DRAFT OF 10/10/00
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
[x] Filed by the registrant
[_] Filed by a party other than the registrant
Check the appropriate box:
[x] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant toss.240.14a - 11(c) orss.240.14a-12
MATRIA HEALTHCARE, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:_____________________
(2) Aggregate number of securities to which transaction
applies:_____________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):_____________________________________________
(4) Proposed maximum aggregate value of transaction:_____________
(5) Total fee paid: _____________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting Fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: __________________________________
(2) Form, Schedule or Registration Statement No.:_____________
(3) Filing party:_____________________________________________
(4) Date Filed:_______________________________________________
<PAGE>
MATRIA HEALTHCARE, INC.
1850 Parkway Place
Marietta, Georgia 30067
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be Held on December 5, 2000
NOTICE IS HEREBY GIVEN THAT a Special Meeting of Stockholders (the
"Special Meeting") of Matria Healthcare, Inc. (the "Company" or "Matria") will
be held on December 5, 2000, at 10:00 a.m. local time at 1850 Parkway Place,
Suite 320, Marietta, Georgia 30067, for the following purposes:
(1) To approve an amendment of the Company's Certificate of
Incorporation to effect a reverse stock split whereby the
Company would issue one new share of Common Stock in exchange
for not less than three nor more than five shares of
outstanding Common Stock and to reduce proportionately the
number of authorized shares of Common Stock; and
(2) To transact such other business as properly may come before
the Special Meeting and any adjournment or postponement
thereof.
Your vote is important regardless of the number of shares you own. Each
stockholder, even though he or she now plans to attend the Special Meeting, is
requested to sign, date and return the enclosed proxy card without delay in the
enclosed postage-paid envelope. You may revoke your proxy at any time prior to
its exercise. Any stockholder present at the Special Meeting or any adjournment
or postponement thereof may revoke his or her proxy and vote personally on each
matter brought before the meeting.
I look forward to welcoming you at the meeting.
Very truly yours,
Roberta L. McCaw
Secretary
Marietta, Georgia
October __, 2000
<PAGE>
MATRIA HEALTHCARE, INC.
1850 Parkway Place
Marietta, Georgia 30067
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
To Be Held December 5, 2000
GENERAL INFORMATION
This proxy statement and the accompanying proxy card are being
furnished to stockholders in connection with the solicitation of proxies by the
Board of Directors of Matria Healthcare, Inc., a Delaware corporation (the
"Company"), for use at the Special Meeting of Stockholders (the "Special
Meeting") to be held on December 5, 2000 at 10:00 a.m. local time at 1850
Parkway Place, Suite 320, Marietta, Georgia 30067, and at any adjournment or
postponement thereof for the purposes set forth in the accompanying Notice of
Special Meeting of Stockholders and in this Proxy Statement.
It is anticipated that this proxy statement and the accompanying proxy
will first be mailed to the Company's stockholders on or about October __, 2000.
Record Date
The Board of Directors has fixed the close of business on October 18,
2000 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of, and to vote at, the Special Meeting and at
any adjournment or postponement thereof. At the close of business on the Record
Date, __________ shares of Common Stock were issued and outstanding.
Proxies
When a proxy card is returned, properly signed and dated, the shares
represented thereby will be voted in accordance with the instructions on the
proxy card. If a stockholder does not attend the Special Meeting and does not
return the signed proxy card, such stockholder's shares will not be voted. If a
stockholder returns a signed proxy card but does not indicate how his or her
shares are to be voted, such shares will be voted FOR approval of the amendment
of the Company's Certificate of Incorporation to effect a reverse stock split
whereby the Company would issue one new share of Common Stock in exchange for
not less than three nor more than five shares of outstanding Common Stock and to
reduce proportionately the number of authorized shares of Common Stock. As of
the date of this proxy statement, the Board of Directors does not know of any
other matters that are to come before the Special Meeting. If any other matters
are properly presented at the Special Meeting for consideration, the persons
named in the enclosed form of proxy and acting thereunder will have discretion
to vote on such matters in accordance with their best judgment.
Any proxy given may be revoked by the person giving it at any time
before it is voted. Proxies may be revoked by (i) filing with the Secretary of
the Company, at or before the taking of the vote at the Special Meeting, a
written notice of revocation bearing a later date than the proxy, (ii) duly
executing a later dated proxy relating to the same shares of Common Stock and
delivering it to the Secretary of the Company at or before the taking of the
vote at the Special Meeting or (iii) attending the Special Meeting and voting in
person (although attendance at the Special Meeting will not in and of itself
constitute a revocation of a proxy). Any written notice of revocation or
subsequent proxy should be sent so as to be delivered to Matria Healthcare,
Inc., 1850 Parkway Place, Marietta, Georgia 30067, Attention: Secretary, or hand
delivered to the Secretary of the Company at or before the taking of the vote at
the Special Meeting.
<PAGE>
The Company will bear the cost of the solicitation of proxies from its
stockholders. In addition to solicitation by use of the mails, proxies may be
solicited by directors, officers and employees of the Company in person or by
telephone or other means of communication. Such directors, officers and
employees will not be additionally compensated, but may be reimbursed for
out-of-pocket expenses incurred in connection with such solicitation.
Arrangements also will be made with custodians, nominees and fiduciaries for the
forwarding of proxy solicitation materials to beneficial owners of shares held
of record by such custodians, nominees and fiduciaries, and the Company will
reimburse such custodians, nominees and fiduciaries for reasonable expenses
incurred in connection therewith. In addition, D.F. King & Co., Inc. ("D.F.
King") will assist in the solicitation of proxies by the Company for a fee of
$5,500, plus reimbursement of reasonable out-of-pocket expenses.
Quorum
The presence, either in person or by properly executed proxies, of the
holders of a majority of the outstanding shares of the Company's Common Stock is
necessary to constitute a quorum at the Special Meeting. Abstentions will be
treated as present for quorum purposes.
Vote Required
The Company's stockholders are entitled to one vote at the Special
Meeting for each share of Common Stock held of record by them on the Record
Date. The affirmative vote of a majority of the outstanding shares of Common
Stock is required to approve the amendment of the Company's Certificate of
Incorporation to effect a reverse stock split and to reduce proportionately the
number of authorized shares of Common Stock. Votes may be cast for or against or
to abstain from approval of the amendment of the Company's Certificate of
Incorporation. Under applicable Delaware law, abstentions will have the effect
of a vote against approval of the amendment of the Company's Certificate of
Incorporation.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as to the beneficial
ownership of shares of the Company's Common Stock as of October 1, 2000 by (i)
all stockholders known by the Company to be the beneficial owners of more than
five percent of its Common Stock, (ii) each director of the Company, (iii) the
Chief Executive Officer and each of the Company's four other most highly
compensated executive officers serving at the end of the 1999 fiscal year, and
(iv) all executive officers and directors as a group. Unless otherwise
indicated, the holders listed below have sole voting and investment power with
respect to all shares beneficially owned by them.
<TABLE>
Amount and Nature Percent
Name of Beneficial Owner of Beneficial Ownership (1) of Class (2)
<S> <C> <C>
Gainor Medical Management, L.L.C. (3) 6,222,222 14.4%
Lord, Abbett & Co. (4) 4,714,825 12.7%
Dimensional Fund Advisors, Inc. (5) 2,224,200 6.0%
Wellington Management Company, LLP (6) 2,025,000 5.4%
Vanguard Explorer Fund (7) 2,025,000 5.4%
Parker H. Petit (8) 1,541,081 4.1%
Donald R. Millard (9) 417,057 1.1%
Frank D. Powers (10) 381,723 1.0%
Thornton A. Kuntz, Jr. (11) 58,985 -
Roberta L. McCaw (12) 37,271 -
Yvonne V. Scoggins (13) 56,468 -
Mark J. Gainor (14) 6,223,472 14.4%
Jeffrey D. Koepsell -0- -
Richard F. Levy (15) 833 -
Carl E. Sanders (16) 124,500 -
Thomas S. Stribling (17) 7,500 -
Jackie M. Ward (18) 55,004 -
Donald W. Weber (19) 12,500 -
Morris S. Weeden (20) 75,000 -
Frederick P. Zuspan (21) 84,019 -
All executive officers and directors
as a group (17 persons) 9,204,749 20.7%
--------------------------------------------------
-- Less than 1%
</TABLE>
<PAGE>
(1) Under the rules of the Securities and Exchange Commission (the "SEC"),
a person is deemed to be a beneficial owner of a security if he or she
has or shares the power to vote or to direct the voting of such
security ("voting power") or the power to dispose or to direct the
disposition of such security ("investment power"). A person is also
deemed to be a beneficial owner of any securities of which that person
has the right to acquire beneficial ownership within 60 days as well
as any securities owned by such person's spouse, children or relatives
living in the same house. Accordingly, more than one person may be
deemed to be a beneficial owner of the same securities.
(2) Based on 36,911,558 shares of Common Stock outstanding on October 1,
2000. With respect to each person or group in the table, assumes that
such person or group has exercised all options, warrants and other
rights to purchase Common Stock which he or she beneficially owns and
which are exercisable within 60 days and that no other person has
exercised any such rights.
(3) Gainor Medical Management, L.L.C. does not actually own any shares of
Common Stock. The number of shares benefically owned is based on
information contained in a report on Schedule 13D filed by Gainor
Medical Management, L.L.C., Mark J. Gainor and Gainor Medical U.S.A.
Inc. (the "Acquirers") with the SEC on January 27, 1999. The
Acquirers' principal business address is at 2205 Highway 42 North,
P.O. Box 353, McDonough, Georgia 30253. Gainor Medical Management,
L.L.C. sold substantially all of its assets to Matria in exchange for,
among other things, a currently exercisable warrant to purchase
4,000,000 shares of Matria's Common Stock and 10,000 shares of Series
A convertible preferred stock that is currently convertible into
2,222,222 shares of Matria's Common Stock. The aggregate exercise
price of the warrants is $12,000,000 and the aggregate liquidation
preference of the Series A convertible preferred stock that would be
surrendered upon conversion to Common Stock is $10,000,000. Gainor
Medical U.S.A., Inc. beneficially owns 6,222,222 shares by virtue of
the fact that it is the majority member of Gainor Medical Management,
L.L.C. Gainor Medical U.S.A., Inc. disclaims beneficial ownership of
2,811,822 shares, the ownership of which is attributable to other
members of Gainor Medical Management, L.L.C. Mr. Gainor beneficially
owns 6,222,222 shares of Matria Common Stock by virtue of the fact
that he owns, either directly or through his ownership of Gainor
Medical U.S.A., Inc. common stock, a majority of Gainor Medical
Management, L.L.C. See footnote 15 below for a description of shares
of stock disclaimed by Mr. Gainor.
(4) The number of shares owned is based on information contained in a
report on Schedule 13G filed with the SEC on February 2, 2000. The
address of Lord, Abbett & Co. is 90 Hudson Street, Jersey City, New
Jersey 07302.
(5) The number of shares owned is based on information contained in a
report on Schedule 13G filed with the SEC on February 11, 2000. The
address of Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401.
<PAGE>
(6) The number of shares owned is based on information contained in a
report on Schedule 13G filed with the SEC on February 9, 2000. The
address of Wellington Management Company, LLP ("WMC") is 75 State
Street, Boston, Massachusetts 02109. According to its Schedule 13G,
WMC, in its capacity as investment adviser, may be deemed to
beneficially own 2,025,000 shares of the Company's Common Stock that
are held of record by clients of WMC. WMC reports that it has no power
to vote or direct the vote of such shares and shared power to dispose
or direct the disposition of such shares, while its clients have the
right to receive, or direct the receipt of, dividends from, or
proceeds from the sale of, such shares. The shares reported by WMC are
also beneficially owned by Vanguard Explorer Fund (See footnote 7
below).
(7) The number of shares owned is based on information contained in a
report on Schedule 13G filed with the SEC on February 8, 2000.
According to its Schedule 13G, Vanguard Explorer Fund has the sole
power to vote or direct the vote of such shares and shared power to
dispose or direct the disposition of such shares. The address of
Vanguard Explorer Fund is Post Office Box 2600, Valley Forge,
Pennsylvania 19482.
(8) Represents 1,328,581 shares owned by Mr. Petit, 52,500 shares held by
Petit Investments Limited Partnership, 10,000 shares held by Petit
Grantor Trust and 150,000 shares that are subject to purchase upon
exercise of options exercisable within 60 days.
(9) Represents 92,427 shares owned by Mr. Millard, 10,000 shares owned by
his adult son who resides at home, 312,590 shares that are subject to
purchase upon exercise of options exercisable within 60 days, and
2,040 shares issuable upon conversion of 8% Convertible Subordinated
Debentures owned by Mr. Millard. Effective October 4, 2000, Mr. Parker
H. Petit, Chairman of the Board, succeeded Mr. Millard as President
and Chief Executive Officer of the Company. Also effective October 4,
2000, Mr. Millard resigned from the Company's Board of Directors and
Mr. Guy W. Millner, who is neither an officer or employee of the
Company, was elected by the Board of Directors as a director to fill
the vacancy created by Mr. Millard's resignation.
<PAGE>
(10) Represents 81,103 shares owned by Mr. Powers and 300,620 shares that
are subject to purchase upon exercise of options exercisable within 60
days.
(11) Represents 14,537 shares owned by Mr. Kuntz and 44,448 shares that are
subject to purchase upon exercise of options exercisable within 60
days.
(12) Represents 13,687 shares owned by Ms. McCaw and 23,584 shares that are
subject to purchase upon exercise of options exercisable within 60
days.
13) Represents 17,395 shares owned by Ms. Scoggins and 39,073 shares that
are subject to purchase upon exercise of options exercisable within 60
days.
(14) Mr. Gainor does not actually own any shares of Common Stock. The number of
shares beneficially owned consists of 1,250 shares that are subject to
purchase upon exercise of an option exercisable within 60 days that was
granted to Mr. Gainor as a member of the Company's Board of Directors . In
addition, Gainor Medical Management, L.L.C. owns a currently exercisable
warrant to purchase 4,000,000 shares and 10,000 shares of Series A
convertible preferred stock that is currently convertible into 2,222,222
shares of Common Stock. The aggregate exercise price of the warrants is
$12,000,000 and the aggregate liquidation preference of the Series A
convertible preferred stock that would be surrendered upon conversion to
Common Stock is $10,000,000. Because Mr. Gainor is a member of the
Management Committee of Gainor Medical Management, L.L.C. and owns, either
directly or through his ownership of Gainor Medical U.S.A., Inc. common
stock, a controlling interest in Gainor Medical Management, L.L.C., he is
deemed to be the beneficial owner of the shares of Common Stock issuable
upon exercise of the warrants and conversion of the Series A convertible
preferred stock. Mr. Gainor, however, disclaims ownership of 849,440 shares
of the stock related to the warrant and 479,344 shares of the stock related
to the Series A convertible preferred stock that are attributable to the
owners of Gainor Medical Management, L.L.C. other than himself and
companies that he controls.
(15) Represents 833 shares that are subject to purchase upon exercise of
options exercisable within 60 days.
<PAGE>
(16) Represents 64,500 shares owned by Mr. Sanders and 60,000 shares that
are subject to purchase upon exercise of options exercisable within 60
days.
(17) Represents 5,000 shares owned by Mr. Stribling and 2,500 shares that
are subject to purchase upon exercise of an option exercisable within
60 days.
(18) Represents 4 shares issuable upon conversion of 8% Convertible
Subordinated Debentures owned by Ms. Ward and 55,000 shares that are
subject to purchase upon exercise of options exercisable within 60
days.
(19) Represents 10,000 shares owned by Mr. Weber and 2,500 shares that are
subject to purchase upon exercise of an option exercisable within 60
days.
(20) Represents 15,000 shares owned by Mr. Weeden and 60,000 shares that
are subject to purchase upon exercise of options exercisable within 60
days.
(21) Represents 29,019 shares owned by Dr. Zuspan and 55,000 shares which
are subject to purchase upon exercise of options exercisable within 60
days.
<PAGE>
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
TO EFFECT REVERSE STOCK SPLIT
General
On September 20, 2000, the Company's Board of Directors approved, and
recommended that stockholders approve, an amendment to Article IV of the
Company's Restated Certificate of Incorporation (the "Amendment") to effect a
reverse stock split (the "Reverse Split") of the Company's Common Stock (of
which ______ shares were issued and outstanding as of the close of business on
the Record Date), whereby the Company would issue one new share of Common Stock
in exchange for not less than three nor more than five shares of outstanding
Common Stock. The Amendment also would reduce proportionately the number of
authorized shares of Common Stock. If approved, the Amendment would be effective
on the date a Certificate of Amendment (the "Certificate of Amendment") is filed
with the Secretary of State of the State of Delaware (the "Effective Date").
The complete text of the Certificate of Amendment that would be filed
in the office of the Secretary of State of the State of Delaware to effect the
Reverse Split is set forth in Appendix A to this Proxy Statement, provided,
however, that such text is subject to amendment to include such changes as may
be required by the office of the Secretary of State of the State of Delaware and
as the Company's Board of Directors deems necessary and advisable to effect the
Reverse Split in the range described above and the proportionate reduction in
the number of authorized shares of Common Stock.
Effect of Reverse Split
If the Amendment is approved by the stockholders at the Special
Meeting, the Board of Directors, in its discretion, will determine the
appropriate number of outstanding shares of Common Stock (the "Reverse Split
Number") to be exchanged for a single new share of Common Stock in the Reverse
Split. The Reverse Split Number will be from three to five, inclusive. The
actual Reverse Split Number will be determined in a manner that takes into
consideration items more fully discussed below.
Upon the Effective Date, each fixed number of shares of Common Stock of
the Company ("Old Common Stock") equal to the Reverse Split Number issued and
outstanding will be combined, reclassified and changed into one fully paid and
non-assessable share of Common Stock ("New Common Stock"). Each holder of record
of a certificate representing shares of Old Common Stock will be entitled to
receive, upon surrender of such certificate, a certificate representing the
number of whole shares of New Common Stock to which the holder is entitled
pursuant to the Reverse Split. Any certificates for shares of Old Common Stock
not so surrendered shall be deemed to represent one share of New Common Stock
for each such fixed number of shares equal to the Reverse Split Number of Old
Common Stock previously represented by such certificate. No fractional shares of
Common Stock or scrip representing fractional shares will be issued as a result
of the Reverse Split. Although the number of each stockholder's shares of Common
Stock will be reduced as a result of the Reverse Split, such stockholder's
voting rights and pro rata equity interest in the Company and its shares of
outstanding Common Stock will not be reduced, except for possible immaterial
changes due to the Company's purchase of fractional shares as described below.
<PAGE>
The Reverse Split also will effect a reduction in the aggregate number
of shares of Common Stock reserved for issuance upon exercise of warrants,
options and other rights to purchase the Company's Common Stock. Each
outstanding warrant, option or other right will automatically become a warrant
or option to purchase the number of shares subject to the warrant or option
immediately prior to the Reverse Split divided by the Reverse Split Number, and
the exercise price will be proportionately adjusted to reflect the Reverse
Split. In addition, the shares available for issuance under the Company's stock
option and stock purchase plans will be reduced to reflect the Reverse Split,
and the other relevant terms and provisions of the Company's stock option and
stock purchase plans will be appropriately adjusted.
The Company also has outstanding 10,000 shares of Series A Convertible
Preferred Stock and $1,186,000 of 8% Convertible Subordinated Debentures (the
"Debentures"), which are convertible into shares of Common Stock at the option
of the preferred stock and debenture holders at a conversion price of $4.50 and
$4.90 per share, respectively. The Reverse Split will increase the conversion
price of the Series A Convertible Preferred Stock and the Debentures by a
multiple equal to the Reverse Split Number and the number of shares of Common
Stock issuable upon conversions of the Series A Convertible Preferred Stock and
the Debentures will be reduced proportionately.
The Reverse Split will reduce the number of issued and outstanding
shares of the Company's Common Stock. Except for changes resulting from the
receipt of cash in lieu of fractional shares as described below, the Reverse
Split will not change the equity interests of the stockholders in the Company
and will not affect the relative rights of any stockholder or result in a
dilution or diminution of any stockholder's proportionate interest in the
Company. Management does not believe, nor does it intend, that the Reverse Split
will result in a significant number of stockholders being cashed out by virtue
of holding less than one share after the Reverse Split.
The Amendment to effect the Reverse Split would reduce the number of
shares of Common Stock that the Company is authorized to issue to a number equal
to the number of shares of Common Stock currently authorized (100,000,000)
divided by the Reverse Split Number.
If adopted, the Amendment will not affect the .01 par value of the
Company's Common Stock; however, an amount equal to the difference between the
aggregate par value of the Old Common Stock and the aggregate par value of the
New Common Stock will be transferred for financial accounting purposes from the
Company's Common Stock account to the Company's additional paid-in capital
account.
Fractional Shares
Stockholders who otherwise would be entitled to receive fractional
shares because they hold a number of shares of Old Common Stock that is not
evenly divisible by the Reverse Split Number will be entitled, upon surrender of
certificates representing such shares, to a cash payment in lieu thereof at a
price equal to the fraction to which the stockholder would otherwise be entitled
multiplied by the closing price of New Common Stock on the Effective Date as
reported on The Nasdaq National Market. The ownership of a fractional interest
will not give the holder thereof any voting, dividend or other rights, except to
receive payment therefor as described above.
<PAGE>
Purpose of the Proposed Reverse Split
The Board of Directors believes that the Reverse Split should enhance
the acceptability of the Company's Common Stock to the financial community and
the investing public. Many leading brokerage firms are reluctant to recommend
low-priced stocks to their clients. Additionally, because brokers' commissions
on low-priced stocks generally represent a higher percentage of the stock price
than commissions on higher priced stocks, the current share price of the Common
Stock can result in an individual stockholder's paying transaction costs that
represent a higher percentage of total share value than would be the case if the
Company's share price were substantially higher. This factor may also limit the
willingness of institutions to purchase the Company's stock. In addition, a
variety of brokerage house policies and practices tend to discourage individual
brokers within those firms from dealing in low-priced stocks. Some of those
policies and practices pertain to the payment of brokers' commissions and to
time-consuming procedures that function to make the handling of low-priced
stocks unattractive to brokers from an economic standpoint.
The Common Stock has been trading at a price below $5.00 per share for
several months. With the shares trading in such a range, small moves in absolute
terms in the price-per-share of Common Stock translate into disproportionately
large swings in the price on a percentage basis, and these swings tend to bear
little relationship to the financial condition and results of the Company. In
the Board's view, these factors have contributed to an unjustified, relatively
low level of interest in the Company on the part of investment analysts, brokers
and professionals, and individual investors, which tends to depress the market
for the Common Stock. The Board has thus proposed the Reverse Split as a means
of increasing the per-share market price of the Common Stock in the hope that
these problems will thereby be addressed.
Finally, in order for the Company's Common Stock to continue to be eligible
for quotation on The Nasdaq National Market, the Common Stock must maintain a
minimum bid price per share of $5.00, as well as meet certain other
requirements. Although the Company currently meets all other listing
requirements, the Company's Common Stock currently does not meet the $5.00
minimum bid price requirement. The Company's failure to comply with the minimum
price requirement on or before December ___, 2000 will result in the removal of
the Company's Common Stock from The Nasdaq National Market. Although the
Company's Common Stock would be eligible for listing on The Nasdaq SmallCap
Market, management believes that listing on The Nasdaq National Market is
preferred. Accordingly, management believes that, if required to maintain the
Company's Nasdaq National Market listing, the implementation of the Reverse
Split is in the best interests of the Company and its stockholders.
The decrease in the number of shares of Common Stock outstanding as a
consequence of the proposed Reverse Split should increase the per share price of
the Common Stock, which should enable the Company to maintain its listing on The
Nasdaq National Market and may encourage greater interest in the Common Stock
and possibly promote greater liquidity for the Company's stockholders. However,
the increase in the per share price of the Common Stock as a consequence of the
proposed Reverse Split may be proportionately less than the decrease in the
number of shares outstanding. In addition, any increased liquidity due to any
increased per share price could be partially or entirely offset by the reduced
number of shares outstanding after the proposed Reverse Split. Moreover, the
Reverse Split is expected to increase the number of "odd-lot" Common Stock
holdings (i.e., holdings of a number of shares that are not divisible by 100),
which may be more difficult to sell and may also result in increased selling
costs. Nevertheless, the proposed Reverse Split could result in a per share
price that adequately compensates for the adverse impact of the market factors
noted above. There can, however, be no assurance that the market price of the
Common Stock after the proposed Reverse Split will increase in direct proportion
to the ratio of the Reverse Split (e.g., a 1:3 Reverse Split may not result in
an increase in the pre-Reverse Split market price by a multiple of three), or
that such price will either exceed or remain in excess of the current market
price or the minimum bid price for continued listing on The Nasdaq National
Market.
<PAGE>
Procedure for Implementing the Reverse Split
If the Amendment is approved by the stockholders at the Special Meeting,
the Board, in its discretion, will determine as soon as practicable the Reverse
Split Number. The Certificate of Amendment will become effective upon the filing
with the Secretary of State of the State of Delaware. Currently, management
intends to effect the Reverse Split as soon as practicable subsequent to
receiving the requisite stockholder approval. The Board expects that the filing
will be made on or about December 6, 2000. The Company expects to notify
stockholders of the effectiveness of the Reverse Split and the Reverse Split
Number by a press release.
Each stockholder of record as of the close of business on the Effective
Date will be entitled to receive, upon surrender of a certificate of shares of
Old Common Stock, a new stock certificate representing the number of whole
shares of the Company's New Common Stock to which the holder shall be entitled
pursuant to the Reverse Split. For example, if the Reverse Split Number
determined by the Board is three and a stockholder owned 300 shares of the
Company's Old Common Stock on the Effective Date, upon surrender of the
certificate for 300 shares, the Company would mail to the stockholder a share
certificate for 100 shares of the Company's New Common Stock. Any certificates
for shares of Old Common Stock not so surrendered after the Effective Date shall
be deemed to represent one share of New Common Stock for each such fixed number
equal to the Reverse Split Number of Old Common Stock previously represented by
such certificate. Holders of fractional share interests will be entitled to
receive cash in lieu of fractional shares as described above.
The Company expects that its transfer agent will act as exchange agent (the
"Exchange Agent") for purposes of implementing the exchange of stock
certificates. Shortly after the Effective Date, each holder of an outstanding
certificate theretofore representing shares of Old Common Stock will receive
from the Exchange Agent instructions for the surrender of such certificate to
the Exchange Agent. No new certificates or cash in lieu of fractional shares
will be issued to a stockholder until such stockholder has surrendered to the
Exchange Agent such stockholder's outstanding certificates together with a
properly completed and executed letter of transmittal. Stockholders should not
destroy any stock certificate and should not submit any certificate until
requested to do so by the Company or the Exchange Agent.
No Appraisal Rights
Under Delaware law, stockholders of the Company are not entitled to
appraisal rights with respect to the proposed Reverse Split.
<PAGE>
Federal Income Tax Consequences
The following discussion generally describes certain federal income tax
consequences of the proposed Reverse Split to stockholders of the Company. The
following does not address any foreign, state, local tax or minimum income or
other federal tax consequences of the proposed Reverse Split. Moreover, the
federal income tax consequences of the Reverse Split will vary among
stockholders. In addition, the actual consequences for each stockholder will be
governed by the specific facts and circumstances pertaining to such
stockholder's acquisition and ownership of the Common Stock.
Thus, the Company makes no representations concerning the tax consequences
for any of its stockholders and recommends that each stockholder consult with
his own tax advisor concerning the tax consequences of the Reverse Split,
including federal, state and local or other income tax.
The Company has not sought and will not seek an opinion of counsel or a
ruling from the Internal Revenue Service regarding the federal income tax
consequences of the proposed Reverse Split. However, the Company believes that,
because the Reverse Split is not part of a plan to periodically increase a
stockholder's proportionate interest in the assets or earnings and profits of
the Company, the proposed Reverse Split will have the following income tax
effects:
1. A stockholder will not recognize taxable gain or loss as a result of
the Reverse Split, except to the extent a stockholder receives cash in lieu of
fractional shares. Cash payments in lieu of a fractional share of New Common
Stock should be treated as if the fractional share were issued to the
stockholder and then redeemed by the Company for cash. Generally, a stockholder
receiving such payment should recognize gain or loss equal to the difference, if
any, between the amount of cash received and the stockholder's basis in the
fractional share. Such gain or loss generally will be capital gain or loss.
2. In the aggregate, the stockholder's basis in New Common Stock will
equal his basis in the shares of Old Common Stock exchanged therefor (but not
including the basis allocated to a fractional share for which the stockholder is
entitled to receive cash), and such stockholder's holding period for New Common
Stock will include the holding period for Old Common Stock exchanged therefor if
the shares of Old Common Stock were capital assets in the hands of such
stockholder.
3. The proposed Reverse Split will constitute a reorganization within
the meaning of Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Company will not recognize any gain or loss as a
result of the Reverse Split.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE "FOR" THE
AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO EFFECT THE REVERSE
SPLIT AND TO REDUCE PROPORTIONATELY THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK.
STOCKHOLDER PROPOSALS AT THE COMPANY'S
NEXT ANNUAL MEETING OF STOCKHOLDERS
The 2001 Annual Meeting of Stockholders ("2001 Annual Meeting") is
anticipated to be held in June 2001. Under the Company's Amended and Restated
bylaws, a notice of intent of a stockholder to bring a proposal (other than a
director nomination) before the 2001 Annual Meeting must comply with the
requirements of the Company's Bylaws and must be received by the Company no
later than December 19, 2000 in order for the proposal to be presented for a
vote at the meeting. However, if the 2001 Annual Meeting is held on a date more
than 30 days before or after May 18, 2001, notice of a stockholder proposal
(other than a director nomination), to be timely, must be received by the
Company within a reasonable time before the Company begins to print and mail
proxy materials. If timely delivered to the Secretary of the Company, such
proposals may be included in the Company's Proxy Statement for the 2001 Annual
Meeting, provided the proponent(s) satisfies all applicable rules of the
Securities and Exchange Commission relating to stockholder proposals. The
Company will furnish copies of the Bylaw provisions that set forth the
requirements of the notice of intent by a stockholder upon written request to
the Secretary of the Company at the address set forth below.
<PAGE>
Notices of intention to present proposals at the 2001 Annual Meeting or
requests in connection therewith should be addressed to Matria Healthcare, Inc.,
1850 Parkway Place, Marietta, Georgia 30067, Attention: Corporate Secretary.
OTHER MATTERS
Management does not know of any other business to come before the
Special Meeting. If, however, other matters do properly come before the Special
Meeting, it is the intention of the persons named in the accompanying proxy to
vote on such matters in accordance with their best judgment.
Roberta L. McCaw
Secretary
____________, 2000
<PAGE>
APPENDIX A
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION OF
MATRIA HEALTHCARE, INC.
It is hereby certified that:
1. The name of the Corporation (hereinafter called the "Corporation") is
Matria Healthcare, Inc.
2. The Restated Certificate of Incorporation of the Corporation is hereby
amended by striking out Article IV thereof and by substituting in lieu of said
Article the following new Article:
"ARTICLE IV.
The Corporation shall have the authority to issue
_____________ shares of stock, consisting of __________ shares of
Common Stock, par value $.01 per share, and 50,000,000 shares of
Preferred Stock, par value $.01 per share. Effective at the time of
filing this Certificate of Amendment of Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware,
each ___________ (___) share of the Corporation's Common Stock issued
and outstanding shall, automatically and without any action on the part
of the respective holders thereof, be converted into one share of
Common Stock of the Corporation (the "Reverse Split"). No fractional
shares shall be issued, and, in lieu thereof, the Corporation shall pay
in cash the fair value of fractions of a share as of the time when
those entitled to receive such fractions are determined in accordance
with Section 155 of the Delaware General Corporation Law. From and
after the filing of this Certificate of Amendment, the amount of
capital represented by the shares of Common Stock which remain issued
and outstanding after the Reverse Split shall be the same as the amount
of capital represented by the shares of Common Stock issued and
outstanding immediately prior to the Reverse Split, until thereafter
reduced or increased in accordance with applicable law."
3. Pursuant to Section 242 of the General Corporation Law of the State of
Delaware, the proposed amendment of the Restated Certificate of Incorporation as
set forth in paragraph 2 hereinabove was adopted by the Board of Directors of
the Corporation on September 20, 2000 declaring said amendment to be advisable
and calling a meeting of the stockholders for consideration thereof. Thereafter,
a special meeting of the stockholders of said Corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
4. The effective time of the amendment herein certified shall be _______,
____.
<PAGE>
IN WITNESS WHEREOF, this Amendment to the Restated Certificate of
Incorporation has been its authorized officer this ____ day of _________, ____.
MATRIA HEALTHCARE, INC.
By:_____________________________________
Roberta L. McCaw, Vice President-Legal,
General Counsel and Secretary
