<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): JUNE 28, 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 July 8, 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 Synergistic
Systems, Inc., a California corporation ('SSI'), as of December 31, 1994 and
1995 and for the three years ended December 31, 1995. These financial statements
have been audited by Deloitte & Touche LLP, independent auditors. Also set forth
below are the unaudited financial statements of SSI as of June 28, 1996 and for
the six months ended June 30, 1995 and June 28, 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 six months ended June 28, 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
Synergistic Systems, Inc.
We have audited the accompanying balance sheets of Synergistic Systems, Inc.
(the "Company") as of December 31, 1995 and 1994, and the related statements of
income, stockholders' equity, and cash flows for each of the three years in the
period ended December 31, 1995. 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.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1995 and
1994, and the results of its operations, and its cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in Note 7 to the financial statements, the Company consummated a
merger transaction on June 28, 1996.
DELOITTE & TOUCHE LLP
August 29, 1996
Los Angeles, California
<PAGE>
<PAGE>
SYNERGISTIC SYSTEMS, INC.
BALANCE SHEETS
DECEMBER 31, 1994 AND 1995, AND JUNE 28, 1996 (UNAUDITED)
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- JUNE 28,
ASSETS (NOTES 4, 5) 1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 740,405 $ 625,157 $ 475,760
Accounts receivable - billed 1,530,979 1,501,781 1,867,936
Accounts receivable - unbilled 2,161,074 2,272,552 2,430,436
Prepaid expenses 108,306 183,605 214,431
Other current assets 1,913 495
--------- --------- ---------
Total current assets 4,542,677 4,583,590 4,988,563
PROPERTY AND EQUIPMENT, Net (Notes 2, 3) 1,302,628 1,264,114 1,150,102
OTHER ASSETS 102,072 86,390 91,550
--------- -------- --------
TOTAL $ 5,947,377 $ 5,934,094 $ 6,230,215
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 342,917 $ 346,849 $ 504,229
Accrued liabilities 882,731 784,459 1,005,240
Line of credit (Note 4) 100,000
Current portion of long-term debt (Notes 3, 5) 198,400 244,983 185,000
Dividends payable 60,000 42,000
Deferred income taxes (Note 6) 608,925 655,952 655,952
--------- ---------- --------
Total current liabilities 2,092,973 2,174,243 2,350,421
LONG-TERM DEBT (Notes 3, 5) 633,950 628,551 527,746
DEFERRED INCOME TAXES (Note 6) 138,956 79,225 79,225
DEFERRED CREDIT 19,444 7,164 1,024
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY:
Common stock, $.10 par - authorized, 2,000,000
shares; issued, 600,000 shares 60,000 60,000 60,000
Additional paid-in capital 285,223 285,223 285,223
Retained earnings 2,716,831 2,699,688 2,926,576
----------- ----------- -----------
Total stockholders' equity 3,062,054 3,044,911 3,271,799
----------- ----------- -----------
TOTAL $ 5,947,377 $ 5,934,094 $ 6,230,215
=========== =========== ===========
</TABLE>
See notes to financial statements.
-2-
<PAGE>
<PAGE>
SYNERGISTIC SYSTEMS, INC.
STATEMENT OF INCOME FOR THE
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
AND THE SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND JUNE 28, 1996 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------- JUNE 30, JUNE 28,
1993 1994 1995 1995 1996
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE $9,477,258 $9,588,121 $9,830,978 $4,728,725 $5,398,531
OPERATING EXPENSES:
Salaries and wages 4,980,501 5,182,386 5,589,783 2,637,517 2,896,536
General and administrative 3,246,214 3,416,548 3,742,340 1,814,793 1,708,667
Depreciation and amortization 415,595 417,227 420,102 215,430 210,979
Merger related expenses 150,000
---------- ---------- ---------- ---------- ----------
Total operating expenses 8,642,310 9,016,161 9,752,225 4,667,740 4,966,182
---------- ---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 834,948 571,960 78,753 60,985 432,349
INTEREST AND OTHER INCOME (EXPENSE):
Gain on disposition of property 2,303
Interest expense (Notes 4, 5) (77,505) (32,784) (83,559) (33,653) (39,520)
Interest and other income 50,661 32,764 46,263 17,923 35,317
---------- ---------- ---------- ---------- ----------
Total other income (expense) (24,541) (20) (37,296) (15,730) (4,203)
---------- ---------- ---------- ---------- ----------
INCOME BEFORE TAXES 810,407 571,940 41,457 45,255 428,146
PROVISION FOR INCOME TAXES (Note 6) 323,000 230,500 16,600 18,102 171,258
---------- ---------- ---------- ---------- ----------
NET INCOME $ 487,407 $ 341,440 $ 24,857 $ 27,153 $ 256,888
========== ========== ========== ========== ==========
</TABLE>
See notes to financial statements.
-3-
<PAGE>
<PAGE>
SYNERGISTIC SYSTEMS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY FOR THE
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995, AND THE SIX-MONTH
PERIOD ENDED JUNE 28, 1996 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
<S> <C> <C> <C> <C> <C>
BALANCE,
JANUARY 1, 1993 12,000 $60,000 $285,223 $2,007,984 $2,353,207
Net income 487,407 487,407
Dividends (60,000) (60,000)
------- ------- -------- ---------- ----------
BALANCE,
DECEMBER 31, 1993 12,000 60,000 285,223 2,435,391 2,780,614
Net income 341,440 341,440
Dividends (60,000) (60,000)
50 for 1 stock split 588,000
------- ------- -------- ---------- ----------
BALANCE,
DECEMBER 31, 1994 600,000 60,000 285,223 2,716,831 3,062,054
Net income 24,857 24,857
Dividends (42,000) (42,000)
------- ------- -------- ---------- ----------
BALANCE,
DECEMBER 31, 1995 600,000 60,000 285,223 2,699,688 3,044,911
Net income (unaudited) 256,888 256,888
Dividends (unaudited) (30,000) (30,000)
------- ------- -------- ---------- ----------
BALANCE,
JUNE 28, 1996 (Unaudited) 600,000 $60,000 $285,223 $2,926,576 $3,271,799
======= ======= ======== ========== ==========
</TABLE>
See notes to financial statements.
-4-
<PAGE>
<PAGE>
SYNERGISTIC SYSTEMS, INC.
STATEMENT OF CASH FLOWS FOR THE
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995, AND THE SIX-MONTH
PERIODS ENDED JUNE 30, 1995 AND JUNE 28, 1995 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------- JUNE 30, JUNE 28,
1993 1994 1995 1995 1996
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 487,407 $ 341,440 $ 24,857 $ 27,153 $ 256,888
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 415,595 417,227 420,102 215,430 210,979
Deferred income taxes (11,319) (52,333) (12,704)
Add (gain) on disposition of equipment (2,303)
Changes in operating assets and liabilities:
Accounts receivable:
Billed (213,427) (284,753) 29,198 (150,530) (366,155)
Unbilled (439,319) (93,903) (111,478) 112,732 (157,884)
Prepaid expenses (68,797) 30,915 (75,299) (171,421) (30,826)
Other current assets (3,425) 1,512 1,418 495
Other assets (7,651) 24,414 15,682 (10,753) (5,160)
Accounts payable 132,407 68,187 3,932 18,304 157,380
Accrued liabilities 217,592 182,735 (98,272) (151,987) 220,781
Deferred credit (12,281) (12,281) (12,280) (6,140) (6,140)
--------- --------- -------- --------- ---------
Net cash provided by (used in) operating 494,479 623,160 185,516 (117,212) 280,358
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of asset 15,000
Purchase of property and equipment (90,427) (450,397) (130,098) (98,016) (98,980)
--------- --------- -------- --------- ---------
Net cash used by investing activities (75,427) (450,397) (130,098) (98,016) (96,980)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advance from line of credit 100,000 (100,000)
Proceeds from long-term debt 392,883
Principal payments on capital lease obligations (432,095) (122,822) (71,730) (29,411) (51,487)
Principal payments on long-term debt (83,885) (135,576) (70,916) (109,288)
Dividends paid (60,000) (60,000) (60,000) (60,000) (72,000)
--------- --------- -------- --------- ---------
Net cash provided by (used in) financing (492,095) 126,176 (170,306) (160,327) (332,775)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: (73,043) 298,939 (115,248) (375,555) (149,397)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 514,509 441,466 740,405 740,405 625,157
--------- --------- -------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 441,466 $ 740,405 $625,157 $ 364,850 $ 475,760
========= ========= ======== ========= =========
</TABLE>
See notes to financial statements.
(Continued)
-5-
<PAGE>
<PAGE>
SYNERGISTIC SYSTEMS, INC.
STATEMENT OF CASH FLOWS FOR THE
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995, AND THE SIX-MONTH
PERIODS ENDED JUNE 30, 1995 (UNAUDITED) AND JUNE 28, 1996 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------- JUNE 30, JUNE 28,
1993 1994 1995 1995 1996
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 77,505 $ 32,784 $ 83,559 $ 33,635 $ 39,520
========== ========== ========= ========== =========
Cash paid for taxes $ 334,719 $ 248,288 $ 161,550 $ 125,667 $ -
========== ========== ========= ========== =========
NON CASH INVESTING AND FINANCING ACTIVITIES
Capital lease obligations $ - $ 344,966 $ 251,490 $ $ -
========== ========== ========= ========== =========
</TABLE>
See notes to financial statements.
(Concluded)
-6-
<PAGE>
<PAGE>
SYNERGISTIC SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995, AND THE
SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND JUNE 28, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS - Synergistic Systems, Inc. (the "Company") is
engaged in the business of providing accounts receivable management,
billing, collection, and related business services for health care
providers primarily in the state of California. The Company was
incorporated in 1984.
RECLASSIFICATIONS - Certain reclassifications have been made in the
financial statements to conform to the 1995 presentation.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents consist of
short-term, highly liquid investments with maturities of 90 days or less at
date of purchase.
ACCOUNTS RECEIVABLE - The Company grants credit to its customers for
services performed; resulting accounts receivable are not collateralized.
Accounts receivable are charged directly against revenue when they are
determined to be uncollectible.
PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost.
Depreciation of property and equipment is computed by using the
straight-line method over an estimated useful life of five to seven years.
Leasehold improvements are amortized over the life of the lease.
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.
INCOME TAXES - The Company uses the asset and liability method of
accounting for income taxes. Deferred income taxes reflect a net effect of
temporary differences between the carrying values of assets and liabilities
for financial reporting purposes and the amounts used for income tax
purposes. Such deferred income tax asset and liability computations are
based on enacted laws and rates applicable to periods in which the
differences are expected to reverse.
-7-
<PAGE>
<PAGE>
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 may differ from those estimates.
UNAUDITED INTERIM FINANCIAL INFORMATION - The unaudited interim financial
information as of and for the six-month period ended June 28, 1996, and for
the six-month period ended June 30, 1995 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
six-month period ended June 28, 1996, are not necessarily indicative of the
results to be expected for the entire year.
FAIR VALUE INFORMATION - The estimated fair value of financial instruments
has been determined by the Company using available market information and
other appropriate valuation methodologies. The carrying amounts of current
assets and current liabilities is estimated to equal their fair values due
to the short-term nature of these accounts. The carrying amount of long
term debt also approximates fair value due to the variable rates of
interest on such debt.
CONCENTRATION OF CREDIT RISK - Financial instruments that potentially
subject the Company to concentrations of credit risk consist of cash and
cash equivalents and accounts receivable. The Company's cash and cash
equivalents consist of cash and money market funds invested through a major
bank. Concentration of credit risk with respect to accounts receivable is
limited due to the large number of customers composing the Company's
customer base and their geographical dispersion.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
LIVES DECEMBER 31, JUNE 28,
------------------------------------------------------
1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C>
Equipment 5 $2,215,945 $2,541,445 $2,547,859
Furniture and fixtures 7 764,827 804,062 894,615
Vehicles 5 19,779 19,779 19,779
Leasehold improvements 10 173,769 190,622 190,622
--------- --------- -------
3,174,320 3,555,908 3,652,875
Less accumulated depreciation and
amortization (1,871,692) (2,291,794) (2,502,773)
----------- ---------- ---------
$1,302,628 $1,264,114 $1,150,102
=========== ========== ==========
</TABLE>
-8-
<PAGE>
<PAGE>
3. LEASES
The Company leases its corporate office facility, located in Chatsworth,
California under a five year operating lease which commenced September 1,
1991. On January 1, 1996, the Company and landlord agreed to extend the
initial term until December 1999. At the end of the extended initial term,
there is a five-year renewal option. In addition to the monthly rental
payment, the Company is responsible for its pro rata share of property
taxes, property insurance and common area maintenance expense. In
consideration for entering into this lease, the Company received a rental
concession (three months free rental) a portion of which will be used to
offset future rent expense. The rental concession is classified on the
balance sheet as deferred credit. During 1994, the Company leased an office
located in Palm Springs, California under a two-year operating lease which
commenced September 1, 1994. During 1995, the Company leased an office
located in Fresno, California on a month-to-month basis. Total rental
expense under these leases for the years ending December 31, 1995, 1994 and
1993 were $612,927, $517,677 and $461,755, respectively. The Company leases
certain of its computer equipment under capital leases. These lease
agreements generally provide for a bargain purchase option or transfer of
title to the Company at the end of the lease term. During 1994, the Company
exercised its purchase options under certain such leases. During 1995, the
Company entered into a new capital lease obligation for computer equipment
which expires September 2000. The following is an analysis of leased
property (included in property and equipment) under capital leases:
DECEMBER 31, JUNE 28,
-----------------------------------
1994 1995 1996
(UNAUDITED)
Computer equipment $ 344,966 596,455 $ 596,455
Less accumulated amortization 34,497 128,639 188,284
--------- ------- ---------
$ 310,469 $ 467,816 $408,171
========== ========= =========
Amortization expense from capital leases amounted to $94,142, $34,497 and
$271,325 for 1995, 1994 and 1993, respectively, and is included in
depreciation and amortization expense.
The following is a schedule by year of future minimum lease payments under
capital and operating leases, together with the present value of the net
minimum lease payments for capital leases as of December 31, 1995:
YEAR ENDED CAPITAL OPERATING
DECEMBER 31, LEASES LEASES
1996 $144,309 405,512
1997 144,309 425,796
1998 144,309 425,796
1999 130,670 448,536
2000 46,852
------- ----------
Total minimum lease payments 610,449 $1,705,640
Less interest 97,338 ==========
-------
Present value of future
minimum lease pay ments $513,111
========
-9-
<PAGE>
<PAGE>
4. LINE OF CREDIT
The Company has a line of credit with First Professional Bank in the amount
of $150,000. Advances under this line of credit bear interest at 1 percent
over the bank's prime rate (9.5% at December 31, 1995) and are secured by
accounts receivable, equipment, and an assignment of life insurance on the
president of the Company.
5. LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
---------------------------------
1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C>
Note payable to First Professional Bank,
secured by accounts receivable, equipment,
and guaranteed by the Company's majority
stockholders. The note is to be repaid in
54 monthly installments of $5,000 each
beginning in July 1992. Interest is computed
at 1 percent over the bank's prime interest
rate (9.5% at December 31, 1995) per annum $130,000 $ 70,000
Note payable to NationsBank, secured by various
equipment, bearing interest at 3.65% over
the rate of interest for federal funds (9.51% at
December 31, 1995) per annum. The note is to be
repaid in 60 monthly installments of $2,889 each
beginning July 1994 215,867 171,963 $150,008
Note payable to NationsBank, secured by various
equipment, bearing interest at 3.65% over
the rate of interest for federal funds (9.51% at
December 31, 1995) per annum. The note is to be repaid
in 60 monthly installments of $3,659 each
beginning December 1994 153,132 118,460 101,125
Equipment under capital leases 333,351 513,111 461,613
--------- -------- -------
832,350 873,534 712,746
Less current portion 198,400 244,983 185,000
--------- -------- --------
$ 633,950 $628,551 $527,746
========= ======== ========
The line of credit and notes payable contain certain restrictive covenants. As
of December 31, 1995, the Company was either in compliance with debt covenants
or had obtained waivers for conditions of non-compliance.
</TABLE>
-10-
<PAGE>
<PAGE>
Maturities of long-term debt (including equipment under capital leases) as
of December 31, 1995 for the succeeding five years are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
<S> <C>
1996 $244,983
1997 203,865
1998 203,401
1999 176,210
2000 45,075
---------
$873,534
=========
</TABLE>
6. INCOME TAXES
The provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30, ENDED JUNE 28,
-----------------------------------------------------------------------
1993 1994 1995 1995 1996
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
Federal $ 282,187 $ 240,698 $ 22,969 $ 14,952 $ 145,570
State 52,132 42,135 6,335 3,150 25,688
Deferred:
Federal (9,621) (44,773) (10,798) -
State (1,698) (7,560) (1,906) -
--------- --------- --------- --------- ---------
Total $ 323,000 $ 230,500 $ 16,600 $ 18,102 $ 171,258
========= ========= ========= ========= =========
</TABLE>
-11-
<PAGE>
<PAGE>
Deferred tax assets and liabilities were primarily comprised of:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
-------------------------------------
1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C>
Deferred Income Tax Assets
Accrued vacation $ 102,726 $ 97,051 $ 97,051
Unbilled expenses
164,242 172,714 172,714
-------- ------- --------
266,968 $269,765 $269,765
-------- -------- --------
Deferred Income Tax Liabilities
Unbilled receivables (809,554) (925,717) (925,717)
Depreciation (138,956) ( 79,225) (79,225)
Cash to accrual conversion (66,339) - -
----------- ---------- ----------
(1,014,849) (1,004,942) (1,004,942)
----------- ----------- ----------
Net Deferred Income Tax Asset (Liability) $ (747,881) $ (735,177) $(735,177)
=========== =========== ==========
</TABLE>
A reconciliation between the income taxes computed at the Federal statutory
rate and the provision for income taxes is as follows:
<TABLE>
<CAPTI
SIX MONTHS SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30, ENDED JUNE 28,
--------------------------- ------------- --------------
1993 1994 1995 1995 1996
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Statutory Federal
income tax rate 34% 34% 34% 34% 34%
State income taxes, net
of net of Federal
income benefits 6 6 6 6 6
-- -- -- -- --
Total 40% 40% 40% 40% 40%
== == == == ==
</TABLE>
7. SALE OF NET ASSETS
On June 28, 1996, the Company consummated a transaction whereby a wholly
owned subsidiary of Physician Support Systems, Inc. ("PSS") merged into
the Company. In exchange for all of the assets and liabilities of the
Company, the shareholders of the Company received 945,000 shares of PSS
common stock.
-12-
<PAGE>
<PAGE>
(B) PRO FORMA FINANCIAL INFORMATION.
The following unaudited pro forma financial information gives effect to the
merger by Physician Support Systems, Inc. ('PSS') with Synergistic Systems, Inc.
('SSI') which was completed on June 28, 1996. The SSI transaction was accounted
for as a pooling of interests and accordingly, all previously issued financial
statements of PSS will be restated to include SSI. The unaudited pro forma
financial information also gives effect to the acquisitions by PSS of North
Coast Health Care Management Group ('NCHCM'), Medical Management Support, Inc.
('MMS') and Data Processing Systems, Inc. ('DPS') on February 12, 1996, PBS
Northwest, Inc. ('PBS') on May 8, 1996 and ALM, Inc. ('ALM') on May 21, 1996
(together the 'Acquired Businesses'), all of which were accounted for as
purchases. The unaudited pro forma financial statements are derived from
the historical financial statements of PSS, SSI and the Acquired Businesses
including those of PBS and ALM included in PSS' reports on Form 8-K dated
May 14, 1996, and June 4, 1996, respectively, in each case as amended by
Amendment No. 1 thereto, which are incorporated herein by reference, and
estimates and assumptions set forth below and in the notes to the unaudited
pro forma financial statements.
The unaudited pro forma statements of operations present unaudited pro
forma results of operations for the years ended December 31, 1993, 1994 and 1995
and the six months ended June 30, 1996. For purposes of the unaudited pro forma
statements of operations, the acquisitions by PSS of the Acquired Businesses are
included as if such acquisitions had occurred on January 1, 1995. In addition,
the unaudited pro forma statements of operations for the year ended December 31,
1995 and the six months ended June 30, 1996 include pro forma adjustments
related to the Company's initial public offering of Common Stock which was
completed on February 12, 1996. The unaudited pro forma statements of operations
for the years ended December 31, 1993 and 1994 are derived from the audited
Consolidated Statements of operations for the years ended December 31, 1993 and
1994 included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, which is incorporated herein by reference and the audited
statements of operations of SSI. 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, for the year ended
December 31, 1995 and the audited and unaudited statements of operations of the
Acquired Businesses and SSI for the year ended December 31, 1995. The unaudited
pro forma statement of operations for the six months ended June 30, 1996 is
derived from the unaudited consolidated statement of operations of PSS for the
six months ended June 30, 1996 included in its Quarterly Report on Form 10-Q
for the six months ended June 30, 1996 (excluding merger costs of $1,150,000
and restructuring charge of $900,000 related to SSI) (which includes the results
of operations of the Acquired Businesses from the effective dates of their
acquisitions by PSS to June 30, 1996) which is incorporated herein by reference
and the unaudited statements of operations of the Acquired Businesses and SSI
from January 1, 1996 to the effective dates of their acquisitions.
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 Report.
13
<PAGE>
<PAGE>
PHYSICIAN SUPPORT SYSTEMS, INC.
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
-----------------
PHYSICIAN
SUPPORT
SYSTEMS
AND
SUBSIDIARY SSI PRO FORMA
---------- --- ---------
<S> <C> <C> <C>
Revenues.......................... $ 13,080 $9,477 $22,557
Operating Expenses:
Wages and salaries............ 5,898 4,980 10,878
General and administrative 4,291 3,246 7,537
Depreciation and
amortization................ 2,566 416 2,982
---------- ------ --------
12,755 8,642 21,397
---------- ------ --------
Income (loss) from operations 325 835 1,160
Other income (expense)
Interest...................... (1,262) (78) (1,340)
Interest and other income
(expense)................... (38) 53 15
---------- ------ --------
(1,300) (25) (1,325)
---------- ------ --------
Income (loss) before income taxes
(benefit)....................... (975) 810 (165)
Income taxes (benefit)............ (303) 323 20
---------- ------ --------
Net income (loss)................. $ (672) $487 $(185)
---------- ------ --------
---------- ------ --------
Weighted average shares
outstanding..................... 3,185,000(f)
---------
---------
Net income (loss) per share....... (.06)
-----
-----
</TABLE>
See notes to pro forma financial statements.
14
<PAGE>
<PAGE>
PHYSICIAN SUPPORT SYSTEMS, INC.
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
-----------------
PHYSICIAN
SUPPORT
SYSTEMS
AND
SUBSIDIARY SSI PRO FORMA
---------- --- ---------
<S> <C> <C> <C>
Revenues.......................... $ 18,773 $9,588 $28,361
Operating Expenses:
Wages and salaries............ 8,866 5,182 14,048
General and administrative 6,723 3,417 10,140
Depreciation and
amortization................ 3,349 417 3,766
---------- ------- --------
18,938 9,016 27,954
---------- ------- --------
Income (loss) from operations (165) 572 407
Other income (expense)
Interest...................... (1,526) (33) (1,559)
Interest and other income
(expense)................... (186) 33 (153)
---------- ------- --------
(1,712) - (1,712)
---------- ------- --------
Income (loss) before income taxes
(benefit)....................... (1,877) 572 (1,305)
Income taxes (benefit)............ (810) 231 (579)
---------- ------- --------
Net income (loss)................. $(1,067) $ 341 (726)
---------- ------- --------
---------- ------- --------
Weighted average shares
outstanding..................... 3,185,000(f)
---------
---------
Net income (loss) per share....... (.23)
-----
-----
</TABLE>
See notes to pro forma financial statements.
15
<PAGE>
<PAGE>
PHYSICIAN SUPPORT SYSTEMS, INC.
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------- PRO FORMA
PHYSICIAN ACQUISITION
SUPPORT ADJUSTMENTS
SYSTEMS ----------- PRO FORMA
AND ACQUIRED ACQUIRED OFFERING
SUBSIDIARY SSI BUSINESSES BUSINESSES ADJUSTMENTS PRO FORMA
---------- --- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues.......................... $ 19,584 $9,831 $12,795 $ 42,210
Operating Expenses:
Wages and salaries............ 9,661 5,590 5,855 $ (100)(a) 21,006
General and administrative 6,846 3,742 3,690 14,278
Depreciation and
amortization................ 3,378 420 247 854(b) 4,900
---------- ------ --------- --------
19,885 9,752 9,792 40,184
---------- ------ --------- --------
Income (loss) from operations (301) 79 3,003 2,026
Other income (expense)
Interest...................... (1,476) (59) (2) $ 2,166(c) 633
Other......................... 4 22 (37) (15)
---------- ------ --------- --------
(1,472) (37) (39) 618
---------- ------ --------- --------
Income (loss) before income taxes
(benefit)....................... (1,773) 42 2,964 2,644
Income taxes (benefit)............ (500) 17 149 735(d) 866(d) 1,267
---------- ------ --------- --------
Net income (loss)................. $ (1,273) 25 $ 2,815 $ 1,377
---------- ------ --------- --------
---------- ------ --------- --------
Weighted average shares
outstanding..................... 7,221,628(e)
---------
---------
Net income (loss) per share....... $0.19
-----
-----
</TABLE>
See notes to pro forma financial statements.
16
<PAGE>
<PAGE>
PHYSICIAN SUPPORT SYSTEMS, INC.
PRO FORMA STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
------------------------------- PRO FORMA
PHYSICIAN ACQUISITION
SUPPORT ADJUSTMENTS
SYSTEMS ----------- PRO FORMA
AND ACQUIRED ACQUIRED OFFERING
SUBSIDIARIES SSI BUSINESSES BUSINESS ADJUSTMENTS PRO FORMA
------------ --- ---------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues..................................... $13,979 $5,410 $2,104 $21,493
Operating Expenses:
Wages and salaries....................... 7,317 2,910 1,082 11,309
General and administrative............... 4,851 1,664 599 7,114
Depreciation and amortization............ 1,878 211 29 150(b) 2,268
Spring restructuring charge.............. 1,600 -- -- 1,600
---------- ------ ----- ------
15,646 4,785 1,710 22,291
---------- ------ ----- ------
Income (loss) from operations................ (1,667) 625 394 (798)
Other income (expense)
Interest................................. 88 (25) (1) 53(c) 115
Other.................................... -- 9 7 16
---------- ------ ----- ------
88 (16) 6 131
---------- ------ ----- ------
Income (loss) before income taxes
(benefit).................................. (1,579) 609 400 (667)
Income taxes (benefit)....................... (309) -- -- 100(d) 35(d) (174)
---------- ------ ----- ------
Net income (loss)............................ $(1,270) 609 400 $ (493)
---------- ------ ----- --------
---------- ------ ----- --------
Weighted average shares outstanding.......... 7,221,628(e)
---------
---------
Net income (loss) per share.................. $ (0.01)
-------
-------
</TABLE>
See notes to pro forma financial statements.
17
<PAGE>
<PAGE>
1. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS
(a) 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.
(b) 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.
(c) 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.
(d) Adjustment to reflect the income tax effects of the acquisitions.
(e) The weighted average shares outstanding used to calculate pro forma
earnings per share in 1995 is 7,221,628 shares, representing the number of
shares issued and outstanding as a result of the Company's initial public
offering, the acquisition of ALM and the merger with SSI.
(f) The weighted average shares outstanding used to calculate pro forma
earnings per share in 1993 and 1994 is 3,185,000 shares, representing the number
of shares issued and outstanding as a result of the Company's merger with SSI.
(C) EXHIBITS.
<TABLE>
<S> <C>
99.1 -- Physician Support Systems, Inc., Form 10-K (File 33-80731) for the year ended December 31, 1995 previously
filed and incorporated herein by reference.
99.2 -- Physician Support Systems, Inc., Form 10-Q (File 33-80731) for the quarter ended June 30, 1996 previously
filed and incorporated herein by reference.
99.3 -- Physician Support Systems, Inc. Form 8-K (File 33-80731) dated May 14, 1996 as amended by Amendment No. 1
thereto dated July 15, 1996, previously filed and incorporated herein by reference.
99.4 -- Physician Support Systems, Inc. Form 8-K (File 33-80731) dated June 4, 1996, as amended by Amendment No. 1
thereto dated August 2, 1996, previously filed and incorporated herein by reference.
</TABLE>
18
<PAGE>
<PAGE>
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: September 6, 1996.
/S/ DAVID S. GELLER
By ..................................
DAVID S. GELLER
SENIOR VICE PRESIDENT
