par value $.01 per share (the "Class B Non-Voting Common Stock"), issued and outstanding or held in treasury immediately prior to the Effective Date shall, without any action on the part of the respective holders thereof, be reclassified into one share of Class A Common Stock, and each stock certificate that, immediately prior to the Effective Date, represented shares of the Corporation's Class B Non-Voting Common Stock shall, from and after the Effective Date and without the necessity of presenting the same for exchange, represent one share of Class A Common Stock. 7 ------------------------------------------------------------- 3. The Board of Directors of the Corporation adopted resolutions on February 26, 1997 declaring the advisability of the foregoing amendment and directing the officers of the Corporation to submit the amendment to the stockholders of the Corporation for their approval at the Corporation's 1997 Annual Meeting of Stockholders. 4. The stockholders of the Corporation approved the foregoing amendment by the affirmative vote of the holders of a majority of the shares of Common Stock outstanding and entitled to vote at the Corporation's 1997 Annual Meeting of Stockholders held on May 15, 1997. 5. The amendment was duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, Sheridan Healthcare, Inc., has caused this Certificate to be signed on its behalf by Mitchell Eisenberg, M.D., Chairman of the Board of Directors, President and Chief Executive Officer and attested by Jay A. Martus, Esq., Vice President, General Counsel and Secretary, and does hereby affirm that the facts stated therein are true, this 21st day of May, 1997. SHERIDAN HEALTHCARE, INC. By: /s/ Mitchell Eisenberg ------------------------------------- Mitchell Eisenberg, M.D. Chairman of the Board of Directors, President and Chief Executive Officer ATTEST: /s/ Jay A. Martus - ----------------------------- Jay A. Martus, Esq. Vice President, General Counsel and Secretary 8 EX-10 3 SECOND AMENDED AND RESTATED 1995 STOCK OPTION PLAN SHERIDAN HEALTHCARE, INC. SECOND AMENDED AND RESTATED 1995 STOCK OPTION PLAN -------------------------------------------------- 1. PURPOSE ------- This Second Amended and Restated 1995 Stock Option Plan (the "Plan"), which was first adopted as the SAMA Holdings, Inc. 1995 Stock Option Plan effective as of April 27, 1995 and first amended and restated on July 27, 1995, is intended as a performance incentive for officers, employees, consultants, directors and other key persons of Sheridan Healthcare, Inc. (the "Company"), its Subsidiaries (as hereinafter defined) or their Affiliates (as hereinafter defined) to enable the persons to whom options are granted (the "Optionees") to acquire or increase a proprietary interest in the success of the Company. The Company intends that this purpose will be effected by the granting of "incentive stock options" ("Incentive Options") as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and nonqualified stock options ("Nonqualified Options"). The term "Subsidiaries" includes any corporations in which stock possessing fifty percent or more of the total combined voting power of all classes of stock is owned directly or indirectly by the Company. The term "Affiliates" includes all corporations or other entities controlling, controlled by or under common control with the Company or any of its Subsidiaries and includes any physician, professional corporation or other person to whom or which the Company or any of its Subsidiaries provides services pursuant to a management services agreement or similar arrangements. 2. OPTIONS TO BE GRANTED; ADMINISTRATION OF THE PLAN ------------------------------------------------- (a) Options granted under the Plan may be either Incentive Options or Nonqualified Options, and shall be designated as such at the time of grant. To the extent that any option intended to be an Incentive Option shall fail to qualify as an "incentive stock option" under the Code, such option shall be deemed to be a Nonqualified Option. Each option granted hereunder shall be embodied in a written agreement, as described in Section 4 hereof, that is signed by the Optionee and an authorized officer of the Company. (b) The Plan shall be administered either by the Board of Directors of the Company (the "Board of Directors") or by a committee (the "Option Committee") of not fewer than two directors of the Company appointed by the Board of Directors (in either case, the "Administrator"). None of the members of the Option Committee shall be an officer or other full-time employee of the Company. It is the intention of the Company that each member of the Option Committee shall be a "Non-Employee Director" as that term is defined and interpreted pursuant to Rule 16b-3(b)(3)(i) or any successor rule thereto promulgated under the Securities Exchange Act of 1934, as amended (the "Act"), and that, on and after the date the Plan becomes subject to Section 162(m) of the Code, each member of the Option Committee shall be an "outside director" as that term is defined and interpreted pursuant to Section 162(m) of the Code and the regulations promulgated thereunder. Subject to the foregoing requirements of Section 2(b), the Compensation Committee of the Board of Directors may serve as the Option Committee. Action by the Option Committee shall require the affirmative vote of a majority of all its members. (c) Subject to the terms and conditions of the Plan, the Administrator shall have the power: (i) To determine from time to time the options to be granted to eligible persons under the Plan and to prescribe the terms and provisions (which need not be identical) of options (including without limitation, the number of shares subject to each such option, the effects upon such options of any change in control of the Company and any vesting provisions with respect to such options) granted under the Plan to such persons; (ii) To construe and interpret the Plan and grants thereunder and to establish, amend, and revoke rules and regulations for administration of the Plan (including to correct any defect or supply any omission, or reconcile any inconsistency in the Plan, in any option agreement, or in any related agreements, in the manner and to the extent the Administrator shall deem necessary or expedient to make the Plan fully effective); (iii) To amend from time to time, as the Administrator may determine is in the best interests of the Company, the terms of any outstanding options, including without limitation, to modify the vesting schedule, exercise price or expiration date thereof in a manner not inconsistent with the terms of the Plan; and (iv) Generally, to exercise such powers and to perform such acts as are deemed necessary or expedient to promote the best interests of the Company with respect to the Plan. All decisions and determinations by the Administrator in the exercise of these powers shall be final and binding upon the Company and the Optionees. (d) Delegation of Authority to Grant Options. The Administrator, in its discretion, may delegate to the Chief Executive Officer of the Company or any Subsidiary all or part of the Administrator's authority and duties with respect to Options, including the granting thereof, to individuals who are not subject to the reporting and other provisions of Section 16 of the Act and, on and after the date the Plan becomes subject to Section 162(m) of the Code, who also are not "covered employees" within the meaning of Section 162(m) of the Code. The Administrator may revoke or amend the terms of a delegation at any time, but such action shall not invalidate any prior actions of the Administrator's delegate or delegates that were consistent with the terms of the Plan. 3. STOCK SUBJECT TO THE OPTIONS ---------------------------- The stock granted under the Plan, or subject to the options granted under the Plan, shall be shares of the Company's authorized but unissued Common Stock, 2 par value $.01 per share (the "Common Stock"), which may either be authorized but unissued shares or treasury shares or shares previously reserved for issuance upon exercise of options under the Plan, and allocable to one or more options (or portions of options) which have expired or been canceled or terminated (other than by exercise). The total number of shares that may be issued under the Plan shall not exceed an aggregate of 1,350,000 shares of Common Stock. Options with respect to no more than 250,000 shares of Common Stock may be granted to any one individual during any one calendar year period. Such number of shares shall be subject to adjustment as provided in Section 7 hereof. 4. ELIGIBILITY ----------- (a) Incentive Options may be granted only to employees of the Company or its Subsidiaries, including members of the Board of Directors who are also employees of the Company or its Subsidiaries, who are eligible to receive an Incentive Stock Option under the Code. Nonqualified Options may be granted to officers, other employees and directors of the Company or its Subsidiaries, and to consultants and other key persons who provide services to the Company or its Subsidiaries or their Affiliates (regardless of whether they are also employees) and to such other persons as the Administrator may select from time to time, provided, however, that no Nonqualified Options may be granted under the Plan to any person while serving as a member of the Option Committee except as provided in Section 4(d) hereof. (b) No person shall be eligible to receive any Incentive Option under the Plan if, at the date of grant, such person beneficially owns stock representing in excess of ten percent of the voting power of all outstanding capital stock of the Company, unless notwithstanding anything in this Plan to the contrary (i) the purchase price for Common Stock subject to such option is at least 110% of the fair market value of such Common Stock at the time of the grant and (ii) the option by its terms is not exercisable more than five years from the date of grant thereof. (c) Notwithstanding any other provision of the Plan, the aggregate fair market value (determined as of the time the option is granted) of the Common Stock with respect to which Incentive Options are exercisable for the first time by any individual during any calendar year (under all plans of the Company and its parent and Subsidiaries) shall not exceed $100,000. Any option granted under the Plan in excess of the foregoing limitations shall be deemed to be a Nonqualified Option. (d) (i) (A) Each non-employee member of the Board of Directors of the Company serving in such capacity upon consummation of the Company's initial public offering shall automatically be granted on such date a Nonqualified Option to purchase 7,500 shares of Common Stock. 3 (B) Each person who first becomes a non-employee member of the Board of Directors of the Company after the consummation of the Company's initial public offering shall automatically be granted on the date such person first becomes a director a Nonqualified Option to purchase 7,500 shares of Common Stock. (C) Each non-employee member of the Board of Directors of the Company serving in such capacity on the fifth business day after each annual meeting of stockholders, beginning with the 1996 annual meeting, shall automatically be granted on such day a Nonqualified Option to purchase 2,500 shares of Common Stock. (ii) The purchase price per share of Common Stock of each Nonqualified Option granted to a member of the Board of Directors pursuant to this Section 4(d) shall be the fair market value of the Common Stock on the date the option is granted. (iii) Options granted under this Section 4(d) shall become exercisable in three equal installments, with one-third becoming exercisable on the date of grant and an additional one-third on each of the two successive anniversaries thereof and shall expire no later than the tenth anniversary of the grant date. (iv) The provisions of this Section 4(d) shall apply only to automatic grants of Nonqualified Options to non-employee directors, and shall not be deemed to modify, limit or otherwise apply to any other provisions of the Plan or to any option granted thereunder to any other person, including options granted to non-employee directors otherwise than pursuant to this Section 4(d). 5. TERMS OF THE OPTION AGREEMENTS ------------------------------ Subject to the terms and conditions of the Plan, each option agreement shall contain such provisions as the Administrator shall from time to time deem appropriate. Option agreements need not be identical, but each option agreement by appropriate language shall include the substance of all of the following provisions: (a) Expiration; Termination of Employment. Notwithstanding any other provision of the Plan or of any option agreement, each option shall expire not later than the date specified in the option agreement, which date in the case of any Incentive Option shall not be later than the tenth anniversary of the date on which the option was granted. If an Optionee's employment with the Company and its Subsidiaries terminates for any reason, the Administrator may in its discretion provide, at any time, that any outstanding option granted to such Optionee under the Plan shall be exercisable for such period following termination of employment as may be specified by the Administrator, subject to the expiration date of such option. 4 (b) Exercise. Each option shall be exercisable in such installments (which need not be equal) and at such times as may be designated by the Administrator. To the extent not exercised, installments shall accumulate and be exercisable, in whole or in part, at any time after becoming exercisable, but not later than the date the option expires. (c) Purchase Price. The purchase price per share of Common Stock subject to each option shall be determined by the Administrator; provided, however, that the purchase price per share of Common Stock subject to each Incentive Option shall be not less than the fair market value of the Common Stock on the date such Incentive Option is granted. For the purposes of the Plan, the fair market value of the Common Stock shall be determined in good faith by the Administrator; provided, however, that (i) if the Common Stock is admitted to quotation on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") Small-Cap Market on the date the option is granted, the fair market value shall not be less than the average of the highest bid and lowest asked prices of the Common Stock on NASDAQ reported for such date, (ii) if the Common Stock is admitted to trading on a national securities exchange or the NASDAQ National Market on the date the option is granted, the fair market value shall not be less than the closing price reported for the Common Stock on such exchange or system for such date or, if no sales were reported for such date, for the last date preceding such date for which a sale was reported, and (iii) the fair market value of the Common Stock on the effective date of the registration statement for the Company's initial public offering shall be the initial offering price. (d) Rights of Optionees. No Optionee shall be deemed for any purpose to be the owner of any shares of Common Stock subject to any option unless and until (i) the option shall have been exercised pursuant to the terms thereof, (ii) all requirements under applicable law and regulations shall have been complied with to the satisfaction of the Company, (iii) the Company shall have issued and delivered the shares to the Optionee, and (iv) the Optionee's name shall have been entered as a stockholder of record on the books of the Company. Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such shares of Common Stock. (e) Transfer. No option granted hereunder shall be transferable by the Optionee other than by will or by the laws of descent and distribution, and such option may be exercised during the Optionee's lifetime only by the Optionee, or his or her guardian or legal representative. Notwithstanding the foregoing, the Administrator may permit an optionee to transfer, without consideration for the transfer, a Nonqualified Option to members of his immediate family, to trusts for the benefit of such family members, to partnerships in which such family members are the only partners, or to charitable organizations, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable option agreement. 5 6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE --------------------------------------------- (a) Any option granted under the Plan may be exercised by the Optionee in whole or in part by delivering to the Company on any business day a written notice specifying the number of shares of Common Stock the Optionee then desires to purchase (the "Notice"). (b) Payment for the shares of Common Stock purchased pursuant to the exercise of an option shall be made either: (i) in cash, or by certified or bank check or other payment acceptable to the Company, equal to the option exercise price for the number of shares specified in the Notice (the "Total Option Price"); (ii) if authorized by the applicable option agreement and if permitted by law, by delivery of shares of Common Stock that the optionee may freely transfer having a fair market value, determined by reference to the provisions of Section 5(c) hereof, equal to or less than the Total Option Price, plus cash in an amount equal to the excess, if any, of the Total Option Price over the fair market value of such shares of Common Stock; or (iii) by the Optionee delivering the Notice to the Company together with irrevocable instructions to a broker to promptly deliver the Total Option Price to the Company in cash or by other method of payment acceptable to the Company; provided, however, that the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity or other agreements as the Company shall prescribe as a condition of payment under this clause (iii). (c) The delivery of certificates representing shares of Common Stock to be purchased pursuant to the exercise of an option will be contingent upon the Company's receipt of the Total Option Price and of any written representations from the Optionee required by the Administrator, and the fulfillment of any other requirements contained in the option agreement or applicable provisions of law (including payment of any amount required to be withheld by the Company pursuant to applicable law). 7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION ----------------------------------------- (a) If the shares of the Company's Common Stock as a whole are increased, decreased, changed into or exchanged for a different number or kind of shares or securities of the Company, whether through merger, consolidation, reorganization, recapitalization, reclassification, stock dividend, stock split, combination of shares, exchange of shares, change in corporate structure or the like, an appropriate and proportionate adjustment shall be made in the number and kind of shares subject to the Plan, and in the number, kind, and per share exercise price of shares subject to unexercised options or portions thereof granted prior to any such change. In the event of any such adjustment in an outstanding option, the Optionee thereafter shall have the right to purchase the number of shares under such option at the per share price, as so adjusted, which the Optionee could purchase at the total purchase price applicable to the option immediately prior to such adjustment. 6 (b) Adjustments under this Section 7 shall be determined by the Administrator and such determinations shall be conclusive. The Administrator shall have the discretion and power in any such event to determine and to make effective provision for acceleration of the time or times at which any option or portion thereof shall become exercisable. No fractional shares of Common Stock shall be issued under the Plan on account of any adjustment specified above. 8. EFFECT OF CERTAIN TRANSACTIONS ------------------------------ (a) In the case of a Change of Control (as defined below), all outstanding options shall automatically become fully exercisable whether or not such options were exercisable immediately prior thereto. Unless provision is made in connection with such Change of Control for the assumption of options theretofore granted, or the substitution for such options of new options of the successor entity or parent thereof (with appropriate adjustment as to the number and kind of shares and the per share exercise prices, as provided in Section 7), the Plan and the options issued hereunder shall terminate upon the effectiveness of such Change of Control. In the event of such termination, all outstanding options shall be exercisable in full for at least fifteen days prior to the date of such termination whether or not otherwise exercisable during such period. (b) "Change of Control" shall mean the occurrence of any one of the following events: (i) any "person," as such term is used in Sections 13(d) and 14(d) of the Act (other than the Company, any of its Subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company of any of its Subsidiaries), together with all "affiliates" and "associates" (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing in excess of 50% of either (A) the combined voting power of the Company's then outstanding securities having the right to vote in an election of the Company's Board of Directors ("Voting Securities") or (B) the then outstanding shares of Common Stock of the Company (in either such case other than as a result of an acquisition of securities directly from the Company); or (ii) persons who, as of the effective date of the Plan, constitute the Company's Board of Directors (the "Incumbent Directors") cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Company subsequent to the Effective Date whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall, for purposes of this Plan, be considered an Incumbent Director; or, 7 (iii) the stockholders of the Company shall approve (A) any consolidation or merger of the Company or any Subsidiary where the stockholders of the Company immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate 80% or more of the voting shares of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), (B) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or (C) any plan or proposal for the liquidation or dissolution of the Company. Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by the Company which, by reducing the number of shares of Common Stock or other Voting Securities outstanding, increases (x) the proportionate number of shares of Common Stock beneficially owned by any person in excess of 50% or more of the shares of Common Stock then outstanding or (y) the proportionate voting power represented by the Voting Securities beneficially owned by any person in excess of 50% or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any person referred to in clause (x) or (y) of this sentence shall thereafter become the beneficial owner of any additional shares of Common Stock or other Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction), then a "Change of Control" shall be deemed to have occurred for purposes of the foregoing clause (i). 9. TAX WITHHOLDING --------------- (a) Payment by Optionee. Each Optionee shall, no later than the date as of which the value of any option granted hereunder or of any Common Stock issued upon the exercise of such option first becomes includible in the gross income of the Optionee for federal income tax purposes (the "Tax Date"), pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of any federal, state, or local taxes of any kind required by law to be withheld with respect to such income. In the event that an Optionee has not made the arrangements described in this Section 9(a) and has not made an election under this Section 9(b) on or before the Tax Date, the Company is hereby authorized to withhold the amount of any federal, state or local taxes of any kind required by law with respect to such income from any payment otherwise due to the Optionee. (b) Payment in Shares. Subject to approval by the Administrator, an Optionee may elect to have such tax withholding obligation satisfied, in whole or in part, by (i) authorizing the Company to withhold from shares of Common Stock to be issued pursuant to an option exercise a number of shares with an aggregate fair market value (determined by the Administrator in accordance with Section 5(c) as of the date the withholding is effected) 8 that would satisfy the withholding amount due, or (ii) transferring to the Company shares of Common Stock owned by the Optionee with an aggregate fair market value (determined by the Administrator in accordance with Section 5(c) as of the date the withholding is effected) that would satisfy the withholding amount due. 10. AMENDMENT OF THE PLAN --------------------- The Board of Directors may discontinue the Plan or amend the Plan at any time, and from time to time, subject to any required regulatory approval, provided that any such amendment is also approved by the stockholders of the Company if it would materially increase the benefits accruing to Optionees under the Plan, or to the extent required by the Code to ensure that Incentive Options granted under the Plan are qualified under Section 422 of the Code or if determined by the Administrator to be necessary or advisable for purposes of the Act or otherwise. Except as otherwise provided, an amendment shall be binding upon options previously granted under the Plan unless the amendment adversely affects the rights of an Optionee, in which event the consent of the Optionee shall be required with respect to any portion of such amendment having such effect. 11. NONEXCLUSIVITY OF THE PLAN -------------------------- Neither the adoption of the Plan by the Board of Directors nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board of Directors to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock or stock options otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases. Neither the Plan nor any option granted hereunder shall be deemed to confer upon any employee any right to continued employment with the Company or its Subsidiaries or their Affiliates. 12. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW ----------------------------------------------- (a) The obligation of the Company to sell and deliver shares of Common Stock with respect to options granted under the Plan shall be subject to all applicable laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Administrator. (b) The Plan shall be governed by Delaware law, except to the extent that such law is preempted by federal law. 9 3. EFFECTIVE DATE OF THE PLAN; STOCKHOLDER APPROVAL ------------------------------------------------ The Plan shall become effective upon the date that it is approved by the Board of Directors of the Company; provided, however, that the Plan shall be subject to the approval of the Company's stockholders in accordance with applicable laws and regulations within twelve months of such effective date. No options granted under the Plan prior to such stockholder approval may be exercised until such approval has been obtained. No options may be granted under the Plan after the tenth anniversary of the effective date of the Plan. * * * * * APPROVED BY BOARD OF DIRECTORS: JULY 27, 1995 APPROVED BY STOCKHOLDERS: AUGUST 17, 1995 AMENDED BY BOARD OF DIRECTORS: FEBRUARY 26, 1997 APPROVED BY STOCKHOLDERS: MAY 15, 1997 EX-11 4 COMPUTATION PER SHARE Exhibit 11.1 SHERIDAN HEALTHCARE, INC. Computation of Earnings per Share of Common Stock (in thousands, except per share amounts)
Three Months Ended June 30, -------------------------- 1997 1996 ----------- ----------- Primary Earnings Per Share: - --------------------------- Weighted average shares outstanding............................................ 6,715 6,725 Dilutive effect of outstanding stock options................................... 219 106 ----------- ----------- Primary weighted average shares of common stock and common stock equivalents outstanding........................................ 6,934 6,831 =========== =========== Net income..................................................................... $ 1,232 $ 1,116 Net income per share - primary................................................. $ .18 $ .16 Fully Diluted Earnings Per Share: - --------------------------------- Weighted average shares outstanding............................................ 6,715 6,725 Dilutive effect of outstanding stock options................................... 296 106 ----------- ----------- Fully diluted weighted average shares of common stock and common stock equivalents outstanding........................................ 7,011 6,831 =========== =========== Net income..................................................................... $ 1,232 $ 1,116 Net income per share - fully diluted........................................... $ .18 $ .16
EX-11 5 COMPUTATION OF PER SHARE EARNINGS Exhibit 11.1 SHERIDAN HEALTHCARE, INC. Computation of Earnings per Share of Common Stock (in thousands, except per share amounts)
Six Months Ended June 30, -------------------------- 1997 1996 ----------- ----------- Primary Earnings Per Share: - --------------------------- Weighted average shares outstanding............................................ 6,715 6,459 Dilutive effect of outstanding stock options................................... 198 118 ----------- ----------- Primary weighted average shares of common stock and common stock equivalents outstanding........................................ 6,913 6,577 =========== =========== Net income..................................................................... $ 2,420 $ 1,969 Net income per share - primary................................................. $ .35 $ .30 Fully Diluted Earnings Per Share: - --------------------------------- Weighted average shares outstanding............................................ 6,715 6,459 Dilutive effect of outstanding stock options................................... 280 118 ----------- ----------- Fully diluted weighted average shares of common stock and common stock equivalents outstanding........................................ 6,995 6,577 =========== =========== Net income..................................................................... $ 2,420 $ 1,969 Net income per share - fully diluted........................................... $ .35 $ .30
EX-27 6 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FIANNACIAL INFORMATIN EXTRACTED FROM THE FINANCIAL STATEMENTS OF SHERIDAN HEALTHCARE, INC. FOR THE SIX MONTHS ENDED JUNE 30, 1997 AN DIS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 0 0 53,094 32,600 0 24,119 5,353 2,011 79,054 14,754 0 0 0 67 38,311 79,054 0 46,634 0 32,485 7,340 1,875 1,184 3,750 1,330 2,420 0 0 0 2,420 .35 .35
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