<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NO. 1-13772
HEALTHPLAN SERVICES CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
DELAWARE 13-3787901
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
3501 FRONTAGE ROAD, TAMPA, FLORIDA 33607
(Address of Principal Executive Offices) (Zip Code)
(813) 289-1000
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock as of the latest
practicable date.
Total number of shares of Common Stock outstanding as of April 30, 1996.
Common Stock ...................................................... 13,396,757
<PAGE> 2
HEALTHPLAN SERVICES CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Balance Sheet
March 31, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statement of Income
Three Months Ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statement of Changes in Common Stockholders'
Equity March 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows
Three Months Ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PART II - OTHER INFORMATION
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 4. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
HEALTHPLAN SERVICES CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
---------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,734 $ 4,738
Restricted cash 8,815 1,005
Short-term investments 30,229 36,723
Accounts receivable 7,727 6,411
Refundable income taxes - 1,041
Prepaid commissions 519 748
Prepaid expenses and other current assets 1,808 1,485
Deferred taxes 477 965
--------- ---------
Total current assets 56,309 53,116
Property and equipment, net 9,572 9,241
Other assets, net 1,140 1,463
Note receivable 6,900 -
Investment in unconsolidated subsidiary 2,055 -
Goodwill, net 48,331 48,847
--------- ---------
Total assets $ 124,307 $ 112,667
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,987 $ 3,407
Premiums payable to carriers 27,730 17,209
Commissions payable 3,073 2,897
Deferred revenue 1,119 947
Accrued liabilities 3,763 5,093
Accrued contract commitments 18 482
Income taxes payable 461 -
Current portion of long-term debt 68 68
--------- ---------
Total current liabilities 38,219 30,103
Note payable 1,214 1,214
Deferred taxes 517 354
Other long-term liabilities 27 30
--------- ---------
Total liabilities 39,977 31,701
--------- ---------
Common stockholders' equity:
Common stock voting, $0.01 par value 25,000,000 shares
authorized, 13,396,757 and 13,395,357 issued and outstanding
at March 31, 1996 and December 31, 1995, respectively 134 134
Additional paid-in capital 71,735 71,636
Retained earnings 12,530 9,196
--------- ---------
84,399 80,966
Less: Valuation allowance on securities available for sale (69) -
--------- ---------
Total stockholders' equity 84,330 80,966
--------- ---------
Total liabilities and stockholders' equity $ 124,307 $ 112,667
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 4
HEALTHPLAN SERVICES CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------------
1996 1995
---- ----
(unaudited)
<S> <C> <C>
Operating revenues $ 30,298 $ 23,413
Interest income 710 163
-------- --------
Total revenues 31,008 23,576
-------- --------
Expenses:
Agents commissions 9,762 9,303
Personnel expenses 8,393 6,187
General and administrative 5,821 4,015
Pre-operating and contract
start-up costs 277 -
Depreciation and amortization 1,274 931
-------- --------
Total expenses 25,527 20,436
-------- --------
Income before interest expense
and income taxes 5,481 3,140
Interest expense 16 16
-------- --------
Income before income taxes 5,465 3,124
Provision for income taxes 2,131 1,269
-------- --------
Net income $ 3,334 $ 1,855
======== ========
Dividends on Redeemable
Preferred Stock $ - $ 285
======== ========
Net income attributable to
common stock $ 3,334 $ 1,570
======== ========
Pro forma net income per share $ 0.25 $ 0.20
======== ========
Pro forma weighted average
shares outstanding 13,457 9,339
======== ========
Historical weighted average
net income per share $ 0.25 $ n/a
======== ========
Historical weighted average
share outstanding 13,456 n/a
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 5
HEALTHPLAN SERVICES CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
VOTING ADDITIONAL
COMMON PAID-IN RETAINED VALUATION
STOCK CAPITAL EARNINGS ALLOWANCE TOTAL
------- ---------- -------- --------- -----
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $134 $71,636 $ 9,196 $ 0 $ 80,966
Vesting of stockholders' interest in management
stock (unaudited) - 79 - - 79
Issuance of 1,400 shares in connection with
stock option plans (unaudited) - 20 - - 20
Valuation allowance from marketable securities
(unaudited) - - - (69) (69)
Net income (unaudited) - - 3,334 - 3,334
----------------------------------------------------
Balance at March 31, 1996 (unaudited) $134 $71,735 $ 12,530 $(69) $ 84,330
=====================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 6
HEALTHPLAN SERVICES CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------
1996 1995
---- ----
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,334 $ 1,855
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 713 524
Amortization of goodwill 507 356
Amortization of deferred costs 54 51
Issuance of common stock to management 79 80
Deferred taxes 651 -
(Increase) Decrease in:
Restricted cash (7,810) (1,193)
Accounts receivable (1,316) (2,055)
Refundable income taxes 1,041 -
Prepaid commissions 229 (36)
Prepaid expenses and other current
assets (323) (516)
Other assets 270 -
Increase (Decrease) in:
Accounts payable (1,420) 396
Premiums payable to carriers 10,521 3,316
Commissions payable 176 54
Deferred revenue 172 212
Accrued liabilities (1,330) (498)
Accrued contract commitments (464) (785)
Income taxes payable 461 (135)
-------- -------
Net cash provided by
operating activities 5,545 1,626
-------- -------
Cash flows from investing activities:
Purchases of property and equipment (1,039) (695)
(Purchases) sales of short-term
investments, net 6,425 -
Investment in unconsolidated
subsidiary (2,055) -
Increase in note receivable (6,900) -
-------- -------
Net cash used in investing
activities (3,569) (695)
-------- -------
Cash flows from financing activities:
Issuance of common stock 20 -
-------- -------
Net cash provided by (used in)
financing activities 20 -
-------- -------
Net increase in cash and cash equivalents 1,996 931
Cash and cash equivalents at beginning
of period 4,738 4,303
-------- -------
Cash and cash equivalents at end of
period $ 6,734 $ 5,234
======== =======
Supplemental disclosure of cash flow
information:
Cash paid for interest $ - $ -
======== =======
Cash paid for income taxes $ 64 $ 1,470
======== =======
Supplemental disclosure of noncash activities:
Issuance of common stock to management $ 79 $ 80
======== =======
Dividends on redeemable preferred stock $ - $ 285
======== =======
</TABLE>
The accompany notes are an integral part of these consolidated financial
statements.
5
<PAGE> 7
HEALTHPLAN SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. DESCRIPTION OF BUSINESS AND ORGANIZATION
On October 1, 1994, HealthPlan Services Corporation (the "Company"), a
company formed by certain Company officers and Noel Group, Inc., acquired the
outstanding stock and assumed designated liabilities of Plan Services, Inc., a
division of The Dun & Bradstreet Corporation. The Company provides
distribution, enrollment, billing and collection, claims administration, and
information reports and analysis on behalf of health care payors and providers.
Its customers include small businesses, health care purchasing alliances,
health maintenance organizations ("HMOs") and other managed care organizations,
insurance companies, and organizations with self-funded health care plans. It
serves approximately 85,000 businesses, plan holders and governmental agencies
in 50 states, Washington, D.C. and Puerto Rico.
On May 19, 1995, the Company completed an initial public offering of
4,025,000 shares of its Common Stock, shares of which are presently traded on
the New York Stock Exchange.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The interim financial data is unaudited and should be read in conjunction
with the audited Consolidated Financial Statements and notes thereto included
in the Company's 1995 Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 29, 1996.
In the opinion of the Company, the interim data includes all adjustments,
consisting only of normal recurring adjustments, necessary for fair
presentation of financial position and results of operations for the interim
periods presented. Interim results are not necessarily indicative of results
for a full year.
Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries HealthPlan Services, Inc. ("HPS") and
HealthCare Informatics Corporation, as well as Third Party Claims Management,
Inc. ("TPCM"), the wholly owned subsidiary of HPS. All intercompany
transactions and balances have been eliminated in consolidation.
Short-Term Investments
Investments in marketable securities at March 31, 1996 consisted of a
professionally managed portfolio of short- term financial instruments including
short-term municipal bonds. As of January 1, 1995, the Company adopted
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities ("SFAS 115"). The effect of SFAS 115
is dependent upon classification of the investment. As the Company's
investments are classified as available for sale, they are measured at fair
market value. Any decline in the value of investments is recorded as a
6
<PAGE> 8
valuation allowance in the equity section of the balance sheet. There are no
investments with maturities of greater than one year.
Earnings per share
Earnings per share was computed based on both the historical and
pro forma weighted average number of shares of Common Stock outstanding during
the period. The pro forma basis gives retroactive effect in 1995 to the
exchange of the Company's Redeemable Series A and Series B Preferred Stock at
the time of the Company's initial public offering. Pursuant to Securities and
Exchange Commission Staff Accounting Bulletin No. 83, all stock options and
shares of Common Stock issued have been included as outstanding for the entire
period using the treasury stock method.
Income Taxes
The Company's effective tax rate for these periods differed from the
statutory rate due primarily to the amortization of goodwill and state income
taxes. The Company's effective tax rate is expected to vary from the statutory
rate for the remainder of the fiscal year.
Pre-Operating and Contract Start-Up Costs
The Company has elected to expense as incurred, and segregate from other
operating costs, those costs related to the preparation for and implementation
of new products and contracts for services to new customers prior to the
initiation of significant new revenue activity from these new revenue
initiatives.
Stock-Based Compensation
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting
for Stock Based Compensation," which will be adopted by the Company in 1996.
SFAS 123 establishes a fair value based method of accounting for stock-based
compensation plans. However, it also allows companies to continue to apply the
intrinsic value method currently prescribed by existing generally accepted
accounting principles on the condition that pro forma disclosures are made
illustrating the effect of the fair value based method on the income statement.
The Company has not yet decided if it will apply the effects of SFAS 123
to its income statement upon adoption in 1996 or if it will provide pro forma
disclosures only.
3. CREDIT FACILITY
On April 22, 1996, the Company received commitments to a $75 million
senior credit facility from several participating banks, subject to customary
conditions including satisfactory documentation. First Union National Bank of
North Carolina ("First Union") will serve as administrative agent with respect
to this facility. The Company plans to use available capital from the facility
to refinance its existing $20 million credit facility with First Union, to fund
acquisitions, and to support other general corporate purposes. Like the
existing credit facility, the new facility will contain provisions which
require the Company to maintain certain minimum financial ratios, impose
limitations on acquisition activity, and prohibit the Company from declaring or
paying any dividend upon any of its capital stock without the consent of First
Union.
7
<PAGE> 9
4. ACQUISITIONS
On August 31, 1995, HPS acquired all of the issued and outstanding shares
of capital stock of TPCM. TPCM's principal business is the administration of
medical benefits for self-funded health care plans.
On October 12, 1995, HPS acquired substantially all of the assets and
assumed certain liabilities of the third party administration business of
Diversified Group Brokerage Corporation ("DGB"), effective as of October 1,
1995.
Both TPCM and DGB have experienced declining revenues due to customer
attrition. If additional customers elect to change suppliers, it could have an
adverse effect on the expected economic benefits of the acquisitions. The
Company has begun consolidating and integrating the operations of the TPCM and
DGB businesses, and intends to continue this process in 1996.
On January 8, 1996, the Company entered into an agreement with Medirisk,
Inc. ("Medirisk"), a provider of proprietary health care information products
and services that track the price and utilization of medical procedures, to
purchase $2.0 million of Medirisk preferred stock representing a 9% ownership
interest in Medirisk accounted for by the Company under the cost method. In
addition, the Company agreed to lend Medirisk up to $10.0 million over four
years in the form of debt, with interest payable to the Company at a rate of
10% per annum, for which the Company would receive detachable warrants to
purchase Medirisk common stock at $0.01 per share. On March 15, 1996, Medirisk
exercised its option to issue $6.9 million in debt, and has acquired two health
care data companies using proceeds from the Company's preferred stock
investment and debt purchase. The investment could result in the Company
owning up to 25% of Medirisk.
5. SUBSEQUENT EVENTS
On May 15, 1996, the Company significantly reduced the staff at its
Memphis, Tennessee office from approximately 80 employees to eight employees,
in order to achieve operational efficiencies. The Memphis office provides
claims administration services for clients obtained in the TPCM acquisition.
The Company will operate this claims administration business primarily from
its Tampa, Florida and Oklahoma City, Oklahoma offices. The Company intends
to continue consolidating and integrating the operations of TPCM and DGB during
the remainder of 1996.
8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
A. RESULTS OF OPERATIONS
The following is a discussion of material changes in the consolidated
results of operations of the Company for the three months ended March 31, 1996
compared to the same period in 1995. The Company provides distribution,
enrollment, billing and collection, claims administration, and information
reports and analysis on behalf of health care payors and providers. Its
customers include small businesses, health care purchasing alliances, HMOs and
other managed care organizations, insurance companies, and organizations with
self-funded health care plans. It serves approximately 85,000 businesses, plan
holders and governmental agencies in 50 states, Washington D.C. and Puerto
Rico. The following table sets forth certain operating data as a percentage of
total revenues for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
Operating revenues . . . . . . . . . . . . . . . . . . . . . . 97.7% 99.3%
Interest income . . . . . . . . . . . . . . . . . . . . . . . . 2.3% 0.7%
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0%
Expenses:
Agents commissions . . . . . . . . . . . . . . . . . . . . 31.4% 39.4%
Personnel expenses . . . . . . . . . . . . . . . . . . . . 27.1% 26.3%
General and administrative . . . . . . . . . . . . . . . . 18.7% 17.0%
Pre-Operating and contract
start-up costs . . . . . . . . . . . . . . . . . . 0.9% 0.0%
Depreciation and amortization . . . . . . . . . . . . . . . 4.1% 3.9%
Total expenses . . . . . . . . . . . . . . . . . 82.2% 86.6%
Net income before interest expense and
income taxes . . . . . . . . . . . . . . . . . . . . . . 17.8% 13.4%
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . 0.1% 0.1%
Net income before income taxes . . . . . . . . . . . . . . . . 17.7% 13.3%
Provision for income taxes . . . . . . . . . . . . . . . . . . . 6.9% 5.4%
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . 10.8% 7.9%
Dividends on Redeemable Preferred
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0% 1.2%
Net income attributable to common
stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.8% 6.7%
</TABLE>
Three Months Ended March 31, 1996 Compared to Three Months Ended March 31, 1995
Revenues for the three months ended March 31, 1996 increased $7.4
million, or 31.4%, to $31.0 million from $23.6 million for the same period in
1995. This increase resulted primarily from revenue of $4.6 million produced
by the Company's 1995 acquisitions, $1.1 million in revenue from the new
alliance contract in Kentucky, $0.8 million in revenue from new Administrative
Services Only ("ASO") contracts, and interest income of $0.5 million from the
proceeds of the Company's initial public offering on May 19, 1995. Revenues
provided from Multiple Employer Trust ("MET") business increased by
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$0.1 million from the same period in 1995, and by $0.4 million from the fourth
quarter of 1995. This was the second consecutive quarter of increasing MET
revenues after seven consecutive quarters of MET revenue decreases.
Agents commissions expenses for the three months ended March 31, 1996
increased $0.5 million, or 5.4%, to $9.8 million from $9.3 million for the same
period in 1995. Agents commissions represented 32.2% of operating revenues in
1996 (39.7% in 1995). This decrease in commissions as a percentage of revenue
resulted primarily from an increase in ASO and alliance revenue as a percentage
of total revenue. As a percentage of revenue, MET agents commissions are
typically significantly greater than ASO agents commissions. There are no
agents commissions associated with alliance revenues. MET agents commissions
represented 44.2% of MET revenues in 1996 (46.7% in 1995), and ASO agents
commissions represented 13.6% of ASO revenues in 1996 (9.9% in 1995).
Personnel costs for the three months ended March 31, 1996 increased
$2.2 million, or 35.5%, to $8.4 million from $6.2 million for the same period
in 1995. This increase primarily resulted from the additional costs associated
with the Company's 1995 acquisitions and the alliance contract in Kentucky.
General and administrative expenses for the three months ended March
31, 1996 increased $1.8 million, or 45.0%, to $5.8 million from $4.0 million
for the same period in 1995. This increase primarily resulted from other
operating expenses (primarily postage, telephone and printing) related to the
Company's 1995 acquisitions and costs associated with the Kentucky alliance and
new ASO contracts.
The Company incurred $0.3 million in pre-operating and start-up costs
during the three months ended March 31, 1996. These costs related primarily to
the state-sponsored health care purchasing alliances in North Carolina and
Washington, the private alliance in Texas and the new ASO contracts, and
consisted of salaries and wages and temporary help, printing and travel
expenses.
Depreciation and amortization expenses for the three months ended
March 31, 1996 increased $0.4 million, or 44.4% to $1.3 million from $0.9
million in 1995. This increase related primarily to an increase in the
amortization of goodwill related to the Company's 1995 acquisitions.
B. LIQUIDITY AND CAPITAL RESOURCES
On May 19, 1995, the Company completed an initial public offering
which generated net proceeds of approximately $51.0 million. On August 31,
1995, HPS used approximately $7.5 million of the offering proceeds to acquire
all of the outstanding capital stock of TPCM. On October 12, 1995, HPS used
approximately $5.1 million of the proceeds to acquire substantially all of the
assets of the third party administration business of DGB. The Company placed an
additional $5 million of the proceeds in an escrow account to guarantee the
availability of funds for semi-monthly payments due with respect to the DGB
acquisition. On January 13, 1996, using offering proceeds, the Company
acquired $2.0 million of preferred stock of Medirisk, representing a 9%
ownership interest in Medirisk, and on March 15, 1996, Medirisk exercised its
option to issue $6.9 million of debt with detachable warrants to the Company.
To date the Company has not elected to convert the detachable warrants into
common stock of Medirisk.
The Company intends to continue to utilize the remaining net proceeds
of the public offering to fund working capital, to expand the Company's core
business through selective acquisitions of other health care administration,
marketing and information businesses, to further invest in the health care
purchasing alliance business, to finance completion of the conversion of the
Company's information systems to client-server technology, to develop an
electronic, automated claims adjudication system and for other general
corporate purposes, including the development of new information-based products
with data generated by the Company's claims adjudication system.
10
<PAGE> 12
Pending use of the remaining net proceeds from the offering as
described above, the Company has invested the proceeds in short-term fixed
income obligations of investment grade quality.
On April 22, 1996, the Company received commitments to a $75 million
senior credit facility from several participating banks, subject to customary
conditions including satisfactory documentation. First Union will serve as
administrative agent with respect to this facility. The Company plans to use
available capital from the facility to refinance its existing $20 million
facility with First Union, to fund acquisitions, and to support other general
corporate purposes. Like the existing credit facility, the new facility will
contain provisions which require the Company to maintain certain minimum
financial ratios, impose limitations on acquisition activity, and prohibit the
Company from declaring or paying any dividend upon any of its capital stock
without the consent of First Union.
Based on current expectations, the Company believes that all
operating, investing and financing activities for the remainder of 1996 and the
foreseeable future will be met from internally generated cash flow, available
cash, or its existing or future credit facility.
C. SEASONALITY AND INFLATION
The Company has not experienced any pattern of seasonality with
respect to its sales.
The Company does not believe that inflation had a material effect on
its results of operations for the three months ended March 31, 1996 or March
31, 1995. There can be no assurance, however, that the Company's business will
not be affected by inflation in the future.
PART II - OTHER INFORMATION
ITEM 3. LEGAL PROCEEDINGS
In November 1995, Self Funded Strategies, L.L.C. ("SFS") filed a
complaint against the Company in the District Court of Dallas County, Texas.
SFS provided sales and marketing services for the Company's ASO business
between July 1992 and August 1995, when the Company terminated its contract with
SFS. The SFS complaint alleges that the Company wrongfully terminated the SFS
contract, and also alleges tortious interference and breach of implied covenant
of good faith and fair dealing. The complaint, which has been served on the
Company, asserts an estimated $25 million in compensatory damages plus
unspecified punitive damages. The Company and SFS are negotiating an agreement
to resolve this dispute through binding arbitration. The Company intends to
defend its interests in this matter vigorously. There can be no assurance,
however, regarding the outcome of this matter, and an adverse outcome could
have a material adverse effect on the Company.
ITEM 4. CHANGES IN SECURITIES
At the Annual Meeting of Stockholders of the Company held on May 2, 1996,
the Company's stockholders approved an amendment to the Company's Certificate
of Incorporation to increase the number of shares of Common Stock of the
Company from 25,000,000 shares to 100,000,000 shares.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------ ----------------------
<S> <C>
27.1 Financial Data Schedule (for SEC use only)
</TABLE>
11
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HEALTHPLAN SERVICES CORPORATION
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.
HEALTHPLAN SERVICES CORPORATION
Date: May 14, 1996 /s/ James K. Murray, Jr.
--------------------- ----------------------------------------
President and Chief Executive Officer
Date: May 14, 1996 /s/ James K. Murray III
--------------------- ----------------------------------------
Executive Vice President and Chief
Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF HEALTHPLAN SERVICES, INC. FOR THE THREE MONTHS ENDED
MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 15,549
<SECURITIES> 30,229
<RECEIVABLES> 7,727
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 56,309
<PP&E> 13,899
<DEPRECIATION> 4,327
<TOTAL-ASSETS> 124,307
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0
0
<COMMON> 134
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<EPS-DILUTED> .25
</TABLE>
