-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BND+wKu+Fj0vkKZgo2vP9JY4p7lQonVW/n4dD/8aHsBb4lDlGdkBPy0AVZHEGF9f tKPsxolxismSErdbEVWIxg== 0000950137-04-003268.txt : 20040428 0000950137-04-003268.hdr.sgml : 20040428 20040428144039 ACCESSION NUMBER: 0000950137-04-003268 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20040428 GROUP MEMBERS: MCM MANAGEMENT LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NDCHEALTH CORP CENTRAL INDEX KEY: 0000070033 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 580977458 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-17059 FILM NUMBER: 04760117 BUSINESS ADDRESS: STREET 1: NDCHEALTH CORPORATION STREET 2: NDC PLAZA CITY: ATLANTA STATE: GA ZIP: 30329 BUSINESS PHONE: 4047282000 MAIL ADDRESS: STREET 1: NDC PLAZA CITY: ATLANTA STATE: GA ZIP: 30329-2010 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL DATA CORP DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MMI INVESTMENTS LP CENTRAL INDEX KEY: 0001089447 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 141810589 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O MMI INVESTMENTS LLC, GENERAL PARTNER STREET 2: 26 WING RD CITY: MILLBROOK STATE: NY ZIP: 12545 BUSINESS PHONE: 9146778383 MAIL ADDRESS: STREET 1: C/O MMI INVESTMENTS LLC, GENERAL PARTNER STREET 2: WING ROAD RR 1, BOX 167D CITY: MILLBROOK STATE: NY ZIP: 12545 FORMER COMPANY: FORMER CONFORMED NAME: MMI INVESTMENTS II-A LP DATE OF NAME CHANGE: 19990623 SC 13D/A 1 c84937a1sc13dza.txt AMENDMENT TO SCHEDULE 13D OMB APPROVAL -------------------------- OMB Number: 3235-0145 Expires: December 31, 2005 Estimated average burden hours per response....15 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D/A UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)* NDCHEALTH CORPORATION - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $.125 PER SHARE - -------------------------------------------------------------------------------- (Title of Class of Securities) 639480102 - -------------------------------------------------------------------------------- (CUSIP Number) JEROME J. LANDE MMI INVESTMENTS, L.P. 152 West 57th Street New York, New York 10019 (212) 586-4333 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) APRIL 28, 2004 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. / / NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). PERSONS WHO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER. SEC 1746 (11-03) Page 2 of 12 CUSIP No. 639480102 - -------------------------------------------------------------------------------- 1. Names Of Reporting Persons. I.R.S. Identification Nos. of Above Persons (Entities Only). MMI Investments, L.P. I.R.S. Identification No.: 141810589 - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) 00 - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- 7. Sole Voting Power Number of 2,296,500 Shares ----------------------------------------------------------------- 8. Shared Voting Power Beneficially Owned by Each ----------------------------------------------------------------- 9. Sole Dispositive Power Reporting 2,296,500 Person ----------------------------------------------------------------- 10. Shared Dispositive Power With - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 2,296,500 - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 6.4% - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) PN - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Page 3 of 12 CUSIP No. 639480102 - -------------------------------------------------------------------------------- 1. Names Of Reporting Persons. I.R.S. Identification Nos. of Above Persons (Entities Only). MCM Management,LLC I.R.S. Identification No.: 141814578 - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) AF - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- 7. Sole Voting Power Number of 2,296,500 Shares ----------------------------------------------------------------- 8. Shared Voting Power Beneficially Owned by Each ----------------------------------------------------------------- 9. Sole Dispositive Power Reporting 2,296,500 Person ----------------------------------------------------------------- 10. Shared Dispositive Power With - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 2,296,500 - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 6.4% - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) 00 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Page 4 of 12 ITEM 1. SECURITY AND ISSUES This Amendment No. 1 to statement on Schedule 13D (this "Statement") relates to the Common Stock, Par Value $.125 Per Share (the "Common Stock"), of NDCHEALTH CORPORATION, a DELAWARE corporation (the "Issuer"), the principal executive offices of which are located at NDC PLAZA, ATLANTA, GEORGIA 30329-2010. This Amendment No. 1 amends and restates in full as set forth below Items 3, 4, 5, 6 and 7 of the Schedule 13D as originally deemed filed on April 7, 2004 ("Original Schedule 13D"). Terms not defined in this Amendment No. 1 shall have the respective meanings given to such terms in the Original Schedule 13D. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS The total purchase price of the 2,296,500 shares of Common Stock (the "Shares") purchased by MMI Investments was $53,765,086, all of which has been financed by incurring margin loans. These margin loans were obtained from Bear, Stearns & Co. Inc. under customary terms and conditions. The entire principal amount of such margin loans remains outstanding as of the date of this Statement. ITEM 4. PURPOSE OF TRANSACTION MMI Investments purchased the Shares as part of its investment activities. The Reporting Persons intend to review and evaluate the investment by MMI Investments in the Common Stock of the Issuer on an ongoing basis and may, depending upon their evaluation of the business and prospects of the Issuer, or such other considerations as they may deem relevant, determine to increase (but not to more than 10% of the outstanding Common Stock), decrease, or dispose of MMI Investments' holdings of Common Stock. As a part of such review and evaluation, the Reporting Persons may communicate with the Issuer's management, directors and other shareholders, including, without limitation, as described in the following paragraph. MMI Investments has submitted to the Issuer, for inclusion in its proxy statement for its 2004 annual meeting, a shareholder proposal ("Proposal") requesting that the Board of Directors engage a leading investment bank to analyze strategic alternatives for maximizing shareholder value, including but not limited to acquisitions, divestitures, recapitalizations and sale to or merger with a third party; a copy of that Proposal, related supporting statement and related letter to the Issuer is filed herewith as Exhibit 2. Although MMI Investments has held in excess of $2,000 worth of the issuer's common stock only since July 10, 2003, and therefore does not meet the Rule 14a-8 requirement for such a holding for one year at the time of the Proposal's submission, MMI Investments believes that the Proposal otherwise meets the 14a-8 requirements and has requested that the Company waive the one year requirement. If the Issuer includes the Proposal in its proxy statement, the Reporting Persons may file proxy materials and solicit proxies in support of the Proposal in accordance with the proxy rules under the Securities Exchange Act of 1934 (the "Act"). If the Issuer does not include the Proposal in its proxy material, the Reporting Persons may submit to the Issuer notice of a proposal -- similar to the Proposal - -- to be moved at the Issuer's annual meeting, in which event the Reporting Persons may file proxy materials and solicit proxies in favor of such proposal in accordance with the proxy rules under the Act. Page 5 of 12 Other than as described in this Item 4, neither Reporting Person, nor, to the knowledge of each Reporting Person, any individuals listed on Schedule I, has any current plan or proposal that relates to or would result in any of the transactions or other matters specified in clauses (a) through (j) of Item 4 of Schedule 13D; PROVIDED that the Reporting Persons reserve the right to develop such plans or proposals. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a)-(b) Based on 36,012,221 shares of Common Stock outstanding as of April 15, 2004, as reported in the Issuer's Form 10Q filed April 19, 2004, the Shares owned by MMI Investments represent approximately 6.4% of the outstanding Common Stock. MMI Investments has the sole power to direct the vote and disposition of such Shares on the date of this Statement. However, by virtue of being the general partner of MMI Investments, MCM may be deemed to be the beneficial owner of the Shares owned by MMI Investments and to have sole power over the voting and disposition of such Shares as a result of its having the sole power to make voting and disposition decisions on behalf of MMI Investments with respect to such Shares. Except for the Shares owned by MMI Investments, as of the date hereof, neither MCM nor, to MMI Investments' and MCM's knowledge, any of the persons listed on Schedule I, owns any Common Stock of the Issuer or has any right to acquire, directly or indirectly, any beneficial ownership of other Common Stock of the Issuer. (c) Except for the open market purchases of Common Stock by MMI Investments set forth in Schedule II attached hereto and incorporated herein by reference, there have been no transactions with respect to the Common Stock since April 7, 2004 the date of the last filing on Schedule 13D by MMI Investments, MCM, or, to either Reporting Person's knowledge, any of the persons listed on Schedule I. (d) No person other than MMI Investments is known to either Reporting Person to have the right to receive or the power to direct the receipt of dividends from or the proceeds from the sale of, any of the Shares referred to in Item 5(a) above. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS, OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER By virtue of being the general partner of MMI Investments, MCM may be deemed to be the beneficial owner of the Shares of the Issuer owned by MMI Investments. Other than as described in Item 3 of this Statement (and the Joint Filing Agreement filed as an Exhibit to the Original Schedule 13D), there are no contracts, arrangements or understandings between the Reporting Persons or between either of the Reporting Persons and any other person with respect to any securities of the Issuer. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS See Exhibit Index appearing elsewhere herein, which is incorporated herein by reference. -5- Page 6 of 12 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete, and correct. Pursuant to Rule 13d-1(k)(1)(iii) of Regulation 13D-G of the General Rules and Regulations of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, the undersigned agree that the attached statement is filed on behalf of each of them. Date: APRIL 28, 2004 MMI INVESTMENTS, L.P. By: MCM Management, LLC General Partner By: /s/ JEROME J. LANDE ------------------------------ Jerome J. Lande Vice President MCM MANAGEMENT, LLC By: /s/ JEROME J. LANDE ------------------------------ Jerome J. Lande Vice President -6- Page 7 of 12 SCHEDULE I MCM MANAGEMENT, LLC ("MCM") Voting Members and Executive Officers NAME AND BUSINESS ADDRESS POSITION AND PRINCIPAL OCCUPATION John S. Dyson Voting Member and Chairman of MCM; 152 West 57th Street Voting Member and Chairman of Millcap New York, New York 10019 Advisors, LLC ("Millcap"), a Delaware limited liability company, 152 West 57th Street, New York, New York 10019 Clay B. Lifflander Voting Member and President of MCM; 152 West 57th Street Voting Member and President of Millcap New York, New York 10019 Alan L. Rivera Voting Member, Executive Vice President, 152 West 57th Street and Secretary of MCM; New York, New York 10019 Voting Member, Executive Vice President, Chief Financial Officer and General Counsel of Millcap -7- Page 8 of 12 SCHEDULE II OPEN MARKET PURCHASES BY MMI INVESTMENTS SINCE THE SCHEDULE 13D FILED ON APRIL 7, 2004
Trade Date Number of Shares Price/Share 4/15/04 2,500 $23.45 4/20/04 255,000 22.22 4/23/04 20,000 22.11
-8- Page 9 of 12 EXHIBIT INDEX NUMBER DESCRIPTION 1. Joint Filing Agreement dated as of April 7, 2004, by and between MMI Investments and MCM (incorporated by reference to Exhibit to the Schedule 13D filed by such persons on April 7, 2004, with respect to NDCHealth Corporation). 2. Letter, dated April 28, 2004 to NDCHealth Corporation and enclosure thereto (containing a shareholder resolution and related support statement). -9- EX-99.2 2 c84937a1exv99w2.txt LETTER Page 10 of 12 EXHIBIT 2 MMI MMI INVESTMENTS, L.P. April 28, 2004 Board of Directors NDCHealth Corporation NDC Plaza Atlanta, Georgia 30329-2010 Dear Members of the Board: MMI Investments, L.P. is the owner of 2,296,500 shares of NDCHealth Corporation common stock, as reflected in our enclosed Schedule 13D and Amendment No. 1 thereto, which are being filed today. Enclosed herein is the text of a shareholder resolution we wish to be carried in NDC's forthcoming proxy statement for consideration by shareholders at the 2004 Annual Meeting. We first acquired more than $2,000 worth of NDC stock on July 10th, 2003 and believe we are presently among NDC's top five shareholders. We have provided our proposal in advance of the April 30th deadline for submission and will have held a substantial portion of our current position for well over a year by the expected date of publication of the 2004 proxy and the expected date of the Annual Meeting. While we are not in strict compliance with the holding requirement of SEC Rule 14a-8, we trust that you will not rely on a technicality to inhibit your shareholders from voting on this important matter that goes to the heart of your primary fiduciary duty as Directors - the obligation to enhance shareholder value. We have proposed that NDC hire an Investment Banker to analyze all strategic alternatives available to the Company to maximize value for shareholders. We have proposed this now to meet your deadline for inclusion in the 2004 proxy, but are mindful that another two quarters will pass before shareholders vote on our proposal. If by the Annual Meeting management and the Board have not shown significant progress in executing their chosen growth strategy, a process should begin to take the logical steps toward maximizing shareholder value. Just because management and the Board proposed an "Eight Quarter Plan" does not mean shareholders should sit idly by for two years without any demonstrable progress. The concerns of shareholders and Wall Street about NDC's progress in achieving its Eight Quarter Plan are well-founded. Performance in the first three quarters has not met management's targets, with slowing growth in Network Systems and Services and skyrocketing data cost margins in Information Management. Management has already had to revise its 2004 revenue guidance downward and suspend earnings and cash flow guidance altogether despite already deflated expectations due to European expansion costs and weak domestic pharmaceutical manufacturer spending. We are concerned that this signals an imminent suspension or revision of the Eight Quarter Plan's stated targets altogether. In the meantime, NDC management's credibility has been marred once again by a failure to meet its announced targets - the second time in a year. We are concerned that the Company is fast approaching a critical mass of frustration for its investors and research analysts wherein no target is to be trusted and no positive improvement will be rewarded. If this is a possibility now, we fear that continued failure to meet management and the Board's stated objectives will make it a certainty. As one of NDC's largest shareholders, we believe there is (and has been for too long) a severe disconnect between NDC's market capitalization and the true intrinsic value of its strong cash flow generation capabilities, leading market positions and potential for operating leverage. We also strongly believe, however, that without 152 West 57th Street Tel: (212)586-4333 New York, NY 10019 Fax: (212)586-0340 Page 11 of 12 demonstrable progress NDC's long-term value will only diminish. Our ultimate purpose as long-term investors is to see NDC thrive and its shareholders prosper, by means of the soundest strategy available. Therefore if significant improvements and a clear path to success for the Eight Quarter Plan should materialize before the Annual Meeting, we will reconsider our position. Furthermore, we recognize that there may have been progress made thus far that is not apparent to shareholders or analysts. If this is the case, we encourage the Board to direct management to discuss publicly its demonstrable and verifiable results thus far. However, if NDC's performance continues to falter, the Board must consider the wealth of alternative opportunities for significant value enhancement for shareholders. As former General Electric Chairman and CEO Jack Welch said to the Wall Street Journal recently, "There is no room in an organization for those `eternal optimists' who never confront reality and keep hoping quietly that the team will make an impossible deadline." Sincerely, /s/ Clay Lifflander President Enclosure Page 12 of 12 SHAREHOLDER RESOLUTION RESOLVED, that the shareholders of NDCHealth Corporation (the "Company" or "NDC") request that the Board of Directors engage a leading investment bank to analyze, and provide a written report to the full Board on, all strategic alternatives available to the Company for maximization of shareholder value, including but not limited to acquisitions, divestitures, recapitalizations and sale to or merger with a third-party. SUPPORTING STATEMENT We believe NDC's shares trade at a value which does not recognize the strength of NDC's underlying businesses. At the time of submission of this proposal (April 28th, 2004), NDC's multiples of EBITDA and earnings are 25%-45% below its self-defined peer universe (presented in its proxy statement), in spite of its leading position in transaction services, #2 position in information management and an EBITDA margin more than 75% above its peers' average. Furthermore, despite NDC's significant attractiveness to potential acquirors, its multiple of LTM EBITDA is less than 1/2 the average of acquisitions in its industry. Were NDC valued at its peers' average trading or acquisition multiples, the share price would double. With the "Eight Quarter Plan" already well underway, we believe NDC management has failed to deliver, casting significant doubt on management's ability to achieve their announced goals. We believe, based on past performance, that NDC as currently organized and managed is likely to continue to lag its peers in performance and valuation and to produce continued poor returns for NDC shareholders. Clearly the status quo is unacceptable: 1. WEAK STOCK PERFORMANCE - NDC stock is nearly 20% below its level of five years ago and nearly 30% below two years ago. The average stock price appreciation among NDC's peers is 2% and 11% over those periods, respectively. Even during 2003 when NDC rose 29% (rebounding from significant weakness in fall, 2002), its peers averaged a 56% gain. 2. FINANCIAL UNDERPERFORMANCE - NDC is nearly four quarters into management's "Eight Quarter Plan," and already showing negative progress with slowing growth (30% lower for the first three quarters of fiscal 2004 compared with the first three quarters of fiscal 2003) and rising expenses (data costs are averaging 13% higher, with total SG&A margin 120 basis points higher). 3. MANAGEMENT FAILURES - Management's ability to forecast has been called into question again by a missed estimate (the second time in a year) and its suspension of 2004 earnings guidance - in spite of its attempted shift to a more predictable recurring revenue model. This has further marred the credibility of a team whose auditors recently forced it to change accounting practices, inviting an SEC inquiry and multiple class-action lawsuits. The best recourse for shareholders is for a leading investment bank to analyze all options available to NDC and execute a strategy to unlock its significant intrinsic value. This proposal is precatory and its passage cannot compel action. However, a substantial vote in favor should be regarded as a mandate to the Board. SEND A STRONG MESSAGE TO MANAGEMENT AND THE BOARD. PLEASE VOTE "FOR" THIS RESOLUTION. -----END PRIVACY-ENHANCED MESSAGE-----