<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A-1
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ---- SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MAY 31, 1996
OR
- ---- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-19393
MANAGED CARE SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3338328
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2510 WEST DUNLAP AVENUE
SUITE 300
PHOENIX, ARIZONA 85021
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 602-943-5660
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
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 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
-- --
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _____
Based on the closing sale price of $4.00 on the NASDAQ National Market System,
as of August 20, 1996 the aggregate market value of the registrant's common
stock held by nonaffiliates was approximately $6,370,868.
As of August 20, 1996 the number of shares outstanding of the registrant's
common stock, $.01 par value, was 4,364,712 shares.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Certain information called for by Item 10 concerning executive officers is
set forth in the section entitled "Executive Officers of the Registrant" in Part
I of the Company's Annual Report on Form 10-K for the fiscal year ended May 31,
1996, as originally filed (the "Original Report"), under Item 1, pursuant to
Instruction 3 to paragraph (b) of Item 401 of Regulation S-K.
The other information called for by Item 10, including biographical
information with respect to the remaining directors of the Company, and
compliance with Section 16(a) of the Securities Exchange Act of 1934, is set
forth below.
Risa Lavizzo-Mourey, age 41, is the Class of 1970 Associate Professor of
Medicine and Health Care Systems at the University of Pennsylvania and a board
certified Internist and Geriatrician. Dr. Lavizzo-Mourey earned her medical
degree at Harvard Medical School followed by a Masters of Business
Administration at the University of Pennsylvania's Wharton School. After
completing a residency in internal medicine at Brigham and Women's Hospital in
Boston, Massachusetts, she was a Robert Wood Johnson Clinical Scholar at the
University of Pennsylvania. She also held faculty appointments at the Harvard
Medical School and Temple University Medical School. Dr. Lavizzo-Mourey has
served on numerous Federal advisory committees, including the White House Task
Force on Health Care Reform where she co-chaired the Working Group on Quality of
Care. She continues to be a consultant to the White House on Health Care Policy.
Dr. Lavizzo-Mourey joined the Predecessor Corporation Board in April 1994 and
has served as a director of the Company and Medicus since the Distribution and
Mergers.
Walter J. McNerney, age 69, is the Herman Smith Professor of Health Policy
at the J.L. Kellogg Graduate School of Management, Northwestern University and
Chairman of Walter J. McNerney and Associates. From 1978 to 1981, Mr. McNerney
was national President of the Blue Cross and Blue Shield Association. Mr.
McNerney is Chairman of the Board of McNerney Heintz, Inc. He is also Chairman
of the Board of American Health Properties, Inc. and a director of Hanger
Orthopaedic Group, Inc., The Hospital Fund, Inc., Hospital Research and
Educational Trust, Institute for the Future, Institute of Physician Management
Relations, National Executive Service Corps., Nellcor Corp., Osteotech Inc., The
Stanley Works, Inc., Value Health, Inc. and Ventritex. He was first elected a
director of the Predecessor Corporation in 1985 and has served as a director of
the Company and Medicus since the Distribution and Mergers and served as
Chairman of the Company from March 1, 1996 until July 1, 1996.
Henry Kaldenbaugh, M.D., 50, is a founder of Ventana, AHC and MCSAZ, and
has been a director of the Company since the Mergers. He has been an officer and
board member of Ventana and AHC since their inception and of MCSAZ since 1993.
He has had a family medicine and pediatric practice in northern Arizona since
1977. Dr. Kaldenbaugh is board certified in pediatrics and quality assurance and
utilization and review. Dr. Kaldenbaugh served as medical director of AHC from
1992 to the present and has been an officer or director of MCSAZ, AHC and
Ventana since their inception. He served as Administrative Medical Director for
Health Management Associates, Inc. from 1990 through 1991, for Northern Arizona
Family Health Plan from 1988 through 1991, and for the Arbors Nursing Facility
from 1984 through 1987. Dr. Kaldenbaugh received his medical degree from Baylor
University.
John Lingenfelter, M.D., 67, is a founder of Ventana, AHC and MCSAZ, and
has been a director of the Company since the Mergers. He has been an officer and
board member of Ventana and AHC since their inception and of MCSAZ since 1993.
Dr. Lingenfelter has engaged in the general practice of medicine in Kingman,
Arizona since 1961. He served as Mohave County, Arizona Health Director from
1966 until 1982, Assistant County Medical Examiner from 1986 until 1987,
Hospital District Board Trustee from 1988 to the present and has been Medical
Director of the Kingman Health Care Center from 1985 to the present. Dr.
Lingenfelter received his medical degree from the University of Iowa.
2
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Richard C. Jelinek failed to timely file a Form 5 with respect to four
gifts of an aggregate of 50,000 shares of Predecessor Corporation Common Stock
during the fiscal year ended May 31, 1996.
ITEM 11. EXECUTIVE COMPENSATION
Set forth below is information concerning the executive officers of the
Company as of May 31, 1996, as well as certain officers of the Predecessor
Corporation. The information provided for Mr. Jelinek, Patrick C. Sommers, Susan
P. Dowell and Frank A. Pierce reflects compensation received through February
29, 1996, the last day on which they served as officers of the Predecessor
Corporation. Mr. Sommers became an employee of the Predecessor Corporation on
February 28, 1996. Information for James Burns, Blaine Bergeson and Jerry
Witherspoon, who became executive officers of the Company on March 1, 1996, the
effective date of the Mergers, includes compensation they received from MCSAZ
prior to the Mergers during the fiscal year ended May 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
POSITION (1) YEAR ($) ($) ($) (#) ($)(2)
- --------------------------- ------ ------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
James A. Burns
Vice Chairman 1996 162,319 75,000 -- 150,000 1,568
Blaine Bergeson
Chief Executive Officer 1996 162,319 75,000 -- 150,000 1,334
Richard C. Jelinek
Chairman/C.E.O. 1996 176,042 -- -- 5,000 (4) 4,620
Chairman/C.E.O. 1995 228,420 -- -- 5,000 (4) 4,620
Chairman/C.E.O. 1994 211,888 45,000 -- -- 375
Patrick C. Sommers
Chief Executive Officer 1996 -- -- -- 350,000 (4) --
Susan P. Dowell
Executive Vice President 1996 187,688 -- -- -- 3,465
Executive Vice President 1995 168,438 -- -- 20,000 (4) 3,885
Executive Vice President 1994 156,250 34,750 -- -- 375
Frank A. Pierce
Senior Vice President 1996 112,438 70,000 -- 20,000 (3) 4,340
Senior Vice President 1995 142,916 70,000 -- 76,667 (3)(4) 1,697
Senior Vice President 1994 3,141 -- -- 76,667 (3)(4) --
Jerry L. Witherspoon
Chief Information Officer 1996 111,154 10,102 -- 50,000 --
</TABLE>
(1) Includes each person who served as the Chief Executive Officer during the
most recent fiscal year and the other most highly compensated executive
officers as measured by salary and bonus meeting the disclosure threshold
requirements pursuant to Item 402 of S.E.C. Regulation S-K.
3
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(2) The Predecessor Corporation had a contributory retirement savings plan
which covers eligible employees who qualify as to age and length of
service. Participants may contribute 2% to 15% of their salaries, subject
to maximum contribution limitations imposed by the Internal Revenue
Service. The amounts shown for Mr. Jelinek, Ms. Dowell and Mr. Pierce
represent Predecessor Corporation contributions to the accounts of those
individuals under such plan. The amounts shown for Mr. Burns and Mr.
Bergeson include term life insurance premiums of $1,140 each and split
dollar insurance premiums of $428 for Mr. Burns and $194 for Mr. Bergeson.
(3) The options shown as granted in fiscal 1995 to Mr. Pierce reflect the
repricing of the options originally granted in fiscal 1994.
(4) Options shown for Mr. Jelinek, Mr. Sommers, Ms. Dowell and Mr. Pierce were
granted by the Predecessor Corporation and were assumed by Medicus at the
time of the Distribution. As a result, such options are not exercisable
with respect to Company Common Stock.
OPTION/SAR GRANTS TABLE
The following table provides information on stock options granted to the
named executive officers during fiscal year 1996. The potential realizable value
of each grant of options was determined assuming that the market price of the
underlying security appreciates in value from the date of grant to the end of
the option term at annualized rates of 5% and 10% as required pursuant to Item
402 of S.E.C. Regulation S-K.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
-------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS 10-YEAR OPTION TERM
-------------------------------------------------------- ----------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES IN OR BASE EXPIRATION 5%(2) 10%(2)
NAME GRANTED (#)(1) FISCAL YEAR PRICE ($/SH) DATE ($) ($)
- ------------------------- ------------ ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
James A. Burns 150,000 19.7 3.25 3/01/06 306,586 776,949
Blaine Bergeson 150,000 19.7 3.25 3/01/06 306,586 776,949
Richard C. Jelinek(3) 5,000 (3) 7.605 2/27/06 23,914 60,602
Frank A. Pierce(3) 20,000 (3) 6.825 7/28/95 85,844 217,546
Susan P. Dowell - - - - - -
Patrick C. Sommers(3) 350,000 (3) 7.51 2/28/06 1,653,050 4,189,152
Jerry L. Witherspoon 50,000 6.57 6.250 3/12/06 196,530 498,045
</TABLE>
(1) Generally, options granted in fiscal year 1996 are exercisable starting 12
months after the grant date, with 25 percent of the shares covered thereby
becoming exercisable at that time and with an additional 25 percent of the
option shares becoming exercisable on each successive anniversary date,
with full vesting occurring on the fourth anniversary date. The options
were granted for a term of 10 years, subject to earlier termination in
certain events related to termination of employment.
(2) These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises and common stock holdings are
dependent on the future performance of the common stock and overall stock
market conditions. There can be no assurance that the amounts reflected in
this table will be achieved.
4
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(3) Options shown for Mr. Jelinek, Mr. Sommers and Mr. Pierce were granted by
the Predecessor Corporation prior to the Distribution, and were assumed by
Medicus at the time of the Distribution. Therefore, such options no
longer represent options to purchase Company Common Stock, and have been
omitted in calculating the Percentage of Total Options/SARs Granted to
Employees in Fiscal Year.
OPTION / SAR EXERCISES AND YEAR-END VALUATION
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
---------------------------------------------------
AND FY-END OPTION/SAR VALUES
----------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
OPTIONS/SARS AT FY-END SARS AT FY-END (3)
------------------------ ------------------------
SHARES ACQUIRED VALUE
ON EXERCISE (1) REALIZED (2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James A. Burns - - - 150,000 - 450,000
Blaine Bergeson - - - 150,000 - 450,000
Richard C. Jelinek (4) - - - - - -
Patrick C. Sommers(4) - - - - - -
Susan P. Dowell (4) - - - - - -
Frank A. Pierce (4) - - - - - -
Jerry L. Witherspoon - - 10,000 40,000 - -
</TABLE>
(1) Number of securities underlying options/SAR exercised.
(2) Market value of underlying securities on date of exercise, minus the
exercise or base price.
(3) Market value of underlying securities at year-end ($6.25), minus the
exercise or base price.
(4) Options previously granted to these individuals by the Predecessor
Corporation were assumed by Medicus at the time of the Distribution.
DIRECTOR COMPENSATION
All directors of the Company are paid an annual retainer of $15,000. In
addition, under the Company's 1995 Directors' Stock Option Plan, an option to
purchase 20,000 shares of the Company's Common Stock is granted to each
director of the Company who is not an officer, employee or greater than five
percent stockholder of the Company at the time of such director's initial
election to the Board, provided that the first director elected as Chairman
after the approval of the 1995 Directors Stock Option Plan (Mr. McNerney)
received an option to purchase 50,000 shares. Each option is for a term of ten
years, becomes exercisable with respect to 25% of the shares covered thereby on
each of the first four anniversaries of the date of grant and has an exercise
price equal to the fair market value on the date of grant.
EMPLOYMENT AGREEMENTS
At the time of the Mergers, the Company entered into employment agreements
with each of Mr. Burns and Mr. Bergeson. Mr. Burns' agreement provides that he
will receive a salary of at least $175,000 annually, and that if
5
<PAGE>
his employment is terminated by the Company (other than for cause), he will
receive severance payments at the rate of $175,000 annually (i) until March 1,
1999, in the event of termination prior to March 1, 1998; (ii) for a period of
one year if termination occurs between March 1, 1998 and March 1, 1999; (iii)
until March 1, 2000 if termination occurs between March 1, 1999 and September 1,
1999; and (iv) for a period of six months if termination occurs after September
1, 1999.
Mr. Bergeson's agreement also provided that he would receive a salary of at
least $175,000 annually, and for severance payments at the rate of $175,000
annually for a period of one year if the Company terminated his employment
(other than for cause).
Each of Mr. Burns' and Mr. Bergeson's employment agreements further provide
that in no event will severance pay exceed six months if at the time of
termination the Company has not had net income after taxes during the preceding
12 months of a least $1,000,000. Each agreement also provided for the grant of
options to purchase 150,000 shares of Common Stock (described elsewhere in this
Proxy Statement).
On August 16, 1996, Mr. Bergeson resigned as an officer and director of the
Company and each of its subsidiaries. The Company has arrived at an agreement in
principle with Mr. Bergeson pursuant to which it will pay him $14,583.33 monthly
for four months, beginning in September 1996. These payments will be subject to
offsets representing amounts owed to the Company by Mr. Bergeson.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Brown and McNerney and Drs. Kaldenbaugh and Lingenfelter are
currently members of the Compensation Committee and Mr. Jelinek and Dr. Lavizzo-
Mourey are currently members of the Stock Option Committee. Prior to the
Mergers, Messrs. Brown, McNerney and Warden were members of the Compensation and
Stock Option Committee of the Predecessor Corporation. None of the Company's
directors have, and none of the Predecessor Corporation directors had,
interlocking or other relationships with other boards or the Company or the
Predecessor Corporation that require disclosure under Item 402(j) of S.E.C.
Regulation S-K, except as described below.
For the fiscal year ended May 31, 1996, the Predecessor Corporation
incurred legal fees for general legal services of $670,239 to the law firm of
Bell, Boyd & Lloyd, of which William G. Brown, Secretary and a director of the
Company and the Predecessor Corporation, is a partner. In addition, the
directors of the Company other than Mr. Brown have approved a proposed
transaction pursuant to which Mr. Brown will purchase from the Company, for a
cash purchase price of $300,000, a convertible unsecured note in the principal
amount of $300,000, due, if extended in accordance with its terms, on September
30, 2001, bearing interest at a rate of 8% per annum. Such note will be
convertible into Common Stock at a conversion price of $3.85 per share. Mr.
Brown will also receive warrants to purchase 10,000 shares of Common Stock at an
exercise price of $4.45 per share. While this transaction is scheduled to close
on October 1, 1996, there can be no assurance that such closing will occur. The
Stock Option Committee has approved the grant to Mr. Brown of an additional
option to purchase 25,000 shares of Common Stock at an exercise price equal to
the market price at the date of closing of such transaction. During the fiscal
year ended May 31, 1996, the Predecessor Corporation recorded revenues of
$448,149 for sales of products and services to Henry Ford Health System,
Detroit, Michigan, of which Gail L. Warden, a director of the Predecessor
Corporation, is the President and Chief Executive Officer. During the fiscal
year ended May 31, 1996, Drs. Kaldenbaugh and Lingenfelter served as Medical
Directors of AHC and Ventana, respectively. The Company paid Medical Director
fees of $15,000 and $1,800 to Drs. Kaldenbaugh and Lingenfelter, respectively,
following the Distribution on March 1, 1996.
Relationship Between the Company and Medicus
Messrs. Jelinek, Brown and McNerney and Dr. Lavizzo-Mourey are each
directors, and Mr. Jelinek is Chairman, of both the Company and Medicus. In
connection with the Distribution, the Company and Medicus entered into a
Distribution Agreement and a Services Agreement.
Distribution Agreement. The Distribution Agreement provides for, among
other things, the principal corporate transactions which were required to effect
the Distribution, the division between the Company and Medicus of certain
liabilities, the treatment of certain employee compensation, benefit and labor
matters, and certain other agreements governing the relationship between the
Company and Medicus following the Distribution. Subject to certain exceptions,
the Distribution Agreement is designed to place with Medicus and its
subsidiaries, following the Distribution, financial responsibility for the
liabilities of Medicus' businesses and for other corporate liabilities of the
Predecessor Corporation, except those liabilities relating to businesses that
relate specifically to the business of the Company.
6
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The Distribution Agreement provides that, except as otherwise set forth
therein, all costs and expenses arising prior to the Distribution in connection
with the Distribution were to be paid by the Company (except that Medicus was to
pay all expenses in connection with the filing of its Registration Statement on
Form 10 and the printing and mailing of the related Information Statement) and
that each of the Company and Medicus will indemnify the other in respect of
certain liabilities under the Exchange Act. Except as otherwise specifically
provided in the Distribution Agreement, Medicus generally will indemnify the
Company for all liabilities arising in connection with the assets and businesses
of Medicus or that are otherwise unrelated to the businesses of the Company.
The Company and Medicus have also agreed to make records and personnel
available to each other in connection with audits, claims, litigation and
preparation of tax returns. The Distribution Agreement also provides for the
allocation of benefits between the Company and Medicus under existing insurance
policies.
Pursuant to the Distribution Agreement, Medicus generally assumed all
liabilities of the Predecessor Corporation under employee pension and welfare
benefit plans with respect to the employees and former employees (including
retirees and disabled workers) of Medicus' businesses. In addition, Medicus has
agreed that it and its subsidiaries will be solely responsible for salary and
bonus deferrals by employees of Medicus and its subsidiaries who are not also
employees of the Company following the Distribution.
Services Agreement. The Company and Medicus have also entered into a
Services Agreement (the "Services Agreement"), pursuant to which Medicus (i)
was to make available to the Company certain services, including tax,
accounting, data processing, cash management, employee benefits, monitoring,
operational, supervisory, insurance purchasing and claims administration
consulting services, and (ii) provide certain financial services to the
Company, including analysis and advice regarding potential financial
transactions (including but not limited to proposed issuances of debt or equity
securities, proposed merger or asset acquisition or sale transactions and
dividend, stock split or similar transactions), assistance in budget and
forecast preparation, relations with financial analysts, financial press, and
investors, and crisis management and control. Such services were to commence on
the date of the Distribution and continue for one year. The Company was to pay
Medicus $700,000 for such services. In order to compensate Medicus for fixed
costs incurred in making such services available, the Company was to be
obligated to pay such fees whether or not it elects to utilize the services.
The Company will also reimburse Medicus for its out-of-pocket expenses in
connection therewith. The Services Agreement also provides that Medicus will
not be liable for any losses or damages suffered in respect of services to be
performed thereunder, other than by reason of its willful misconduct or gross
negligence in performing such services. The Company believes it has received
all of the benefits to be received by it under the Services Agreement and
therefore had accrued the full $700,000 amount due thereunder as of May 31,
1996.
Certain Relationships and Related Transactions Concerning the MCS Companies
MCSAZ. In June 1995, John Lingenfelter gave MCSAZ a $100,000 unsecured
line of credit, with interest accruing on the unpaid balance at 8% per annum.
At May 31, 1996, no amounts were outstanding under this line of credit.
In October 1995, MCSAZ borrowed $154,797 from a trust established by John
Lingenfelter, M.D., $51,555 from a trust established by Henry Kaldenbaugh,
M.D., and $43,464 from a trust established by Geralde Curtis, who was then a
director and officer of the MCS Companies and currently owns approximately
13.3% of the Company's Common Stock. MCSAZ then loaned from these funds
$118,153 each to Dr. Kaldenbaugh and Ms. Curtis pursuant to promissory notes
due December 31, 2000 providing for interest to accrue at 8% per annum. The
notes are secured by a pledge of the Company Common Stock received by Dr.
Kaldenbaugh and Ms. Curtis in the Mergers in exchange for their stock in MCSAZ.
The stock pledge also secures the above described loans from the trusts to
MCSAZ. The purpose of the loans was to provide Dr. Kaldenbaugh and Ms. Curtis
funds to pay taxes incurred as a result of their owning shares in AHC, a
Subchapter S corporation. As of May 31, 1996, $124,368 was outstanding under
each of the loans to Dr. Kaldenbaugh and Ms. Curtis.
7
<PAGE>
Ventana. In October 1995, Dr. Kaldenbaugh borrowed $95,055 and Ms. Curtis
borrowed $97,704 from Ventana pursuant to promissory notes due December 31,
2000 providing for interest to accrue at 8% per annum. The notes are secured by
a pledge of the Company Common Stock received by Dr. Kaldenbaugh and Ms. Curtis
in the Mergers in exchange for their stock in Ventana. The purpose of the loans
was to provide Dr. Kaldenbaugh and Ms. Curtis funds to pay taxes as described
in the preceding paragraph. As of May 31, 1996, $99,894 and $102,678 was
outstanding under the loans to Dr. Kaldenbaugh and Ms. Curtis, respectively.
As of May 31, 1996, Dr. Kaldenbaugh owed Ventana $92,015 pursuant to a
promissory note in the original principal amount of $94,000, with interest at
the rate of 3%. During fiscal year 1996, the largest aggregate amount of this
indebtedness was $92,015. The purpose of this loan was to provide Dr.
Kaldenbaugh funds to settle litigation in 1992 concerning a covenant not to
compete to which he was subject.
During fiscal 1996, Dr. Lingenfelter received total payments of $351,930
under risk sharing contracts between Dr. Lingenfelter and Ventana in Mohave
County, Arizona. As of May 31, 1996, Dr. Lingenfelter is owed an additional
$109,400 pursuant to such contracts.
Arizona Health Concepts. Dr. Lingenfelter received payments of $267,227
during fiscal year 1996 pursuant to risk sharing contracts with AHC in Mohave
County, Arizona.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 31, 1996, certain information
regarding the beneficial ownership of Common Stock by each of the Company's
directors and executive officers named in the Summary Compensation Table set
forth in Item 11 and by all directors and executive officers of the Company as
a group, and by each person known by the Company to be the beneficial owner of
5 percent or more of the outstanding Company Common Stock.
<TABLE>
<CAPTION>
SHARES PERCENT OF
NAME(1) BENEFICIALLY OWNED COMMON STOCK
---- ------------------ -------------
<S> <C> <C>
Blaine Bergeson....................... 204,890 4.7%
James A. Burns........................ 205,590 4.7%
Henry Kaldenbaugh..................... 567,454 13.0%
John Lingenfelter..................... 573,654 13.1%
Richard C. Jelinek(2)................. 664,900 15.2%
William G. Brown...................... 38,760 *
Risa Lavizzo-Mourey................... - -
Walter J. McNerney.................... 36,876 *
Geralde Curtis(3)..................... 582,654 13.3%
Patrick C. Sommers.................... - -
Susan P. Dowell....................... - -
Frank A. Pierce....................... - -
Jerry L. Witherspoon.................. 10,000(5) *
Stephens Inc.(4)...................... 218,167 5.0%
All directors and executive officers
as a group (10 persons)(2)........... 2,292,124 52.5%
</TABLE>
- -----------
* Represents less than one percent of the outstanding Common Stock.
(1) The address of all of the persons named or identified above, except for
Stephens Inc., is c/o Managed Care Solutions, Inc., 2510 West Dunlap
Avenue, Suite 300, Phoenix, Arizona 85021.
(2) Includes 33,333 shares owned by Mr. Jelinek's wife.
(3) Includes 2,100 shares owned by Ms. Curtis' children.
8
<PAGE>
(4) Represents shares as of February 12, 1996, as reported on Schedule 13G,
Amendment No. 3. Stephens Inc. disclaims beneficial ownership with respect
to all of the shares for all purposes other than for reporting purposes on
Schedule 13G. These shares are shares over which Stephens Inc.'s investment
adviser division, Stephens Capital Management ("SCM") has or shares voting
and dispositive power with respect to discretionary accounts of customers
of SCM. The address of Stephens Inc. is 111 Center Street, Little Rock,
Arkansas 72201.
(5) Represents shares covered by outstanding stock options exercisable within
60 days of May 31, 1996.
The Company's Certificate of Incorporation authorizes 6.85 shares of Voting
Preferred Stock, $1,000 par value, all of which are outstanding, as described
below. Until May 31, 1998, the Voting Preferred Stock is entitled to 14,667
votes per share. After May 31, 1998, the Voting Preferred Stock has 220 votes
per share. Richard C. Jelinek, Chairman and a director of the Company, who owns
15.2% of the Common Stock outstanding, owns all of the authorized and
outstanding Voting Preferred Stock (representing 100,667 votes).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For descriptions of certain transactions involving Messrs. Brown, Warden
and Jelinek and Drs. Kaldenbaugh and Lingenfelter, see the information under
the caption "Compensation and Stock Option Committee Interlocks and Insider
Participation," in Item 11, which is incorporated herein by reference. As
compensation for investment banking services performed by it in connection with
the Distribution and Mergers (including the delivery of a fairness opinion and
valuation) Stephens Inc. (an affiliate of Stephens Group, Inc., of which Jon E.
M. Jacoby, a director of the Predecessor Corporation, is an officer and
director), received a fee from the Predecessor Corporation of $75,000, together
with reimbursement of its out-of-pocket expenses.
9
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in Phoenix, Arizona.
MANAGED CARE SOLUTIONS, INC.
By: /s/ James A. Burns
---------------------------
James A. Burns, President
Dated: September 27, 1996
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