SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earlier event reported): August 11, 1995 (May 31, 1995)
C.I.S. TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-15457 73-1199382
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
6100 SOUTH YALE AVENUE, SUITE 1900, TULSA, OK 74136
(Address of registrant's principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 496-2451
Page 1 of 20
C.I.S. TECHNOLOGIES, INC.
INDEX TO FORM 8-K/A
Page
----
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF HOSPITAL COST CONSULTANTS,
INC.
Report of Independent Auditors............................ 4
Consolidated Balance Sheets as of December 31, 1994 and
1993..................................................... 5
Consolidated Statements of Operations for the years ended
December 31, 1994 and 1993............................... 6
Consolidated Statements of Cash Flows for the years ended
December 31, 1994 and 1993............................... 7
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1994 and 1993................... 8
Notes to Consolidated Financial Statements................ 9
(B) PRO FORMA FINANCIAL INFORMATION
Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1995 (Unaudited)............................... 15
Notes to Unaudited Pro Forma Condensed Consolidated
Balance Sheet............................................ 16
Pro Forma Condensed Consolidated Statement of Operations
for the three months ended March 31, 1995
(Unaudited).............................................. 17
Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1994 (Unaudited)......... 18
Notes to Unaudited Pro Forma Condensed Consolidated
Statement of Operations.................................. 19
Signatures................................................ 20
Page 2 of 20
(C) EXHIBITS
The following exhibits were included in the Registrant's Form 8-K dated
June 15, 1995 to which this Form 8-K/A is an amendment at the pages
indicated on the Exhibit Index thereto following the signature page thereof
and are, together with such Exhibit Index, incorporated by reference
herein:
Page(s) of this
Form or
Report Exhibit
previously
Number Description filed
------ ----------- ---------------
10.j Stock Purchase and Sale Agreement (Definitive Agreement Form 8-K filed
by and between CIS Technologies, Inc., First Financial May 19, 1995
Management Corporation, and MicroBilt Corporation)
10.k First Amendment to Stock Purchase and Sale Agreement Form 8-K filed
June 15, 1995
10.l Promissory Note Form 8-K filed
June 15, 1995
10.m Corporate Guaranty Form 8-K filed
June 15, 1995
10.n Pledge Agreement Form 8-K filed
June 15, 1995
10.o Accounts Security Agreement Form 8-K filed
June 15, 1995
10.p Agreement Concerning Earn-out Form 8-K filed
June 15, 1995
10.q Noncompete Agreement Form 8-K filed
June 15, 1995
10.w Section 2.2(b) and "Exhibit B" to Agreement of Merger dated Form 8-K filed
October 19, 1993 between inter alia, First Financial June 15, 1995
Management Corporation and Hospital Cost Consultants,
Inc., setting out certain "Earn-out Obligations" assumed by
the Registrant.
99.b Press release dated June 1, 1995. Form 8-K filed
June 15, 1995
Page 3 of 20
INDEPENDENT AUDITORS' REPORT
Hospital Cost Consultants, Inc.:
We have audited the accompanying consolidated balance sheets of Hospital Cost
Consultants, Inc. and subsidiaries ("the Company," a wholly-owned subsidiary of
First Financial Management Corporation ("FFMC") since December, 1993) as of
December 31, 1994 and 1993 and the related consolidated statements of
operations, shareholders' equity, and cash flows for the years 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 1994
and 1993 and the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, all of the
Company's outstanding common stock was acquired by FFMC in late December, 1993.
The transaction was accounted for as a purchase, and the financial statements as
of and subsequent to December 31, 1993 have been adjusted in accordance with the
principles of push-down accounting to reflect allocation of the purchase price
to the fair value of assets acquired and liabilities assumed. The financial
statements for the year ended December 31, 1993 reflect operations before the
acquisition by FFMC.
As discussed in Note 9 to the consolidated financial statements, on May 31,
1995, FFMC sold all of the outstanding stock of the Company to C.I.S.
Technologies, Inc.
/s/ Deloitte & Touche LLP
-------------------------
Deloitte & Touche, LLP
Atlanta, Georgia
July 14, 1995
Page 4 of 20
HOSPITAL COST CONSULTANTS, INC.
(a wholly-owned subsidiary of First Financial Management Corporation since
December, 1993)
CONSOLIDATED BALANCE SHEETS
As of December 31, 1994 and 1993
1994 1993
------------ -----------
Assets
------
Current assets:
Cash $ 235,000 $ 29,000
Accounts receivable, net of allowance for doubtful
accounts of $215,000 in 1994 and $135,000 in 1993 2,031,000 1,142,000
Other current assets 47,000 26,000
----------- -----------
Total current assets 2,313,000 1,197,000
----------- -----------
Property and equipment, net 1,044,000 634,000
Intangible assets, net 8,983,000 9,224,000
----------- -----------
Total non-current assets 10,027,000 9,858,000
----------- -----------
Total Assets $12,340,000 $11,055,000
=========== ===========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 1,079,000 $ 2,107,000
Deferred revenue 2,117,000 2,744,000
Current maturities of long-term debt -- 105,000
Current portion of capital leases 123,000 142,000
----------- -----------
Total current liabilities 3,319,000 5,098,000
----------- -----------
Payable to FFMC 4,300,000 697,000
Long-term debt -- 202,000
Capital lease obligations 188,000 311,000
----------- -----------
Total non-current liabilities 4,488,000 1,210,000
----------- -----------
Commitments and contingencies (see Note 8)
Shareholders' Equity:
Common stock, no par value: 10,000,000 shares
authorized, 100 shares issued and outstanding -- --
Investment by FFMC 5,365,000 4,747,000
Accumulated deficit (832,000) --
----------- -----------
Total shareholders' equity 4,533,000 4,747,000
----------- -----------
Total Liabilities and Shareholders' Equity $12,340,000 $11,055,000
=========== ===========
See accompanying notes to consolidated financial statements.
Page 5 of 20
HOSPITAL COST CONSULTANTS, INC.
(a wholly-owned subsidiary of First Financial Management Corporation since
December, 1993)
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 1994 and 1993
(Note 1c)
1994 1993
----------- -----------
Total revenues $7,997,000 $ 5,450,000
---------- -----------
Operating expenses:
Development and field operations 5,825,000 8,847,000
General and administrative 1,454,000 1,459,000
Depreciation and amortization 1,398,000 156,000
---------- -----------
Total operating expenses 8,677,000 10,462,000
---------- -----------
Operating loss (680,000) (5,012,000)
Interest expense 74,000 179,000
---------- -----------
Loss before income taxes (754,000) (5,191,000)
Income taxes 78,000 --
---------- -----------
Net loss $ (832,000) $(5,191,000)
========== ===========
See accompanying notes to consolidated financial statements.
Page 6 of 20
HOSPITAL COST CONSULTANTS, INC.
(a wholly-owned subsidiary of First Financial Management Corporation since
December, 1993)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1994 and 1993
(Note 1c)
1994 1993
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (832,000) $(5,191,000)
Adjustments to reconcile to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,398,000 156,000
Loss on sale of assets 28,000 4,000
Stock issued in lieu of cash compensation -- 1,785,000
Note payable issued in lieu of cash compensation -- 288,000
Changes in assets and liabilities:
Receivables (889,000) (898,000)
Other current assets (21,000) 20,000
Accounts payable and accrued expenses 91,000 2,745,000
Deferred revenue (627,000) 1,612,000
----------- -----------
Net cash provided by (used in) operating activities (852,000) 521,000
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment, net (698,000) (50,000)
Software development costs (897,000) (225,000)
Payment of acquisition costs (1,119,000) --
----------- -----------
Net cash used in investing activities (2,714,000) (275,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in payable to FFMC 3,603,000 697,000
Increase in investment by FFMC 618,000 --
Payments on notes payable (307,000) (1,000,000)
Payments on capital leases (142,000) (112,000)
Sales of common stock -- 8,000
----------- -----------
Net cash provided by (used in) financing activities 3,772,000 (407,000)
----------- -----------
Net change in cash 206,000 (161,000)
Cash at beginning of year 29,000 190,000
----------- -----------
Cash at end of year $ 235,000 $ 29,000
=========== ===========
See accompanying notes to consolidated financial statements.
Page 7 of 20
HOSPITAL COST CONSULTANTS, INC.
(a wholly-owned subsidiary of First Financial Management Corporation since
December, 1993)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years Ended December 31, 1994 and 1993
Common Stock Total
---------------------- Investment Accumulated Shareholders'
Shares Amount by FFMC Deficit Equity
--------- ---------- ----------- ----------- -------------
Balance, December 31, 1992 5,550,835 $2,025,000 $(3,734,000) $(1,709,000)
Net loss (5,191,000) (5,191,000)
Exercise of stock options 50,350 8,000 8,000
Issuance of common stock in
lieu of cash compensation 164,000 1,785,000 1,785,000
--------- ---------- ----------- ----------- -----------
Balance before investment by FFMC 5,765,185 $3,818,000 -- $(8,925,000) $(5,107,000)
========= ========== =========== =========== ===========
Balance December 31, 1993 (Note 1c) 100 $ 4,747,000 $ 4,747,000
Increase in investment by FFMC 618,000 618,000
Net loss (832,000) (832,000)
--------- ---------- ----------- ----------- -----------
Balance, December 31, 1994 100 -- $5,365,000 $ (832,000) $ 4,533,000
========= ========== ========== =========== ===========
See accompanying notes to consolidated financial statements.
Page 8 of 20
HOSPITAL COST CONSULTANTS, INC.
(a wholly-owned subsidiary of First Financial Management Corporation since
December, 1993)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1994 and 1993
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------------
A. CONSOLIDATION
-------------
The consolidated financial statements include the accounts of Hospital
Cost Consultants, Inc. and its wholly-owned subsidiaries Hospital Cost
Consultants Pty, Ltd. (an Australian Company) and Master Hospital
Systems, Inc. (collectively, the "Company" or "HCC"). All material
intercompany profits, transactions, and balances have been eliminated.
B. NATURE OF BUSINESS
------------------
The Company develops, markets, installs and provides technical support
for health care information systems for hospitals and other health care
providers.
C. CHANGE IN OWNERSHIP AND BASIS OF PRESENTATION
---------------------------------------------
In late December, 1993, First Financial Management Corporation ("FFMC")
acquired all of the outstanding common stock of HCC. FFMC's initial
investment, including payment of certain obligations of HCC to its
former shareholders, aggregated $4,842,000 (including $95,000 paid in
January, 1994). The acquisition was accounted for as a purchase, and
the accompanying financial statements as of and subsequent to December
31, 1993 have been adjusted, in accordance with the principles of push-
down accounting, to reflect allocation of the purchase price to the
fair value of assets acquired and liabilities assumed. Accordingly, the
statements of operations and cash flows for 1994 and 1993 are not
directly comparable, due principally to the amortization of intangible
assets recorded as a result of push-down accounting.
In accordance with the terms of the agreement and plan of merger, FFMC
agreed to pay additional consideration if certain contingencies were
met. Such consideration would be paid annually and based upon net
collected revenues of HCC, as defined, at levels exceeding historical
experience, for the period from the acquisition date through December
31, 1998. FFMC paid $523,000 of additional consideration in 1994, and
this amount was accrued at December 31, 1993 and is reflected in the
accompanying consolidated financial statements as an increase in
goodwill and investment by FFMC. In May 1995, in conjunction with the
transaction discussed in Note 9, FFMC agreed to pay $1,130,000 in
settlement of any and all remaining consideration due from FFMC to the
former HCC shareholders. The accompanying consolidated financial
statements do not reflect this settlement as of December 31, 1994.
D. REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK
----------------------------------------------------
HCC software sales and installation service revenues are recognized on
a percentage of completion method based on the completion of specific
installation milestones. Software maintenance contract revenues are
recognized on a straight-line basis over the lives of the maintenance
contracts. Other service revenues are recognized in the period the
services are performed. Sales of third party hardware and software are
recognized upon delivery.
Page 9 of 20
The Company primarily markets its products directly to its customers,
which consist of hospitals and other health care providers. Trade
receivables with hospitals potentially subject the Company to
concentration of credit risk. Such risk, however, is considered by
management to be limited because of the Company's sizable and
geographically diverse client base. The Company regularly evaluates the
credit worthiness of its customers; to date uncollectible accounts have
not been material. Sales to customers in Australia and the United
Kingdom represent approximately 8% and 10% of total revenues in 1994
and 1993, respectively.
E. PROPERTY AND EQUIPMENT
----------------------
Property and equipment is depreciated or amortized on a straight-line
basis over the lesser of the useful life of the related assets
(generally five years) or the lease term, as appropriate.
F. INTANGIBLE ASSETS
-----------------
Software development costs are capitalized in accordance with Statement
of Financial Accounting Standards No. 86 ("SFAS 86"), "Accounting for
the Cost of Computer Software to be Sold, Leased, or Otherwise
Marketed." Under SFAS 86, once the software has been clearly defined
and technological feasibility has been established, software
development costs are capitalized. In the allocation of purchase price
associated with FFMC's acquisition of the Company, approximately
$1,345,000 was allocated to purchased software technology. Software
development costs and purchased software technology are amortized over
an estimated useful life of four years.
Goodwill represents the excess of FFMC's cost of the Company over the
value assigned to tangible and identifiable intangible assets, and is
amortized on a straight-line basis over ten years. The Company
periodically assesses the recoverability of goodwill when there are
indications of potential impairment by comparing its carrying value to
expected future operating results of the Company. If estimates of
future operating results would be insufficient to recover future
charges of goodwill amortization, then the recorded value of goodwill
balances would be reduced by the estimated deficiencies in operating
results. No impairment has been recorded through December 31, 1994.
G. INCOME TAXES
------------
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for
Income Taxes." Under SFAS 109, deferred income taxes are determined
based on the difference between financial statement and tax bases of
assets and liabilities using enacted tax rates in effect for the years
in which such differences are expected to reverse.
FFMC files a consolidated federal income tax return which includes the
accounts of the Company for 1994. Income tax expense is computed for
the Company based upon the inclusion of the Company's income and
deductions in the consolidated federal return of FFMC, and current
income taxes payable are a component of the payable to FFMC in the
accompanying consolidated balance sheet. The evaluation of necessary
valuation allowances has been made based upon assessments of HCC's
ability to recover deferred tax assets on a stand-alone basis.
Page 10 of 20
H. PAYABLE TO FFMC
---------------
Payable to FFMC represents cumulative net advances from FFMC as a result of
transactions with or on behalf of the Company in the ordinary course of
business.
I. INVESTMENT BY FFMC
------------------
Investment by FFMC represents consideration paid by FFMC for HCC. These
amounts are reflected in shareholder's equity in the accompanying
consolidated balance sheets.
2. PROPERTY AND EQUIPMENT
----------------------
Property and equipment at December 31 consist of:
1994 1995
---------- ---------
Equipment and purchased internal-use software $ 787,000 $ 376,000
Furniture, fixtures and other 462,000 258,000
Less accumulated depreciation and amortization (205,000) --
---------- ---------
$1,044,000 $ 634,000
========== =========
The amount charged to expense for depreciation and amortization of
property and equipment was $260,000 and $156,000 for the years ended
December 31, 1994 and 1993, respectively. The gross value of equipment
under capital leases was $431,000 at December 31, 1994 and 1993, and the
accumulated amortization was $117,000 and zero at December 31, 1994 and
1993, respectively.
3. INTANGIBLE ASSETS
-----------------
Intangible assets at December 31 consist of:
1994 1993
---------- ----------
Goodwill $7,611,000 $7,611,000
Software development costs and
purchased software technology 2,510,000 1,613,000
Less accumulated amortization (1,138,000) --
---------- ----------
$8,983,000 $9,224,000
========== ==========
Amortization of software development costs and purchased software
technology was $377,000 for 1994 and zero for 1993.
4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
-------------------------------------
Accounts payable and accrued expenses at December 31 consist of:
1994 1993
---------- ----------
Accounts payable $ 384,000 $ 569,000
Accrued compensation and benefits 535,000 310,000
Acquisition liabilities 79,000 1,228,000
Other accrued expenses 81,000 --
---------- ----------
$1,079,000 $2,107,000
========== ==========
Page 11 of 20
5. INCOME TAXES
------------
The Company had no provision for deferred income taxes for 1994 and 1993.
The Company's effective tax rate differs from the statutory rate as
follows:
1994 1993
---- ----
Federal statutory rate (34)% (34)%
State income taxes, net of federal income tax benefit (6) (6)
Non-deductible goodwill amortization 39 --
Change in deferred tax asset valuation allowance 11 40
--- ---
Effective tax rate 10% 0%
=== ===
The following table outlines the principal components of deferred tax
items, representing the difference between book and tax bases of the
Company's assets and liabilities as aggregated under SFAS 109 as of
December 31, 1994 and 1993.
1994 1993
------------ -----------
Deferred tax assets (liabilities) related to:
Net operating loss carryforward $ 882,000 $ 1,003,000
Accounts receivable 1,421,000 785,000
Deferred revenue 847,000 1,098,000
Accrued expenses (67,000) 325,000
Software development costs (130,000) (140,000)
Property and equipment 186,000 4,000
Other 24,000 4,000
Less: valuation allowance (3,163,000) (3,079,000)
----------- -----------
Deferred taxes $ -- $ --
=========== ===========
6. EMPLOYEE BENEFIT PLANS
----------------------
In January 1994, the Company's employees began participating in FFMC's
savings plan which covers substantially all of its employees. The plan
provides tax deferred amounts for each participant, consisting of employee
elective contributions and additional discretionary Company contributions.
The aggregate amount charged to expense for this plan was approximately
$49,000 in 1994.
The Company does not offer post-retirement health care or other insurance
benefits for retired employees. The Company does offer postemployment
benefits primarily relating to short-term disability, and has adopted
Statement of Financial Accounting Standards No. 112, "Employer's Accounting
for Postemployment Benefits."
The Company's stock option plan was discontinued upon acquisition by FFMC,
and options for 2,350,250 shares expired without being exercised.
7. RELATED PARTY TRANSACTIONS
--------------------------
The Company utilizes certain FFMC services such as legal, internal audit,
income tax accounting, and other general administrative services which are
not charged to HCC and which are not in the aggregate material.
During 1994, the Company repaid notes payable to certain former
shareholders of HCC. These notes, which bore interest at 8%, are reflected
in the accompanying December 31, 1993 balance sheet at $307,000.
Page 12 of 20
8. COMMITMENTS AND CONTINGENCIES
-----------------------------
The Company leases certain of its equipment under operating lease agreements.
Lease terms generally range from four to five years and substantially all
agreements contain renewal options. Total rent expense for operating leases
was $472,000 and $220,000 for 1994 and 1993, respectively.
Minimum commitments for rental payments under noncancelable capital and
operating leases at December 31, 1994 are as follows:
Operating Capital
1995 $ 516,000 $ 157,000
1996 516,000 104,000
1997 516,000 76,000
1998 516,000 30,000
1999 47,000 --
---------- ---------
Total minimum payments $2,111,000 367,000
==========
Less amount representing interest (56,000)
---------
Present value of capital lease obligations 311,000
Less current portion (123,000)
---------
Long-term portion of capital lease obligations $ 188,000
=========
9. SUBSEQUENT EVENTS
-----------------
On May 31, 1995, FFMC sold all of the outstanding common stock of HCC to CIS
Technologies, Inc. for $10,000,000 and the assumption of remaining contingent
consideration payable pursuant to the agreement and plan of merger between
FFMC and the former shareholders of HCC (see Note 1).
The accompanying consolidated financial statements do not reflect adjustments
to assets and liabilities of HCC which may be required to reflect CIS
Technologies, Inc.'s new basis of accounting resulting from the purchase.
Page 13 of 20
C.I.S. TECHNOLOGIES, INC. AND SUBSIDIARIES
____________
PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS - UNAUDITED
For the Three Months Ended March 31, 1995
and the Year Ended December 31, 1994
Page 14 of 20
C.I.S. TECHNOLOGIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET - UNAUDITED
At March 31, 1995
Pro Forma
CIS HCC Adjustments Pro Forma
----------- ----------- ----------- -----------
ASSETS
------
CURRENT ASSETS
Cash $ 8,942,013 $ 231,000 $(8,000,000)/(a)/ $ 1,173,013
Accounts receivable, net 6,702,263 1,990,000 8,692,263
Charge recovery 5,048,557 5,048,557
Related party receivable 229,154 229,154
Prepaid expenses 645,199 645,199
Other current assets 1,198,610 42,000 1,240,610
----------- ----------- ----------- ===========
TOTAL CURRENT ASSETS 22,765,796 2,263,000 (8,000,000) 17,028,796
=========== =========== =========== ===========
NON-CURRENT ASSETS
Related party receivables 32,061 -- 32,061
Property and equipment, net 10,170,835 2,672,432 12,843,267
Intangible assets, net 13,461,629 7,583,568 6,278,000/(b)/ 27,323,197
Deferred tax asset 900,000 -- 900,000
Other non-current assets 453,419 453,419
----------- ----------- ----------- -----------
TOTAL NON-CURRENT ASSETS 25,017,944 10,256,000 6,278,000 41,551,944
=========== =========== =========== ===========
TOTAL ASSETS $47,783,740 $12,519,000 $(1,722,000) $58,580,740
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 1,347,242 $ 1,027,000 $ 2,374,242
Borrowings under line of credit -- -- 2,000,000/(d)/ 2,000,000
Current maturities of long-term debt 1,102,579 -- 5,000,000/(b)/ 6,102,579
Current portion of capital leases 220,280 123,000 343,280
Deferred revenue 573,273 2,495,000 3,068,273
----------- ----------- ----------- ===========
TOTAL CURRENT LIABILITIES 3,243,374 3,645,000 7,000,000 13,888,374
=========== =========== =========== ===========
NON-CURRENT LIABILITIES
Long-term debt 3,195,596 4,200,000 (4,200,000)/(c)/ 3,195,596
Capital lease obligation 74,375 152,000 226,375
Deferred income taxes 157,963 -- -- 157,963
----------- ----------- ----------- -----------
TOTAL NON-CURRENT LIABILITIES 3,427,934 4,352,000 (4,200,000) 3,579,934
=========== =========== =========== ===========
STOCKHOLDERS' EQUITY 41,112,432 4,522,000 (4,522,000)/(e)/ 41,112,432
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $47,783,740 $12,519,000 $(1,722,000) $58,580,740
=========== =========== =========== ===========
See Accompanying Notes.
Page 15 of 20
C.I.S. TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
The pro forma condensed consolidated balance sheet, which has been prepared
utilizing the historical balance sheet of Hospital Cost Consultants, Inc.
("HCC") and C.I.S. Technologies, Inc. ("CIS") as of March 31, 1995, is based
upon the assumption that the acquisition by CIS accounted for under the purchase
method, occurred as of March 31, 1995, and includes the following pro forma
adjustments:
(a) To reflect the cash paid to complete the acquisition of HCC.
(b) Adjustment to reflect the allocation of the total purchase price of
HCC of $15,000,000 to the assets acquired and liabilities assumed and
the recording of goodwill and other intangibles associated with the
acquisition.
The final allocation of the purchase price is contingent upon the
receipt of final information on the acquired assets, but is not
expected to differ materially from the preliminary allocation herein.
(c) To eliminate debt of HCC not assumed as part of the acquisition.
(d) To reflect additional borrowings associated with the acquisition.
(e) To eliminate HCC shareholders' equity.
The pro forma balance sheet should be read in conjunction with the financial
statements and notes of CIS and HCC as of December 31, 1994 and March 31, 1995.
Page 16 of 20
C.I.S. TECHNOLOGIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS - UNAUDITED
For the Three Months Ended March 31, 1995
Pro Forma
CIS HCC Adjustments Pro Forma
----------- ---------- ----------- -----------
REVENUE $ 8,396,113 $1,624,000 $ -- $10,020,113
----------- ---------- ---------- -----------
OPERATING EXPENSES
Technical operations 856,373 394,866 -- 1,251,239
Sales and client service 4,008,260 1,391,134 -- 5,399,394
General and administrative 1,745,689 374,000 -- 2,119,689
Depreciation and amortization 897,053 390,000 426,000/(a)/ 1,713,053
----------- ---------- ---------- -----------
Total operating expenses 7,507,375 2,550,000 426,000 10,483,375
----------- ---------- ---------- -----------
OPERATING INCOME (LOSS) 888,738 (926,000) (426,000) (463,262)
OTHER INCOME (EXPENSE) 15,575 -- (49,000)/(b)/
(75,000)/(c)/ (108,425)
----------- ---------- ---------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 904,313 (926,000) (550,000) (571,687)
PROVISION (BENEFIT) FOR
INCOME TAXES 51,692 (184,000) 184,000/(d)/ 51,692
----------- ---------- ---------- -----------
NET INCOME (LOSS) $ 852,621 $ (742,000) $ (734,000) $ (623,379)
=========== ========== ========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 32,495,677 32,495,677
=========== ===========
EARNINGS PER SHARE-PRIMARY
AND FULLY DILUTED $.03 $(.02)
=========== ===========
See Accompanying Notes.
Page 17 of 20
C.I.S. TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
Pro Forma
CIS HCC Adjustments Pro Forma
----------- ---------- ------------ -----------
REVENUE $31,689,204 $7,997,000 $ -- $39,686,204
----------- ---------- ----------- -----------
OPERATING EXPENSES
Technical operations 2,783,217 793,000 -- 3,576,217
Sales and client service 17,015,000 5,032,000 -- 22,047,000
General and administrative 6,852,545 1,454,000 -- 8,306,545
Depreciation and amortization 2,701,671 1,398,000 1,700,000/(a)/ 5,799,671
----------- ---------- ----------- -----------
Total operating expenses 29,352,433 8,677,000 1,700,000 39,729,433
----------- ---------- ----------- -----------
OPERATING INCOME (LOSS) 2,336,771 (680,000) (1,700,000) (43,229)
OTHER INCOME (EXPENSE) (125,805) (74,000) (510,000)/(b)/
(50,000)/(c)/ (759,805)
----------- ---------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 2,210,966 (754,000) (2,260,000) (803,034)
PROVISION (BENEFIT) FOR
INCOME TAXES 13,964 78,000 (78,000)/(d)/ 13,964
----------- ---------- ----------- -----------
NET INCOME (LOSS) $ 2,197,002 $ (832,000) $(2,182,000) $ (816,998)
=========== ========== =========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 27,617,091 27,617,091
=========== ===========
EARNINGS PER SHARE-PRIMARY
AND FULLY DILUTED $.08 $(.03)
=========== ===========
See Accompanying Notes.
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C.I.S. TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
The pro forma condensed statements of operations, which have been prepared
utilizing the historical statements of operations of Hospital Cost Consultants,
Inc. ("HCC") and C.I.S. Technologies, Inc. ("CIS") for the year ended December
31, 1994 and the three months ended March 31, 1995, are based upon the
assumption that the acquisition by CIS, accounted for under the purchase method,
occurred as of January 1, 1994 and include the following pro forma adjustments.
(a) Adjustment to amortization due to increase in goodwill and other
intangibles associated with the acquisition.
(b) Adjustment to reflect increase in interest expense on debt issued
associated with the acquisition.
(c) Adjustment to reflect interest foregone from short-term investments
due to acquisition.
(d) Adjustment of income tax expense (benefit) recognized to reflect
expense (benefit) associated with pro forma combined results of
operations.
The pro forma financial statements should be read in conjunction with the
financial statements and notes of CIS and HCC for the year ended December 31,
1994 and the three months ended March 31, 1995. HCC results of operations for
1994 included expenses related to the re-engineering of their software products,
which re-engineering increased the sales cycle time and negatively impacted
revenues. These pro forma results are not necessarily indicative of what
actually would have occurred if the acquisition had been in effect for the
entire periods presented. In addition, they are not intended to be a projection
of future results and do not reflect any synergies that might be achieved from
combined operations.
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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, thereunto duly authorized.
C.I.S. TECHNOLOGIES, INC.
/s/ Rebecca L. Speight
----------------------
Rebecca L. Speight
Director, Finance & Accounting
(Principal Accounting Officer)
Date: August 14, 1995
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