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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
(Amendment No. 1)
Filed Pursuant to Section 13, or 15(d) of
The Securities Exchange Act of 1934
November 18, 1996 (September 19, 1996) Date of Report (Date of
earliest event reported)
PHYSICIAN COMPUTER NETWORK ,INC.
(Exact name of registrant as specified in charter)
New Jersey
(State of other jurisdiction of incorporation)
0-19666
(Commission File Number)
22-2485688
(IRS Employer Identification No.)
1200 The American Road
Morris Plains, NJ 07950
(Address of Principal Executive Offices)
(201) 490-3100
Registrant's Telephone Number, including area code
Page 1 of 10 Pages
- --------------------------------------------------------------------------------
<PAGE>
Item 7(b) of the registrant's Current Report on Form 8-K dated September
19, 1996 is hereby amended in its entirety to read as follows:
2
<PAGE>
(b) Pro Forma Financial Information of Business Acquired:
On September 10, 1996, Physician Computer Network, Inc. ("PCN or the
"Company") completed the acquisition of Wismer-Martin, Inc.
("Wismer-Martin"), located in Mead, Washington, by way of a merger of a
wholly-owned subsidiary of PCN with and into Wismer-Martin for $1,980,000
in cash and 935,000 shares of the Company's common stock ("Common Stock").
The following Unaudited Pro Forma Condensed Consolidated Statements of
Operations and Unaudited Pro Forma Condensed Consolidated Balance Sheet
give effect to (i) the acquisition by PCN of Wismer-Martin, and (ii) the
acquisition by PCN of substantially all of the assets of the medical
practice management software business and the commercial software business
of CUSA Technologies, Inc. (the "CTI Business") on July 2, 1996 pursuant to
an asset purchase agreement for $9,350,000 in cash. The Unaudited Pro Forma
Condensed Consolidated Statement of Operations for the six months ended
June 30, 1996 also gives effect to the completion by PCN on May 10, 1996 of
the public offering of 6,440,000 shares of its Common Stock at $10.00 per
share (the "1996 Offering"), of which 1,932,217 shares were issued by PCN
to Equifax, Inc. ("Equifax") upon the conversion in full of the five year,
$10,000,000 principal amount convertible subordinated promissory note
issued to Equifax on February 15, 1995 (the "Equifax Note"). In addition to
all of the above, the Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the year ended December 31, 1995 also gives effect to
PCN's February 1995 public offering of PCN Common Stock, the October 1995
Regulation S offering of PCN Common Stock and convertible preferred stock
and the acquisitions of Versyss, Inc. ("Versyss") and the Practice
Management Systems Corp. Business (the "PMS Business") and the related
financings.
These statements have been prepared from the historical consolidated
financial statements of PCN, Wismer-Martin and the CTI Business and should
be read in conjunction with the following reports: (i) PCN's Annual Report
on Form 10-K for the year ended December 31, 1995 and PCN's Quarterly
Report on Form 10-Q for the period ended June 30, 1996, (ii)
Wismer-Martin's Annual Report on Form 10-KSB for the year ended June 30,
1995 and Wismer-Martin's Quarterly Report on Form 10-QSB for the period
ended March 31, 1996, and, (iii) PCN's Current Report on Form 8-K/A dated
August 7, 1996 which contains the historical financial statements of the
CTI Business.
The unaudited pro forma financial information assumes that the
transactions for which pro forma effects are shown occurred on January 1,
1995 for the Unaudited Pro Forma Condensed Consolidated Statements of
Operations and on June 30, 1996 for the Unaudited Pro Forma Condensed
Consolidated Balance Sheet. The pro forma financial information gives
effect to the acquisition transactions under the purchase method of
accounting based on the assumptions and adjustments described in the
accompanying notes. It should be understood that the Pro Forma Condensed
Consolidated Financial Statements do not necessarily reflect the actual
consolidated financial position or results of operations since, among other
factors, actual expenses may be lower or higher than amounts assumed or
estimated. Such pro forma information is not necessarily indicative of the
results which would actually have occurred had the transactions been in
effect for the period or on the date indicated or which may occur in the
future.
3
<PAGE>
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Adjustments Increase/(Decrease) Giving Effect to
--------------------------------------------------------------
Versyss/PMS
PCN PMS Versyss Acquisition
Historical (a) Acquisition (b) Acquisition (c) Adjustments
---------------- ----------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues $41,805,342 $3,067,872 $44,398,000
---------------- ----------------- ------------------- -------------------
Costs and Expenses:
Cost of revenues 16,288,953 1,341,797 27,532,000
Research and development 2,219,223 563,221 1,806,000
Selling and marketing 3,038,069 371,739 5,340,000
General and administrative 13,238,269 1,187,924 8,690,000 $3,864,532 (d)
Acquired technology in process 14,516,000 (14,516,000)(e)
Restructuring 3,072,450
Write-down of assets and other charges 1,477,000
---------------- ----------------- ------------------- -------------------
53,849,964 3,464,681 43,368,000 (10,651,468)
Interest (income) expense:
Interest income (577,039) (12,615)
Interest expense 1,451,604 2,183,000 901,903 (f)
---------------- ----------------- ------------------- -------------------
874,565 (12,615) 2,183,000 901,903
Income (loss) before income tax expense
(benefit) and extraordinary item (12,919,187) (384,194) (1,153,000) 9,749,565
Income tax expense (benefit) (1,419,000) 13,145 168,000
---------------- ----------------- ------------------- -------------------
Income (loss) available to common
shareholders before extraordinary
item $(11,500,187) $(397,339) $(1,321,000) 9,749,565
================ ================= =================== ===================
Earnings (loss) per Common Share:
Before extraordinary item $(0.29)
================
Weighted average number
of common shares outstanding 40,068,406 2,622,781 (g)
================ ===================
<CAPTION>
Adjustments Increase/(Decrease) Giving Effect to
----------------------------------------------------------------------------------
CTI Business
1996 Equifax CTI Business Acquisition
Offering Conversion Acquisition (j) Adjustments
--------------- ----------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues $12,467,346 ($2,667,432)(k)
--------------- ----------------- ------------------- -------------------
Costs and Expenses:
Cost of revenues 4,880,221 (2,120,608)(k)
Research and development 1,377,086
Selling and marketing 2,125,033
General and administrative 4,172,287 988,080 (l)
(583,900)(m)
Acquired technology in process
Restructuring
Write-down of assets and other charges
--------------- ----------------- ------------------- -------------------
12,554,627 (1,716,428)
Interest (income) expense:
Interest income
Interest expense $(525,000)(i)
--------------- ----------------- ------------------- -------------------
(525,000) 0 0
Income (loss) before income tax expense
(benefit) and extraordinary item 525,000 (87,281) (951,004)
Income tax expense (benefit)
--------------- ----------------- ------------------- -------------------
Income (loss) available to common
shareholders before extraordinary
item -- 525,000 $(87,281) $(951,004)
=============== ================= =================== ===================
Earnings (loss) per Common Share:
Before extraordinary item
Weighted average number
of common shares outstanding 4,507,783 (h) 1,932,217 (i)
=============== =================
<CAPTION>
Pro Forma Wismer-Martin Pro Forma
Before Acq. of Wismer-Martin Acquisition After Acq. of
Wismer-Martin Acquisition (o) Adjustments Wismer-Martin
------------------ ------------------ ---------------- -----------------
<S> <C> <C> <C> <C>
Revenues $99,071,128 $10,021,490 $109,092,618
------------------ ------------------ ---------------- -----------------
Costs and Expenses:
Cost of revenues 47,922,363 4,103,747 52,026,110
Research and development 5,965,530 545,608 6,511,138
Selling and marketing 10,874,841 1,714,104 12,588,945
General and administrative 31,557,192 3,057,950 1,109,132 (l) 35,724,275
Acquired technology in process 0 0
Restructuring 3,072,450 3,072,450
Write-down of assets and other charges 1,477,000 1,477,000
------------------ ------------------ ---------------- -----------------
100,869,376 9,421,409 1,109,132 111,399,917
Interest (income) expense:
Interest income (589,654) (27,514) (617,168)
Interest expense 4,011,507 343,319 4,354,826
------------------ ------------------ ---------------- -----------------
3,421,853 315,805 0 3,737,658
Income (loss) before income tax expense
(benefit) and extraordinary item (5,220,101) 284,276 (1,109,132) (6,044,957)
Income tax expense (benefit) (1,237,855) 1,021 (1,236,834)
------------------ ------------------ ---------------- -----------------
Income (loss) available to common
shareholders before extraordinary
item $(3,982,246) $283,255 $(1,109,132) $(4,808,123)
================== ================== ================ =================
Earnings (loss) per Common Share:
Before extraordinary item $(0.8)(n) $(0.10)(n)
================== =================
Weighted average number
of common shares outstanding 49,131,187 935,000 (p) 50,066,187
================== ================ =================
</TABLE>
- -----------------------------------------------
See accompanying notes to the unaudited pro forma condensed consolidated
financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
Six Months Ended June 30, 1996
Adjustments Increase/(Decrease) Giving Effect to
------------------------------------------------------------------
CTI Business
PCN 1996 Equifax CTI Business Acquisition
Historical Offering Conversion Acquisition (j) Adjustments
------------ -------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $42,895,208 $5,588,505
------------ -------------- --------------- ------------ ------------
Costs and Expenses:
Cost of revenues 17,433,201 3,491,009
Research and development 2,222,876 820,298
Selling and marketing 3,655,560 1,300,042
General and administrative 8,589,295 1,432,196 440,540 (l)
(291,950)(m)
------------ -------------- --------------- ------------ ------------
31,900,932 7,043,545 148,590
Interest (income) expense:
Interest income (217,710) 0
Interest expense 1,338,407 (215,934)(i) 0
------------ -------------- --------------- ------------ ------------
1,120,697 (215,934) 0 0
Income (loss) before income tax expense
and loss on equity investment 9,873,579 215,934 (1,455,040) (148,590)
Income tax expense 2,073,363 0
------------ -------------- --------------- ------------ ------------
Income before loss on equity investment 7,800,216 215,934 (1,455,040) (148,590)
Loss on equity investment, net of taxes (817,650) 0 0 0
------------ -------------- --------------- ------------ ------------
Net income (loss) $6,982,566 $215,934 $(1,455,040) $(148,590)
============ ============== =============== ============ ============
Primary and Fully Diluted earnings (loss)
per Common Share:
Earnings (loss) per Common Share $0.14
============
Primary weighted average number
of common shares outstanding 51,703,221 3,289,842 (h) 1,410,158 (i)
============ ============== ===============
Fully Diluted weighted average number
of common shares outstanding 51,710,586 3,289,842 (h) 1,410,158 (i)
============= ============== ===============
<CAPTION>
Pro Forma Wismer-Martin Pro Forma
Before Acq. of Wismer-Martin Acquisition After Acq. of
Wismer-Martin Acquisition (o) Adjustments Wismer-Martin
-------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $48,483,713 $4,345,150 $52,828,863
-------------- ------------- ------------- -------------
Costs and Expenses:
Cost of revenues 20,924,210 2,038,404 22,962,614
Research and development 3,043,174 321,937 3,365,111
Selling and marketing 4,955,602 612,960 5,568,562
General and administrative 10,170,081 1,326,282 512,066 (l) 12,008,429
-------------- ------------- ------------- -------------
39,093,067 4,299,583 512,066 43,904,716
Interest (income) expense:
Interest income (217,710) (31,910) (249,620)
Interest expense 1,122,473 57,695 1,180,168
-------------- ------------- ------------- -------------
904,763 25,785 0 930,548
Income (loss) before income tax expense
and loss on equity investment 8,485,883 19,782 (512,066) 7,993,599
Income tax expense 2,073,363 0 2,073,363
-------------- ------------- ------------- -------------
Income before loss on equity investment 6,412,520 19,782 (512,066) 5,920,236
Loss on equity investment, net of taxes (817,650) 0 0 (817,650)
-------------- ------------- ------------- -------------
Net income (loss) $5,594,870 $19,782 $(512,066) $5,102,586
============== ============= ============= =============
Primary and Fully Diluted earnings (loss)
per Common Share:
Earnings (loss) per Common Share $0.10 (n) $0.09 (n)
============== =============
Primary weighted average number
of common shares outstanding 56,403,221 935,000 (p) 57,338,221
============== ============= =============
Fully Diluted weighted average number
of common shares outstanding 56,410,586 935,000 (p) 57,345,586
============== ============= =============
</TABLE>
- ----------------------------------------------
See accompanying notes to the unaudited pro forma condensed consolidated
financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
Unaudited Pro Forma Condensed Consolidated Balance Sheet
June 30, 1996
ASSETS
CTI Business Pro Forma Wismer-Martin Pro Forma
PCN CTI Business Acquisition Before Acq. of Wismer-Martin Acquisition After Acq. of
Historical Acquisition(j) Adjustments Wismer-Martin Acquisition(o) Adjustments Wismer-Martin
------------ -------------- ----------- ------------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $46,421,006 $ -- $(9,350,000)(j) $37,071,006 $447,036 $(1,980,000)(o) $35,538,042
Accounts receivable, net 22,781,670 1,928,092 (1,183,435)(q) 23,526,327 917,820 24,444,147
Inventories 4,382,065 108,008 4,490,073 153,746 4,643,819
Prepaid expenses and other 2,314,138 2,314,138 584,901 2,899,039
Deferred tax asset 1,650,000 1,650,000 1,650,000
------------ ----------- ----------- ------------ ---------- ---------- ------------
Total current assets 77,548,879 2,036,100 (10,533,435) 69,051,544 2,103,503 (1,980,000) 69,175,047
Intangible assets, net 51,147,142 10,124,525 11,675,954 (j) 62,823,096 2,591,665 11,994,236 (o) 74,817,332
(10,124,525)(r) (2,591,665)(r)
Property and equipment, net 4,026,757 1,201,907 5,228,664 1,107,887 800,000 (t) 7,136,551
Investment in joint venture 2,498,391 2,498,391 2,498,391
Other assets 5,262,160 5,262,160 31,438 5,293,598
------------ ----------- ----------- ------------ ---------- ---------- ------------
Total Assets $140,483,329 $13,362,532 $(8,982,006) $144,863,855 $5,834,493 $8,222,571 $158,920,919
============ =========== =========== ============ ========== ========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $6,297,909 $97,686 $6,395,595 $6,395,595
Current portion of
long-term debt 1,085,407 1,085,407 40,471 1,125,878
Current portion of obligation
under capital leases 371,497 371,497 9,485 380,982
Accounts payable 3,922,726 1,504,116 5,426,842 445,106 5,871,948
Accrued expenses and
other liabilities 10,152,510 183,654 250,000 (j) 10,586,164 360,362 1,385,000 (s) 12,331,526
Customer deposits 2,153,020 472,087 (s) 2,625,107 2,625,107
Unearned income 13,731,316 1,872,983 15,604,299 1,128,987 16,733,286
------------ ----------- ----------- ------------ ---------- ---------- ------------
Total current liabilities 37,714,385 3,658,439 722,087 42,094,911 1,984,411 1,385,000 45,464,322
Long-term debt, net
of current portion: 12,238,759 12,238,759 732,153 12,970,912
Obligations under capital
leases, net of current portion 551,499 551,499 551,499
Deferred income taxes 589,885 589,885
------------ ----------- ----------- ------------ ---------- ---------- ------------
Total liabilities 50,504,643 3,658,439 722,087 54,885,169 3,306,449 1,385,000 59,576,618
Shareholders' Equity:
Preferred stock 10 10 10
Common stock 520,185 520,185 16,321 (16,321)(u) 529,535
9,350 (p)
Additional paid-in capital 183,436,735 183,436,735 4,881,194 (4,881,194)(u) 192,793,000
9,356,265 (p)
Excess purchase price
of acquired subsidiary -- -- (2,500,000) 2,500,000 (u) 0
Retained earnings
(Accumulated deficit) (93,978,244) 9,704,093 (9,704,093)(u) (93,978,244) 130,529 (130,529)(u) (93,978,244)
------------ ----------- ----------- ------------ ---------- ---------- ------------
Shareholders' equity 89,978,686 9,704,093 (9,704,093) 89,978,686 2,528,044 6,837,571 99,344,301
------------ ----------- ----------- ------------ ---------- ---------- ------------
Total liabilities and
shareholders' equity $140,483,329 $13,362,532 $(8,982,006) $144,863,855 $5,834,493 $8,222,571 $158,920,919
============ =========== =========== ============ ========== ========== ============
</TABLE>
- ----------------------------------------------
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
6
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(a) Includes the operations of the PMS Business from April 24, 1995, the
date of acquisition (see note (b) below) and the operations of Versyss
from October 27, 1995, the date of acquisition (see note (c) below).
(b) Reflects the operations of the PMS Business from January 1, 1995 to
April 24, 1995. On April 24, 1995, a wholly-owned subsidiary of PCN
acquired substantially all of the assets of the PMS Business for
$4,861,000, of which $2,861,000 was paid in cash and $2,000,000 was
paid in the form of a one year 10% interest bearing note (which note
was paid in full on April 24, 1996). In addition, PCN assumed
$3,009,000 of certain liabilities of the PMS Business, primarily
related to software support and hardware maintenance agreements.
(c) Reflects the operations of Versyss from January 1, 1995 to October 27,
1995. On October 27, 1995, PCN acquired all of the issued and
outstanding capital stock of Versyss, pursuant to a merger agreement,
for $12,333,000 in cash and $11,750,000 in the form of a two year, 11%
interest bearing note.
(d) Reflects the prorated amortization of the PMS Business and Versyss
acquired intangible assets, with the exception of Acquired technology
in process, based on the estimated useful lives established in the
table in Note 3 to the Consolidated Financial Statements of PCN as
previously disclosed in PCN's Annual Report on Form 10-K for the year
ended December 31, 1995. Included within PCN Historical is $421,365 of
PMS Business-related amortization expense for the period of April 24,
1995 to December 31, 1995, and $722,735 of Versyss-related amortization
expense for the period of October 27, 1995 to December 31, 1995. The
pro forma acquisition amortization adjustment therefore consists of the
following:
<TABLE>
<S> <C>
Amortization of PMS acquired intangible assets (Jan. 1 to April 24, 1995) ............. $ 210,692
Amortization of Versyss acquired intangible assets (Jan. 1 to October 27, 1995) ....... 3,653,840
----------
Total adjustment ...................................................................... $3,864,532
</TABLE>
(e) With the help of an appraiser, PCN allocated $14,516,000 of the
purchase price of the Versyss acquisition to Acquired technology in
process which was recorded as an expense in the year ended December 31,
1995. This charge is non-recurring and unusual and, as it relates
directly to the acquisition, is excluded from the unaudited pro forma
consolidated statement of operations.
(f) Reflects accrued interest expense on the following acquisition-related
indebtedness:
<TABLE>
<S> <C>
10% Interest on $2,000,000 note issued in connection with the acquisition of the PMS
Business (Jan 1 to April 24, 1995) ................................................. $ 66,667
11% Interest on $11,750,000 note issued in connection with the Versyss
acquisition (Jan. 1 to Oct. 27, 1995) .............................................. 1,077,083
----------
Subtotal ........................................................................ $1,143,750
Less: Interest paid to Mr. Jeffry M. Picower (the "Investor") which would have been
avoided if the February 1995 Offering had occurred on January 1, 1995 .............. (241,847)
----------
Total adjustment to interest expense related to the acquisitions of
Versyss and the PMS Business .................................................... $ 901,903
==========
</TABLE>
(g) Reflects the increase in the weighted average number of shares of
Common Stock outstanding after giving effect to (i) the issuance of
6,250,000 shares of Common Stock pursuant to PCN's February 1995 public
offering and (ii) the issuance of 1,902,748 shares of Common Stock
pursuant to the October 1995 Regulation S offering.
(h) Reflects the increase in the weighted average number of shares of
Common Stock outstanding after giving effect to the issuance of the
4,507,783 shares of Common Stock sold by PCN pursuant to the 1996
Offering.
(i) Reflects the reversal of interest expense incurred on the Equifax Note
and an increase in the weighted average number of shares of Common
Stock outstanding after giving effect to the conversion of the Equifax
Note into 1,932,217 shares of Common Stock.
7
<PAGE>
(j) Reflects the operations of the CTI Business for the year ended December
31, 1995 and the six months ended June 30, 1996 and the balance sheet
of the CTI Business as of June 30, 1996. On July 2, 1996, PCN purchased
substantially all of the assets of the medical practice management
software business and certain other software businesses of CUSA
Technologies, Inc. for $9,350,000 in cash. The purchase price is
allocated as follows:
<TABLE>
<S> <C> <C>
Consideration (including liabilities assumed):
Cash $ 9,350,000
Liabilities assumed 3,658,439
Accounting and legal costs 250,000
-----------
Subtotal 13,258,439
Other acquisition-related liabilities (See Note (s)) 472,087
-----------
Total Purchase Price $13,730,526
===========
Allocation of Purchase Price:
Accounts Receivable and Inventory $ 852,665
Equipment and other assets, including cash 1,201,907
Intangible assets:
Profit on support and update agreements (1 year life) 107,000
Profit on future support and update
agreements (4 year life) 599,000
Other intangible assets (includes customer list
and goodwill) (15 year life) 10,969,954
-----------
Total Intangible assets 11,675,954
-----------
$13,730,526
===========
</TABLE>
(k) Represents the elimination of revenue and cost of sales related to
sales transactions between Versyss and the CTI Business prior to the
acquisition of Versyss by PCN.
(l) Reflects the prorated amortization of the acquired intangible assets of
Wismer-Martin and the CTI Business, based on the useful lives
established in notes (j) and (o).
(m) Reflects the elimination of the amortization of intangible assets
recorded in the historical results of operations of the CTI Business.
(n) For the year ended December 31, 1995, the assumed exercise of certain
outstanding options and warrants have not been included in the
calculation of unaudited pro forma loss per common share as they are
anti-dilutive, thus making unaudited pro forma primary and fully
diluted loss per common share the same. For the six months ended June
30, 1996, the assumed exercise of dilutive options and warrants and the
assumed conversion of outstanding shares of PCN's Series A convertible
non dividend-paying preferred stock has been included in the
calculation of the primary and fully-diluted weighted average number of
common shares outstanding.
8
<PAGE>
(o) Reflects the operations of Wismer-Martin for the year ended December
31, 1995 and the six months ended June 30, 1996 and the balance sheet
of Wismer-Martin as of June 30, 1996. On September 10, 1996, PCN
acquired Wismer-Martin pursuant to a merger agreement dated June 20,
1996 for $1,980,000 in cash and 935,000 shares of Common Stock of PCN.
The purchase price is allocated as follows (assuming a $10.0167 price
per share of PCN Common Stock):
<TABLE>
<S> <C> <C>
Consideration (including liabilities assumed):
Cash $ 1,980,000
PCN Common Stock issued 9,365,615
Liabilities assumed 3,306,449
Accounting and legal costs 250,000
-----------
Subtotal 14,902,064
Other acquisition-related liabilities (See Note (s)) 1,135,000
-----------
Total Purchase Price $16,037,064
===========
Allocation of Purchase Price:
Accounts Receivable and Inventory $ 1,071,566
Property, equipment and other assets, including cash 2,971,262
Intangible assets:
Profit on support and update agreements (1 year life) 85,000
Profit on future support and update
agreements (4 year life) 537,000
Acquired software products (3 year life) 494,000
Other intangible assets (includes customer list,
and goodwill) (15 year life) 10,878,236
-----------
Total Intangible assets 11,994,236
-----------
$16,037,064
===========
</TABLE>
(p) Reflects the increase in the weighted average number of shares of
Common Stock outstanding after giving effect to the issuance of 935,000
shares of Common Stock, valued at $10.0167 per share, pursuant to the
acquisition of Wismer-Martin by PCN.
(q) Represents a valuation adjustment that reflects the difference between
the fair value of the accounts receivable acquired from the CTI
Business and the carrying cost of those assets on the historical
balance sheet of the CTI Business.
(r) Represents the elimination of intangible assets related to capitalized
proprietary software costs recorded by both Wismer-Martin and the CTI
Business which had no fair market value to PCN.
(s) In the Wismer-Martin merger agreement and the CTI Business purchase
agreement, the Company agreed to assume the liability of certain
obligations of the acquired entities that were directly related to the
acquisitions. Such additional liabilities include $1,135,000 for
Wismer-Martin for acquisition legal and accounting costs, severance and
restructuring costs, certain contract termination costs, certain key
employee sign-on bonuses and the health insurance termination
liability. For the CTI Business, such liabilities include $472,087 of
customer deposits for future goods and services.
(t) Represents the fair value adjustment to the net book value of the
Wismer-Martin land and building assets as determined by an independent
appraiser.
(u) Reflects the elimination of the prior ownership of Wismer-Martin and
the CTI Business.
9
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act of 1934, the Registrant
has duly caused the Report to be signed on its behalf by the undersigned
thereunto duly authorized.
PHYSICIAN COMPUTER NETWORK, INC.
(Registrant)
Date: November 18, 1996 By: /s/Thomas F. Wraback
---------------------
Thomas F. Wraback
Senior Vice President and
Chief Financial Officer
10
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