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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 30, 1996 or
Transition Report Pursuant to Section 13 or 15(d)
----- of the Securities Exchange Act of 1934
For the Transition Period from to
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COMMISSION FILE NUMBER 0-28182
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TRANSITION SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2887598
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
ONE BOSTON PLACE, BOSTON, MASSACHUSETTS 02108
---------------------------------------------
(Address of principal executive offices)
(Zip Code)
(617) 723-4222
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(Registrant's telephone number, including area code)
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 NO X
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
OUTSTANDING AT
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CLASS APRIL 30, 1996
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COMMON STOCK, 16,631,514
$.01 PAR VALUE SHARES
NON-VOTING COMMON STOCK, 356,262
$.01 PAR VALUE SHARES
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TRANSITION SYSTEMS, INC.
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 30, 1996
TABLE OF CONTENTS
Page No.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of
March 30, 1996 (unaudited) and September 30, 1995 .................. 3
Consolidated Statements of Operations for the Three and
Six Months Ended March 30, 1996 and 1995 (unaudited) ............... 4
Consolidated Statements of Cash Flows for the Six
Months Ended March 30, 1996 and 1995 (unaudited) ................... 5
Notes to Interim Consolidated Financial Statements ................. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ................................ 7
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ................ 11
ITEM 5. OTHER INFORMATION .................................................. 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................... 14
SIGNATURES ..................................................................... 15
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TRANSITION SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 30, SEPTEMBER 30,
1996 1995
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 2,949,292 $ 3,843,711
Short-term investments - 7,323,628
Accounts receivable, net 10,866,783 11,550,959
Other current assets 1,916,963 866,882
Deferred income taxes 1,559,585 1,666,236
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Total current assets 17,292,623 25,251,416
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Property and equipment, net 1,025,000 1,015,403
Capitalized software costs, net 1,428,760 1,462,264
Intangible assets, net 3,393,635 7,994
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Total assets $ 23,140,018 $27,737,077
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 845,164 $ 693,094
Accrued expenses 5,433,148 4,023,044
Accounts payable - affiliates 2,011 9,335
Income taxes payable 99,179 1,284,000
Deferred revenue 5,245,989 5,034,776
Revolving line of credit 5,000,000 -
Current portion of long-term debt 4,000,000 -
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Total current liabilities 20,625,491 11,044,249
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Subordinated debt 9,605,461 -
Term loan 30,000,000 -
Deferred income taxes 501,030 501,030
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Total liabilities $ 60,731,982 $11,545,279
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Commitments
Series A non-voting preferred stock 19,059,027 -
Series B convertible preferred stock 32,746,961 -
Series C non-voting convertible preferred stock 1,352,280 -
Stockholders' equity:
Common stock 313,666 300,600
Non-voting common stock warrant 394,539 -
Treasury stock (109,857,203) (1,470,950)
Additional paid-in capital 766,793 -
Retained earnings 17,631,973 17,362,148
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Total stockholders' equity (90,750,232) 16,191,798
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Total liabilities
and stockholders' equity $ 23,140,018 $27,737,077
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The accompanying notes are an integral part of the consolidated financial
statements.
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TRANSITION SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
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March 30, March 25, March 30, March 25,
1996 1995 1996 1995
-------------- ------------ ----------- -----------
Revenues:
Software and implementation $ 5,223,000 $ 4,039,000 $ 9,630,000 $ 6,938,000
Maintenance 2,295,000 1,837,000 4,446,000 3,497,000
----------- ----------- ----------- -----------
Total revenues 7,518,000 5,876,000 14,076,000 10,435,000
----------- ----------- ----------- -----------
Cost of Revenues:
Software and implementation 1,852,000 1,465,000 3,508,000 2,919,000
Maintenance 714,000 476,000 1,522,000 1,026,000
Research and development 820,000 583,000 1,628,000 1,292,000
Sales and marketing 1,133,000 890,000 2,021,000 1,724,000
General and administrative 679,000 614,000 1,226,000 1,170,000
Compensation charge 3,024,000 - 3,024,000 -
----------- ----------- ----------- -----------
Total operating expenses 8,222,000 4,028,000 12,929,000 8,131,000
----------- ----------- ----------- -----------
Income (loss) from operations (704,000) 1,848,000 1,147,000 2,304,000
Interest income 61,000 136,000 209,000 167,000
Interest expense (828,000) - (828,000) -
Amortization of capitalized financing costs (71,000) - (71,000) -
----------- ----------- ----------- -----------
Income (loss) before income taxes (1,542,000) 1,984,000 457,000 2,471,000
Income tax provision (benefit) (632,000) 872,000 188,000 1,067,000
=========== =========== =========== ===========
Net income (loss) $ (910,000) $ 1,112,000 $ 269,000 $ 1,404,000
=========== =========== =========== ===========
Pro forma net income per share $ (0.07) $ 0.08 $ 0.02 $ 0.10
=========== =========== =========== ===========
Pro forma weighted average common
shares outstanding 13,886,129 13,886,129 13,886,129 13,886,129
The accompanying notes are an integral part of the consolidated financial
statements.
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TRANSITION SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
Six Months Ended
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March 30, March 24,
1996 1995
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Cash flows from operating activities:
Net income 269,825 1,403,541
Adjustments to reconcile net income to net cash provided by
operating activities:
Deferred income taxes 106,651 (351,100)
Depreciation and amortization 639,526 699,490
Amortization of capitalized recapitalization costs 70,687 -
Compensation charge in connection with the recapitalization 3,023,964 -
Compensation charge related to options 13,059 -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 684,176 (93,851)
(Increase) in other current assets (1,050,081) (33,486)
Increase (decrease) in accounts payable 152,070 (520,033)
Increase (decrease) in accrued expenses 1,410,104 (431,962)
Increase (decrease) in income taxes payable (1,184,821) 930,557
(Decrease) in due to affiliates (7,324) (27,658)
Increase (decrease) in deferred revenue 211,213 284,923
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Net cash provided by operating activities 4,339,049 1,860,421
Cash flows provided by (used by) investing activities:
Sales and maturities of long-term investments - 325,749
Sales and maturities of short-term investments 7,323,628 1,395,658
Purchase of short-term investments - (4,041,754)
Purchase of property and equipment (263,334) (174,400)
Additions to capitalized software costs (349,999) (349,998)
Additions to intangible assets (1,750) -
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Net cash provided by (used by) investing activities 6,708,545 (2,844,745)
Cash flows provided by (used by) financing activities:
Proceeds from issuance of debt 49,605,461 -
Payment of principal on term loan (1,000,000) -
Net proceeds from issuance of preferred stock 53,158,268 -
Purchase of common stock (111,410,217) -
Payment of fees related to recapitalization (3,336,227) -
Excercise of options 766,800 -
Warrant 394,539 -
Equity issuance costs (120,637) -
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Net cash provided by (used by) financing activities (11,942,013) -
Net decrease in cash and cash equivalents (894,419) (984,324)
Cash and cash equivalents - beginning of period 3,843,711 5,616,180
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Cash and cash equivalents - end of period 2,949,292 4,631,856
============ ==========
Supplemental information:
Income taxes paid 454,924 682,062
Interest paid - -
The accompanying notes are an integral part of the consolidated financial
statements.
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TRANSITION SYSTEMS, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, and have been prepared by the Company
without audit. In the opinion of management, the accompanying consolidated
financial statements contain all adjustments, consisting only of those of a
normal recurring nature, necessary for a fair presentation of the Company's
financial position, results of operation and cash flows at the dates and for the
periods indicated. While the Company believes that the disclosures presented are
adequate to make the information not misleading, these financial statements
should be read in conjunction with the audited consolidated financial statements
for the year ended September 30, 1995 which are contained in the Company's
Registration Statement on Form S-1, File No. 333-01758, as declared effective by
the Securities and Exchange Commission on April 17, 1996. The results of
operations for the three and six months ended March 30, 1996 are not necessarily
indicative of the results to be expected for the entire year ending September
30, 1996. The Company changed its fiscal year end from the last Saturday of
September of each year, to September 30. The change is effective commencing with
the quarter ending June 30, 1996. In the future, quarters will end on December
31, March 31, June 30, and September 30.
2. COMPUTATION OF PRO FORMA EARNINGS PER SHARE
The pro forma net income per common share is computed based upon the weighted
average number of common shares and common equivalent shares outstanding after
giving effect to the Recapitalization. Common equivalent shares are included in
the per share calculations where the effect of their inclusion would be
dilutive. In accordance with the Securities and Exchange Commissions Staff
Accounting Bulletin No. 83 ("SAB 83") all common and common equivalent shares
and other potentially dilutive instruments, including stock options, warrants
and preferred stock issued during the twelve-month period to the filing date of
the Company's Registration Statement for its initial public offering have been
included in the calculation as if they were outstanding for all periods
presented. The common equivalent shares for stock options were determined using
the treasury stock method at an assumed initial public offering price of $17.50
per share.
3. SUBSEQUENT EVENTS
On April 18, 1996 the Company completed an initial public offering of 6,900,000
shares of its common stock which generated net proceeds of approximately $114.5
million. The proceeds were used to redeem $20.6 million of Series A Preferred
Stock, to repay the $34.7 million outstanding principal amount and accrued
interest under the secured term loan facility, to repay the $10.3 million
outstanding principal amount and accrued interest under the senior subordinated
notes and to repay the $5.1 million outstanding principal amount and accrued
interest under the Company's revolving credit facility.
On April 26, 1996 the Company entered into a $25 million unsecured revolving
line of credit with a bank group led by NationsBank, N.A. as agent and as
lender. The new credit facility contains covenants setting minimum net worth,
maximum leverage ratio and minimum net income requirements for the Company.
There have been no amounts drawn on this line.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
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OPERATIONS
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This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that may contribute
to such difference include those listed under "Risk Factors" in the Company's
Registration Statement on Form S-1, File No. 333-01758, as declared effective by
the Securities and Exchange Commission on April 17, 1996.
The following information should be read in conjunction with the consolidated
financial statements included herein and the notes thereto.
OVERVIEW
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The Company provides integrated clinical and financial decision support systems
to hospitals, integrated delivery systems and other health care institutions.
The Company was founded in 1985 to apply management control techniques to the
health care delivery process, with the objective of improving quality and
lowering costs.
The Company has experienced a seasonal pattern in its operating results, in
which the first quarter of each fiscal year typically has the lowest revenue and
net income, frequently lower than the last quarter of the previous fiscal year,
and the fourth quarter typically has the highest revenue and net income. While
the Company has taken steps to moderate this seasonal pattern, there can be no
assurance that it will eliminate the seasonality of its operating results.
The Company's revenues are derived from sales of software licenses and related
implementation services and of software maintenance. Software and implementation
revenue are generally accounted for using the percentage of completion method
based principally upon progress and performance as measured by achievement of
contract milestones. Software maintenance fees, which are generally received
annually in advance, are recorded as deferred revenue on the Company's balance
sheet and are recognized as revenue ratably over the life of the contract.
RESULTS OF OPERATION
- - --------------------
REVENUES
The Company's total revenues increased 28% to $7.5 million for the three months
ended March 30, 1996 from $5.9 million for the same period in the prior year.
For the six months ended March 30, 1996 total revenues increased 35% to $14.1
million from $10.4 million for the same six month period in the prior year.
Software and implementation revenue increased 29% to $5.2 million for the three
months ended March 30, 1996 from $4.0 million for the same period in the prior
year, and increased 39% to $9.6 million for the six months ended March 30, 1996
from $6.9 million for the same period in the prior year. The Company attributes
the growth in software and implementation revenue to increased demand from both
new and existing customers, for the Transition II products for use on, AS/400
and UNIX platforms. Maintenance revenue increased 25% to $2.3 million for the
three months ended March 30, 1996 from $1.8 million for the same period in the
prior year, and increased 27% to $4.5 million for the six months ended March
30, 1996 from $3.5 million for the same period in the prior year. The growth in
maintenance revenue is attributable to the growth in the Company's installed
base.
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COST OF REVENUE
Cost of software and implementation revenue consists primarily of the cost of
third-party software that is resold by the Company or included in the Company's
product , personnel costs, the cost of related benefits, travel and living
expenses, costs of materials and other costs related to the installation and
implementation of the Company's products, and amortization of capitalized
software development costs. Cost of maintenance revenue consists primarily of
maintenance costs associated with the third-party software included in the
Company's products and personnel costs incurred in providing maintenance and
technical support services to the Company's customers.
Cost of software and implementation revenue increased 26% to $1.9 million for
the three months ended March 30, 1996 from $1.5 million for the same period in
the prior year, and increased 20% to $3.5 million for the six months ended March
30, 1996 from $2.9 million for the same period in the prior year. The increase
in cost of software and implementation revenue was primarily due to a net
increase of eight persons in the Company's implementation staff. In addition,
the royalty cost associated with third-party software has increased due to a
greater proportion of revenue generated from the AS/400, UNIX, and Clinical ABCs
products, which have a higher content of third party software. Cost of
maintenance revenue increased 50% to $0.7 million for the three months ended
March 30, 1996 from $0.5 million for the same period in the prior year, and
increased 48% to $1.5 million for the six months ended March 30, 1996 from $1.0
million for the same period in the prior year. The increase was attributable
primarily to higher third-party software maintenance costs incurred in the first
year of a multi-year fixed fee software maintenance agreement. In addition the
Company had a net increase in support staff of two persons.
RESEARCH AND DEVELOPMENT
Research and development expense increased 41% to $0.8 million for the three
months ended March 30, 1996 from $0.6 million for the same period in the prior
year, and increased 26% to $1.6 million for the six months ended March 30, 1996
from $1.3 million for the same period in the prior year. The increase was
primarily due to a net increase of nine persons in the Company's research and
development staff, principally to support the further development of its AS/400
and UNIX products, its Transition II for the Integrated Delivery System product
and its Clinical ABCs products.
SALES AND MARKETING
Sales and marketing expense increased 27% to $1.1 million for the three months
ended March 30, 1996 from $0.9 million for the same period in the prior year,
and increased 17% to $2.0 million for the six months ended March 30, 1996 from
$1.7 million for the same period in the prior year. The increase was primarily
attributable to the Company's investment in marketing collateral and
presentation materials to provide further sales support. In addition, a portion
of the increase is the result of higher commission expense associated with
higher software and implementation revenue.
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GENERAL AND ADMINISTRATIVE
General and administrative expense increased 11% to $0.7 million for the three
months ended March 30, 1996 from $0.6 million for the same period in the prior
year, and increased 5% to $1.2 million for the six months ended March 30, 1996
from $1.1 million for the same period in the prior year. The increase was
primarily due to additional costs incurred in connection with the January 1996
Recapitalization and in preparation for becoming a public company.
OTHER OPERATING EXPENSES
Other operating expenses for the three and six months ended March 30, 1996
included a non-cash compensation charge of $3.0 million arising from the
acquisition by the Company, in connection with the January 1996
Recapitalization, of shares of Common Stock issued to certain executive officers
pursuant to the exercise of options.
NET INTEREST INCOME (EXPENSE)
During the six months ended March 30, 1996 the Company had $0.6 million in net
interest expense compared to $0.2 million of net interest income for the same
period in the prior year. The increase in interest expense was due to an
increase in debt outstanding associated with the Recapitalization of the Company
in January 1996.
PROVISION FOR INCOME TAXES
The Company recorded an income tax benefit for the three months ended March 30,
1996 resulting from the loss before taxes due to the compensation charge in the
quarter. The Company's effective income tax rate decreased to 41% from 43% for
the six months ended March 30, 1996 compared to the same period in the prior
year. The decrease is due to certain provisions taken in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
Cash and cash equivalents decreased to $3.0 million at March 30, 1996 from $11.2
million at September 30, 1995. The decrease is attributable primarily to the
repurchase by the Company of shares of its common stock in the Recapitalization.
On January 24, 1996, the Company repurchased from New England Medical Center,
Inc. and the other stockholders of the Company 87.4% of the shares of common
stock then issued and outstanding on a fully diluted basis for an aggregate
purchase price of approximately $111.4 million. The principal purpose of this
transaction was to provide liquidity for the existing stockholders of the
Company while permitting them to retain a substantial ownership interest in the
Company. The transaction has been accounted for by the Company as a leveraged
recapitalization. To finance the repurchase of these shares, the Company issued
to Warburg, Pincus Ventures, L.P. and NationsBanc Investment Corporation (NIC)
shares of Preferred Stock for an aggregate of $55.0 million. The Company also
issued to NIC senior subordinated notes in the aggregate principal amount of
$10.0 million and a related warrant, and made borrowings of $40.0 million under
a secured credit facility provided by a syndicate of banks led by an affiliate
of NIC. The outstanding balance of these borrowings was repaid in full and all
outstanding Series A Non-Voting Preferred Stock was redeemed upon the closing of
the Company's initial public offering.
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On April 18, 1996 the Company completed its initial public offering of
6,900,000 shares of its common stock which generated net proceeds of
approximately $114.5 million. The proceeds were used to redeem $20.6 million of
Series A Preferred Stock, to repay the $34.7 million outstanding principal
amount and accrued interest under the secured term loan facility, to repay the
$10.3 million outstanding principal amount and accrued interest under the
senior subordinated notes and to repay the $5.1 million outstanding principal
amount and accrued interest under the Company's revolving credit facility.
On April 26, 1996 the Company entered into a $25 million unsecured revolving
line of credit with a bank group led by NationsBank, N.A. as agent and as
lender. The new credit facility contains covenants setting minimum net worth,
maximum leverage ratio and minimum net income requirements for the Company.
There have been no amounts drawn on this line. Advances under the revolving line
of credit bear interest, at the Company's election, either at a "base rate" or
at a "eurodollar rate." The base rate is a floating rate equal to the greater of
(a) the prime rate or (b) the federal funds effective rate plus one-half of one
percent (.50%). The eurodollar rate is equal to the sum of (x) a rate determined
by reference to the then-current interbank offered rate for dollar-denominated
eurodollar deposits, with certain adjustments, plus, (y) one percent (1.0%).
The Company believes that its cash flows from operations and amounts available
under its new credit facility will be sufficient to finance the Company's
operations and planned capital expenditures for at least the next twelve months.
There can be no assurance, however, that the Company will not require additional
financing during that time or thereafter.
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TRANSITION SYSTEMS, INC.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.*
At a Special Meeting of Stockholders duly called and adjourned on
January 18, 1996 and reconvened on January 22, 1996, the Company's stockholders
voted on the following matters:
(i) to amend the Company's Articles of Organization to, among other
things, authorize and set forth the terms of the Company's Common Stock,
Non-Voting Common Stock, Series A Non-Voting Preferred Stock, Series B
Convertible Preferred Stock, and Series C Non-Voting Convertible Preferred
Stock;
(ii) in connection with the recapitalization of the Company effected on
January 24, 1996, (a) to approve an amendment to a Recapitalization Agreement
with WP Ventures and each of the stockholders of the Company pursuant to which
the Company repurchased 28,592,404 shares of Common Stock from New England
Medical Center, Inc. ("NEMC") and the other stockholders of the Company for an
aggregate purchase price of approximately $111.4 million; (b) to enter into a
Joinder Agreement with Warburg Pincus Ventures, L.P. ("WP Ventures"),
NationsBanc Investment Corporation ("NIC") and NEMC, providing for, among other
things, the addition of NIC as a party to the Recapitalization Agreement and
the assignment to NIC of certain of WP Ventures' rights and delegation to NIC
of certain of WP Ventures' obligations under the Recapitalization Agreement;
(c) in order to finance the repurchase of shares, to issue to WP Ventures and
NIC an aggregate of 20,000 shares of Series A Non-Voting Preferred Stock,
33,612 shares of Series B Convertible Preferred Stock and 1,388 shares of
Series C Non-Voting Convertible Preferred Stock, in each case at a purchase
price of $1,000 per share, for an aggregate purchase price of $55.0 million,
and to issue to NIC senior subordinated notes and a warrant to purchase 297,928
shares of Non-Voting Common Stock for an aggregate purchase price of $10.0
million; and (d) to take all necessary actions in connection with such
recapitalization, including the reserving of authorized but unissued shares of
the Company's capital stock, and registering, qualifying or exempting from
registration or qualifying the offer, sale and issuance of such shares;
(iii) also in connection with the recapitalization of the Company
effected on January 24, 1996, (a) to enter into a secured Credit Agreement with
NationsBanc, N.A., as agent and lender, and the other lenders party thereto (the
"Banks"), providing for, among other things, a term loan to the Company in the
amount of $35.0 million and a revolving credit facility under which the Company
may borrow up to the maximum aggregate principal amount at any time outstanding
of $15.0 million; (b) to enter into certain agreements necessary to grant to the
banks a security interest in all assets of the Company; and (c) to take all
necessary actions in connection with such Credit Agreement; and
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(iv) also in connection with the recapitalization of the Company
effected on January 24, 1996, to enter into a Subordinated Note and Warrant
Purchase Agreement with NIC, providing for, among other things, the issuance to
NIC of a senior subordinated promissory note and related warrant for an
aggregate purchase price of $10.0 million and to take all necessary actions in
connection with such Subordinated Note and Warrant Purchase Agreement.
The holders of 24,382,000 of the 28,390,000 then outstanding shares of
the Company's Common Stock were present at the meeting. The holder of 23,380,000
shares voted to adopt the foregoing votes and the holder of 1,002,000 shares
abstained.
At a Special Meeting of Stockholders in Lieu of Annual Meeting duly
called and adjourned on April 2, 1996 and reconvened on April 3, 1996, the
Company's stockholders voted on the following matters:
(i) to amend the Company's Articles of Organization to: (a)
increase the number of authorized shares of Common Stock to
30,000,000; (b) increase the number of authorized shares of
Non-Voting Common Stock to 1,000,000; and (c) authorize
1,000,000 shares of undesignated Preferred Stock, par value
$.01 per share;
(ii) to further amend and restate the Company's Articles of
Organization to: (a) eliminate and delete all references to
all authorized shares of the Company's Series A Non-Voting
Preferred Stock, Series B Convertible Preferred Stock and
Series C Non-Voting Convertible Preferred Stock, all of the
outstanding shares of which will be redeemed or converted into
shares of the Company's Common Stock or Non-Voting Common
Stock upon the closing of the initial public offering of the
Common Stock to be effected pursuant to the Company's
Registration Statement on Form S-1, File No. 333-01758; (b)
change the fiscal year of the Company to the twelve-month
period ending September 30; and (c) restate the Articles of
Organization to consolidate all previous Amendments;
(iii) to amend and restate the By-Laws of the Company;
(iv) to approve and adopt the Amended and Restated 1995 Incentive
and Non-Statutory Stock Option Plan;
(v) to approve and adopt the Transition Systems, Inc. Employee
Stock Purchase Plan; and
(vi) to fix the number of directors of the Company for the ensuing
year at five and to elect the following persons directors of
the Company, each as a member of the class of directors set
forth opposite his name, and each to serve for a term
continuing until the annual meeting of stockholders held
during the calendar year set forth opposite his name and until
his successor is duly elected and
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qualified:
Class I: Robert S. Hillas 1997
Allen F. Wise 1997
Class II: Peter W. Van Etten 1998
Patrick T. Hackett 1998
Class III: Robert F. Raco 1999
Holders of 631,260 shares of Common Stock and all of the shares of
Series B Convertible Preferred Stock, voting as a single class, and the holders
of all of the shares of Series B Convertible Preferred Stock, voting
separately, voted by proxy to approve the votes relating to the Articles of
Amendment as described in (i) above.
Holders of 631,260 shares of Common Stock and all of the shares of
Series B Convertible Preferred Stock, voting as a single class, holders of all
of the shares of Series A Non-Voting Preferred Stock, holders of all of the
shares of Series B Convertible Preferred Stock and holders of all of the shares
of Series C Non-Voting Convertible Preferred Stock, each class voting
separately, voted by proxy to approve the votes relating to the Amended and
Restated Articles of Organization as described in (ii) above.
Holders of 631,260 shares of Common Stock and all of the shares of
Series B Convertible Preferred Stock, voting as a single class, and holders of
all of the shares of Series B Convertible Preferred Stock, voting separately,
voted by proxy to approve the votes relating to the Amended and Restated
By-Laws.
Holders of 631,260 shares of Common Stock and all of the shares of
Series B Convertible Preferred Stock, voting as a single class, voted by proxy
to approve the votes relating to the Amended and Restated 1995 Incentive and
Non-Statutory Stock Option Plan.
Holders of 631,260 shares of Common Stock and all of the shares of
Series B Convertible Preferred Stock, voting as a single class, voted by proxy
to approve the votes relating to the Employee Stock Purchase Plan.
Holders of 631,260 shares of Common Stock and all of the shares of
Series B Convertible Preferred Stock, voting as a single class, voted by proxy
for the election of each of the above-listed directors.
- - -------------
* The number of shares of Common Stock referred to in this Item 4 has
been adjusted in each case to give effect to a 334-for-1 stock split in
the form of a stock dividend effective on April 4, 1996.
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ITEM 5. OTHER INFORMATION.
The Company changed its fiscal year end from the last Saturday of
September of each year to September 30. The change is effective commencing with
the quarter ending June 30, 1996. In the future, quarters will end on December
31, March 31, June 30 and September 30.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- - ------ -----------
10.1 Credit Agreement dated April 26, 1996 between the Company and
NationsBank, N.A. as Agent and the Lenders party thereto
(Exhibits B through I and all Schedules omitted)
11.1 Computation of Per Share Earnings
27.1 Financial Data Schedule
(b) REPORTS ON FORM 8-K
None.
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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.
Transition Systems, Inc.
(Registrant)
Dated: May 31, 1996 /s/ Robert F. Raco
--------------------------------------------
Robert F. Raco
President, Chief Executive Officer
(principal executive officer)
Dated: May 31, 1996 /s/ Robert E. Kinney
--------------------------------------------
Robert E. Kinney
Chief Financial Officer
(principal financial and accounting officer)
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- - ------ -----------
10.1 Credit Agreement dated April 26, 1996 between the Company and
NationsBank, N.A. as Agent and the Lenders party thereto
(Exhibits B through I and all Schedules omitted)
11.1 Computation of Per Share Earnings
27.1 Financial Data Schedule