SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
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 31, 1996
MEDIC COMPUTER SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
North Carolina
(State or other jurisdiction of incorporation)
0-20183 56-1306083
(Commission file Number) (IRS Employer ID Number)
8601 Six Forks Road, Raleigh, North Carolina 27615
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 919/ 847-8102
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired. As required by Item
7 of Form 8-K promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Exchange
Act of 1934, as amended (the "Act"), the following financial
statements of the business acquired are filed with this report:
<TABLE>
<CAPTION>
Page
Number
<S> <C>
Report of Independent Public Accountants.............................................F-2
Combined Balance Sheet as of December 31,
1995.................................................................................F-3
Combined Statement of Income for the
Year Ended December 31, 1995.........................................................F-4
Combined Statement of Changes in
Shareholders' Equity for the Year Ended
December 31, 1995....................................................................F-5
Combined Statement of Cash Flows for the
Year Ended December 31, 1995.........................................................F-6
Notes to Combined Financial Statements...............................................F-7
(b) Pro Forma Financial Information. As required by Item 7
of Form 8-K promulgated by the Commission under the
Act, the following pro forma financial information is
filed with this report:
Page
Number
CompuSystems, Inc. Unaudited Combined
Balance Sheet as of March 31, 1996..................................................F-12
CompuSystems, Inc. Unaudited Combined
Statement of Operations for the Period
Ended March 31, 1996................................................................F-13
Medic Computer Systems, Inc. Unaudited
Pro Forma Consolidated Balance Sheets
as of June 30, 1996 and December 31, 1995 ..........................................F-15
Medic Computer Systems, Inc. Unaudited Pro
Forma Consolidated Statements of Operations
For the Years Ended December 31, 1995
and 1994............................................................................F-16
2
<PAGE>
Page
Number
Medic Computer Systems, Inc. Unaudited Pro
Forma Consolidated Statements of Operations
For the Six Months Ended June 30, 1996 and
1995................................................................................F-17
</TABLE>
(c) Exhibits.
2.6* Agreement of Merger dated as of May 31, 1996, by and
among the Registrant, CompuSystems Acquisition
Corporation, CompuSystems, Inc., Nexsen B. Johnson,
Eugene F. Gallogly and Sylvia Johnson.
3.5, 4.6* Articles of Merger of CompuSystems Acquisition
Corporation into CompuSystems, Inc.
23.1.1 Consent of Arthur Andersen LLP
- -------------------
*Previously filed.
3
<PAGE>
CompuSystems, Inc.
Combined Financial Statements as of December 31, 1995
Together with Report of Independent Public Accountants
F-1
<PAGE>
Report of Independent Public Accountants
To the Stockholders of CompuSystems, Inc.:
We have audited the accompanying combined balance sheet of
CompuSystems, Inc. (Note 1) (a South Carolina corporation) as of
December 31, 1995, and the related combined statements of income,
changes in stockholders' equity and cash flows for the year 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
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, the combined financial statements referred to above
present fairly, in all material respects, the financial position of
CompuSystems, Inc. (Note 1) as of December 31, 1995, and the
results of its operations and its cash flows for the year ended
December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Columbia, South Carolina,
July 29, 1996.
F-2
<PAGE>
CompuSystems, Inc. (Note 1)
Combined Balance Sheet December 31, 1995
Assets
Current assets:
Cash and cash equivalents $1,474,493
Accounts receivable, net 1,540,891
Inventories 1,162,685
Prepaid expenses and other 20,140
Total current assets 4,198,209
Property and equipment, net 2,044,427
Other assets 153,556
$6,396,192
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable, trade $ 118,807
Accrued liabilities 296,366
Deferred maintenance revenue 1,236,838
Current portion of long-term debt 1,258,149
Total current liabilities 2,910,160
Long-term debt, less current portion 32,887
Stockholders' equity:
Common stock, $1 par value, 100,000 shares
authorized, 40,000 shares issued and
outstanding 40,000
Additional paid-in capital 170,836
Retained earnings 3,242,309
Total stockholders' equity 3,453,145
$6,396,192
The accompanying notes to combined financial statements
are an integral part of this balance sheet.
F-3
<PAGE>
CompuSystems, Inc. (Note 1)
Combined Statement of Income
For the Year Ended December 31, 1995
Net sales $10,327,153
Cost of sales 2,813,303
Gross profit 7,513,850
Operating expenses:
General and administrative expenses 4,202,135
Depreciation and amortization 295,954
Total operating expenses 4,498,089
Income from operations 3,015,761
Other income (expense):
Interest income 131,989
Interest expense (107,463)
Loss on sale of marketable securities (83,110)
Other, net (5,996)
Net income $ 2,951,181
The accompanying notes to combined financial statements
are an integral part of this balance sheet.
F-4
<PAGE>
CompuSystems, Inc. (Note 1)
Combined Statement of Changes in Stockholders' Equity
For the Year Ended December 31, 1995
Unrealized
Common Paid-in Retained Holding
Stock Capital Earnings Loss Total
Balance, December 31, 1994 $40,000 $170,836 $3,678,229 $(75,859) $3,813,206
Net income 0 0 2,951,181 0 2,951,181
Distribution to
stockholders 0 0 (3,387,101) 0 (3,387,101)
Reduction in unrealized
holding loss on
marketable securities 0 0 0 75,859 75,859
Balance, December 31, 1995 $40,000 $170,836 $3,242,309 $ 0 $3,453,145
The accompanying notes to combined financial statements
are an integral part of this balance sheet.
F-5
<PAGE>
CompuSystems, Inc. (Note 1)
Combined Statement of Cash Flows
For the Year Ended December 31, 1995
Cash flows from operating activities:
Net income $2,951,181
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation and amortization 295,954
Loss on sale of marketable securities 83,110
Provision for doubtful accounts 64,315
Changes in operating assets and liabilities:
Increase in accounts receivable, net (378,736)
Increase in inventories (192,721)
Increase in prepaid expenses and other (14,673)
Increase in other assets (26,927)
Increase in accounts payable, trade 80,603
Increase in accrued liabilities 135,571
Increase in deferred maintenance revenue 132,234
Net cash provided by operating activities 3,129,911
Cash flows from investing activities:
Purchases of property and equipment, net (253,851)
Purchases of software rights (3,000)
Purchases of marketable securities (49,762)
Sale of marketable securities 84,283
Net cash used in investing activities (222,330)
Cash flows from financing activities:
Payments on long-term debt (163,624)
Proceeds from long-term debt 35,454
Distributions to stockholders (3,387,101)
Net cash used in financing activities (3,515,271)
Net decrease in cash and cash equivalents (607,690)
Cash and cash equivalents, beginning of period 2,082,183
Cash and cash equivalents, end of period $1,474,493
Supplemental disclosure - Cash paid for interest $ 107,463
The accompanying notes to combined financial statements
are an integral part of this balance sheet.
F-6
<PAGE>
CompuSystems, Inc. (Note 1)
Notes to Combined Financial Statements
December 31, 1995
1. Organization:
The combined statements of CompuSystems, Inc. represent the
accounts of CompuSystems, Inc. (the Company) and a building
occupied and leased by the Company and owned by the majority
stockholder. All transactions between the Company and the majority
stockholder related to the building lease have been eliminated in
combination. The Company was incorporated on June 30, 1980, under
the laws of the state of South Carolina. The Company manufactures
computer systems and installs administrative medical support
software for physicians' offices primarily in four Southeastern
states: North Carolina, South Carolina, Georgia and Florida. The
Company also provides maintenance service for its installations as
part of its core business.
2. Summary of Significant Accounting Policies:
Revenue Recognition
The Company recognizes revenue on software license sales in
accordance with the provisions of AICPA Statement of Position 91-1,
"Software Revenue Recognition." The Company's products are sold
with 90 days of technical support services included as part of the
sale. Revenue from systems sales are recognized upon the
installation and testing of the system. Costs of remaining
insignificant company obligations, if any, are accrued as cost of
revenues at the time of revenue recognition. Revenues related to
hardware and software maintenance contracts are recognized ratably
over the terms of the contracts, generally one year. The cost of
revenues consists primarily of the costs of hardware components
purchased from outside vendors. Deferred maintenance revenue
consists of the amount collected from customers for maintenance
contracts which cover future periods.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks and all highly
liquid investments with original maturities of three months or
less.
Inventory
Inventories are valued using the first-in, first-out (FIFO) method
of inventory costing and are stated at the lower of cost (FIFO) or
market. Inventories consist principally of computer hardware held
for resale and computer maintenance parts.
F-7
<PAGE>
Ending inventories consisted of the following:
New and used computer hardware and parts $1,100,676
Inventory shipped to customers for which
revenue recognition criteria has not
been met 9,807
Computer forms 52,202
$1,162,685
Property and Equipment
Property and equipment are stated at cost. Expenditures for
repairs and maintenance are charged to expense as incurred.
Depreciation is computed using the straight-line method based on
the estimated useful lives of five to 31.5 years.
A summary of property and equipment at December 31, 1995, is as
follows:
1995 Useful Lives
Equipment $ 677,465 5 to 7 years
Furniture and fixtures 358,450 5 to 7 years
Vehicles 264,459 5 years
Building and improvements 1,750,524 31.5 years
3,050,898
Less - Accumulated depreciation
and amortization (1,006,471)
Total property and equipment, net $2,044,427
At December 31, 1995, the building, which is owned by the majority
stockholder, had a net book value of $1,323,985 and related debt
outstanding of $1,201,377.
Income Taxes
The Company has elected to be taxed as an S Corporation. As an S
Corporation, the stockholders of the Company are required to
include their proportionate share of the Company's taxable income
on their individual tax returns. The Company periodically
distributes to the stockholders amounts that represent the
estimated increased tax liability of the stockholders associated
with their proportionate share of the Company's taxable income.
Accordingly, no tax provision has been recorded for the year ended
December 31, 1995.
F-8
<PAGE>
Marketable Securities
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." SFAS No. 115
requires that all securities be classified according to the
Company's investment strategy. Based on this strategy, the Company
classified all of its marketable securities as available-for-sale
during 1994. In accordance with SFAS No. 115, marketable
securities were carried at the lower of aggregate quoted market
value or cost. Unrealized holding losses on noncurrent marketable
equity securities were accumulated in the unrealized holding loss
component of stockholders' equity. Realized gains or losses in
1995 were computed based on specific identification of the
securities sold. During 1995, the Company sold all of its
marketable securities, resulting in the elimination of the
unrealized holding loss component of stockholders' equity.
Product Development
Product development costs, including software development costs,
are charged to expense the year incurred.
Other Assets
Other assets consist primarily of capitalized costs related to
software rights purchased from outside sources. These costs are
being amortized on a straight-line basis over three years, which is
the estimated useful life of the rights.
Fair Value of Financial Instruments
Effective January 1, 1995, the Company adopted the provision of
SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments." The following methods and assumptions were used by
the Company's management in estimating fair values for financial
instruments as required by SFAS No. 107:
Investments - The fair values of the Company's investments are
based on market quotations.
Long-term Note - Management believes that the Company's long-term
note is at fair value
Pervasiveness of Estimates
The preparation of the 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. Estimates
also affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
F-9
<PAGE>
3. Concentration of Credit Risk:
The Company manufactures and installs medical support systems and
provides technical support for medical agencies and physician's
offices in the Southeast. The Company performs periodic credit
evaluations of its customers' financial conditions and establishes
an allowance for doubtful accounts based upon factors surrounding
the credit risk of specific customers, historical trends and other
information. The Company has no significant exposure to any
individual customer. However, the Company sells products and
provides services primarily to physicians' practices located in the
southeastern United States. Substantially all of the Company's
accounts receivable are due from customers in the above lines of
business. Receivables are generally due within 30 days. Accounts
receivable are reflected net of a reserve for doubtful accounts of
$100,000 at December 31, 1995.
4. Debt:
The Company's long-term debt consisted of the following at December
31, 1995:
Note payable to a bank, monthly payments of $13,968, interest at
7.3%, secured by a building $1,201,377
Note payable to a bank, due in 36 monthly payments of $3,126,
beginning September 1993, interest at 6%, secured by six vans 24,609
Note payable to a bank, due in 36 monthly payments of $1,554,
beginning June 1994, interest at 7%, secured by three
automobiles 23,739
Note payable to a bank, due in 36 monthly payments of $499,
beginning June 1994, interest at 9.5%, secured by an automobile 7,581
Note payable to a bank, due in monthly payments of $1,132,
beginning November 1995, interest at 9.25%, secured by two
vans 33,730
1,291,036
Less - Current maturities 1,258,149
Long-term debt $ 32,887
Future principal maturities of long-term debt are as follows at
December 31, 1995:
1996 $1,258,149
1997 22,038
1998 10,849
F-10
<PAGE>
5. Benefit Plan:
In 1989, the Company established the CompuSystems, Inc. 401(k) Plan
(the Plan), covering all employees who meet the service period and
age requirement as defined in the Plan. The Company matches
employee contributions based on a discretionary matching percentage
as determined by the Plan's trustees. In 1995, the Company matched
3% of employee compensation contributed to the Plan. These
matching contributions totaled approximately $63,000 for the year
ended December 31, 1995. Although additional contributions to the
Plan may be made at the discretion of the Company, no additional
contributions were made to the Plan for the year ended December 31,
1995.
6. Subsequent Event:
On May 31, 1996, the Company entered into an Agreement of Merger
with Medic Computer Systems, Inc. (Medic), a North Carolina
corporation. As of May 31, 1996, each of the 40,000 shares of the
Company's common stock, $1.00 par value per share, was converted
into the right to receive shares of the common stock, $.01 par
value per share, of Medic. Additionally, each share of the
Company's common stock was converted into the right to receive
8.680555 shares of Medic common stock. An aggregate of 347,221
shares of Medic common stock were issued to the stockholders of the
Company. Medic also acquired the land and building in which the
Company conducts its business for which the owners of the building
received an aggregate of 12,222 shares of Medic common stock,
subject to adjustment upon completion of an appraisal and survey of
the property.
F-11
<PAGE>
COMPUSYSTEMS, INC.
UNAUDITED COMBINED BALANCE SHEET
AS OF MARCH 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,558
Accounts receivable, trade, net 1,478
Inventories and maintenance parts 1,298
Prepaid expenses 150
- ---------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 4,484
Property and equipment, at cost, net 2,067
- ---------------------------------------------------------------------------------------------------
TOTAL ASSETS $6,551
- ---------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term note $1,259
Accounts payable, trade 113
Customer deposits and deferred maintenance revenue 1,196
Accrued expenses:
Commissions 49
Compensation and related items 166
Other 11
- ---------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 2,794
Long-term note, less current portion 16
- ---------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY:
Common Stock, $1.00 par value; 100,000 shares authorized; 40,000
issued and outstanding in 1996 40
Additional paid-in capital 171
Retained earnings 3,530
- ---------------------------------------------------------------------------------------------------
3,741
- ---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,551
- ---------------------------------------------------------------------------------------------------
</TABLE>
F-12
<PAGE>
COMPUSYSTEMS, INC.
UNAUDITED COMBINED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
NET REVENUES:
Systems $1,043
Maintenance, forms and other services 1,271
--------------------
TOTAL NET REVENUES 2,314
- ------------------------------------------------------------------------------------
COST OF REVENUES:
Systems 397
Maintenance, forms and other services 715
--------------------
TOTAL COST OF REVENUES 1,112
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
GROSS MARGIN 1,202
- ------------------------------------------------------------------------------------
OPERATING EXPENSES:
Sales and marketing 181
General and administrative 192
Research and development 197
- ------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 570
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 632
- ------------------------------------------------------------------------------------
OTHER EXPENSE:
Interest expense 4
- ------------------------------------------------------------------------------------
NET INCOME $628
- ------------------------------------------------------------------------------------
</TABLE>
F-13
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Pro forma financial information is set forth herein to give effect to the
acquisition of CompuSystems, Inc. ("CompuSystems") by Medic Computer Systems,
Inc., ("Medic") as if the two companies had always operated on a combined basis
for purposes of the Unaudited Pro Forma Consolidated Balance Sheets as of June
30,1996, and December 31, 1995, and for the Unaudited Pro Forma Consolidated
Statements of Operations for the years ended December 31, 1995 and 1994 and for
the six months ended June 30, 1996 and 1995. The Pro Forma Consolidated
Statement of Operations for the year ended December 31, 1993 has not been
presented as it is not significant to the evaluation of the combined companies.
The Unaudited Pro Forma Consolidated Statements of Operations does not purport
to represent what the Company's results of operations would actually have been
if such transaction had in fact occurred at the beginning of the periods
presented and does not purport to project the results of operations of the
Company for the current year or for any future period. There are no significant
adjustments made in the preparation of these pro forma combined statements. All
information contained herein should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto of Medic and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included in
Medic's Annual Report, the Combined Financial Statements and Notes thereto of
CompuSystems incorporated by reference in Form 8-K/A Amendment 1, the
Consolidated Financial Statements and the Notes thereto of Medic and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in Medic's Form 10Q for the quarter ended June 1996 and the
notes to the Unaudited Pro Forma Consolidated Financial Information.
F-14
<PAGE>
MEDIC COMPUTER SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
(unaudited) (unaudited and
restated)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $32,993 $38,935
Short-term investments 16,672 11,461
Accounts receivable, trade, net 44,898 41,189
Inventories and maintenance parts 11,994 12,294
Prepaid expenses 6,575 6,190
Other current assets 1,372 1,237
Deferred income tax benefit 2,255 2,515
- -----------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 116,759 113,821
Property and equipment, at cost, net 8,185 7,075
Intangible assets, at cost, net 19,622 20,445
Other assets 99 122
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $144,665 $141,463
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term note $1,475 $2,677
Accounts payable, trade 5,520 7,336
Customer deposits and deferred maintenance revenue 9,573 13,396
Income taxes payable 0 1,676
Accrued expenses:
Commissions 1,660 1,604
Compensation and related items 5,985 3,963
Other 2,746 3,075
- -----------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 26,959 33,727
Long-term note, less current portion 2,192 3,127
Other long-term liabilities 134 172
- -----------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY:
Common Stock, $.01 par value; 40,000,000 shares authorized; 24,336,008
and 24,210,264 shares issued and outstanding in 1996 and 1995, respectively 243 242
Additional paid-in capital 69,960 68,628
Retained earnings 45,177 35,567
- -----------------------------------------------------------------------------------------------------------------------
115,380 104,437
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $144,665 $141,463
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
F-15
<PAGE>
MEDIC COMPUTER SYSTEMS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
NET REVENUES:
Systems $77,618 $59,794
Maintenance, forms and other services 75,898 55,561
--------------------------------
TOTAL NET REVENUES 153,516 115,355
- -----------------------------------------------------------------------------------------
COST OF REVENUES:
Systems 48,275 36,752
Maintenance, forms and other services 43,846 30,327
--------------------------------
TOTAL COST OF REVENUES 92,121 67,079
- -----------------------------------------------------------------------------------------
--------------------------------
GROSS MARGIN 61,395 48,276
- -----------------------------------------------------------------------------------------
OPERATING EXPENSES:
Sales and marketing 15,001 12,639
General and administrative 8,503 6,968
Amortization of intangible assets 2,872 3,088
Research and development 8,391 5,991
- -----------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 34,767 28,686
- -----------------------------------------------------------------------------------------
--------------------------------
INCOME FROM OPERATIONS 26,628 19,590
- -----------------------------------------------------------------------------------------
OTHER INCOME:
Interest income (1,868) (317)
- -----------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 28,496 19,907
PROVISION FOR INCOME TAXES 10,102 7,233
- -----------------------------------------------------------------------------------------
--------------------------------
NET INCOME 18,394 12,674
- -----------------------------------------------------------------------------------------
PRO FORMA DATA:
INCOME BEFORE PRO FORMA INCOME
TAX PROVISION 18,394 12,674
PRO FORMA INCOME TAX EXPENSE FOR THE PERIODS
PRIOR TO MAY 31, 1996 FOR COMPUSYSTEMS 1,178 968
--------------------------------
--------------------------------
PRO FORMA NET INCOME $17,216 $11,706
- -----------------------------------------------------------------------------------------
PRO FORMA EARNINGS PER SHARE:
NET INCOME PER SHARE $0.72 $0.52
- -----------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON
SHARES AND EQUIVALENTS USED IN
COMPUTING NET INCOME PER SHARE 23,951,132 22,513,824
- -----------------------------------------------------------------------------------------
</TABLE>
F-16
<PAGE>
MEDIC COMPUTER SYSTEMS, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
------------------------------
SIX MONTHS ENDED
------------------------------
JUNE 30, JUNE 30,
1996 1995
---- ----
<S> <C> <C>
NET REVENUES:
Systems $41,488 $34,845
Maintenance, forms and other services $46,470 $34,658
------------------------------
TOTAL NET REVENUES 87,958 69,503
- --------------------------------------------------------------------------------------------------------------------
COST OF REVENUES:
Systems 24,888 21,880
Maintenance, forms and other services 27,841 19,753
------------------------------
TOTAL COST OF REVENUES 52,729 41,633
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
GROSS MARGIN 35,229 27,870
- --------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
Sales and marketing 8,397 6,748
General and administrative 4,862 3,665
Amortization of intangible assets 892 1,512
Research and development 4,793 3,686
- --------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 18,944 15,611
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 16,285 12,259
- --------------------------------------------------------------------------------------------------------------------
OTHER INCOME:
Interest income (1,118) (706)
- --------------------------------------------------------------------------------------------------------------------
INCOME BEFORE TAXES 17,403 12,965
------------------------------
PROVISION FOR INCOME TAXES 6,320 4,591
- --------------------------------------------------------------------------------------------------------------------
NET INCOME $11,083 8,374
- --------------------------------------------------------------------------------------------------------------------
PRO FORMA DATA:
INCOME BEFORE PRO FORMA INCOME
TAX PROVISION $11,083 $8,374
PRO FORMA INCOME TAX EXPENSE FOR THE PERIODS
PRIOR TO MAY 31, 1996 FOR COMPUSYSTEMS 489 557
- --------------------------------------------------------------------------------------------------------------------
PRO FORMA NET INCOME $10,594 $7,817
- --------------------------------------------------------------------------------------------------------------------
PRO FORMA EARNINGS PER SHARE:
Net income per share $0.43 $0.33
- --------------------------------------------------------------------------------------------------------------------
Weighted average common shares and
equivalents used in computing
net income per share 24,786,156 23,387,158
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes to Pro Forma Combined Statement of Operations
Merger related expenses of $243 have been included in the Pro Forma Consolidated
Statement of Operations for the six months ended June 30, 1996.
F-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDIC COMPUTER SYSTEMS, INC.
Date: August 13, 1996 /s/ Luanne L. Roth
------------------
Luanne L. Roth
Vice President, Chief Financial
Officer, Secretary and Treasurer
(Principal Financial and
Accounting Officer)
<PAGE>
Consent of Independent Public Accountants
As independent public accounts, we hereby consent to the use of our report on
the combined financial statements of CompuSystems, Inc. for the year ended
December 31, 1995, included in or made a part of this Form 8-K/A Amendment
No. 1.
/s/ Arthur Andersen LLP
Columbia, South Carolina,
August 9, 1996.
