Lawndale increases QSII 13-D position/calls for board changes
In a filing with the SEC on July 29, 1998, Lawndale Capital Mgmt amended its Quality Systems (O-QSII) 13-D filing, calling for changes to improve Quality's Board of Directors. Lawndale's filing also disclosed that it had boosted Lawndale's ownership in Quality Systems to over 8.4% of QSII stock. Quality Systems, Inc., is a Tustin, CA-based health care information systems company with over $2/share of net cash, substantial recurring revenue from its core dental practice managment systems business and two start-up subsidiaries, Clinitec Intl and MicroMed Healthcare Info. Sys that develop and provide electronic medical records systems and enterprise practice management systems, respectively.
As stated in ITEM 4 of its filing:
Lawndale has been in additional contact with management and members of the Board of Directors of QSII to discuss the strategies QSII plans to employ to maximize shareholder value, including, but not limited to, changes in the composition of QSII's Board of Directors (see below), the integration of QSII's separate businesses and QSII's announced, but not executed, Stock buyback plan.
Lawndale has communicated to members of QSII's Board of Directors, including its Chairman, Lawndale's views as to the merits of changes in QSII's Board of Directors. Lawndale believes that a more active and independent Board with a long-term strategic view of maximizing shareholder value is necessary and currently lacking at QSII. Furthermore, Lawndale believes that the proper framework in determining the "independence" of a director should follow guidelines promulgated by either the Council of Institutional Investors or CALPERS. Lawndale believes that QSII directors need to have greater operating depth and experience in QSII's industry(ies) than QSII's current independent board members. Lawndale believes that shareholder interests would be further served if representatives of large non-management shareholders were members of QSII's Board.
In April, as part of Lawndale's desire to strengthen the quality and independence of, and level of management accountability to, the Board, Lawndale introduced a highly qualified independent director for QSII's consideration to be nominated to a vacancy on the QSII's Board. Lawndale has been informed by QSII that the candidate introduced by Lawndale is among several under consideration for appointment to the Board. QSII has been unable to fully evaluate candidates in time for nomination and election by shareholders at the upcoming Annual Meeting. QSII has represented to Lawndale that its Board intends to continue the evaluation process and to appoint new Board member(s) in a timely manner. Depending on the progress of this evaluation process, at the time of the Annual Meeting in September 1998, Lawndale may withhold the vote of its Stock (a "Vote No Action") on the reelection of QSII's current Board of Directors. In the event that QSII is unable to timely evaluate and appoint new members to its Board that are independent and possess greater operating depth and experience in QSII's industry(ies), Lawndale may communicate with other shareholders to discuss actions that could be taken to cause QSII to improve the make-up of its Board.
Lawndale's latest filing is available on the SEC's Edgar databasethrough various same day comm'l services on the web such as free edgar at
freeedgar.com
Its amended filings on 6/8/98, 1/28/98 and our original filing can be found directly in SEC's Edgar database at:
freeedgar.com
sec.gov
sec.gov
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