<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
HEALTHDYNE TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
NEWS RELEASE
<TABLE>
<S> <C>
[HEALTHDYNE LOGO]
M. WAYNE BOYLSTON
HEALTHDYNE TECHNOLOGIES ------------------------------------
ANNOUNCES RECORD REVENUE CONTACT
AND EARNINGS, A 105 JULY 10, 1997
PERCENT GROWTH IN ------------------------------------
QUARTERLY PROFITS AND RELEASE DATE
OTHER DEVELOPMENTS (770) 499-1212
------------------------------------
PHONE
</TABLE>
-- SECOND QUARTER NET EARNINGS PER SHARE REACHED $0.20 BEFORE CHARGE --
FOR IMMEDIATE RELEASE
Marietta, Georgia, July 10, 1997 -- Healthdyne Technologies, Inc.
(Nasdaq: HDTC) announced today record revenue and earnings for the second
quarter and six months ended June 30, 1997, together with announcements
concerning other developments.
For the second quarter of 1997, revenues increased 33% to a record $38.1
million from $28.6 million reported in the second quarter of 1996. Net earnings
for the quarter were $2.7 million, or $0.20 per share, excluding an after-tax
charge of $510,000 ($0.04 per share) for expenses associated with Invacare's
unsolicited hostile takeover attempt. Excluding this charge, net earnings for
the quarter increased 105% over the prior year period. After giving effect to
takeover related expenses, which totaled $850,000 before taxes, the Company
reported record net earnings of $2.2 million, or $0.16 per share, for the second
quarter of 1997. Operating earnings for the second quarter reached $5.1 million,
or 13.5% of revenues, up from $4.0 million, or 11.1% of revenues, in the first
quarter of 1997.
For the six month period ended June 30, 1997, revenues were $73.7
million, a 32% increase over the $56.1 million reported for the same period a
year ago. Net earnings for the first half of 1997 were $4.8 million, or $0.36
per share, excluding an after tax charge of $1.3 million ($0.10 per share) for
the expenses associated with Invacare's hostile takeover attempt. For the first
six months of 1996, the Company reported net earnings of $3.1 million, or $0.24
per share. Operating earnings for the first six months of 1997 were $9.1
million, or 12.3% of revenues, up from $6.1 million, or 11.0% of revenues in the
first half of 1996.
1255 KENNESTONE CIRCLE - MARIETTA, GEORGIA 30066 - (770) 499-1212 - FAX
(770) 421-1684
<PAGE> 3
PAGE: 2
The Company's accelerated revenue growth was largely due to the rapid
acceptance of the Quantum(TM), its non-invasive ventilator; growth in its sleep
disorders product line; and increased sales of the Company's asthma management
products. Quantum(TM) contributed almost $9 million in revenue for the second
quarter, continuing to exceed the Company's expectations. During the quarter,
the Company announced FDA clearance for its new Tranquility(R) Bilevel product,
a device for maintaining airway patency utilizing dual pressures. This product
was successfully introduced in the international market during the first
quarter, and the Company has now seen strong demand for the product in the
United States. Revenues from the asthma management product line increased 30%
over the comparable quarter in 1996 due, in part, to the success of the
OptiChamber(TM), the Company's new spacer device for delivering asthma
medication, which was introduced in the first quarter of 1997.
"We are excited to report that, in addition to recording our second
consecutive quarter of 30% or greater revenue growth, our gross profit margin
improved more than three percentage points over the first quarter of 1997," said
Craig B. Reynolds, President and Chief Executive Officer. "This margin expansion
is due to our ongoing effort to shift our product mix towards higher margin
products, such as the Tranquility(R) Bilevel. We expect that gross profit
margins will improve further as we continue to introduce new products. The
ongoing introduction of proprietary high technology products with higher gross
margins is a key element of our strategic plan as other commodity-based products
in our industry continue to experience price and margin pressure."
The Company also announced that a major pharmaceutical company has
selected the Company's asthma subsidiary to provide some of its asthma products
as part of the U.S. launch campaign for their recently approved anti-asthma
drug. This drug currently maintains a leading market position in Europe,
Australia, and Canada. This contract represents the single largest order ever
received by the Company's asthma subsidiary, and is expected to more than triple
sales to this market segment in 1997 over 1996. Shipment of the order is
expected to begin this quarter and be complete in early 1998. "We believe this
contract will add momentum to the Company's recent new product introductions in
the asthma arena and will contribute to the Company's success for the balance of
the year," stated Mr. Reynolds.
The Company also stated that Respironics, Inc. has recently threatened to
initiate a lawsuit, claiming that the Company's Quantum(TM) and Tranquility(R)
Bilevel products infringe
<PAGE> 4
PAGE: 3
Respironics' patents relating to bi-level airway pressure breathing devices. "We
believe Respironics' claims are totally without merit," said Mr. Reynolds. "Our
patent counsel carefully studied the Respironics' patents at issue and rendered
a written opinion that our devices do not infringe any valid Respironics' claim.
Respironics is already litigating against two other corporations over the same
patents and has not won either case. If they sue us, we will vigorously defend
ourselves and would expect to prevail. The timing of the Respironics threat has
caused us to question Respironics' motivations."
Parker H. Petit, Chairman of the Board, stated, "Over two years ago,
Healthdyne Technologies assessed industry changes and refocused our strategic
programs. Our subsequent investment in technology and new product lines has
resulted in the reestablishment of exceptional growth in our revenues and
profits over the last nine months. We look forward to continuing to deliver
increasing value to our shareholders."
Healthdyne Technologies designs, manufactures and markets technologically
advanced medical devices for use in the home, as well as other specialized
clinical settings. The Company's products include diagnostic and therapeutic
devices for the evaluation and treatment of sleep disorders, non-invasive
ventilators, oxygen concentrators and medication nebulizers for the treatment of
respiratory disorders, monitors for infants at risk for SIDS, and products for
asthma management.
This press release contains forward-looking statements that involve risks
and uncertainties, including developments in the healthcare industry,
development and introduction of new products on a timely basis, favorable
resolution of intellectual property matters, third-party reimbursement policies
and practices and regulatory requirements affecting the approval and sale of
medical devices, as well as other risks detailed from time to time in the
Company's reports filed with the Securities and Exchange Commission, including
its Reports on Form 10-K, 8-K and 10-Q.
<PAGE> 5
PAGE: 4
HEALTHDYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -----------------
1997 1996 1997 1996
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Revenues............................................. $38,063 $28,587 $73,734 $56,069
Cost of revenues..................................... 22,051 17,145 43,911 33,162
------- ------- ------- -------
Gross profit............................... 16,012 11,442 29,823 22,907
Selling and administrative expenses.................. 8,674 7,318 16,643 13,993
Research and development expenses.................... 2,214 1,422 4,087 2,772
------- ------- ------- -------
Operating earnings......................... 5,124 2,702 9,093 6,142
Interest income...................................... 56 78 137 166
Costs associated with an unsolicited offer to acquire
the Company........................................ (850) -- (2,150) --
Interest expense..................................... (651) (572) (1,243) (1,149)
Other expense, net................................... (9) (9) (35) (24)
------- ------- ------- -------
Earnings before income taxes............... 3,670 2,199 5,802 5,135
Income tax expense................................... 1,468 879 2,321 2,038
------- ------- ------- -------
Net earnings............................... $ 2,202 $ 1,320 $ 3,481 $ 3,097
======= ======= ======= =======
Net earnings per common share and common share
equivalent......................................... $ 0.16 $ 0.10 $ 0.26 $ 0.24
======= ======= ======= =======
Net earnings per share, exclusive of costs associated
with an unsolicited offer to acquire the Company... $ 0.20 $ 0.10 $ 0.36 $ 0.24
======= ======= ======= =======
Weighted average number of common shares and common
share equivalents outstanding...................... 13,525 13,110 13,398 13,030
======= ======= ======= =======
</TABLE>
<PAGE> 6
PAGE: 5
HEALTHDYNE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and short term investments........................... $ 2,924 $ 3,041
Trade accounts and notes receivable....................... 40,958 36,164
Inventories............................................... 22,309 18,593
Deferred income taxes..................................... 1,787 1,523
Prepaid expenses and other current assets................. 1,658 2,296
-------- -------
Total current assets.............................. 69,636 61,617
Property and equipment, net................................. 11,387 9,294
Excess of cost over net assets of businesses acquired....... 20,527 20,911
Intangible assets........................................... 7,420 5,410
Other assets................................................ 1,614 846
-------- -------
$110,584 $98,078
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt.................... $ 1,098 $ 2,610
Accounts payable, principally trade....................... 17,723 12,375
Accrued liabilities....................................... 11,287 9,745
-------- -------
Total current liabilities......................... 30,108 24,730
Long-term debt.............................................. 31,000 29,078
-------- -------
Total liabilities................................. 61,108 53,808
-------- -------
Shareholders' equity........................................ 49,476 44,270
-------- -------
$110,584 $98,078
======== =======
</TABLE>
<PAGE> 7
HEALTHDYNE TECHNOLOGIES
ANNOUNCES COURT OF APPEALS
DENIED MOTION FOR EXPEDITED REVIEW
M. Wayne Boylston
-----------------
CONTACT
July 11, 1997
------------------
RELEASE DATE
(770) 499-1212
------------------
PHONE
FOR IMMEDIATE RELEASE
Marietta, Georgia, July 11, 1997 - Healthdyne Technologies, Inc.
(Nasdaq:HDTC) announced today that the Eleventh Circuit Court of Appeals has
denied the motion filed by Invacare Corporation seeking to expidite review of
the July 3 decision of the District Court. The District Court's decision held
that the continuing director provision in the Company's shareholder rights plan
is valid under Georgia law and invalidated Invacare's proposed bylaw amendment
designed to circumvent the continuing director provision. Accordingly, the
Court of Appeals will not review the District Court's ruling until after the
July 30, 1997 annual meeting.
"We are extremely pleased by the decision of the Court of Appeals," said
Parker H. Petit, Chairman of Healthdyne Technologies, Inc. Mr. Petit also said
that the Company's litigation victory would have no effect on the continued
exploration of possible alternatives for further increasing shareholder value as
previously announced on June 23.
"Under the Court's interpretations of Georgia law, even if Invacare's
nominees are elected at the July 30 shareholders meeting, they will not be able
to redeem the rights under our shareholders rights plan," said Mr. Petit.
"Given these
<PAGE> 8
facts, we call upon Invacare to tell our shareholders how Invacare will be in a
position to buy their shares in the tender offer or to conduct its two-week
so-called 'auction' of the Company."
Healthdyne Technologies designs, manufactures and markets
technologically advanced medical devices for use in the home, as well as other
specialized clinical settings. The Company's products include diagnostic and
therapeutic devices for the evaluation and treatment of sleep disorders,
non-invasive ventilators, oxygen concentrators and medication nebulizers for
the treatment of respiratory disorders, monitors for infants at risk for SIDS,
and products for asthma management.
<PAGE> 9
[HEALTHDYNE TECHNOLOGIES LETTERHEAD]
July 11, 1997
Dear Fellow Shareholder:
THE ISSUE IS CLEAR: $15 PER SHARE
FROM INVACARE IS GROSSLY INADEQUATE!
We believe there is only one issue before you -- whether to vote for
Invacare's nominees and sell your Healthdyne Technologies stock to Invacare for
the below market "bargain price" of $15 per share in cash, or whether to vote
for your present Board (Blue Proxy) and preserve your opportunity to realize
greater value for your shares.
For six months, Invacare has tried to buy your Company, first at $12.50
per share and now at $15 per share. Invacare now would have you believe that its
nominees, if elected, will auction Healthdyne Technologies in two weeks to the
highest bidder. Ask yourself whether Invacare's nominees will really conduct a
fair auction and sell to a higher bidder.
INVACARE'S REAL INTENTIONS
Remember that the preliminary proxy materials Invacare filed with the SEC
stated that INVACARE'S NOMINEES ARE COMMITTED TO INVACARE'S $15 PER SHARE OFFER
AND DO NOT INTEND TO SOLICIT HIGHER BIDS. Ask yourself why Invacare has now
changed its story and states it will conduct an auction. Which statement do you
believe?
Assuming Invacare's nominees did go through a so-called "auction" process,
do you believe that any third parties will bid knowing that they only have two
weeks to bid and that the purported "auctioneers" have been hand-picked by, and
owe their positions to, Invacare? We believe that if Invacare wins, potential
third party bidders will refuse to bid because they will think the deck is
stacked against them.
It is clear to us that INVACARE ONLY INTENDS TO ACQUIRE YOUR HEALTHDYNE
TECHNOLOGIES SHARES AT THE LOWEST POSSIBLE PRICE. Remember: Invacare started at
$12.50 per share, then went to $13 and then to $13.50, before submitting its
so-called "best and final" offer of $15 per share. Your stock has traded
consistently above Invacare's offering price.
IT IS TIME TO PROTECT YOUR INTERESTS
Unlike Invacare, your Company's directors and officers share your
interests in enhancing the value of Healthdyne Technologies' shares. They
collectively own 683,372 shares, and have options to acquire another 909,720
shares, of Healthdyne Technologies stock -- representing 12.50% of the fully
diluted shares.
<PAGE> 10
YOUR BOARD'S RECORD OF INCREASING SHAREHOLDER VALUE
OUTSTANDING SECOND QUARTER RESULTS
Enclosed is your Company's recent press release announcing outstanding
results for the three months and six months ended June 30, 1997. Some
highlights:
Three months ended June 30, 1997:
<TABLE>
<S> <C>
REVENUES: $38.1 million, 33% ABOVE LAST YEAR.
NET EARNINGS:(1) $2.7 million, or 20c per share, 105% ABOVE LAST YEAR.
OPERATING EARNINGS: $5.1 million, 90% ABOVE LAST YEAR.
OPERATING PROFIT MARGIN:(2) 13.5%, 4 PERCENTAGE POINTS HIGHER THAN LAST YEAR.
Six months ended June 30, 1997:
REVENUES: $73.7 million, 32% ABOVE LAST YEAR.
NET EARNINGS:(1) $4.8 million, or 36c per share, 54% ABOVE LAST YEAR.
OPERATING EARNINGS: $9.1 million, 48% ABOVE LAST YEAR.
OPERATING PROFIT MARGIN:(2) 12.3%, 1.3 PERCENTAGE POINTS HIGHER THAN LAST YEAR.
</TABLE>
REVENUE AND PROFIT MOMENTUM
We are confident that the execution of our strategic plan is responsible
for your Company's excellent first and second quarter results. In particular,
revenue and profit momentum is coming from innovative products that your Company
recently introduced, and we intend to continue this growth with the introduction
of more new products during the remainder of 1997 and in 1998. Don't deny
yourself the opportunity to share in the Company's growth by voting for
Invacare.
Independent analysts who follow Healthdyne Technologies recognize the
value of your Company and agree with your Board that Invacare's offer of $15 is
too low. The following analysts' comments have been reproduced for your
consideration.(3)
"THE HEALTHDYNE TECHNOLOGIES TEAM HAS, IN OUR OPINION, QUICKLY CREATED
SHAREHOLDER VALUE IN 1997 DUE TO IMPROVING FUNDAMENTALS AND A SUCCESSFUL
TRANSFORMATION OF THE COMPANY WHICH IS JUST IN THE EARLY INNINGS. WE
BELIEVE THE COMPANY'S PERFORMANCE IN Q2 FIRMLY UNDERSCORES THIS TRANSITION.
WE ALSO BELIEVE THE COMPANY IS ENTERING AN ACCELERATING GROWTH STAGE AS NEW
PRODUCTS ARE INTRODUCED IN VENTILATION, ASTHMA, SLEEP THERAPY, FETAL
OXIMETRY, AND NON-INVASIVE JAUNDICE TESTING."
Tucker Anthony, July 10, 1997
"WE . . . ARE NOW EVEN MORE CONVINCED THAT INVACARE'S CURRENT $15 OFFER IS
TOO LOW."
". . . WITH WHAT WE BELIEVE IS A LIMITED DOWNSIDE AND A SIGNIFICANT UPSIDE,
WE CONTINUE TO RATE HEALTHDYNE TECHNOLOGIES BUY."
Dillon Read & Co., Inc., July 10, 1997
EXPLORING ALTERNATIVES TO INVACARE'S OFFER
As you know, the Company is exploring alternatives to Invacare's grossly
inadequate offer, including engaging in discussions with several large companies
and financial institutions. While there can be no assurance that this process
will result in a transaction that the Board considers to be in the best
interests of shareholders, we are committed to further increasing the value of
your interest in Healthdyne Technologies. The business record of members of your
Board clearly demonstrates their commitment to increasing shareholder value.
- ---------------
(1) Excluding after-tax charges of $510,000 (4c per share) for the three-month
period and $1.3 million (10c per share) for the six-month period for
expenses incurred to defend against Invacare's grossly inadequate takeover
attempt.
(2) Operating earnings as a percentage of revenues.
(3) Permission for use of analysts' quotes was sought and obtained.
2
<PAGE> 11
RECENT DEVELOPMENT
On July 3, 1997, a federal court in Atlanta upheld the continuing
directors provision of Healthdyne Technologies' Shareholder Rights Plan
and invalidated Invacare's proposed bylaw amendment designed to circumvent
that provision. Unless overturned on appeal, the court's decision means
that even if Invacare takes control of your Board, it cannot eliminate
your Shareholder Rights Plan to facilitate its grossly inadequate tender
offer. This is YET ANOTHER REASON WHY YOU SHOULD NOT VOTE FOR INVACARE'S
NOMINEES AND PROPOSALS. Enclosed is a supplement to the Company's proxy
materials which discusses this matter in greater detail.
VOTE FOR VALUE --
VOTE THE BLUE PROXY CARD TODAY
Your Board of Directors and management have already created value for you
in excess of Invacare's offer. We are committed to further increasing
shareholder value -- either by pursuing our strategic plan to further increase
revenues and earnings or engaging in a transaction which provides fair value for
your shares. GIVE YOUR BOARD AND MANAGEMENT THE OPPORTUNITY TO PROVIDE VALUE FOR
YOU SUBSTANTIALLY IN EXCESS OF INVACARE'S GROSSLY INADEQUATE $15 OFFER. Vote the
enclosed BLUE proxy card in FAVOR OF your Board's nominees for director
(proposal 1) and AGAINST the Invacare proposals (proposals 2 through 5).
Sincerely yours,
<TABLE>
<S> <C>
/s/ Parker H. Petit /s/ Craig B. Reynolds
Parker H. Petit Craig B. Reynolds
Chairman of the Board President and Chief Executive Officer
</TABLE>
IMPORTANT
EVEN IF YOU HAVE TENDERED OR SOLD YOUR SHARES, YOU HAVE EVERY RIGHT TO VOTE YOUR
SHARES AT THE ANNUAL MEETING. PLEASE SIGN, DATE AND MAIL THE ENCLOSED BLUE PROXY
TODAY.
1. Regardless of how many shares you own, YOUR VOTE IS VERY IMPORTANT.
Please sign, date and mail the enclosed BLUE proxy card. PLEASE VOTE
EACH BLUE PROXY CARD YOU RECEIVE since each account in which you own
shares must be voted separately. Only your latest dated proxy card
counts.
2. We urge you NOT TO RETURN ANY GOLD PROXY CARD sent to you by Invacare.
3. IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER NOMINEE,
please direct the party responsible for your account to vote the BLUE
proxy card as recommended by the Board of Directors.
IF YOU HAVE ANY QUESTIONS on how to vote your shares, please contact Craig
Reynolds or Wayne Boylston at (800) 421-8754 Ext. 2336 or call our proxy
solicitor MORROW & CO. at (800) 662-5200.
3
<PAGE> 12
[HEALTHDYNE TECHNOLOGIES LETTERHEAD]
July 11, 1997
To the Shareholders of
Healthdyne Technologies, Inc. (the "Company")
You have previously received a Proxy Statement and Letter to Shareholders
(together, the "Proxy Materials") for the Annual Meeting of the Company's
shareholders scheduled to be held at 1850 Parkway Place, Suite 320, Marietta,
Georgia, 30067 at 10:30 a.m. local time on July 30, 1997.
In connection with the Annual Meeting, Invacare Corporation has made
several proposals, which are described more fully in the Proxy Materials. In
particular, Invacare has made a proposal concerning the continuing director
provision of the Company's Shareholder Rights Plan (enumerated as Proposal Three
in the Proxy Materials) which is a proposed bylaw amendment designed to
circumvent the continuing director provision. Under the continuing director
provision, only the current Board of Directors of the Company or director
successors approved by the current Board of Directors or their approved
successors can redeem or amend the Rights.
The purpose of this letter is to make you aware of certain recent
developments which bear on the upcoming Annual Meeting. On July 3, 1997, the
federal district court in Atlanta entered an Order upholding the continuing
director provision under Georgia law and invalidating Proposal Three. The court
concluded that Invacare failed to show a substantial likelihood of succeeding on
the merits of its claim that the continuing director provision is invalid. The
court also held that Invacare's Proposal Three would infringe upon the Board of
Directors' discretion under Georgia law to determine the terms and conditions of
a Shareholder Rights Plan. Under the court's ruling, even if Invacare wins the
proxy contest, Invacare will be unable to eliminate the Company's Shareholder
Rights Plan in order to facilitate its tender offer, which your Board of
Directors has determined to be grossly inadequate.
Although the court has deemed Proposal Three to be invalid, Proposal Three
will remain on the Company's BLUE proxy card. Invacare has appealed the Order of
the court, but has been denied expedited review of that appeal. Accordingly, so
long as the court's Order is in effect, Healthdyne Technologies will not
tabulate or count any votes received on Proposal Three.
For your convenience, an additional BLUE proxy card is enclosed. Please
sign, date and mail your BLUE proxy card in the enclosed return envelope.
Your cooperation is appreciated. Thank you.
Sincerely,
/s/ Leslie R. Jones
Leslie R. Jones
Secretary
This letter shall constitute a supplement to the Company's Proxy Materials dated
June 24, 1997.
