UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
Amendment No. 1
X Annual Report Pursuant to Section 13 or 15(d) of the Securities
---------- Exchange Act of 1934
For the fiscal year ended December 31, 2001 or
Transition Report Pursuant to Section 13 or 15(d) of the Securities
---------- Exchange Act of 1934
For the transition period from ---------- to -------------
Commission File No. 0-20619
MATRIA HEALTHCARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 58-2205984
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1850 Parkway Place
Marietta, Georgia 30067
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 767-4500
The Registrant hereby files this Form 10-K/A to amend its Annual Report on Form
10-K for the fiscal year ended December 31, 2001 to include the information
required by Part III (Items 10, 11, 12 and 13) in lieu of the incorporation
thereof by reference from the Registrant's definitive proxy statement for its
Annual Meeting of Shareholders.
PART III
Item 10. Directors and Executive Officers of the Registrant
The names of the current directors and executive officers, their ages
as of April 1, 2002 and certain other information about them are set forth
below.
Parker H. Petit, age 62, has served as Chairman of the Board of the
Company since the formation of the Company through the merger (the "Merger") of
Tokos Medical Corporation and Healthdyne Maternity Management ("Healthdyne") on
March 8, 1996 (the "Merger Date") and as President and Chief Executive Officer
since October 5, 2000. In addition, he served as a member of the three-person
Office of the President during a brief period in 1997. Mr. Petit was the founder
of Healthdyne and served as its Chairman of the Board of Directors and Chief
Executive Officer from 1970 until the Merger. Mr. Petit is also a director of
Intelligent Systems Corp. and Logility, Inc.
Jeffrey D. Koepsell, age 55, has served as a director of the Company
and as Executive Vice President and Chief Operating Officer since May 17, 2000.
From 1992 to 1998, he was President and Chief Executive Officer of CardioLogic
Systems, Inc., a venture capital-backed company in the cardiopulmonary market
segment formed in cooperation with Johns Hopkins University and Medical Center.
Prior thereto, he served as President and Chief Executive Officer of Physiologic
Diagnostic Services, Inc., a women's health service provider acquired by Tokos
Medical Corporation in 1992. Mr. Koepsell is also a former executive of
Healthdyne.
Guy W. Millner, age 66, has been a director of the Company since
October 4, 2000. Mr. Millner is Chairman of MI Holdings, a private investment
firm. Until the fall of 1997 he was Chairman of Norrell Corporation, a staffing
services and outsourcing firm, which he founded in 1961. From 1997 until July
1999 he served as a director of Norrell Corporation, at which time Norrell
Corporation merged with Spherion Corporation.
Carl E. Sanders, age 76, has served as a director of the Company since
the Merger Date and previously served as a director of Healthdyne from 1986
until the Merger. Mr. Sanders, a former governor of the State of Georgia, is
Chairman of Troutman Sanders LLP, an Atlanta based law firm that provides legal
services to the Company.
Thomas S. Stribling, age 59, has served as a director of the Company
since May 18, 2000. Mr. Stribling has been President and Chief Executive Officer
of DermaCo, Inc. a development stage dermatology company since September 1, 2002
and was an entrepreneur and private investor from September 1999 to September
2001. From 1998 to September 1999, he was President, Chief Executive Officer and
a board member of Scandipharm, Inc., a privately held pharmaceutical company.
Prior thereto, he was Vice Chairman and Chairman of the Advisory Board of Legacy
Securities Corporation, an investment banking and securities group, from 1997 to
1998, and from 1994 to 1996, he was President of UCB Pharma, Inc., a division of
a Belgian-based pharmaceutical company.
Jackie M. Ward, age 63, has served as a director of the Company since
the Merger Date. Ms. Ward was Founder, Chairman and Chief Executive Officer of
Computer Generation Incorporated, which she founded in 1968, until December
2000. In December 2000, Computer Generation Incorporated, was purchased by Intec
Telecom Systems and she currently serves in the capacity of Outside Managing
Director of Intec, a British based corporation engaged in designing and
producing computer software systems for telecommunications and other specialized
applications. Ms. Ward is also a former Chairperson of the Board of Regents of
the University System of Georgia and former Chairman of the Metro Atlanta
Chamber of Commerce, as well as a director of Bank of America, Equifax, Inc.,
PTEK Holdings, Inc., PRG-Schultz International, Inc., Sanmina-SCI Corporation,
Flowers Foods, Inc., Trigon Healthcare, Inc.and SYSCO Corporation and a member
of several other civic and government organizations.
Donald W. Weber, age 65, has served as a director of the Company since May
18, 2000. Mr. Weber is a private investor. He was President and Chief Executive
Officer of Viewstar Entertainment Services, Inc., a distributor of satellite
entertainment systems, from August 1993 until November 1997. Prior thereto, from
1987 to 1991 he was President and Chief Executive Officer of Contel Corporation,
a telecommunications supplier, which was sold in 1991 to GTE Corp. Mr. Weber is
also a director of Knology Holdings, Inc.
Morris S. Weeden, age 82, has served as a director of the Company since the
Merger Date and previously served as a director of Healthdyne from 1987 until
the Merger. Mr. Weeden, who is retired, was Vice Chairman - Board of Directors
of Morton Thiokol Inc., a salt, chemical, household and aerospace products
manufacturer, from March 1980 to December 1984. Previous positions held by Mr.
Weeden include Executive Vice President of Morton Norwich Products, Inc. in
charge of pharmaceutical operations, President of Morton International, a
pharmaceutical division of Morton Norwich Products, Inc., and President of
Bristol Laboratories, a pharmaceutical division of Bristol Myers Corp. Mr.
Weeden is also a director of Stat-Chem, Inc.
Frederick P. Zuspan, M.D., age 80, has served as a director of the
Company since the Merger Date and previously served as a director of Healthdyne
from 1993 until the Merger. Dr. Zuspan, who has been a physician since 1951, has
been Professor and Chairman Emeritus, Department of Obstetrics and Gynecology at
the Ohio State University College of Medicine since July 1991 and
Editor-in-Chief of the American Journal of Obstetrics and Gynecology since 1991
and as editor since 1969. Dr. Zuspan was previously Professor of the Ohio State
University College of Medicine from 1987 to 1991 and Professor and Chairman of
the Department of Obstetrics and Gynecology at the Ohio State University College
of Medicine from 1975 to 1987, at the University of Chicago, Pritzker School of
Medicine from 1966 to 1975, and at the Medical College of Georgia from 1960 to
1966.
George W. Dunaway, age 41, has been Vice President - Finance and Chief
Financial Officer since October 5, 1999. Prior thereto, Mr. Dunaway was employed
by The Dun & Bradstreet Corporation, a commercial credit information services
provider, in the following capacities: Chief Financial Officer of Dun &
Bradstreet, U.S. from 1996 to October 1999; Vice President - Finance, Dun &
Bradstreet, U.S. from 1995 to 1996; Chief Financial Officer of Dun & Bradstreet
Plan Services from 1992 to 1995 and Assistant Vice President - Strategic
Planning, Dun & Bradstreet Plan Services from 1989 to 1992.
Yvonne V. Scoggins, age 52, has been Vice President - Financial
Planning and Analysis since February 28, 2001 and previously was Vice President,
Treasurer and Chief Accounting Officer of the Company from December 15, 1997 to
February 28, 2001 and also Vice President and Controller from March 8, 1996 to
December 15, 1997. Prior thereto, she was Vice President and Controller of
Healthdyne from May 1995 to March 8, 1996; Vice President - Planning and
Analysis of Healthdyne from May 1993 to May 1995; and Vice President and Chief
Financial Officer of Home Nutritional Services, Inc., a former majority owned
subsidiary of Healthdyne, from February 1990 to April 1993.
Roberta L. McCaw, age 46, has been Vice President - Legal, General
Counsel and Secretary of the Company since April 23, 1998 and previously was
Assistant General Counsel and Assistant Secretary of the Company from December
15, 1997 to April 23, 1998, and Assistant General Counsel from July 1996 to
December 1997. Prior thereto, Ms. McCaw was a partner at Tyler, Cooper & Alcorn,
a Connecticut-based law firm, from January 1990 to July 1996.
Thornton A. Kuntz, Jr., age 48, has been Vice President -
Administration since February 24, 1998 and previously was Vice President - Human
Resources of the Company from March 8, 1996 to February 24, 1998. Prior thereto,
he served as Vice President - Administration of Healthdyne from August 1992 to
March 1996.
Item 11. Executive Compensation
The following table sets forth compensation paid to the Company's Chief
Executive Officer and the four other most highly compensated executive officers
serving on December 31, 2001 (the "Named Executive Officers") for their services
in all capacities to the Company and its subsidiaries in fiscal years 2001,
2000, and 1999:
Summary Compensation Table
Long-term
Annual Compensation Compensation Awards
Securities Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#) Compensation ($)(1)
------------------------------------------ ----------- ----------------------------- ------------------------- ---------------------
Parker H. Petit (2) 2001 $425,038 -0- 238,750 $524,449
Chairman of the Board, President and 2000 96,924 -0- 41,250 472,603
Chief Executive Office 1999 -0- -0- 17,500 506,370
Jeffrey D. Koepsell (3) 2001 $320,031 -0- 119,935 $279
Executive Vice President and Chief 2000 189,231 -0- 22,500 300
Operating Officer
Frank D. Powers (4) 2001 $300,000 $119,513 28,856 $207,829
President, Population Health 2000 315,599 73,991 21,250 203,270
Management 1999 320,494 -0- 21,350 179,446
George W. Dunaway (5) 2001 $215,918 -0- 14,145 $ 5,290
Vice President - Finance and Chief 2000 203,355 -0- 1,875 5,288
Financial Officer 1999 50,000 -0- 10,000 21,821
James P. Reichmann (6) 2001 $218,416 -0- 16,856 $145,834
President, Women's Health 2000 205,900 -0- 7,544 127,837
1999 188,055 -0- 6,525 118,104
(1) Details of amounts reported in "All Other Compensation" column are provided in the table below.
(2) Mr. Petit was elected President and Chief Executive Officer on October 4, 2000.
(3) Mr. Koepsell was elected to this position on May 17, 2000.
(4) Mr. Powers served as President, Population Health Management through December 31, 2001.
He retired from the Company March 31, 2002.
(5) Mr. Dunaway was elected to this position on October 5, 1999.
(6) Mr. Reichmann was elected to the new position of Corporate Vice President of Strategic Sales on February 11, 2002.
Item Mr. Petit Mr. Koepsell Mr. Powers Mr. Dunaway Mr. Reichmann
-------------------------- -------- -------------- -------------- ---------------- ----------------- -------------------
Officer Term Life 2001 $29,698 $279 $5,669 $190 $2,001
Insurance 2000 30,098 300 5,946 188 1,045
1999 29,949 N/A 5,985 29 988
Split Dollar Insurance 2001 $280,088 $-0- $201,583 $-0- $138,733
Premium Value 2000 330,005 -0- 192,224 -0- 121,692
1999 326,421 N/A 168,661 -0- 112,316
401(k) Matching 2001 $-0- $-0- $ 577 $5,100 $5,100
Contributions 2000 -0- -0- 5,100 5,100 5,100
1999 N/A N/A 4,800 -0- 4,800
Non-Employee Board 2001 N/A N/A N/A N/A N/A
Retainer 2000 112,500 N/A N/A N/A N/A
1999 150,000 N/A N/A N/A N/A
Relocation Expenses 2001 N/A N/A N/A N/A N/A
2000 N/A N/A N/A N/A N/A
1999 N/A N/A N/A $21,792 N/A
Loan Forgiveness(1) 2001 $214,663 N/A N/A N/A N/A
2000 N/A N/A N/A N/A N/A
1999 N/A N/A N/A N/A N/A
Total All Other 2001 $524,449 $279 $207,829 $ 5,290 $145,834
Compensation 2000 472,603 300 203,270 5,288 127,837
506,370 N/A 179,446 21,821 118,104
(1) See "CEO Compensation".
Stock Options
The following table contains information concerning the grant of stock
options to the Named Executive Officers of the Company during 2001:
Option Grants in Last Fiscal Year
Potential Realizable Value at
Assumed Annual Rates of Stock Price
Individual Grants Appreciation for Option Term (1)
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options Granted Employees in Base Price Expiration Date
Name (#) Fiscal Year ($/Sh) 5% ($) 10% ($)
Parker H. Petit 38,750 (2) 6.3% $14.63 2/16/2001 $ 356,528 $ 903,513
200,000 (3) 32.5% $15.85 5/24/2011 1,993,596 5,052,164
Jeffrey D. Koepsell 19,935 (2) 3.2% $14.63 2/16/2011 183,417 464,813
100,000 (3) 16.2% $15.85 5/24/2011 996,798 2,526,082
Frank D. Powers 13,356 (2) 2.2% $14.63 2/16/2011 122,885 311,415
5,000 (3) 0.8% $15.85 5/24/2011 49,840 126,304
10,500 (4) 1.7% $18.91 7/24/2011 124,870 316,446
George W. Dunaway 6,645 (2) 1.1% $14.63 2/16/2011 61,138 154,938
1,500 (3) 0.2% $15.85 5/24/2011 14,952 37,891
6,000 (4) 1.0% $18.91 7/24/2011 71,354 180,826
James P. Reichmann 6,856 (2) 1.1% $14.63 2/16/2011 63,080 159,858
2,500 (3) 0.4% $15.85 5/24/2011 24,920 63,152
7,500 (4) 1.2% $18.91 7/24/2011 89,193 226,033
(1) Based on actual option term and annual compounding. These amounts are
calculated pursuant to applicable requirements of the SEC and do not
represent a forecast of the future appreciation of the Company's Common
Stock.
(2) These options to purchase the Company's Common Stock were granted on
February 16, 2001 as follows: a total of 72,041 shares under the Company's
2000 Stock Incentive Plan (the "2000 Plan"), 6,645 shares under the
Company's 1997 Stock Incentive Plan (the "1997 Plan") and 6,856 shares
under the Company's 1996 Stock Incentive Plan (the "1996 Plan"). Full
vesting shall occur not before two years and not later than four years
from the date of grant, based on performance vesting thresholds.
(3) These options to purchase the Company's Common Stock were granted on May
24, 2001 as follows: a total of 100,000 shares under the Company's 2001
Stock Incentive Plan, 186,250 shares under the 2000 Plan, 10,248 shares
under the 1997 Plan and 3,502 shares under the 1996 Plan. Full vesting
shall occur not before two years and not later than four years from the
date of grant, based on performance vesting thresholds.
(4) These options to purchase the Company's Common Stock were granted on July
24, 2001 as follows: a total of 16,500 shares under the Company's 1997 Plan
and 7,500 shares under the Company's 1996 Plan. Full vesting shall occur
not before two years and not later than four years from the date of grant,
based on performance vesting thresholds.
Stock Option Exercises
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options in 2001 and unexercised
options held as of the end of the fiscal year:
-------------------------------------------------------------------------------
Aggregated Option Exercises in Last Fiscal Year
and FY - End Option Values
Number of Securities Value of Unexercised In the-Money
Underlying Unexercised Options at Fiscal Year End($) (1)
Options at Fiscal Year
End(#)
------------------------------ --------------- ------------------ --------------------------------- --------------------------------
Name Shares Value Realized Exercisable Unexercisable Exercisable Unexercisable
Acquired on (Market Price at
Exercise (#) exercise less
exercise price)
Parker H. Petit -0- -0- 38,750 277,500 $601,937.50 $5,330,412.50
Jeffrey D. Koepsell -0- -0- 7,500 134,935 124,725.00 2,256,150.00
Frank D. Powers -0- -0- 108,512 47,058 1,136,252.56 784,876.26
George W. Dunaway -0- -0- 3,958 22,062 66,967.04 389,341.71
James P. Reichmann -0- -0- 26,934 27,707 319,801.17 466,925.13
(1) Based on $34.63, the last sale price of the Company's Common Stock on
December 31, 2001.
Compensation of Directors
The Directors who are employees of the Company receive no additional
compensation for serving on the Board of Directors. Directors who are not
employees of the Company ("Non-Employee Directors") receive a fee of $3,000 per
quarter, plus $1,000 for each Board meeting attended and $750 for each Committee
meeting attended on a day other than a day on which a Regular Meeting of the
Board is held, and are reimbursed for any travel expenses incurred.
In addition, under the 2000 Directors' Non-Qualified Stock Option Plan, all
Non-Employee Directors are entitled to receive an initial grant of options to
purchase 1,250 shares of the Company's Common Stock and at each annual meeting
of stockholders after their first full year serving as a director, an additional
grant of options to purchase 3,750 shares of Common Stock. The option price for
all such options is the fair market value of the underlying Common Stock on the
date of grant. Options have a ten year term and vest monthly over 12 months. On
May 24, 2001, each Non-Employee Director other than Mr. Millner was awarded an
option to purchase 3,750 shares of Common Stock at a price of $15.85 per share
under the 2000 Directors' Non-Qualified Stock Option Plan.
Severance Agreements
The Company and Mr. Powers are party to a severance agreement dated April
27, 1999. The severance agreement provides for a lump sum severance payment to
Mr. Powers in the event that his employment is involuntarily terminated for
reasons other than his death, disability or "cause" (defined as certain acts of
criminal or civil fraud), or if he voluntarily terminates employment for "good
reason" (defined as failure to be reelected as an officer of the Company,
reduction in base salary, discontinuance of certain incentive or stock option
plans or actions materially adversely affecting his participation therein, or
failure to honor earned and accrued vacation balances). The severance payment is
in an amount equal to two times Mr. Powers' annual base salary and targeted base
bonus as of the date of the agreement (the "Severance Amount"). Mr. Powers also
is entitled to a lump sum severance payment if he voluntarily terminates his
employment without "good reason" at any time after the first year of the
agreement. In such case, the severance payment is equal to the Severance Amount
less the amount of any gain accruing to Mr. Powers after the date of the
agreement with respect to stock options granted to him by the Company (whether
the grant date is before or after the date of the agreement) through the earlier
of the date of exercise or the date of expiration of the option. In addition, he
circumstances in which Mr. Powers is entitled to a severance payment, the also
is entitled to receive, for a period of two years after the date of termination,
life, disability and health insurance coverage, automobile allowances and other
fringe benefits equivalent to those in effect at the date of termination of
employment. The agreement requires Mr. Powers to comply with certain covenants
that preclude him from competing with the Company or soliciting customers or
employees of the Company for a period of two years following termination of
employment. Mr. Powers terminated his employment with the Company for "good
reason" on March 31, 2002, thereby entitling him to a severance payment of
$969,931 and a continuation of benefits as provided by the Agreement.
In addition to the agreement discussed in the preceding paragraph, the
Company entered into change in control severance agreement with Mr. Powers. Mr.
Powers' agreement terminated upon termination of his employment on March 31,
2002.
At its February 19, 2002 meeting the Board approved change in control
severance agreements for Mr. Petit, Mr. Koepsell and Mr. Dunaway. Although
formal agreements have yet to be finalized, the arrangement approved by the
Board contemplates that if the executive's employment with the Company
terminates following the consummation of a "change in control" for reasons other
than the executive's death, disability or retirement, or, by the Company for
"cause" (as defined in the preceding paragraph), or if the executive terminates
employment for "good reason" (which is defined to include the reasons set forth
in the preceding paragraph as well as other reasons, such as a reduction in
powers and responsibilities or an adverse change in title following a change in
control), the executive will receive a lump sum severance payment equal to a
multiple of the executive's annual base salary as of the date of the change in
control. The multiples applicable to Mr. Petit, Mr. Koepsell and Mr. Dunaway are
three, two and one, respectively. In addition, following termination of
employment, the executives are entitled to receive for a period of three years
in the case of Mr. Petit, two years in the case of Mr. Koepsell and one year in
the case of Mr. Dunaway, all life, disability and health insurance coverage,
automobile allowances and other fringe benefits equivalent to those in effect at
the date of termination and will be entitled to receive additional amounts, if
any, relating to any excise taxes imposed on the executive as a result of
Section 280(g) of the Internal Revenue Code of 1986, as amended (the "Code").
The agreements require the executive to comply with certain covenants that
preclude the executive from competing with the Company or soliciting customers
or employees of the Company for a period following termination of employment
equal to the period for which fringe benefits are continued under the applicable
agreement.
On May 16, 2000, the Company entered into a letter agreement with Mr.
Koepsell providing for 12 months of severance pay and benefits if the Company
terminates Mr. Koepsell's employment for reasons other than "for cause." The
letter agreement also provides that if the Company terminates Mr. Koepsell's
employment other than "for cause" within 24 months of his hire date, the Company
will retain Mr. Koepsell as a consultant on a "prn" basis for the balance of the
24-month period, at compensation to be decided upon at the sole discretion of
the Company and deducted from the 12-month severance pay to which he would
otherwise be entitled.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the Compensation
Committee Report on Corporate Compensation, the Report of the Audit Committee
and the Stock Performance Graph shall not be incorporated by reference into any
such filings.
Compensation Committee Report on Corporate Compensation
The Company's executive compensation program is designed to (1)
integrate pay and incentive plans with the Company's strategic goals, so as to
align the interests of management with the long-term interests of the Company's
stockholders, (2) attract, motivate and retain executives capable of achieving
the Company's strategic business goals (3) recognize outstanding individual
contributions and (4) provide compensation opportunities that are competitive
with those offered by other companies of similar size and performance,
especially within the healthcare industry. To achieve these goals, the Company's
executive compensation program consists of three elements: (i) base salary, (ii)
annual cash bonus, and (iii) long-term incentives in the form of stock options.
Each element of compensation has an integral role in the total executive
compensation program, including the compensation of the Named Executive
Officers.
In making its compensation determinations, the Compensation Committee
evaluates, on both an absolute and relative basis, a variety of Company
financial results (including sales, earnings, return on equity, return on assets
and balance sheet strength), market share and competitive position, the
potential for future growth, the overall importance of the individual to the
organization and the individual and group performance of senior management and
compensation levels at comparable companies, especially within the healthcare
industry. In formulating its determinations, it recognizes and rewards
achievements on an annual basis, while emphasizing the value and importance of
sustained long-term performance and recognition of developing trends within the
healthcare industry. The Compensation Committee reviews information prepared or
compiled by the Company, and also draws on the business experience of the
individual members of the Compensation Committee.
Cash Compensation. Officers and other employees are compensated within
salary ranges that are generally based on similar positions in companies of
comparable size and complexity to the Company. The actual base pay level for
each executive officer is based on a combination of experience, performance and
other factors that are determined to be important by the Committee. The salary
of the executive officers is generally reviewed annually at the beginning of
each year, with the amount of any increases based on factors such as Company
performance, general economic conditions, marketplace compensation trends and
individual performance.
Cash bonuses for management are paid under the Company's incentive
bonus plan (the "MIP Plan"). Bonuses under the MIP Plan are computed as a
percentage of year-end base salary. The amount of and entitlement to bonuses
paid under the MIP Plan are based upon the performance of the Company in
comparison to its operating budget. The Committee determines the participants in
the MIP Plan and sets the target bonus levels and performance criteria in the
first quarter of each year.
Stock Options. The Company grants stock options to certain of its
management employees, based on guidelines that take salary level, tenure,
individual performance rating and importance to the Company into account. Stock
options have been granted at exercise prices equal to the market price on the
date of grant and typically become exercisable in one of two ways (either (i)
based on the financial performance of the Company or (ii) 50% on the third
anniversary of the grant and 50% on the fourth anniversary of the grant), and
expire on the tenth anniversary.
CEO Compensation
CEO Compensation. Mr. Petit has served as the Company's Chief Executive
Officer since October 5, 2000. Mr. Petit's initial negotiated compensation
package was finalized after extensive discussions between the Compensation
Committee and the executive search firm the Company engaged to assist in
recruiting a new chief executive officer as well as with other candidates for
the position, and a review of comparative data of selected peer companies. The
Committee believes that Mr. Petit's package meets the Company's compensation
goals as stated above. Mr. Petit's initial annual base salary was $400,000. In
addition, the Company made a loan to Mr. Petit in the principal sum of $200,000.
The loan bore interest at a rate of 6% per annum and matured on January 1, 2002.
By its terms, the principal and interest on the note were to be forgiven at
maturity if Mr. Petit was still employed by the Company (or his employment was
previously terminated due to his death or disability) and, since the date of
issuance of the note, the Company's Common Stock had traded at a price of at
least $24 share. The applicable criteria for forgiveness were met and the note
and accrued interest were forgiven. Mr. Petit's base salary increased to
$430,000 effective March 1, 2001 and increased to $451,500 effective March 31,
2002. These increases were based on available competitive information and
inflation factors. In addition, on February 16, 2001 and May 24, 2001 Mr. Petit
was granted options to purchase 38,750 shares and 200,000 shares, respectively,
of the Company's Common Stock.
Compensation Committee of the Board of Directors
Thomas S. Stribling
Morris S. Weeden
Frederick P. Zuspan
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is responsible for executive compensation
decisions as described above. The Compensation Committee consisted of Thomas S.
Stribling, Morris S. Weeden and Frederick P. Zuspan during 2001. No member of
the Compensation Committee is currently or has served as an executive officer or
employee of the Company.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as to the beneficial
ownership of shares of the Company's Common Stock as of April 1, 2002 by (i) all
stockholders known by the Company to be the beneficial owners of more than five
percent of its Common Stock, (ii) each director of the Company, (iii) each Named
Executive Officer (as hereinafter defined), and (iv) all executive officers and
directors as a group. Unless otherwise indicated, the holders listed below have
sole voting and investment power with respect to all shares beneficially owned
by them.
Name of Beneficial Owner Amount and Nature of Beneficial Ownership Percent of Class (2)
(1)
------------------------------------------------------------ ------------------------------------------- -------------------------
Lord, Abbett & Co. (3) 1,036,149 11.5%
FMR Corp. (4) 1,011,800 11.2%
Fidelity Management & Research Company (4) 754,400 8.3%
Fidelity Small Cap Stock Fund (4) 550,900 6.1%
Edward C. Johnson, III (4) 754,400 8.3%
Safeco Corporation (5) 956,075 10.6%
Wellington Management Company, LLP (6) 896,100 9.9%
Vanguard Explorer Fund (7) 553,200 6.1%
Dimensional Fund Advisors, Inc. (8) 568,150 6.3%
Parker H. Petit (9) 458,686 5.1%
Jeffrey D. Koepsell (10) 10,500 -
Frank D. Powers (11) 141,318 1.5%
George W. Dunaway (12) 15,329 -
James P. Reichmann (13) 40,338 -
Guy W. Millner (14) 11,250 -
Carl E. Sanders (15) 20,625 -
Thomas S. Stribling (16) 9,500 -
Jackie M. Ward (17) 18,750 -
Donald W. Weber (18) 10,000 -
Morris S. Weeden (19) 21,250 -
Frederick P. Zuspan (20) 22,879 -
All current executive officers and directors 664,024 7.4%
as a group (13 persons)
-- Less than 1%
(1) Under the rules of the Securities and Exchange Commission (the "SEC"),
a person is deemed to be a beneficial owner of a security if he or she
has or shares the power to vote or to direct the voting of such
security ("voting power") or the power to dispose or to direct the
disposition of such security ("investment power"). A person is also
deemed to be a beneficial owner of any securities of which that person
has the right to acquire beneficial ownership within 60 days as well as
any securities owned by such person's spouse, children or relatives
living in the same house. Accordingly, more than one person may be
deemed to be a beneficial owner of the same securities.
(2) Based on 8,984,495 shares of Common Stock outstanding on April 1, 2002.
With respect to each person or group in the table, assumes that such
person or group has exercised all options, warrants and other rights to
purchase Common Stock which he or she beneficially owns and which are
exercisable within 60 days and that no other person has exercised any
such rights.
(3) The number of shares owned is based on information contained in a
report on Schedule 13G filed with the SEC on January 12, 2001.
The address of Lord, Abbett & Co. is 90 Hudson Street, Jersey City,
New Jersey 07302.
(4) The address of these beneficial owners is 82 Devonshire Street, Boston,
Massachusetts 02109. According to a Schedule 13G filed March 11, 2002
by FMR Corp. ("FMR"), Edward C. Johnson 3rd, Abigail P. Johnson,
Fidelity Management & Research Company and Fidelity Small Cap Stock
Fund the ("FMR Schedule 13G"), FMR possesses sole voting power with
respect to 260,800 shares and sole investment power as to 1,011,800
shares. FMR is the parent company of Fidelity Management and Research
Company ("Fidelity") an investment advisor registered under the
Investment Advisors' Act of 1940, which beneficially owns 754,400
shares, or 8.613% of the shares outstanding, as a result of acting as
investment advisor to various investment companies. One of these
investment companies, Fidelity Small Cap Stock Fund, is the beneficial
owner of 550,900 shares or 6.29% of the shares outstanding. Edward C.
Johnson 3rd and FMR, through its control of Fidelity, and the funds
each has sole power to dispose of 754,400 shares owned by the funds.
Neither FMR nor Edward C. Johnson 3rd has the sole power to vote or
direct the voting of the shares owed directly by the funds, which power
resides with the funds' boards of trustees. Fidelity Management Trust
Company, a wholly-owned subsidiary of FMR, is the beneficial owner of
257,400 shares as a result of serving as investment manager to
institutional accounts, and Edward C. Johnson 3rd and FMR each has sole
dispositive power over 257,400 shares and sole voting power as to
257,400 shares owned by such institutional accounts. Members of the
Edward C. Johnson 3rd family are the predominant owners of the Class B
shares of common stock of FMR, which class holds approximately 49% of
the voting power of FMR. Through their stock ownership and the
operation of a shareholders voting agreement to which they are parties,
members of the Johnson family may be deemed to form a controlling group
with respect to FMR under the Investment Company Act of 1940.
(5) The number of shares owned is based on information contained in a
report on Schedule 13G filed with the SEC on January 11, 2002. The
address of Safeco Corporation is Safeco Plaza, Seattle, Washington
98185.
(6) The number of shares owned is based on information contained in a
report on Schedule 13G filed with the SEC on March 31, 2002. The
address of Wellington Management Company, LLP ("WMC") is 75 State
Street, Boston, Massachusetts 02109. According to its Schedule 13G,
WMC, in its capacity as investment adviser, may be deemed to
beneficially own 896,100 shares of the Company's Common Stock, which
shares are held of record by clients of WMC. WMC reports that it has
no power to vote or direct the vote of such shares and shared power to
dispose or direct the disposition of such shares, while its clients
have the right to receive, or direct the receipt of, dividends from,
or proceeds from the sale of, such shares.
(7) The number of shares owned is based on information contained in a
report on Schedule 13G filed with the SEC on January 31, 2002.
According to its Schedule 13G, Vanguard Explorer Fund has the sole
power to vote or direct the vote of such shares and shared power to
dispose or direct the disposition of such shares. The address of
Vanguard Explorer Fund is Post Office Box 2600, Valley Forge,
Pennsylvania 19482.
(8) The number of shares owned is based on information contained in a
report on Schedule 13G filed with the SEC on January 30, 2002. The
address of Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue,
11th Floor, Santa Monica, California 90401.
(9) Represents 391,395 shares owned by Mr. Petit, 13,125 shares held by
Petit Investments Limited Partnership, 2,500 shares held by Petit
Grantor Trust and 51,666 shares which are subject to purchase upon
exercise of options exercisable within 60 days.
(10) Represents 3,000 shares owned by Mr. Koepsell and 7,500 shares which
are subject to purchase upon exercise of options exercisable within
60 days.
(11) Represents 13,692 shares owned by Mr. Powers and 127,626 shares which
are subject to purchase upon exercise of options exercisable within 60
days.
(12) Represents 7,413 shares owned by Mr. Dunaway and 7,916 shares which
are subject to purchase upon exercise of options exercisable within 60
days.
(13) Represents 5,068 shares owned by Mr. Reichmann and 35,270 shares
which are subject to purchase upon exercise of options exercisable
within 60 days.
(14) Represents 10,000 shares owned by Mr. Millner and 1,250 shares
which are subject to purchase upon exercise of options
exercisable within 60 days.
(15) Represents 3,125 shares owned by Mr. Sanders and 17,500 shares which
are subject to purchase upon exercise of options exercisable within 60
days.
(16) Represents 4,500 shares owned by Mr. Stribling and 5,000 shares
which are subject to purchase upon exercise of options exercisable
within 60 days.
(17) Represents shares which are subject to purchase upon exercise of
options exercisable within 60 days.
(18) Represents 5,000 shares owned by Mr. Weber and 5,000 shares which
are subject to purchase upon exercise of options exercisable
within 60 days.
(19) Represents 3,750 shares owned by Mr. Weeden and 17,500 shares
which are subject to purchase upon exercise of options
exercisable within 60 days.
(20) Represents 217 shares owned by Dr. Zuspan, 125 shares held by Zuspan &
Associates Partnership, 3,787 shares owned by Dr. Zuspan's wife and
18,750 shares which are subject to purchase upon exercise of options
exercisable within 60 days.
Item 13. Certain Relationships and Related Transactions
Mr. Carl E. Sanders, a director of the Company, is also the Chairman of Troutman
Sanders LLP, a law firm based in Atlanta, Georgia, which provided certain legal
services to the Company in fiscal year 2001 and is expected to be retained by
the Company in the future.
In 2001, the Company had certain business relationships with MarketRing.com
("MarketRing"), a privately held company located in the Atlanta area. Mr. Petit
and Mr. Weber are members of the Board of Directors of MarketRing and they are
beneficial owners of approximately 14% and 2%, respectively, of MarketRing's
outstanding common stock. In addition, Carl E. Sanders, Thomas S. Stribling and
Guy W. Millner each own a small percentage (less than 1%) of MarketRing's common
stock. Pursuant to the agreements, Matria licenses from MarketRing certain
software, and MarketRing provides certain software development and website
hosting services to the Company. Payments to MarketRing in 2001 totaled
$2,182,217. Hosting and maintenance fees payable to MarketRing in 2002 will
approximate $450,000. Future development fees will vary depending on the amount
of development efforts the Company undertakes.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 10-K/A to be signed on its behalf by the
undersigned, thereunto duly authorized.
Matria Healthcare, Inc.
By: /s/ Parker H. Petit
Parker H. Petit, Chairman of the Board,
Chief Executive Officer
Date: April 30, 2002