<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
X Quarterly Report Pursuant to Section 13 or 15 (d) of
--- the Securities Exchange Act of 1934
For the Quarterly Period Ended June 30, 1996 or
--- Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Transition Period from _____to_____
COMMISSION FILE NUMBER 0-28182
-------
TRANSITION SYSTEMS, INC.
------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2887598
------------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
ONE BOSTON PLACE, BOSTON, MASSACHUSETTS 02108
---------------------------------------------
(Address of principal executive offices)
(Zip Code)
(617) 723-4222
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
OUTSTANDING AT
CLASS JULY 22, 1996
----- --------------
Common Stock, 16,631,514
$.01 par value shares
Non-Voting Common Stock, 356,262
$.01 par value shares
<PAGE> 2
TRANSITION SYSTEMS, INC.
FORM 10-Q FOR THE THREE MONTHS ENDED JUNE 30,1996
TABLE OF CONTENTS
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of
June 30, 1996 (unaudited) and September 30, 1995 .................3
Consolidated Statements of Operations for the Three and
Nine Months Ended June 30, 1996 and 1995 (unaudited) .............4
Consolidated Statements of Cash Flows for the Nine
Months Ended June 30, 1996 and 1995 (unaudited) ..................5
Notes to Interim Consolidated Financial Statements ...............6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ..............................8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................12
SIGNATURES...............................................................13
2
<PAGE> 3
<TABLE>
TRANSITION SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
JUNE 30, SEPTEMBER 30,
1996 1995
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $49,471,000 $ 3,844,000
Short-term investments - 7,324,000
Accounts receivable, net 13,268,000 11,551,000
Other current assets 2,246,000 867,000
Deferred income taxes 1,721,000 1,666,000
----------- -----------
Total current assets 66,706,000 25,252,000
----------- -----------
Property and equipment, net 1,047,000 1,015,000
Capitalized software costs, net 1,412,000 1,462,000
Intangible assets, net 109,000 8,000
----------- -----------
Total assets $69,274,000 $27,737,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,224,000 $ 693,000
Accrued expenses 4,365,000 4,023,000
Accounts payable - affiliates - 9,000
Income taxes payable 150,000 1,284,000
Deferred revenue 5,604,000 5,035,000
----------- -----------
Total current liabilities 11,343,000 11,044,000
----------- -----------
Deferred income taxes 501,000 501,000
----------- -----------
Total liabilities $11,844,000 $11,545,000
----------- -----------
Commitments
Stockholders' equity:
Common stock 166,000 301,000
Non-voting common stock 3,000 -
Non-voting common stock warrant 395,000 -
Treasury stock - (1,471,000)
Additional paid-in capital 39,106,000 -
Retained earnings 17,760,000 17,362,000
----------- -----------
Total stockholders' equity 57,430,000 16,192,000
----------- -----------
Total liabilities
and stockholders' equity $69,274,000 $27,737,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 4
<TABLE>
TRANSITION SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
----------------------- ---------------------------
June 30, June 24, June 30, June 24,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Software and implementation $ 7,718,000 $ 6,004,000 $17,348,000 $12,942,000
Maintenance 2,384,000 1,912,000 6,830,000 5,409,000
----------- ----------- ----------- -----------
Total revenues 10,102,000 7,916,000 24,178,000 18,351,000
----------- ----------- ----------- -----------
Cost of Revenues:
Software and implementation 1,827,000 1,554,000 5,335,000 4,473,000
Maintenance 800,000 573,000 2,322,000 1,599,000
Research and development 816,000 686,000 2,444,000 1,978,000
Sales and marketing 1,156,000 1,288,000 3,177,000 3,012,000
General and administrative 770,000 565,000 1,996,000 1,735,000
Compensation charge - - 3,024,000 -
----------- ----------- ----------- -----------
Total operating expenses 5,369,000 4,666,000 18,298,000 12,797,000
----------- ----------- ----------- -----------
Income from operations 4,733,000 3,250,000 5,880,000 5,554,000
Interest income 468,000 127,000 677,000 294,000
Interest expense (337,000) - (1,236,000) -
----------- ----------- ----------- -----------
Income before income taxes 4,864,000 3,377,000 5,321,000 5,848,000
Provision for income taxes 1,994,000 1,478,000 2,182,000 2,545,000
----------- ----------- ----------- -----------
Income before extraordinary item 2,870,000 1,899,000 3,139,000 3,303,000
Extraordinary item:
Loss on early extinguishment of debt,
net of taxes (2,149,000) - (2,149,000) -
----------- ----------- ----------- -----------
Net income 721,000 1,899,000 990,000 3,303,000
Series A non-voting preferred stock
dividends 593,000 - 593,000 -
----------- ----------- ----------- -----------
Net income allocable to common
stockholders $ 128,000 $ 1,899,000 $ 397,000 $ 3,303,000
=========== =========== =========== ===========
Income per share:
Income before extraordinary item $ 0.15 $ 0.10 $ 0.20 $ 0.21
Extraordinary item $ (0.11) $ - $ (0.13) $ -
Net income allocable to common
stockholders $ 0.01 $ 0.10 $ 0.02 $ 0.21
Weighted average common shares
outstanding 19,629,000 19,629,000(1) 15,931,000 15,931,000(1)
<FN>
(1) See Note 2 of Notes to Interim Consolidated Financial Statements.
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
<TABLE>
TRANSITION SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
Nine Months Ended
-----------------
June 30, June 24,
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income 990,000 3,303,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Extraordinary item 3,642,000 -
Deferred income taxes (55,000) (242,000)
Depreciation and amortization 1,033,000 1,046,000
Compensation charge in connection with the Recapitalization 3,024,000 -
Compensation charge related to options 52,000 -
Changes in operating assets and liabilities:
(Increase) in accounts receivable (1,717,000) (2,908,000)
(Increase) in other current assets (1,379,000) (648,000)
Increase (decrease) in accounts payable 531,000 (81,000)
Increase (decrease) in accrued expenses 342,000 (7,000)
Increase (decrease) in income taxes payable (1,132,000) 837,000
(Decrease) in due to affiliates (9,000) (51,000)
Increase in deferred revenue 569,000 1,101,000
------------ ----------
Net cash provided by operating activities 5,891,000 2,350,000
Cash flows provided by (used by) investing activities:
Purchases of investments - (5,617,000)
Maturities of investments 7,324,000 1,886,000
Purchase of property and equipment (414,000) (310,000)
Additions to capitalized software costs (525,000) (525,000)
Additions to intangible assets (9,000) -
------------ ----------
Net cash provided by investing activities 6,376,000 (4,566,000)
Cash flows provided by (used by) financing activities:
Proceeds from initial public offering 114,468,000 -
Redemption of Series A preferred stock (20,000,000) -
Payment of Series A preferred stock dividends (593,000) -
Proceeds of issuance of debt 49,605,000 -
Early extinguishment of debt (50,000,000) -
Net proceeds from issuance of Preferred Stock 53,585,000 -
Purchase of Common Stock (111,410,000) -
Payment of fees related to Recapitalization (3,336,000) -
Exercise of options 767,000 -
Proceeds from warrants issued 395,000 -
Equity issuance costs (121,000) -
------------ ----------
Net cash provided by financing activities 33,360,000 -
Net increase (decrease) in cash and cash equivalents 45,627,000 (2,216,000)
Cash and cash equivalents - beginning of period 3,844,000 5,616,000
------------ ----------
Cash and cash equivalents - end of period 49,471,000 3,400,000
============ ==========
Supplemental information:
Income taxes paid 2,488,000 2,429,000
Interest paid 1,119,000
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE> 6
TRANSITION SYSTEMS, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, and have been prepared by the Company
without audit. In the opinion of management, the accompanying consolidated
financial statements contain all adjustments, consisting only of those of a
normal recurring nature, except for the effects of the Recapitalization and
initial public offering, necessary for a fair presentation of the Company's
financial position, results of operations and cash flows at the dates and for
the periods indicated. While the Company believes that the disclosures presented
are adequate to make the information not misleading, these financial statements
should be read in conjunction with the audited consolidated financial statements
for the year ended September 30, 1995 which are contained in the Company's
Registration Statement on Form S-l, File No. 333-01758, as declared effective by
the Securities and Exchange Commission on April 17, 1996. The results of
operations for the three and nine months ended June 30, 1996 are not necessarily
indicative of the results to be expected for the entire year ending September
30, 1996. The Company changed its fiscal year end from the last Saturday of
September of each year, to September 30. The change is effective commencing with
the quarter ending June 30, 1996. In the future, quarters will end on December
31, March 31, June 30, and September 30.
2. COMPUTATION OF EARNINGS PER SHARE
Net income allocable to common stockholders is computed based upon the weighted
average number of common shares and common equivalent shares outstanding during
each period. Common equivalent shares are included in the per share calculations
where the effect of their inclusion would be dilutive. Net income allocable to
common stockholders for the three and nine month periods ended June 24, 1995, on
a proforma basis, gives effect to the issuance of common stock in the Company's
Recapitalization and initial public offering. In accordance with the Securities
and Exchange Commissions Staff Accounting Bulletin No. 83 ("SAB 83") all common
and common equivalent shares and other potentially dilutive instruments,
including stock options, warrants and preferred stock issued during the
twelve-month period prior to the filing date of the Company's Registration
Statement for its initial public offering have been included in the calculation
as if they were outstanding for all periods presented.
3. INITIAL PUBLIC OFFERING
On April 18, 1996 the Company completed an initial public offering of 6,900,000
shares of its common stock which generated net proceeds of $114.5 million. A
substantial part of the proceeds were used to redeem $20.6 million of Series A
Preferred Stock and accrued dividends, to repay the $34.7 million outstanding
principal amount and accrued interest under the secured term loan facility, to
repay the $10.3 million outstanding principal amount and accrued interest under
the senior subordinated notes and to repay the $5.1 million outstanding
principal amount and accrued interest under the Company's revolving credit
facility.
4. EXTRAORDINARY ITEM
In the three months ended June 30, 1996, the Company incurred an extraordinary
loss of $2,149,000 representing the after tax effect of the write-off of
$3,642,000 of unamortized capitalized financing costs. These costs were
attributable to indebtedness incurred in the Recapitalization that was repaid
out of the proceeds of the Company's initial public offering.
6
<PAGE> 7
5. PREFERRED STOCK DIVIDEND
The holders of the Series A Preferred Stock (issued in connection with the
Recapitalization on January 24,1996) were entitled to receive, when and as
declared by the Board of Directors, out of funds legally available therefor,
preferential cumulative dividends at the rate of 12% per annum. The Company was
not obligated to pay dividends prior to the redemption of the Series A Preferred
Stock, and no dividends were declared by the Board. The Series A Preferred Stock
was subject to mandatory redemption, provided funds were legally available
therefor, upon the closing of an initial public offering or the sale of the
Company, but in no event later than January 2006. Upon the closing of the
Company's initial public offering, on April 23, 1996, at which time funds became
legally available for the redemption of the Series A Preferred Stock and payment
of dividends, the Company redeemed in full the Series A Preferred Stock and
accrued and paid dividends thereon from the date of the Recapitalization.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
- --------------------------------------------------------------------------
OPERATIONS
- ----------
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that may contribute
to such differences include those listed under "Risk Factors" in the Company's
Registration Statement on Form S-1, File No. 333-01758, as declared effective by
the Securities and Exchange Commission on April 17, 1996.
The following information should be read in conjunction with the consolidated
financial statements included herein and the notes thereto.
OVERVIEW
- --------
The Company provides integrated clinical and financial decision support systems
to hospitals, integrated delivery systems and other health care institutions.
The Company was founded in 1985 to apply management control techniques to the
health care delivery process, with the objective of improving quality and
lowering costs.
The Company has experienced a seasonal pattern in its operating results, in
which the first quarter of each fiscal year typically has the lowest revenue and
net income, frequently lower than the last quarter of the previous fiscal year,
and the fourth quarter typically has the highest revenue and net income. While
the Company has taken steps to moderate this seasonal pattern, there can be no
assurance that it will be able to eliminate the seasonality of its operating
results.
The Company's revenues are derived from sales of software licenses and related
implementation services and of software maintenance. Software and implementation
revenues are generally accounted for using the percentage of completion method
based principally upon progress and performance as measured by achievement of
contract milestones. Software maintenance fees, which are generally received
annually in advance, are recorded as deferred revenue on the Company's balance
sheet and are recognized as revenue ratably over the life of the contract.
RESULTS OF OPERATIONS
- ---------------------
REVENUES
The Company's total revenues increased 28% to $10.1 million for the three months
ended June 30, 1996 from $7.9 million for the same period in the prior year. For
the nine months ended June 30, 1996 total revenues increased 32% to $24.2
million from $18.4 million for the same nine month period in the prior year.
Software and implementation revenue increased 29% to $7.7 million for the three
months ended June 30, 1996 from $6.0 million for the same period in the prior
year, and increased 34% to $17.4 million for the nine months ended June 30,1996
from $12.9 million for the same period in the prior year. The increase in
software and implementation revenue was due primarily to growth in sales to
integrated delivery systems and increased penetration of the small hospital
market through sales of the company's AS/400 and UNIX products. Maintenance
revenue increased 25% to $2.4 million for the three months ended June 30, 1996
from $1.9 million for the same period in the prior year, and increased 26% to
$6.8 million for the nine months ended June 30, 1996 from $5.4 million for the
same period in the prior year. The growth in maintenance revenue is attributable
to the growth in the Company's installed base.
8
<PAGE> 9
COST OF REVENUE
Cost of software and implementation revenue consists primarily of the cost of
third-party software that is resold by the Company or included in the Company's
products, personnel costs, the cost of related benefits, travel and living
expenses, costs of materials and other costs related to the installation and
implementation of the Company's products, and amortization of capitalized
software development costs. Cost of maintenance revenue consists primarily of
maintenance costs associated with the third-party software included in the
Company's products and personnel costs incurred in providing maintenance and
technical support services to the Company's customers.
Cost of software and implementation revenue increased 18% to $1.8 million for
the three months ended June 30, 1996 from $1.6 million for the same period in
the prior year, and increased 18% to $5.3 million for the nine months ended June
30, 1996 from $4.5 million for the same period in the prior year. The increase
in cost of software and implementation revenue was primarily due to higher
royalty cost associated with third-party software, due to a greater proportion
of revenue generated from the AS/400, UNIX, and Clinical ABCs products which
have a higher content of third party software, and, to a lesser extent, to
growth in the Company's implementation staff. Cost of maintenance revenue
increased 40% to $0.8 million for the three months ended June 30, 1996 from $0.6
million for the same period in the prior year, and increased 45% to $2.3 million
for the nine months ended June 30, 1996 from $1.6 million for the same period in
the prior year. The increase was attributable primarily to higher third-party
software maintenance costs incurred in the first year of a multi-year fixed fee
software maintenance agreement and to growth in the Company's support staff.
RESEARCH AND DEVELOPMENT
Research and development expense increased 19% to $0.8 million for the three
months ended June 30, 1996 from $0.7 million for the same period in the prior
year, and increased 24% to $2.4 million for the nine months ended June 30, 1996
from $2.0 million for the same period in the prior year. The increase was
primarily due to a net increase of six persons in the Company's research and
development staff, principally to support the further development of its
Transition II for Integrated Delivery Systems product, its Clinical ABCs
product, and its AS/400 and UNIX products.
SALES AND MARKETING
Sales and marketing expense decreased 10% to $1.2 million for the three months
ended June 30, 1996 from $1.3 million for the same period in the prior year. The
decrease was primarily attributable to the timing of the Company sponsored
annual user group conference which in fiscal 1995 took place during the three
months ended June 30, 1995, but in fiscal 1996 took place earlier, during the
three months ended March 30, 1996. Sales and marketing expense increased 5% to
$3.2 million for the nine months ended June 30, 1996 from $3.0 million for the
same period in the prior year. The increase was attributable to higher
commission expense associated with higher software and implementation revenue
and a net increase of two persons in the Company's sales and marketing staff.
The Company is continuing to recruit additional sales and marketing personnel
and expects that, as a result, sales and marketing expense, as a percentage of
total revenue, will increase in the future.
9
<PAGE> 10
GENERAL AND ADMINISTRATIVE
General and administrative expense increased 36% to $0.8 million for the three
months ended June 30,1996 from $0.6 million for the same period in the prior
year, and increased 15% to $2.0 million for the nine months ended June 30, 1996
from $1.7 million for the same period in the prior year. The increase was
primarily due to increased costs related to becoming a public company.
OTHER OPERATING EXPENSES
Other operating expenses for the nine months ended June 30,1996 included a
compensation charge of $3.0 million arising from the acquisition by the Company,
in connection with the January 1996 Recapitalization, of shares of Common Stock
issued to certain executive officers pursuant to the exercise of options.
NET INTEREST INCOME (EXPENSE)
Net interest income remained relatively unchanged at $0.1 million for the three
months ended June 30, 1996 and June 24, 1995. For the three months ended
June 30,1996 interest income earned on the cash balances of the Company
generated by the Company's initial public offering was partially offset by
interest expense from debt associated with the Recapitalization of the Company
in January 1996 which was repaid with proceeds received from the initial public
offering in April 1996. During the nine months ended June 30, 1996 the Company
had $0.6 million of net interest expense compared to $0.3 million of net
interest income for the same period in the prior year. The increase in interest
expense was due to an increase in debt outstanding associated with the
Recapitalization of the Company in January 1996, which was partially offset by
the interest income earned on the cash balances of the Company generated by the
Company's initial public offering.
PROVISION FOR INCOME TAXES
The Company's effective income tax rate decreased to 41% from 43% for the three
and nine months ended June 30, 1996 compared to the same period in the prior
year. The decrease is due to certain provisions taken in the prior year.
EXTRAORDINARY ITEM
For the three and nine months ended June 30,1996, the Company incurred an
extraordinary loss of $2.1 million representing the after tax effect of the
write-off of $3.6 million of unamortized capitalized financing costs
attributable to indebtedness incurred in the Recapitalization that was repaid
out of the proceeds of the Company's initial public offering.
10
<PAGE> 11
PREFERRED STOCK DIVIDEND
The holders of the Series A Preferred Stock (issued in connection with the
Recapitalization on January 24,1996) were entitled to receive, when and as
declared by the Board of Directors, out of funds legally available therefor,
preferential cumulative dividends at the rate of 12% per annum. The Company was
not obligated to pay dividends prior to the redemption of the Series A Preferred
Stock, and no dividends were declared by the Board. The Series A Preferred Stock
was subject to mandatory redemption, provided funds were legally available
therefor, upon the closing of an initial public offering or the sale of the
Company, but in no event later than January 2006. Upon the closing of the
Company's initial public offering, on April 23, 1996, at which time funds became
legally available for the redemption of the Series A Preferred Stock and payment
of dividends, the Company redeemed in full the Series A Preferred Stock and
accrued and paid dividends thereon from the date of the Recapitalization.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased to $49.5 million at June 30,1996 from $11.2
million at September 30, 1995. The increase is attributable primarily to the
proceeds received from the Company's initial public offering of its common stock
in April 1996.
On April 18, 1996 the Company completed its initial public offering of 6,900,000
shares of its common stock which generated net proceeds of $114.5 million. The
proceeds were used to redeem $20.6 million of Series A Preferred Stock, to repay
the $34.7 million outstanding principal amount and accrued interest under a
secured term loan facility, to repay the $10.3 million outstanding principal
amount and accrued interest under certain senior subordinated notes and to repay
the $5.1 million outstanding principal amount and accrued interest under the
Company's revolving credit facility.
On April 26, 1996 the Company entered into a $25 million unsecured revolving
line of credit with a bank group led by NationsBank, N.A. as agent and as
lender. The new credit facility contains covenants setting minimum net worth,
maximum leverage ratio and minimum net income requirements for the Company.
There have been no amounts drawn on this line. Advances under the revolving line
of credit bear interest, at the Company's election, either at a "base rate" or
at a "eurodollar rate." The base rate is a floating rate equal to the greater of
(a) the prime rate or (b) the federal funds effective rate plus one-half of one
percent (.50%). The eurodollar rate is equal to the sum of (x) a rate determined
by reference to the then-current interbank offered rate for dollar-denominated
eurodollar deposits, with certain adjustments, plus, (y) one percent (1.0%).
The Company believes that the net proceeds from the common stock sold by the
Company in its initial public offering in April 1996, together with available
funds, cash generated from operations and its unused line of credit of $25
million, will be sufficient to finance the Company's operations and planned
capital expenditures for at least the next twelve months. There can be no
assurance, however, that the Company will not require additional financing
during that time or thereafter.
11
<PAGE> 12
TRANSITION SYSTEMS, INC.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
In April 1996, prior to its initial public offering, stockholders of
the Company amended and restated the Company's Articles of
Organization, amended and restated the By-Laws of the Company, approved
and adopted the Amended and Restated Incentive and Non-Statutory Stock
Option Plan and the Transition Systems, Inc. Employee Stock Purchase
Plan, and reelected two Class I directors, two Class II directors and
one Class III director. For a description of the matters considered at
the April 1996 meetings of Stockholders, see Item 4, "Submission of
Matters to a Vote of Security Holders" in the Company's Quarterly
Report on Form 10-Q for the Quarterly Period Ended March 30, 1996 as
filed with the Securities and Exchange Commission on May 31, 1996.
Item 6 Exhibits and Reports on Form 8-K
(a) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.2 Amended and Restated Articles of Organization of the Company*
3.4 Amended and Restated By-Laws of the Company*
4.1 Specimen certificate for the Common Stock*
11.1 Computation of Earnings Per Share
27.1 Financial Data Schedule
(b) REPORTS ON FORM 8-K
None.
- -------------
*Incorporated by reference to the similarly numbered exhibits to the Company's
Registration Statement on Form S-l, File No. 333-01758, as declared effective by
the Securities and Exchange Commission on April 17, 1996.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Transition Systems, Inc.
(Registrant)
Dated: August 9, 1996 /s/Robert F. Raco
----------------------------------------------
Robert F. Raco
President, Chief Executive Officer and Director
(principal executive officer)
Dated: August 9, 1996 /s/Robert E. Kinney
----------------------------------------------
Robert E. Kinney
Chief Financial Officer
(principal financial and accounting officer)
13
<PAGE> 1
Exhibit 11.1
<TABLE>
TRANSITION SYSTEMS, INC
COMPUTATION OF EARNINGS PER SHARE
<CAPTION>
For the three month period ended: June 30,1996 June 24,1995
------------ ------------
<S> <C> <C>
Weighted averages shares outstanding:
Common stock outstanding ............... 15,638,000 15,638,000
Common stock equivalent ................ 3,693,000 3,693,000
Warrants ............................... 298,000 298,000
Weighted average number of common shares
and common equivalent shares outstanding 19,629,000 19,629,000
=========== ===========
Net income:
Net income before extraordinary item ... $ 2,870,000 $ 1,899,000
Extraordinary item ..................... (2,149,000) --
Net income allocable to common
stockholders ........................... $ 128,000 $ 1,899,000
Earnings per share:
Net income before extraordinary item ... $ 0.15 $ 0.10
Extraordinary item ..................... (0.11) --
Net income allocable to common
stockholders ........................... $ 0.01 $ 0.10
For the nine months ended:
Weighted averages shares outstanding:
Common stock outstanding ............... 11,951,000 11,951,000
Common stock equivalent ................ 3,682,000 3,682,000
Warrants ............................... 298,000 298,000
Weighted average number of common shares
and common equivalent shares outstanding 15,931,000 15,931,000
=========== ===========
Net income:
Net income before extraordinary item ... $ 3,139,000 $ 3,303,000
Extraordinary item ..................... (2,149,000) --
Net income allocable to common
stockholders ........................... $ 397,000 $ 3,303,000
Earnings per share:
Net income before extraordinary item ... $ 0.20 $ 0.21
Extraordinary item ..................... (0.13) --
Net income allocable to common
stockholders ........................... $ 0.02 $ 0.21
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
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0
0
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