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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 000-22409
LHS GROUP INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 58-2224883
(STATE OR OTHER JURISDICTION OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
SIX CONCOURSE PARKWAY, SUITE 2700
ATLANTA, GEORGIA 30328
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(770) 280-3000
(REGISTRANT'S TELEPHONE NUMBER)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE
(TITLE OF CLASS)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
The aggregate market value of the common stock held by non-affiliates
of the registrant (assuming, for purposes of this calculation, without
conceding, that all executive officers and directors are "affiliates") was
$2,224,042,500 at April 17, 2000, based on the closing sales price of $37.50 per
share for the common stock on such date on the Nasdaq National Market.
The number of shares of the registrant's common stock outstanding at
April 17, 2000 was 59,307,805.
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This Amendment amends and supplements the Form 10-K filed by the
Company on March 28, 2000 by adding the following Part III, Items 10 through 13:
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS
Hartmut Lademacher, age 51, is one of the founders of LHS Group Inc. He
has served as Chairman of the Board since the Company's inception in October
1990. He served as Chief Executive Officer from October 1990 to October 1999.
From 1973 to October 1990, Mr. Lademacher was employed by IBM in Germany where
he last served as Manager of Project Marketing.
Gary D. Cuccio, age 54, has been a director of the Company since
January 2000, and has served as the Company's President and Chief Executive
Officer since November 1999. Prior to joining the Company, Mr. Cuccio served as
President of AirTouch Paging since 1998. He served as Chief Operating Officer of
Omnipoint Communications from 1996 to 1998. Before joining Omnipoint in 1996,
Mr. Cuccio held senior operations positions with AirTouch International in
Europe and Asia from 1994 to 1996. He previously worked at Pacific Bell, now a
subsidiary of SBC Communications, where he held various positions in sales,
marketing, operations, and engineering during his 28 years with the company. Mr.
Cuccio is also a director of Objective Systems Integrators, Inc. and
Saraide.com, a privately held company.
William O. Grabe, age 61, has been a director of the Company since
December 1995. Mr. Grabe is a managing member of General Atlantic Partners, LLC
("GAP LLC") and has been with GAP LLC since April 1992. Prior to April 1992, Mr.
Grabe was Corporate Vice President and General Manager, Marketing and Services
for IBM US. Mr. Grabe is a director of Compuware Corporation, Marcam Solutions,
Inc., Baan Company N.V., Coda Group Plc., and TDS Informationstechnologie AG,
all of which are software companies, and is also a director of Gartner Group, an
information technology consulting company. He is also a director of a number of
privately held companies.
George Schmitt, age 56, has been a director of the Company since
October 1996. He has served as President and as a member of the Board of
Directors of Omnipoint Communications, Inc., a PCS carrier, since October 1995.
From November 1994 to September 1995, Mr. Schmitt was President and Chief
Executive Officer of PCS PrimeCo L.P., a PCS services provider formed by
AirTouch Communications, Bell Atlantic, NYNEX and U.S. West. From November 1993
to November 1994, Mr. Schmitt was Executive Vice President of International
Operations of AirTouch Communications. From January 1990 to March 1994, he
served as Vice President of Pacific Telesis Group, a predecessor of AirTouch
Communications. Mr. Schmitt is also a director of Objective Systems Integrators,
Inc. and Telesoft partners.
Ulf Bohla, age 56, has been a director of the Company since December
1995. He was Chairman of the Board of Vebacom GmbH, a telecommunications service
provider, from July 1994 through July 1998. Mr. Bohla was General Manager of
Telecommunications and Vice President of International Marketing Operations for
IBM Germany from 1970 to 1994. While with IBM, Mr. Bohla also acted as Director
of the North German Region.
William E. Ford, age 38, has been a director of the Company since
December 1995. Mr. Ford is a managing member of GAP LLC and has been with GAP
LLC since July 1991. From August 1987 to July 1991, Mr. Ford was an associate
with Morgan Stanley & Co. Incorporated. Mr. Ford is also a director of E* Trade
Group, an electronic discount brokerage company, Priceline.com Incorporated and
Tickets.com, Inc., which both provide e-commerce purchasing services for, among
other things, tickets for travel and special events, and Quintiles Transactional
Corp. and Eclipsys Corporation, which are both software companies.
Vincenzo Damiani, age 60, has been a director of the Company since July
1999. Mr. Damiani has been Corporate Vice President, EDS Corporation, a global
information technology services company, and a member of the EDS EMEA Executive
Board since
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1997. From 1993 to 1996, he was Corporate Vice President, Digital Equipment, a
global computer hardware and services company, and President of Digital
Equipment Europe. Prior to joining Digital in 1993, Mr. Damiani held various
positions with IBM Europe since 1964, when he joined IBM as an attorney in
Milan, Italy. During his career with IBM, Mr. Damiani held senior management
positions in Europe and the United States. He also is a director of Banca di
Roma.
Dr. Wolf J. Gaede, age 43, has been a director of the Company since
September 1996 and served as the Company's as Executive Vice President and
General Counsel from January 1997 through March 1999, and as Secretary through
November 1998. From 1991 to January 1997, Dr. Gaede was a partner with the
German law firm of Oppenhoff & Radler. From 1989 to 1991, Dr. Gaede served with
the law firm of Fischotter & Luther in Hamburg, Germany and the law firm of
Fulbright, Jaworski, Reavis & McGrath in New York, New York. From 1986 to 1989,
Dr. Gaede acted as Adjunct Professor at the University of Hamburg, Germany.
NON-DIRECTOR EXECUTIVE OFFICERS
Stefan Sieber, age 40, has served as the Company's Executive Vice
President and Chief Divisional Officer since February 1999. Mr. Sieber joined
LHS in 1995 as Managing Director of LHS Projects. He was then promoted to Vice
President and General Manager of LHS Asia Pacific in May 1996, Senior Vice
President in October 1997, and served in such capacity until January 1999. Prior
to joining LHS, Mr. Sieber was Managing Director, Wireless Business Europe for
EDS from 1994 to 1995, Managing Director of Unicom Germany from 1991 to 1994,
and held several positions in business development, marketing, and research and
development for RWE Germany. Mr. Sieber oversees the Company's worldwide sales,
marketing and project management activities.
Jon Limbird, age 47, has served as the Company's Chief Technology
Officer since April 1999, and as Executive Vice President of Corporate
Development since January 1999. He has been with the Company since 1996. During
his four years with the Company, he has held the positions of Vice President of
Operations, Vice President of Research and Development, and Senior Vice
President of Product Management. Prior to joining LHS, Mr. Limbird was employed
at Data General Corporation from 1980 until 1996 where he served as General
Manager and Director of the North America Systems Integration business unit. Mr.
Limbird oversees the Company's mergers and acquisitions and product strategy.
Peter Chambers, 44, has served as the Company's Executive Vice
President, Chief Financial Officer and Treasurer since September 1999. From
1997 to August 1999 Mr. Chambers was Vice President, Finance and a director of
PT Excelcomindo, an Indonesian wireless service provider owned in part by Bell
Atlantic. From 1991 to 1997, Mr. Chambers was employed by Coopers & Lybrand
Consulting. His last position with Coopers & Lybrand Consulting was Executive
Director in charge of the Telecommunications Practice - East Asia. From 1988
through 1991, he was employed by KPMG Consulting as a management consultant in
the telecommunications practice. Mr. Chambers is a Chartered Accountant
(Australia). He is responsible for the Company's accounting, finance, IT,
human resources and administration functions.
Ruediger Hellmich, age 55, has served as the Company's Executive Vice
President and Chief Business Units Officer since October 1999. From 1997 to
1999, Mr. Hellmich was employed by o.tel.o Communications GmbH & Co., a German
wireless service provider, as Chief Information Officer and a member of the
management board. From 1993 to 1997, he was Managing Director of several joint
venture companies of IBM and its customers. From 1968 to 1993, Mr. Hellmich held
various positions with IBM in Germany and the United States. Mr. Hellmich
oversees the Company's product-based business units and is responsible for
product development and marketing.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of the copies of Forms 3 and 4, and
amendments thereto, received by it and written representations that no other
reports were required of those persons, the Company believes that during the
fiscal year ended December 31, 1999, all of its directors, executive officers
and beneficial owners of more than 10% of the common stock compiled with
applicable Section 16(a) filing requirements.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY OF COMPENSATION
The following table sets forth the compensation for 1999 earned by the
Chief Executive Officer of the Company, the four other most highly compensated
(in terms of salary and bonus) executive officers of the Company, and two
additional individuals for whom disclosures would have been provided pursuant to
paragraph (a) (3) (ii) of Item 402 of Regulation S-K but for the fact that such
individuals were not serving as executive officers of the registrant as of
December 31, 1999.
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------------- -----------------
NAME AND PRINCIPAL OTHER ANNUAL SHARES UNDERLYING
POSITION SALARY BONUS COMPENSATION OPTIONS (#)
- ------------------------------ -------- ---------- ------------ ---------------
Hartmut Lademacher (1) 1999 $337,500 -- $ 30,341 (2) --
Chairman of the Board and 1998 540,000 -- 60,118 (2) --
former Chief Executive 1997 519,233 -- 108,168 (2) --
Officer
Gary D. Cuccio (3) 1999 65,758 -- 1,910 (4) 1,000,000
President, Chief Executive
Officer and Director
Stefan Sieber (5) 1999 311,728 $28,005 114,213 (6) 375,000
Executive Vice President 1998 170,425 36,926 17,043 --
and Chief Divisional Officer 1997 173,080 16,647 17,308 --
Jon Limbird 1999 278,672 -- 1,000 (7) 100,000
Executive Vice President and 1998 178,333 30,000 -- 50,000
Chief Technology Officer 1997 150,000 -- -- --
Peter Chambers (8) 1999 103,577 -- 46,292 (9) 250,000
Chief Financial Officer,
Executive Vice President
and Treasurer
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Ruediger Hellmich (10) 1999 175,524(11) -- -- 300,000
Executive Vice President
and Chief Business Lines
Officer
Jerry W. Braxton (12) 1999 250,000 -- 10,250 --
1998 250,000 -- 12,300(13) --
1997 250,000 -- -- --
Dr. Hansjorg Beha (14) 1999 300,000 12,000(15) --
1998 215,000 -- 31,486(16) --
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(1) Mr. Lademacher's employment as Chief Executive Officer terminated on
October 31, 1999.
(2) Consists of allowances for personal use of a Company-provided
automobile in both the United States and Europe of $30,341 in 1999,
$58,387 in 1998 and $56,177 in 1997, respectively, and for personal
transportation of $21,062 in 1997, tuition reimbursement for Mr.
Lademacher's children of $17,702 in 1997, deferred compensation of
$11,496 in 1997, and premiums for life insurance of $1,731 and $1,731
in 1998 and 1997, respectively.
(3) Mr. Cuccio's employment with the Company commenced on November 1, 1999.
(4) Consists of car allowance of $1,000 and reimbursed moving expenses of
$910 in 1999.
(5) Mr. Sieber was appointed an executive officer of the Company in
February 1999.
(6) Consists of tuition reimbursement of $13,100 for Mr. Sieber's children,
foreign service allowances of $12,980, relocation allowance of $70,660,
and car allowance of $17,473.
(7) Consists of car allowance of $1,000.
(8) Mr. Chambers' employment with the Company commenced on September 7,
1999.
(9) Consists of relocation allowance of $44,292 and car allowance of
$2,000.
(10) Mr. Hellmich's employment with the Company commenced on October 1,
1999.
(11) Consists of compensation deferred at the election of Mr. Hellmich.
(12) Mr. Braxton resigned from his position as Chief Financial Officer,
Executive Vice President and Treasurer effective September 7, 1999.
(13) Consists of car allowance.
(14) Dr. Beha resigned from his position as Executive Vice President -
Technology effective March 29, 1999.
(15) Consists of car allowance.
(16) Consists of allowances for expenses of $22,486 incurred in connection
with Dr. Beha's relocation from Germany to the United States and $9,000
for personal use of a Company-provided automobile.
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OPTION GRANTS IN LAST FISCAL YEAR
The Company granted the following stock options to the Named Executive
Officers during the fiscal year ended December 31, 1999.
INDIVIDUAL GRANTS
----------------------------------------------------------------
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS
OPTIONS/SARS GRANTED EXERCISE OR
GRANTED TO EMPLOYEES BASE PRICE EXPIRATION
NAME (#) IN FISCAL YEAR ($/SHARE) DATE
- ---- ------------ -------------- ----------- ----------
Gary D. Cuccio 1,000,000 19.13% $ 28.6250 11/01/2009
Stefan Sieber 50,000 0.96% 51.8700 1/01/2009
300,000 5.74% 37.6250 3/19/2009
25,000 0.48% 26.9375 6/16/2009
Jon Limbird 50,000 0.96% 51.8750 1/01/2009
50,000 0.96% 26.9375 6/16/2009
Peter Chambers 250,000 4.78% 32.6200 9/07/2009
Ruediger Hellmich 300,000 5.74% 29.1250 10/01/2009
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE APPRECIATION
FOR OPTION TERM (10 YEARS)*
-----------------------------------------------------------------
5% 10%
--------------------------- ---------------------------
PRICE
PRICE PER AGGREGATE PER AGGREGATE
NAME SHARE VALUE SHARE VALUE
- ---- --------- --------- ----- ---------
Gary D. Cuccio $ 46.6271 $ 18,002,100 $ 74.2459 $ 45,620,900
Stefan Sieber 84.4907 1,631,035 134.5374 4,133,370
61.2872 7,098,660 97.5896 17,989,380
43.8783 423,520 69.8689 1,073,285
Jon Limbird 84.4989 1,631,195 134.5504 4,133,770
43.8783 847,040 69.8689 2,146,570
Peter Chambers 53.1345 5,128,625 84.6079 12,996,975
Ruediger Hellmich 47.4416 5,494,980 75.5427 13,925,310
* The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates as set by the Securities and Exchange Commission and are
not intended to forecast future price appreciation of Company common stock. The
gains reflect a future value based upon growth at these prescribed rates. The
Company did not use an alternative formula for a grant date valuation, an
approach which would state gains at present, and therefore lower, value.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information regarding (a) the number of
shares of common stock received upon exercise of options by the Company's
executive officers in the fiscal year ended December 31, 1999, (b) the net value
realized upon such exercise, (c) the number of unexercised options held as of
December 31, 1999 and (d) the aggregate dollar value of unexercised options held
at December 31, 1999.
Aggregated Option Exercises in the Last Fiscal Year and Fiscal Year-End
Option Values
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES UNDER- IN-THE-MONEY
LYING UNEXERCISED OPTIONS OPTIONS AT
SHARES AT DECEMBER 31, 1999(#) DECEMBER 31, 1999($)(1)
ACQUIRED VALUE --------------------------- -------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------------- ----------- --------------------------- -------------------------
Hartmut Lademacher 106,251 2,673,541 3,125/28,125 68,477/616,289
Jerry W. Braxton 170,000 4,308,325 60,000/-- 1,314,750/
Dr. Hansjorg Beha 20,000 271,000 122,500/337,500 267,969/738,281
Stefan Sieber 10,000 251,000 20,481/424,219 448,790/1,078,511
Jon Limbird -- -- 63,843/186,157 1,073,713/1,117,538
Gary D. Cuccio -- -- --/1,000,000 --/--
Peter Chambers -- -- --/250,000 --/--
Ruediger Hellmich -- -- --/300,000 --/--
- -------------------------
(1) Value is based on the difference between the option exercise price and
the fair market value of $24.5625 per share at December 31, 1999
multiplied by the number of shares underlying the option.
DIRECTOR COMPENSATION
Directors do not receive cash retainers or fees for attendance at
meetings of the Board of Directors or committees of the Board but are reimbursed
for reasonable expenses incurred by them in connection with their attendance at
Board and committee meetings.
In lieu of cash compensation, the Company in 1996 granted non-qualified
options to purchase 100,000 shares of common stock to each of the seven
directors of the Company who were serving as directors at that time. The
exercise price of all options held by those seven directors is $2.65 per share,
and these options expire in 2006. The Company granted to Vincenzo Damiani, upon
his appointment as a director in 1999, non-qualified options to purchase 100,000
shares of common stock at an exercise price of $31.8125. Gary D. Cuccio, who
also is the Company's President and Chief Executive Officer, did not receive any
additional option grants or other compensation in connection with his
appointment as a director in January 2000. All options granted to directors are
immediately exercisable into non-vested restricted shares of common stock, or
vest at the rate of 25% one year from the date of the option grant and 1.56% on
the monthly anniversary of the
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grant date in each of the succeeding 48 months. The restrictions on 25% of the
restricted shares lapse one year from the date of the option grant, and the
restrictions on 1.56% of the shares lapse on the monthly anniversary of the
grant date in each of the succeeding 48 months.
EMPLOYMENT AGREEMENTS
Gary D. Cuccio, President and Chief Executive Officer, entered into an
employment agreement with the Company on September 5, 1999. The agreement
provides for base compensation of $400,000 per year. The agreement also provides
for an incentive bonus of up to $400,000 per year, options to purchase 1,000,000
shares of common stock in accordance with the terms and conditions of the LHS
Group Inc. 1996 Stock Incentive Plan and the Company's standard non-qualified
option agreement, and reimbursement of up to $70,000 in relocation expenses. The
agreement may be terminated by the Company at any time without notice, and by
Mr. Cuccio upon six months notice to the Company. In the event the Company
terminates Mr. Cuccio's employment without cause, he is entitled to receive a
lump sum severance payment equal to his then-current base annual salary.
Peter Chambers, Chief Financial Officer, Executive Vice President and
Treasurer, entered into an employment agreement with the Company on June 23,
1999. The agreement provides for an annual salary of $300,000 per year, a car
allowance of $1,000 per month and a one time payment of $50,000 to cover
relocation expenses. The agreement also provides for options to purchase 250,000
shares of common stock in accordance with the terms and conditions of the LHS
Group Inc. 1996 Stock Incentive Plan and the Company's standard non-qualified
option agreement. The agreement is for no specific period of time and may be
terminated by either party upon 180 days notice, and by the Company at any time
without notice for cause.
Ruediger Hellmich, Executive Vice President and Chief Business Lines
Officer, entered into an employment agreement with the Company on June 23, 1999.
The agreement provides for an annual salary of $300,000 per year, a car
allowance of $1,000 per month and a one time payment of $70,000 to cover
relocation expenses. The agreement also provides for options to purchase 300,000
shares of common stock in accordance with the terms and conditions of the LHS
Group Inc. 1996 Stock Incentive Plan and the Company's standard non-qualified
option agreement. The agreement is for no specific period of time and may be
terminated by either party upon 180 days notice, and by the Company at any time
without notice for cause.
Stefan Sieber, Executive Vice President and Chief Divisional Officer,
entered into an employment agreement with the Company on March 19, 1999. The
agreement provides for an annual salary of $300,000 per year, and a one time
payment of $70,000 to cover relocation expenses. The agreement also provides for
options to purchase 300,000 shares of common stock in accordance with the terms
and conditions of the LHS Group Inc. 1996 Stock Incentive Plan and the Company's
standard non-qualified option agreement. The agreement is for no specific period
of time and may be terminated by either party upon 180 days notice, and by the
Company at any time without notice for cause.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Board's Compensation Committee is comprised of William O. Grabe,
who serves as the Chairman of the Committee, and Ulf Bohla. There were no
compensation committee interlocks during 1999.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of March 31, 2000, by (a)
each person who is known by the Company to own more than 5% of the Company's
common stock, (b) each director, (c) each executive officer named in the Summary
Compensation Table herein and (d) all directors and executives officers as a
group.
SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OF CLASS
OF BENEFICIAL OWNER OWNED(1) OWNED(1)(2)
- ------------------- ------------ -----------
5% Stockholders
General Atlantic Partners, LLC(3) .................................. 8,161,343 13.8%
Sema Group plc(4)................................................... 10,141,250 14.7%
Directors
Hartmut Lademacher(5) .............................................. 5,487,501 9.2%
William O. Grabe(3) ................................................ 8,314,578 13.8%
William E. Ford(3) ................................................. 8,271,343 13.8%
Ulf Bohla(6) ....................................................... 60,000 *
Gary D. Cuccio ..................................................... 1,000 *
Dr. Wolf Gaede(7)................................................... 347,985 *
George F. Schmitt(6) ............................................... 67,280 *
Vicenzo Damiani..................................................... 100,000 *
Named Executive Officers
Stefan Sieber(6).................................................... 132,199 *
Jon Limbird(6)...................................................... 99,311 *
Peter Chambers...................................................... 0 *
Ruediger Hellmich .................................................. 0 *
Jerry Braxton....................................................... 4,000 *
Hansjorg Beha....................................................... 0 *
All executive officers and directors as a group (12 persons).(8)... 14,509,854 24.3%
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* Less than one percent (1%).
(1) The persons and entities named in the table have sole voting and
investment power with regard to all shares shown as beneficially owned
by them, except as noted below. Information is as of March 31, 2000
unless otherwise indicated. Pursuant to the rules of the Securities and
Exchange Commission, the number of shares of Common Stock beneficially
owned by a specified person or group includes shares issuable pursuant
to convertible securities, warrants and options held by such person or
group which may be converted or exercised within 60 days after March
31, 1999. Such shares are deemed to be outstanding for the purpose of
computing the percentage of the class beneficially owned by such person
or group but are not deemed to be outstanding for the purpose of
computing the percentage of the class owned by any other person or
group.
(2) Based on 59,062,017 shares of Common Stock outstanding as of March 31,
2000.
(3) Includes (a) 4,941,006 shares of common stock held by General Atlantic
Partners 23, L.P. ("GAP 23"), (b) 2,040,931 shares of common stock held
by General Atlantic Partners 31, L.P. ("GAP 31"), (c) 1,179,406 shares
of common stock owned by GAP Coinvestment Partners, L.P. ("GAP
Coinvestment"), (d) 10,000 shares of common stock and options to
purchase an additional 100,000 shares of common stock held by Mr. Ford,
and (e) 91,235 shares of common stock held by Mr. Grabe and 6,000
shares of common stock held by each of Mr. Grabe's two minor children.
We refer to GAP 23, GAP 31 and GAP Coinvestment as the "General
Atlantic Stockholders." The general partner of GAP 31 and GAP 23 is
General Atlantic Partners, LLC ("GAP LLC").
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The managing members of GAP LLC are Steven A. Denning, David C.
Hodgson, J. Michael Cline, William O. Grabe, Peter L. Bloom, William E.
Ford and Franchon M. Smithson. The managing member of GAP LLC are the
general partners of GAP Coinvestment. Messrs. Ford and Grabe, directors
of the Company, are managing members of GAP LLC and general partners of
GAP Coinvestment. Mr. Ford and Mr. Grabe disclaim beneficial ownership
of shares owned by the General Atlantic Stockholders, except to the
extent of their respective pecuniary interests therein. The General
Atlantic Stockholders disclaim beneficial ownership of the shares of
common stock and options to purchase common stock held by Mr. Ford and
the shares of common stock held by Mr. Grabe and his minor children.
The address for the General Atlantic Stockholders, GAP LLC, Mr. Ford
and Mr. Grabe is c/o of General Atlantic Service Corporation, 3
Pickwick Plaza, Greenwich, Connecticut 06830.
(4) Pursuant to a stock option agreement entered into by Sema Group plc
("Sema") and the Company on March 14, 2000, Sema has the right to
purchase 17.5% of the Company's common stock outstanding on the date
the option is exercised. Sema's address is 233 High Holborn, London,
WC1V 7D5 England.
(5) Includes options to purchase 7,813 shares. The address of Mr.
Lademacher is LHS Group Inc., Six Concourse Parkway, Suite 2700,
Atlanta, Georgia 30328.
(6) Consists of options to purchase shares of common stock.
(7) Consists of options to purchase 54,972 shares of common stock.
(8) Includes options to purchase 590,040 shares of common stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A subsidiary of the Company leases office space in Frankfurt, Germany
from a corporation controlled by the Company's Chairman of the
Board, Hartmut Lademacher. During the fiscal year ended December 31, 1999, the
Company made lease payments totaling $ 317,000 to this corporation.
During 1999, the Company paid approximately $172,000 to H.L. Aircraft
Leasing Company for the use of its aircraft. Hartmut Lademacher is the sole
proprietor of H.L. Aircraft Leasing Company.
The Company believes that each of the above transactions was on terms
no less favorable to the Company than could have been obtained from unaffiliated
third parties on an arm's-length basis. The Company has adopted a policy
requiring that all transactions between the Company and its officers, directors
or other affiliates, or entities in which such person has an interest, must be
on terms no less favorable to the Company than could be obtained from
unaffiliated third parties on an arm's-length basis and must be approved in
advance by a majority of the Company's directors who have no interest in the
transaction.
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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.
LHS GROUP INC.
(Registrant)
By: /s/ Scott A. Wharton
---------------------------------
Scott A. Wharton
Senior Vice President,
General Counsel and Secretary
Date: April 21, 2000
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