<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X Quarterly Report pursuant to Section 13 or 15(d) of the Securities
- - - --- Exchange Act of 1934 for the quarterly period ended March 31, 1996
--------------
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 0-21776
HEALTHDYNE TECHNOLOGIES, INC.
- - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
GEORGIA 52-1756497
- - - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1255 KENNESTONE CIRCLE, MARIETTA GEORGIA 30066
- - - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(770) 499-1212
- - - --------------------------------------------------------------------------------
(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
----- -----
As of May 1, 1996, 12,552,527 shares of the Company's Common Stock, $.01 par
value, were outstanding.
Page 1 of
<PAGE> 2
PART I - FINANCIAL INFORMATION
HEALTHDYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Amounts in thousands)
<TABLE>
<CAPTION>
ASSETS March 31, December 31,
------ 1996 1995
------------ -----------
Current assets: (Unaudited)
<S> <C> <C>
Cash and short-term investments $ 2,530 287
Trade accounts and notes receivable, less
allowances of $1,191 at March 31, 1996 and $1,161
at December 31, 1995 30,418 32,401
Inventories:
Finished goods 8,682 8,539
Work in process 5,123 3,750
Raw materials 7,615 7,645
------- -------
Total inventories 21,420 19,934
------- -------
Deferred income taxes 1,510 1,744
Prepaid expenses and other current assets 1,430 2,000
------- -------
Total current assets 57,308 56,366
------- -------
Property and equipment 16,535 15,833
Less accumulated depreciation and
amortization (9,327) (8,729)
------- -------
Net property and equipment 7,208 7,104
------- -------
Excess of cost over net assets of businesses acquired,
less accumulated amortization of $1,287 at
March 31, 1996 and $1,138 at December 31, 1995 16,997 17,146
Intangible assets, less accumulated
amortization of $2,825 at March 31, 1996
and $2,744 at December 31, 1995 2,170 2,053
Other assets 436 207
------- -------
$84,119 82,876
======= =======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
2
<PAGE> 3
HEALTHDYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY March 31, December 31,
1996 1995
------------- ------------
<S> <C> <C>
(Unaudited)
Current liabilities:
Current installments of long-term debt $ 2,821 2,982
Accounts payable, principally trade 8,341 9,285
Accrued liabilities 7,721 7,458
------- ------
Total current liabilities 18,883 19,725
Long-term debt, excluding current installments 26,000 26,250
------- ------
Total liabilities 44,883 45,975
------- ------
Shareholders' equity:
Preferred stock, without par value. Authorized 10,000
shares; issued none - -
Common stock, $.01 par value. Authorized 50,000 shares;
issued and outstanding 12,549 and 12,455 shares at
March 31, 1996 and December 31, 1995, respectively 125 125
Additional paid-in capital 21,670 21,112
Retained earnings 17,441 15,664
------- ------
Total shareholders' equity 39,236 36,901
------- ------
$84,119 82,876
======= ======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE> 4
HEALTHDYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
---- ----
<S> <C> <C>
Revenues $27,482 27,664
Cost of revenues 16,017 17,162
------- -------
Gross profit 11,465 10,502
Selling and administrative expenses 6,675 6,445
Research and development expenses 1,350 1,112
------- -------
Operating profit 3,440 2,945
Interest income 88 71
Interest expense (577) (443)
Other expense, net (15) (16)
------- -------
Earnings before income taxes 2,936 2,557
Income tax expense 1,159 1,010
------- -------
Net earnings $ 1,777 1,547
======= =======
Net earnings per common share and
common share equivalent $ .14 .12
======= =======
Weighted average number of common shares
and common share equivalents outstanding 12,950 12,450
======= =======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE> 5
HEALTHDYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $1,777 1,547
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 828 745
Deferred income taxes 234 (417)
(Increase) decrease in:
Trade accounts and notes receivable 1,983 (1,786)
Inventories (1,486) (1,268)
Other assets 341 (334)
Increase (decrease) in:
Accounts payable (943) (530)
Accrued liabilities 263 1,015
------ ------
Net cash provided by (used in)
operating activities 2,997 (1,028)
------ ------
Cash flows from investing activities:
Purchase of product rights (198) (75)
Purchases of property and
equipment (702) (843)
------ ------
Net cash used in
investing activities $ (900) (918)
------ ------
(continued)
</TABLE>
5
<PAGE> 6
HEALTHDYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from financing activities:
Net borrowings under revolving
credit agreement $ 500 2,000
Principal repayments of long-term debt (912) (100)
Net borrowings from Healthdyne - 1,664
and Affiliates
Proceeds from issuance of common stock 558 20
------ -----
Net cash provided by
financing activities 146 3,584
------ -----
Net increase in cash and short-term
investments 2,243 1,638
Cash and short-term investments at
beginning of period 287 620
------ -----
Cash and short-term investments at
end of period $2,530 2,258
====== =====
</TABLE>
See accompanying notes to consolidated condensed financial statements.
6
<PAGE> 7
HEALTHDYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
1. General
The consolidated condensed financial statements as of March 31, 1996
and for the three months ended March 31, 1996 and 1995 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
interim periods are not necessarily indicative of results that may be
expected for the full fiscal year.
These consolidated condensed financial statements should be read in
conjunction with the consolidated financial statements and related
notes included in the Annual Report on Form 10-K of Healthdyne
Technologies, Inc. (the "Company") for the year ended December 31,
1995.
2. Earnings Per Share of Common Stock
Primary earnings per common share and common share equivalent are
based on the weighted average number of shares outstanding and common
share equivalents derived from dilutive stock options. Fully diluted
earnings per share are not significantly different from primary
earnings per share.
3. License Agreement
In April, 1996 the Company entered into a license agreement under
which the rights to certain proprietary ventilator technologies were
acquired. The license fees are payable over time, up to a maximum of
approximately $4,900.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(AMOUNTS IN THOUSANDS)
General
Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve a number of risks
and uncertainties. Factors which could cause the Company's actual results in
future periods to differ materially include, but are not limited to, those
discussed below, as well as those 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, 1995.
The Company's revenues are derived from sales of technologically
advanced medical devices primarily for use in the home and alternate care
sites. These products include diagnostic and therapeutic devices for the
evaluation and treatment of sleep disorders, oxygen concentrators,
noninvasive ventilators, medication nebulizers, peak flow meters and drug
delivery systems for the treatment of respiratory disorders, and monitors for
infants at risk for Sudden Infant Death Syndrome ("SIDS"), as well as a
limited line of obstetrical care products. The Company markets its products,
both domestically and internationally, through a dedicated sales force and a
network of independent manufacturers' representatives and distributors.
The Company's present operations and future prospects may be influenced
by several factors, including developments in the healthcare industry, third
party reimbursement policies and practices, and changes in regulatory
requirements with respect to approval and sale of medical devices. As a
result of the increasing cost of health care in the United States, government
and third party payors are becoming increasingly focused on promoting
cost-effective health care services, and payors in particular have become
more involved in decisions regarding diagnosis and treatment to ensure that
care is delivered in a cost-effective manner. As a result of this focus on
cost-effective healthcare delivery, the Company believes that home-based
services and medical products will continue to provide a viable
cost-effective alternative to treatment in traditional institutional care
settings in many instances. There is no assurance, however, that the
increased focus on healthcare expenditures will not decrease the availability
of certain equipment, therapies or services offered by the Company.
The Company's success is dependent to a large extent upon the ability of
its customers to obtain adequate reimbursement from third-party payors, such
as government and private insurance programs, for procedures using the
Company's products. For example, Congress passed legislation in December
1995 (which was vetoed by the President) which would have imposed a plan for
balancing the federal budget over a seven year period. The plan included
major reductions in Medicare and Medicaid expenditures and would have reduced
Medicare payment rates for oxygen by 20% beginning in 1996, gradually rising
to 30% by 2002. President Clinton's budget plan contained similar
provisions, as well as competitive bidding for selected items of equipment,
which would include oxygen. While Congress recently enacted appropriations
legislation for the remainder of the current fiscal year which did not
include long-term medical payment reductions, similar proposals will likely
be included as part of future budget legislation. Similarly, the Health Care
Financing Administration ("HCFA") has announced a plan to adjust Medicare
payment amounts for oxygen and oxygen equipment on the grounds that such
amounts are not "inherently reasonable". Before making any such adjustments,
the HCFA will need to consider specific economic factors and provide notice
and an opportunity for public comment. While this plan could be superseded
by Congressional action, the HCFA intends to issue a proposed rule with
potential reductions in oxygen payments in the ranges contained in the seven
year budget plan. Reductions in the reimbursement rates that the Company's
customers receive for services rendered could have an adverse impact on the
Company. The Company, however, is hopeful that the overall cost-effective
nature of diagnosis and treatment in the home will be recognized by any new
initiatives.
The Company's business also may be affected by changes in government
regulation to which the Company's products are subject or changes in the
manner in which such regulations are enforced or medical devices are
approved. The Food and Drug Administration recently published for comment
proposed performance standards for monitors for infants at risk for SIDS.
The Company is unable to predict whether, or in what form, these performance
standards ultimately will be adopted, but anticipates that it should be able
to design and manufacture products that will comply with any such standards.
8
<PAGE> 9
A number of businesses within the healthcare industry, including in some
instances customers of the Company, recently have begun to consolidate in
order, among other things, to increase the size, efficiency and purchasing
power of the entities in question, to broaden the number and nature of
products and services offered to consumers or simply to better serve the
changing healthcare industry with its focus upon cost-effective medical care.
The Company's two largest home care dealer customers, both of which were
publicly held and had branch locations throughout the U.S., merged in August
1995. The Company expects that consolidation among home care dealers is
likely to continue; however, the Company cannot predict the effect of such
mergers and consolidations on its business or distribution channels.
The Company acquired HealthScan Products during 1994 in an effort to
broaden its product offerings and will continue to examine possible
candidates for acquisitions in the future should the opportunity arise. No
assurances, however, can be given that any such acquisitions will be
consummated by the Company or, if consummated, that they will be financially
or operationally successful.
On May 22, 1995, Healthdyne, Inc. ("Healthdyne") consummated a
transaction pursuant to which the 10,000 shares of the Company's Common Stock
owned at that time by Healthdyne were distributed to Healthdyne's
shareholders as a tax-free dividend (the "Spin-off"). In an effort to
facilitate the Spin-off, the Board of Directors of the Company adopted a
special stock option plan pursuant to which options to purchase 1,344 shares
of the Company's common stock were granted to holders, including employees of
the Company, of outstanding Healthdyne stock options. The Company believes
the Spin-off has been and will continue to be beneficial to the Company in
that, among other things, it will increase the number of shares of common
stock of the Company available for trading and is expected to permit the
Company to raise capital more economically and with less restrictions than if
it were a subsidiary of Healthdyne.
Although the Company derives a portion of its revenues from foreign
customers, substantially all of these sales have historically been invoiced
in U.S. Dollars and therefore the Company has not been exposed to any
significant foreign exchange rate risk. The Company does not expect that a
significant portion of its foreign sales in the future will be invoiced in
currencies other than U.S. Dollars and therefore does not anticipate that it
will be exposed to a material amount of exchange rate risk. However, no
assurance can be given that this will be the case.
The following discussion of the Company's financial condition and
results of operations should be read in conjunction with the financial
information included herein and the Company's consolidated financial
statements and related notes presented in the Company's Annual Report on Form
10-K for the year ended December 31, 1995 as filed with the Securities and
Exchange Commission.
9
<PAGE> 10
Operating Results
The following table sets forth the percentage of revenues represented by
line items in the Consolidated Condensed Statements of Earnings for the three
months ended March 31, 1996 and 1995:
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31,
------------------
1996 1995
---- ----
<S> <C> <C>
Revenues 100% 100%
Cost of revenues 58 62
--- ---
Gross profit 42 38
Selling and administrative expenses 24 23
Research and development expenses 5 4
--- ---
Operating profit 13 11
Interest income - -
Interest expense (2) (2)
--- ---
Earnings before income taxes 11 9
Income tax expense 4 3
--- ---
Net earnings 7% 6%
=== ===
</TABLE>
Revenues for the three months ended March 31, 1996 decreased 1% to
$27,482, from $27,664 in the equivalent period in 1995. This slight decrease
in revenues was principally due to lower revenue in the Company's respiratory
therapy product line, mitigated somewhat by revenue growth in other areas.
Revenues from the respiratory therapy product line decreased 10% in the first
quarter of 1996, as compared to the first quarter of 1995. This decrease was
primarily due to lower unit sales of oxygen concentrators, partially offset
by sales of the Company's noninvasive ventilator, QuantumTM, which was
introduced in late 1995. The decrease in oxygen concentrator volume was due
to a significant reduction in sales to the Company's largest domestic
customer combined with a slowdown in purchases by many smaller customers. The
Company believes that these reductions in purchases have resulted in part
from changes in purchasing habits and concerns over potential changes in
government reimbursement for oxygen. Revenues from the sleep disorders
product line increased 15% in the first quarter of 1996 over the comparable
period in 1995 primarily due to the continued growth of the TranquilityR CPAP
System coupled with sales of the NightWatch and AliceR sleep diagnostic
systems. The infant monitor product line increased revenue by 10% in the
three months ended March 31, 1996 over the year-earlier period primarily due
to achieving greater market share.
The Company's gross profit margins increased almost 4 percentage points
to 42% during the three months ended March 31, 1996 as compared to the three
months ended March 31, 1995. This increase was primarily due to the results
of the Company's cost reduction program begun during the first quarter of
1995 and to the shift in product sales mix towards higher margin products,
such as sleep disorders products.
Selling and administrative expenses increased slightly as a percentage
of revenues in the first quarter of 1996 as compared to the first quarter of
1995 due primarily to the expansion of the sales staff and expenses to
support the Company's entry into the noninvasive ventilation market.
Research and development expenses as a percentage of revenues increased
in the three months ended March 31, 1996 from the year-earlier period
primarily due to the addition of engineering staff and engineering project
costs related principally to the development and introduction of new
products.
The increase in interest expense for the three months ended March 31,
1996 as compared to the same period in 1995 was primarily due to higher
average balances outstanding under the Company's bank credit agreement.
The effective income tax rate remained constant at 39.5% in the first
quarter of both 1996 and 1995.
Until May 22, 1995, the Company's provision for income taxes was
determined based upon a tax sharing arrangement with Healthdyne due to the
inclusion of the Company's operating results in Healthdyne's consolidated tax
return. Under the arrangement, the Company's provision for income taxes has
been determined as if the Company had filed separate federal
10
<PAGE> 11
and state corporate income tax returns. Such provision may not reflect the
Company's actual tax rate had it not been consolidated with Healthdyne for
tax purposes.
The Company had deferred tax assets of $1,510 at March 31, 1996, which
resulted from allowances for uncollectible accounts and accruals and reserves
recorded for financial statement purposes but not yet deducted for income tax
purposes. Management believes such deferred tax assets will be recoverable
through reduced income taxes payable in future periods.
Liquidity and Capital Resources
The Company had working capital of approximately $38,400 as of March 31,
1996 and the current ratio was 3.0 to 1.0.
Cash flow provided by operations was $2,997 in the three months ended
March 31, 1996, compared to cash flow used in operations of $1,028 in the three
months ended March 31, 1995. The change is principally a result of the decrease
in the Company's trade accounts and notes receivable. Cash used in investing
activities remained relatively constant in the three months ended March 31,
1996 as compared to the same period in 1995.
The Company entered into a Secured Revolving Credit Agreement in June
1993 (the "Credit Agreement") with two commercial banks and in December 1994
entered into an amendment to the Credit Agreement which increased the total
commitment from $15,000 to $25,000. During the last half of 1995, the Credit
Agreement was amended again to add a third bank to the Agreement and to
increase the total commitment to $35,000. This facility, which will
terminate on June 30, 1997, may be used for general corporate purposes, with
borrowings limited to a borrowing base established by a formula. This
facility is secured by all accounts receivable, inventory, deposit accounts
and all intangible assets of the Company and contains various covenants,
including but not limited to, net worth and financial ratio requirements.
The Company had outstanding borrowings of $26,000 under its line of credit at
interest rates ranging from 7.41% to 8.75% as of March 31, 1996.
The Company believes that its existing cash balances, together with
internally generated funds and remaining amounts available under its Credit
Agreement, will be sufficient to meet the Company's operating capital
requirements for at least the next twelve months. Additional indebtedness
and/or equity, in all likelihood, would be needed to finance possible
acquisitions should the Company decide to pursue such transactions in the
future.
As of March 31, 1996, the Company had outstanding commitments for
capital expenditures of approximately $500 relating primarily to
manufacturing tooling.
Recent Accounting Pronouncements
In 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" and Statement of Financial Accounting Standards No. 123 ("SFAS
123"), "Accounting for Stock-Based Compensation". Had SFAS 121 or SFAS 123
been implemented as of March 31, 1996 by the Company there would have been no
material effect to the consolidated financial statements.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed as part of this Report:
(3) Amended and Restated By-Laws Dated as of April 17, 1996
(11) Computation of Earnings Per Common Share
(27) Financial Data Schedule (for SEC use only)
(b) No reports on Form 8-K were filed by the Company during the
quarter ended March 31, 1996.
12
<PAGE> 13
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 TECHNOLOGIES, INC.
May 13, 1996 By: M. Wayne Boylston
----------------------------------------
M. Wayne Boylston
Vice President - Finance,
Chief Financial Officer and Treasurer
(duly authorized and
principal financial officer)
13
<PAGE> 1
BY-LAWS OF HEALTHDYNE TECHNOLOGIES, 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, or if the Board of Directors fails to
provide, then such meeting shall be held at the principal office of the
Corporation at 10:00 a.m. on the fourth Tuesday in April of each year or such
other date as the Board of Directors shall direct. 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 (10) nor more than fifty (50) 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
<PAGE> 2
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.
Business transacted at any special meeting shall be limited to the purposes set
forth in the notice.
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, the affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on the subject matter shall be the act of the
shareholders, unless a greater vote is required by law, by the Articles of
Incorporation or by these By-Laws. 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
2
<PAGE> 3
have the same force and effect as a unanimous affirmative vote of the
shareholders and shall be filed with the minutes of the proceedings of the
shareholders.
Section 6. Notice of Business. No business may be transacted at
an annual meeting of shareholders, other than business that is either
(a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board of Directors (or any duly authorized
committee thereof), (b) otherwise properly brought before the annual
meeting by or at the direction of the Board of Directors (or any duly
authorized committee thereof) or (c) otherwise properly brought before
the annual meeting by any shareholder of the Corporation (i) who is a
shareholder of record on the date of the giving of the notice provided
for in this Section 6 and on the record date for the determination of
shareholders entitled to vote at such annual meeting and (ii) who
complies with the notice procedures set forth in this Section 6. The
nomination by a shareholder of any person for election as a director,
other than the persons nominated by the Board of Directors or any duly
authorized committee thereof, shall be considered business other than
business specified in clauses (a) and (b) above and shall be permitted
only upon compliance with the requirements of this Section 6.
In addition to any other applicable requirements for business to be
properly brought before an annual meeting by a shareholder, such
shareholder must have given timely notice thereof in proper written form
to the Secretary of the Corporation.
To be timely, a shareholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
not less than sixty (60) days nor more than ninety (90) days prior to the
anniversary date of the immediately preceding annual meeting of shareholders;
provided, however, that in the event that the annual meeting is called for a
date that is not within thirty (30) days before or after such anniversary date,
notice by the shareholder in order to be timely must be so received not later
than the close of business on the tenth (10th) day following the day on which
such notice of the
3
<PAGE> 4
date of the annual meeting was mailed or such public disclosure of the date of
the annual meeting was made, whichever first occurs.
To be in proper written form, a shareholder's notice to the
Secretary must set forth as to each matter such shareholder proposes to
bring before the annual meeting (i) a brief description of the business
described to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and record
address of such shareholder, (iii) the class or series and number of
shares of capital stock of the Corporation which are owned beneficially
or of record by such shareholder, (iv) a description of all
arrangements or understandings between such shareholder and any other
person or persons (including their names) in connection with the
proposal of such business by such shareholder and any material interest
of such shareholder in such business, (v) a representation that such
shareholder intends to appear in person or by proxy at the annual
meeting to bring such business before the meeting, and (vi) in the case
of the nomination of a person as a director, a brief description of the
background and credentials of such person including (A) the name, age,
business address and residence address of such person, (B) the principal
occupation or employment of such person, (C) the class and number of
shares of the Corporation which are beneficially owned by such person,
and (D) any other information relating to such person that is required
to be disclosed in solicitations of proxies for election of directors,
or as otherwise required, in each case pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (including without
limitation such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected).
No business shall be conducted at the annual meeting of
shareholders except business brought before the annual meeting in
accordance with the procedures set forth in this Section 6; provided,
however, that, once business has been properly brought before the annual
meeting in accordance with such procedures, nothing in this Section 6
shall be deemed to preclude discussion by any shareholder of any such business.
If the Chairman of an annual meeting
4
<PAGE> 5
determines that business was not properly brought before the meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted."
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 size of the Board of Directors
of the Corporation shall be fixed from time to time by the Board of Directors
and shall consist of not less than three (3) or more than nine (9) natural
persons of the age of eighteen years or over, except that if all of the shares
of the Corporation are owned beneficially and of record by less than
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; Notice of Meetings; Waiver of
Notice. The annual meeting of the Board of Directors for the purpose of
electing officers and transacting such other 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
5
<PAGE> 6
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 (1) 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 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 (1) 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
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
6
<PAGE> 7
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. 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.
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.
7
<PAGE> 8
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 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.
8
<PAGE> 9
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 certificates 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 its face
"Canceled" 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 fifty (50) 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, banks, or other financial
institutions as the Board of Directors may from time to time designate and
shall be drawn out on checks,
9
<PAGE> 10
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 of 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 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
10
<PAGE> 11
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.
Action by the shareholders with respect to the By-Laws shall be taken by an
affirmative vote of a majority of all shares outstanding and entitled to vote.
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 Section 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.
11
<PAGE> 1
EXHIBIT 11
HEALTHDYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
Primary
Net earnings $ 1,777 1,547
======= ======
Shares:
Weighted average number of
common shares outstanding 12,482 12,336
Shares issuable from assumed
exercise of options and warrants 468 114
------- ------
Weighted average number of
common shares and common
share equivalents 12,950 12,450
======= ======
Net earnings per common share
and common share equivalent $ .14 .12
======= ======
Fully Diluted
Net earnings $ 1,777 1,547
======= ======
Shares:
Weighted average number of
common shares outstanding as
adjusted per primary
computation above 12,950 12,450
Additional shares issuable from
assumed exercise of options and
warrants computed on a fully
diluted basis 61 25
------- ------
13,011 12,475
======= ======
Net earnings per common share
and common share equivalent $ .14 .12
======= ======
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM HEALTHDYNE
TECHNOLOGIES, INC. FOR THE THREE MONTHS ENDED MARCH 31, 1996, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,530
<SECURITIES> 0
<RECEIVABLES> 31,609
<ALLOWANCES> 1,191
<INVENTORY> 21,420
<CURRENT-ASSETS> 57,308
<PP&E> 16,535
<DEPRECIATION> 9,327
<TOTAL-ASSETS> 84,119
<CURRENT-LIABILITIES> 18,883
<BONDS> 26,000
0
0
<COMMON> 125
<OTHER-SE> 39,111
<TOTAL-LIABILITY-AND-EQUITY> 84,119
<SALES> 27,482
<TOTAL-REVENUES> 27,482
<CGS> 16,017
<TOTAL-COSTS> 16,017
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 577
<INCOME-PRETAX> 2,936
<INCOME-TAX> 1,159
<INCOME-CONTINUING> 1,777
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,777
<EPS-PRIMARY> .14
<EPS-DILUTED> 0
</TABLE>
