<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
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 0-9900
HBO & COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 37-0986839
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
301 PERIMETER CENTER NORTH
ATLANTA, GEORGIA
30346
(Address of principal executive offices)
(Zip Code)
(770) 393-6000
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report.)
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 / /.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS SHARES OUTSTANDING AT APRIL 30, 1997
- -------------------------------------------------- ------------------------------------------
<S> <C>
Common Stock, $.05 par value 91,962,158
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART 1--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CONSOLIDATED BALANCE SHEETS--UNAUDITED
(000 Omitted)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
---------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents............................................................. $ 200,820 $ 160,363
Short-Term Investments................................................................ 18,900 23,250
Receivables, Net of Allowance For Doubtful Accounts of $11,851 and $9,516............. 277,482 290,808
Current Deferred Income Taxes......................................................... 26,639 25,020
Inventories........................................................................... 9,524 6,993
Prepaids and Other Current Assets..................................................... 12,751 13,329
---------- ------------
Total Current Assets................................................................ 546,116 519,763
---------- ------------
INTANGIBLES
Net of Accumulated Amortization of $35,590 and $31,691................................ 173,801 177,911
CAPITALIZED SOFTWARE
Net of Accumulated Amortization of $39,555 and $36,039................................ 61,082 58,338
PROPERTY AND EQUIPMENT
Net of Accumulated Depreciation of $106,717 and $104,244.............................. 48,281 49,419
DEFERRED INCOME TAXES..................................................................... 33,794 34,998
OTHER NONCURRENT ASSETS, NET.............................................................. 9,864 8,518
---------- ------------
TOTAL ASSETS.............................................................................. $ 872,938 $ 848,947
---------- ------------
---------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Deferred Revenue...................................................................... $ 98,883 $ 91,978
Other Current Liabilities............................................................. 180,228 224,380
---------- ------------
Total Current Liabilities........................................................... 279,111 316,358
---------- ------------
LONG-TERM DEBT............................................................................ 174 192
OTHER LONG-TERM LIABILITIES............................................................... 8,080 7,054
---------- ------------
Total Liabilities................................................................... 287,365 323,604
---------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, 1,000 Shares Authorized and No Shares Issued......................... -- --
Common Stock, $.05 Par Value, 250,000 Shares Authorized and 122,157 and 122,136 Shares
Issued.............................................................................. 6,107 6,107
Additional Paid-in Capital............................................................ 455,351 427,324
Retained Earnings..................................................................... 199,918 168,793
---------- ------------
661,376 602,224
Treasury Stock, at Cost (30,932 and 31,535 Shares).................................... (75,803) (76,881)
---------- ------------
Total Stockholders' Equity.......................................................... 585,573 525,343
---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................................................ $ 872,938 $ 848,947
---------- ------------
---------- ------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these consolidated financial statements.
2
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME--UNAUDITED
(000 Omitted Except for Per Share Data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
<S> <C> <C>
1997 1996
---------- ----------
REVENUE:
Systems............................................................................... $ 98,303 $ 67,575
Services.............................................................................. 121,594 104,940
---------- ----------
Total Revenue....................................................................... 219,897 172,515
OPERATING EXPENSE:
Cost of Operations.................................................................... 95,447 76,773
Marketing............................................................................. 30,885 25,489
Research and Development.............................................................. 15,473 14,569
General and Administrative............................................................ 20,245 20,656
---------- ----------
Total Operating Expense............................................................. 162,050 137,487
---------- ----------
OPERATING INCOME.......................................................................... 57,847 35,028
Other Income, Net......................................................................... 1,713 918
---------- ----------
Income Before Income Taxes................................................................ 59,560 35,946
Provision for Income Taxes................................................................ 23,824 14,079
---------- ----------
NET INCOME................................................................................ $ 35,736 $ 21,867
---------- ----------
---------- ----------
EARNINGS PER SHARE:
Primary............................................................................... $ .38 $ .24
---------- ----------
---------- ----------
Fully Diluted......................................................................... $ .38 $ .24
---------- ----------
---------- ----------
WEIGHTED AVERAGE SHARES OUTSTANDING:
Primary............................................................................... 94,060 92,573
---------- ----------
---------- ----------
Fully Diluted......................................................................... 94,060 92,678
---------- ----------
---------- ----------
CASH DIVIDENDS DECLARED PER SHARE......................................................... $ .02 $ .02
---------- ----------
---------- ----------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these consolidated financial statements.
3
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS--UNAUDITED
(000 Omitted)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------
<S> <C> <C>
1997 1996
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income for the Period.......................................................................... $ 35,736 $ 21,867
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization.................................................................... 12,557 11,702
Provision for Noncurrent Deferred Income Taxes................................................... 1,597 1,396
Changes in Assets and Liabilities, Net of Acquisitions:
Receivables.................................................................................... 12,826 (9,300)
Current Deferred Income Taxes.................................................................. (244) 4,081
Inventories.................................................................................... (2,531) (1,465)
Prepaids and Other Current Assets.............................................................. 425 (922)
Noncurrent Deferred Income Tax................................................................. (393) --
Other Noncurrent Assets........................................................................ (672) (1,216)
Deferred Revenue............................................................................... 6,905 1,547
Other Current Liabilities...................................................................... (27,980) (16,084)
Other, Net....................................................................................... (741) 286
---------- ---------
Total Adjustments............................................................................ 1,749 (9,975)
---------- ---------
Net Cash Provided by Operating Activities.................................................... 37,485 11,892
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of Property and Equipment..................................................................... 3 497
Capital Expenditures............................................................................... (4,641) (4,034)
Capitalized Software............................................................................... (6,341) (6,070)
Purchases of Businesses, Net of Cash Acquired...................................................... (117) (4,000)
Proceeds from Sale or Maturity of Investments...................................................... 930 3,999
Purchase of Investments............................................................................ -- (4,480)
Other.............................................................................................. (170) 430
---------- ---------
Net Cash Used in Investing Activities........................................................ (10,336) (13,658)
---------- ---------
NET CASH PROVIDED (USED) BEFORE FINANCING ACTIVITIES......................................... 27,149 (1,766)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Common Stock............................................................. 15,627 6,438
Repayment of Long-Term Debt........................................................................ (36) (379)
Repayment of Capital Leases........................................................................ (70) (208)
Purchase of Treasury Stock......................................................................... (401) (1,026)
Payment of Dividends............................................................................... (1,812) (2,409)
---------- ---------
Net Cash Provided by Financing Activities.................................................... 13,308 2,416
---------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS.................................................................. 40,457 650
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD....................................................... 160,363 86,612
---------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............................................................. $ 200,820 $ 87,262
---------- ---------
---------- ---------
CASH PAID DURING THE PERIOD FOR:
Interest........................................................................................... $ 64 $ 335
Income Taxes....................................................................................... $ 16,213 $ 4,841
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of these consolidated financial statements.
4
<PAGE>
HBO & COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements include all adjustments that, in
the opinion of management, are necessary for a fair presentation of the results
for the periods indicated. All such adjustments are of a normal recurring
nature. Quarterly results of operations are not necessarily indicative of annual
results. Certain previously reported amounts have been reclassified to conform
to the current presentation. These statements should be read in conjunction with
the consolidated financial statements and the notes thereto included in the HBO
& Company ("the Company" or "HBOC") 1996 Annual Report on Form 10-K for the
fiscal year ended December 31, 1996.
2. As of March 31, 1997, there was no outstanding balance on the Company's
$30 million long-term revolving credit agreement. Interest is payable at the
Company's option of prime or LIBOR plus a margin determined by certain of the
Company's financial ratios (6.3125% as of March 31, 1997). A variable commitment
fee on the revolving credit agreement is payable quarterly on the unused portion
of the commitment (0.1875% for the first quarter of 1997). The agreement, which
expires June 30, 1997, contains certain net worth, income, cash flow and
financial ratio covenants. The Company is in compliance with these covenants at
March 31, 1997.
The Company had an agreement with a financial institution whereby the
Company could sell on an ongoing basis, with partial recourse, an undivided
interest in a pool of customer receivables. As of March 31, 1997, the amount
available to be sold was $30 million and the amount sold was $5 million.
Interest was payable at the Company's option of prime or LIBOR plus a margin
determined by certain of the Company's financial ratios (6.3125% as of March 31,
1997). The Company, as agent for the purchaser, retained collection and
administrative responsibilities for the receivables sold. This agreement was
canceled on April 7, 1997.
3. On February 11, 1997, the Company announced it had signed a definitive
agreement to acquire AMISYS Managed Care Systems, Inc. (AMISYS), a leading
provider of information systems for managed care entities and other parties that
assume financial risk for healthcare populations. The acquisition, which is
subject to regulatory and AMISYS stockholder approval, will be accounted for as
a pooling of interests and is anticipated to close during the second quarter of
1997. Assuming consummation of the transaction, AMISYS stockholders will receive
0.35 of a share of HBOC common stock for each share of AMISYS common stock, or
approximately 3.1 million HBOC shares.
4. On March 14, 1997, the Company announced it had signed a definitive
agreement to acquire Enterprise Systems, Inc. (ESi), a leading developer of
resource management solutions, including materials management, operating room
logistics, scheduling and financial management. The stockholders of ESi will
receive a maximum of approximately 4.7 million shares of HBOC common stock in
the transaction with the exchange ratio determined by averaging the closing HBOC
stock price for a specified period of 20 trading days preceding the closing of
the transaction. The acquisition, which is subject to regulatory and ESi
stockholder approval, will be accounted for as a pooling of interests and is
anticipated to close during the second quarter of 1997.
5. During the first quarter of 1997, the Financial Accounting Standards
Board (FASB) issued Statement No. 128, Earnings Per Share. This statement sets
out new guidelines for the calculation and presentation of earnings per share
but cannot be adopted until December 31, 1997. The following table
5
<PAGE>
presents a reconciliation of basic and diluted weighted average shares
outstanding and a pro forma calculation of earnings per share using the
guidelines of Statement No. 128.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
<S> <C> <C>
(000 OMITTED EXCEPT PER SHARE DATA) 1997 1996
- -------------------------------------------------------------------------------------------- --------- ---------
Basic weighted average shares outstanding................................................... 90,917 89,136
ADD: Shares of common stock assumed issued upon exercise of stock options using the
"treasury stock" method as it applies to the computation of diluted earnings per share.... 3,143 3,437
--------- ---------
Diluted weighted average shares outstanding................................................. 94,060 92,573
--------- ---------
--------- ---------
Net earnings used in the computation of basic and diluted earnings per share................ $ 35,736 $ 21,867
--------- ---------
--------- ---------
Earnings per share
Basic..................................................................................... $ 0.39 $ 0.25
--------- ---------
--------- ---------
Diluted................................................................................... $ 0.38 $ 0.24
--------- ---------
--------- ---------
</TABLE>
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1997, COMPARED TO QUARTER ENDED MARCH 31, 1996:
SUMMARY
For the quarter ended March 31, 1997, HBO & Company recorded earnings per
share of $.38, a 58% increase over earnings per share of $.24 for the first
quarter of 1996. Total revenue for the first quarter of 1997 increased 27% to
$219.9 million from $172.5 million in the first quarter of 1996, primarily due
to strong software license fee, hardware and service revenue. Operating expense
increased only 18% for the first quarter of 1997 compared to the same period in
1996. The Company continues to make progress in the area of employee
productivity, with revenue per average employee at March 31, 1997, of $192,000,
up from $160,000 at March 31, 1996. The combined changes in revenue and expense
increased operating income for the first quarter of 1997 by 65% to $57.8 million
from $35.0 million for the first quarter of 1996.
REVENUE
Software license fee revenue grew 55% to $67.9 million for the first quarter
of 1997 compared to $43.9 million for the same period in 1996. This increase was
primarily due to the continuing strong demand for the STAR 2000 and Pathways
2000-Registered Trademark- line of enterprisewide solutions, including a
significant increase in the sale of Pathways Homecare, HBOC's solution for the
home health industry, and the Company's physician practice management products.
The significant growth in sales from these products demonstrates not only the
Company's ability to quickly integrate products into its portfolio, but also the
growing desire of customers to partner with a single vendor for solutions that
span the full continuum of care.
Hardware revenue increased 29% to $30.4 million for the first quarter of
1997, compared to $23.6 million for the same period in 1996. This increase was
primarily from hardware related to the strong sales of RISC-based processors
sold in conjunction with the software sales discussed above.
Implementation and one-time services revenue for the first quarter of 1997
increased 30% to $36.6 million from $28.1 million for the first quarter of 1996.
This increase was primarily due to the numerous implementations resulting from
strong system sales of the Company's STAR 2000 and Pathways 2000 products. The
Company continues to invest in programs designed to streamline the
implementation process by giving customer organizations more control over their
implementation process and the extent of HBOC involvement. As a result, the
productivity of the Company's implementation personnel continues to improve.
Maintenance and support revenue increased 9% to $49.6 million for the first
quarter of 1997 compared to $45.5 million for the same period in 1996. This
increase is the result of an annual price increase, new maintenance contracts
from increased software sales and the expansion of the customer base. To manage
this growth and increase customer satisfaction, the Company has completed the
implementation of a central support system for the entire employee and customer
base.
Outsourcing revenue increased 49% in the first quarter of 1997 compared to
the first quarter of 1996. This increase was mainly in international outsourcing
revenue from a new site, which began operations on January 1, 1997, and which
performs computer processing operations for healthcare providers in the South
Thames region of the United Kingdom.
7
<PAGE>
Systems revenue, which represents all software and hardware revenue,
increased to 45% of total revenue in the first quarter of 1997 compared to 39%
for the first quarter of 1996. This increase was mainly due to growth in
software revenues to 31% of revenue for the first quarter of 1997 compared to
25% for the same period in 1996.
EXPENSE
Cost of operations as a percent of revenue decreased to 43% for the first
quarter of 1997, from 45% in the first quarter of 1996. This decrease was
primarily the result of employee productivity enhancements in implementation and
support, and strong high-margin software sales. In conjunction with decreases in
cost of operations as a percent of revenue, the gross margin for the first
quarter of 1997 grew to 57% from 55% for the first quarter of 1996. Total cost
of operations expense increased in the first quarter of 1997 compared to the
same period in 1996, primarily due to increased hardware costs associated with
the growth in hardware sales, increased software royalties expense due to
increases in software sales and increased personnel expense due to the overall
growth of the Company.
Marketing expense as a percent of revenue decreased slightly to 14% for the
first quarter of 1997 from 15% for the same period in 1996. Marketing expense
increased in the first quarter of 1997 primarily due to higher personnel and
commission expenses directly related to the growth in size and revenue of the
Company.
Research and development (R&D) expense as a percent of revenue decreased
slightly to 7% for the first quarter of 1997 compared to 8% for the same period
in 1996. The R&D capitalization rate decreased to 29% for the first quarter of
1997 from 30% for the same period in 1996. The R&D capitalization rate continues
to decrease as the business groups from 1996 acquisitions fully adopt the more
conservative capitalization policies of HBOC. The increase in actual R&D expense
is mainly due to increases in personnel and facilities cost associated with
growth in the Company.
General and administrative (G&A) expense as a percent of revenue decreased
to 9% in the first quarter of 1997 from 12% in the first quarter of 1996. G&A
expense is growing at a slower rate than revenue due to the Company's ability to
leverage its fixed costs and increase efficiencies. Actual G&A expense decreased
slightly for the first quarter of 1997 compared to the same period in 1996.
For the first quarter of 1997 compared to the same period in 1996, operating
expense grew at a slower rate than revenue due to strong software sales,
successful cost-control programs and productivity enhancements. Total operating
income increased 65% for the first quarter of 1997 compared to the same period
in 1996. In addition, operating income as a percent of revenue increased to 26%
for the first quarter of 1997 from 20% for the first quarter of 1996. These
increases represent a significant growth in volume and increased efficiency in
operations.
The tax rate increased to 40% for the first quarter of 1997 from 39% for the
first quarter of 1996. This increase was due to the September 1996 pooling
acquisition of Management Software, Inc. which had formerly been a Subchapter S
Corporation and therefore did not provide for corporate taxes on a historical
basis.
LIQUIDITY AND CAPITAL RESOURCES
MARCH 31, 1997, COMPARED TO DECEMBER 31, 1996:
The Company continues to improve the strength and quality of its balance
sheet. At March 31, 1997, with $220 million in cash and short-term investments,
no bank debt and an improving current ratio, the Company remains well-positioned
for continued growth.
During the first quarter of 1997, the Company generated $37.5 million in
cash flow from operations. The Company used $10.3 million in investing
activities, primarily consisting of $6.3 million for software
8
<PAGE>
development capitalization and $4.6 million for capital expenditures. An
additional $13.3 million was provided from financing activities, primarily
proceeds from the issuance of common stock. As a result, the Company's cash
balance increased by 25% to $201 million at March 31, 1997, from $160 million at
December 31, 1996.
The Company's current ratio increased to 1.96:1 at March 31, 1997, from
1.64:1 at December 31, 1996. Current assets increased $26 million, primarily
reflecting a large increase in cash, partially offset by a decrease in
receivables. Receivables as a percent of current assets decreased to 51% at
March 31, 1997, from 56% at December 31, 1996. The Company's management places a
high priority on the area of receivables and the Company continues to maintain a
low delinquency rate. Current liabilities decreased $37 million, mainly due to
the pay-down of year-end accruals.
The Company has access to several financing sources, including a $5 million
line of credit and a $30 million revolving credit agreement. As of March 31,
1997, there were no outstanding balances on either. Management believes that the
Company's cash flow from operations and amounts available under existing credit
arrangements are sufficient to meet ongoing operational and capital expenditure
requirements, as well as to fund costs associated with future equity
acquisitions and small acquisitions for cash.
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements, which are qualified
by the risks and uncertainties described from time to time in HBOC's reports
filed with the Securities and Exchange Commission, including the Annual Report
on Form 10-K for the fiscal year ended December 31, 1996.
9
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and
Board of Directors of
HBO & Company:
We have reviewed the accompanying consolidated condensed balance sheet of
HBO & COMPANY (a Delaware corporation) AND SUBSIDIARIES as of March 31, 1997 and
the related statements of income and cash flows for the three-month period then
ended. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
April 16, 1997
10
<PAGE>
PART II--OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
(a) Exhibits: PAGE
-----
<C> <S> <C>
2a Agreement of Merger dated February 10, 1997, by and among HBO & Company, HBO &
Company of Georgia, and AMISYS Managed Care Systems, Inc. Incorporated by
reference from Exhibit 2 to the registrant's Registration Statement on Form
S-4
(File No. 333-22929).......................................................... n/a
2b Agreement of Merger dated March 13, 1997, by and among HBO & Company, HBO &
Company of Georgia, and Enterprise Systems, Inc. Incorporated by reference
from Exhibit 2 to the registrant's Registration Statement on Form S-4 (File
No. 333- )................................................................ n/a
11 Statement regarding computation of per share earnings.........................
15 Letter re: unaudited interim financial information............................
27 Financial Data Schedule.......................................................
</TABLE>
(b) Reports on Form 8-K filed during the quarter ended March 31, 1997, or
subsequent to that date but prior to the filing date of this Form 10-Q:
FORM 8-K DATED FEBRUARY 11, 1997:
Reporting under Item 5 that on February 11, 1997, the Board of Directors of
HBO & Company declared a quarterly cash dividend of $.02 per share payable on
April 22, 1997, to stockholders of record on March 31, 1997.
Reporting under Item 5 the unaudited combined operations for the first full
month subsequent to the December 9, 1996, pooling acquisition of GMIS Inc., as
follows: revenue and net income for January 1997 was $50.7 million and $4.9
million, respectively; revenue and net income for January 1996 was $47.6 million
and $2.8 million, respectively.
Reporting under Item 5 that on February 11, 1997, the Company announced it
had signed a definitive agreement to acquire AMISYS Managed Care Systems, Inc.
(AMISYS), a leading provider of information systems for managed care entities
and other parties that assume financial risk for healthcare populations. The
acquisition, which is subject to regulatory and AMISYS stockholder approval,
will be accounted for as a pooling of interests and is scheduled to close during
the second quarter of 1997. Assuming consummation of the transaction, AMISYS
stockholders will receive 0.35 of a share of HBOC common stock for each share of
AMISYS common stock.
FORM 8-K DATED MARCH 19, 1997:
Reporting under Item 5 that on March 14, 1997, the Company announced it had
signed a definitive agreement to acquire Enterprise Systems, Inc. (ESi), a
leading developer of resource management solutions including materials
management, operating room logistics, scheduling and financial management. The
stockholders of ESi will receive shares of HBOC common stock in the transaction
and the exchange ratio will be determined by averaging the closing HBOC stock
price for a specified period of 20 trading days preceding the closing of the
transaction. The acquisition, which is subject to regulatory and ESi stockholder
approval, will be accounted for as a pooling of interests and is anticipated to
close during the second quarter of 1997.
11
<PAGE>
SIGNATURE
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.
<TABLE>
<S> <C> <C>
HBO & COMPANY
(Registrant)
Date: May 15, 1997 By: /s/ JAY P. GILBERTSON
------------------------------------------
Jay P. Gilbertson
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER, TREASURER,
PRINCIPAL ACCOUNTING OFFICER AND SECRETARY
</TABLE>
12
<PAGE>
EXHIBIT 11
HBO & COMPANY
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(000 OMITTED EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED
MARCH 31,
--------------------
<S> <C> <C>
1997 1996
--------- ---------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING........................................ 90,917 89,136
ADD: Shares of common stock assumed issued upon exercise of stock options using the
"treasury stock" method as it applies to the computation of primary earnings per
share.................................................................................. 3,143 3,437
--------- ---------
NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING................................... 94,060 92,573
ADD: Additional shares of common stock assumed issued upon exercise of stock options using
the "treasury stock" method as it applies to the computation of fully diluted earnings
per share.............................................................................. -- 105
--------- ---------
NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING ASSUMING FULL DILUTION............ 94,060 92,678
--------- ---------
--------- ---------
NET EARNINGS FOR PRIMARY AND FULLY DILUTED EARNINGS PER SHARE............................... $ 35,736 $ 21,867
--------- ---------
--------- ---------
EARNINGS PER SHARE:
PRIMARY................................................................................. $ 0.38 $ 0.24
--------- ---------
--------- ---------
FULLY DILUTED........................................................................... $ 0.38 $ 0.24
--------- ---------
--------- ---------
</TABLE>
<PAGE>
EXHIBIT 15
ARTHUR ANDERSEN LLP
To HBO & Company:
We are aware that HBO & Company has incorporated by reference in its
previously filed registration statements on Form S-8 its Form 10-Q for the
quarter ended March 31, 1997, which includes our report dated April 16, 1997
covering the unaudited interim consolidated financial information contained
therein. Pursuant to Regulation C of the Securities Act of 1933 (the "Act"),
that report is not considered a part of the registration statement prepared or
certified by our firm or a report prepared or certified by our firm within the
meaning of Sections 7 and 11 of the Act.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
April 16, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from HBO &
Company Consolidated Statement of Income for the Three Months Ended 3/31/97 and
HBO & Company Consolidated Balance Sheet at 3/31/97 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 200,820
<SECURITIES> 18,900
<RECEIVABLES> 289,333
<ALLOWANCES> 11,851
<INVENTORY> 9,524
<CURRENT-ASSETS> 546,116
<PP&E> 154,998
<DEPRECIATION> 106,717
<TOTAL-ASSETS> 872,938
<CURRENT-LIABILITIES> 279,111
<BONDS> 174
0
0
<COMMON> 6,107
<OTHER-SE> 579,466
<TOTAL-LIABILITY-AND-EQUITY> 872,938
<SALES> 98,303
<TOTAL-REVENUES> 219,897
<CGS> 37,380
<TOTAL-COSTS> 162,050
<OTHER-EXPENSES> (1,713)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 59,560
<INCOME-TAX> 23,824
<INCOME-CONTINUING> 35,736
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,736
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
