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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K(A)3
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
JUNE 5, 1996
Date of Report
(JUNE 17, 1995)
(Date of earliest event reported)
HBO & COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
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0-9900 37-0986839
(Commission File Number) (IRS Employer Identification No.)
301 PERIMETER CENTER NORTH
ATLANTA, GA 30346
(Address of principal executive offices) (Zip Code)
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(770) 393-6000
Registrant's telephone number, including area code
Exhibit Index on page 2 of 6
Page 1 of 6
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THE FORM 8-K OF HBO & COMPANY DATED JUNE 23, 1995, AS AMENDED BY FORM 8-K(A)
DATED JULY 31, 1995, AS FURTHER AMENDED BY FORM 8-K(A)2 DATED AUGUST 8, 1995, IS
HEREBY FURTHER AMENDED TO INCLUDE THE ADDITION OF THE FOLLOWING INFORMATION:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information.
The following Pro Forma Financial Information for the year ended December 31,
1995 is attached as Exhibit 99(e):
HBO & Company Pro Forma Combined Income Statement (Unaudited)
HBO & Company Notes to Pro Forma Combined Income Statement
(c) Exhibits
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EXHIBIT NO. DESCRIPTION PAGE
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99(e) HBO & Company Pro Forma Financial Statement 4
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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 hereunto duly authorized.
HBO & COMPANY
(Registrant)
Date: June 5, 1996
/s/ JAY P. GILBERTSON
---------------------------------
Jay P. Gilbertson
Senior Vice President - Finance,
Chief Financial Officer,
Principal Accounting Officer,
Treasurer and Assistant Secretary
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EXHIBIT 99(e)
HBO & COMPANY AND SUBSIDIARIES
PRO FORMA COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1995
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YEAR
ENDED 1/1/95 -
12/31/95 6/17/95 PRO FORMA PRO FORMA
(000 Omitted) HBOC HSG ADJUSTMENTS COMBINED
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REVENUE $495,595 $53,429 $17,048 (2) $563,790
(2,282)(3)
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Total Revenue 495,595 53,429 14,766 563,790
OPERATING EXPENSE:
Cost of Operations 232,095 44,263 (2) 278,010
(296)(3)
130 (3)
3,334 (3)
(456)(3)
(1,060)(3)
Marketing 70,591 6,048 (2) 73,990
(2,649)(3)
Research and Development 42,964 4,509 (2) 43,235
(4,238)(3)
General and Administrative 54,223 12,597 (2) 63,042
(1,896)(3)
767 (3)
(2,649)(3)
Nonrecurring Charge 136,481 (125,520)(4) 0
(10,961)(4)
HSG Operating Expense 50,369 (50,369)(2) 0
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Total Operating Expense 536,354 50,369 (128,446) 458,277
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OPERATING INCOME (LOSS) (40,759) 3,060 143,212 105,513
Other Expense, Net 1,299 3,233 4,532
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INCOME (LOSS) BEFORE
PROVISION (CREDIT)
FOR INCOME TAX (42,058) (173) 143,212 100,981
PROVISION (CREDIT) FOR
INCOME TAX (16,823) 1,433 55,782 (5) 40,392
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NET INCOME (LOSS) ($25,235) ($1,606) $87,430 $60,589
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EARNINGS (LOSS) PER SHARE:
Primary ($0.67) $1.47
Fully Diluted ($0.67) $1.47
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WEIGHTED AVERAGE SHARES OUTSTANDING:
Primary 37,822 3,301 (6) 41,123
Fully Diluted 37,822 3,510 (6) 41,332
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NOTES TO PRO FORMA COMBINED INCOME STATEMENTS
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(000 Omitted)
1. The attached Pro Forma Combined Income Statement for the year ended December
31, 1995 gives effect to the acquisition of First Data Health Systems
Corporation (HSG) which was completed on June 17, 1995. The Pro Forma Combined
Income Statement assumes the transaction was consummated January 1, 1995.
No Pro Forma Combined Balance Sheet is included since the HBO & Company Balance
Sheet at December 31, 1995, includes HSG.
HBO & Company accounted for the acquisition as a purchase. Accordingly, pro
forma adjustments include such adjustments as are necessary to allocate the
purchase price based on the estimated fair market value of the assets acquired
and liabilities assumed and to give effect to events that are directly
attributable to the transaction, expected to have a continuing impact on HBOC
and are factually supportable.
The Pro Forma Combined Income Statement is not necessarily indicative of the
results of operations which would have been attained had the acquisition been
consummated on the date indicated or which may be attained in the future. The
Pro Forma Combined Income Statement should be read in conjunction with the
historical consolidated financial statements of HBOC and the historical
financial statements of HSG.
2. HSG revenue and expense classifications were historically broken out using
different policies than those applied by HBOC. The reclassifications necessary
to restate HSG revenue and expenses in accordance with HBOC policies are:
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12/31/95
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Revenue $ 17,048
Cost of Operations 44,263
Marketing 6,048
Research and Development 4,509
General and Administrative 12,597
HSG Operating Expense (50,369)
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Historically, HSG netted certain costs against revenue for presentation, while
HBOC has historically reported revenue as a gross number.
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3. The following adjustments are necessary to adjust the income statement
impact of the asset and liability fair market value adjustments assuming the
transaction had been consummated on January 1, 1995:
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12/31/95
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HSG Capitalized Software $ (296)
HSG Goodwill (1,896)
HBOC Capitalized Software 130
HBOC Customer Lists - to
amortize over 15 years 3,334
HBOC Goodwill - to
amortize over seven years 767
Deferred Revenue
Revenue (2,282)
Cost of Operations (456)
Terminated Employees
Cost of Operations (1,060)
Marketing (2,649)
Research and Development (4,238)
General and Administrative (2,649)
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HBOC recorded deferred revenue acquired at its cost (the cost to service
remaining commitment). The net profit which had been deferred has been
eliminated.
The reduction of expense related to terminated employees results from the
permanent termination of certain HSG employees in order to eliminate certain
redundant positions and increase the efficiency of the combined operations.
4. In the second quarter of 1995, HBOC recorded a $125,520 purchased research
and development charge directly attributable to the purchase of HSG. In the
third quarter of 1995, HBOC recorded a $10,961 charge attributable to the
acquisition of CliniCom Incorporated. Since these amounts are nonrecurring
transaction charges, they have been excluded from this Pro Forma Statement.
5. The provision for income tax was derived by using the HBOC effective tax
rate of 40%.
6. The weighted average shares outstanding have been adjusted to give effect to
the 4 million shares outstanding assuming the transaction had been consummated
on January 1, 1995 and to give effect to the dilutive effect of stock options
outstanding at December 31, 1995, assuming that HBOC had net income instead of a
net loss.
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