<PAGE>
<PAGE>
_______________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 8, 1996
------------------------
PHYSICIAN SUPPORT SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 33-80731 13-3624081
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
</TABLE>
<TABLE>
<S> <C>
ROUTE 230 AND EBY-CHIQUES ROAD,
MT. JOY, PA 17552
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (717) 653-5340
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
________________________________________________________________________________
<PAGE>
<PAGE>
Physician Support Systems, Inc., a Delaware Corporation ('PSS'), hereby
amends its Current Report on Form 8-K dated May 14, 1996 as set forth below.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Set forth below are the audited financial statements of PBS Northwest,
Inc., an Oregon corporation ('PBS'), as of December 31, 1994 and 1995 and for
the two years then ended. These financial statements have been audited by
Deloitte & Touche LLP, independent auditors. Also set forth below are the
unaudited financial statements of PBS as of March 31, 1996 and for the three
months ended March 31, 1995 and 1996. These unaudited statements have been
prepared on the same basis as the audited financial statements and, in the
opinion of management, contain all adjustments necessary for a fair presentation
of the financial position and results of operations for the periods presented.
Operating results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the entire year.
1
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
PBS NORTHWEST, INC.
We have audited the accompanying balance sheets of PBS Northwest, Inc. as
of December 31, 1995 and 1994, and the related statements of income,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 9 to the financial statements, substantially all
assets and liabilities of PBS Northwest, Inc. were sold on May 8, 1996.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of PBS Northwest, Inc. as of December 31, 1995
and 1994, and the results of its operations, stockholders' equity, and cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
June 27, 1996
Seattle, Washington
2
<PAGE>
<PAGE>
PBS NORTHWEST, INC.
BALANCE SHEETS
DECEMBER 31, 1994 AND 1995, AND MARCH 31, 1996
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.............................................. $ -- $ 4,477 $ 270,714
Accounts receivable -- billed.......................................... 290,637 304,196 219,559
Accounts receivable -- unbilled........................................ 219,842 269,754 257,384
Prepaid expenses....................................................... 20,498 17,560 16,354
-------- -------- -----------
Total current assets.............................................. 530,977 595,987 764,011
Property and equipment, net................................................. 20,681 13,167 12,631
Other assets................................................................ 9,346 2,981 3,033
-------- -------- -----------
Total....................................................................... $561,004 $612,135 $ 779,675
-------- -------- -----------
-------- -------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable....................................................... $ 18,098 $ 9,925 $ 8,527
Accrued liabilities.................................................... 105,917 115,377 104,942
-------- -------- -----------
Total current liabilities......................................... 124,015 125,302 113,469
Stockholders' Equity:
Common stock, $.01 par -- authorized, 1,000,000 shares; issued, 10,000
shares............................................................... 100 100 100
Additional paid-in capital............................................. 9,900 9,900 9,900
Retained earnings...................................................... 426,989 476,833 656,206
-------- -------- -----------
Total stockholders' equity........................................ 436,989 486,833 666,206
-------- -------- -----------
Total....................................................................... $561,004 $612,135 $ 779,675
-------- -------- -----------
-------- -------- -----------
</TABLE>
See notes to financial statements.
3
<PAGE>
<PAGE>
PBS NORTHWEST, INC.
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THREE-MONTH PERIODS ENDED MARCH 31, 1995 AND 1996
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------ --------------------
1994 1995 1995 1996
---------- ---------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue...................................................... $2,107,349 $2,113,374 $464,556 $565,281
Operating Expenses:
Salaries and wages...................................... 1,168,655 1,086,896 233,314 281,486
General and administrative.............................. 409,062 407,429 88,472 99,243
General and administrative -- related parties........... 24,000 24,000 6,000 6,000
Depreciation............................................ 28,864 8,883 3,000 536
---------- ---------- -------- --------
Total operating expenses........................... 1,630,581 1,572,208 330,786 387,265
---------- ---------- -------- --------
Income from operations....................................... 476,768 586,166 133,770 178,016
Other Income:
Interest income......................................... 6,021 13,661 1,380 1,336
Other income............................................ 5 17 21
---------- ---------- -------- --------
Total other income................................. 6,026 13,678 1,380 1,357
---------- ---------- -------- --------
Net income................................................... $ 482,794 599,844 $135,150 179,373
---------- --------
---------- --------
Unaudited pro forma income tax adjustment.................... 203,947 60,987
---------- --------
Unaudited pro forma net income............................... $ 395,897 $118,386
---------- --------
---------- --------
</TABLE>
See notes to financial statements.
4
<PAGE>
<PAGE>
PBS NORTHWEST, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THREE-MONTH PERIOD ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
---------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
------ ------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1994............................. 10,000 $100 $9,900 $ 444,195 $ 454,195
Net income...................................... 482,794 482,794
Dividends....................................... (500,000) (500,000)
------ ------ ---------- --------- -------------
Balance, December 31, 1994........................... 10,000 100 9,900 426,989 436,989
Net income...................................... 599,844 599,844
Dividends....................................... (550,000) (550,000)
------ ------ ---------- --------- -------------
Balance, December 31, 1995........................... 10,000 100 9,900 476,833 486,833
Net income (unaudited).......................... 179,373 179,373
------ ------ ---------- --------- -------------
Balance, March 31, 1996.............................. 10,000 $100 $9,900 $ 656,206 $ 666,206
------ ------ ---------- --------- -------------
------ ------ ---------- --------- -------------
</TABLE>
See notes to financial statements.
5
<PAGE>
<PAGE>
PBS NORTHWEST, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994 AND 1995,
AND THREE-MONTH PERIODS ENDED MARCH 31, 1995 AND 1996
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------------- --------------------
1994 1995 1995 1996
--------- --------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating Activities:
Net income................................................ $ 482,794 $ 599,844 $135,150 $179,373
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation......................................... 28,864 8,883 3,000 536
Cash provided (used) by changes in operating assets
and liabilities:
Accounts receivable:
Billed..................................... 3,938 (13,559) 88,677 84,637
Unbilled................................... 4,158 (49,912) 5,576 12,370
Prepaid expenses................................ (14,178) 2,939 8,798 1,206
Other assets.................................... (2,949) 6,365 (58,483) (52)
Accounts payable................................ 18,098 (8,173) (6,398) (1,398)
Accrued liabilities............................. (17,974) 9,460 (18,515) (10,435)
--------- --------- -------- --------
Net cash provided by operating activities................. 502,751 555,847 157,805 266,237
Investing Activities:
Capital expenditures...................................... (19,546) (1,370)
Financing Activities:
Dividends paid............................................ (500,000) (550,000)
--------- --------- -------- --------
Net increase (decrease) in cash and cash equivalents........... (16,795) 4,477 157,805 266,237
Cash and Cash Equivalents:
Beginning of period....................................... 16,795 4,477
--------- --------- -------- --------
End of period............................................. $ -- $ 4,477 $157,805 $270,714
--------- --------- -------- --------
--------- --------- -------- --------
</TABLE>
See notes to financial statements.
6
<PAGE>
<PAGE>
PBS NORTHWEST, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994 AND 1995,
AND THREE-MONTH PERIODS ENDED MARCH 31, 1995 AND 1996 (UNAUDITED)
NOTE 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
PBS Northwest, Inc. (the Company or PBS), an Oregon S-Corporation, is
engaged in the business of providing accounts receivable management, billing,
collection, and related business services for health care providers in the
greater Portland metropolitan area and in Tacoma, Washington. The Company was
incorporated in 1992.
REVENUE RECOGNITION
For physician billing activities, the Company recognizes client fee revenue
on the accrual basis. Billing revenue is based on a percentage fee of net
provider collections of receivables from patient and insurance company billings.
Client fees are calculated at month end and billed to clients the following
month.
A portion of the unbilled receivable is based on an estimate of future
billing revenue from outstanding provider receivables. The estimated amount is
calculated by multiplying client fee percentages times outstanding provider
accounts receivable balances, less estimated provider write-offs and less
estimated costs to collect. This portion of the unbilled receivable estimate is
calculated and adjusted monthly.
In addition to normal billing activities, the Company provides accounting
services to several medical practices, and periodically performs special project
and consulting work. This work is billed to clients based either on actual time
at standard hourly billing rates, or at a fixed fee.
ACCOUNTS RECEIVABLE
The Company grants credit to its customers for services performed;
resulting accounts receivable are not collateralized. Accounts receivable are
charged directly against earnings when they are determined to be uncollectible.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are cash and short-term, highly liquid
investments with maturities of 90 days or less that are readily convertible to
known amounts of cash and present an insignificant risk of changes in principal
amount due to interest rate fluctuations. Periodically, the Company maintains
deposits in a money market account with a mutual fund which are not covered
under federally insured programs.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided by
using the straight-line method over the estimated useful lives of five to seven
years.
INCOME TAXES
As the Company is classified as an S-Corporation, all taxable income or
loss is included in the stockholders' individual tax returns. These financial
statements do not include a provision for income taxes. In the event the
S-election is terminated the Company will be responsible for income taxes at the
corporate level. The unaudited pro forma income tax adjustment reflects income
taxes as if the Company was a C Corporation. There were no significant
differences between taxable income for financial statement purposes and income
tax purposes for the years ended December 31, 1994 and 1995, and the three-month
period ended March 31, 1996.
7
<PAGE>
<PAGE>
PBS NORTHWEST, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1994 AND 1995,
AND THREE-MONTH PERIODS ENDED MARCH 31, 1995 AND 1996 (UNAUDITED)
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INTERIM FINANCIAL INFORMATION
The interim financial information as of and for the three-month periods
ended March 31,1995 and 1996, was prepared by the Company in a manner consistent
with the audited financial statements. The unaudited information, in
management's opinion, reflects all adjustments that are of a normal recurring
nature and that are necessary to present fairly the results for the periods
presented. The results of operations for the three-month period ended March 31,
1996, are not necessarily indicative of the results to be expected for the
entire year.
NOTE 2. RELATED PARTY TRANSACTIONS
SERVICES AGREEMENTS
The Company pays two related parties a total of $2,000 per month; $1,000
per month for maintenance of computer systems, and $1,000 per month for
consulting. There were no accounts payable to related parties at March 31, 1996,
and December 31, 1995 and 1994.
LEASE AGREEMENTS
The Company leases office space from a related party at $4,178 per month.
NOTE 3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
ESTIMATED -------------------- MARCH 31,
USEFUL LIFE 1994 1995 1996
----------- -------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Furniture, fixtures, and office equipment............ 7 $ 35,936 $ 35,936 $ 35,936
Computer equipment................................... 5 65,411 66,780 66,780
-------- -------- -----------
101,347 102,716 102,716
Less accumulated depreciation and amortization....... (80,666) (89,549) (90,085)
-------- -------- -----------
$ 20,681 $ 13,167 $ 12,631
-------- -------- -----------
-------- -------- -----------
</TABLE>
NOTE 4. OFFICE LEASES
PBS had entered into an operating lease in Portland, Oregon with DP
Associates (see Note 2) for the use of space in an office building. The lease
agreement expired on February 29, 1996, and was renewed on April 30, 1996. The
renewed lease will expire March 31, 1998. Rent expense is recognized on a
straight-line basis over the contractual lease term. Rental expense incurred for
this operating lease amounted to $45,600 and $45,502 for the years ended
December 31, 1995 and 1994, respectively.
PBS also renewed an operating lease on June 3, 1996, in Tacoma, Washington
with Tacoma Medical Building Associates, a General Partnership, for the use of
space in Jackson Hall at the Tacoma General Hospital complex at a monthly rate
of $2,312. The lease will expire August 31, 2001. Rent expense is
8
<PAGE>
<PAGE>
PBS NORTHWEST, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1994 AND 1995,
AND THREE-MONTH PERIODS ENDED MARCH 31, 1995 AND 1996 (UNAUDITED)
recognized on a straight-line basis over the contractual lease term. Rental
expense incurred for this operating lease amounted to $27,590 and $27,111 for
the years ended December 31, 1995 and 1994, respectively.
NOTE 5. EMPLOYEE BENEFIT PLAN
The Company has a defined contribution 401(k) plan covering all employees
who, at a minimum, are 21 years of age, have worked for the Company for one
year, and work 1,000 hours per year. Eligible employees may contribute up to 17%
of gross pay, subject to statutory limitations. The Company, at its discretion,
matches employee contributions up to 3%. Employer contributions vest over a
seven-year period. Pension expense incurred by the Company was $18,950 and
$16,586 for 1995 and 1994, respectively.
NOTE 6. MAJOR CUSTOMERS
Customers which represent 10% or more of revenue for each year are as
follows:
<TABLE>
<CAPTION>
PERCENT OF REVENUE
------------------------
CUSTOMER 1994 1995
- ------------------------------------------------------------- ----------- -----------
<S> <C> <C>
1......................................................... 11.8% 13.1%
2......................................................... 13.8 15.5
----- -----
25.6% 28.6%
----- -----
----- -----
</TABLE>
Customer 1 may discontinue its business relationship with the Company
during October 1996, due to a pending merger of that organization.
NOTE 7. BUY-SELL AGREEMENT
Through May 8, 1996, the date of the sale ( see Note 9), the shareholders
had a buy-sell agreement providing for the transfer of shares in the event of a
stockholder death or other disposition. This agreement was cancelled effective
May 8, 1996.
NOTE 8. ACCRUED LIABILITIES
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Accrual for compensated absences.................................. $ 86,030 $ 92,080 $ 95,674
Accrued pension contribution and other payroll related items...... 18,496 22,547 7,442
Other............................................................. 1,391 750 1,826
-------- -------- -----------
$105,917 $115,377 $ 104,942
-------- -------- -----------
-------- -------- -----------
</TABLE>
Included in other accrued liabilites as of December 31, 1994 is a bank
overdraft of $96.
Included in the accrual for compensated absences as of March 31, 1996, is
an accrual for extended sick leave of approximately $61,000. This amount was
paid by the Company prior to purchase by Physician Support Systems, Inc. as
discussed in Note 9.
NOTE 9. SALE OF NET ASSETS
On May 8, 1996, the Company sold substantially all of its assets and
liabilities to a wholly-owned subsidiary of Physician Support Systems, Inc.
9
<PAGE>
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS. -- (CONTINUED)
(b) Pro Forma Financial Information.
The following unaudited pro forma financial information gives effect to the
acquisition by Physician Support Systems, Inc. ('PSS') of PBS Northwest, Inc.
('PBS'). Such acquisition, which was completed on May 8, 1996, was accounted for
as a purchase. The unaudited pro forma financial statements are derived from the
historical financial statements of PSS and PBS and estimates and assumptions set
forth below and in the notes to the unaudited pro forma financial statements.
The unaudited pro forma balance sheet gives effect to the acquisition by
PSS of PBS as if such acquisition had occurred on March 31, 1996. Such unaudited
pro forma balance sheet is derived from the unaudited consolidated balance sheet
of PSS as of March 31, 1996 included in its Quarterly Report on Form 10-Q for
the three months ended March 31, 1996 which is incorporated herein by reference,
as well as the unaudited balance sheet of PBS as of March 31, 1996 included
elsewhere in this Form 8-K.
The unaudited pro forma statements of operations present unaudited pro
forma results of operations for the year ended December 31, 1995 and the three
months ended March 31, 1996. For purposes of the unaudited pro forma statements
of operations, the acquisition by PSS of PBS is included as if such acquisition
had occurred on January 1, 1995. In addition, the unaudited pro forma statements
of operations show separately the results of operations of the Acquired
Businesses (North Coast Health Care Management Group ('NCHCM'), Medical
Management Support, Inc. ('MMS') and Data Processing Systems, Inc. ('DPS'))
which were acquired by PSS effective upon the completion of its initial public
offering of common stock on February 12, 1996 and also include pro forma
adjustments related to such offering. The unaudited pro forma statement of
operations for the year ended December 31, 1995 is derived from the audited
consolidated statement of operations of PSS for the year ended December 31, 1995
included in the Company's Annual Report on Form 10-K, the audited and unaudited
statements of operations of the Acquired Businesses for the year ended December
31, 1995, and the audited statement of operations of PBS for the year ended
December 31, 1995 included elsewhere in this Form 8-K. The unaudited pro forma
statement of operations for the three months ended March 31, 1996 is derived
from the unaudited consolidated statement of operations of PSS for the three
months ended March 31, 1996 included in its Quarterly Report on Form 10-Q for
the three months ended March 31, 1996 (which includes the results of operations
of the Acquired Businesses from the effective dates of their acquisitions by PSS
to March 31, 1996), the unaudited statements of operations of the Acquired
Businesses from January 1, 1996 to the effective dates of their acquisitions,
and the unaudited statement of operations of PBS for the three months ended
March 31, 1996 included elsewhere in this Form 8-K.
Pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deems appropriate. The
unaudited pro forma financial information presented herein are not necessarily
indicative of the results PSS would have obtained had such events occurred at
the beginning of the period, as assumed, or of the future results of PSS. The
unaudited pro forma financial information should be read in conjunction with the
financial statements and notes thereto included elsewhere in this prospectus.
10
<PAGE>
<PAGE>
PHYSICIAN SUPPORT SYSTEMS, INC.
PRO FORMA BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------
PHYSICIAN
SUPPORT
SYSTEMS
AND PBS PRO FORMA
SUBSIDIARIES NORTHWEST ADJUSTMENTS PRO FORMA
------------ --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash........................................................... $ 20,157 $ 271 $(3,300)(a) $17,128
Accounts receivable -- billed.................................. 2,730 220 2,950
Accounts receivable -- unbilled................................ 5,520 257 5,777
Prepaid expenses and other current assets...................... 772 16 788
------------ --------- ---------
Total current assets...................................... 29,179 764 26,643
------------ --------- ---------
Fixed assets, net.............................................. 2,518 13 2,531
Intangible assets, net......................................... 22,617 2,745(a) 25,362
Other assets................................................... 74 3 77
------------ --------- ----------- ---------
54,388 780 (555) 54,613
------------ --------- ----------- ---------
------------ --------- ----------- ---------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable............................................... 590 8 598
Accrued expenses............................................... 5,922 105 6,027
Current portion of other long-term liabilities................. 520 520
Deferred income taxes.......................................... 39 112(a) 151
------------ --------- ---------
Total current liabilities................................. 7,071 113 7,296
------------ --------- ---------
Long-term debt................................................. 5,500 5,500
Other long-term liabilities.................................... 1,287 1,287
Deferred income taxes.......................................... 912 912
Common stock................................................... 6 1 (1)(a) 6
Additional paid-in capital..................................... 43,678 10 (10)(a) 43,678
656 (a)
(656)(a)
Retained earnings.............................................. (4,066) 656 (656)(a) (4,066)
------------ --------- ----------- ---------
39,618 667 (667) 39,618
------------ --------- ----------- ---------
$ 54,388 $ 780 $ (555) $54,613
------------ --------- ----------- ---------
------------ --------- ----------- ---------
</TABLE>
See notes to pro forma financial statements.
11
<PAGE>
<PAGE>
PHYSICIAN SUPPORT SYSTEMS, INC.
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------- PRO FORMA
PHYSICIAN ACQUISITION PBS NORTHWEST
SUPPORT ADJUSTMENTS ------------------------
SYSTEMS ----------- PRO FORMA PRO FORMA
AND ACQUIRED ACQUIRED OFFERING ACQUISITION
SUBSIDIARY BUSINESSES BUSINESSES ADJUSTMENTS SUBTOTAL HISTORICAL ADJUSTMENTS
---------- ---------- ----------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues......................... $ 19,584 $8,704 $ 28,288 $2,113
Operating Expenses:
Wages and salaries........... 9,661 4,016 $(100)(b) 13,577 1,087
General and administrative... 6,846 2,499 9,345 431
Depreciation and
amortization............... 3,378 181 614(c) 4,173 9 $ 144(c)
---------- ---------- -------- ----------
19,885 6,696 27,095 1,527
---------- ---------- -------- ----------
Income (loss) from operations.... (301) 2,008 1,193 586
Other income (expense)
Interest..................... (1,476) (20) $ 2,406(d) 910 14 (165)(e)
Other........................ 4 (55) (51)
---------- ---------- -------- ----------
(1,472) (75) 859 14
---------- ---------- -------- ----------
Income (loss) before income taxes
(benefit)...................... (1,773) 1,933 2,052 600
Income taxes (benefit)........... (500) 149 418(f) 962(f) 1,030 116(f)
---------- ---------- -------- ----------
Net income (loss)................ $ (1,273) $1,784 $ 1,022 $ 600
---------- ---------- -------- ----------
---------- ---------- -------- ----------
Weighted average shares
outstanding....................
Net income (loss) per share......
<CAPTION>
PRO FORMA
---------
<S> <C>
Revenues......................... $30,401
Operating Expenses:
Wages and salaries........... 14,664
General and administrative... 9,776
Depreciation and
amortization............... 4,326
---------
28,766
---------
Income (loss) from operations.... 1,635
Other income (expense)
Interest..................... 759
Other........................ (51)
---------
708
---------
Income (loss) before income taxes
(benefit)...................... 2,343
Income taxes (benefit)........... 1,146
---------
Net income (loss)................ $ 1,197
---------
---------
Weighted average shares
outstanding.................... 6,265,000(g)
---------
---------
Net income (loss) per share...... $0.19
-----
-----
</TABLE>
See notes to pro forma financial statements.
12
<PAGE>
<PAGE>
PHYSICIAN SUPPORT SYSTEMS, INC.
PRO FORMA STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------------------
PHYSICIAN PRO FORMA ACQUISITION
SUPPORT ADJUSTMENTS
SYSTEMS ------------------------ PRO FORMA
AND ACQUIRED PBS ACQUIRED PBS OFFERING
SUBSIDIARIES BUSINESSES NORTHWEST BUSINESSES NORTHWEST SUBTOTAL ADJUSTMENTS
------------ ---------- --------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................... $6,399 $729 $ 565 $7,693
Operating Expenses:
Wages and salaries..... 3,325 390 281 3,996
General and
administrative....... 2,218 210 105 2,533
Depreciation and
amortization......... 961 64 1 $ 50(c) $36(c) 1,112
------ ----- --------- --------
6,504 664 387 7,641
------ ----- --------- --------
Income (loss) from
operations............... (105) 65 178 52
Other income (expense)
Interest............... (146) (1) (147) $ 224(d)
Other.................. 136 1 137
------ ----- --------- --------
(10) (1) 1 (10)
------ ----- --------- --------
Income (loss) before income
taxes (benefit).......... (115) 64 179 42
Income taxes (benefit)..... (56) 5(f) 57(f) 6 91(f)
------ ----- --------- --------
Net income (loss).......... $ (59) $ 64 $ 179 $ 36
------ ----- --------- --------
------ ----- --------- --------
Weighted average shares
outstanding..............
Net income (loss) per
share....................
<CAPTION>
PRO FORMA
---------
<S> <C>
Revenues................... $ 7,693
Operating Expenses:
Wages and salaries..... 3,996
General and
administrative....... 2,533
Depreciation and
amortization......... 1,112
---------
7,641
---------
Income (loss) from
operations............... 52
Other income (expense)
Interest............... 77
Other.................. 137
---------
214
---------
Income (loss) before income
taxes (benefit).......... 266
Income taxes (benefit)..... 97
---------
Net income (loss).......... $ 169
---------
---------
Weighted average shares
outstanding.............. 6,265,000(g)
---------
---------
Net income (loss) per
share.................... $0.03
-----
-----
</TABLE>
See notes to pro forma financial statements.
13
<PAGE>
<PAGE>
PHYSICIAN SUPPORT SYSTEMS, INC.
NOTES TO PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
1. UNAUDITED PRO FORMA BALANCE SHEET ADJUSTMENTS
(a) Adjustment to reclassify undistributed S Corporation earnings to
additional paid-in capital and to reflect the acquisition of PBS by PSS. The
purchase price of $3,300,000 (including transaction fees of approximately
$300,000) is allocated as follows:
<TABLE>
<CAPTION>
($000s)
-----------------
<S> <C>
Current assets......................................................... $ 764
Fixed assets........................................................... 13
Other assets........................................................... 3
Intangible assets...................................................... 2,745
Current liabilities.................................................... (225)
-------
Total purchase price.............................................. $ 3,300
-------
-------
</TABLE>
Intangible assets include the following:
<TABLE>
<CAPTION>
($000s)
-----------------
<S> <C>
Non-compete agreement.................................................. $ 100
Goodwill............................................................... 2,645
-------
Total intangible assets........................................... $ 2,745
-------
-------
</TABLE>
Useful lives assigned to intangible assets are as follows:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE
-----------------
<S> <C>
Non-compete agreement.................................................. Life of agreement
Goodwill............................................................... 20 years
</TABLE>
2. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS
(b) Adjustment to reflect the decrease in compensation expense as a result
of employment agreements with NCHCM executive officers entered into as a result
of the acquisition by PSS.
(c) Adjustment to reflect the increase in amortization expense associated
with the intangible assets recorded by PSS in purchase accounting related to the
acquisitions. The goodwill associated with the acquisitions is being amortized
on a straight line basis over an estimated life of 20 years.
(d) Adjustment to reflect the decrease in interest expense and increase in
interest income associated with the repayment of long-term debt as a result of
the offering.
(e) Adjustment to reduce interest income earned in adjustment(d) as a
result of the purchase of PBS.
(f) Adjustment to reflect the income tax effects of the acquisitions.
(g) The weighted average shares outstanding used to calculate pro forma
earnings per share is 6,265,000 shares, representing the number of shares issued
and outstanding as a result of the offering.
14
<PAGE>
<PAGE>
(c) Exhibits.
<TABLE>
<C> <S>
99. -- Physician Support Systems, Inc., Form 10-Q (File 33-80731) for the quarter ended March 31, 1996
previously filed and incorporated herein by reference.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this Amendment No. 1 to its report to be signed
on its behalf by the undersigned hereunder duly authorized.
PHYSICIAN SUPPORT SYSTEMS, INC.
Dated: July 15, 1996.
/S/ DAVID S. GELLER
By ..................................
DAVID S. GELLER
SENIOR VICE PRESIDENT
15
