SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE QUARTER ENDED OCTOBER 31, 1996
[ ] 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 0-13608
INNOSERV TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
CALIFORNIA 95-3619990
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
320 WESTWAY, SUITE 530, ARLINGTON, TEXAS 76018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 468-3377
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 twelve 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 ___
At December 13, 1996, the Registrant had outstanding 5,035,833 shares of its
common stock, $.01 par value.
INNOSERV TECHNOLOGIES, INC.
FORM 10-Q
OCTOBER 31, 1996
TABLE OF CONTENTS
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of October 31, 1996,
and April 30, 1996 3
Consolidated Statements of Operations for the three
months ended October 31, 1996 and 1995 4
Consolidated Statements of Operations for the six months
ended October 31, 1996 and 1995 5
Consolidated Statements of Cash Flows for the six months
ended October 31, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II - OTHER INFORMATION
Item 2. Changes in Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Report on Form 8-K 14
SIGNATURES 15
INDEX TO EXHIBITS 16
2
INNOSERV TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
October 31,
1996 April 30,
(Unaudited) 1996
----------- ---------
ASSETS
Current assets
Cash and cash equivalents $1,166 $ 941
Receivables 4,214 5,238
Inventory:
Spare parts and supplies, net 5,209 5,580
Inventory held for sale 1,059 1,878
Prepaid expenses 419 350
------- -------
Total current assets 12,067 13,987
Equipment, net 5,407 6,186
Goodwill, net 3,469 3,544
Other assets 85 123
------- -------
$21,028 $23,840
------- -------
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 1,050 $ 862
Accounts payable 4,125 4,613
Accrued liabilities 2,480 3,090
Deferred revenues 3,857 4,399
------- -------
Total current liabilities 11,512 12,964
Long-term debt 633 910
Shareholders' equity
Preferred stock, $.01 par value: 5,000,000
shares authorized; no shares issued -- --
Common stock, $.01 par value: 10,000,000
shares authorized; 5,035,833 issued 51 51
Paid-in capital 17,303 17,303
Accumulated deficit (8,471) (7,388)
------- -------
Total shareholders' equity 8,883 9,966
------- -------
$21,028 $23,840
------- -------
------- -------
The accompanying notes are an integral part of these financial statements.
3
INNOSERV TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended
October 31,
-----------------------
1996 1995
-------- -------
Revenues $10,684 $11,898
Costs and expenses:
Cost of operations 9,121 9,247
Depreciation and amortization 505 501
Selling and administrative 1,445 1,807
Interest expense, net 69 35
-------- -------
Total costs and expenses 11,140 11,590
-------- -------
Income (loss) before income taxes (456) 308
Provision for income taxes -- 123
-------- -------
Net income (loss) $ (456) $ 185
-------- -------
-------- -------
Per share information:
Net income (loss) $ (.09) $ .04
-------- -------
-------- -------
Weighted average shares outstanding 5,036 5,036
-------- -------
-------- -------
The accompanying notes are an integral part of these financial statements.
4
INNOSERV TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Six Months Ended
October 31,
------------------------
1996 1995
-------- -------
Revenues $22,472 $23,866
Costs and expenses:
Cost of operations 19,144 18,713
Depreciation and amortization 1,016 986
Selling and administrative 3,299 3,963
Interest expense, net 96 84
-------- -------
Total costs and expenses 23,555 23,746
-------- -------
Income (loss) before income taxes (1,083) 120
Provision for income taxes -- 49
-------- -------
Net income (loss) $(1,083) $ 71
-------- -------
-------- -------
Per share information:
Net income (loss) $ (.22) $ .01
-------- -------
-------- -------
Weighted average shares outstanding 5,036 5,038
-------- -------
-------- -------
The accompanying notes are an integral part of these financial statements.
5
INNOSERV TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
October 31,
--------------------
1996 1995
-------- -------
Cash flows from:
Operations -
Net income (loss) $ (1,083) $ 71
Adjustments to reconcile net income (loss) to
net cash flows from operations:
Depreciation and amortization 1,016 986
Gain on disposal of equipment -- (67)
Deferred income taxes -- (57)
Changes in assets and liabilities:
Receivables 1,025 1,224
Inventory 1,189 (1,381)
Prepaid expenses (68) 30
Other assets 37 (327)
Accounts payable (488) 721
Accrued liabilities (609) (607)
Deferred revenues (542) 217
-------- -------
Net cash provided by operations 477 810
Investments and acquisitions -
Sale of equipment -- 180
Purchase of equipment (163) (887)
-------- -------
Net cash used for investments and acquisitions (163) (707)
Financing activities -
Borrowings from line of credit 242 --
Principal payments of long-term debt (331) (1,799)
-------- -------
Net cash used for financing activities (89) (1,799)
-------- -------
Net increase (decrease) in cash and cash equivalents 225 (1,696)
Cash and cash equivalents at beginning of period 941 1,827
-------- -------
Cash and cash equivalents at end of period $ 1,166 $ 131
-------- -------
-------- -------
The accompanying notes are an integral part of these financial statements.
6
INNOSERV TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
(UNAUDITED)
1. GENERAL
The consolidated financial statements included herein have been prepared by
InnoServ Technologies, Inc. ("InnoServ") without audit, include all adjustments
which are, in the opinion of management, necessary for a fair presentation of
the results of operations for the three months and six months ended October 31,
1996 and 1995, pursuant to the rules and regulations of the Securities and
Exchange Commission, and include the accounts of InnoServ and its consolidated
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. Any and all adjustments made are of a normal and recurring nature in
accordance with Rule 10-01(b)(8) of Regulation S-X. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulation, however, InnoServ believes that
the disclosures in such financial statements are adequate to make the
information presented not misleading. These financial statements should be read
in conjunction with InnoServ's annual report on Form 10-K for the fiscal year
ended April 30, 1996, filed with the Securities and Exchange Commission. The
results of operations for the six months ended October 31, 1996, are not
necessarily indicative of the results that may be expected for the year ending
April 30, 1997.
2. INTEREST EXPENSE, NET
Interest expense is net of interest income of $8,000 and $16,000 for the
three months ended October 31, 1996 and 1995, respectively.
Interest expense is net of interest income of $23,000 and $16,000 for the
six months ended October 31, 1996 and 1995, respectively.
3. SUPPLEMENTAL CASH FLOW DISCLOSURE
Interest and income taxes paid in the six months ended October 31, 1996 and
1995 were as follows:
Six Months Ended
October 31,
-----------------------
1996 1995
-------- --------
Interest $124,000 $100,000
Income taxes $ 53,000 $ 8,000
7
INNOSERV TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
(UNAUDITED)
4. LONG-TERM DEBT
InnoServ has a loan agreement which contains a $1,500,000 term loan
expiring January 30, 1999, and a $500,000 revolving line of credit for working
capital, against which InnoServ had outstanding borrowings of $1,125,000 and
$498,000, respectively, at October 31, 1996. Obligations under the loan
agreement are secured by a security interest in InnoServ's accounts receivable,
inventory and equipment. The principal of the term loan is payable in equal
quarterly installments of $125,000. Interest on the obligations under the term
loan is payable quarterly and is payable monthly under the revolving line of
credit based on varying interest rates above the prime rate. The interest rate
at October 31, 1996, on the term loan was 9.25 percent and was 8.75 percent on
the revolving line of credit. The loan agreement contains financial covenants
including maintenance of certain financial ratios, net worth requirements and
restrictions on future borrowings and payment of dividends. As a result of the
net loss for the period, InnoServ failed to meet the net worth covenant under
the loan agreement as of October 31, 1996. InnoServ's bank waived this event of
default and has amended the net worth covenant effective October 31, 1996,
through the expiration date of the loan agreement of January 30, 1999. InnoServ
was in compliance with the financial covenants, as amended, at October 31, 1996.
Subsequent to October 31, 1996, the expiration date of the revolving line
of credit was extended from November 12, 1996, to March 12, 1997, and the
interest rate was increased from 0.5 percent to 1.0 percent above the prime
rate.
5. RESTRUCTURING
In the fourth quarter of fiscal 1996, InnoServ adopted a plan to reorganize
its operations in order to strategically focus on its comprehensive asset
management services business ("Asset Management"). As a result of this
reorganization, InnoServ recorded restructuring charges in the fourth quarter of
fiscal 1996 of $154,000 for employee termination benefits for 25 employees. As
of October 31, 1996, $108,000 of this amount had been paid to 21 employees. The
reorganization is expected to be completed by the end of the third quarter of
fiscal 1997.
8
INNOSERV TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
(UNAUDITED)
In the third quarter of fiscal 1996, InnoServ relocated its headquarters
from Corona, California to Arlington, Texas and recorded restructuring charges
of $411,000. As of October 31, 1996, this restructuring and the associated
payments were complete. The major components of these charges, the amounts
paid, and the adjustments to the liability as of October 31, 1996, were as
follows (in thousands):
Amounts
Paid as of Adjustments
Total October 31, to the
Charges 1996 Liability
------- ----------- -----------
Employee termination benefits $115 $(115) $ --
Employee relocation 169 (164) (5)
Employee training 67 (67) --
Office equipment relocation 30 (30) --
Facility closing costs 30 (7) (23)
---- ----- ----
$411 $(383) $(28)
---- ----- ----
---- ----- ----
The termination benefits were related to 12 employees.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SECOND QUARTER FISCAL 1997 COMPARED TO SECOND QUARTER FISCAL 1996
Consolidated revenues for the second quarter of fiscal 1997 were
$10,684,000 as compared to $11,898,000 in the same period of fiscal 1996, a
decline of $1,214,000, or 10 percent. Revenues from computerized tomography
("CT") maintenance service agreements decreased approximately $2,000,000
primarily as a result of the continued decline in the number and average
contract amount of CT maintenance service agreements in effect as older
equipment is being upgraded or removed from service by customers and
InnoServ's decision to not renew certain CT maintenance agreements in
unprofitable locations. Revenues from equipment sales decreased
approximately $250,000. Revenues at Advanced Imaging Technologies, Inc.
("AIT") were approximately $210,000 lower than the revenues in the same
period in fiscal 1996 as a result of lower sales of x-ray film, chemistry and
related accessories. Offsetting these declines, revenues from Asset
Management and multi-vendor services increased approximately $1,400,000 as
InnoServ continues to focus on the growing market for these type services.
Cost of operations decreased $126,000 from the same period in the prior
fiscal year primarily as a result of the decline in revenues, however, as a
percent of revenues, cost of operations increased from 78 percent to 85
percent. This increase as a percent of revenues was a result of costs
required to provide services for Asset Management agreements, while InnoServ
was not able to reduce its costs to service CT maintenance agreements
proportionately due to certain fixed support costs and the need to retain
field service technicians in certain locations despite a declining revenue
base in those locations. Selling and administrative expenses decreased
$362,000, or 20 percent, from the prior year primarily as a result of savings
from the consolidation of InnoServ's administrative functions and lower
selling expenses. Depreciation and amortization expenses did not change
significantly quarter to quarter.
The loss before income taxes for the second quarter of fiscal 1997 was
$456,000 as compared to income of $308,000 in the first quarter of fiscal
1996. The loss for fiscal 1997 was primarily the result of unfavorable
operating margins associated with InnoServ's maintenance business. Because
InnoServ employs field service engineers over a wide geographic area, the
current level of revenues are not sufficient in certain locations to cover
the direct and indirect costs of providing maintenance and repair services.
10
InnoServ did not recognize a tax benefit from the operating loss for the
second quarter of fiscal 1997. Under Statement of Financial Accounting
Standard No. 109 ("SFAS 109"), "Accounting for Income Taxes," net operating
losses enter into the calculation of deferred tax assets and liabilities. At
October 31, 1996, InnoServ had an estimated net deferred tax asset of
$6,100,000, primarily as a result of net operating losses. In accordance
with SFAS 109, InnoServ recorded a valuation allowance for the full amount of
the net deferred tax asset. The ultimate realization of the deferred tax
asset depends on the ability of InnoServ to generate sufficient taxable
income in the future. While InnoServ believes the deferred tax asset will be
substantially realized by future operating results, due to the cumulative
losses incurred in recent years the deferred tax assets do not currently meet
the criteria for recognition under SFAS 109. At October 31, 1995, the
effective tax rate for fiscal 1996 was estimated to be 40 percent and a
corresponding provision for income taxes was recorded for the three months
ended October 31, 1995.
SIX MONTHS FISCAL 1997 COMPARED TO SIX MONTHS FISCAL 1996
Consolidated revenues for the first six months of fiscal 1997 were
$22,472,000 as compared to $23,866,000 in the same period of fiscal 1996, a
decline of $1,394,000, or 6 percent. Revenues from CT maintenance service
agreements decreased approximately $3,900,000 primarily as a result of the
continued decline in the number and average contract amount of CT maintenance
service agreements in effect as older equipment is being upgraded or removed
from service by customers and InnoServ's decision to not renew certain CT
maintenance agreements in unprofitable locations. Revenues from InnoServ's
diagnostic mobile imaging operations were approximately $380,000 lower than
the revenues in the same period in fiscal 1996 as InnoServ discontinued its
shared services program at the end of the first quarter of fiscal 1996.
Additionally, revenues at AIT were approximately $350,000 lower as a result
of lower sales of x-ray film, chemistry and related accessories. Offsetting
these declines, revenues from Asset Management and multi-vendor services
increased approximately $3,200,000 as InnoServ continues to focus on the
growing market for these type services.
Cost of operations increased $431,000 from the same period in the prior
fiscal year. This increase was a result of costs required to provide
services for Asset Management agreements, while InnoServ was not able to
reduce its costs to service CT maintenance agreements proportionately due to
certain fixed support costs and the need to retain field service technicians
in certain locations despite a declining revenue base in those locations.
Selling and administrative expenses decreased $664,000, or 17 percent, from
the prior year primarily as a result of savings from the consolidation of
InnoServ's administrative functions and lower selling expenses. Depreciation
and amortization expenses did not change significantly between the two
periods.
The loss before income taxes for the first six months of fiscal 1997 was
$1,083,000 as compared to income of $120,000 in the first six months of
fiscal 1996. The loss in fiscal 1997 was primarily the result of unfavorable
operating margins associated with InnoServ's maintenance business. Because
InnoServ employs field service engineers over a wide geographic area, the
current level of revenues are not sufficient in certain locations to cover
the direct and indirect costs of providing maintenance and repair services.
InnoServ is continuing to implement plans to reorganize its service
operations to more cost effectively provide the services required by its
customers and to discontinue service in selected locations upon the
expiration of the existing maintenance agreements in those locations.
InnoServ believes these actions, coupled with strategic changes it is making
in the operations of the CT and Asset Management business and efforts to
expand the revenue base, will improve InnoServ's operations.
11
InnoServ did not recognize a tax benefit from the operating loss for the
first six months of fiscal 1997. Under Statement of Financial Accounting
Standard No. 109 ("SFAS 109"), "Accounting for Income Taxes," net operating
losses enter into the calculation of deferred tax assets and liabilities. At
October 31, 1996, InnoServ had an estimated net deferred tax asset of
$6,100,000, primarily as a result of net operating losses. In accordance
with SFAS 109, InnoServ recorded a valuation allowance for the full amount of
the net deferred tax asset. The ultimate realization of the deferred tax
asset depends on the ability of InnoServ to generate sufficient taxable
income in the future. While InnoServ believes the deferred tax asset will be
substantially realized by future operating results, due to the cumulative
losses incurred in recent years the deferred tax assets do not currently meet
the criteria for recognition under SFAS 109. At October 31, 1995, the
effective tax rate for fiscal 1996 was estimated to be 40 percent and a
corresponding provision for income taxes was recorded for the six months
ended October 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
At October 31, 1996, InnoServ had working capital of $555,000, of which
$1,166,000 was in cash and cash equivalents. Operations provided $477,000 of
cash for the six months ended October 31, 1996, primarily as a result of a
$1,189,000 reduction in inventory due to a decline in CT tube inventory as a
result of lower requirements for inventory because of the declining number of
CT maintenance service agreements in effect and management controls on
purchases, the sale of refurbished CT and magnetic resonance imaging scanners,
and the amortization of spare parts inventory. Additionally, receivables
declined $1,025,000 due to successful collection activities and lower
revenues. These funds were used to reduce accounts payable by $488,000 and
liabilities accrued at April 30, 1996, by $609,000. Deferred revenues also
declined $542,000 as services were provided and refurbished scanners were
delivered in the six months for which payment had been received as of April
30, 1996.
InnoServ's allowance for doubtful accounts at October 31, 1996, was
$905,000, or 18 percent of gross accounts receivable. InnoServ's customers
include hospitals, physician practices, outpatient clinics and
entrepreneurial operations. Some of these customers are thinly capitalized,
operate on small margins and experience cash flow difficulties due to the
lengthy time required to receive reimbursements from Medicare and insurance
companies. The changes occurring in the healthcare industry, primarily the
move to managed care, has weakened healthcare providers' ability to honor
their debts and have forced some of the providers out of business. As a
result of these factors, InnoServ has experienced difficulty in collecting on
its accounts receivable.
InnoServ has a loan agreement which contains a $1,500,000 term loan
expiring January 30, 1999, and a $500,000 revolving line of credit for
working capital, against which InnoServ had outstanding borrowings of
$1,125,000 and $498,000, respectively, at October 31, 1996. Obligations under
the loan agreement are secured by a security interest in InnoServ's accounts
receivable, inventory and equipment. The principal of the term loan is
payable in equal quarterly installments of $125,000. Interest on the
obligations under the term loan is payable quarterly and is payable monthly
under the revolving line of credit based on varying interest rates above the
prime rate. The interest rate at October 31, 1996, on the term loan was 9.25
percent and was 8.75 percent on the revolving line of credit. The loan
agreement contains financial covenants including maintenance of certain
financial ratios, net worth requirements and restrictions on future
borrowings and payment of dividends. As a result of the net loss for the
period, InnoServ failed to meet the net
12
worth covenant under the loan agreement as of October 31, 1996. InnoServ's
bank waived this event of default and has amended the net worth covenant
effective October 31, 1996, through the expiration date of the loan agreement
of January 30, 1999. InnoServ was in compliance with the financial
covenants, as amended, at October 31, 1996.
Subsequent to October 31, 1996, the expiration date of the revolving
line of credit was extended from November 12, 1996, to March 12, 1997, and
the interest rate was increased from 0.5 percent to 1.0 percent above the
prime rate. The previously announced negotiations with another financial
institution to secure financing to replace the bank loan agreement have been
discontinued. InnoServ is investigating alternative sources of financing. If
InnoServ is not successful in securing replacement financing by March 12,
1997, InnoServ believes the bank will extend the revolving line of credit
further.
InnoServ does not foresee the need to make any significant capital
purchases in the next twelve months and believes sufficient funds will be
available from its operations and line of credit to meet its working capital
requirements. If efforts to secure replacement financing are not successful
and the bank does not extend the line of credit, InnoServ will experience a
hardship in meeting its working capital requirements.
CAUTIONARY STATEMENT
The statements in this Management's Discussion and Analysis and
elsewhere in this report that are forward looking are based on current
expectations which involve numerous risks and uncertainties. InnoServ's
future results of operations and financial condition may differ materially
due to many factors including InnoServ's ability to attract and retain Asset
Management contracts, InnoServ's ability to implement its operating plan,
particularly as it relates to the CT maintenance business, competitive and
regulatory conditions in the healthcare industry generally, the availability
of financing, and other factors, many of which are beyond the control of
InnoServ.
13
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
In December 1995 InnoServ entered into a loan agreement with a bank.
The loan agreement contains financial covenants including the maintenance of
certain financial ratios, net worth requirements, and restrictions on future
borrowings and payment of dividends. In addition, the obligations under the
loan agreement are secured by a security interest in InnoServ's accounts
receivable, inventory and equipment. The line of credit facility contained
in the loan agreement was extended from October 12, 1996, to November 12,
1996, and subsequently extended to March 12, 1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders was held on September 17, 1996. At
the annual meeting the shareholders elected directors to hold office until
the 1997 annual meeting of shareholders and until their successors are
elected and qualified. The following directors were elected:
VOTES CAST
-------------------------
DIRECTOR FOR WITHHELD
-------- --------- --------
Thomas E. Carroll 3,985,133 3,282
Bernard J. Korman 3,985,133 3,282
Michael G. Puls 3,985,033 3,382
Dudley A. Rauch 3,985,133 3,282
Michael M. Sachs 3,985,233 3,182
Samuel Salen, M.D. 3,985,133 3,282
Michael F. Sandler 3,985,133 3,282
David A. Wegmann 3,985,133 3,282
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K.
(a) Exhibits:
The information required by this portion of Item 6 is set forth in the
Index to Exhibits beginning on page 16.
(b) Reports on Form 8-K:
The Registrant filed a report on Form 8-K on October 31, 1996, to report
the extension of the bank line of credit from October 12, 1996, to November
12, 1996.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATED: December 13, 1996
INNOSERV TECHNOLOGIES, INC.
By: /s/ Thomas Hoefert
--------------------------------
Thomas Hoefert
Vice President and Chief
Financial Officer (Duly
Authorized Officer and Principal
Financial and Accounting Officer)
15
INDEX TO EXHIBITS
Exhibit
No. Description of Exhibit
------- ----------------------
10.1 Revolving Credit Agreement dated as of October 12, 1996, in the
principal amount of $500,000 payable by the Registrant to Overton
Bank & Trust, N.A.
10.2 Revolving Credit Agreement dated as of November 12, 1996, in the
principal amount of $500,000 payable by the Registrant to Overton
Bank & Trust, N.A.
10.3 Form of Security Agreement dated as of November 12, 1996, between
Overton Bank & Trust, N.A. and each of InnoServ Technologies,
Inc., InnoServ Technologies Maintenance Services, Inc., Advanced
Imaging Technologies, Inc. and Sietec, Inc.
10.4 Letter Agreement dated December 12, 1996, amending the Loan
Agreement dated as of December 15, 1995, by and between Registrant
and Overton Bank & Trust, N.A.
11.1 Computation of Per Share Earnings.
27.1 Financial Data Schedule.
16