<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number: 0-24132
ABR INFORMATION SERVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
Florida 59-3228107
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
34125 U.S. Highway 19 North, Palm Harbor, Florida 34684-2116
- ------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code: (813) 785-2819
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [ X ] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
<TABLE>
<S> <C> <C>
Class: Voting Common Stock, $.01 Par Value Outstanding at March 10, 1997: 27,374,454
Class: Nonvoting Common Stock, $.01 Par Value Outstanding at March 10, 1997: None
</TABLE>
1
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ABR INFORMATION SERVICES, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income for the three
and six months ended January 31, 1996 and 1997 3
Consolidated Balance Sheets as of July 31, 1996 and
January 31, 1997 4
Consolidated Statements of Cash Flows for the six months
ended January 31, 1996 and 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1.
ABR INFORMATION SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
January 31, January 31,
------------------------------ ------------------------------
1996 1997 1996 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $ 6,851,136 $11,714,389 $12,465,439 $22,103,582
Operating expenses:
Cost of services 3,780,042 6,469,631 6,824,505 12,384,210
Selling, general and administrative 1,420,482 2,368,084 2,801,474 4,515,024
Other operating 53,308 79,967 103,177 140,633
----------- ----------- ----------- -----------
Total operating expenses 5,253,832 8,917,682 9,729,156 17,039,867
----------- ----------- ----------- -----------
Operating income 1,597,304 2,796,707 2,736,283 5,063,715
Interest income 106,054 1,909,046 266,093 3,869,108
----------- ----------- ----------- -----------
Income before income taxes 1,703,358 4,705,753 3,002,376 8,932,823
Income taxes 655,726 1,769,288 1,171,308 3,384,995
----------- ----------- ----------- -----------
Net income $ 1,047,632 $ 2,936,465 $ 1,831,068 $ 5,547,828
=========== =========== =========== ===========
Net income per common share $ .05 $ .11 $ .09 $ .20
=========== =========== =========== ===========
Weighted average shares outstanding 20,516,742 27,938,898 20,418,111 27,399,889
</TABLE>
The accompanying notes are an integral part of these statements.
3
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ABR INFORMATION SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
July 31, 1996 January 31, 1997
(Unaudited)
------------- ----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 14,088,396 $ 29,451,276
Investments 147,111,102 131,112,933
Accounts receivable, net 3,870,539 5,146,748
Prepaid expenses and other 1,282,952 2,109,712
-------------- -------------
Total current assets 166,352,989 167,820,669
PROPERTY AND EQUIPMENT, net 14,539,898 18,742,841
SOFTWARE DEVELOPMENT COSTS, net 6,181,973 8,177,056
GOODWILL, INTANGIBLES AND OTHER ASSETS, net 15,498,745 15,934,276
-------------- -------------
TOTAL ASSETS $ 202,573,605 $ 210,674,842
============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 615,663 $ 573,112
Accrued expenses 762,442 1,062,501
Customer account deposits 18,019,405 18,901,678
Unearned revenue 647,093 599,102
Income taxes payable 483,663 406,455
-------------- --------------
Total current liabilities 20,528,266 21,542,848
------------- -------------
DEFERRED INCOME TAXES 895,555 1,772,795
-------------- -------------
SHAREHOLDERS' EQUITY
Preferred Stock - authorized 2,000,000 shares of
$.01 par value; no shares issued - -
Common Stock - authorized, 100,250,000
shares of $.01 par value; issued and outstanding,
13,588,194 and 27,370,706 shares, respectively 135,882 273,708
Additional paid in capital 169,879,717 170,403,478
Retained earnings 11,134,185 16,682,013
-------------- -------------
TOTAL SHAREHOLDERS' EQUITY 181,149,784 187,359,199
-------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 202,573,605 $ 210,674,842
============== =============
</TABLE>
The accompanying notes are an integral part of these statements.
4
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ABR INFORMATION SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
January 31,
-----------
1996 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,831,068 $ 5,547,828
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and other amortization 468,030 1,259,182
Amortization of software 33,809 231,042
Deferred income taxes 403,705 877,240
Increase in allowance for doubtful accounts 8,000 10,808
Tax benefit related to exercise of certain stock options -- 56,606
Change in operating assets and liabilities:
Accounts receivable 181,955 (1,287,018)
Prepaid expenses and other (367,077) (826,760)
Other assets 1,190 3,737
Accounts payable (362,819) (42,551)
Accrued expenses (120,856) 300,059
Unearned revenue 26,888 (47,991)
Customer account deposits 1,236,586 882,274
Income taxes payable 118,522 (77,208)
------------ -------------
Net cash provided by operating activities 3,459,001 6,887,248
------------ -------------
Cash flows from investing activities:
Additions to investments (24,550,752) (265,579,923)
Maturity of investments 29,524,787 281,578,092
Additions to property and equipment (4,604,362) (5,040,946)
Additions to software development costs (1,010,037) (2,226,125)
Cash paid for acquisition, net (12,476,476) (863,053)
Disposal of fixed assets -- 2,607
------------ -------------
Net cash provided by (used in) investing activities (13,116,840) 7,870,652
------------ -------------
Cash flows from financing activities:
Proceeds from long-term bank borrowings 6,104,641 --
Payments on bank borrowings (365,997) --
Exercise of common stock options 289,266 604,980
------------ -------------
Net cash provided by financing activities 6,027,910 604,980
------------ -------------
Net increase (decrease) in cash and cash equivalents (3,629,929) 15,362,880
Cash and cash equivalents at beginning of year 19,403,090 14,088,396
------------ -------------
Cash and cash equivalents at end of period $ 15,773,161 $ 29,451,276
============ =============
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
ABR INFORMATION SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1997
NOTE A - DESCRIPTION OF ORGANIZATION AND BUSINESS
ABR Information Services, Inc. (the "Company") is a leading provider of
comprehensive benefits administration, compliance and information services to
employers seeking to outsource their benefits administration functions. The
Company believes it is the largest provider of COBRA (the "Consolidated Omnibus
Reconciliation Act") compliance services. COBRA is a federally mandated law
related to the portability of employee group health insurance. The Company also
provides benefits administration services with respect to benefits provided to
retirees and inactive employees, including retiree healthcare, disability,
surviving dependent, family leave and severance benefits. Additionally, the
Company provides benefits administration services with respect to benefits
provided to active employees, including enrollment, eligibility verification,
qualified domestic relations order ("QDRO") administration, HMO consolidation,
401(k) administration services, Flexible Spending Account ("FSA") administration
and pension services. These services are offered on either an "a la carte" or a
total outsourcing basis, allowing customers to outsource certain benefits
administration tasks which they find too costly or burdensome to perform
in-house, or to outsource the entire benefits administration function.
The Company is headquartered in Palm Harbor, Florida and provides
information and support services to more than 21,000 employers, including
Fortune 500 companies, insurance companies and other employers. The Company's
operations are in a single business segment, the information services business.
The accompanying financial statements have been restated to reflect a
two-for-one stock split completed February 1997 and an acquisition by a pooling
of interest completed June 1996. Additionally, certain amounts in previous
periods' financial statements have been adjusted or reclassified, for
comparability purposes.
NOTE B - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
the instructions to Form 10-Q and do not include all the information and
footnote disclosure required by generally accepted accounting principles for
complete financial statements. The financial statements as of January 31, 1997
and for the three and six months ended January 31, 1996 and January 31, 1997 are
unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the interim
periods. The results of operations for the three and six months ended January
31, 1997 are not necessarily indicative of results that may be expected for the
year ending July 31, 1997. These financial statements should be read in
conjunction with the audited financial statements of the Company as of July 31,
1995 and 1996, and for each of the three years in the period ended July 31,
1996, included in the Company's 1996 Annual Report to Shareholders.
Effective August 1, 1996 management elected to continue using the method
under Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued
for Employees" to account for stock option awards granted to employees. As a
result, the pro forma disclosures required by Statement of Financial Accounting
Standards No. 123 (SFAS No. 123) "Accounting for Stock-Based Compensations" will
be in the Company's 1997 annual financial statements. The adoption of SFAS No.
123's accounting and reporting provisions had an immaterial effect on the
Company's financial statements.
NOTE C - NET INCOME PER COMMON SHARE
Net income per common share has been computed using the weighted average of
the outstanding Common Stock plus the dilutive Common Stock equivalents (stock
options), using the treasury or the modified treasury stock method. Primary and
fully dilutive calculations result in the same net income per common share.
6
<PAGE> 7
ABR INFORMATION SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE D - COMMITMENTS
Management estimates that as of January 31, 1997, approximately $4.4
million will be required in order for the Company to complete the currently
defined software projects. Additionally, management estimates that as of January
31, 1997, approximately $3.8 million will be required to complete the cost of
improvements to be made to a 110,000 square foot facility purchased in 1996.
NOTE E - BUSINESS ACQUISITIONS
On December 15, 1995, the Company, in an acquisition accounted for as a
purchase, acquired all of the outstanding capital stock of Bullock Associates,
Inc., which was subsequently renamed ABR Benefits Services, Inc. ("BSI"), for
$12.5 million, with an additional $2.0 million payable upon the attainment of
certain revenue requirements during 1996 and 1997. As of January 31, 1997,
$863,053 of this additional amount was paid for the attainment of these revenue
requirements leaving a balance of $1,136,947 that could be paid in 1997 upon the
attainment of certain revenue requirements. BSI is located in Princeton, New
Jersey, and provides COBRA administration, retiree insurance administration,
insurance continuation billing and collection, pension benefits administration,
QDRO administration and educational benefit administration services as well as
administration for other employee benefits programs such as employee discount
plans, adoption programs, program rebates and emergency loans.
The following unaudited pro forma information have been derived from the
historical financial statements of the Company and BSI and adjusts such
information to give effect to the acquisition of BSI. The balances for the three
and six months ended January 31, 1996 assume that the acquisition of BSI
occurred on August 1, 1995. The unaudited pro forma financial information is not
necessarily indicative of the results which would actually have occurred had the
transaction been in effect on the dates and for the periods indicated or which
may result in the future.
<TABLE>
<CAPTION>
Pro Forma Financials Three months ended Six months ended
(in thousands, except per share data) January 31, January 31,
1996 1996
------ -----
<S> <C> <C>
Revenue $8,030 $16,044
Operating income $1,826 $ 3,621
Net income $1,120 $ 2,172
Net income per share $.05 $.11
==== ====
</TABLE>
NOTE F - LITIGATION
The Company is involved in various litigation arising from the normal course
of its operations. The outcome of the pending litigation is not expected to be
material to the Company's financial condition but no assurances can be given in
this regard.
7
<PAGE> 8
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Financial Statements and notes thereto appearing elsewhere in this Form
10-Q.
OVERVIEW
The Company's revenues currently are generated from three sources: COBRA
compliance services, administration services with respect to benefits provided
to retirees and inactive employees, and administration services with respect to
benefits provided to active employees.
The first source of revenue for the Company, COBRA compliance services, is
generated primarily from its qualifying event agreements with employers and
through capitation agreements with insurance companies. Through qualifying event
agreements, the Company receives a fixed, per occurrence fee from its customers
for each qualifying event. A qualifying event occurs when an employee or his or
her dependents experience a loss of coverage under a group healthcare plan. The
amount of the fixed fee varies depending on the method of the qualifying event
notification mailing, which is selected by the customer. Through capitation
agreements, insurance companies designate the Company as the administrator of
COBRA compliance for their group insurance clients that are subject to COBRA.
The Company is paid a monthly fee for each employee covered by the group plan.
The revenue generated under a capitation agreement is not dependent on the
triggering of a qualifying event, but is determined based on the number of
employees covered by the group plan at the beginning of each month. The Company
also receives an administrative fee typically equal to 2% of the monthly health
insurance premium that is paid by or on behalf of each continuant. In addition,
the Company generates revenues from customers for additional COBRA compliance
and healthcare administration services, both on a one-time and continuous basis.
These additional revenues include new account fees paid to the Company when it
is retained by a new customer. During the first six months of fiscal 1996 and
1997, 76.2% and 62.2%, respectively, of the Company's revenues were attributable
to the Company's COBRA compliance services.
The second source of the Company's revenue is providing administration
services with respect to benefits provided to retirees and inactive employees,
including retiree healthcare, disability, surviving dependent, family leave and
severance benefits. During the first six months of fiscal 1996 and 1997, 10.1%
and 16.0%, respectively, of the Company's revenues were attributable to the
Company's administration services for retirees and inactive employees.
The third source of the Company's revenues is providing administration
services with respect to benefits provided to active employees. Through this
service, the Company provides benefits administration services for active
employees, such as enrollment, eligibility verification, QDRO administration,
Flexible Spending Account administration, 401(k) plan administration and pension
services. During the first six months of fiscal 1996 and the first six months of
fiscal 1997, 13.7% and 21.8%, respectively, of the Company's revenues were
attributable to benefits administration services for active employees.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
RESULTS OF OPERATIONS
The following table sets forth the percentage of revenue represented by
certain items reflected in the Company's statements of income, as restated to
reflect the acquisition by a pooling of interest in 1996.
<TABLE>
<CAPTION>
Three months ended Six months ended
January 31, January 31,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue 100.0% 100.0% 100.0% 100.0%
Cost of services 55.2 55.2 54.7 56.0
Selling, general and administrative expenses 20.7 20.2 22.5 20.4
Other operating expenses .8 .7 .8 .7
---- --- ----- ----
Operating income 23.3 23.9 22.0 22.9
Interest income 1.6 16.3 2.1 17.5
Income taxes 9.6 15.1 9.4 15.3
----- ----- ----- -----
Net income 15.3% 25.1% 14.7% 25.1%
===== ====== ===== =====
</TABLE>
THREE MONTHS ENDED JANUARY 31, 1997 COMPARED TO THREE MONTHS ENDED JANUARY 31,
1996
Revenues increased $4.9 million, or 71%, to $11.7 million during the three
months ended January 31, 1997 from $6.8 million in the three months ended
January 31, 1996. Of the $4.9 million increase in revenues, $2.3 million was
attributable to increased revenues from COBRA compliance services, $.8 million
was attributable to increased revenues from retiree/inactive employee benefits
administration and $1.8 million was due to increased revenues from active
employee benefits administration.
The increase in COBRA compliance revenues increased primarily as a result
of the addition of new customers, the addition of a new product to service
clients having to comply with newly passed state mandated continuation coverage
health portability laws and as a result of the acquisitions.
The increase in revenues from retiree/inactive employee benefits
administration was primarily attributable to the addition of new customers,
obtained by the Company and through acquisitions, who were not customers of the
Company during the three months ended January 31, 1996.
The increase in revenues from active employee benefits administration was
primarily attributable to the addition of new customers obtained by the Company,
the addition of new service product offerings and as a result of the
acquisitions.
Cost of services increased $2.7 million, or 71.2%, to $6.5 million during
the three months ended January 31, 1997 from $3.8 million during the three
months ended Janaury 31, 1996. The increase in cost of services was attributable
to the addition of data processing, information systems and customer service
personnel to support growth, the result of the acquisitions and the amortization
of software placed in service as completed. As a percentage of revenues, cost of
services remained the same at 55.2% for both periods.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Selling, general and administrative expenses increased $948,000, or 66.7%,
to $2.4 million during the three months ended January 31, 1997 from $1.4 million
in the three months ended January 31, 1996. The increase in selling, general and
administrative expenses was primarily attributable to the addition of marketing,
management and administrative personnel to support the Company's growth and
additional marketing costs. As a percentage of revenues, selling, general and
administrative expenses decreased to 20.2% from 20.7% for the same periods. The
decrease as a percentage of revenues resulted primarily from the acquisitions
which had lower selling, general and administrative expenses as a percent of
revenue, and from operating efficiencies from allocating expenses over a larger
revenue base.
Other operating expenses increased 50% to $80,000 during the three months
ended January 31, 1997 from $53,000 in the three months ended January 31, 1996.
Interest income increased $1.8 million to $1.9 million during the three
months ended January 31, 1997 from $106,000 in the three months ended January
31, 1996. This increase is a result of the investment of the proceeds from the
Company's secondary stock offering completed in March 1996.
Income taxes increased 169.8% to $1.8 million during the three months ended
January 31, 1997 from $656,000 during the three months ended January 31, 1996.
The Company's effective tax rate decreased to 37.6% from 38.5% for the same
period in the previous year.
As a result of the foregoing, the Company's net income increased $1.9
million, or 180.3%, to $2.9 million during the three months ended January 31,
1997 from $1.0 million in the three months ended January 31, 1996. Net income
per share was $.11 for the quarter ended January 31, 1997 compared to $.05 for
the corresponding prior year period, after adjustment for the February 1997
stock split.
SIX MONTHS ENDED JANUARY 31, 1997 COMPARED TO SIX MONTHS ENDED JANUARY 31, 1996
Revenues increased $9.6 million, or 77.3%, to $22.1 million in the six
months ended January 31, 1997 from $12.5 million in the same period of 1996. Of
the $9.6 million increase in revenues, $4.2 million was attributable to
increased revenues from COBRA compliance services, $2.3 million was attributable
to increased revenues from retiree/inactive employee benefits administration and
$3.1 million was due to increased revenues from active employee benefits
administration.
COBRA compliance revenues increased as a result of new customers, a new
product to service clients mandated by the new state insurance portability laws
and an increase in the number of COBRA compliance events over the prior period.
The increase in retiree/inactive employee benefits administration revenues
was primarily attributable to the addition of new customers during the first six
months of fiscal 1997 who were not customers of the Company during the same
period of 1996.
The increase in revenues from active employee benefits administration was
primarily attributable to the addition of new customers and new product
offerings in total benefits outsourcing administration.
Cost of services increased $5.6 million or 81.5% to $12.4 million in the
six months ended January 31, 1997 from $6.8 million in the six months ended
January 31, 1996. As a percentage of revenues, however, cost of services
increased to 56.0% from 54.7% for the same period of 1996. The increase in the
amount and percentage of cost of services was attributable to the addition of
data processing, information systems and customer service personnel to support
revenue growth and an increase in operating expenses to service the additional
revenues.
10
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (continued)
Selling, general and administrative expenses increased $1.7 million, or
61.2% to $4.5 million in the six months ended January 31, 1997 from $2.8 million
in the six months ended January 31, 1996. As a percentage of revenues, selling,
general and administrative expense decreased to 20.4% in the six months ended
January 31, 1997 from 22.5% in the six months ended January 31, 1996. The
decrease as a percent of revenues results primarily from the acquisitions which
had lower selling, general and administration expenses as a percent of revenue
and from allocating expenses over a larger revenue base.
Other operating expenses increased 36.3% to $141,000 in the six months
ended January 31, 1997 from $103,000 in the six months ended January 31, 1996.
Interest income increased $3.6 million to $3.9 million during the six
months ended January 31, 1997 from $266,000 in the six months ended January 31,
1996. This increase is a result of the investment of the proceeds from the
Company's secondary stock offering completed in March 1996.
Income taxes increased 189% to $3.4 million in the six months ended January
31, 1997 from $1.2 million in the six months ended January 31, 1996. The
Company's effective tax rate decreased to 37.9% from 39.0% for the same period.
As a result of the foregoing, the Company's net income increased $3.7
million or 203% to $5.5 million in the six months ended January 31, 1997 from
$1.8 million in the six months ended January 31, 1996. Net income per share was
$.20 for the six months ended January 31, 1997 compared to $.09 for the
corresponding prior year period after adjustment for the February 1997 stock
split.
LIQUIDITY AND CAPITAL RESOURCES
In March 1996, the Company completed a secondary stock offering which
provided, net cash after offering expenses, $151 million to its operations. Net
cash provided by operating activities was $6.9 million for the six months ended
January 31, 1997 compared to $3.5 million for the same period of 1996. As of
January 31, 1997 and July 31, 1996, the Company's working capital and current
ratio were $146.3 million and 7.8-to-1 and $145.8 million and 8.1-to-1,
respectively. The Company invests excess cash balances in short-term investment
grade securities, such as money market investments, obligations of the U.S.
government and its agencies, and obligations of state and local government
agencies.
During the six months ended January 31, 1997, the Company's capital
expenditures were $7.3 million.
In December 1995, the Company purchased a 110,000 square foot facility
situated on 12.7 acres of land in Palm Harbor, Florida. As of January 31, 1997,
the cost of improvements to be made by the Company to such facility has been
estimated to be $3.8 million. Management estimates that this operating facility
will be ready for occupancy by May of 1997.
Management estimates that as of January 31, 1997, approximately $9 million
will be required in order for the Company to complete its currently defined
software projects and to purchase equipment, furniture and hardware.
The Company has a five-year, $15.0 million unsecured credit facility. The
Company has agreed to maintain all of its assets free and clear of all liens,
encumbrances and pledges, except purchase money security interests in specific
equipment in an aggregate amount of less than $500,000 as long as the credit
facility remains outstanding or any indebtedness thereunder remains unpaid.
Interest on the principal balance outstanding under this line of credit accrues
at a floating interest rate equal to the prime rate or, at the Company's option,
to the 30-day London Interbank Offering Rate (LIBOR), plus an applicable
interest rate margin between 1% and 2% based on certain financial ratios. The
credit facility contains certain financial covenants requiring the maintenance
of cash and cash equivalents and investments equal to or greater than customer
account deposits, a funded debt to EBITDA ratio of a maximum of 2.25-to-1, a
debt service coverage ratio of not less than 1.35-to-1, as well as the
maintenance of certain funded debt to tangible net worth ratio. As of January
31, 1997, the Company was in compliance with all such covenants and there were
no amounts outstanding under the credit facility.
The Company believes that its cash, investments, its cash flow from
operations and the funds available from its credit facility will be adequate to
meet the Company's expected capital requirements for the foreseeable future.
11
<PAGE> 12
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of shareholders held on December 6, 1996,
three matters were submitted to a vote of shareholders. James E. MacDougald and
Thomas F. Costello were elected as directors of the Company for terms expiring
in 1999. The following table sets forth certain information with respect to the
election of directors at the annual meeting:
Shares Withholding
Name of Nominee Shares Voted For Authority
--------------- ---------------- ---------
James E. MacDougald 9,498,934 137,765
Thomas Costello 9,578,572 58,427
The following table sets forth the other directors of the Company whose
terms of office continued after the 1996 annual meeting of the shareholders:
Name of Director Term Expires
---------------- ------------
Suzanne M. MacDougald 1997
Mark M. Goldman 1998
Second, the Company's shareholders approved a proposal to amend the
Company's Articles of Incorporation to increase the number of authorized shares
of voting common stock from 20,000,000 to 100,000,000. The following table sets
forth certain information with respect to the vote on such matter:
Shares Voted Shares Voted
For Against Abstentions
--- ------- -----------
6,076,639 3,501,750 40,035
Third, the Company's shareholders approved a proposal to adopt the 1996
Non-Employee Director Stock Option Plan. The following table sets forth certain
information with respect to the vote on such matter:
Shares Voted Shares Voted
For Against Abstentions
--- ------- -----------
9,421,308 151,594 45,522
12
<PAGE> 13
OTHER INFORMATION (continued)
Item 5. Other Information
Effective November 12, 1996, Vincent Addonisio was removed as Executive
Vice President, Chief Financial Officer and Treasurer of the Company due to
differences with the Board of Directors. On November 20, 1996, Mr. Addonisio
resigned as a Director of the Company and withdrew as a nominee for election as
a Director at the 1996 Annual Meeting of Shareholders. The Board did not propose
for election at the Annual Meeting a successor director or nominee to Mr.
Addonisio and has reduced the size of the Board to four directors. Mr. Addonisio
has filed a lawsuit against the Company alleging breach of his employment
contract and against the Company and James E. MacDougald, Chairman of the Board,
President and Chief Executive Officer of the Company, alleging defamation. The
Company does not believe that such litigation, or any settlement relating
thereto, will have a material adverse effect on the Company's financial position
but no assurances can be given in this regard.
On January 30, 1997, James P. O'Drobinak joined the Company as Senior Vice
President and Chief Financial Officer. From 1995 until joining the Company, Mr.
O'Drobinak served as Chief Financial Officer - North America for Danka
Industries, Inc., a publicly-held company that is the largest independent retail
distributor of office equipment in North America. From 1983 to 1995, Mr.
O'Drobinak held various positions with Deloitte & Touche LLP, an international
accounting and consulting firm, most recently as a Senior Manager in the Tampa,
Florida office.
The Company also created two new wholly-owned subsidiaries to expand its
benefits outsourcing offerings to include retirement plan administration
services to employers and compliance services to insurance carriers. ABR
Qualified Plan Services, Inc. ("QPSI"), a Florida corporation, provides
employers with a complete menu of retirement plan administrative services,
including administration of 401(k), profit sharing and other types of retirement
plans. QPSI currently services more than 250 clients through several strategic
alliances with financial institutions. These strategic alliances provide QPSI
with a source of ongoing new business.
The Company's other new subsidiary, ABR Coverage Continuation Services,
Inc. ("CCSI"), also a Florida corporation, currently provides services to
insurance carriers who are required to comply with the Florida Health Insurance
Coverage Continuation Act. The compliance services required by the new Florida
law are similar in many respects to those required by federal COBRA law, which
are administered by the Company's CobraServ subsidiary. However, while CobraServ
assists employers in satisfying the requirements of federal COBRA law, CCSI will
focus on providing services to insurance carriers in fulfilling their compliance
requirements under state insurance portability laws, such as the Florida Health
Insurance Coverage Continuation Act.
13
<PAGE> 14
OTHER INFORMATION (continued)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Amendment to the Company's Articles of
Incorporation of ABR Information Services,
Inc.
3.2 Articles of Incorporation of ABR Information
Services, Inc., as amended to date.
10.1 1996 Non-Employee Director Stock Option Plan
27.1 Financial Data Schedule (Edgar Version Only)
(b) Reports on Form 8-K
The Company filed a Form 8-K dated January 30, 1997 on March
5, 1997.
14
<PAGE> 15
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.
Date: March 13, 1997 ABR INFORMATION SERVICES, INC.
(Registrant)
/s/ James P. O'Drobinak
---------------------------------
James P. O'Drobinak
Senior Vice President
and Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)
15
<PAGE> 1
EXHIBIT 3.1
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
OF ABR INFORMATION SERVICES, INC.
<PAGE> 2
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION
OF
ABR INFORMATION SERVICES, INC.
Pursuant to the provisions of Section 607.1006 of the Florida Statutes,
the undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation for the purpose of increasing the number of
authorized shares of voting Common Stock pursuant to Section 607.0602 of the
Florida Statutes:
1. Name of Corporation. The name of the corporation is ABR
Information Services, Inc.
2. Amendments. The Articles of Incorporation of the corporation are
amended by deleting the first two sentences of Section 3.1 of
Article III in their entirety and inserting in lieu thereof the
following:
ARTICLE III
Section 3.1 "The total number of shares of all classes of capital
stock that the Corporation shall have the authority to issue shall
be 102,250,000 shares, of which 100,250,000 shares shall be Common
Stock having a par value of $0.01 per share ("Common Stock") and
2,000,000 shares shall be Preferred Stock having a par value of
$0.01 per share ("Preferred Stock"). Of the Common Stock,
100,000,000 shares shall be voting shares ("Voting Common Stock")
and 250,000 shares shall be nonvoting shares ("Nonvoting Common
Stock"). . . ."
3. Adoption of Amendment. The amendment was adopted at a duly called
meeting of the shareholders on December 6, 1996 at which a quorum
appeared. Of the shares represented at the shareholders meeting,
6,076,639 shares were voted in favor of adoption of the amendment,
3,501,750 shares were voted against adoption of the amendment, and
40,035 shares abstained from voting on the proposal. There are no
voting groups authorized to vote separately on the amendment, and
the number of votes cast for adoption of the amendment was
sufficient for approval pursuant to Section 607.1004 of the Florida
Statutes.
<PAGE> 1
EXHIBIT 3.2
ARTICLES OF INCORPORATION OF ABR INFORMATION SERVICES, INC.,
AS AMENDED TO DATE
<PAGE> 2
ARTICLES OF INCORPORATION
OF
ABR INFORMATION SERVICES, INC.
THE UNDERSIGNED, acting as sole incorporator of ABR
INFORMATION SERVICES, INC (hereinafter, the "Corporation") under the Florida
Business Corporation Act, Chapter 607 of the Florida Statutes, as hereafter
amended and modified (the "FBCA"), hereby adopts the following Articles of
Incorporation for the Corporation, effective as of February 21, 1994 pursuant
to Section 607.0203(1) of the Florida Statutes:
ARTICLE I
NAME
The name of the Corporation is:
ABR INFORMATION SERVICES, INC.
ARTICLE II
BUSINESS AND ACTIVITIES
The Corporation may, and is authorized to, engage in any
activity or business now or hereafter permitted under the laws of the United
States and of the State of Florida.
ARTICLE III
CAPITAL STOCK
3.1 Authorized Shares. The total number of shares of all
classes of capital stock that the Corporation shall have the authority to issue
shall be 22,250,000 shares, of which 20,250,000 shares shall be Common Stock
having a par value of $0.01 per share ("Common Stock") and 2,000,000 shares
shall be Preferred Stock, par value of $0.01 per share ("Preferred Stock"). Of
the Common Stock, 20,000,000 shares shall be voting shares ("Voting Common
Stock") and 250,000 shares shall be nonvoting shares ("Nonvoting Common
Stock"). Following the issuance by the Corporation of any shares of Nonvoting
Common Stock, and the transfer or other disposition of any such Nonvoting
Common Stock by the initial holder thereof, each share of Nonvoting Common
Stock that is so transferred or disposed of, automatically and without further
action on the part of the Corporation, shall be converted into the right to
receive one share of Voting Common Stock. Except as otherwise provided in
these Articles of Incorporation, each share of Nonvoting
<PAGE> 3
Common Stock shall have the same rights as and be identical in all
respects to each share of Voting Common Stock. The Board of Directors is
expressly authorized, pursuant to Section 607.0602 of the FBCA, to provide for
the classification and reclassification of any unissued shares of Common Stock
or Preferred Stock and the issuance thereof in one or more classes or series
without the approval of the shareholders of the Corporation, all within the
limitations set forth in Section 607.0601 of the FBCA.
3.2 Common Stock.
(a) Relative Rights. The Common Stock shall be
subject to all of the rights, privileges, preferences and priorities of the
Preferred Stock as set forth in the Articles of Amendment to these Articles of
Incorporation that may hereafter be filed pursuant to Section 607.0602 of the
FBCA to establish the respective series of the Preferred Stock. Except as
otherwise provided in these Articles of Incorporation, each share of Common
Stock shall have the same rights as and be identical in all respects to all the
other shares of Common Stock.
(b) Voting Rights. Except as otherwise provided by
the FBCA and except as may be determined by the Board of Directors with respect
to the Preferred Stock, only the holders of Voting Common Stock shall be
entitled to vote for the election of directors of the Corporation and for all
other corporate purposes. Upon any such vote, each holder of Voting Common
Stock shall, except as otherwise provided by the FBCA, be entitled to one vote
for each share of Voting Common Stock held by such holder. Except as otherwise
provided by the FBCA, each holder of Nonvoting Common Stock shall not be
entitled to vote for the election of directors of the Corporation or for any
other corporate purpose.
(c) Dividends. Whenever there shall have been paid,
or declared and set aside for payment, to the holders of the shares of any
class of stock having preference over the Common Stock as to the payment of
dividends, the full amount of dividends and of sinking fund or retirement
payments, if any, to which such holders are respectively entitled in preference
to the Common Stock, then the holders of record of the Common Stock and any
class or series of stock entitled to participate therewith as to dividends,
shall be entitled to receive dividends, when, as, and if declared by the Board
of Directors, out of any assets legally available for the payment of dividends
thereon.
(d) Dissolution, Liquidation, Winding Up. In the
event of any dissolution, liquidation, or winding up of the Corporation,
whether voluntary or involuntary, the holders of record of the Common Stock
then outstanding, and all holders of any class or series of stock entitled to
participate therewith in whole or in part, as to the distribution of assets,
shall become entitled to participate in the distribution of assets of the
Corporation remaining after the Corporation shall have
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<PAGE> 4
paid , or set aside for payment, to the holders of any class of stock having
preference over the Common Stock in the event of dissolution, liquidation, or
winding up, the full preferential amounts (if any) to which they are entitled,
and shall have paid or provided for payment of all debts and liabilities of the
Corporation.
3.3 Preferred Stock.
(a) Issuance, Designations, Powers, Etc. The Board
of Directors is expressly authorized, subject to the limitations prescribed by
the FBCA and the provisions of these Articles of Incorporation, to provide, by
resolution and by filing Articles of Amendment to these Articles of
Incorporation, which, pursuant to Section 607.0602(4) of the FBCA shall be
effective without shareholder action, for the issuance from time to time of the
shares of the Preferred Stock in one or more series, to establish from time to
time the number of shares to be included in each such series, and to fix the
designations, powers, preferences and other rights of the shares of each such
series and to fix the qualifications, limitations and restrictions thereon,
including, but without limiting the generality of the foregoing, the following:
1. the number of shares constituting
that series and the distinctive
designation of that series;
2. the dividend rate on the shares of
that series, whether dividends shall
be cumulative, noncumulative or
partially cumulative and, if so,
from which date or dates, and the
relative rights of priority, if any,
of payments of dividends on shares
of that series;
3. whether that series shall have
voting rights, in addition to the
voting rights provided by the FBCA,
and, if so, the terms of such voting
rights;
4. whether that series shall have
conversion privileges, and, if so,
the terms and conditions of such
conversion, including provision for
adjustment of the conversion rate in
such events as the Board of
Directors shall determine;
5. whether or not the shares of that
series shall be redeemable, and, if
so, the terms and conditions of such
redemption, including the dates upon
or after which they shall be
redeemable, and the amount per share
payable in case of redemption, which
amount
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<PAGE> 5
may vary under different conditions
and at different redemption dates;
6. whether that series shall have a
sinking fund for the redemption or
purchase of shares of that series,
and, if so, the terms and amount of
such sinking fund;
7. the rights of the shares of that
series in the event of voluntary or
involuntary liquidation,
dissolution, or winding up of the
Corporation, and the relative rights
of priority, if any, of payment of
shares of that series; and
8. any other relative powers,
preferences, and rights of that
series, and qualifications,
limitations or restrictions on that
series.
(b) Dissolution, Liquidation, Winding Up. In the
event of any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the holders of Preferred Stock of each series shall
be entitled to receive only such amount or amounts as shall have been fixed by
the Articles of Amendment to these Articles of Incorporation or by the
resolution or resolutions of the Board of Directors providing for the issuance
of such series.
3.4. No Preemptive Rights. Except as the Board of
Directors may otherwise determine, no shareholder of the Corporation shall have
any preferential or preemptive right to subscribe for or purchase from the
Corporation any new or additional shares of capital stock, or securities
convertible into shares of capital stock, of the Corporation, whether now or
hereafter authorized.
ARTICLE IV
BOARD OF DIRECTORS
4.1 Classification. Except as otherwise provided in these
Articles of Incorporation or Articles of Amendment filed pursuant to Section
3.3 hereof relating to the rights of the holders of any class or series of
Preferred Stock, voting separately by class or series, to elect additional
directors under specified circumstances, the number of directors of the
Corporation shall be as fixed from time to time by or pursuant to these
Articles of Incorporation or by bylaws of the Corporation (the "Bylaws"). The
directors, other than those who may be elected by the holders of any class or
series of Preferred Stock voting separately by class or series, shall be
classified, with respect to the time for which they severally hold office, into
three classes, Class I, Class II and Class III, each of which shall be as
nearly equal in number
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<PAGE> 6
as possible, and shall be adjusted from time to time in the manner specified in
the Bylaws to maintain such proportionality. Each initial director in Class I
shall hold office for a term expiring at the 1996 annual meeting of the
shareholders; each initial director in Class II shall hold office for a term
expiring at the 1995 annual meeting of the shareholders; and each initial
director in Class III shall hold office for a term expiring at the 1994 annual
meeting of the shareholders. Notwithstanding the foregoing provisions of this
Section 4.1, each director shall serve until such director's successor is duly
elected and qualified or until such director's earlier death, resignation or
removal. At each annual meeting of the shareholders, the successors to the
class of directors whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual meeting of the shareholders held in
the third year following the year of their election and until their successors
shall have been duly elected and qualified or until such director's earlier
death, resignation or removal.
4.2 Removal.
(a) Removal For Cause. Except as otherwise provided
pursuant to the provisions of these Articles of Incorporation or Articles of
Amendment relating to the rights of the holders of any class or series of
Preferred Stock, voting separately by class or series, to elect directors under
specified circumstances, any director or directors may be removed from office
at any time, but only for cause (as defined in Section 4.2(b) hereof) and only
by the affirmative vote, at a special meeting of the shareholders called for
such a purpose, of not less than sixty-six and two-thirds percent (66 2/3%) of
the total number of votes of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors, voting
together as a single class, but only if notice of such proposed removal was
contained in the notice of such meeting. At least thirty (30) days prior to
such special meeting of shareholders, written notice shall be sent to the
director or directors whose removal will be considered at such meeting. Any
vacancy on the Board of Directors resulting from such removal or otherwise
shall be filled only by vote of a majority of the directors then in office,
although less than a quorum, and any director so chosen shall hold office until
the next election of the class for which such director shall have been chosen
and until his or her successor shall have been elected and qualified or until
any such director's earlier death, resignation or removal.
(b) "Cause" Defined. For the purposes of this
Section 4.2, "cause" shall mean (i) misconduct as a director of the Corporation
or any subsidiary of the Corporation which involves dishonesty with respect to
a substantial or material corporate activity or corporate assets, or (ii)
conviction of an offense punishable by one (1) or more years of imprisonment
(other than minor regulatory infractions and traffic violations which do not
materially and adversely affect the Corporation).
4.3 Change of Number of Directors. In the event of any
increase or decrease in the authorized number of directors, the newly created
or eliminated
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<PAGE> 7
directorships resulting from such increase or decrease shall be apportioned by
the Board of Directors among the three classes of directors so as to maintain
such classes as nearly equal as possible. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
4.4 Directors Elected by Holders of Preferred Stock.
Notwithstanding the foregoing, whenever the holders of any one or more classes
or series of Preferred Stock issued by the Corporation shall have the right,
voting separately by class or series, to elect one or more directors at an
annual or special meeting of shareholders, the election, term of office,
filling of vacancies and other features of such directorships shall be governed
by the terms of these Articles of Incorporation, as amended by Articles of
Amendment applicable to such classes or series of Preferred Stock, and such
directors so elected shall not be divided into classes pursuant to this Article
IV unless expressly provided by the Articles of Amendment applicable to such
classes or series of Preferred Stock.
4.5 Exercise of Business Judgment. In discharging his or
her duties as a director of the Corporation, a director may consider such
factors as the director considers relevant, including the long-term prospects
and interests of the Corporation and its shareholders, the social, economic,
legal, or other effects of any corporate action or inaction upon the employees,
suppliers, customers of the Corporation or its subsidiaries, the communities
and society in which the Corporation or its subsidiaries operate, and the
economy of the State of Florida and the United States.
4.6 Initial Directors. The number of directors
constituting the initial Board of Directors of the Corporation is five (5).
The number of directors may be increased or decreased from time to time as
provided in the Bylaws, but in no event shall the number of directors be less
than three (3). The names and addresses of the persons who are to serve as
initial directors in each class until successor directors are duly elected and
qualified are as follows:
Class I
James E. MacDougald 34125 U.S. Highway 19 North
Palm Harbor, FL 34684-2116
Thomas F. Costello 34125 U.S. Highway 19 North
Palm Harbor, FL 34684-2116
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<PAGE> 8
Class II
Stephen R. Hood 34125 U.S. Highway 19 North
Palm Harbor, FL 34684-2116
Mark M. Goldman 34125 U.S. Highway 19 North
Palm Harbor, FL 34684-2116
Class III
Suzanne M. MacDougald 34125 U.S. Highway 19 North
Palm Harbor, FL 34684-2116
ARTICLE V
ACTION BY SHAREHOLDERS
5.1 Call For Special Meeting. Special meetings of the
shareholders of the Corporation may be called at any time, but only by (a) the
Chairman of the Board of the Corporation, (b) a majority of the directors in
office, although less than a quorum, and (c) the holders of not less than
thirty-five percent (35%) of the total number of votes of the then outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class.
5.2 Shareholder Action By Unanimous Written Consent. Any
action required or permitted to be taken by the shareholders of the Corporation
must be effected at a duly called annual or special meeting of the
shareholders, and may not be effected by any consent in writing by such
shareholders, unless such written consent is unanimous.
ARTICLE VI
INDEMNIFICATION
6.1 Provision of Indemnification. The Corporation shall, to
the fullest extent permitted or required by the FBCA, including any amendments
thereto (but in the case of any such amendment, only to the extent such
amendment permits or requires the Corporation to provide broader
indemnification rights than prior to such amendment), indemnify its Directors
and Executive Officers against any and all Liabilities, and advance any and all
reasonable Expenses, incurred thereby in any Proceeding to which any such
Director or Executive Officer is a Party or in which such Director or Executive
Officer is deposed or called to testify as a witness because he
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<PAGE> 9
or she is or was a Director or Executive Officer of the Corporation. The
rights to indemnification granted hereunder shall not be deemed exclusive of
any other rights to indemnification against Liabilities or the advancement of
Expenses which a Director or Executive Officer may be entitled under any
written agreement, Board of Directors' resolution, vote of shareholders, the
Act, or otherwise. The Corporation may, but shall not be required to,
supplement the foregoing rights to indemnification against Liabilities and
advancement of Expenses by the purchase of insurance on behalf of any one or
more of its Directors or Executive Officers whether or not the Corporation
would be obligated to indemnify or advance Expenses to such Director or
Executive Officer under this Article. For purposes of this Article, the term
"Directors" includes former directors of the Corporation and any director who
is or was serving at the request of the Corporation as a director, officer,
employee, or agent of another Corporation, partnership, joint venture, trust,
or other enterprise, including, without limitation, any employee benefit plan
(other than in the capacity as an agent separately retained and compensated for
the provision of goods or services to the enterprise, including, without
limitation, attorneys-at-law, accountants, and financial consultants). The
term "Executive Officers" includes those individuals who are or were at any
time "executive officers" of the Corporation as defined in Securities and
Exchange Commission Rule 3b-7 promulgated under the Securities Exchange Act of
1934, as amended. All other capitalized terms used in this Article VI and not
otherwise defined herein have the meaning set forth in Section 607.0850,
Florida Statutes (1991). The provisions of this Article VI are intended solely
for the benefit of the indemnified parties described herein, their heirs and
personal representatives and shall not create any rights in favor of third
parties. No amendment to or repeal of this Article VI shall diminish the
rights of indemnification provided for herein prior to such amendment or
repeal.
ARTICLE VII
AMENDMENTS
7.1 Articles of Incorporation. Notwithstanding any other
provision of these Articles of Incorporation or the Bylaws of the Corporation
(and notwithstanding that a lesser percentage may be specified by law) the
affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the total
number of votes of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required (unless separate voting by
classes is required by the FBCA, in which event the affirmative vote of
sixty-six and two-thirds percent (66 2/3%) of the number of shares of each
class or series entitled to vote as a class shall be required), to amend or
repeal, or to adopt any provision inconsistent with the purpose or intent of,
Articles IV, V, VI or this Article VII of these Articles of Incorporation.
Notice of any such proposed amendment, repeal or adoption shall be contained in
the notice of the meeting at which it is to be considered. Subject to the
provisions set forth herein, the Corporation reserves the
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<PAGE> 10
right to amend, alter, repeal or rescind any provision contained in these
Articles of Incorporation in the manner now or hereafter prescribed by law.
7.2 Bylaws. The shareholders of the Corporation may
adopt or amend a bylaw which fixes a greater quorum or voting requirement for
shareholders (or voting groups of shareholders) than is required by the FBCA.
The adoption or amendment of a bylaw that adds, changes or deletes a greater
quorum or voting requirement for shareholders must meet the same quorum or
voting requirement and be adopted by the same vote and voting groups required
to take action under the quorum or voting requirement then in effect or
proposed to be adopted, whichever is greater.
ARTICLE VIII
INITIAL REGISTERED OFFICE AND AGENT
The address of the initial Registered Office of the
Corporation is 34125 U.S. Highway 19 North, Palm Harbor, FL 34684-2116, and
the initial Registered Agent at such address is Vincent Addonisio.
ARTICLE IX
PRINCIPAL OFFICE AND MAILING ADDRESS
The address of the Principal Office of the Corporation and its
mailing address is 34125 US Highway 19 North, Suite 300, Palm Harbor, Florida
34684-2116. The location of the Principal Office and the mailing address shall
be subject to change as may be provided in the Bylaws.
ARTICLE X
INCORPORATOR
The name and address of the sole incorporator of the
corporation is: Thomas E. Lange, Foley & Lardner, 100 North Tampa Street,
Tampa, FL 33602.
IN WITNESS WHEREOF, these Articles of Incorporation have been
signed by the undersigned incorporator this 17th day of February, 1994.
/s/ Thomas E. Lange
_____________________________
Thomas E. Lange, Incorporator
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<PAGE> 11
ACCEPTANCE OF APPOINTMENT BY INITIAL
REGISTERED AGENT
THE UNDERSIGNED, having been named in Article VIII of the
foregoing Articles of Incorporation as initial Registered Agent at the office
designated therein, hereby accepts such appointment and agrees to act in such
capacity. The undersigned hereby states that he is familiar with, and hereby
accepts, the obligations set forth in Section 607.0505, Florida Statutes, and
the undersigned will further comply with any other provisions of law made
applicable to him as Registered Agent of the Corporation.
DATED, this 17th day of February, 1994.
/s/ Vincent Addonisio
____________________________
Vincent Addonisio
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<PAGE> 1
EXHIBIT 10.1
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
<PAGE> 2
EXHIBIT A
ABR INFORMATION SERVICES, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE OF PLAN
The purpose of this Plan is to enable ABR Information Services, Inc.
(the "Company") and its Subsidiaries to compete successfully in attracting,
motivating and retaining Non-Employee Directors with outstanding abilities by
making it possible for them to purchase Shares on terms that will give them a
direct and continuing interest in the future success of the businesses of the
Company and its Subsidiaries and encourage them to remain as directors of the
Company or one or more of its Subsidiaries.
2. DEFINITIONS
For purposes of the Plan, except where the context clearly indicates
otherwise, the following terms shall have the meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the United States Internal Revenue Code
of 1986, as amended.
(c) "Effective Date" means the date the Plan is adopted
by the Board.
(d) "Fair Market Value" means, with respect to a Share,
if the Shares are then listed and traded on a registered national or
regional securities exchange, or quoted on The National Association of
Securities Dealers' Automated Quotation System (including The Nasdaq
Stock Market's National Market), the average closing price of a Share
on such exchange or quotation system for the five trading days
immediately preceding the date of grant of an Option, or, if Fair
Market Value is used herein in connection with any event other than
the grant of an Option, then such average closing price for the ten
trading days immediately preceding the date of such event. If the
Shares are not traded on a registered securities exchange or quoted in
such a quotation system, the Board shall determine the Fair Market
Value of a Share.
(e) "Non-Employee Director" shall mean any member of the
Company's Board of Directors who is not an employee of the Company or
any Subsidiary.
(f) "Option" means an option granted under this Plan,
which Option shall not be an incentive stock option within the meaning
of Section 422 of the Code, or the corresponding provision of any
subsequently enacted tax statute.
(g) "Optionee" means any person who has been granted an
Option which Option has not expired or been fully exercised or
surrendered.
(h) "Plan" means the Company's 1996 Non-Employee Director
Stock Option Plan.
A-1
<PAGE> 3
(i) "Rule 16b-3" means Rule 16b-3 promulgated pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended, or
any successor rule.
(j) "Share" means one share of voting common stock, par
value $.01 per share, of the Company, and such other stock or
securities that may be substituted therefor pursuant to Section 5
hereof.
(k) "Subsidiary" means any "subsidiary corporation"
within the meaning of Section 424(f) of the Code.
3. LIMITS ON OPTIONS
The total number of Shares with respect to which Options may be
granted under the Plan shall not exceed in the aggregate 200,000 Shares,
subject to adjustment as provided in Section 5 hereof. If any Option expires,
terminates or is terminated for any reason prior to its exercise in full, the
Shares that were subject to the unexercised portion of such Option shall be
available for future grants under the Plan.
4. GRANTING AND TERMS OF OPTIONS
(a) On the date on which a Non-Employee Director, other than a
Non-Employee Director who is serving as such on the Effective Date, is first
elected or appointed as a Non-Employee Director during the existence of the
Plan, such Non-Employee Director shall automatically be granted an Option to
purchase 5,000 Shares. Each Non-Employee Director as of the Effective Date
shall, on the Effective Date, automatically be granted an Option to purchase
5,000 Shares.
(b) Each Non-Employee Director (if he or she continues to serve in
such capacity) shall, on the day following the annual meeting of shareholders
in each year during the time the Plan is in effect, automatically be granted an
Option to purchase 5,000 Shares; provided, however, that a Non-Employee
Director who receives, in any year, an Option pursuant to Section 4.(a) hereof
shall not be eligible to begin to receive grants pursuant to this Section 4.(b)
until the following year.
(c) Notwithstanding the provisions of Section 4.(a) and 4.(b)
hereof, Options shall be automatically granted to Non-Employee Directors under
the Plan only for so long as the Plan remains in effect and a sufficient number
of Shares are available hereunder for the granting of such Options.
(d) The exercise price of each Share subject to an Option shall be
equal to 100% of the Fair Market Value of the Shares on the date of grant of
such Option.
(e) Options shall not be assignable or transferable by the
Optionee other than by will or by the laws of descent and distribution.
(f) Each Option shall expire and all rights thereunder shall end
at the expiration of ten (10) years after the date on which it was granted,
subject in all cases to earlier expiration as provided in subsections (g) and
(h) of this Section 4.
(g) During the life of an Optionee, an Option shall be exercisable
only by such Optionee and only within one (1) month after the date on which the
Optionee ceases to be a Non-Employee Director,
A-2
<PAGE> 4
other than by reason of the Optionee's death or resignation from the Board with
the consent of the Company as provided in subsection (h) of this Section 4, but
only if and to the extent the Option was exercisable immediately prior to such
date, and subject to the provisions of the subsections (f) and (i) of this
Section 4. If the Optionee is removed as a Director for cause (as defined in
the Company's Articles of Incorporation, as amended from time to time), all
Options of the Optionee shall terminate immediately on the date of removal.
(h) If an Optionee: (i) dies while a Non-Employee Director or
within the period when an Option could have otherwise been exercised by the
Optionee; or (ii) ceases to be a Non-Employee Director as a result of such
Optionee's resignation from the Board, provided that the Company has consented
in writing to such Optionee's resignation, then, in each such case, such
Optionee, or the duly authorized representatives of such Optionee, shall have
the right, at any time within three (3) months after the death or after such
resignation of the Optionee, as the case may be, and prior to the termination
of the Option pursuant to subsections (f) and (i) of this Section 4, to
exercise any Option to the extent such Option was exercisable by the Optionee
immediately prior to such Optionee's death or resignation.
(i) The Optionee may exercise the Option (subject to the
limitations on exercise set forth in subsection (f) of this Section 4), in
whole or in part, as follows: (i) the Option may not be exercised to any
extent prior to one (1) year following the date of grant; and (ii) the Option
may be exercised to the extent of 25% of the Shares subject to such Option
after one year following the date of grant and may be exercised to the extent
of an additional 25% of the Shares subject to such Option after each of the
second, third and fourth years following the date of grant.
(j) An Option may be exercised in whole at one time or in part
from time to time, subject to subsection (i) of this Section 4.
5. EFFECT OF CHANGES IN CAPITALIZATION
(a) If the number of outstanding Shares is increased or decreased
or changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of any recapitalization, reclassification,
stock split, combination of shares, exchange of shares, stock dividend or other
distribution payable in capital stock, or other increase or decrease in such
shares effected without receipt of consideration by the Company, a
proportionate and appropriate adjustment shall be made by the Board of
Directors in (i) the number and type of Shares subject to the Plan and which
thereafter may be made the subject of Options under the Plan, and (ii) the
number and kind of shares for which Options are outstanding, so that the
proportionate interest of the Optionee immediately following such event shall,
to the extent practicable, be the same as immediately prior to such event. Any
such adjustment in outstanding Options shall not change the aggregate option
price payable with respect to Shares subject to the unexercised portion of the
Options outstanding but shall include a corresponding proportionate adjustment
in the option price per Share.
(b) Subject to Section 5.(c) hereof, if the Company shall be the
surviving corporation in any reorganization, merger, share exchange or
consolidation of the Company with one or more other corporations or other
entities, any Option theretofore granted shall pertain to and apply to the
securities to which a holder of the number of Shares subject to such Option
would have been entitled immediately following such reorganization, merger,
share exchange or consolidation, with a corresponding proportionate adjustment
of the option price per Share so that the aggregate option price thereafter
shall
A-3
<PAGE> 5
be the same as the aggregate option price of the Shares remaining subject to
the Option immediately prior to such reorganization, merger, share exchange or
consolidation.
(c) In the event of: (i) the adoption of a plan of
reorganization, merger, share exchange or consolidation of the Company with one
or more other corporations or other entities as a result of which the holders
of the Shares as a group would receive less than fifty percent (50%) of the
voting power of the capital stock or other interests of the surviving or
resulting corporation or entity; (ii) the adoption of a plan of liquidation or
the approval of the dissolution of the Company; (iii) the approval by the Board
of an agreement providing for the sale or transfer of the assets of the
Company; or (iv) the acquisition of more than fifty percent (50%) of the
outstanding shares by any person within the meaning of Rule 13(d)(3) under the
Securities Exchange Act of 1934 if such acquisition is not preceded by a prior
expression of approval by the Board, then, in each such case, any Option
granted hereunder shall become immediately exercisable in full, subject to any
appropriate adjustments in the number of Shares subject to such Option and the
option price, regardless of any provision contained in the Plan with respect
thereto limiting the exercisability of the Option for any length of time.
Notwithstanding the foregoing, if a successor corporation or other entity as
contemplated in clause (i) or (iii) of the preceding sentence agrees to assume
the outstanding Options or to substitute substantially equivalent options,
then the outstanding Options issued hereunder shall not be immediately
exercisable, but shall remain exercisable in accordance with the terms of the
Plan and the applicable stock option agreements.
(d) Adjustments under this Section 5 relating to Shares or
securities of the Company shall be made by the Board, whose determination in
that respect shall be final and conclusive. Options subject to grant or
previously granted under the Plan at the time of any event described in this
Section 5 shall be subject to only such adjustments as shall be necessary to
maintain the proportionate interest of the Options and preserve, without
exceeding, the value of such Options. No fractional Shares or units of other
securities shall be issued pursuant to any such adjustment, and any fractions
resulting from any such adjustment shall be eliminated in each case by rounding
upward to the nearest whole Share or unit.
(e) The grant of an Option pursuant to the Plan shall not affect
or limit in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
6. DELIVERY AND PAYMENT FOR SHARES
(a) No Shares shall be delivered upon the exercise of an Option
until the option price for the Shares acquired has been paid in full. No
shares shall be issued or transferred under the Plan unless and until all legal
requirements applicable to the issuance or transfer of such Shares have been
complied with to the satisfaction of the Board. Any Shares issued by the
Company to an Optionee upon exercise of an Option may be made only in strict
compliance with and in accordance with applicable state and federal securities
laws.
(b) Payment of the option price for the Shares purchased pursuant
to the exercise of an Option shall be made: (i) in cash or by check payable to
the order of the Company; (ii) through the tender to the Company of Shares,
which Shares shall be valued, for purposes of determining the extent to which
the option price has been paid thereby, at their Fair Market Value on the date
of exercise; or (iii) by a combination of the methods described in (i) and (ii)
hereof.
A-4
<PAGE> 6
7. NO CONTINUATION AS A DIRECTOR AND DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or option agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain a director of the Company or any Subsidiary.
The Plan shall in no way be interpreted to require the Company to transfer any
amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any Optionee or beneficiary under the terms of the Plan.
An Optionee shall have none of the rights of a shareholder of the Company until
all or some of the Shares covered by an Option are fully paid and issued to
such Optionee.
8. ADMINISTRATION
The Plan is intended to meet the requirements of Rule 16b-3(c)(2)(ii)
adopted under the Securities Exchange Act of 1934, as amended, and accordingly
is intended to be self-governing. To this end, the Plan requires no
discretionary action by any administrative body with regard to any transaction
under the Plan. To the extent, if any, that any questions of interpretation
arise, these shall be resolved by the Board.
9. NO RESERVATION OF SHARES
The Company shall be under no obligation to reserve or to retain in
its treasury any particular number of Shares in connection with its obligations
hereunder.
10. AMENDMENT OF PLAN
The Board, without further action by the shareholders, may amend this
Plan from time to time as it deems desirable; provided, that (i) no such
amendment shall be made without shareholder approval if such approval would be
required to comply with Rule 16b-3 and (ii) the provisions of Sections 4.(a)
and 4.(b) shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act
of 1974, as amended, or the rules and regulations promulgated thereunder.
11. TERMINATION OF PLAN
This Plan shall terminate ten (10) years from the Effective Date. The
Board may, in its discretion, suspend or terminate the Plan at any time prior
to such date, but such termination or suspension shall not adversely affect any
right or obligation with respect to any outstanding Option.
12. EFFECTIVE DATE
The Plan shall become effective on the Effective Date and Options
hereunder may be granted at any time on or after that date, subject to approval
of the Plan by the Company's shareholders within one year after the Effective
Date by a majority of the votes cast at a duly held meeting of the shareholders
of the Company at which a quorum representing a majority of all outstanding
stock is present, either in person or by proxy, and in a manner that satisfies
the requirements of Rule 16b-3. Upon approval of the Plan by the shareholders
of the Company as set forth above, all Options granted under the Plan on or
after the Effective Date shall be fully effective as if the shareholders of the
Company had approved the Plan on the Effective Date.
A-5
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ABR
INFORMATION SERVICES, INC. FORM 10-Q
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 29,451,276
<SECURITIES> 131,112,933
<RECEIVABLES> 5,196,450
<ALLOWANCES> 49,702
<INVENTORY> 0
<CURRENT-ASSETS> 167,820,669
<PP&E> 22,131,027
<DEPRECIATION> 3,388,186
<TOTAL-ASSETS> 210,674,842
<CURRENT-LIABILITIES> 21,542,848
<BONDS> 0
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0
<COMMON> 273,708
<OTHER-SE> 187,085,491
<TOTAL-LIABILITY-AND-EQUITY> 210,674,842
<SALES> 22,103,582
<TOTAL-REVENUES> 22,103,582
<CGS> 12,384,210
<TOTAL-COSTS> 4,515,024
<OTHER-EXPENSES> 140,633
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (3,869,108)
<INCOME-PRETAX> 8,932,823
<INCOME-TAX> 3,384,995
<INCOME-CONTINUING> 5,547,828
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