<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH , 1997
REGISTRATION NO. 333- .
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HEALTHPLAN SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-3787901
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
3501 FRONTAGE ROAD, TAMPA, FLORIDA 33607 (813) 289-1000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------------------
JAMES K. MURRAY, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
HEALTHPLAN SERVICES CORPORATION
3501 FRONTAGE ROAD
TAMPA, FLORIDA 33607
(813) 289-1000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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COPIES TO:
DAVID C. SHOBE, ESQ.
FOWLER, WHITE, GILLEN, BOGGS, VILLAREAL AND BANKER, P.A.
501 EAST KENNEDY BOULEVARD, SUITE 1700
TAMPA, FLORIDA 33602
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Common Stock, par value
$0.01 per share............ 4,275,846 shares $16.5625 $70,818,699.38 $21,460.21
=================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED MARCH , 1997
PROSPECTUS
4,275,846 SHARES
HEALTHPLAN SERVICES CORPORATION
COMMON STOCK
---------------------
This Prospectus relates to 4,275,846 shares (the "Shares") of common stock,
par value $0.01 per share (the "Company Common Stock"), of HealthPlan Services
Corporation (the "Company") held by Noel Group, Inc. ("Noel"). See "Shares
Covered by this Prospectus." The Shares are being registered for distribution
pro-rata by Noel to its stockholders (the "Noel Distribution"). See "Plan of
Distribution." The Company will not receive any of the proceeds from the Noel
Distribution.
The Company has agreed to bear all out-of-pocket expenses incurred in
connection with registration of the Shares, which expenses are expected to be
approximately $51,460. In addition, Noel has agreed to indemnify the Company,
and the Company has agreed to indemnify Noel, against certain civil liabilities,
including liabilities under the Securities Act of 1933, as amended.
The Company Common Stock is listed on the New York Stock Exchange and is
quoted under the symbol "HPS." On March 26, 1997, the last reported sale price
for the Company Common Stock as reported on the New York Stock Exchange
Composite Tape was $16.75 per share.
---------------------
SEE "RISK FACTORS" BEGINNING AT PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY THE NOEL STOCKHOLDERS OR OTHER POTENTIAL INVESTORS.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is March , 1997
<PAGE> 3
FORWARD-LOOKING STATEMENTS
This Prospectus includes and incorporates by reference forward-looking
statements based on current plans and expectations of the Company, relating to,
among other matters, analyses, and estimates of amounts that are not yet
determinable. Such forward-looking statements are contained in the sections
entitled "The Company," "Risk Factors," and other sections of this Prospectus
(including documents incorporated herein by reference, see "Incorporation of
Certain Documents by Reference"). Such statements involve risks and
uncertainties which may cause actual future activities and results of operations
to be materially different from those suggested in this Prospectus, including,
among others, the risks and uncertainties present in the Company's business and
the competitive health care marketplace where clients and vendors commonly
experience mergers or acquisitions, volume fluctuations, participant enrollment
fluctuations, fixed price contracts, contract disputes, contract modifications,
contract renewals and nonrenewals, various business reasons for delaying
contract closings, and the operational challenges of matching case volume with
optimum staffing, having fully trained staff, having computer and telephonic
supported operations, and managing turnover of key employees and outsourced
services to performance standards, as well as other factors described elsewhere
in this Prospectus. See "Risk Factors."
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at its
regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates, or through the World Wide Web (http://www.sec.gov). The
Company's Common Stock is listed on the NYSE, and such reports, proxy statements
and other information concerning the Company are available for inspection and
copying at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement") with the Commission under the Securities Act of 1933,
as amended, in respect of the Common Stock offered hereby. For purposes of this
Prospectus, the term "Registration Statement" means the initial Registration
Statement and any and all amendments thereto. This Prospectus omits certain
information contained in the Registration Statement as permitted by the rules
and regulations of the Commission. For further information with respect to the
Company and the Company Common Stock offered hereby, reference is made to the
Registration Statement, including the exhibits thereto. Statements contained
herein concerning the contents of any document are not necessarily complete, and
in each instance, reference is made to the copy of such document filed with the
Commission as an exhibit to the Registration Statement. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
1-13772) are incorporated in this Prospectus by reference: (a) the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996; (b) the
description of the Company Common Stock contained in the Company's Registration
Statement on Form 8-A, dated May 12, 1995, as amended; (c) all other reports and
other documents filed by the Company pursuant to Sections 13(a) or 15(d) of the
Exchange Act since December 31, 1996; and (d) all documents filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, subsequent to the date of this Prospectus and prior to the
termination of the Shares offered hereby.
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<PAGE> 4
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded,
for purposes of this Prospectus, to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or verbal request of such person, a copy
of any or all of the documents incorporated herein by reference (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into the document that this Prospectus incorporates by reference).
Requests should be directed to James K. Murray III, Chief Financial Officer,
HealthPlan Services Corporation, 3501 Frontage Road, Tampa, Florida 33607,
telephone number (813) 289-1000.
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<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information appearing elsewhere in this
Prospectus.
HEALTHPLAN SERVICES CORPORATION
HealthPlan Services Corporation (the "Company") is a provider of marketing,
administrative, and risk management services and solutions for health and other
benefit programs.
The Company's principal executive offices are located at 3501 Frontage
Road, Tampa, Florida 33607 and its telephone number is (813) 289-1000.
THE NOEL DISTRIBUTION
Distributing Company....... Noel Group, Inc., a Delaware corporation ("Noel").
Shares Distributed and
Distribution Ratio....... 4,275,846 shares of Company Common Stock at the
rate of [ ] shares of Company Common Stock
for each share of Noel Common Stock issued and
outstanding on the Record Date (i.e., one share of
Company Common Stock in respect of approximately
[ ] shares of Noel Common Stock). The
4,275,846 shares of Company Common Stock which are
being distributed in the Noel Distribution
constitute approximately 29% of the issued and
outstanding shares of Company Common Stock.
Following the Noel Distribution, Noel will hold no
shares of Company Common Stock. In connection with
the Noel Distribution, up to shares of
the Company Common Stock being registered hereby
may be reserved by Noel for transfer to Noel's
warrant and/or option holders upon exercise of
their respective warrants and options. See "Plan of
Distribution."
Record Date................ April , 1997
Distribution Date.......... April , 1997
Ex-Dividend Date........... April , 1997
Distribution Agent......... First Union Corporation, Corporate Trust, 230 South
Tryon Street, Charlotte, North Carolina 28288.
Transfer Agent and
Registrars................. With respect to Noel, ChaseMellon Shareholder
Services, Inc., 450 West 33rd Street, New York, New
York 10001.
With respect to Company, First Union Corporation,
Corporate Trust, 230 South Tryon Street, Charlotte,
North Carolina 28288.
Manner of Distribution..... Certificates representing the shares of Company
Common Stock distributed pursuant to the Noel
Distribution are being mailed by the Company's
Transfer Agent on April , 1997, to holders of
Noel Common Stock of record at the close of
business on the Record Date. Checks for cash
payable in lieu of fractional shares will be mailed
separately by the Distribution Agent. See "Plan of
Distribution."
Fractional Share
Interests.................. Fractional share interests will be sold by the
Distribution Agent and the cash proceeds
distributed to those Noel shareholders entitled to
a fractional interest. See "Plan of Distribution."
Transferability of
Shares..................... The shares of Company Common Stock distributed by
Noel to its shareholders pursuant to the Noel
Distribution will be freely transferable, except
for shares received by persons who may be deemed to
be "affiliates" of the Company. See "Plan of
Distribution."
Trading and Listing........ The Company Common Stock is traded on the New York
Stock Exchange under the symbol "HPS".
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<PAGE> 6
RISK FACTORS
Investors should carefully consider the following information in addition
to the other information contained in this Prospectus in evaluating an
investment in the shares of Company Common Stock offered hereby.
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in the following risk factors and elsewhere in this
Prospectus.
RISKS RELATED TO NEW BUSINESS STRATEGY
From 1990 to 1995, the Company's annual revenues declined from
approximately $129 million to approximately $100 million. Effective September
30, 1994, the Company, formerly known as Plan Services, Inc., a division of The
Dun & Bradstreet Corporation ("D & B"), was acquired from D & B by the Noel
Group, Inc. ("Noel"), James K. Murray, Jr., the Company's current President and
Chief Executive Officer, and certain other investors. A new management team was
recruited to implement a new business strategy aimed at growing revenue through
strengthening its relationships with managed care companies, adding new payors
as customers (such as preferred provider organizations ("PPOs"), health
maintenance organizations ("HMOs"), and integrated delivery systems), and
consolidating the fragmented third party administrator industry.
The Company believes that the decline in revenue during the 1990-1995
period is attributable primarily to a slow transition by its major customers
from offering traditional "fee for service" health care plans to managed care
products. The cost of traditional health insurance increased significantly
during this period, and the Company did not expand distribution by developing
relationships with HMOs or PPOs. As a result, many of the Company's small
business customers elected to seek alternative coverage or became self-insured.
In order to combat this trend, the Company's management is committed to
expand distribution and develop client relationships with established HMOs. The
Company will seek to build economies of scale by continuing to pursue vigorously
these relationships, as well as by executing an acquisition strategy aimed at
consolidating the third party administrator industry. In addition, the Company
expects to pursue administrative services contracts with large employers to
administer their self-insured health care plans, and it may also invest in the
development of information based products for its payors and their customers.
Starting in 1994, the Company has also pursued contracts with state
sponsored health care purchasing alliances, initially in Florida, and in
1995-1996, with additional contracts in North Carolina, Kentucky, and
Washington. The Company has incurred substantial expenses in connection with the
start up of these contracts, and, to date, the alliance business has been
unprofitable. The primary material risks associated with alliance contracts are
(i) private enterprises will not accept the use of a government-sponsored
program and will therefore fail to provide an adequate number of enrollees to
support a revenue base (over which fixed costs may be spread); (ii) the number
of enrollees per group will be so low that margins are insufficient to cover the
fixed costs of set up for the group; (iii) the level of marketing, enrollment,
and customer service required will be materially higher than expected, therefore
increasing the variable costs required under the contract; and (iv) the
independent agents on whom the Company relies to distribute the product are not
enthusiastic about the alliance program and, as a result, program enrollment
fails to meet expectations. During the quarter ended December 31, 1994, the
Company recorded a pre-tax charge of approximately $3.6 million related to state
sponsored and private health care purchasing alliances. The Company has also
announced that an additional charge in the amount of $2.6 million was taken in
the third quarter of 1996. There can be no assurance that the Company will be
able to recoup its investment in developing these relationships or that these
operations will ultimately be profitable.
The implementation of this overall strategy involves substantial risks, and
there can be no assurance that this strategy will be effectively implemented. In
addition, it is likely that the Company will experience a flattening or decrease
in net margins as it pursues this aggressive expansion strategy.
5
<PAGE> 7
RISKS RELATED TO GROWTH THROUGH ACQUISITIONS
The Company's strategy has included the acquisition of other managed care
services companies, as well as the acquisition of blocks of health care
administrative services business. Growth through acquisition involves
substantial risks, including the risk of improper valuation of the acquired
business. In addition, the value of such an acquired business or block of
business could be impaired if the Company is not successful in integrating the
business or block of business into its existing operations. These risks are
increased when the Company elects to make such acquisitions on a leveraged
basis. In 1995, the Company acquired, in two separate transactions, two
administrative services businesses for a total consideration of $17.6 million
($5.0 million of which is being held in escrow). On July 1, 1996, the Company
acquired all of the issued and outstanding shares of capital stock of
Consolidated Group, Inc., Consolidated Group Claims, Inc., Consolidated Health
Coalition, Inc., and Group Benefit Administrators Insurance Agency, Inc.
(collectively, the "Consolidated Group") for a purchase price of $61.6 million.
Consolidated Group, like the Company, provides distribution and administrative
services to payors interested in accessing the small group market. On July 1,
1996, the Company acquired all of the issued and outstanding shares of capital
stock of Harrington Services Corporation ("Harrington") for a purchase price
consisting of (i) approximately $32.5 million in cash, and (ii) 1,400,110 shares
of the Company's Common Stock. Harrington's principal business is the
administration of medical benefits for self-funded health care plans of
primarily large employer groups. The combined 1995 revenues of Harrington and
the Consolidated Group exceeded the Company's 1995 revenues.
There can be no assurance that the Company will successfully and profitably
integrate the businesses of Harrington and Consolidated Group into its existing
operations. In addition, certain costs will be incurred to successfully
integrate these acquired companies.
The Company may compete for acquisition and expansion opportunities with
companies which have significantly greater resources than the Company. There can
be no assurance that suitable acquisition candidates will be available, that
financing for such acquisitions will be obtainable on terms acceptable to the
Company, that such acquisitions can be consummated, or that acquired businesses
or blocks of business can be integrated successfully and profitably into the
Company's operations.
SIGNIFICANT BORROWINGS
In connection with its growth strategy, the Company has incurred
significant indebtedness with relatively short-term repayment schedules under
its primary credit facility (the "Line of Credit"). On September 13, 1996, the
Company announced an expansion of its credit facility from $85 million to $175
million. First Union National Bank of North Carolina is the "agency bank," and
the participating banks are Barnett Bank, N.A., Fleet Bank N.A., The Fifth Third
Bank of Columbus, NationsBank, N.A., SouthTrust Bank of Alabama and SunTrust
Bank, Tampa Bay. At December 31, 1996, the Company's total indebtedness under
the Line of Credit was approximately $55 million, of which approximately 13.3%
will be due on November 30, 1998. An additional 13.3% will be due on April 30,
1999. On both November 30, 1999 and April 30, 2000, an additional 16.7% will be
due. Finally, on both November 30, 2000 and April 30, 2001, an additional 20%
will be due. The Company's borrowing under the Line of Credit will result in
interest expense that will range from LIBOR plus 125 to 175 basis points or New
York prime plus 25 to 75 basis points. For 1996 and 1997, interest expense will
approximate $2.5 million and $9.0 million, respectively, based on currently
prevailing interest rates and assuming the outstanding indebtedness is paid in
accordance with the existing payment schedule without any prepayment or
additional borrowings. Such interest payments must be made regardless of the
Company's operating results. The Line of Credit is guaranteed by the Company's
subsidiaries and secured by the stock of such subsidiaries.
On September 13, 1996, the Company entered into an interest rate swap
agreement with NationsBank, N.A. ("NationsBank"). According to the terms of the
agreement, the Company is obligated to pay NationsBank on the 17th of each
month, commencing October 17, 1996 and ending September 17, 2001, monthly
interest at a fixed per annum rate of 6.61% on the principal amount of the swap,
which is $25 million. In exchange, NationsBank will reimburse the Company based
on the prevailing one month LIBOR rate, thereby matching the floating rate index
as required on the Line of Credit.
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On October 21, 1996, the Company entered into an interest rate swap
agreement with First Union National Bank of North Carolina ("First Union").
According to the terms of the agreement, the Company is obligated to pay First
Union on the 22nd of each month, commencing November 22, 1996 and ending October
22, 1999, monthly interest at a fixed per annum rate of 6.10% on the principal
amount of the swap, which is $15 million. In exchange, First Union will
reimburse the Company based on the prevailing one month LIBOR rate, thereby
matching the floating rate index as required on the Line of Credit.
RISKS RELATED TO GOODWILL
In March 1995, the Financial Accounting Standards Board issued its
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("FASB 121"), which became effective for fiscal years beginning after December
15, 1995. In addition to the adoption of FASB 121 on January 1, 1996, the
Company will continue to evaluate, where appropriate and on a regular basis,
whether events and circumstances have occurred that indicate the carrying amount
of goodwill warrants revision or is not recoverable, based on estimated future
undiscounted cash flows from operations, in accordance with Accounting
Principles Board Opinion 17, "Intangible Assets".
FASB 121 established standards for determining when impairment losses on
long-lived assets, including goodwill, have occurred and how impairment losses
should be measured. The Company is required to review long-lived assets and
certain intangibles, to be held and used, for impairment whenever events or
changes in circumstances indicate that the carrying value of such assets may not
be recoverable. In performing such a review for recoverability, the Company is
required to compare the expected future cash flows to the carrying values of the
long-lived assets and identifiable intangibles at the lowest level of
identifiable cash flows. If the sum of the expected future undiscounted cash
flows is less than the carrying amount of such assets and intangibles, the
assets are impaired, and the assets must be written down to their estimated fair
value. The Company estimates the discounted future value of anticipated future
cash flows as a measure of the fair value, using a discount rate of 16%, which
approximates management's estimate of the Company's estimated weighted average
cost of capital.
After performing a review for impairment of goodwill related to each of the
Company's acquired businesses and applying the principles of measurement
contained in FASB 121, the Company recorded a pre-tax charge against earnings of
$13.7 million in the third quarter of 1996, representing approximately 7.6% of
the Company's pre-charge goodwill. The pre-tax charge is attributable to
impairment of goodwill recorded on the following acquisitions: Diversified Group
Brokerage Corporation (acquired in October 1995), $6.6 million and Third Party
Claims Management, Inc. (acquired in August 1995), $7.1 million.
The assets of DGB were acquired by the Company's wholly-owned subsidiary,
HPS, on October 12, 1995. DGB, located in Marlborough, Connecticut, is a third
party administrator providing managed health care administrative services to
self-funded employers, typically having between 250 and 2,000 employees in the
New England market. At the time of this acquisition, the Company projected a 10%
to 15% growth rate in net cash flows and paid a purchase price which resulted in
$9.8 million excess of purchase price over the fair value of the assets
acquired. Since this acquisition, the DGB business has not achieved, and is not
expected to achieve, the revenue and net cash flow projections prepared at the
time of the acquisition due to, among other things, higher than originally
expected attrition rates resulting in ongoing decreases in net revenues (due in
part to increased pricing resulting from a reinsurance carrier's departure from
DGB's market), and an inadequate distribution system, as evidenced by an
underperforming sales force and greater than anticipated operating costs. The
Company's efforts to correct these deficiencies have not enabled it to meet its
original projections. The Company has determined that its revised projected cash
flows will not fully provide for the recovery of the goodwill balance of $8.8
million. Accordingly, the Company has written off $6.6 million of goodwill
associated with the DGB acquisition. Any further significant declines in the
Company's projected net cash flows may result in additional write-downs of
remaining goodwill.
TPCM was acquired by the Company's wholly-owned subsidiary, HPS, on August
31, 1995. TPCM is a third party administrator providing managed health care
administrative services to hospitals and other health care institutions which
offer self-funded health care benefits. At the time of this acquisition, the
Company
7
<PAGE> 9
projected a 10% to 15% growth rate in net cash flows and paid a purchase price
which resulted in $8.1 million excess of purchase price over fair market value
of assets acquired. Since this acquisition, TPCM has not achieved, and does not
expect to achieve, the revenue and net cash flow projections prepared at the
time of the acquisition due to, among other things, higher than originally
expected attrition rates, significantly higher than expected claims experience
(claims filed per enrollee), and greater than anticipated operating costs due to
the inability to obtain economies of scale through integration. The Company's
efforts to correct these deficiencies have not enabled it to meet its original
projections. Lives covered at TPCM decreased by 32,000 during 1996. The Company
has determined that its revised projected cash flows will not fully provide for
the recovery of the goodwill balance of $7.5 million. Accordingly, the Company
has written off $7.1 million of goodwill associated with the TPCM acquisition.
Any further significant declines in the Company's projected net cash flows may
result in additional write-downs of remaining goodwill.
To understand how the Company books acquisitions in purchase transactions,
an understanding of the unique nature of the business is essential. Because
administrators can operate with a minimal amount of capital, acquired companies
typically have modest tangible asset bases. As evidenced by the Company's recent
experiences at Harrington and CGI, other than the underlying business, there are
no intangible long-lived assets such as work force, customer base, or supplier
relationships to which the Company could assign significant value, as these are
relationships that routinely turn over and are replaced in the ordinary course
of business. Often no single customer is a significant part of the business, and
customers typically have annual contracts which may or may not be renewed.
Renewal rates can vary significantly on an annual basis. Accordingly, values
cannot be assigned to individual customers or contracts. Thus goodwill is often
a significant portion of the purchase price.
The Company anticipates reductions in revenue at TPCM and DGB of
approximately 30% and 17%, respectively, in 1997. TPCM and DGB represented
approximately 5% of the Company's consolidated revenue in the fourth quarter of
1996. The Company continually evaluates these operations for opportunities to
reverse these revenue losses and adjust operating costs in response to changing
conditions and does not believe these operations will create any further
materially adverse impact on future results of operations.
There can be no assurance that the Company will successfully and profitably
integrate the businesses of Harrington and Consolidated Group into its existing
operations. In addition, certain costs will be incurred to successfully
integrate these acquired companies. Although Harrington and Consolidated Group
are significantly larger companies with a broader customer base over which to
spread risk, more infrastructure, and longer histories of servicing customers,
and management remains optimistic about the future, there can be no assurance
that adverse renewals will not occur in the future. The Company will continue to
evaluate on a regular basis whether events and circumstances have occurred that
indicate that the carrying amount of goodwill may not be recoverable. Although
the net unamortized balance of goodwill is not considered to be impaired, any
such future determination requiring the write-off of a significant portion of
unamortized goodwill could have a material adverse effect on the Company's
financial results.
RELIANCE ON PAYORS
Typically, the Company's insurance and managed care payors sign contracts
with the Company that are cancelable by either party without penalty upon
advance written notice of between 90 days and one year and are also cancelable
upon a significant change of ownership of the Company. The New England, Celtic
Life Insurance Company, and Ameritas Life Insurance Corporation businesses
accounted for approximately 31.0%, 23.0%, and 10.7%, respectively, of the
Company's consolidated revenue in 1995 and approximately 16.2%, 12.5%, and 6.5%,
respectively, of the Company's consolidated revenue for the year ended December
31, 1996. Although this decline is due primarily to the Company's expansion
through acquisition, which has diluted its concentration of revenues from these
sources, it should be noted that the Company continues to experience higher
lapses than originations in the business written with these payors, and it is
not certain when, if ever, this trend will be reversed. In the third quarter of
1996, Metropolitan Life Insurance Company completed a merger with The New
England. The Company is unable to predict what effect, if any, such merger will
ultimately have on the Company's relationship with The New England.
8
<PAGE> 10
Historically, the majority of Consolidated Group's business was written
with The Travelers Insurance Company, which recently combined with the health
insurance business of Metropolitan Life Insurance Company to form MetraHealth.
Subsequently, MetraHealth was acquired by United HealthCare, one of the nation's
leading HMO companies. Between July 1, 1996 and December 31, 1996, this business
represented approximately 75% of Consolidated Group's revenue, or approximately
13% of the Company's consolidated revenue. The Company is dependent on United
HealthCare's commitment to the small group market and on the Company's ultimate
success in converting the MetraHealth business to United HealthCare's new
products. Should the Company have to move this business to another payor it
could experience higher than normal lapse rates and lower than normal margins.
The abandonment of the small group market by either The New England, Celtic
Life Insurance Company, or Ameritas Life Insurance Corporation, indemnity
payors' ability to manage medical losses, and the degree to which the Company is
successful in the MetraHealth conversion, could have a material adverse effect
on the Company. With respect to the business serviced by the Company, a decision
by any one of these payors to administer and distribute a significant portion of
its products directly to small businesses also could have a material adverse
effect on the Company.
DEPENDENCE ON KEY PERSONNEL
The success of the Company depends to a large degree upon the efforts of
its executive officers, the loss of whose services could have a material adverse
effect on its business and prospects. The Company does not generally enter into
employment agreements with its executive officers, and such executive officers
are generally not bound by any noncompetition agreement following termination of
their employment.
UNCERTAINTIES RELATING TO HEALTH CARE REFORM INITIATIVES
Since 1993, many competing proposals have been introduced in Congress and
various state legislatures have called for general health care insurance market
reforms to increase the access and availability of group health insurance and to
require that all businesses offer health insurance coverage to their employees.
For example, the Health Insurance Portability and Accountability Act of 1996 was
signed into law in August 1996. This law, among other things, provides for
insurance portability for individuals who lose or change jobs, limits exclusions
for pre-existing conditions, and establishes a pilot program for medical savings
accounts. It is uncertain what additional health care reform legislation, if
any, will ultimately be implemented or whether other changes in the
administration or interpretation of governmental health care programs will
occur. Although recent proposals on health care reform have focused primarily on
Medicare and Medicaid reform, it is not possible to predict if proposals calling
for broad insurance market reform will be reintroduced in Congress or in any
state legislature in the future, or if and when any such proposal may be
enacted. Additionally, the adoption of a publicly-financed, single payor,
national or state health plan not requiring the marketing, distribution and
administrative services currently delivered by the Company would have a material
adverse effect on the Company's business. It is possible that health care reform
at the federal or state level, whether implemented through legislation or
through action by federal or state administrative agencies, would require the
Company to make significant changes to the way it conducts its business.
Although it is not possible at this time to predict accurately the nature or
effects of health care reform or whether it will be adopted and implemented, if
at all, no assurances can be given that health care reform will not materially
and adversely affect the Company's business.
GOVERNMENT REGULATION
The Company is subject to regulation under the health care and insurance
laws and other statutes and regulations of all 50 states, the District of
Columbia and Puerto Rico. Many states in which the Company provides claims
administration services require the Company or its employees to receive
regulatory approval or licensure to conduct such business. Provider networks are
also regulated in many states, and certain states require the licensure of
companies, such as the Company, which provide utilization review services. The
Company's operations are dependent upon its continued good standing under
applicable licensing laws and regulations. Such laws and regulations are subject
to amendment or interpretation by regulatory authorities in
9
<PAGE> 11
each jurisdiction. Generally, such authorities have relatively broad discretion
when granting, renewing, or revoking licenses or granting approvals. These laws
and regulations are intended to protect insured parties rather than
stockholders, and differ in content, interpretation and enforcement practices
from state to state. Moreover, with respect to many issues affecting the
Company, there is a lack of guiding judicial and administrative precedent.
Certain of these laws could be construed by state regulators to prohibit or
restrict practices which have been significant factors in the Company's
operating procedure for many years. The Company could risk major erosion and
even "rebate" exposure in these states if state regulators were to deem the
Company's practices to be impermissible.
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
governs the relationships between certain health benefit plans and the
fiduciaries of those plans. In general, ERISA is designed to protect the
ultimate beneficiaries of the plans from wrongdoing by the fiduciaries. ERISA
provides that a person is a fiduciary of a plan to the extent that such person
has discretionary authority in the administration of the plan or with respect to
the plan's assets. Each employer is a fiduciary of the plan it sponsors, but
there can also be other fiduciaries of a plan. ERISA imposes various express
obligations on fiduciaries. These obligations include barring a fiduciary from
permitting a plan to engage in certain prohibited transactions with parties in
interest or from acting under an impermissible conflict of interest with a plan.
Generally, a party in interest with respect to a plan includes a fiduciary of
the plan and persons that provide services to the plan. Violations of ERISA by
fiduciaries can result in the rescission of any affected agreement, the
imposition of substantial civil penalties on fiduciaries and parties in interest
and the imposition of excise taxes under the Internal Revenue Code on parties in
interest.
Currently, the Company's Consolidated Group subsidiary is undergoing a
Department of Labor (the "DOL") audit in which the DOL has raised various
questions about the application of ERISA to the way that subsidiary does
business. This audit is ongoing and there can be no assurance that the DOL will
not take positions which could require changes to the way this subsidiary
operates or result in the assertion or the imposition of administrative fines
and penalties.
The application of ERISA to the operations of the Company and its customers
is an evolving area of law and is subject to ongoing regulatory and judicial
interpretations of ERISA. Although the Company strives to minimize the
applicability of ERISA to its business and to ensure that the Company's
practices are not inconsistent with ERISA, there can be no assurance that courts
or the DOL will not take positions contrary to the current or future practices
of the Company. Any such contrary positions could require changes to the
Company's business practices (as well as industry practices generally) or result
in liabilities of the type referred to above. Similarly, there can be no
assurance that future statutory changes to ERISA will not significantly affect
the Company and its industry.
COMPETITION
The Company faces competition and potential competition from traditional
indemnity insurance carriers, Blue Cross/Blue Shield organizations, managed care
organizations, third party administrators, utilization review companies, risk
management companies, and health care informatics companies. The Company
competes principally on the basis of the price and quality of its services. Many
large insurers have actively sought the claims administration business of
self-funded programs and have begun to offer utilization review and other
managed health care services similar to the services offered by the Company.
Many of the Company's competitors and potential competitors are considerably
larger and have significantly greater resources than the Company. There can be
no assurance that the Company will be able to compete effectively against such
competitors in the future.
AUTHORIZATION OF PREFERRED STOCK; EFFECT OF DELAWARE GENERAL CORPORATION LAW
The Company's Certificate of Incorporation authorizes the issuance of
preferred stock with such designation, rights and preferences as may be
determined from time to time by the Board of Directors. Accordingly, the Board
of Directors is empowered, without stockholder approval, to issue preferred
stock with dividend, liquidation, conversion, voting or other rights which could
adversely affect the voting power or other
10
<PAGE> 12
rights of the holders of the Company Common Stock. The ability of the Company to
issue preferred stock and the application of Section 203 of the Delaware General
Corporation Law could have the effect of discouraging, delaying or preventing a
change in control of the Company. Section 203 of the Delaware General
Corporation Law prohibits a Delaware corporation from engaging in a wide range
of specified transactions with any interested stockholder, defined to include,
among others, any person or entity who in the previous three years obtained 15%
or more of any class or series of stock entitled to vote in the election of
directors, unless, among other exceptions, the transaction is approved by (i)
the Board of Directors prior to the date the interested stockholder obtained
such status or (ii) the holders of two-thirds of the outstanding shares of each
class or series not owned by the interested stockholder.
RISK OF CONTRACTING WITH GOVERNMENT AGENCIES
An increasing number of states, including some of the principal states in
which the Company does business, are providing for the statutory creation of
health care purchasing alliances. As part of its business strategy, the Company
is aggressively seeking to provide administrative and related services to these
state-sponsored health care purchasing alliances. The competitive bidding
processes in which the Company typically is required to participate in order to
obtain this business may limit the profitability of this business and lengthen
the amount of time required to recover start-up expenses. There can be no
assurance that the health care purchasing alliance contracts obtained by the
Company will ultimately be profitable for the Company. Additionally, changes in
governmental policy could make the alliances substantially less attractive to
small businesses and could materially and adversely affect the Company's health
care purchasing alliance revenues. Also, the health care purchasing alliance
contracts currently held by the Company contain broad cancellation provisions
which enable the health care purchasing alliance to cancel the administration
contracts on relatively short notice without penalty.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of the Company Common Stock in the public
market under Securities Act Rule 144 ("Rule 144") or otherwise, or the
perception that such sales could occur, may adversely affect prevailing market
prices of the Company Common Stock and could impair the future ability of the
Company to raise capital through an offering of its equity securities. As of
March 10, 1997, the Company had approximately 14,991,126 shares of Company
Common Stock outstanding. Of those, approximately 4,030,000 shares were freely
tradable in the public market and approximately 9,370,000 shares of the Company
Common Stock became eligible for sale in the public market, pursuant to Rule
144, in the fourth quarter of 1996. In addition, certain stockholders owning
approximately 6,655,578 shares have the right to have their shares of the
Company Common Stock included in future registered public offerings of Company
Common Stock.
On May 21, 1996, the Board of Directors of Noel adopted a Plan of Complete
Liquidation and Dissolution of Noel (the "Plan") which was approved by the Noel
shareholders at a Special Meeting of Shareholders of Noel held on March 19,
1997. Pursuant to the Plan, Noel will be liquidated (i) by the sale of such of
its assets as are not to be distributed in-kind to its shareholders, and (ii)
after paying or providing for all its claims, obligations and expenses, by cash
and in-kind distributions to its shareholders pro rata and, if required by the
Plan or deemed necessary by Noel's Board of Directors, by distributions of its
assets from time to time to one or more liquidating trusts established for the
benefit of the then shareholders, or by a final distribution of its then
remaining assets to a liquidating trust established for the benefit of the then
shareholders. Noel currently holds 4,275,846 shares of the Company Common Stock
and has stated that it currently intends to distribute most of its shares of the
Company Common Stock to its shareholders. On February 7, 1997, Noel sold
1,320,000 shares of Company Common Stock to ADP and in the agreement relating to
such sale to ADP, Noel has agreed that, other than pursuant to a distribution to
Noel's shareholders, it will not transfer any of its shares of Company Common
Stock prior to September 30, 1997.
11
<PAGE> 13
LEGAL PROCEEDINGS
In 1995, Self Funded Strategies, L.L.C. ("SFS"), a former provider of
marketing services for the Company, filed a complaint against the Company
claiming wrongful termination of an exclusive marketing agreement and breach of
contract. The complaint asserted damages of $25,000,000. The parties to the
dispute agreed to binding arbitration and the arbitration proceedings occurred
during the week of October 29, 1996. The arbitration panel's decision, rendered
in December 1996, is not expected to materially alter the amount or timing of
future payments that the Company is contractually obligated to make to SFS under
the marketing agreement, and thus is not expected to materially affect the cash
flows of the Company's business.
In connection with the acquisition of Harrington, the Company agreed to use
its best efforts to cause a registration statement sufficient to permit the
public offering and sale of the shares of the Company's Common Stock issued to
the Harrington stockholders in the acquisition, through the facilities of all
appropriate securities exchanges and the over-the-counter market, provided that
in all events, such registration statement shall have become effective on or
before October 31, 1996. On October 30, 1996, the Company received a letter from
Harrington's shareholders' representative notifying the Company that it was in
apparent violation of such agreement and reserving all rights under such
agreement. Due to the inability of both parties to finalize the closing balance
sheet for the transaction, and due to the disclosure requirements for the then
pending Health Risk Management, Inc. merger, the Company was not able to have
such registration statement declared effective by October 31, 1996. While the
Company believes it has meritorious defenses against any possible claim, as of
the date hereof, it is not possible for the Company to evaluate what, if any,
damages might result from such notice.
The Company is involved in various claims arising in the normal course of
business. In the opinion of the Company's management, although the outcomes of
these claims arising in the normal course of business are uncertain, in the
aggregate they are not likely to have a material adverse effect on the Company's
business, financial condition and results of operations.
THE COMPANY
HealthPlan Services Corporation was incorporated in August 1994 as a
Delaware corporation. Unless the context otherwise requires, as used in this
Prospectus the "Company" refers to HealthPlan Services Corporation and its
direct and indirect wholly owned subsidiaries for periods subsequent to
September 30, 1994, and to its predecessor for prior periods. The Company's
principal executive offices are located at 3501 Frontage Road, Tampa, Florida
33607. The Company's telephone number is (813) 289-1000.
The Company's initial principal operating subsidiary, HealthPlan Services,
Inc., was founded in 1970 by James K. Murray, Jr., the Company's current
President and Chief Executive Officer, Charles H. Guy, Jr., and Trevor G. Smith
(the "Founders"), each of whom currently serves as a director of the Company.
D&B purchased the business in 1978 and operated it as a division. Mr. Murray
continued to play an active role in the business until 1987, when he left to
assume roles of increasing responsibility within D&B, which included serving as
president of two of its largest operating divisions. On September 30, 1994, the
Founders, Noel Group, Inc., a publicly-traded company based in New York, and
three funds in which Trinity Ventures, Ltd., a privately-held venture capital
company, is the general partner (the "Initial Investors"), purchased the
business (the "Acquisition"), which was then called Plan Services, Inc., from
D&B Plan Services Corporation, a Delaware corporation.
The Company, including its newly acquired operating units, Consolidated
Group, Inc. ("Consolidated Group") and Harrington Services Corporation
("Harrington"), is a leading provider of marketing, administrative, and risk
management services and solutions for benefit programs. The Company provides
these services for over 125,000 small businesses and large, self-funded
organizations, covering more than three million members in the United States.
The Company's clients include managed care organizations, insurance companies,
integrated health care delivery systems, self-funded benefit plans, and health
care purchasing alliances. The Company and its operating units function solely
as service providers generating fee-based income and do not assume any
underwriting risk.
12
<PAGE> 14
SHARES COVERED BY THIS PROSPECTUS
The following table sets forth certain information regarding the beneficial
ownership of the Company Common Stock as of March 24, 1997, and as adjusted to
reflect the Noel Distribution. Joseph S. DiMartino is a director of the Company
and is the Chairman of the Board of Noel.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED AFTER
TO OFFERING(1) SHARES OFFERING(1)(2)
------------------- BEING -------------------
NUMBER PERCENT OFFERED NUMBER PERCENT
--------- ------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Noel Group, Inc.............................. 4,275,846 29% 4,275,846 0(3) 0%
</TABLE>
- ---------------
(1) The percentages shown include the shares of Company Common Stock actually
owned as of March 24, 1997. Noel does not possess the right to acquire any
additional shares of Company Common Stock within 60 days of such date.
(2) Assumes the distribution of all of the Shares offered hereby.
(3) As of the close of business on March 24, 1997, Noel owned directly 4,275,846
shares. In addition, Joseph S. DiMartino, who is a director of the Company
and Noel, beneficially owned 8,000 shares of Company Common Stock,
including currently exercisable options to purchase 4,800 shares.
The Company has agreed to indemnify Noel and Noel has agreed to indemnify
the Company against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, in connection with the distribution of the
Shares offered by this Prospectus.
The Company will pay the expenses incurred in connection with the
preparation and filing of this Prospectus and the related Registration
Statement.
USE OF PROCEEDS
No cash or other proceeds will be received by the Company as a result of
the Noel Distribution.
PLAN OF DISTRIBUTION
The Noel Distribution is being made pursuant to Noel's Plan of Complete
Liquidation and Dissolution which was approved by the stockholders of Noel on
March 19, 1997. The Noel Distribution will be made on , (the
"Distribution Date") to stockholders of record of Noel at the close of business
on (the "Record Date"). Based on the shares of Noel Common
Stock outstanding as of , 1997 the Noel Distribution would
be made on the basis of shares of Company Common Stock for every one share
of Noel Common Stock held on the Record Date. Prior to the Distribution Date,
Noel will deliver certificates representing shares of Company Common Stock to
the Distribution Agent for distribution. The Distribution Agent will mail, on or
about the Distribution Date to Noel stockholders of record on the Record Date
certificates representing the shares of Company Common Stock. Noel stockholders
will not be required to pay for shares of Company Common Stock received in the
Noel Distribution, or to surrender or exchange shares of Noel Common Stock in
order to receive shares of Company Common Stock. All such shares of Company
Common Stock will be fully-paid and non-assessable.
As of March , 1997 there were outstanding options to purchase an
aggregate of 1,953,441 shares of Noel Common Stock and warrants to purchase an
aggregate of 1,120,000 shares of Noel Common Stock.
As more fully described in Noel's Proxy Statement for the Special Meeting
of Noel's Shareholders held on March 19, 1997, at which meeting the Plan was
approved by Noel's shareholders, the terms of the warrants require the Noel
Board of Directors to take action to protect the warrant holders against any
dilution or
13
<PAGE> 15
impairment which may result from any sale or distribution of Noel's assets. In
addition, the terms of the warrants and the options both provide that in the
event that Noel shall effect a distribution, other than a normal and customary
cash distribution, upon shares of Noel Common Stock, the Board of Directors of
Noel may, in order to prevent significant diminution in the value of such
options and warrants, take such measures as it deems fair and equitable.
Accordingly, in order to prevent significant diminution in the value of the
options and warrants that may result from distributions of Noel's assets
pursuant to the Plan, including, the Noel Distribution, it is anticipated that
the Compensation Committee of the Board of Directors of Noel may, at its
discretion, adjust the warrants and/or options by, among other things, providing
that upon each distribution of assets in kind to Noel shareholders pursuant to
the Plan, including the Noel Distribution, a number of shares of each
distributed security equal to the aggregate number of outstanding options and/or
warrants times the number of shares of such distributed entity receivable by the
shareholders in respect of each outstanding share of Noel Common Stock would be
withheld such that, in addition to the shares of Noel Common Stock otherwise
issuable on exercise of the warrants and/or options, the warrant holders and/or
option holders will be entitled to receive the withheld securities (or the
proceeds of their sale if the reserved shares shall have been sold at the
discretion of the Compensation Committee). Accordingly, in connection with the
Noel Distribution, up to shares of the Company Common Stock being
registered hereby may be reserved by Noel for transfer to the warrant and/or
option holders upon exercise of their respective warrants and options. In the
event and to the extent that such shares are withheld and the warrants and/or
options for which they are withheld are not exercised prior to a date specified
by the Compensation Committee, such reserved shares will either be (i)
distributed pro rata to Noel's shareholders, or (ii) sold by Noel. Any such sale
may be in one or more transactions on the New York Stock Exchange, in the
over-the-counter market, in private sales or negotiated transactions, at prices
and at terms then prevailing or at prices related to the then current market
price, or as otherwise agreed in negotiated transactions.
In connection with the Noel Distribution, Noel may effect sales by selling
shares of Company Common Stock to or through broker-dealers, and such
broker-dealers will receive compensation in the form of discounts or commissions
from Noel and may receive commissions from the purchaser of shares for whom they
may act as agent. A broker or dealer selling shares of Company Common Stock for
Noel or purchasing such shares from Noel for purposes of resale may be deemed to
be an underwriter under the Securities Act, and any compensation received by any
such broker or dealer may be deemed underwriting compensation. Neither the
Company nor Noel can presently estimate the amount of such compensation which is
to be paid by Noel; however, the Company has been advised that such discounts or
commissions from Noel will not exceed those customary in the types of
transaction involved. In addition, any securities covered by this Prospectus
which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather
than pursuant to this Prospectus.
No certificates or scrip representing fractional shares of Company Common
Stock will be issued to Noel shareholders as part of the Noel Distribution. In
lieu of receiving fractional shares of Company Common Stock, each holder of Noel
Common Stock who would otherwise be entitled to receive a fractional share will
receive cash for such fractional interests. The Distribution Agent will, as soon
as practicable after the Distribution Date, aggregate and sell all such
fractional interests on the New York Stock Exchange at then prevailing market
prices and distribute the aggregate proceeds (net of brokerage fees) ratably to
Noel shareholders otherwise entitled to such fractional interests.
The National Association of Securities Dealers, Inc. (the "NASD") has set
April , 1997, as the Noel Distribution's "Ex-Dividend Date" for shares of Noel
Common Stock. Hence, persons who sold shares of Noel Common Stock subsequent to
the Record Date but prior to the Ex-Dividend Date will be deemed to have sold
the Company Common Stock distributable in respect of the shares of Noel Common
Stock sold and will be required to deliver such stock, plus any cash paid in
lieu of the issuance of fractional shares, to the purchaser of such shares of
Noel Common Stock. Conversely, purchasers of Noel Common Stock subsequent to the
Record Date but prior to the Ex-Dividend Date will be entitled to delivery to
them of the shares of Company Common Stock, plus any cash in lieu of fractional
shares, distributed with respect to the shares of Noel Common Stock so
purchased.
Following the Noel Distribution, Noel will hold no shares of Company Common
Stock.
14
<PAGE> 16
All shares of Company Common Stock received by Noel shareholders in the
Noel Distribution will be freely transferable, except for shares received by
persons who may be deemed to be "affiliates" of the Company under the Securities
Act of 1933, as amended, and the rules promulgated thereunder (the "Securities
Act"). Persons who may be deemed to be affiliates of the Company after the Noel
Distribution generally include individuals or entities that control, are
controlled by, or are under common control with, the Company, and may include
certain officers and directors of the Company as well as principal stockholders
of the Company, if any. Persons who are affiliates of the Company will be
permitted to sell their shares of Company Common Stock only pursuant to an
effective registration statement under the Securities Act or an exemption from
the registration requirements of the Securities Act, such as the exemption
afforded by Section 4(2) of the Securities Act or by Rule 144 under such Act.
IN ORDER TO BE ENTITLED TO RECEIVE SHARES OF COMPANY COMMON STOCK IN THE
NOEL DISTRIBUTION, NOEL STOCKHOLDERS MUST BE STOCKHOLDERS AT THE CLOSE OF
BUSINESS ON THE RECORD DATE, , 1997.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996, 1995 and 1994, and for the years ended December 31, 1996 and 1995, and for
the period from inception (October 1, 1994 through December 31, 1994),
incorporated in this Prospectus by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting. The
financial statements of the Company as of September 30, 1994, and for the
nine-month period ended September 30, 1994 incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, have
been so incorporated in reliance on the report of Coopers & Lybrand L.L.P.,
independent public accountants, given on the authority of said firm as experts
in auditing and accounting.
The financial statements of Consolidated Group, Inc. and Affiliates, as of
December 31, 1995 and 1994, and for each of the three years ended December 31,
1995, and the financial statements of Consolidated Health Coalition, Inc., as of
December 31, 1995 and 1994 (year of inception) and for each of the two years
ended December 31, 1995, incorporated in this Prospectus by reference have been
so incorporated in reliance on the report of Bonanno, Savino & Davies, P.C.,
independent certified public accountants, given on the authority of said firm as
experts in auditing and accounting.
The financial statements of Harrington Services Corporation as of December
31, 1995 and 1994, and for each of the three years ended December 31, 1995,
incorporated in this Prospectus by reference have been so incorporated in
reliance on the report of Richard A. Eisner & Co., LLP, independent certified
public accountants, given on the authority of said firm as experts in auditing
and accounting.
LEGAL MATTERS
The validity of the Shares being offered hereby will be passed upon by
Fowler, White, Gillen, Boggs, Villareal and Banker, P.A., of Tampa, Florida.
15
<PAGE> 17
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the General Corporation Law of Delaware grants each
corporation organized thereunder the power to indemnify its officers, directors,
employees and agents on certain conditions against liabilities arising out of
any action or proceeding to which any of them is a party by reason of being such
officer, director, employee or agent. The Company's Certificate of
Incorporation, as amended, also provides for the indemnification, to the fullest
extent permitted by the General Corporation Law of Delaware, of such persons.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provision, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
16
<PAGE> 18
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING HEREIN CONTAINED, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO BUY
ANY SECURITY OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES, OR AN
OFFER TO OR SOLICITATION OF ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER
OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE FACTS HEREIN SET FORTH SINCE THE DATE
HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Forward-Looking Statements............ 2
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Prospectus Summary.................... 4
Risk Factors.......................... 5
The Company........................... 12
Shares Covered by this Prospectus..... 13
Use of Proceeds....................... 13
Plan of Distribution.................. 13
Experts............................... 15
Legal Matters......................... 15
Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities......................... 16
</TABLE>
------------------
======================================================
======================================================
4,275,846 SHARES
HEALTHPLAN SERVICES CORPORATION
COMMON STOCK
--------------------
PROSPECTUS
--------------------
MARCH , 1997
======================================================
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses (other than the SEC registration fee) of the sale of the
shares of Common Stock are as follows:
<TABLE>
<S> <C>
SEC registration fee........................................ $21,460.21
Legal fees and expenses..................................... 10,000
Accounting fees and expenses................................ 10,000
Printing and engraving expenses............................. 5,000
Miscellaneous fees and expenses............................. 5,000
----------
Total..................................................... $51,460.21
==========
</TABLE>
All such fees and expenses will be paid by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware (the "General
Corporation Law") grants each corporation organized thereunder the power to
indemnify its officers, directors, employees and agents on certain conditions
against liabilities arising out of any action or proceeding to which any of them
is a party by reason of being such officer, director, employee or agent. Section
102(b)(7) of the General Corporation Law permits a Delaware corporation, with
the approval of its stockholders, to include within its certificate of
incorporation a provision eliminating or limiting the personal liability of its
directors to such corporation or its stockholders for monetary damages resulting
from certain breaches of the directors' fiduciary duty of care, both in suits by
or on behalf of the corporation and in actions by stockholders of the
corporation.
The Company's certificate of incorporation (the "Certificate of
Incorporation") includes an Article which allows the Company to take advantage
of Section 102(b)(7) of the General Corporation Law. The Certificate of
Incorporation also provides for the indemnification, to the fullest extent
permitted by the General Corporation Law, of officers and directors of the
Company. The Company currently maintains policies of insurance under which the
directors and officers of the Company are insured, within the limits and subject
to the limitations of the policies, against certain expenses in connection with
the defense of actions, suits or proceedings, to which they are parties by
reason of being or having been such directors or officers.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following documents are filed as exhibits to this Registration
Statement:
<TABLE>
<C> <S> <C>
2.1 -- Plan of Complete Liquidation and Dissolution of Noel
(included as an exhibit to Noel's Proxy Statement for the
Special Meeting of Shareholders held on March 19, 1997 and
incorporated herein by reference).
4.1 -- Excerpts from Certificate of Incorporation, as amended, of
the Registrant (included as Exhibit 4.1 to the Registrant's
Registration Statement on Form S-8 (Commission File No.
333-07631) and incorporated herein by reference).
4.2 -- Excerpts from Bylaws of the Registrant (included as Exhibit
3.2 to the Registrant's Registration Statement on Form S-1
(Commission File No. 33-90472) and incorporated herein by
reference).
5.1 -- Opinion of Fowler, White, Gillen, Boggs, Villareal and
Banker, P.A. with respect to legality of the securities
being registered.
23.1 -- Consent of Fowler, White, Gillen, Boggs, Villareal and
Banker, P.A. (included in its opinion filed as Exhibit 5.1).
23.2 -- Consent of Price Waterhouse LLP.
23.3 -- Consent of Bonanno, Savino & Davies, P.C.
23.4 -- Consent of Richard A. Eisner & Company, LLP.
</TABLE>
II-1
<PAGE> 20
23.5 -- Consent of Coopers & Lybrand L.L.P.
24.1 -- Powers of Attorney of Directors and Executive Officers
(included on the Signature Pages of this Registration
Statement).
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with the Commission by the registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-2
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Tampa, State of Florida, on March 25, 1997.
HEALTHPLAN SERVICES CORPORATION
By: /s/ WILLIAM L. BENNETT
------------------------------------
William L. Bennett
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the directors and/or executive
officers of HealthPlan Services Corporation whose signature appears below hereby
appoints William L. Bennett and James K. Murray, Jr., and each of them
severally, as his attorney-in-fact to sign in his name and behalf, in any and
all capacities stated below and to file with the Commission, any and all
amendments, including post-effective amendments to this registration statement,
making such changes in the registration statement as appropriate, and generally
to do all such things in their behalf in their capacities as officers and
directors to enable HealthPlan Services Corporation to comply with the
provisions of the Securities Act of 1933, and all requirements of the Securities
and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ WILLIAM L. BENNETT Chairman of the Board, March 25, 1997
- ----------------------------------------------------- Director
William L. Bennett
/s/ JAMES K. MURRAY, JR. President and chief March 25, 1997
- ----------------------------------------------------- Executive Officer;
James K. Murray, Jr. Director (Principal
Executive Officer)
/s/ JAMES K. MURRAY, III Executive Vice President March 25, 1997
- ----------------------------------------------------- and Chief Financial
James K. Murray, III Officer (Principal
Financial and Accounting
Officer)
/s/ JOSEPH A. CALIFANO, JR. Director March 25, 1997
- -----------------------------------------------------
Joseph A. Califano, Jr.
/s/ JOSEPH S. DIMARTINO Director March 25, 1997
- -----------------------------------------------------
Joseph S. DiMartino
/s/ JOHN R. GUNN Director March 25, 1997
- -----------------------------------------------------
John R. Gunn
/s/ NANCY KANE Director March 25, 1997
- -----------------------------------------------------
Nancy Kane
/s/ DAVID NIERENBERG Director March 25, 1997
- -----------------------------------------------------
David Nierenberg
/s/ JAMES G. NIVEN Director March 25, 1997
- -----------------------------------------------------
James G. Niven
</TABLE>
II-3
<PAGE> 22
<TABLE>
<S> <C> <C>
/s/ SAMUEL F. PRYOR, IV Director March 25, 1997
- ------------------------------------------------------
Samuel F. Pryor, IV
/s/ TREVOR G. SMITH Director March 25, 1997
- ------------------------------------------------------
Trevor G. Smith
/s/ JAMES F. CARLIN Director March 25, 1997
- ------------------------------------------------------
James F. Carlin
/s/ ARTHUR F. WEINBACH Director March 25, 1997
- ------------------------------------------------------
Arthur F. Weinbach
/s/ HOLYOKE L. WHITNEY Director March 25, 1997
- ------------------------------------------------------
Holyoke L. Whitney
</TABLE>
II-4
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <C> <S> <C>
2.1 -- Plan of Complete Liquidation and Dissolution of Noel
(included as an exhibit to Noel's Proxy Statement for the
Special Meeting of Shareholders held on March 19, 1997 and
incorporated herein by reference).
4.1 -- Excerpts from Certificate of Incorporation, as amended, of
the Registrant (included as Exhibit 4.1 to the Registrant's
Registration Statement on Form S-8 (Commission File No.
333-07631) and incorporated herein by reference).
4.2 -- Excerpts from Bylaws of the Registrant (included as Exhibit
3.2 to the Registrant's Registration Statement on Form S-1
(Commission File No. 33-90472) and incorporated herein by
reference).
5.1 -- Opinion of Fowler, White, Gillen, Boggs, Villareal and
Banker, P.A. with respect to legality of the securities
being registered.
23.1 -- Consent of Fowler, White, Gillen, Boggs, Villareal and
Banker, P.A. (included in its opinion filed as Exhibit 5.1).
23.2 -- Consent of Price Waterhouse LLP.
23.3 -- Consent of Bonanno, Savino & Davies, P.C.
23.4 -- Consent of Richard A. Eisner & Company, LLP.
23.5 -- Consent of Coopers & Lybrand L.L.P.
24.1 -- Powers of Attorney of Directors and Executive Officers
(included on the Signature Pages of this Registration
Statement).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD]
March 31, 1997
HealthPlan Services Corporation
3501 Frontage Road
Tampa, Florida 33607
Gentlemen:
In connection with the Registration Statement on Form S-3 (the
"Registration Statement") filed by HealthPlan Services Corporation, a Delaware
corporation, (the "Company") with the Securities and Exchange Commission on
March 31, 1997 pursuant to the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder, you have requested that we furnish you
with our opinion as to the legality of the 4,275,846 shares of the Company's
common stock, $0.01 par value (the "Shares"), which are registered under the
Registration Statement.
In this regard, we have examined originals or copies of such corporate
records, documents and other instruments relating to the authorization and
issuance of the Shares as we have deemed relevant under the circumstances.
On the basis of the foregoing, it is our opinion that:
1. The Company is duly organized and incorporated and is validly
existing under the laws of the State of Delaware, with an authorized
capitalization consisting of 100,000,000 shares of Common Stock, $.01 par
value per share, and 20,000,000 shares of Preferred Stock, $.01 par value
per share.
2. The Shares have been duly and validly authorized and issued and are
fully paid and non-assessable.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and further consent to the use of our name under the
heading "Legal Matters" in the Registration Statement.
Very truly yours,
FOWLER, WHITE, GILLEN, BOGGS,
VILLAREAL AND BANKER, P.A.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
March 14, 1997 appearing on page F-1 of HealthPlan Services Corporation's Annual
Report on Form 10-K for the year ended December 31, 1996. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Tampa, Florida
March 31, 1997
<PAGE> 1
EXHIBIT 23.3
[BONANNO, SAVINO & DAVIES, P.C. LETTERHEAD]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the reference to our firm under the caption "EXPERTS" and
to the use of our report dated March 15, 1996, relating to the financial
statements of Consolidated Group, Inc. and Affiliates, and of our report dated
March 15, 1996 relating to the financial statements of Consolidated Health
Coalition, Inc. in the Proxy Statement/Prospectus constituting part of this
Registration Statement on Form S-3 of HealthPlan Services Corporation.
/s/ Bonanno, Savino & Davies, P.C.
Needham, Massachusetts
March 27, 1996
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion of our report dated February 16, 1996 on our
audit of the financial statements of Harrington Services Corporation as at
December 31, 1995 and for the year then ended in the Form 8-K/A Amendment
Number 2 and incorporated by reference in the registration statement of
HealthPlan Services Corporation on Form S-3. We also consent to the reference
to our firm under the caption "Experts".
Richard A. Eisner & Company, LLP
New York, New York
March 31, 1997
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
HealthPlan Services Corporation on Form S-3 of our report dated December 2,
1994, on our audit of the financial statements of HealthPlan Services Division
(formerly Plan Services Division, a wholly-owned division of The Dun &
Bradstreet Corporation), as of September 30, 1994 and for the nine-month period
then ended which report is included in the Annual Report on Form 10-K. We also
consent to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Tampa Florida
March 27, 1997
