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Previous: FIDELITY NEW YORK MUNICIPAL TRUST II, DEFA14A, 1997-03-14 |
Next: MORGAN STANLEY EMERGING MARKETS FUND INC, PRE 14A, 1997-03-14 |
<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) December 31, 1996
----------------------------
Physician Support Systems, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-80731 13-3624081
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Route 230 and Eby-Chiques Road, Mt. Joy, PA 17552
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (717) 653-5340
----------------------------
not applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
-1-
<PAGE>
Physician Support Systems, Inc., a Delaware Corporation ("PSS"), hereby
amends its Current Report on Form 8-K dated January 8, 1997 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 Revenue
Production Management, Inc. ("RPM") as of December 31, 1995 and for the year
then ended. These financial statements have been audited by Deloitte &
Touche LLP, independent auditors. Also set forth below are the unaudited
financial statements of RPM as of September 30, 1996 and for the nine months
ended September 30, 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 nine months ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the entire year.
-2-
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Revenue Production Management, Inc.
We have audited the accompanying balance sheet of Revenue Production
Management, Inc.. (the "Company") as of December 31, 1995, and the related
statements of income, stockholders' equity, and cash flows for year 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 audit.
We conducted our audit 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 audit provides 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 the
results of its operations and its cash flows for the year then ended, in
conformity with generally accepted accounting principles.
As discussed in Note 10, the Company consummated a merger transaction on
December 31, 1996.
-3-
Deloitte & Touche LLP
February 1, 1997
New York, New York
<PAGE>
<TABLE>
<CAPTION>
REVENUE PRODUCTION MANAGEMENT, INC.
BALANCE SHEETS
DECEMBER 31, 1995 AND SEPTEMBER 30, 1996 (UNAUDITED)
- -------------------------------------------------------------------------------
December 31, September 30,
1995 1996
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 26,335 $ 323,857
Accounts receivable - net 994,283 1,192,433
Other assets 14,334 23,264
Prepaid expenses 26,205 51,697
---------- ----------
Total current assets 1,061,157 1,591,251
PROPERTY AND EQUIPMENT - Net 331,568 415,200
OTHER ASSETS - 30,154
---------- ----------
TOTAL $1,392,725 $2,036,605
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 77,920 $ 158,382
Accrued expenses 200,628 211,080
Notes payable - stockholders - 272,000
Short term debt 146,365 315,000
---------- ----------
Total current liabilities 424,913 956,462
---------- ----------
STOCKHOLDERS' EQUITY 967,812 1,080,143
---------- ----------
TOTAL $1,392,725 $2,036,605
========== ==========
</TABLE>
See notes to financial statements
-4-
<PAGE>
REVENUE PRODUCTION MANAGEMENT, INC.
STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND 1996 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
December 31, Nine Months Ended
1995 1995 1996
(Unaudited)
<S> <C> <C> <C>
REVENUES $ 6,471,205 $ 4,824,027 $ 5,487,207
SALARY AND WAGE EXPENSE 3,385,205 2,474,712 2,897,755
ADMINISTRATIVE EXPENSES 2,478,493 1,736,076 1,988,567
DEPRECIATION EXPENSE 122,622 71,170 105,460
------------ -------------- --------------
INCOME FROM OPERATIONS 484,885 542,069 495,425
OTHER INCOME (EXPENSE):
Other expense (28,924) (26,324) (16,982)
------------ -------------- --------------
NET INCOME $ 455,961 $ 515,745 $ 478,443
============ ============== ==============
</TABLE>
See notes to financial statements.
-5-
<PAGE>
REVENUE PRODUCTION MANAGEMENT, INC.
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1995 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total
Common Stock Retained Shareholders'
Shares Amount Earnings Equity
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 1,000 $ 1,000 $ 622,629 $ 623,629
Net income - - 455,961 455,961
Distributions to stockholders - - (111,778) (111,778)
------ ------- --------- ----------
BALANCE, DECEMBER 31, 1995 1,000 1,000 966,812 967,812
Net income (unaudited) - - 478,443 478,443
Distributions to stockholders (unaudited) - - (366,112) (366,112)
------ ------- --------- ---------
BALANCE, SEPTEMBER 30, 1996
(UNAUDITED) 1,000 $ 1,000 $1,079,143 $1,080,143
====== ======= ========== ==========
</TABLE>
-6-
<PAGE>
REVENUE PRODUCTION MANAGEMENT, INC.
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND
1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
December 31, Nine Months Ended
1995 1995 1996
(Unaudited)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 455,961 $ 515,745 $ 478,443
-------------- -------------- --------------
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation 122,622 71,170 105,460
Loss on disposal of property and equipment 992 - -
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable (90,377) (104,647) (198,149)
Decrease (increase) in prepaid expenses 21,118 40,163 (34,423)
(Increase) decrease in other assets - (25,000) (30,154)
Increase in accounts payable 72,915 70,647 80,461
Increase in accrued expenses 73,869 78,330 10,452
-------------- -------------- --------------
Total adjustments 201,139 130,663 (66,351)
-------------- -------------- --------------
Net cash provided by operating activities 657,100 646,408 412,090
-------------- -------------- --------------
INVESTING ACTIVITIES:
Acquisition of property and equipment (247,291) (115,636) (189,091)
Proceeds from disposal of property and equipment 4,398 - -
-------------- -------------- --------------
Net cash used in investing activities (242,893) (115,636) (189,091)
-------------- -------------- --------------
FINANCING ACTIVITIES:
(Repayment) proceeds from borrowings (148,823) (105,965) 168,635
(Repayment) proceeds of stockholders debt (166,500) (166,500) 272,000
Distributions paid to stockholders (111,777) - (366,112)
-------------- -------------- --------------
Net cash (used in) provided by financing activities (427,100) (272,465) 74,523
-------------- -------------- --------------
NET (DECREASE) INCREASE IN CASH (12,893) 258,307 297,522
CASH, BEGINNING OF PERIOD 39,228 39,228 26,335
-------------- -------------- --------------
CASH, END OF PERIOD $ 26,335 $ 297,535 $ 323,857
============== ============== ==============
SUPPLEMENTAL DISCLOSURE:
Interest paid $ 23,922 $ 10,059 $ 16,090
============== ============== ==============
</TABLE>
See notes to financial statements
-7-
<PAGE>
REVENUE PRODUCTION MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND
1996 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Revenue Production Management, Inc. (the "Company") is an Illinois
Corporation with operations primarily in Illinois and Missouri. The
Company specializes in accounts receivable management including primarily
hospital billings and collections, Medicaid and Charity Care
qualification and eligibility, and self-pay processing.
Also included herein are the results of the hospital billing and
collection operations of Grabowski & Clutts ("G&C"), a law firm with an
identical ownership structure as the Company. G&C was named in a Class
Action Law Suit for alleged violations of the Fair Debt Collection
Practices Act and as part of the 1996 settlement of this case, G&C agreed
to cease collection activities in the manner alleged by the plaintiffs to
violate the Fair Debt Collection Practices Act. Because of the common
ownership, for purposes of these financial statements only, the Company
has done an "as-if" pooling with G&C that shows all results of operations
of the hospital billing and collection business for all periods shown.
These financial statements exclude the results of operations of the law
firm activities of G&C (see Note 4) .
2. SIGNIFICANT ACCOUNTING POLICIES
Property and Equipment - Property and equipment are stated at cost.
Expenditures for maintenance, repairs, renovations and betterments, which
do not materially extend the useful life of the asset, are expensed as
incurred. Depreciation is computed using the straight-line method over
the estimated useful-lives of the assets which range from five to seven
years. Amortization is provided on leasehold improvements on a
straight-line basis over the term of the lease.
Revenue Recognition - The Company recognizes revenue based upon a fee
calculated as a percentage of collections in the period hospital
collections are made.
Income Taxes - The Company has elected to be treated as an S Corporation
for federal income tax purposes and, therefore, the taxable income of the
Company is taxed directly to the individual stockholders in proportion to
their ownership interests. Accordingly, no provision for income taxes has
been made in the accompanying financial statements.
Management Estimates - 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 disclosure 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. The Company records both
revenue and accounts receivable allowances based on management's estimate
of the net realizable value of accounts receivable.
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 are estimated to equal
their fair value 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.
-8-
<PAGE>
3. PROPERTY AND EQUIPMENT
Property and equipment consists of:
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
(Unaudited)
<S> <C> <C>
Furniture and fixtures $109,020 $120,246
Office equipment 210,453 252,985
Leasehold improvements 92,911 142,500
Software 211,106 297,870
Other 35,677 34,658
-------- --------
659,167 848,259
Accumulated depreciation 327,599 433,059
-------- --------
$331,568 $415,200
======== ========
</TABLE>
4. RELATED PARTY
G & C provides the Company with legal services relating to collections on
behalf of customers. For the purpose of the "as-if" pooling presented in
these financial statements, the value of legal services provided by G & C
to the Company was $666,852 for the year ended December 31, 1995 and
$500,139 in each of the nine-month periods ended September 30, 1995 and
1996, (unaudited).
5. SHORT-TERM DEBT
Short-term debt consists of the following:
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
(unaudited)
<S> <C> <C>
Installment loan $ 11,365 $ -
Line of credit 135,000 315,000
-------- --------
$146,375 $315,000
======== ========
</TABLE>
The installment loan, is payable in monthly installments, bearing
interest at 10.44%, and is due March, 1996.
At December 31, 1995, the Company had a $400,000 line of credit agreement
which bore interest at prime (8.50% at December 31, 1995).
6. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to credit risk
consist principally of receivables. The Company believes the
concentration of credit risk in its accounts receivables is substantially
mitigated by the Company's ongoing credit evaluation process and the
large number of customers comprising the Company's customer base. The
Company does not generally require collateral from customers. The Company
evaluates the need for an allowance for doubtful accounts based upon
factors surrounding the credit risk of specific customers, historical
trends and other information.
-9-
<PAGE>
7. COMMITMENTS AND CONTINGENCIES
a. Operating Leases - The Company occupies office space in various
locations under noncancellable operating leases which expire in
various years through 2002.
Future minimum payments under noncancellable operating leases by
year and in the aggregate are as follows:
<TABLE>
<CAPTION>
Amount
<S> <C>
1996 $ 286,183
1997 227,533
1998 218,170
1999 218,170
2000 218,170
Thereafter 363,617
----------
$1,531,843
==========
</TABLE>
Rent expense was $184,670 for the year ended December 31, 1995 and
$143,894 and $134,865 for the nine-month periods ended September
30, 1996 and 1995, respectively.
b. Legal Matters - The Company is involved in legal matters arising
in the ordinary course of business. In the opinion of management
and legal counsel, the ultimate liability, if any, resulting from
such matters will not have a material effect on the Company's
financial condition or results of operations.
8. SUBSEQUENT EVENT
On December 31, 1996, the Company consummated a transaction whereby the
Company was merged into Physician Support Systems, Inc. ("PSS").
In exchange for all of the outstanding common stock of the Company, its
stockholders received 315,048 shares of PSS common stock.
******
-10-
<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 Revenue Production
Management, Inc. ("RPM") which was completed on December 31, 1996. This
transaction was accounted for as a pooling of interests. 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, ALM, Inc. ("ALM") on May 21, 1996, and
the MIS Group ("MIS") on September 3, 1996, (together, the "Acquired
Businesses"), and the acquisition by PSS of each of (i) C-Care, Inc., (ii)
H.O.P.E. Enterprises Group, Inc. and (iii) Professional Medical Recovery
Services, Inc. (combined, "MARS") on December 16, 1996, all of which were
accounted for as purchases, and the acquisitions by PSS of Synergistic Systems,
Inc. ("SSI") on June 28, 1996, and EE&C Financial Services, Inc. ("EEC") on
August 31, 1996, which were accounted for as poolings of interests. The
unaudited pro forma financial statements are derived from the historical
financial statements of PSS, RPM the Acquired Businesses MARS, SSI and EEC
including those of PBS, ALM, SSI, EEC, MIS and MARS included in PSS' current
reports on Form 8-K dated May 14, 1996, June 4, 1996, July 8, 1996, September
13, 1996, September 16, 1996, and December 30,1996 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 balance sheet gives effect to the acquisition by
PSS of RPM as if such acquisition had occurred on September 30, 1996. Such
unaudited pro forma balance sheet is derived from the unaudited consolidated
balance sheet of PSS as of September 30, 1996 included in its Quarterly Report
on Form 10-Q for the nine months ended September 30, 1996 which is incorporated
herein by reference, the unaudited balance sheet of RPM as of September 30, 1996
included elsewhere in this Form 8-K as well as the unaudited combined balance
sheet of MARS as of September 30, 1996 included in PSS' Current Report on Form
8-K dated December 30, 1996 as amended by Amendment No. 1 thereto.
The unaudited pro forma statements of operations present unaudited pro
forma results of operations for the year ended December 31, 1995 and the nine
months ended September 30, 1996. For purposes of the unaudited pro forma
statements of operations, the acquisitions by PSS of the Acquired Businesses and
MARS 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 nine months ended September 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 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 SSI, EEC, the
Acquired Businesses, MARS and RPM (included elsewhere in this Form 8-K) for the
year ended December 31, 1995. The unaudited pro forma statement of operations
for the nine months ended September 30, 1996 is derived from the unaudited
consolidated statement of operations of PSS for the nine months ended September
30, 1996 included in its Quarterly Report on Form 10-Q for the nine months ended
September 30, 1996 (which includes the results of operations of SSI and EEC for
the nine months then ended and which also includes the results of operations of
the Acquired Businesses from the effective dates of their acquisitions by PSS to
September 30, 1996) which is incorporated herein by reference, the unaudited
combined statement of operations of MARS for the nine months ended September 30,
1996, and the unaudited statement of operations of RPM for the nine months ended
September 30, 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 Report.
-11-
<PAGE>
Physician Support Systems, Inc.
Pro Forma Balance Sheet
September 30, 1996
(Unaudited)
($000s)
<TABLE>
<CAPTION>
Physician Support
Systems and
ASSETS Subsidiaries MARS Group RPM Group
----------------- ---------- ---------
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 4,997 $ 876 $ 324
Accounts receivable 13,359 1,904 1,192
Accounts receivable - unbilled 11,203 23
Prepaid expenses and other current assets 1,900 -- 52
---------- -------- --------
Total Current Assets 31,459 2,780 1,591
Property and equipment 7,708 283 415
Intangible assets - net 43,740
Due from related parties 572
Other assets 1,764 223 30
---------- -------- --------
$ 85,243 $ 3,286 $ 2,037
========== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable 2,252 62 $ 158
Accrued expenses 14,844 211
Short Term Debt / Notes Payable 587
Current portion long-term debt 2,500 142
Current portion of other long-term liabilities 901
----------
Deferred income taxes 2,634 -- --
---------- -------- --------
Total Current Liabilities 23,132 204 956
Long-term debt 8,134 280 --
Other long-term liabilities 3,213 7 --
Deferred income taxes 1,401
Stockholders' equity
Preferred stock
Common stock 9 8 1
Common stock
Additional paid-in-capital 53,088
----------
Retained earnings (accumulated deficit) (3,734) 2,787 1,079
---------- -------- --------
$ 85,243 $ 3,286 $ 2,036
========== ======== ========
<CAPTION>
MARS Pro Forma RPM Pro Forma
ASSETS Adjustments Adjustments Pro Forma
-------------- ----------- ---------
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 6,197
Accounts receivable 16,455
Accounts receivable - unbilled 11,227
Prepaid expenses and other current assets 1,951
-----------
Total Current Assets - 35,830
Property and equipment 8,406
Intangible assets - net 8,906 (a) 52,646
Due from related parties 572
Other assets 2,018
-----------
$ 99,472
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 2,472
Accrued expenses 800 (a) 15,855
Short Term Debt / Notes Payable 587
Current portion long-term debt 2,642
Current portion of other long-term liabilities 901
Deferred income taxes 500 (a) 3,134
----------- -----------
Total Current Liabilities 1,300 25,592
Long-term debt 7,617 (a) 16,031
Other long-term liabilities - 3,220
Deferred income taxes 1,401
Stockholders' equity
Preferred stock
Common stock (8)(a) (1)(b) 9
Common stock 1 (a)
Additional paid-in-capital 2,784 (a) 1 (b) 55,874
-----------
Retained earnings (accumulated deficit) (2,787)(a) (2,655)
-----------
$ 99,472
===========
</TABLE>
-12-
<PAGE>
Physician Support Systems
Pro Forma Statement of Operations
Year Ended December 31, 1995
(Unaudited)
($000s)
<TABLE>
<CAPTION>
Physician
Support
Systems, Inc. and Acquired MARS
Subsidiary EE&C SSI Businesses Group RPM
----------------- --------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 19,584 $ 23,620 $ 9,831 $ 18,559 $ 7,354 $ 6,471
Operating Expenses:
Wages and salaries 9,661 16,466 5,590 10,050 4,454 3,385
General and administrative 6,846 6,297 3,742 7,117 3,703 2,478
Depreciation and amortization 3,378 543 420 535 237 123
--------------- -------- -------- ----------- --------- ---------
19,885 23,306 9,752 17,702 8,395 5,986
--------------- -------- -------- ----------- --------- ---------
Income (loss) from operations (301) 314 79 857 (1,041) 485
--------------- -------- -------- ----------- --------- ---------
Other Income (expense)
Interest (1,476) (261) (59) (387) (16) -
Interest and other income (expense) 4 (3) 22 (47) - (29)
--------------- -------- -------- ----------- --------- ---------
(1,472) (264) (37) (433) (16) (29)
Income (loss) before income taxes (benefit) (1,773) 50 42 424 (1,057) 456
Income taxes (benefit) (500) (4) 17 149 11 -
--------------- -------- -------- ----------- --------- ---------
Net Income (loss) $ (1,273) $ 54 $ 25 $ 274 $ (1,068) $ 456
=============== ======== ======== =========== ========= =========
Weighted average shares outstanding
Net Income (loss) per share
<CAPTION>
Pro Forma
Adjustments Pro Forma Pro Forma Pro forma
Acquired Adjustments Adjustments Offering
Businesses MARS Group RPM Adjustments Pro Forma
---------- -------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ - $ - $ 85,420
Operating Expenses:
Wages and salaries (100) (c) - 49,506
General and administrative - - 30,184
Depreciation and amortization 1,628 (d) 455 (d) 7,320
---------- -------------- -----------
1,528 455 87,010
---------- -------------- -----------
Income (loss) from operations (1,528) (455) (1,590)
---------- -------------- -----------
Other Income (expense)
Interest 224 (e) (498) (f) 1,356 (f) (1,117)
Interest and other income (expense) - - (53)
---------- -------------- -----------
224 (498) (1,169)
Income (loss) before income taxes (benefit) (1,304) (953) (2,760)
Income taxes (benefit) (482) (815) (h) 182 (h) 542 (h) (899)
---------- -------------- -----------
Net Income (loss) $ (822) $ (138) $ (1,861)
========== ============== ===========
Weighted average shares outstanding 9,156,101 (i)
===========
Net Income (loss) per share $ (0.20)
===========
</TABLE>
-13-
<PAGE>
Physician Support Systems
Pro Forma Statement of Operations
Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Pro Forma
Physican Support Pro Forma Adjustments
Systems, Inc. and Acquired Acquired
Subsidiaries Businesses MARS Group RPM Businesses
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues $ 48,557 $ 9,419 $ 6,592 $ 5,487
Operating Expenses:
Wages and Salaries 25,085 5,438 3,640 2,898
General and Administrative 17,822 3,456 1,927 1,989
Depreciation and Amortization 3,791 234 102 105 735 (d)
Interest Expense and other, net 131 235 16 - (149) (e)
Other 123 (7) 17
Merger Costs 2,350
Restructuring Charge 2,500 - - -
-------------- -------------- -------------- --------------
Income (loss) before income taxes (benefit) (3,244) 63 907 478
Income taxes (benefit) (5) - 3 - (209) (h)
-------------- -------------- -------------- --------------
Net Income (loss) $ (3,239) $ 63 $ 905 $ 478
============== ============== ============== ==============
Weighted average shares outstanding
Net Income (loss) per share
<CAPTION>
Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Offering
MARS Group RPM Adjustments Pro Forma
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues $ 70,056
Operating Expenses:
Wages and Salaries 37,060
General and Administrative 25,193
Depreciation and Amortization 341 (d) 5,309
Interest Expense and other, net 374 (f) (103) (g) 504
Other 133
Merger Costs 2,350
Restructuring Charge 2,500
--------------
Income (loss) before income taxes (benefit) (2,994)
Income taxes (benefit) 74 (h) 191 (h) 41 (h) 95
--------------
Net Income (loss) $ (3,089)
==============
Weighted average shares outstanding 9,156,101 (i)
==============
Net Income (loss) per share $ (0.34)
==============
</TABLE>
-14-
<PAGE>
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 the MARS Group by
PSS. The purchase price of $10,402,000 (including $7,117,000 of cash and 175,439
shares of common stock valued at $2,785,000 and including transaction fees of
approximately $500,000) is allocated as follows:
<TABLE>
<CAPTION>
($000S)
-------
<S> <C>
Current assets...................................... $ 2,780
Fixed and other assets.............................. 506
Goodwill............................................ 8,906
Current liabilities................................. (1,504)
Long-term liabilities............................... (287)
-------
Total purchase price........................ $10,402
=======
</TABLE>
Goodwill is being amortized over 20 years. The adjustment to accrued expenses
includes estimated costs of exiting certain redundant facilities and activities.
(b) Adjustment to reclassify common stock of RPM to additional paid-in
capital.
2. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS
(c) 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.
(d) 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.
(e) Adjustment to decrease interest expense at EEC as a result of
repayment of demand notes with PSS stock.
(f) Adjustment to reflect increase in interest expense as a result of
MARS acquisition.
(g) Adjustment to reflect the decrease in interest expense associated
with the repayment of long-term debt as a result of the offering.
(h) Adjustment to reflect the income tax effects of the acquisitions or
adjustments shown herein.
(i) The weighted average shares outstanding used to calculate pro forma
earnings per share is 9,156,101 shares, representing the number of
shares issued and outstanding as a result of the Company's initial public
offering, the acquisition of ALM, the merger with SSI, the merger with EEC,
the acquisition of MIS and the acquisition of The MARS Group.
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<PAGE>
(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 September 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.
99.5 -- Physician Support Systems, Inc. Form 8-K (File 33-80731) dated July
8, 1996, as amended by Amendment No. 1 thereto dated September 6,
1996, previously filed and incorporated herein by reference.
99.6 -- Physician Support Systems, Inc. Form 8-K (File 33-80731) dated
September 13, 1996, as amended by Amendment No. 1 thereto dated
November 12, 1996, previously filed and incorporated herein by
reference.
99.7 -- Physician Support Systems, Inc. Form 8-K (File 33-80731) dated
September 16, 1996, as amended by Amendment No. 1 thereto dated
November 15, 1996, previously filed and incorporated herein by
reference.
99.8 -- Physician Support Systems, Inc. Form 8-K (File 33-80731) dated
December 30, 1996, as amended by Amendment No. 1 thereto dated
February 28, 1997, previously filed and incorporated herein by
reference.
</TABLE>
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<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.
Date: March 14, 1997. By: /s/ David S. Geller
--------------------------------
David S. Geller
Senior Vice President and Chief
Financial Officer
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