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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
[ ] 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 1-13177
INTEGRA, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3605119
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1060 First Avenue
King of Prussia, Pennsylvania 19406
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 610-992-7000
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of Each Exchange
Title of Each Class on Which Registered
- ------------------- -------------------
<S> <C>
Common Stock, $.01 par value American Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None.
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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 as 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. [ ]
As of March 14, 2000, 10,138,552 shares of Common Stock, $.01 par
value, were outstanding, and the aggregate market value of the shares of Common
Stock, $.01 par value, held by non-affiliates of the registrant as of March 29,
2000 was approximately $5,400,000. (Determination of stock ownership by
non-affiliates was made solely for the purpose of responding to this requirement
and registrant is not bound by this determination for any other purpose).
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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This Form 10-K/A amends Integra, Inc's (the "Company") 10-K previously
filed on March 30, 2000, to restate the information regarding the Company's
executive officers included in Part I of the Company's 10-K and to set forth the
information required in Part III of Form 10-K. The information in Part III was
to be incorporated by reference to the Company's definitive Proxy Statement to
be filed pursuant to Regulation 14A. However, the Company's definitive Proxy
Statement will not be filed within the 120 day period after the end of the
Company's fiscal year necessary to enable the Company to incorporate such
information by reference.
PART I
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Eric E. Anderson, Ph.D. 49 Chief Executive Officer
Jack N. Brown 45 Chief Financial Officer
Edwin Edghill 43 Vice President - Sales
Phyllis L Greenwald, M.D. 46 Vice President and Medical Director
</TABLE>
ERIC E. ANDERSON, PH.D., age 49, has been the Chief Executive Officer
of the Company since November 1999 and a director of the Company since October
1998. From October 1998 to November 1999, Dr. Anderson was the President and
Chief Operating Officer of the Company. Dr. Anderson joined the Company in June
1997 and served as President and Chief Executive Officer of the Company's
behavioral managed care operation until September 1998. From January 1996 to
June 1997, Dr. Anderson served as a consultant in the managed behavioral health
and information technology industries. From February 1994 to December 1996, Dr.
Anderson was an Executive Vice President and General Manager for Medco
Behavioral Care Corp. From May 1991 to January 1994, Dr. Anderson served as
Senior Vice President for College Health Enterprises. Prior to that time he
managed the behavioral health care operation of PacifiCare. Dr. Anderson is a
licensed psychologist and has over twenty years of behavioral health experience.
JACK N. BROWN, age 45, will join the Company on May 15, 2000 as Chief
Financial Officer. From September 1994 to August 1999, Mr. Brown was the Chief
Financial Officer of HomeCare Concepts of America, Inc. From September 1993 to
August 1994, Mr. Brown served as Director of Tax Services for A.G. Epstein & Co.
and from August 1990 to August 1993, Mr. Brown was Treasurer and Chief Financial
Officer of Thera-Kinetics, Inc. Prior to August 1990, Mr. Brown spent fifteen
years at Ernst & Young LLP in a number of positions, lastly as a Partner in that
firm.
EDWIN EDGHILL, age 43, has been Vice President - Sales of the Company
since November 1999. From June 1997 to November 1999, Mr. Edghill was National
Sales Director of the Company. From February 1996 to June 1997, Mr. Edghill was
National Director of Business Development of Compass Information Services, a
company that provides clinical outcome management systems. From 1995 to February
1996, Mr. Edghill was a Team Leader for Behavioral Health, Inc. where he was
responsible for direct sales of EAP and managed health care products.
PHYLLIS L. GREENWALD, M.D., age 46, has been Vice President and Medical
Director of the Company since February 2000. From April 1996 to February 2000,
Dr. Greenwald was Vice President and Medical Director for Magellan Behavioral
Health of Eastern Pennsylvania, a managed behavioral health organization. In
that role, Dr. Greenwald was responsible for clinical oversight of utilization
management, medical policy, quality improvement,
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preventative health, credentialing and quality review of a 2,000 practitioner
network. From July 1994 to April 1996, Dr. Greenwald was Associate Corporate
Medical Director for Green Spring Health Services, Inc.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
DIRECTORS OF THE COMPANY
The Board of Directors is presently composed of four members. Charles
Henri-Weil was appointed to the Board on December 2, 1999 to fill a vacancy
created by the resignation of a director.
ERIC E. ANDERSON, PH.D., age 49, has been the Chief Executive Officer
of the Company since November 1999 and a director of the Company since October
1998. From October 1998 to November 1999, Dr. Anderson was the President and
Chief Operating Officer of the Company. Dr. Anderson joined the Company in June
1997 and served as President and Chief Executive Officer of the Company's
behavioral managed care operation until September 1998. From January 1996 to
June 1997, Dr. Anderson served as a consultant in the managed behavioral health
and information technology industries. From February 1994 to December 1996, Dr.
Anderson was an Executive Vice President and General Manager for Medco
Behavioral Care Corp. From May 1991 to January 1994, Dr. Anderson served as
Senior Vice President for College Health Enterprises. Prior to that time he
managed the behavioral health care operation of PacifiCare. Dr. Anderson is a
licensed psychologist and has over twenty years of behavioral health experience.
IRWIN LEHRHOFF, PH.D., age 70, has been a director of the Company since
March 1991, at which time his company, Irwin Lehrhoff & Associates, Inc., was
acquired by the Company. For more than five years prior to his election as a
director, Dr. Lehrhoff engaged in the private practice of clinical psychology in
Southern California. Dr. Lehrhoff holds a Ph.D. in Communication Disorders and a
Ph.D. in Clinical Psychology. He is a member of the American Psychological
Association and the International Society of Mental Health. Dr. Lehrhoff
presently serves as a director of the Thalians Community Mental Health Center.
He was previously a director and President of the National Association of
Rehabilitation Agencies. Dr. Lehrhoff was Director and President of the
California Speech Pathologies and Audiologists in Private Practice from 1973 to
1977.
SHAWKAT RASLAN, age 48, has been a director of the Company since
February 1994 and has served as Chairman of the Board of Directors since
November 1999. Mr. Raslan serves as President and Chief Executive Officer of the
International Resources Holdings, Inc., an asset management and investment
advisory service. He has held these positions since 1982. Mr. Raslan serves as a
director of U.S. Home Care Corporation and Access Worldwide Communication
Services, Inc.
CHARLES HENRI-WEIL, age 63, has been a director of the Company since
December 1999. Since 1990, Mr. Weil has been a self-employed financial
consultant based in Paris, France. Mr. Weil serves as a director of private
companies located in Great Britain, Europe and the Cayman Islands.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than ten percent of the Company's common stock, to file with the Securities
and Exchange Commission (the "Commission") initial reports of ownership and
reports of changes in ownership of common stock. Officers, directors and greater
than ten percent stockholders are required by the Commission regulations to
furnish the Company with copies of all Section 16(a) reports filed.
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To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and representations that no other reports
were required, during the fiscal year ended December 31, 1999 all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION
The following table sets forth information for the years ended December
31, 1999, 1998 and 1997 concerning the compensation of the Company's Chief
Executive Officer and each of the other most highly compensated executive
officers of the Company whose total annual salary and bonus exceeded $100,000
during the year ended December 31, 1999 (the "Named Executive Officers").
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------------- ------------
Name and Principal Option All Other
Position Year Salary Bonus Awards Compensation(1)
------------------ ---- -------- ------- -------- --------------
<S> <C> <C> <C> <C> <C>
Eric E. Anderson, Ph.D 1999 $239,385 $ 75,000 -- --
Chief Executive Officer 1998 200,000 60,000 200,000 --
1997 104,327 30,625 25,000 --
Lawrence M. Davies(2) 1999 $154,808 $ 39,375 $206,523
Former Chief Executive Officer 1998 156,250 152,500(3) -- --
1997 150,000 20,000 -- 2,885
Mark D. Gibson(4) 1999 $119,308 -- -- $ 68,044
Former Chief Financial Officer 1998 100,054 $ 36,000(5) -- --
1997 86,800 17,400 5,000 --
Paul Patti, Ph.D.(6) 1999 $134,154 -- -- --
Former Vice President - 1998 125,957 $ 25,000 10,000 --
Clinical Services 1997 50,769 10,000 -- --
Richard Jackson(7) 1999 $100,000 $ 5,000 -- --
Former Chief Information 1998 82,692 14,000 7,500 --
Officer 1997 11,538 -- -- --
Edwin Edghill 1999 $ 90,000 $ 54,085(8) -- --
Vice President - Sales 1998 90,000 11,386(8) -- --
1997 36,077 10,000 -- --
</TABLE>
(1) Amounts disclosed in this column include:
(a) Severance amounts paid by the Company to the following Named
Executive Officers in 1999 upon their separation from the Company: Mr.
Davies $175,000 and Mr. Gibson $60,000.
(b) Amounts paid to the following Named Executive Officers for unused
time off: For fiscal year 1999 - Mr. Davies $31,523 and Mr. Gibson
$8,044. For fiscal year 1997 - Mr. Davies $2,885.
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(2) Mr. Davies resigned on November 12, 1999.
(3) Includes one-time bonus of $100,000 related to the sale of the
Outpatient Group Practice Business of the Company.
(4) Mr. Gibson resigned on December 23, 1999.
(5) Includes one-time bonus of $15,000 related to sale of the Outpatient
Group Practice Business of the Company.
(6) Dr. Patti resigned on January 6, 2000.
(7) Mr. Jackson resigned on February 11, 2000.
(8) Includes payments of sales commission.
OPTION GRANTS
The Company granted no stock options to the Named Executive Officers
during the fiscal year ended December 31, 1999.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth the number and value of options held by
the Named Executive Officers at December 31, 1999. During the fiscal year
ended December 31, 1999, none of the Named Executive Officers exercised any
options to purchase common stock.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised In-the-
Options at Money Options at
December 31, 1999 December 31, 1999 (1)
---------------------------- -------------------------------
Shares
Acquired
on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eric E. Anderson, Ph.D. -- -- 45,000 180,000 -- --
Lawrence M. Davies -- -- 10,000 -- -- --
Mark G. Gibson -- -- 6,000 1,500 -- --
Paul Patti, Ph.D. -- -- 2,000 8,000 -- --
Richard Jackson -- -- 1,500 6,000 -- --
Edwin Edghill -- -- -- -- -- --
</TABLE>
(1) None of the options held by the Named Executive Officers were in-the-money
at December 31, 1999. In-the-money options are those for which the fair market
value of the underlying common stock exceed the exercise
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price of the option. The value of in-the-money options is determined in
accordance with Securities and Exchange Commission regulations by subtracting
the aggregate exercise price of the option from the aggregate year-end value of
the underlying common stock.
DIRECTOR COMPENSATION ARRANGEMENTS
Directors of the Company do not receive an annual retainer. Directors
do, however, receive $2,000 for each Board meeting or Committee meeting attended
in person and $1,000 for each Board meeting or Committee meeting attended via
telephone. The Chairman of the Board of Directors receives compensation equal to
twice the per meeting compensation listed in the prior sentence.
Upon stockholder approval of the 1999 Stock Option Plan, each director
will receive a stock option grant to purchase 50,000 shares of the Company's
common stock with an exercise price per share equal to the fair market value of
a share of such common stock on the date of grant. These stock options will be
fully vested on the date of grant and have a ten year term. In addition, if the
Chief Executive Officer meets his bonus plan, each director who has attended
more than seventy-five percent of the Board meetings will receive a bonus stock
option grant to purchase 20,000 shares of the Company's common stock with an
exercise price per share equal to the fair market value of a share of such
common stock on the date of grant under the Company's Board of Directors'
Compensation Plan.
From time to time the Chief Executive Officer may request, with the
approval of the Board of Directors, specific assistance from a particular
director. The compensation of such director for additional services provided
will be considered on a case by case basis and will be granted only with Board
approval. No directors currently are being compensated under such an
arrangement.
CERTAIN EMPLOYMENT AND SEPARATION ARRANGEMENTS
Dr. Anderson was employed by the Company during fiscal year 1999 under
two separate employment agreements. The Company had an agreement with Dr.
Anderson until November 17, 1999 (the "First Agreement") which provided for Dr.
Anderson to serve as President and Chief Operating Officer of the Company at an
annual base salary of $240,000. Under the First Agreement, Dr. Anderson was
eligible to receive a bonus of up to 30% of his base salary based on the
achievement of certain objectives agreed upon with the Chief Executive Officer
of the Company. The First Agreement also provided that if Dr. Anderson was
terminated by the Company without "cause" during the term of his employment, he
was entitled to severance pay equal to 12 months' base salary; provided,
however, that during months seven through twelve of the severance payments
period, the Company would be required to pay Dr. Anderson the difference between
$120,000 and any compensation Dr. Anderson received from any subsequent
employment or from any contract source that may pay Dr. Anderson.
The Company entered into an agreement with Dr. Anderson on November 17,
1999 (the "Second Agreement") that provided for Dr. Anderson to serve as Chief
Executive Officer of the Company. Pursuant to the Second Agreement, Dr. Anderson
received a base salary at a rate of $240,000 per annum, with performance-based
merit increases to be determined by the Board of Directors upon its annual
review of Dr. Anderson's salary. In addition, beginning in 2000, Dr. Anderson
has the opportunity to earn an annual bonus of up to 75% of his base salary,
which bonus will be determined within the first 90 days of each calendar year
for such year. The Second Agreement also provides for Dr. Anderson to receive a
grant of options to purchase an aggregate of 500,000 shares of common stock
under the Company's 1999 Stock Option Plan as promptly as practicable after the
execution of the Second Agreement. The options will vest as follows: 25% on the
date of grant and an additional 25% per year for each of the three years
following the date of grant. The options will become fully vested upon a change
of control (as defined in the Second Agreement).
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Under the Second Agreement, Dr. Anderson may be terminated by the
Company at any time for due cause (as defined in the Second Agreement). In the
event of such termination, or termination due to incapacity, the Company is
required to pay Dr. Anderson the amount of his salary that had accrued, but was
not paid, at the time of his termination. The Company may also terminate Dr.
Anderson at any time for any reason it deems appropriate. After such a
termination, however, the Company would be required to pay Dr. Anderson
severance in the form of salary continuation for twelve months following such
termination. If the termination occurs within six months of a change in control
(as defined in the Second Agreement), Dr. Anderson would be entitled to an
amount equal to twelve months' salary paid to him in a lump sum on the date of
his termination, as well as the continuation of health, disability and life
insurance benefits for twelve months following his termination.
The Company entered into a separation agreement with Lawrence M. Davies
on November 12, 1999 which set forth the terms governing Mr. Davies' separation
from the Company. Under this agreement, Mr. Davies received a severance payment
of $175,000, plus $39,375, which amount equaled 75% of Mr. Davies' bonus
opportunity for 1999. In addition, the Company agreed to continue to provide Mr.
Davies with coverage under the Company's medical and dental plans, long term
disability plan, accidental death and dismemberment insurance and supplemental
life insurance plans for one year. Mr. Davies also will receive basic life
insurance coverage at two times his base salary with the Company for a period of
one year following his separation. If Mr. Davies obtains full-time employment
prior to the end of that one-year period, his inclusion in the Company's benefit
plans will be discontinued. Mr. Davies will continue on as a consultant to the
Company for between eight and twelve hours each week at an hourly rate of $100
per hour until April 30, 2000. The Company may extend Mr. Davies' consulting
arrangement with Mr. Davies' consent.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On March 30, 2000, in return for his commitment to provide the Company
with a line of credit of up to $2 million, Charles Henri-Weil, a director of the
Company who serves on the Compensation Committee, received a commitment from the
Company to issue to him warrants to purchase 50,000 shares of the Company's
common stock. The issuance of warrants is conditioned upon stockholder approval
at the Company's 2000 annual meeting of stockholders. The warrants, if approved
by the Company's stockholders, will have a ten year term and an exercise price
per share equal to the fair market value of a share of the Company's common
stock on the date the warrants are issued.
In addition, if the Company is unable to secure a replacement line of
credit for Mr. Weil's line of credit by June 30, 2000, Mr. Weil will be granted
an additional warrant to purchase 50,000 shares of the Company's common stock on
the same terms and conditions as described above.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The stockholders (including any "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) who, to the knowledge of the
Board of Directors of the Company, owned beneficially more than five percent of
the Company's common stock as of April 27, 2000, each director and each Named
Executive Officer of the Company and all directors and officers of the Company
as a group, and their respective stockholdings as of such date (according to
information furnished by them to the Company), are set forth in the following
table. To the Company's knowledge, no single stockholder, with the exception of
Charles Henri-Weil, beneficially owned more than 5% of the Company's common
stock on April 27, 2000. Except as indicated in the footnotes to the table, all
of such shares are owned with sole voting and investment power.
<TABLE>
<CAPTION>
SHARES OF COMMON
NAME AND ADDRESS STOCK OWNED PERCENT OF CLASS(1)
BENEFICIALLY
<S> <C> <C>
Charles Henri-Weil 629,900 6.2
8/Rue Cortambert
Paris, France 75116
Irwin Lehrhoff, Ph.D(2) 250,000 2.5
Lawrence M. Davies 107,568 1.1
Eric E. Anderson, Ph.D(3)(4) 49,000 *
Shawkat Raslan 35,000 *
Mark D. Gibson -- *
Paul Patti, Ph.D -- *
Richard Jackson(4) 1,500 *
Edwin Edghill -- *
Directors and officers as a group (9 persons)(4) 1,072,968 10.1
</TABLE>
* Less than one percent (1%).
(1) Applicable percentage ownership is based on 10,138,552 shares of common
stock outstanding on April 27, 2000. Shares of common stock issuable
upon the exercise of stock options exercisable currently or within 60
days of April 27, 2000 are deemed outstanding and to be beneficially
owned by the person holding such option for purposes of computing such
person's beneficial ownership, but are not deemed outstanding for the
purpose of computing the percentage ownership of any other person.
(2) Includes 176,000 shares of common stock owned by Irwin Lehrhoff Trust
No. 1, of which Dr. Lehrhoff is a trustee and a beneficiary. Does not
include 5,000 shares of common stock owned by Dr. Lehrhoff's spouse, of
which shares of common stock Dr. Lehrhoff disclaims beneficial
ownership.
(3) Includes 4,000 shares owned by a trust for the benefit of Dr.
Anderson's son.
(4) Includes with respect to Dr. Anderson 45,000 shares and Mr. Jackson
1,500 shares, all of which shares are subject to presently exercisable
options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Compensation Committee Interlocks and Insider Participation."
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SIGNATURE
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Company has duly caused this amendment to its Form 10-K to be
signed on its behalf by the undersigned, thereunto duly authorized.
INTEGRA, INC.
By: /s/ Eric E. Anderson
Eric E. Anderson, Ph.D.
Chief Executive Officer and a director
Date: April 27, 2000
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