<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
----------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 2000
COMMISSION FILE NUMBER: 000-24539
ECLIPSYS CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 65-0632092
(State of Incorporation) (IRS Employer Identification Number)
</TABLE>
777 East Atlantic Avenue
Suite 200
Delray Beach, Florida
33483
(Address of principal executive offices)
(561)-243-1440
(Telephone number of registrant)
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 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.
<TABLE>
<S> <C>
CLASS SHARES OUTSTANDING AS OF APRIL 30, 2000
----- ---------------------------------------
Common Stock, $.01 par value 36,706,108
</TABLE>
================================================================================
<PAGE> 2
ECLIPSYS CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2000
INDEX
<TABLE>
<S> <C>
PART I. Financial Information
Item 1. Condensed Consolidated Balance Sheets - As of March 31, 2000 (unaudited) and December 31, 1999
Condensed Consolidated Statements of Operations (unaudited) - For the Three Months ended
March 31, 2000 and 1999
Condensed Consolidated Statements of Cash Flows (unaudited) - For the Three Months ended
March 31, 2000 and 1999
Notes to Condensed Consolidated Financial Statements (unaudited) - For the Three Months ended
March 31, 2000 and 1999
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
2
<PAGE> 3
PART I.
ITEM 1.
ECLISPSYS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000 (UNAUDITED) AND DECEMBER 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 31,928 $ 33,956
Accounts receivable, net 82,312 77,254
Inventory 606 660
Other current assets 8,367 11,800
---------- ---------
TOTAL CURRENT ASSETS 123,213 123,670
Fixed assets, net 14,976 14,522
Capitalized software development costs, net 9,045 7,944
Acquired technology, net 32,593 33,161
Intangible assets, net 14,594 16,858
Other assets 5,087 6,780
---------- ---------
TOTAL ASSETS $ 199,508 $ 202,935
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Deferred revenue $ 47,594 $ 49,279
Other current liabilities 34,215 41,288
---------- ---------
TOTAL CURRENT LIABILITIES 81,809 90,567
Deferred revenue 7,103 8,803
Other long-term liabilities 2,148 2,264
STOCKHOLDERS' EQUITY
Common stock 366 363
Unearned stock compensation (284) (320)
Additional paid-in capital 255,750 254,085
Accumulated other comprehensive income (loss) 127 (327)
Accumulated deficit (147,511) (152,500)
---------- ---------
Total stockholders' equity 108,448 101,301
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 199,508 $ 202,935
========== =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE> 4
ECLIPSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------------
2000 1999
------------------- ---------------
<S> <C> <C>
REVENUES
Systems and services $ 60,640 $ 51,880
Hardware 4,050 5,498
------------ -----------
TOTAL REVENUES 64,690 57,378
------------ -----------
COSTS AND EXPENSES
Cost of systems and services revenues 32,277 28,827
Cost of hardware revenues 3,276 4,670
Marketing and sales 9,275 7,765
Research and development 9,774 9,889
General and administrative 2,326 3,065
Depreciation and amortization 3,654 3,784
Transaction costs 3,100 614
------------ -----------
TOTAL COSTS AND EXPENSES 63,682 58,614
------------ -----------
INCOME (LOSS) FROM OPERATIONS 1,008 (1,236)
------------ -----------
Interest income, net 385 443
Other income, net 3,596 -
------------ -------
NET INCOME (LOSS) 4,989 (793)
------------ -----------
BASIC NET INCOME (LOSS) PER COMMON SHARE $ 0.14 $ (0.02)
============ ===========
DILUTED NET INCOME (LOSS) PER COMMON SHARE $ 0.13 $ (0.02)
============ ===========
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 36,504 33,229
============ ===========
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 38,645 33,229
============ ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE> 5
ECLIPSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------
2000 1999
--------------- ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) $ 4,989 $ (793)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 8,702 9,858
Provision for bad debts 485 360
Gain on sale of investments (4,462) -
Write down of investments 836 -
Stock compensation expense - 113
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (6,691) 4,424
Inventory (21) (61)
Other current assets 5,317 (183)
Other assets 756 223
Deferred revenue (4,442) (6,726)
Other current liabilities (10,328) (3,878)
Other liabilities (116) (4)
--------- ---------
Total adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities (9,964) 4,126
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (4,975) 3,333
========= =========
INVESTING ACTIVITIES
Purchase of investments (7,905) -
Maturities of investments - 17,003
Sales of investments 12,432 -
Purchase of fixed assets (1,938) (1,401)
Capitalized software development costs (1,800) (1,233)
Acquisitions, net of cash acquired - (25,000)
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 789 (10,631)
========= =========
FINANCING ACTIVITIES
Borrowings - 20,000
Exercise of stock options 952 811
Employee stock purchase plan 748 549
Exercise of warrants 4 -
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,704 21,360
========= =========
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 454 159
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,028) 14,221
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 33,956 37,983
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 31,928 $ 52,204
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART TO THESE UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE> 6
ECLIPSYS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements include all adjustments
that, in the opinion of management, are necessary for a fair presentation of the
results for the periods presented. All such adjustments are considered of a
normal recurring nature.
Quarterly results of operations are not necessarily indicative of annual
results.
Effective June 17, 1999, the Company completed a merger with MSI Solutions,
Inc. and MSI Integrated Services, Inc. (collectively, "MSI"). The merger was
accounted for as a pooling of interests and, accordingly, the condensed
consolidated financial statements for the quarter ended March 31, 1999 has been
retroactively restated as if the merger had occurred as of January 1, 1999.
Certain financial information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K dated March 29, 2000 and as amended April
28, 2000.
2. ACQUISITIONS
The MSI acquisition discussed in Note 1 was accounted for as a pooling of
interests, accordingly, all prior period amounts have been restated. A
reconciliation between revenue and net loss as previously reported by the
Company and as restated (unaudited) is as follows:
FOR THE THREE
MONTHS ENDED
MARCH 31, 1999
--------------
Revenue:
As previously reported $ 53,933
MSI 3,445
---------
As restated $ 57,378
Net Loss:
As previously reported $ (1,265)
MSI 472
---------
As restated $ (793)
=========
Effective March 31, 1999, the Company acquired the common stock of Intelus
Corporation ("Intelus") and Med Data Systems, Inc. ("Med Data"), both wholly
owned subsidiaries of Sungard Data Systems, Inc. for total consideration of
$25.0 million in cash. The acquired entities both provide document imaging
technology and workflow solutions to entities throughout the healthcare
industry. The acquisition was accounted for as a purchase and, accordingly, the
purchase price was allocated based on the fair value of the net assets acquired.
The purchase price is composed of and allocated as follows (in thousands):
Cash $ 25,000
Liabilities assumed 4,306
----------
29,306
Current assets 9,830
Fixed assets 778
----------
10,608
----------
Identifiable intangible assets
(acquired technology) $ 18,698
==========
As of March 31, 1999 the Company intended to dispose of Med Data. Effective
July 1, 1999, the Company sold Med Data for total a sales price of $5.0 million
in cash. The Company reduced the acquired technology originally recorded above
in the purchase by $4.4 million, which represented the difference between the
sales price and the net assets sold. No gain or loss was recorded.
6
<PAGE> 7
During the quarter ended March 31, 2000, the Company finalized the purchase
price of Intelus. An increase of $3.3 million was recorded to acquired
technology.
Unaudited pro forma results of operations as if the aforementioned
acquisitions had occurred on January 1, 1999 is as follows (in thousands except
per share data):
THREE MONTHS
ENDED MARCH
31, 1999
--------
Revenues $60,869
Net loss $(1,232)
Basic and diluted loss per share $ (0.04)
3. UNBILLED ACCOUNTS RECEIVABLE
The current portion of unbilled accounts receivable were $21.0 million and
$15.7 million as of March 31, 2000 and 1999, respectively, and are included in
accounts receivable in the accompanying condensed consolidated balance sheet.
The non-current portion of unbilled accounts receivable were $1.6 and $1.3
million as of March 31, 2000 and 1999, respectively, and are included in other
assets in the accompanying condensed consolidated balance sheet.
4. INVESTMENTS
During the quarter ended March 31, 2000, the Company recorded a gain on its
investment in Shared Medical Systems Corp (SMS) of approximately $4.5 million.
The investment was made in connection with a proposed merger with SMS. The
Company recorded transaction costs of approximately $50,000 related to the
proposed merger with SMS which was not consummated.
Additionally, during first quarter 2000, the Company recorded a charge of
approximately $802,000 to write down an equity investment to its net realizable
value, unrelated to the SMS investment.
5. ECLIPSYS MERGER
On March 30, 2000, the Company signed a merger agreement to be acquired by
Neoforma.com Inc., (Neoforma) a California based, business-to-business
e-commerce services provider in the medical products, supplies and equipment
industry. The merger is subject to the approval of stockholders of both the
Company and Neoforma and the consummation of certain other transactions (see
Management's Discussion and Analysis). In connection with the transaction,
Eclipsys stockholders will receive 1.344 shares of Neoforma common stock for
each share of Eclipsys stock they own. In connection with the proposed merger,
the Company recorded transaction costs of approximately $3.1 million during the
quarter ended March 31, 2000.
The Company and Neoforma are holding discussions regarding the mutually
agreed termination of the Merger Agreement without the payment of a termination
fee. There can be no assurances as to the outcome of these discussions, or the
timing or terms of any termination if, any.
7
<PAGE> 8
PART I.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains forward-looking statements. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects," "intends," and similar
expressions are intended to identify forward-looking statements. The important
factors discussed under the caption "Certain Factors that May Affect Future
Operating Results/Risk Factors," presented from time to time in the Company's
filings with the Securities and Exchange Commission, among others, could cause
actual results to differ materially from those indicated by forward-looking
statements made herein. The Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
OVERVIEW
Eclipsys Corporation ("Eclipsys" or "the Company") is a healthcare
information technology company delivering solutions that enable healthcare
providers to achieve improved clinical, financial and administrative outcomes.
The Company offers an integrated suite of core products in seven functional
areas - clinical management, access management, patient financial management,
health information management, strategic decision support, resource planning
management and enterprise application integration. These products can be
purchased in combination to provide an enterprise-wide solution or individually
to address specific needs. Eclipsys' products have been designed specifically to
deliver a measurable impact on outcomes, enabling Eclipsys' customers to
quantify clinical benefits and return on investment in a precise and timely
manner. Eclipsys' products can be integrated with a customer's existing
information systems, which Eclipsys believes reduces overall cost of ownership
and increases the attractiveness of its products. Eclipsys also provides
outsourcing, remote hosting and networking services to assist customers in
meeting their healthcare information technology requirements. Eclipsys markets
its products primarily to large hospitals, academic medical centers and
integrated health networks. To provide direct and sustained customer contact,
Eclipsys maintains decentralized sales, implementation and customer support
teams in each of its eight North American regions.
The Company was formed in December 1995 and has grown primarily through a
series of strategic acquisitions as follows:
METHOD OF
TRANSACTION DATE ACCOUNTING
----------- ---- ----------
ALLTEL Healthcare Information Services, Inc. 1/24/97 Purchase
("Alltel")
SDK Medical Computer Services Corporation 6/26/97 Purchase
("SDK")
Emtek Healthcare Systems 1/30/98 Purchase
("Emtek") a division of Motorola, Inc.
HealthVISION, Inc. (acquired by Transition) 12/1/98 Purchase
("HealthVISION")
Transition Systems, Inc. 12/31/98 Pooling
("Transition")
PowerCenter Systems, Inc. 2/17/99 Pooling
("PCS")
Intelus Corporation and Med Data Systems, Inc. 3/31/99 Purchase
("Intelus" and "Med Data") wholly owned
subsidiaries of Sungard Data Systems, Inc.
MSI Solutions, Inc. and MSI Integrated 6/17/99 Pooling
Services, Inc.
(collectively, "MSI")
The condensed consolidated financial statements of the Company reflect the
financial results of the purchased entities from the respective dates of the
purchase. For all transactions accounted for using the pooling of interests
method, the Company's condensed consolidated financial statements have been
retroactively restated as if the transactions had occurred as of the beginning
of the earliest period presented.
8
<PAGE> 9
RESULTS OF OPERATIONS
SUMMARY
Total revenues for the quarter ended March 31, 2000 increased 12.8% to $64.7
million compared with $57.4 million for the first quarter 1999.
Total costs and expenses for the quarter ended March 31, 2000 increased 8.7%
compared to the same period in 1999.
These changes in revenues and expenses combined to decrease net loss for the
quarter ended March 31, 2000 by 729.5% to net income of $5.0 million compared to
the same period in 1999. Included in the reported quarterly results were
acquisition related amortization of intangible assets and certain non-recurring
charges of $5.6 million and $8.2 million for the quarter ended March 31, 2000
and 1999, respectively.
REVENUES
System and services revenues increased 16.9% to $60.6 million for the first
quarter of 2000 compared to the same period in 1999. The increase was primarily
due to the inclusion of the results of operations of Intelus during the first
quarter of 2000 and the performance of services related to new contracted
business.
Hardware revenues decreased 26.4% to $4.1 million for the first quarter of
2000 compared to the same period in 1999. The decrease was primarily due to
decreased volume as a result of less hardware-intensive transactions.
EXPENSES
Total cost of revenues increased 6.2% for the first quarter of 2000 compared
to the same period in 1999. Increased costs of system, services and hardware
associated with the growth in revenues were partially offset by a decrease in
hardware costs.
Marketing and sales expenses increased 19.5% for the first quarter of 2000
compared to the same period in 1999. The increase was primarily due to the
addition of marketing and direct sales personnel.
Total expenditures for research and development, including both capitalized
and non-capitalized expenses increased 4.1% to $11.6 million for the first
quarter 2000 compared to the same period in 1999. The increase was due primarily
to continued development of an enterprise-wide, web enabled, client server
platform solution. Research and development expenses capitalized for the first
quarter of 2000 increased $567,000 compared to the same period in 1999.
Increased capitalization was primarily the result of expenditures related to the
development of an enterprise-wide, web enabled, client server platform solution
that had reached technological feasibility.
General and administrative expenses decreased 24.2% for the first quarter of
2000 compared to the same period in 1999. The decrease was primarily due to the
reduction of administrative and finance personnel following the Company's
restructuring that commenced in the second quarter of 1999.
Depreciation and amortization decreased 3.5% for the first quarter of 2000
compared to the same period in 1999. The decrease for the quarter is primarily
the result of the completion of the amortization of acquired technology from the
Alltel acquisition partially offset by an increase in acquired technology
amortization as a result of the Intelus acquisition.
Transaction costs increased 404.9% for the first quarter of 2000 compared to
the same period in 1999. The increase is primarily the result of costs
associated with a proposed merger with Shared Medical Systems Corp (SMS) and
Neoforma.com, Inc. (Neoforma).
Other income during the first quarter of 2000 related to a gain on the
Company's investment in SMS.
ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT
In connection with the Alltel, SDK and HealthVISION acquisitions, the
Company wrote off acquired in-process research and development totaling $92.2
million and $7.0 million in 1997 and $2.4 million in 1998, respectively. These
amounts were expensed as non-recurring charges on the respective acquisition
dates. The Company continues to believe that the acquired in-process research
and
9
<PAGE> 10
development will be successfully developed, but there can be no assurance that
commercial viability of these products will be achieved.
The value of the acquired in-process research and development was determined
by estimating the projected net cash flows related to such products, including
costs to complete the development of the technology and the future revenues to
be earned upon commercialization of the products. These cash flows were
discounted back to their net present value. The resulting projected net cash
flows from such projects were based on management's estimates of revenues and
operating profits related to such projects.
Through March 31, 2000, revenues and operating profit attributable to the
acquired in-process technology have not materially differed from the projections
used in determining its value. Throughout 1999 and during the first quarter of
2000, the Company has continued the development of the in-process technology
that was acquired in the transactions. To date, the Company is installing
modules derived from the acquired in-process technology in various field trial
sites and activated certain sites by the end of 1999. Additionally, the Company
has begun to successfully market certain aspects of the technology to new and
existing customers. The Company expects to continue releasing products derived
from the technology through 2001. Management continues to believe the
projections used reasonably estimate the future benefits attributable to the
in-process technology. However, no assurance can be given that deviations from
these projections will not occur.
If these projects to develop commercial products based on the acquired
in-process technology are not successfully completed, the sales and
profitability of the Company may be adversely affected in future periods.
Additionally, the value of other intangible assets may become impaired.
BALANCE SHEET
OTHER CURRENT ASSETS
Other current assets decreased during the three months ended March 31, 2000
primarily due to the receipt of taxes withheld from employees by the Company's
stock plan administrator which were remitted to the government during the same
period.
CAPITALIZED SOFTWARE DEVELOPMENT COSTS
Capitalized software development costs increased during the three months
ended March 31, 2000 primarily due to the continued development of an
enterprise-wide, web enabled, client server platform solution that had reached
technological feasibility.
INTANGIBLE ASSETS
Intangible assets decreased during the three months ended March 31, 2000 due
to amortization.
OTHER ASSETS
Other assets decreased during the three months ended March 31, 2000
primarily due to a write-down of an equity investment to its net realizable
value.
DEFERRED REVENUE
Deferred revenue decreased during the three months ended March 31, 2000
primarily due to the completion of certain implementations and milestones of
various software license fee contracts.
OTHER CURRENT LIABILITIES
Other current liabilities decreased during the three months ended March 31,
2000 primarily due to the timing of certain employee compensation related
expenses.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 2000, the Company used $5.0 million
in operations. Included in operations is approximately $10.5 million of annual
employee compensation related liabilities paid during the first quarter.
Investing activities
10
<PAGE> 11
provided $790,000 that was primarily the result of the gain on the SMS
investment. Financing activities provided $1.7 million, primarily due to the
exercise of stock options and the employee stock purchase plan.
As of March 31, 2000, the Company had no amounts outstanding under its $50.0
million revolving credit facility.
As of March 31, 2000, the Company had $31.9 million in cash and cash
equivalents.
Management believes that its available cash and cash equivalents,
anticipated cash generated from its future operations and amounts available
under the existing revolving credit facility will be sufficient to meet the
Company's operating requirements for at least the next twelve months.
Proposed Merger with Neoforma
On March 30, 2000, the Company entered into a merger agreement with
Neoforma.com, Inc. ("Neoforma"), pursuant to which the Company agreed to be
acquired by Neoforma (the "Merger Agreement"). Subject to the terms and
conditions of the Merger Agreement, the Company would become a wholly owned
subsidiary of Neoforma, and each outstanding share of the Company's common stock
will be converted into the right to receive 1.344 shares of Neoforma common
stock. The transaction was structured to qualify as a tax-free reorganization
and to be accounted for as a purchase. In addition, Neoforma and HEALTHvision,
Inc. ("HEALTHvision"), entered into a merger agreement pursuant to which
HEALTHvision would become a wholly owned subsidiary of Neoforma. Concurrently
with the execution of the merger agreements, Neoforma entered into an
Outsourcing and Operating Agreement with Novation, LLC, VHA, Inc. ("VHA"),
University Healthsystem Consortium ("UHC"), and Healthcare Purchasing Partners
International, LLC, and Common Stock and Warrant Agreements with VHA and UHC.
Consummation of each of the above-referenced transactions is conditioned
upon completion of each of the other transactions and the approval of the
Neoforma stockholders. In addition, completion of the merger involving Neoforma
and the Company requires the approval of the Company's stockholders.
The Company and Neoforma are holding discussions regarding the mutually
agreed termination of the Merger Agreement without the payment of a termination
fee. In addition, Neoforma and HEALTHvision are holding discussions regarding
the mutually agreed termination of the Merger Agreement without the payment of a
termination fee. In connection with such potential terminations, the parties are
discussing entering into commercial arrangements. There can be no assurances as
to the outcome of these discussions, or the timing or terms of any termination,
if any.
See also "Legal Proceedings" in Item 1 of Part II of this report, which
describes shareholder lawsuits related to the proposed merger with Neoforma.
11
<PAGE> 12
PART II.
ITEM 1. LEGAL PROCEEDINGS
In April 2000, the Company and the members of its Board of Directors were
named as defendants in three shareholder lawsuits filed in the Court of
Chancery of the State of Delaware, Ilene Silberman v. Eclipsys Corporation, et
al.; Paul Minch v. Eclipsys Corporation, et al; and William York v. Eclipsys
Corporation, et al. Each of the lawsuits seeks to enjoin or rescind the
proposed merger with Neoforma.com, Inc. or to collect an unspecified amount of
damages. Each of the lawsuits in general alleges that the members of the
Company's Board of Directors have breached their fiduciary duties by approving
the transaction with Neoforma.com, Inc. and that the consideration received by
the Company's shareholders in connection with the transaction would be
inadequate. The Company believes that the members of its Board of Directors
have properly exercised their fiduciary duties and intends to defend these
claims vigorously.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Index to exhibits.
(b) Reports on Form 8-K: The Company filed with the Securities and
Exchange Commission a Current Report on Form 8-K on April 3, 2000,
relating to the merger agreement with Neoforma.com, Inc., dated March
30, 2000.
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.
ECLIPSYS CORPORATION
Date: May 15, 2000 /s/ Gregory L. Wilson
--------------------------------------------------
Gregory L. Wilson
Senior Vice President, Chief Financial Officer and
Treasurer
13
<PAGE> 14
ECLIPSYS CORPORATION
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
--- -----------
2 Agreement and Plan of Merger, dated as of March 30,2000, by
and among the Registrant, Neoforma, and NeoIII Acquisition
Corp. (Incorporated by reference to the Registrant's
Current Report on Form 8-K dated March 30,
2000 (File No. 000-24539)
27 Financial Data Schedule (for SEC use only)
14
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 31,928
<SECURITIES> 0
<RECEIVABLES> 89,923
<ALLOWANCES> (7,611)
<INVENTORY> 606
<CURRENT-ASSETS> 123,213
<PP&E> 33,865
<DEPRECIATION> (18,889)
<TOTAL-ASSETS> 199,508
<CURRENT-LIABILITIES> (81,809)
<BONDS> 0
0
0
<COMMON> (366)
<OTHER-SE> (108,082)
<TOTAL-LIABILITY-AND-EQUITY> (199,508)
<SALES> 64,690
<TOTAL-REVENUES> 64,690
<CGS> (35,553)
<TOTAL-COSTS> (35,553)
<OTHER-EXPENSES> (28,129)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 385
<INCOME-PRETAX> 4,989
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,989
<EPS-BASIC> $0.14
<EPS-DILUTED> $0.13
</TABLE>
