<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
- ----- Exchange Act of 1934 for the quarterly period ended March 31, 1997.
or
Transition Report pursuant to Section 13 or 15 (d) of the Securities
- ----- Exchange Act of 1934 for the transition period from________to________.
Commission file number 0-27056
Healthdyne Information Enterprises, Inc.
----------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2112366
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1850 Parkway Place, Suite 1100, Marietta, Georgia 30067
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(770) 423-8450
- --------------------------------------------------------------------------------
(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
-------- --------
The number of shares outstanding of the issuer's only class of Common Stock,
$.01 par value, as of April 30, 1997 was 20,251,945.
Exhibit Index is on Page 14 herein.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Healthdyne Information Enterprises, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
3/31/97 12/31/96
Assets (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,466 $ 10,743
Trade accounts receivable, less allowance of $76 and $165 at
March 31, 1997 and December 31, 1996, respectively 5,265 5,260
Other current assets 1,260 963
----------------------------
Total current assets 15,991 16,966
Purchased software, net of accumulated amortization of $998 and $770 at
March 31, 1997 and December 31, 1996, respectively 3,404 3,587
Capitalized software, net of accumulated amortization of $81 and $39 at
March 31, 1997 and December 31, 1996, respectively 946 750
Property and equipment, net of accumulated depreciation of $567 and
$456 at March 31, 1997 and December 31, 1996, respectively 1,382 1,221
Excess of cost over net assets of businesses acquired, less
accumulated amortization of $1,435 and $1,267 at March 31, 1997 and
December 31, 1996, respectively 8,668 8,836
Other assets 730 442
----------------------------
Total assets $ 31,121 $ 31,802
============================
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt and capital lease obligations $ 4,262 $ 163
Accounts payable, principally trade 1,015 1,019
Accrued liabilities 452 981
Deferred service revenue 2,825 2,418
----------------------------
Total current liabilities 8,554 4,581
Long-term debt and capital lease obligations, excluding current installments 211 4,265
----------------------------
Total liabilities 8,765 8,846
----------------------------
Shareholders' Equity:
Preferred stock, without par value. Authorized 20,000 shares;
designated Series A cumulative preferred stock 500 shares;
issued none 0 0
Common stock, $.01 par value. Authorized 50,000 shares; issued and
outstanding 20,212 and 20,172 shares at March 31, 1997 and
December 31, 1996, respectively 202 202
Additional paid-in capital 32,722 32,819
Accumulated deficit (10,568) (10,065)
----------------------------
Total shareholders' equity 22,356 22,956
----------------------------
Commitments
Total liabilities and shareholders' equity $ 31,121 $ 31,802
============================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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Healthdyne Information Enterprises, Inc. and Subsidiaries
Consolidated Condensed Statements of Operations
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
(Unaudited)
<S> <C> <C>
Revenue:
Software $ 1,273 $ 1,718
Services 2,087 1,812
----------------------------
Total revenue 3,360 3,530
----------------------------
Cost of revenue:
Software 522 236
Services 1,347 1,007
----------------------------
Total cost of revenue 1,869 1,243
----------------------------
Gross profit 1,491 2,287
----------------------------
Operating expenses:
Sales and marketing 762 813
Research and development 434 323
General and administrative 1,002 928
----------------------------
Total operating expenses 2,198 2,064
----------------------------
Operating earnings (loss) (707) 223
Losses of affiliate (31) 0
Interest income (expense), net 67 (113)
----------------------------
Earnings (loss) before income taxes (671) 110
Income tax benefit 168 0
----------------------------
Net earnings (loss) $ (503) $ 110
============================
Net earnings (loss) per common share and common share equivalent:
Primary $ (0.02) $ 0.01
============================
Fully diluted $ (0.02) $ 0.01
============================
Weighted average number of common shares and common share equivalents
outstanding:
Primary 20,182 18,117
============================
Fully diluted 20,182 18,380
============================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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Healthdyne Information Enterprises, Inc. and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (503) $ 110
Adjustments to reconcile net earnings (loss) to net cash provided by
(used in) operating activities:
Losses of affiliate 31 0
Provision for doubtful accounts (89) 0
Depreciation and amortization 549 396
(Increase) decrease in trade accounts receivable 84 (1,028)
(Increase) decrease in other current assets (297) 349
Increase (decrease) in accounts payable (151) 310
Increase (decrease) in accrued liabilities (464) (70)
Increase (decrease) in deferred service revenue 407 175
----------------------------
Net cash provided by (used in) operating activities (433) 242
----------------------------
Cash flows from investing activities:
Purchased software (45) (559)
Capitalized software development costs (237) (247)
Capital expenditures (274) (64)
Increase in other assets (319) 0
----------------------------
Net cash used in investing activities (875) (870)
----------------------------
Cash flows before financing activities (1,308) (628)
----------------------------
Cash flows from financing activities:
Principal payments on long-term debt, net (20) (990)
Proceeds from the issuance of common stock 51 173
----------------------------
Net cash provided by (used in) financing activities 31 (817)
----------------------------
Net decrease in cash and cash equivalents (1,277) (1,445)
Cash and cash equivalents at beginning of period 10,743 4,013
----------------------------
Cash and cash equivalents at end of period $ 9,466 $ 2,568
============================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
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Healthdyne Information Enterprises, Inc. and Subsidiaries
Notes to Consolidated Condensed Financial Statements
(Unaudited)
1. General:
The consolidated condensed financial statements as of March 31, 1997 and for the
three months ended March 31, 1997 and 1996 are unaudited. In the opinion of
management, all adjustments, consisting of normal recurring accruals, necessary
for the fair presentation of the consolidated financial position and results of
operations and cash flows for the periods presented have been included. Results
for the interim periods are not necessarily indicative of results that may be
expected for the full year.
These consolidated condensed financial statements should be read in conjunction
with the consolidated financial statements and notes included in the Annual
Report on Form 10-K of Healthdyne Information Enterprises, Inc. ("HIE" or the
"Company") for the year ended December 31, 1996.
2. Major Customers:
One customer accounted for 25% of the Company's revenue during each of the three
months ended March 31, 1997 and 1996. In addition, one distributor provided
customers to the Company that accounted for approximately 11% of the Company's
revenue for the three months ended March 31, 1996. No single distributor
provided customers to the Company that accounted for more than 10% of the
Company's revenue for the three months ended March 31, 1997.
3. Earnings (Loss) Per Share of Common Stock:
Loss per share of common stock for the three months ended March 31, 1997 for
both primary and fully diluted calculation purposes is based on the weighted
average shares of common stock outstanding without regard to the anti-dilutive
effect of outstanding stock options. Earnings per share of common stock for the
three months ended March 31, 1996 are based on the weighted average shares of
common stock outstanding and dilutive outstanding stock options computed using
the treasury stock method for primary and fully diluted calculation purposes.
4. Subsequent Event:
On April 30, 1997, the Company prepaid at a 20.6% discount a portion of the
principal and accrued interest totaling $503,597 due under the Company's
convertible promissory note payable, which matures on January 2, 1998 and had a
balance of $4,116,441 as of March 31, 1997.
5
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Except for the historical information contained hereafter, this
report contains forward-looking statements that involve risks and uncertainties.
The Company's actual results could differ materially from those discussed
herein. Factors that could cause or contribute to such differences include, but
are not limited to, the Company's limited operating history and lack of
profitability for the three months ended March 31, 1997, for the year ended
December 31, 1995 and for the period from June 15, 1994 to December 31, 1994;
limitations and potential costs inherent in the Entrepreneurial Business Unit
("EBU") operational structure; market acceptance of new products and services
offered by the Company; limited capital resources; competitive factors, such as
new technologies and pricing pressures; and other factors discussed or
identified from time to time in the Company's filings with the Securities and
Exchange Commission, including, but not limited to, the Company's annual report
on Form 10-K for the fiscal year ended December 31, 1996.
Overview
Healthdyne Information Enterprises, Inc. ("HIE" or the "Company")
was incorporated in Georgia on June 15, 1994 and was a wholly-owned subsidiary
of Healthdyne, Inc. ("Healthdyne") until November 6, 1995 at which time
Healthdyne distributed all of the outstanding shares of HIE to Healthdyne's
shareholders (the "Spin-Off"). HIE's common stock is publicly traded on the
Nasdaq National Market under the symbol "HDIE". In conjunction with its
subsidiaries Healthcare Communications, Inc. ("HCI") and Integrated Healthcare
Solutions, Inc. ("IHS") and its affiliate Criterion Health Strategies, Inc.
("CHS"), the Company is a leading provider of enterprise-wide clinical
information management solutions for emerging integrated healthcare delivery
networks ("IDNs"). Each subsidiary and the affiliate are referred to by the
Company as an EBU.
The Company generates revenue from licensing clinical information
software tools and products and providing related system design, integration,
implementation, support, education and consulting services as discussed below.
HCI. HCI contributed approximately 42% of HIE's consolidated
revenue for the three months ended March 31, 1997 through Cloverleaf
integration engine software license fees and related implementation,
maintenance and education fees. Software licenses are generally granted on a
perpetual basis for a one-time, upfront fee. Implementation fees are typically
based on actual hours of implementation service at standard hourly rates.
Software maintenance agreements are generally one-year renewable service
contracts for a prepaid standard fee. HCI charges a standard per-student amount
for its education classes.
IHS. IHS contributed approximately 58% of HIE's consolidated
revenue for the three months ended March 31, 1997. IHS provides clinical and
other information solutions through the use of both proprietary and third-party
software tools and by providing related system design, integration and
consulting services. Software licenses and sub-licenses are generally granted
on a perpetual basis for a one-time, upfront fee. Services are
6
<PAGE> 7
generally provided for a fixed fee based on estimated hours of service to be
provided at standard hourly rates.
CHS. CHS provides enterprise management and other decision support
solutions through the use of both proprietary and third-party software tools and
related consulting, implementation, maintenance and education services. HIE uses
the equity method of accounting for its investment in CHS, which is included in
Other Assets in the accompanying Consolidated Condensed Balance Sheets. HIE's
share of CHS' operating results are presented as Losses of Affiliate in the
accompanying Consolidated Condensed Statements of Operations. On November 7,
1996 and December 18, 1996, the Company entered into an agreement in principle
and a separate definitive agreement with certain CHS shareholders and Massey
Burch Capital Corp. ("Massey Burch"), respectively, which together would enable
the Company to acquire a 100% ownership interest in CHS. There can be no
assurance that a definitive agreement will be entered into with the CHS
shareholders or, even if entered into, that the Company would exercise an option
to acquire a 100% ownership interest in CHS.
On June 12, 1996, the Company entered into an agreement effective
April 1, 1996, with a former majority-owned subsidiary, DataView Imaging
International, Inc. ("DataView"), providing for a restructuring of the
relationship between HIE and DataView, which included, among other things, a
reduction of HIE's ownership interest in DataView from 61.5% to 19.5%.
DataView's revenue of $130,000 and net loss of $152,000 are included in the
Company's Consolidated Condensed Statement of Operations for the three months
ended March 31, 1996. Subsequent to March 31, 1996, DataView's financial
position, results of operations and cash flows are no longer included in HIE's
consolidated financial statements, and DataView is no longer considered an EBU.
The Company expects the following external factors to affect the
market for healthcare information systems tools, products and services in future
years: (1) the continued and accelerated emergence of IDNs; (2) the shift from
the traditional fee-for-service reimbursement system to the capitated (fixed
fee) payment system for healthcare services; (3) the growing importance of
comprehensive clinical information in the managed patient care environment; (4)
the introduction of cost accounting to the healthcare delivery system; and (5)
the growing world-wide need to control the cost of quality healthcare.
Software revenue is generally recognized upon shipment in accordance
with Statement of Position 91-1, "Software Revenue Recognition". Service revenue
is recognized as the work is performed or, in the case of a fixed fee contract,
on the percentage of completion basis, even though some services are prepaid.
The Company's Consolidated Condensed Balance Sheets include assets
designated as purchased software and capitalized software development costs.
Purchased software originates from purchases by HIE of proprietary software
tools developed by third parties and prepaid license fees for software tools to
be distributed by HIE on a non-exclusive basis. Certain costs of HIE proprietary
software developed internally are capitalized in accordance with generally
accepted accounting principles. The costs of individual software tools or
products are being amortized ratably based on the projected revenue associated
with the related software or on a straight-line basis over not more than five
years, whichever method results in a higher level of amortization.
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The excess of cost over net assets of businesses acquired (goodwill)
is being amortized over a period of fifteen years. At each balance sheet date,
the Company assesses the recoverability of this intangible asset by determining
whether the amortization of the goodwill balance over its remaining life can be
recovered through undiscounted future operating cash flows of the acquired
operation. The amount of goodwill impairment, if any, is measured based on
projected discounted future operating cash flows using a discount rate
reflecting the Company's average cost of funds.
8
<PAGE> 9
Results of Operations
The following table sets forth for the periods indicated: (1) the relative
significance of each EBU to the Company as a whole and (2) the percentage of
total revenue for each component included in the Company's Consolidated
Condensed Statements of Operations:
<TABLE>
<CAPTION>
PERCENT OF REVENUE (UNLESS OTHERWISE INDICATED)
THREE MONTHS ENDED MARCH 31,
1997 1996
<S> <C> <C>
Total HIE revenue (in 000's) $3,360 $3,530
===============================================
HCI 42% 55%
IHS 58% 41%
DataView 0% 4%
===============================================
Total HIE revenue 100% 100%
===============================================
Revenue:
Software 38% 49%
Services 62% 51%
-----------------------------------------------
Total revenue 100% 100%
-----------------------------------------------
Cost of revenue:
Software (as a percent of software revenue) 41% 14%
Services (as a percent of services revenue) 65% 56%
Total cost of revenue 56% 35%
-----------------------------------------------
Gross profit 44% 65%
-----------------------------------------------
Operating expenses:
Sales and marketing 22% 23%
Research and development 13% 9%
General and administrative 30% 27%
-----------------------------------------------
Total operating expenses 65% 59%
-----------------------------------------------
Operating earnings (loss) (21%) 6%
Losses of affiliate (1%) 0%
Interest income (expense), net 2% (3%)
-----------------------------------------------
Earnings (loss) before income taxes (20%) 3%
Income tax benefit 5% 0%
-----------------------------------------------
Net earnings (loss) (15%) 3%
===============================================
</TABLE>
9
<PAGE> 10
Comparison of Three Months Ended March 31, 1997 and March 31, 1996
Revenue. Total revenue was $3.4 million for the three months ended
March 31, 1997 compared to $3.5 million for the three months ended March 31,
1996, a decrease of 5%. DataView comprised 4% of HIE's consolidated revenue for
the three months ended March 31, 1996, but DataView is no longer included in
the Company's consolidated revenue effective April 1, 1996 as discussed above.
HCI's revenue of $1.4 million for the three months ended March 31, 1997 was
$546,000 lower than its revenue in the prior year's comparable period due
primarily to a $486,000 reduction in Cloverleaf integration engine software
license fee revenue between the two periods. Management believes that this
reduced level of Cloverleaf integration engine software licenses in the first
quarter of 1997 is attributable to sales timing issues. IHS' revenue of $2.0
million for the three months ended March 31, 1997 was $506,000 higher than the
prior year's comparable period due primarily to a $429,000 increase in software
tool revenue from the recently released HIE-proprietary Community Person Index
("CPI") software tool and third-party software tools for imaging, workflow and
COLD ("Computer Output to Laser Disk") that are sub-licensed to end users by
IHS.
Cost of revenue. Cost of revenue includes, among other things,
compensation of service personnel, travel and software royalties and
amortization. The cost of revenue was $1.9 million for the three months ended
March 31, 1997 compared to $1.2 million for the three months ended March 31,
1996, an increase of 50%. Approximately half of the increased cost of revenue
was attributable to the relatively higher mix of third-party software tool
license fee revenue in the first quarter of 1997 compared to the first quarter
of 1996. Third-party software tools, such as imaging, workflow and COLD,
typically have a higher cost of revenue than proprietary software tools, such as
the Cloverleaf integration engine and the CPI. The other half of the increased
cost of revenue was attributable to the relatively low level of service
personnel productivity at IHS in the first quarter of 1997. The IHS service
personnel staffing level was appropriately reduced in April 1997 in response to
this situation.
Gross profit. The Company's gross profit was $1.5 million for the three
months ended March 31, 1997 compared to $2.3 million for the three months ended
March 31, 1996, a decrease of 35%. The primary reason for the reduced gross
profit in the first quarter of 1997 was the lower level of highly profitable
Cloverleaf integration engine software license fee revenue discussed above. A
secondary reason for the reduced gross profit in the first quarter of 1997 was
the relatively low level of service personnel productivity at IHS also discussed
above.
Sales and marketing. Sales and marketing expense includes, among other
things, compensation of sales and marketing personnel, sales commissions, travel
and advertising. Sales and marketing expense was $762,000 or 22% of revenue for
the three months ended March 31, 1997 compared to $813,000 or 23% of revenue for
the three months ended March 31, 1996, a decrease of 6%. The $51,000 decrease in
sales and marketing expense between the periods was due primarily to the lower
level of revenue and secondarily to the exclusion of DataView from the Company's
consolidated operating results for the first quarter of 1997 as discussed above.
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Research and development. Research and development expense includes,
among other things, compensation of research and development personnel,
depreciation and lease expense of research and development equipment and travel.
Research and development expense was $434,000 or 13% of revenue for the three
months ended March 31, 1997 compared to $323,000 or 9% of revenue for the three
months ended March 31, 1996, an increase of 34%. While the level of
capitalization of internally developed software dropped to 35% in the first
quarter of 1997 from 43% in the first quarter of 1996, cash expenditures for
research and development increased $101,000 between the two periods due
primarily to increased staffing for various research and development projects
at HCI.
General and administrative. General and administrative expense
includes, among other things, compensation of finance, accounting and
administrative personnel, goodwill amortization, office rent and insurance.
General and administrative expense was $1.0 million for the three months ended
March 31, 1997 compared to $928,000 for the three months ended March 31, 1996,
an increase of $74,000 or 8%, due primarily to a slight increase in the number
of administrative and financial personnel to support planned growth.
Losses of affiliate. Losses of affiliate, which resulted from the
Company's commitment to fund CHS, totaled $31,000 in the first quarter of 1997.
The December 1995 transaction with Massey Burch, which provided for a sharing of
the Company's funding commitment to CHS, had the additional result of relieving
the Company of the requirement to report any losses from CHS during the year
ended December 31, 1996.
Interest income (expense), net. Net interest income was $67,000 for the
three months ended March 31, 1997 compared to net interest expense of $113,000
for the three months ended March 31, 1996, representing an increase in net
interest income of $180,000. The increased net interest income is due to (1)
interest income resulting from the investment of most of the $10.3 million net
proceeds from the Company's secondary public offering of 2.75 million shares of
its Common Stock during November 1996 and (2) decreased interest expense related
to various payments of long-term debt and accrued interest totaling
approximately $4 million during the year ended December 31, 1996.
Income tax benefit. The Company recorded an income tax benefit of
$168,000 for the three months ended March 31, 1997 based on management's belief
that the Company will generate taxable income above the level of available net
operating loss carryforward benefits for the year ended December 31, 1997. The
Company had no provision for income taxes for the three months ended March 31,
1996 due to the utilization of available net operating loss carryforward
benefits.
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Liquidity and Capital Resources
The Company historically financed both its operations since
inception and its investments in EBUs primarily through equity investments
totaling $22.0 million by Healthdyne. Following the Spin-Off, Healthdyne had no
obligation or intention to make additional advances or equity infusions in the
Company. During November 1996, the Company sold 2.75 million shares of its
Common Stock in a public offering and received proceeds of $10.3 million, after
deducting all offering-related expenses. The Company used $800,000 and $400,000
to partially prepay certain long-term debt at a discount during November 1996
and April 1997, respectively. HIE invested another $350,000 in CHS during
February 1997. The Company intends to use the remainder of the net proceeds of
this offering for working capital and general corporate purposes, including the
satisfaction of the Company's remaining $350,000 funding commitment to CHS. The
Company's present financial condition and its plans for future working capital
and other capital requirements are further discussed below.
The Company has working capital of $7.4 million at March 31, 1997
compared to $12.3 million at December 31, 1996. The primary reason for the $4.9
million decrease in working capital between December 31, 1996 and March 31, 1997
is the reclassification of long-term debt totaling $4.1 million as of December
31, 1996 that matures on January 2, 1998 to a current liability as of March 31,
1997. Cash decreased $1.3 million during the three months ended March 31, 1997
compared to a $1.4 million decrease during the three months ended March 31, 1996
for the reasons discussed below.
Net cash used in operating activities totaled $433,000 for the three
months ended March 31, 1997 compared to net cash provided by operating
activities of $242,000 for the three months ended March 31, 1996. The $675,000
total variance between the two periods is primarily attributable to the
decreased cash flow resulting from the net loss recorded during the three months
ended March 31, 1997 compared to the net earnings recorded in the three months
ended March 31, 1996. In addition, there were various changes in the components
of working capital, most notably the cash used to reduce accrued liabilities and
accounts payable and to increase other current assets, all of which were
substantially offset by the cash provided by accounts receivable collections and
the increase in deferred service revenue.
Net cash used in investing activities was $875,000 for the three months
ended March 31, 1997 compared to $870,000 for the three months ended March 31,
1996. The Company purchased $514,000 less third-party software in the first
quarter of 1997 compared to the first quarter of 1996, but had $210,000 more
capital expenditures, primarily for computer equipment, during the first quarter
of 1997 compared to the first quarter of 1996 and invested another $350,000 in
CHS during February 1997 as previously discussed.
Net cash provided by financing activities was $31,000 for the three
months ended March 31, 1997 and net cash used in financing activities was
$817,000 for the three months ended March 31, 1996. Most of the variance between
the two periods is attributable to HCI acquisition-related debt payments
totaling $814,000 during the first
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<PAGE> 13
quarter of 1996. The proceeds from the issuance of Common Stock relate to the
exercise of stock options during both periods.
As of March 31, 1997, the Company had $4.3 million of debt financing
scheduled for payment over the next twelve months with $4.1 million of that
total due on January 2, 1998, but $504,000 of this balance was prepaid at a
discount on April 30, 1997. The remainder of this debt that matures on January
2, 1998 is payable in cash or the Company's Common Stock at a $3.50 per share
conversion price at the option of the convertible promissory note holders. The
Company's Common Stock is trading below the $3.50 conversion price as of April
30, 1997.
During May 1996, HCI renewed and extended through August 1997 its $1.0
million line of credit with a bank on essentially the same terms and conditions
as the expiring line of credit with said bank. During February 1997, the Company
received a commitment for a $2 million unsecured line of credit from another
bank that requires the termination of the HCI line of credit referred to above
and the maintenance of certain financial covenants. The definitive agreement
related to this line of credit commitment has not been finalized at this date.
The Company plans to maintain a $2 million line of credit for unanticipated
needs and financial flexibility. Based on its current business plan and business
model projections, the Company believes that currently available cash and
anticipated cash flow from operating activities will be sufficient to meet the
Company's capital requirements, including the payment of all maturing debt in
cash and its remaining funding commitment to CHS, for at least the next twelve
months and for the foreseeable future.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.2 - By-Laws of Healthdyne Information Enterprises, Inc.,
as amended on April 24, 1997
11 - Statements of Computation of Per Share Earnings (Loss).
27 - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
During the quarter ended March 31, 1997, the Company did not file any
reports on Form 8-K.
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<PAGE> 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.
Healthdyne Information Enterprises, Inc.
May 12, 1997 By: /s/ Joseph G. Bleser
-----------------------
Joseph G. Bleser
Vice President -Finance,
Chief Financial Officer, Treasurer
and Secretary
(duly authorized and principal
financial officer)
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EXHIBIT INDEX
Exhibit
Number Description
- ------- --------------------------------------------------------
3.2 By-Laws of Healthdyne Information Enterprises, Inc., as
amended on April 24, 1997
11 Statements of Computation of Per Share
Earnings (Loss)
27 Financial Data Schedule (for SEC use only).
16
<PAGE> 1
EXHIBIT 3.2
BY-LAWS OF HEALTHDYNE INFORMATION ENTERPRISES,INC.
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders
for the election of Directors and for the transaction of such other business
as may properly come before the meeting shall be held at such place, either
within or without the State of Georgia, on such date and at such time as the
Board of Directors may by resolution provide. The Board of Directors may
specify by resolution prior to any special meeting of shareholders held within
the year that such meeting shall be in lieu of the annual meeting.
Section 2. Special Meeting; Call and Notice of Meetings. Special
meetings of the shareholders may be called at any time by the Board of
Directors, the Chairman of the Board of Directors or the President. The
Corporation shall call a special meeting of shareholders upon written request
of the holders of at least sixty percent (60%) of the outstanding Common Stock.
Such meetings shall be held at such place, either within or without the State
of Georgia, as is stated in the call and notice thereof. Written notice of
each meeting of shareholders, stating the time and place of the meeting, and
the purpose of any special meeting, shall be mailed to each shareholder
entitled to vote at or to notice of such meeting at his address shown on the
books of the Corporation not less than ten (l0) nor more than sixty (60)
<PAGE> 2
days prior to such meeting unless such shareholder waives notice of the
meeting. Any shareholder may execute a waiver of notice, in person or by proxy,
either before or after any meeting, and shall be deemed to have waived notice
if he is present at such meeting in person or by proxy. Neither the business
transacted at, nor the purpose of, any meeting need be stated in the waiver of
notice of such meeting, except that, with respect to a waiver of notice of a
meeting at which a plan of merger or consolidation is considered, information
as required by the Georgia Business Corporation Code must be delivered to the
shareholder prior to his execution of the waiver of notice or the waiver itself
must conspicuously and specifically waive the right to such information.
Notice of any meeting may be given by the President, the Secretary or
by the person or persons calling such meeting. No notice need be given of the
time and place of reconvening of any adjourned meeting, if the time and place
to which the meeting is adjourned are announced at the adjourned meeting.
Section 3. Quorum; Required Shareholder Vote. A quorum for the
transaction of business at any annual or special meeting of shareholders shall
exist when the holders of a majority of the outstanding shares entitled to vote
are represented either in person or by proxy at such meeting. If a quorum is
present, action on a matter (other than the election of directors) by the
shareholders is approved if the votes cast favoring the action exceed the votes
cast opposing the action, unless the Georgia Business Combination Code (the
"Code"), the Corporation's
<PAGE> 3
Articles of Incorporation, or a provision of these By-laws adopted by the
shareholders under Code Section 14-2-1021 or any successor statute requires a
greater number of affirmative votes. When a quorum is once present to organize
a meeting, the shareholders present may continue to do business at the meeting
or at any adjournment thereof notwithstanding the withdrawal of enough
shareholders to leave less than a quorum. The holders of a majority of the
voting shares represented at a meeting, whether or not a quorum is present, may
adjourn such meeting from time to time.
Section 4. Proxies. A shareholder may vote either in person or by a
proxy which he has duly executed in writing. No proxy shall be valid after
eleven (11) months from the date of its execution unless a longer period is
expressly provided in the proxy.
Section 5. Action of Shareholders Without Meeting. Any action
required to be, or which may be, taken at a meeting of the shareholders, may be
taken without a meeting if written consent, setting forth the actions so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof, except that, with respect to approval of a plan of
merger or consolidation by written consent, information as required by the
Georgia Business Corporation Code must be delivered to the shareholders prior
to their execution of the consent or the consent must conspicuously and
specifically waive the right to such information. Such consent shall have the
same force and effect as a unanimous affirmative vote of the
<PAGE> 4
shareholders and shall be filed with the minutes of the proceedings of the
shareholders.
ARTICLE II
DIRECTORS
Section 1. Power of Directors. The Board of Directors shall manage
the business of the Corporation and may exercise all powers of the Corporation,
subject to any restrictions imposed by law, by the Articles of Incorporation or
by these By-Laws.
Section 2. Composition of the Board. The Board of Directors of the
Corporation shall consist of not less than three (3) or more than nine (9)
natural persons of the age of eighteen years or over, the exact number to be
determined from time to time by resolution of the Board of Directors. If all
of the shares of the Corporation are owned beneficially and of record by less
than three shareholders, the number of directors may be less than three but not
less than the number of shareholders. Directors need not be residents of the
State of Georgia or shareholders of the Corporation. At each annual meeting
of the shareholders, the shareholders shall elect Directors who shall serve
until their successors are elected and qualified; provided that the
shareholders may, by the affirmative vote of the holders of a majority of the
shares entitled to vote at an election of Directors, increase or reduce the
number of Directors or add or remove Directors with or without cause at any
time.
Section 3. Meetings of the Board; Notice of Meetings; Waiver of
Notice. The annual meeting of the Board of Directors for the purpose of
electing officers and transacting such other
<PAGE> 5
business as may be brought before the meeting shall be held each year
immediately following the annual meeting of shareholders. The Board of
Directors may by resolution provide for the time and place of other regular
meetings and no notice of such regular meetings need be given. Special
meetings of the Board of Directors may be called by the Chairman of the Board
of Directors, by the President or by any two Directors, and written notice of
the time and place of such meetings shall be given to each Director by first
class or air mail at least two (2) days before the meeting or by telephone,
telegraph, cablegram or in person at least one (l) day before the meeting. Any
Director may execute a waiver of notice, either before or after any meeting,
and shall be deemed to have waived notice if he is present at such meeting.
Neither the business to be transacted at, nor the purpose of, any meeting of
the Board of Directors need be stated in the notice or waiver of notice of such
meeting. Any meeting may be held at any place within or without the State of
Georgia.
Section 4. Quorum; Vote Requirement. A majority of the Directors in
office at any time shall constitute a quorum for the transaction of business at
any meeting. When a quorum is present, the vote of a majority of the Directors
present shall be the act of the Board of Directors, unless a greater vote is
required by law, by the Articles of Incorporation or by these By-Laws.
Section 5. Action of Board Without Meeting. Any action required or
permitted to be taken at a meeting of the Board of Directors or any committee
thereof may be taken without a meeting
<PAGE> 6
if written consent, setting forth the action so taken, is signed by all the
Directors or committee members and filed with the minutes of the proceedings of
the Board of Directors or committee. Such consent shall have the same force and
effect as a unanimous affirmative vote of the Board of Directors or committee,
as the case may be.
Section 6. Committees. The Board of Directors, by resolution adopted
by a majority of all of the Directors, may designate from among its members an
Executive Committee, and/or other committees, each composed of two (2) or more
Directors, which may exercise such authority as is delegated by the Board of
Directors, provided that no committee shall have the authority of the Board of
Directors in reference to (l) an amendment to the Articles of Incorporation or
By-Laws of the Corporation, (2) the adoption of a plan of merger or
consolidation, (3) the sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the Corporation, or (4) a
voluntary dissolution of the Corporation or a revocation thereof.
Section 7. Vacancies. A vacancy occurring in the Board of Directors
by reason of the removal of a Director by the shareholders shall be filled by
the shareholders, or, if authorized by the shareholders, by the remaining
Directors. Any other vacancy occurring in the Board of Directors may be filled
by the affirmative vote of a majority of the remaining Directors though less
than a quorum of the Board of Directors, or by the sole remaining Director, as
the case may be, or, if the vacancy is not so filled, or if no director
remains, by the shareholders.
<PAGE> 7
A Director elected to fill a vacancy shall serve for the unexpired term of his
predecessor in office.
Section 8. Telephone Conference Meetings. Unless the Articles of
Incorporation otherwise provide, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board or committee by means of telephone conference or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section 8 shall constitute presence in person at such meeting.
ARTICLE III
OFFICERS
Section 1. Executive Structure of the Corporation. The officers of
the Corporation shall consist of a President, a Secretary, a Treasurer and such
other officers or assistant officers, including Vice Presidents, as may be
elected by the Board of Directors. Each officer shall hold office for the term
for which he has been elected or appointed and until his successor has been
elected or appointed and has qualified, or until his earlier resignation,
removal from office or death. Any two or more offices may be held by the same
person, except that the same person shall not be both Chairman of the Board of
Directors and Secretary, or President and Secretary. The Board of Directors
may designate a Vice President as an Executive Vice President and may designate
the order in which other Vice Presidents may act.
<PAGE> 8
Section 2. President. The President shall be the chief operating
officer of the Corporation and shall be in charge of the day-to-day affairs of
the Corporation, subject to the direction of the Board of Directors. He shall
preside at all meetings of the shareholders.
Section 3. Vice President. The Vice President shall act in the case
of absence or disability of the President.
Section 4. Secretary. The Secretary shall keep the minutes of the
proceedings of the shareholders and of the Board of Directors, and shall have
custody of and attest the seal of the Corporation.
Section 5. Treasurer. The Treasurer shall be responsible for the
maintenance of proper financial books and records of the Corporation.
Section 6. Other Duties and Authority. Each officer, employee and
agent of the Corporation shall have such other duties and authority as may be
conferred upon him by the Board of Directors or delegated to him by the
President.
Section 7. Removal of Officers. Any officer may be removed at any
time by the Board of Directors, and such vacancy may be filled by the Board of
Directors. This provision shall not prevent the making of a contract of
employment for a definite term with any officer and shall have no effect upon
any cause of action which any officer may have as a result of removal in breach
of a contract of employment.
Section 8. Compensation. The salaries of the officers shall be fixed
from time to time by the Board of Directors. No
<PAGE> 9
officer shall be prevented from receiving such salary by reason of the fact
that he is also a Director of the Corporation.
ARTICLE IV
STOCK
Section 1. Stock Certificates. The shares of stock of the
Corporation shall be represented by certificates in such form as may be
approved by the Board of Directors, which certificates shall be issued to the
shareholders of the Corporation in numerical order from the stock book of the
Corporation, and each of which shall bear the name of the shareholder, the
number of shares represented, and the date of issue; and which shall be signed
by the Chairman of the Board of Directors or President and the Secretary or an
Assistant Secretary of the Corporation; and which shall be sealed with the seal
of the Corporation. No share certificate shall be issued until the
consideration for the shares represented thereby has been fully paid.
Section 2. Transfer of Stock. Shares of stock of the Corporation
shall be transferred only on the books of the Corporation upon surrender to the
Corporation of the certificate or certificates representing the shares to be
transferred accompanied by an assignment in writing of such shares properly
executed by the shareholder of record or his duly authorized attorney-in-fact
and with all taxes on the transfer having been paid. The Corporation may
refuse any requested transfer until furnished evidence satisfactory to it that
such transfer is proper. Upon the surrender of a certificate for transfer of
stock, such certificate shall at once be conspicuously marked on
<PAGE> 10
its face "Cancelled" and filed with the permanent stock records of the
Corporation. The Board of Directors may make such additional rules concerning
the issuance, transfer and registration of stock and requirements regarding the
establishment of lost, destroyed or wrongfully taken stock certificates
(including any requirement of an indemnity bond prior to issuance of any
replacement certificate) as it deems appropriate.
Section 3. Registered Shareholders. The Corporation may deem and
treat the holder of record of any stock as the absolute owner for all purposes
and shall not be required to take any notice of any right or claim of right of
any other person.
Section 4. Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other purpose, the Board
of Directors of the Corporation may fix in advance a date as the record date
for any such determination of shareholders, such date in any case to be not
more than seventy (70) days and, in the case of a meeting of shareholders, not
less than ten (10) days prior to the date on which the particular action,
requiring such determination of shareholders, is to be taken.
ARTICLE V
DEPOSITORIES, SIGNATURES AND SEAL
Section 1. Depositories. All funds of the Corporation shall be
deposited in the name of the Corporation in such bank,
<PAGE> 11
banks, or other financial institutions as the Board of Directors may from time
to time designate and shall be drawn out on checks, drafts or other orders
signed on behalf of the Corporation by such person or persons as the Board of
Directors may from time to time designate.
Section 2. Contracts and Deeds. All contracts, deeds and other
instruments shall be signed on behalf of the Corporation by the President or by
such other officer, officers, agent or agents as the Board of Directors may
from time to time by resolution provide.
Section 3. Seal. The seal of the Corporation shall be as follows:
If the seal is affixed to a document, the signature of the Secretary
or an Assistant Secretary shall attest the seal. The seal and its attestation
may be lithographed or otherwise printed on any document and shall have, to the
extent permitted by law, the same force and effect as if it had been affixed
and attested manually.
ARTICLE VI
INDEMNITY
Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (including any action by or in
the right of the
<PAGE> 12
Corporation), by reason of the fact that he is or was a director or officer of
the Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise, shall be indemnified by the Corporation against expenses
(including reasonable attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation (and with respect to any criminal action or proceeding, if he had
no reasonable cause to believe his conduct was unlawful), to the maximum extent
permitted by, and in the manner provided by, the Georgia Business Corporation
Code.
ARTICLE VII
AMENDMENT OF BY-LAWS
The Board of Directors shall have the power to alter, amend or repeal
the By-Laws or adopt new by-laws, but any by-laws adopted by the Board of
Directors may be altered, amended or repealed and new by-laws adopted by the
shareholders. The shareholders may prescribe that any by-law or by-laws
adopted by them shall not be altered, amended or repealed by the Board of
Directors. Action by the Directors with respect to the By-Laws shall be taken
by an affirmative vote of a majority of all of the Directors then in office.
If a quorum is present, action by the shareholders with respect to the By-laws
shall be approved if the votes cast favoring the action exceed the votes cast
opposing the
<PAGE> 13
action, unless the Code, the Corporation's Articles of Incorporation, or a
provision of these By-laws adopted by the shareholders under Section 14-2-1021
or any successor statute of the Code requires a greater number of affirmative
votes.
ARTICLE VIII
BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS
In addition to any other provisions of law as may be applicable,
notwithstanding any other provisions of these By-laws or the Corporation's
Articles of Incorporation to the contrary, the provisions of Sections 14-2-1131
through 14-2-1133 of the Georgia Business Corporation Code (the "Code"), as the
same may be amended or supplemented from time to time, shall apply to and
govern those transactions of the Corporation which constitute "business
combinations" (as that term is defined in Section 14-2-1131 of the Code). The
provisions of this Article VIII of the By-laws may not be repealed except in
the manner set forth in Section 14-2-1133 of the Code.
<PAGE> 1
Exhibit 11
Healthdyne Information Enterprises, Inc. and Subsidiaries
Statements of Computation of Per Share Earnings (Loss)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1996
(UNAUDITED)
<S> <C> <C>
Net earnings (loss) $ (503) $ 110
==================================
Primary shares:
Weighted average number of common shares
outstanding 20,182 16,593
Additional shares issuable from assumed
exercise of options (see note 1) 0 1,524
==================================
20,182 18,117
==================================
Earnings (loss) per common share and common
share equivalent $ (0.02) $ 0.01
==================================
Fully diluted shares:
Weighted average number of common shares
outstanding 20,182 16,593
Additional shares issuable from assumed
exercise of options (see note 1) 0 1,787
----------------------------------
20,182 18,380
==================================
Earnings (loss) per common share and common
share equivalent $ (0.02) $ 0.01
==================================
</TABLE>
Note 1: Since stock options are anti-dilutive to the loss per common
share calculations, stock options are not considered in such loss
per share calculations for the three months ended March 31, 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE HEALTHDYNE
INFORMATION ENTERPRISES, INC. CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND THE HEALTHDYNE INFORMATION
ENTERPRISES, INC. CONSOLIDATED CONDENSED BALANCE SHEET AS OF MARCH 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 9,466
<SECURITIES> 0
<RECEIVABLES> 5,341
<ALLOWANCES> 76
<INVENTORY> 0
<CURRENT-ASSETS> 15,991
<PP&E> 1,949
<DEPRECIATION> 567
<TOTAL-ASSETS> 31,121
<CURRENT-LIABILITIES> 8,554
<BONDS> 211
0
0
<COMMON> 202
<OTHER-SE> 22,154
<TOTAL-LIABILITY-AND-EQUITY> 31,121
<SALES> 0
<TOTAL-REVENUES> 3,360
<CGS> 0
<TOTAL-COSTS> 1,869
<OTHER-EXPENSES> 2,198
<LOSS-PROVISION> 31
<INTEREST-EXPENSE> 67
<INCOME-PRETAX> (671)
<INCOME-TAX> (168)
<INCOME-CONTINUING> (503)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (503)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
