<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO ______
COMMISSION FILE NUMBER: 0 - 25078
PHAMIS, INC.
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1141795
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1001 FOURTH AVENUE PLAZA, SUITE 1500, SEATTLE, WASHINGTON 98154-1144
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (206) 622-9558
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
SHARES OUTSTANDING
CLASS MARCH 31, 1997
----- --------------
Common Stock 6,167,726
================================================================================
<PAGE>
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited): Page No.
Condensed Consolidated Balance Sheets-
March 31, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Income-
Quarters ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows-
Quarters ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signature 13
2
<PAGE>
PHAMIS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
March 31, December 31,
1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,085 $ -
Investments available for sale, at
fair value 19,101 18,838
Accounts receivable, net 13,526 8,417
Accrued revenue receivable 1,498 2,073
Refundable income taxes 294 316
Deferred income taxes 369 323
Prepaid expenses and other assets 1,405 857
--------------------------------
Total current assets 40,278 30,824
--------------------------------
Furniture, equipment and leasehold
improvements, at cost 9,106 8,789
Less accumulated depreciation and
amortization 4,360 4,023
--------------------------------
4,746 4,766
--------------------------------
Other investments and advances, at cost 2,265 2,560
Capitalized software costs, net 5,645 5,120
Other assets 994 477
--------------------------------
Total assets $53,928 $43,747
--------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term
obligations $ 100 $ 102
Accounts payable and accrued
liabilities 9,475 3,653
Deferred revenue 9,959 7,590
--------------------------------
Total current liabilities 19,534 11,345
--------------------------------
Long-term obligations, excluding
current installments 28 51
Deferred income taxes 1,702 1,191
Shareholders' equity:
Preferred stock - -
Common stock 15 15
Additional paid-in capital 27,650 27,240
Unrealized gains on investments 11 15
Retained earnings 4,988 3,890
--------------------------------
Total shareholders' equity 32,664 31,160
- ------------------------------------------------------------------------
Total liabilities and
shareholders' equity $53,928 $43,747
- ------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
PHAMIS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
QUARTERS ENDED MARCH 31, 1997 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
1997 1996
- ----------------------------------------------------------------
<S> <C> <C>
Net revenues $14,602 $12,115
Cost of revenues 8,679 7,000
-----------------------
Gross margin 5,923 5,115
-----------------------
Operating expenses:
Sales and marketing 2,188 1,867
Research and development 1,329 1,473
General and administrative 995 1,002
Merger and acquisition costs - 292
-----------------------
Total operating expenses 4,512 4,634
-----------------------
Operating income 1,411 481
-----------------------
Other income (expense):
Interest income 222 194
Interest expense (3) (12)
Other, net (4) (2)
-----------------------
Other income (expense), net 215 180
-----------------------
Income before income taxes 1,626 661
Provision for income taxes 528 306
-----------------------
Net income $ 1,098 $ 355
-----------------------
Net income per common share $.17 $.06
Weighted average number of common
shares outstanding 6,420 6,389
- ---------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
PHAMIS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
QUARTERS ENDED MARCH 31, 1997 AND 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------
1997 1996
- --------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,098 $ 355
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 668 546
Deferred income taxes 468 175
Change in certain assets and
liabilities:
Accounts receivable and accrued
revenue receivable (4,534) (4,033)
Prepaid expenses and other
current assets (548) (58)
Refundable income taxes 59 17
Accounts payable and accrued
liabilities 5,822 2,163
Income taxes payable - 102
Deferred revenue 2,369 694
----------------------
Net cash provided (used) by
operating activities 5,402 (39)
----------------------
Cash flows from investing activities:
Purchases of investments (2,346) (10,227)
Maturities and sales of investments 2,076 11,604
Purchases of furniture, equipment and
leasehold improvements (316) (1,232)
Other investments and advances 295 (961)
Capitalized software development costs (857) (799)
International contract development
costs (456) -
Increase in other assets (61) (23)
----------------------
Net cash used in investing
activities (1,665) (1,638)
----------------------
Cash flows from financing activities:
Net change in note payable to bank - (209)
Principal repayments of long-term
obligations (25) (62)
Proceeds from issuance of common
stock under stock option and
employee benefit plans 373 413
----------------------
Net cash provided by
financing activities 348 142
----------------------
Net increase (decrease) in
cash and cash equivalents 4,085 (1,535)
Cash and cash equivalents at beginning
of period - 4,488
----------------------
Cash and cash equivalents at end of
period $ 4,085 $ 2,953
- --------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
PHAMIS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated balance sheets, statements of
income and statements of cash flows reflect all adjustments which are, in the
opinion of management, necessary to present a fair statement of the condensed
consolidated financial position at March 31, 1997, and the condensed
consolidated statements of operations and cash flows for the interim periods
ended March 31, 1997 and 1996.
The accompanying unaudited condensed financial statements have been prepared in
accordance with the instructions for Form 10-Q and, therefore, do not include
all information and footnotes necessary for a complete presentation of the
financial position, results of operations, and cash flows, in conformity with
generally accepted accounting principles. The Company filed audited financial
statements which included all information and footnotes necessary for such a
presentation of the financial position, results of operations, and cash flows
for the years ended December 31, 1996, 1995 and 1994, in the Company's 1996 Form
10-K.
The results of operations for the interim period ended March 31, 1997 are not
necessarily indicative of the results to be expected for the full year.
NOTE 2. MERGER WITH IDX SYSTEMS CORPORATION
On March 25, 1997, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") by and among PHAMIS, Inc. and IDX Systems Corporation, a
Vermont-based corporation ("IDX"). Pursuant to the Merger Agreement, each
outstanding share of PHAMIS, Inc. common stock will be canceled and converted
automatically into the right to receive .73 shares of IDX common stock, subject
to adjustment within a range of .6811 to .80 shares of IDX common stock, based
on the average market price per share of IDX's common stock. The Merger is
expected to be accounted for as a pooling-of-interests and to qualify as a tax-
free reorganization.
The Merger is subject to the customary closing conditions, including shareholder
approval by both companies, to be considered at separate meetings anticipated to
occur in July 1997, and legal and regulatory approvals. The Merger will be
effective promptly following shareholder approval, assuming satisfaction of the
other conditions of the Merger.
6
<PAGE>
PHAMIS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. INVESTMENTS AVAILABLE-FOR-SALE
Investments available-for-sale at March 31, 1997 and December 31, 1996 consist
principally of tax-exempt, investment-grade, interest-bearing securities
diversified among security types and users. Investments available-for-sale
consisted of the following at March 31, 1997:
<TABLE>
<CAPTION>
Unrealized Fair
Cost gains (losses) value
-----------------------------------------------
(In thousands)
<S> <C> <C> <C>
Money market funds $ 439 - 439
State and municipal bonds and notes 8,011 17 8,028
Tax-exempt municipal preferreds 10,635 (1) 10,634
-----------------------------------------------
$19,085 16 19,101
-----------------------------------------------
</TABLE>
At March 31, 1997, approximately $11,000, net of income taxes, of unrealized
holding gains were recorded in shareholders' equity. The cost and fair value of
available-for-sale securities as of March 31, 1997, by contractual maturity,
consisted of the following:
<TABLE>
<CAPTION>
Fair
Cost value
-----------------------------
(In thousands)
<S> <C> <C>
Due in one year or less $17,075 17,084
Due in one to two years 2,010 2,017
-----------------------------
$19,085 19,101
-----------------------------
</TABLE>
NOTE 4. UNCOMPLETED CONTRACTS
Costs, estimated earnings and billings to date on uncompleted contracts were as
follows:
<TABLE>
<CAPTION>
Mar. 31, Dec. 31,
1997 1996
-------------------
(In thousands)
<S> <C> <C>
Costs incurred on uncompleted contracts $52,212 $49,770
Estimated earnings 34,137 33,618
-------------------
86,349 83,388
Less billings to date 94,810 88,905
-------------------
$(8,461) $(5,517)
-------------------
Included in accompanying balance sheets under the following captions:
Accrued revenue receivable $ 1,498 $ 2,073
Deferred revenue (9,959) (7,590)
-------------------
$(8,461) $(5,517)
-------------------
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the condensed
financial statements and notes thereto.
OVERVIEW
The Company develops, markets, installs and services enterprise-wide, patient-
centered healthcare information systems for use by large- and medium-sized
healthcare providers, and medium- to large-sized management service
organizations (MSOs), and multi-specialty, multi-site physician group practices.
The Company's revenues are derived from system, license and service sales,
support and maintenance fees, and sales of third-party hardware relating to its
products. Systems revenues are generated from long-term contracts to deliver and
install an integrated system solution. The revenues and related costs on these
contracts, including the revenues from the resale of third-party hardware, are
recognized using the percentage-of-completion method based on the estimated
labor hours required to complete an installation. Support and maintenance
revenues are recognized over the contract period, while additional hardware
revenues, generated from hardware sales not included in a systems contract, are
recognized when the hardware is shipped. The Company's total backlog consists of
signed contracts for systems installation, support and maintenance, and
additional software and services that are not yet recognized as revenue.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements which reflect the
Company's current views with respect to future events and financial performance.
These forward-looking statements are subject to certain risks and uncertainties
including those discussed below that could cause actual results to differ
materially from historical results or those anticipated. The Company has
identified by italics, or all capital letters, various sentences within this
Form 10-Q which contain such forward-looking statements, and words such as
"believes", "anticipates", "expects", "intends", and similar expressions are
intended to identify forward-looking statements, but are not the exclusive means
of identifying such statements. In addition, the disclosures on page 12 under
the caption "Other Factors That May Affect Operating Results", which is not
italicized or capitalized for improved readability, consists principally of a
discussion of risks which may affect future results and, are thus, in their
entirety forward-looking in nature. Readers are urged to carefully review and
consider the various disclosures made by the Company in this report and in the
Company's other reports filed with the Securities and Exchange Commission that
attempt to advise interested parties of the risks and factors that may affect
the Company's business.
RESULTS OF OPERATIONS
Revenue for the first quarter ended March 31, 1997, increased 21 percent to
$14.6 million from $12.1 million in the first quarter of 1996. The increase in
first quarter revenues was driven by a combined 6 percent increase in systems,
license and service and support and maintenance revenue categories. The
increases in these revenue categories were augmented by a $1.9 million increase
in additional hardware revenues to $2.8 million for the first quarter of 1997
from $964,000 for the first quarter of 1996. Net income increased 209 percent to
$1.1 million or $0.17 per share compared with $355,000 or $0.06 per share, after
$292,000 of one-time merger costs, in the first quarter of 1996.
8
<PAGE>
NET REVENUES, COST OF REVENUES AND GROSS MARGINS
The following table sets forth the dollar amount of each revenue category, the
percentage that each revenue category represents of total revenue, the dollar
amount of each category of cost of revenues and gross margins, and the
percentage that each category of cost of revenues and gross margins bears to net
revenues for that category:
<TABLE>
<CAPTION>
Quarter ended March 31,
-----------------------
1997 1996
---- ----
$ % $ %
------- ------ ------- ------
(dollars in thousands)
<S> <C> <C> <C> <C>
NET REVENUES:
Systems, licenses and service... 9,389 64.3 9,310 76.8
Support and maintenance......... 2,391 16.4 1,841 15.2
Additional hardware............. 2,822 19.3 964 8.0
------- ----- ------- -----
Total......................... 14,602 100.0 12,115 100.0
COST OF REVENUES:
Systems, licenses and service... 5,271 56.1 5,140 55.2
Support and maintenance......... 1,465 61.3 1,190 64.6
Additional hardware............. 1,943 68.9 670 69.5
------- -------
Total......................... 8,679 59.4 7,000 57.8
GROSS MARGINS:
Systems, licenses and service... 4,118 43.9 4,170 44.8
Support and maintenance......... 926 38.7 651 35.4
Additional hardware............. 879 31.1 294 30.5
------- -------
Total......................... $ 5,923 40.6 $ 5,115 42.2
======= =======
</TABLE>
Systems, licenses and service revenues were $9.4 million, compared to $9.3
million for the same period a year ago. The increase was primarily due to an
increase in the rates realized per revenue hour, partially offset by a decrease
in the number of labor hours dedicated to contract installation. The Company's
backlog of systems, licenses and services was $67.9 million (out of a total
backlog of $101.9 million) at March 31, 1997.
Gross margin percentages on systems, licenses and service sales were 43.9% and
44.8% for the three months ended March 31, 1997 and 1996, respectively. The
slightly lower level of gross margin percentages during 1997 was primarily due
to the rate of increase in labor costs exceeding the rate of increase in the
rates realized per revenue hour in the first quarter of 1997.
Support and maintenance revenues increased to $2.4 million in the first quarter
of 1996 from $1.8 million in the first quarter of 1996. The increase in the
number of installed customer sites and increases in fees from certain renewed
support and maintenance contracts contributed to the 30 percent increase over
the prior year. In 1997, gross margins on support and maintenance increased as
the Company has been able to spread the fixed portion of its maintenance costs
over a larger installed customer base. THE COMPANY EXPECTS GROSS MARGINS MAY
CONTINUE TO INCREASE OVER THE REMAINDER OF 1997, AS THE NUMBER OF INSTALLATIONS
INCREASES.
Additional hardware revenues were $2.8 million and $964,000 for the quarters
ended March 31, 1997 and 1996, respectively. Sales of additional hardware have
historically experienced significant quarterly fluctuations, as evidenced by the
193 percent increase in additional hardware revenues in 1997 as compared to
1996, and may vary significantly from period to period as they are limited in
number and individual sales can have a high dollar value. THE LEVEL OF FUTURE
HARDWARE SALES MAY BE IMPACTED BY BOTH PRICE DECREASES AND BY THE INCREASING
OPPORTUNITIES TO SELL SUCH HARDWARE AS THE COMPANY'S INSTALLED CUSTOMER BASE
INCREASES.
9
<PAGE>
OPERATING EXPENSES
<TABLE>
<CAPTION>
Sales and Marketing
- -------------------------------------------------------------------------------------------
(dollars in thousands)
Percentage Percentage
March 31, of March 31, of
1997 Net Revenues Change 1996 Net Revenues
------ ------------ ------ ------ ------------
<S> <C> <C> <C> <C> <C>
Three months ended $2,188 15.0% 17% $1,867 15.4%
</TABLE>
The increase in sales and marketing expense, in absolute dollars, resulted
primarily from increased personnel costs, corporate marketing and corporate
communication program expenditures necessary to promote the Company's
competitive position and expand its customer base. Sales and marketing expense
decreased as a percentage of net revenues in the first quarter of 1997 as the
rate of increase in sales and marketing expense was less than the rate of
increase in net revenues. The Company believes that this level of expenditure is
appropriate to take advantage of significant opportunities to sell new systems
contracts in the current market environment. THE COMPANY'S EFFORTS TO EXPAND ITS
CUSTOMER BASE, PROMOTE ITS COMPETITIVE POSITION, AND SUPPORT THE SALES AND
MARKETING OF NEW AND EXISTING APPLICATIONS WILL CONTINUE THROUGHOUT THE
REMAINDER OF 1997.
<TABLE>
<CAPTION>
Research and Development
- -------------------------------------------------------------------------------------------
(dollars in thousands)
Percentage Percentage
March 31, of March 31, of
1997 Net Revenues Change 1996 Net Revenues
------ ------------ ------ ------ ------------
<S> <C> <C> <C> <C> <C>
Three months ended $1,329 9.1% (10)% $1,473 12.2%
</TABLE>
The Company's research and development efforts focus on enhancing existing
applications and developing new applications for the LastWord(R), Enterprise
View(TM), and DataBreeze(TM) systems, and integrating applications from its
third party solution providers. The Company also devotes development resources
to various technology migration strategies including investments in web-based
technology and incremental conversion of LastWord to a standards-based SQL
database. The following table sets forth certain information regarding research
and development expense and amounts of capitalized software development costs
for the quarters ended March 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
----------- ----------
(dollars in thousands)
<S> <C> <C>
Research and development expenditures:
Research and development expense.............................. $1,329 $1,473
Capitalized software development costs........................ 857 799
Funded research and development under development contracts... 110 126
------ ------
Total research and development expenditures................... $2,296 $2,398
====== ======
As a percentage of net revenues:
Research and development expense.............................. 9.1% 12.2%
Total research and development expenditures................... 15.7 19.8
Capitalized costs as a percentage of total
research and development expenditures........................ 37.3 33.3
</TABLE>
THE COMPANY HAS SPENT SIGNIFICANT AMOUNTS ON RESEARCH AND DEVELOPMENT AND
BELIEVES IT MUST MAINTAIN A SUBSTANTIAL COMMITMENT TO RESEARCH AND DEVELOPMENT
TO REMAIN COMPETITIVE. The Company capitalizes software development costs when
technological feasibility on a particular project has been established and
thereafter until the related product is available for general release to
customers. Total research and development expenditures decreased $102,000 in the
first quarter of 1997, primarily due to significant strategic investments
undertaken in the first quarter of 1996 to introduce new products and enhance
existing products. THE COMPANY ANTICIPATES ITS LEVEL OF CAPITALIZED SOFTWARE
DEVELOPMENT COSTS AS A PERCENTAGE OF TOTAL RESEARCH AND DEVELOPMENT EXPENDITURES
WILL FLUCTUATE BASED UPON THE NATURE AND TIMING OF SPECIFIC DEVELOPMENT PROJECTS
UNDERTAKEN.
10
<PAGE>
<TABLE>
<CAPTION>
General and Administrative
- ------------------------------------------------------------------------------------------
(dollars in thousands)
Percentage Percentage
March 31, of March 31, of
1997 Net Revenues Change 1996 Net Revenues
---- ------------ ------ ------ ------------
<S> <C> <C> <C> <C> <C>
Three months ended $995 6.8% (1)% $1,002 8.3 %
</TABLE>
General and administrative expense decreased slightly in the first quarter of
1997 primarily due to absence of certain non-recurring operating costs incurred
by the Company's DataBreeze subsidiary prior to the finalization of the
Company's acquisition of DataBreeze in the first quarter of 1996. THE COMPANY
EXPECTS TO MAINTAIN GENERAL AND ADMINISTRATIVE SPENDING AT APPROXIMATELY THE
SAME PERCENTAGE OF REVENUE DURING THE REMAINDER OF 1997 AS WAS ACHIEVED IN THE
FIRST QUARTER OF 1997.
<TABLE>
<CAPTION>
Other Income (Expense), Net
- ------------------------------------------------------------------------------------------
(dollars in thousands)
Percentage Percentage
March 31, of March 31, of
1997 Net Revenues Change 1995 Net Revenues
---- ------------ ------ ---- ------------
<S> <C> <C> <C> <C> <C>
Three months ended $215 1.5% 19% $180 1.5%
</TABLE>
The increase in other income (expense), net in the first quarter of 1997 was
primarily attributable to service charges on certain customer accounts in the
first quarter of 1997, as compared to the absence of such charges in the first
quarter of 1996. Subsequent to March 31, 1997, the Company shifted its
investment portfolio holdings from tax-exempt securities to investment-grade,
interest bearing taxable securities.
<TABLE>
<CAPTION>
Provision for Income Taxes
- ------------------------------------------------------------------------------------------------------
(dollars in thousands)
Percentage Percentage
March 31, of Effective March 31, of Effective
1997 Net Revenues Tax Rate 1996 Net Revenues Tax Rate
---- ------------ -------- ---- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Three months ended $528 3.6% 32.5% $306 2.5% 46.3%
</TABLE>
The Company's effective tax rate for the first quarter of 1997 was less than the
enacted statutory federal tax rate due to tax-exempt interest. THE COMPANY
ANTICIPATES THAT THE EFFECTIVE TAX RATE WILL INCREASE DURING THE BALANCE OF
1997, AS COMPARED TO THE EFFECTIVE RATE IN THE FIRST QUARTER, DUE TO THE
COMPANY'S SHIFT IN ITS INVESTMENT PORTFOLIO HOLDINGS FROM TAX-EXEMPT SECURITIES
TO TAXABLE SECURITIES.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company's principal sources of liquidity consisted of
$4.1 million in cash and cash equivalents, $19.1 million in investments
available for sale, $13.5 million of accounts receivable and up to $5.0 million
available under a bank line of credit. As of March 31, 1997, no amounts were
outstanding under this line of credit and the Company was in compliance with all
applicable debt covenants. The Company had working capital of $20.7 million at
March 31, 1997. The Company requires significant down payments on its systems
contracts and attempts to negotiate its subsequent milestone payments so that it
is in a cash positive position throughout most of the contract period. Amounts
billed in excess of costs and earnings on contracts are reflected as deferred
revenue on the Company's balance sheet.
THE COMPANY BELIEVES EXISTING CASH, CASH EQUIVALENTS, INVESTMENTS AVAILABLE FOR
SALE, ACCOUNTS RECEIVABLE AND AVAILABLE BANK CREDIT, TOGETHER WITH THE
ANTICIPATED CASH GENERATED FROM OPERATIONS AND THE EXERCISE OF STOCK OPTIONS
WILL PROVIDE SUFFICIENT FUNDS FOR INTERNAL WORKING CAPITAL NEEDS, AND CAPITAL
EXPENDITURE REQUIREMENTS FOR THE FORESEEABLE FUTURE.
11
<PAGE>
OTHER FACTORS THAT MAY AFFECT OPERATING RESULTS
The Company's operating results may fluctuate due to factors such as the volume
and timing of systems and additional hardware sales, the length of sales cycles
and the installation process, possible contract and implementation
postponements, changes in product mix of revenues, changes in the level of
operating expenses, delays in revenue contributions from additional product
offerings, uncertainty of international business development, and general
economic conditions in the healthcare industry. All of the above factors are
difficult for the Company to forecast, and can materially adversely affect the
Company's business and operating results for one quarter or a series of
quarters.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (Statement 128).
This statement establishes standards for the computation, presentation, and
disclosure of earnings per share (EPS), replacing the presentation of currently
required Primary EPS with a presentation of Basic EPS. It also requires dual
presentation of Basic EPS and Diluted EPS on the face of the income statement
for entities with complex capital structures. Basic EPS, unlike Primary EPS,
excludes all dilution while Diluted EPS, like the current Fully Diluted EPS,
reflects the potential dilution that could occur from the exercise or conversion
of securities into common stock or from other contracts to issue common stock.
Statement 128 is effective for financial statements for periods ending after
December 31, 1997, including interim periods, and earlier application is not
permitted. When adopted, the Company will be required to restate its EPS data
for all prior periods presented. The Company does not expect the impact of the
adoption of this statement to be material to previously reported EPS amounts.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits--27 Financial Data Schedule.
(b) Reports on Form 8-K--A Form 8-K dated March 28, 1997 was filed by the
Company reporting the Company had entered into an Agreement and Plan of Merger
by and among PHAMIS, Inc. and IDX Systems Corporation.
12
<PAGE>
SIGNATURE
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, thereunto duly authorized.
PHAMIS, Inc.
By /s/ Gregg W. Blodgett Date: May 9, 1997
---------------------
Gregg W. Blodgett
Vice President of Finance and Administration
Chief Financial Officer and Treasurer
(Principal Accounting Officer)
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AND CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,085
<SECURITIES> 19,101
<RECEIVABLES> 13,625
<ALLOWANCES> 99
<INVENTORY> 0
<CURRENT-ASSETS> 40,278
<PP&E> 9,106
<DEPRECIATION> 4,360
<TOTAL-ASSETS> 53,928
<CURRENT-LIABILITIES> 19,534
<BONDS> 0
0
0
<COMMON> 15
<OTHER-SE> 32,649
<TOTAL-LIABILITY-AND-EQUITY> 53,928
<SALES> 14,602
<TOTAL-REVENUES> 14,602
<CGS> 8,679
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<INCOME-TAX> 528
<INCOME-CONTINUING> 1,098
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<CHANGES> 0
<NET-INCOME> 1,098
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
