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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Quality Systems, Inc.
(Name of Issuer)
Common Stock
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(Title of Class of Securities)
747582104
(CUSIP Number)
Andrew E. Shapiro, Manager Christopher J. Rupright, Esq.
Lawndale Capital Management, LLC Shartsis Friese & Ginsburg
One Sansome Street, Suite 3900 One Maritime Plaza, 18th Floor
San Francisco, CA 94104 San Francisco, CA 94111
(415) 288-2330 (415) 421-6500
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January 27, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays
a currently valid OMB control number.
SEC 1746 (10-97)
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CUSIP No. 747582104 Page 2 of 11 pages
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1 NAME OF REPORTING PERSON
SS OR IRS IDENTIFICATION NO. OF ABOVE PERSON
Lawndale Capital Management, LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / X /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(E) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
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NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 370,000
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
370,000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
370,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.2
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14 TYPE OF REPORTING PERSON*
OO and IA
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CUSIP No. 747582104 Page 3 of 11 pages
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1 NAME OF REPORTING PERSON
SS OR IRS IDENTIFICATION NO. OF ABOVE PERSON
Andrew E. Shapiro
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(E) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 370,000
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
370,000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
370,000
- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.2
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14 TYPE OF REPORTING PERSON*
IN<PAGE>
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CUSIP No. 747582104 Page 4 of 11 pages
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1 NAME OF REPORTING PERSON
SS OR IRS IDENTIFICATION NO. OF ABOVE PERSON
Diamond A Partners, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(E) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
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NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 312,700
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
312,700
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
312,700
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.2
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14 TYPE OF REPORTING PERSON*
PN
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CUSIP No. 747582104 Page 5 of 11 pages
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1 NAME OF REPORTING PERSON
SS OR IRS IDENTIFICATION NO. OF ABOVE PERSON
Diamond A Investors, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(E) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
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NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 57,300
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
57,300
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
57,300
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.0
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14 TYPE OF REPORTING PERSON*
PN
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CUSIP No. 747582104 Page 6 of 11 pages
ITEM 1. SECURITY AND ISSUER.
This statement relates to Common Stock (the "Stock") of Quality Systems, Inc.
("QSII"). The principal executive office of QSII is located at 17822 East
17th Street, Tustin, CA 92780.
ITEM 2. IDENTITY AND BACKGROUND.
The persons filing this statement and the persons enumerated in Instruction
C of Schedule 13D and, where applicable, their respective places of
organization, general partners, directors, executive officers and controlling
persons, and the information regarding them, are as follows:
(a) Lawndale Capital Management, LLC, a California limited liability company
("LCM"); Diamond A Partners, L.P., a California limited partnership
("DAP"); Diamond A Investors, L.P., a California limited partnership
("DAI"); and Andrew E. Shapiro ("Shapiro").
(b) The business address of LCM, DAP, DAI and Shapiro is One Sansome Street,
Suite 3900, San Francisco, California 94104.
(c) LCM is the investment adviser to and general partner of DAP and DAI,
which are investment limited partnerships. Shapiro is the sole manager
of LCM.
(d) During the last five years, none of such persons has been convicted in
a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, none of such persons was a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
(f) Shapiro is a citizen of the United States of America.
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CUSIP No. 747582104 Page 7 of 11 pages
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The source and amount of funds used in purchasing the Stock were as follows:
Purchaser Source of Funds Amount
LCM Funds Under Management(1) $2,437,846.50
DAP Working Capital $2,060,067.60
DAI Working Capital $ 377,778.90
(1) Includes funds of DAP and DAI invested in Stock.
ITEM 4. PURPOSE OF TRANSACTION.
Subsequent to their filing of Schedule 13D on December 22, 1997, the
Reporting Persons have been in additional contact with management and members
of the Board of Directors of QSII to discuss the strategies QSII plans to
employ to maximize shareholder value, including, but not limited to, QSII's
stock buyback plan, the composition of QSII's Board of Directors, the
integration of QSII's separate businesses and QSII's acquisition strategy.
The Reporting Persons have introduced QSII management to prospective
customers and joint venture partners. The Reporting Persons have also been
in contact with other significant shareholders of QSII regarding these
matters. The Reporting Persons may continue such activities.
As part of these additional discussions, the Reporting Persons have asked the
Board of Directors, through its Chairman, to reauthorize QSII's stock buyback
plan, which authorization is scheduled to expire in the near future. The
Reporting Persons also believe that in light of the few shares acquired by
QSII during its most recent buyback, the implementation of a large scale
stock buyback through a "Dutch Tender Auction" or similar process may be a
more effective and efficient means of executing such a buyback. The Reporting
Persons have asked the Board, through its Chairman, to give serious
consideration to this or a similar process.
The Reporting Persons have acquired the Stock solely for investment purposes
because they believe that the value of the Common Stock in the public market
does not adequately reflect the potential value of QSII's underlying
businesses and assets. The Reporting Persons did not at the time of the
purchase of the Stock, and do not presently, have any plan to acquire control
of QSII. The Reporting Persons may buy or sell additional shares of Stock in
the open market from time to time.
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CUSIP No. 747582104 Page 8 of 11 pages
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The beneficial ownership of the Stock of the persons named in Item 2 of this
statement is as follows at the date hereof:
Aggregate
Beneficially
Owned Voting Power Dispositive Power
Name Number Percent Sole Shared Sole Shared
LCM 370,000 6.2 -0- 370,000 -0- 370,000
Shapiro 370,000 6.2 -0- 370,000 -0- 370,000
DAP 312,700 5.2 -0- 312,700 -0- 312,700
DAI 57,300 1.0 -0- 57,300 -0- 57,300
The persons filing this statement effected the following transactions in the
Stock on the dates indicated, and such transactions are the only transactions
in the Stock by the persons filing this statement since December 20, 1997.
Purchase Number Price
Name or Sale Date of Shares Per Share
DAP P 12-22-97 8,700 5.969
DAI P 12-22-97 1,300 5.969
DAP S 12-23-97 2,000 5.988
DAP P 12-23-97 9,900 6.011
DAI P 12-23-97 1,400 6.011
DAP S 12-26-97 1,000 6.594
DAI P 12-26-97 500 6.500
DAI P 12-26-97 1,000 6.500
DAP P 1-2-98 1,500 7.375
DAI P 1-6-98 1,000 7.000
DAI P 1-7-98 3,500 6.795
DAI P 1-8-98 2,000 6.938
DAP P 1-9-98 1,100 6.645
DAI P 1-9-98 3,500 6.645
(Table continued on page 9)
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CUSIP No. 747582104 Page 9 of 11 pages
(Table continued from page 8)
DAP P 1-12-98 4,200 6.467
DAP P 1-13-98 5,000 6.156
DAI S 1-14-98 500 6.313
DAP P 1-15-98 4,900 6.082
DAP S 1-15-98 500 6.125
DAP P 1-16-98 2,500 6.050
DAP S 1-16-98 1,000 6.219
DAP P 1-20-98 2,000 6.463
DAP S 1-20-98 500 6.563
DAP P 1-21-98 1,100 6.500
DAP P 1-22-98 4,000 6.219
DAI S 1-22-98 500 6.375
DAP P 1-23-98 500 6.250
DAP P 1-26-98 1,000 6.125
DAP P 1-27-98 4,500 6.125
DAP S 1-27-98 1,000 6.313
DAP P 1-27-98 7,500 6.246
All transactions were executed through the Nasdaq National Market System.
ITEM. 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
LCM is the general partner of DAP and DAI pursuant to limited partnership
agreements providing to LCM the authority, among other things, to invest the
funds of DAP and DAI in Stock, to vote and dispose of Stock and to file this
statement on behalf of DAP and DAI. Pursuant to such limited partnership
agreements, the general partner of DAP and DAI is entitled to allocations
based on assets under management and realized and unrealized gains.
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CUSIP No. 747582104 Page 10 of 11 pages
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
A. Agreement Regarding Joint Filing of Statement on Schedule 13D or 13G.
SIGNATURES
After reasonable inquiry and to the best of my knowledge, I certify that
the information set forth in this statement is true, complete and correct.
DATED: January 28, 1998.
DIAMOND A PARTNERS, L.P. DIAMOND A INVESTORS, L.P.
By: Lawndale Capital Management, LLC By: Lawndale Capital Management, LLC
General Partner General Partner
By: /s/ Andrew E. Shapiro By: /s/ Andrew E. Shapiro
Andrew E. Shapiro Andrew E. Shapiro
Manager Manager
LAWNDALE CAPITAL MANAGEMENT, LLC
By: /s/ Andrew E. Shapiro /s/ Andrew E. Shapiro
Andrew E. Shapiro Andrew E. Shapiro
Manager
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CUSIP No. 747582104 Page 11 of 11 pages
EXHIBIT A
AGREEMENT REGARDING JOINT FILING
OF STATEMENT ON SCHEDULE 13D OR 13G
The undersigned agree to file jointly with the Securities and Exchange
Commission (the "SEC") any and all statements on Schedule 13D or Schedule 13G
(and any amendments or supplements thereto) required under section 13(d) of
the Securities Exchange Act of 1934, as amended, in connection with purchases
by the undersigned of Common Stock of Quality Systems, Inc. For that
purpose, the undersigned hereby constitute and appoint Lawndale Capital
Management, LLC, a California limited liability company, as their true and
lawful agent and attorney-in-fact, with full power and authority for and on
behalf of the undersigned to prepare or cause to be prepared, sign, file with
the SEC and furnish to any other person all certificates, instruments,
agreements and documents necessary to comply with section 13(d) and
section 16(a) of the Securities Exchange Act of 1934, as amended, in
connection with said purchases, and to do and perform every act necessary and
proper to be done incident to the exercise of the foregoing power, as fully
as the undersigned might or could do if personally present.
DATED: December 22, 1997.
DIAMOND A PARTNERS, L.P. DIAMOND A INVESTORS, L.P.
By: Lawndale Capital Management, LLC By: Lawndale Capital Management, LLC
General Partner General Partner
By: /s/ Andrew E. Shapiro By: /s/ Andrew E. Shapiro
Andrew E. Shapiro Andrew E. Shapiro
Manager Manager
LAWNDALE CAPITAL MANAGEMENT, LLC
By: /s/ Andrew E. Shapiro /s/ Andrew E. Shapiro
Andrew E. Shapiro Andrew E. Shapiro
Manager
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