UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended June 30, 1996
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 33-80731
PHYSICIAN SUPPORT SYSTEMS, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 13-3624081
____________________________ __________________
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
ROUTE 230 AND EBY-CHIQUES ROAD
MT. JOY, PENNSYLVANIA 17552
___________________________________________________________________
(Address of principal executive offices) (Zip Code)
(717) 653-5340
______________
Registrant's telephone number, including area code
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 issuer's classes of common
stock, as of the latest practicable date.
Common Stock, par value $.001 per share 7,221,628 Shares
_______________________________________ _______________________
Class Outstanding at
August 10, 1996
PHYSICIAN SUPPORT SYSTEMS, INC.
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 2
Condensed Consolidated Statements of
Operations - Three and Six Months
Ended June 30, 1996 and 1995 3
Condensed Consolidated Statements of Cash
Flows -- Six Months Ended
June 30, 1996 and 1995 4
Notes to Condensed Consolidated
Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Signature 11
Index of Exhibits
1
Part I. Financial Information
Item 1. Financial Statements
PHYSICIAN SUPPORT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
1996 1995
------------ -----------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents................................... $ 15,060,323 $ 1,019,562
Accounts receivable ........................................ 4,893,465 5,495,189
Accounts receivable -- unbilled............................. 8,771,761 6,120,168
Prepaid expenses and other current assets................... 862,767 604,021
------------ -----------
Total current assets................................... 29,588,316 13,238,940
Property and equipment -- net.................................... 3,692,427 3,678,996
Intangible assets -- net......................................... 26,596,563 11,965,026
Other assets..................................................... 167,738 154,537
------------ -----------
Total.................................................. $ 60,045,044 $29,037,499
------------ -----------
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable............................................ $ 958,857 $ 789,021
Accrued expenses............................................ 9,112,221 5,637,915
Short-term borrowings....................................... -- 600,000
Current portion of long-term debt........................... 78,576 2,237,744
Current portion of other long-term liabilities.............. 545,164 710,188
Deferred income taxes....................................... 244,058 267,659
------------ -----------
Total current liabilities.............................. 10,938,876 10,242,527
------------ -----------
Long-term debt................................................... 5,672,557 14,052,609
------------ -----------
Other long-term liabilities...................................... 1,813,338 1,564,942
------------ -----------
Deferred income taxes............................................ 991,172 991,172
------------ -----------
Commitments and contingencies
Redeemable preferred stock:
Par value $.01 per share: authorized 10,000 shares; 10%
Preferred Stock, Series A and B, stated value $500 per
share, outstanding 2,932.032 shares of each
series at December 31, 1995............................... -- 2,932,032
------------ -----------
Stockholders' equity (deficiency):
Preferred stock, par value $.01 per share: authorized
10,000,000 shares; none outstanding
Common stock, par value $.001 per share:
authorized 100,000,000 shares; outstanding 7,221,628 and
3,185,000 shares at June 30, 1996 and December 31, 1995
respectively.............................................. 7,222 3,185
Additional paid-in capital.................................. 44,272,218 470,038
Accumulated deficit......................................... (3,650,339) (1,219,006)
------------ -----------
40,629,101 (745,783)
------------ -----------
Total.................................................. $ 60,045,044 $29,037,499
------------ -----------
------------ -----------
See notes to condensed consolidated financial statements.
2
PHYSICIAN SUPPORT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------- ------------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Revenues............................................. $10,337,432 $ 7,431,197 $19,388,552 $14,262,836
----------- ----------- ----------- -----------
Operating expenses:
Salaries and wages.............................. 5,435,581 3,732,448 10,227,302 7,387,875
General and administrative...................... 3,280,323 2,577,301 6,516,011 5,173,091
Depreciation and amortization................... 1,022,470 958,857 2,088,984 1,908,645
Interest income................................. (226,691) (3,893) (375,889) (8,291)
Interest expense................................ 136,611 384,465 303,156 768,958
Merger costs.................................... 1,150,000 -- 1,150,000 --
Restructuring charge............................ 2,500,000 -- 2,500,000 --
----------- ----------- ----------- -----------
Income (loss) before income taxes (benefit).......... (2,960,862) (217,981) (3,021,012) (967,442)
Income taxes (benefit)............................... (630,000) (33,742) (656,000) (202,890)
----------- ----------- ----------- -----------
Net income (loss).................................... (2,330,862) (184,239) (2,365,012) (764,552)
Preferred stock dividends............................ -- (67,416) (36,320) (132,288)
----------- ----------- ----------- -----------
Net income (loss) applicable to common stock......... $(2,330,862) $ (251,655) $(2,401,332) $ (896,840)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income (loss) per share.......................... $(0.32) $(0.08) $(0.38) $(0.28)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average shares outstanding.................. 7,262,427 3,185,000 6,308,655 3,185,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
See notes to condensed consolidated financial statements.
3
PHYSICIAN SUPPORT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30,
-------------------------------
1996 1995
----------- -----------
(UNAUDITED) (UNAUDITED)
Cash flows from operating activities:
Net income (loss).............................................. $(2,365,012) $ (764,552)
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization............................. 2,088,984 1,908,645
Deferred income taxes..................................... (656,000) (253,751)
Other long-term liabilities............................... (168,714) (498,006)
Changes in operating assets and liabilities:
Accounts receivable.................................. 1,598,571 (460,282)
Accounts receivable -- unbilled...................... (466,087) (161,354)
Prepaid expenses, other current assets and other
assets............................................. (206,817) (121,319)
Accounts payable..................................... 93,793 (24,527)
Accrued expenses..................................... (392,462) 179,003
------------ -----------
Net cash provided by (used in) operating
activities.................................... (473,744) (196,143)
------------ -----------
Cash flows from investing activities:
Acquisitions, net of cash acquired............................. (14,661,135) --
Capital expenditures........................................... (291,498) (453,885)
------------ -----------
Net cash used in investing activities........... (14,952,633) (453,885)
------------ -----------
Cash flows from financing activities:
Net proceeds from sale of common stock......................... 43,806,217 --
Proceeds from short-term borrowings............................ -- 200,000
Repayment of short-term borrowings............................. (600,000) --
Principal payments on long-term debt........................... (10,539,218) (337,583)
Principal payments on capital lease obligations................ (159,509) (151,202)
Common stock dividends......................................... (72,000) (60,000)
Redemption of preferred stock.................................. (2,932,032) --
Redeemable preferred stock distributions....................... (36,320) --
------------- -----------
Net cash provided by (used in)
financing activities.......................... 29,467,138 (348,785)
------------- -----------
Net increase (decrease) in cash and cash equivalents................ 14,040,761 (998,813)
Cash and cash equivalents, beginning of period...................... 1,019,562 1,618,755
------------ -----------
Cash and cash equivalents, end of period........................... $ 15,060,323 $ 619,942
------------ -----------
------------ -----------
Supplemental investing activity:
Fair value of assets acquired.................................. $ 19,876,748 $ --
Cash acquired.................................................. (316,877) --
Liabilities assumed............................................ (2,636,736) --
Deferred purchase price........................................ (2,262,000) --
------------ -----------
Net cash paid for acquisitions.................. $ 14,661,135 $ --
------------ -----------
------------ -----------
Supplemental disclosure of cash flow information:
Cash paid for interest......................................... $ 1,224,181 $ 594,250
------------ -----------
------------ -----------
Capital lease obligations incurred in acquisition of
equipment.................................................... $ -- $ --
------------ -----------
------------ -----------
See notes to condensed consolidated financial statements.
4
PHYSICIAN SUPPORT SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
1. BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements included herein
have been prepared by the Company in accordance with the rules and regulations
of the Securities and Exchange Commission and consequently do not include all
of the disclosures normally required by generally accepted accounting
principles. These unaudited condensed consolidated financial statements should
be read in conjunction with the audited consolidated financial statements and
related notes thereto included in the Company's Annual Report on Form 10-K.
The unaudited financial information contained herein reflects all
adjustments (consisting of only normal recurring accruals) which, in the opinion
of management, are necessary for a fair presentation of the results of
operations for the three and six month periods ended June 30, 1996 and 1995.
2. COMMON STOCK
a. Sale of common stock--On February 12, 1996, the Company authorized the
issuance of up to 10,000,000 shares of preferred stock, increased the number of
authorized shares of common stock from 5,000 to 100,000,000, changed the par
value of its common stock from $.01 to $.001 per share and effected a 1,400-for-
one stock split. In addition, on February 12, 1996, the Company sold 4,025,000
shares of common stock for $12 per share in its initial public offering of
common stock. The net proceeds of such offering of approximately $43,556,000
were used to repay all outstanding short and long-term debt except for the
Spring acquisition subordinated note, redeem all outstanding shares of
preferred stock and acquire three businesses (North Coast Health Care Management
Group (which consisted of three affiliated companies) ('NCHC Group'), Medical
Management Support, Inc. ('MMS') and Data Processing Systems, Inc. ('DPS')
(together, the 'Acquired Businesses')) currently providing business management
services to physicians.
b. 1996 Stock Option Plan--On February 9, 1996, the Company adopted the
1996 Stock Option Plan (the 'Plan'). A total of 939,750 authorized but unissued
shares of common stock are reserved for issuance under the Plan. All options
issued under the Plan through June 30, 1996 have an exercise price of not less
than 100% of the fair market value of a share of the Company's common stock on
the date of the grant, vest over five years and must be exercised within ten
years from the date of the grant. Through June 30, 1996, the Company has issued
165,000 options under the Plan at exercise prices ranging from $12 to $21.75
per share.
3. BUSINESS COMBINATIONS
On February 15, 1996, the Company acquired 100 percent of the outstanding
common stock and substantially all of the assets and liabilities of the
companies that made up the NCHC Group for approximately $8,000,000 in cash and
deferred payments.
On February 15, 1996, the Company acquired substantially all of the assets
and liabilities of MMS for approximately $2,500,000 in cash.
On February 15, 1996, the Company acquired substantially all of the assets
and liabilities of DPS for approximately $1,150,000 in cash and deferred
payments.
On May 8, 1996, the Company acquired substantially all of the assets and
liabilities of PBS Northwest, Inc. ('PBS') for approximately $3,000,000 in cash.
On May 21, 1996, the Company acquired substantially all of the assets and
liabilities of ALM, Inc. ('ALM') for approximately $1,600,000 in cash and
deferred payments plus 11,628 shares of common stock valued at approximately
$250,000.
Each of the foregoing acquisitions was accounted for under the purchase
method of accounting, and accordingly, the net assets were recorded at their
fair values on the dates of acquisition and the results of operations of each of
these companies are included in the Company's consolidated statement of
operations from the respective dates of acquisition. Excess purchase price over
fair value of net assets acquired of approximately $13,667,000 is being
amortized on the straight-line method over 20 years.
On June 28, 1996, the Company merged with Synergistic Systems, Inc.
('SSI') by exchanging 945,000 shares of common stock of the Company for all
the oustanding shares of common stock of SSI. This transaction has been
accounted for as a pooling of interests, and accordingly, all previously
issued financial statements of the Company have been restated to include SSI. A
reconciliation of revenues, net income (loss) and net income (loss) per share of
the Company as previously reported, and combined, is as follows:
5
Six Months Ended June 30, 1995:
- -------------------------------
AS PREVIOUSLY
REPORTED SSI COMBINED
-------------- --- --------
Revenues $9,522,273 $4,740,563 $14,262,836
Net income (loss) $ (791,705) $ 27,153 $ (764,552)
Preferred stock dividends $ (132,288) $ -- $ (132,288)
Net income (loss) applicable to
common stock $ (923,993) $ 27,153 $ (896,840)
Net income (loss) per share $(0.41) $(0.28)
Weighted average shares 2,240,000 3,185,000
In connection with the SSI merger, the Company incurred approximately
$1,150,000 in transaction fees and other merger related costs which are
reflected in the Company's results of operations for the three months ended
June 30, 1996.
The unaudited consolidated results of operations of the Company on a pro
forma basis (excluding merger costs and restructuring charge) as if the Company
had sold 4,025,000 shares of common stock for $12 per share, repaid all
outstanding short and long-term debt (except for The Spring Anesthesia Group,
Inc. ('Spring') acquisition subordinated note), redeemed all outstanding
shares of preferred stock and consummated the acquisitions of NCHC, MMS, DPS,
PBS, ALM and SSI on January 1, 1995 are as follows:
SIX MONTHS ENDED JUNE 30,
-------------------------
1996 1995
---- ----
Revenue $21,493,000 $20,089,000
Net income (loss) $ 468,000 $ 298,000
Net income (loss) per share $0.06 $0.04
Weighted average shares 7,221,628 7,221,628
4. LONG-TERM DEBT
On February 15, 1996, the Company repaid all outstanding short and long-
term debt except for the Spring acquisition subordinated note.
On May 2, 1996, the Company received a commitment from its bank for a $15
million line of credit through June 30, 1998.
5. RESTRUCTURING CHARGE
In June 1996, the Company recorded a restructuring charge of $2,500,000
related to the write-off of certain computer hardware and software and certain
non-recurring expenses associated with a limited restructuring of operations at
Spring, its subsidiary located in Stockton, California, and to the write-off
of certain computer hardware and software at SSI. The Company intends to
replace both the Spring and SSI operating software with its proprietary
operating software as soon as is practicable.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company is a leading provider of business management services to
hospital-affiliated physicians. In providing its clients with business
management services, the Company manages the billing process for its clients,
including preparation and follow-up on bills from physicians for medical
services provided by such physicians to their patients. The Company is generally
compensated with a management fee based upon net receipts of its clients.
On February 12, 1996, the Company sold 4,025,000 shares of common stock
for $12 per share in its initial public offering of common stock. The net
proceeds of such offering of approximately $43,556,000 were used to repay
all outstanding short and long-term debt except for the Spring acquisition
subordinated note, redeem all outstanding shares of preferred stock and
acquire three businesses (North Coast Health Care Management Group (which
consisted of three affiliated companies) ('NCHC Group'), Medical Management
Support, Inc. ('MMS') and Data Processing Systems, Inc. ('DPS') (together,
the 'Acquired Businesses')) currently providing business management services
to physicians. See 'ACQUISITIONS.'
This Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the Company's latest
annual report on Form 10-K.
ACQUISITIONS
On February 15, 1996, the Company acquired 100 percent of the outstanding
common stock and substantially all the assets and liabilities of the companies
that made up the NCHC Group for approximately $8,000,000 in cash and deferred
payments.
On February 15, 1996, the Company acquired substantially all the assets and
liabilities of MMS for approximately $2,500,000 in cash.
On February 15, 1996, the Company acquired substantially all the assets and
liabilities DPS for approximately $1,150,000 in cash and deferred payments. The
payment of the deferred payments is subject to DPS' retention of clients.
On May 8, 1996, the Company acquired substantially all the assets and
liabilities of PBS Northwest, Inc. ('PBS') for approximately $3,000,000 in cash.
On May 21, 1996, the Company acquired substantially all the assets and
liabilities of ALM, Inc. ('ALM') for approximately $1,600,000 in cash and
deferred payments plus 11,628 shares of common stock valued at approximately
$250,000.
Each of the foregoing acquisitions was accounted for under the purchase
method of accounting, and, accordingly, the net assets acquired were recorded at
their fair values on the date of acquisition and the results of operations of
each of these companies is included in the Company's consolidated statement of
operations from the respective dates of acquisition. Excess purchase price over
fair value of net assets acquired is being amortized on the straight-line
method over 20 years.
On June 28, 1996, the Company merged with Synergistic Systems, Inc. ("SSI")
by exchanging 945,000 shares of common stock of the Company for all the
outstanding shares of common stock of SSI. This transaction has been
accounted for as a pooling of interests, and accordingly, all previously issued
financial statements of the Company have been restated to include SSI.
RESULTS OF OPERATIONS
The following table sets forth, for the periods presented, the percentages
of net revenue represented by certain items reflected in the Company's statement
of operations.
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-------------------------------- -----------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
Revenues 100.0% 100.0% 100.0% 100.0%
Salaries and wages 52.6 50.2 52.7 51.8
General and administrative expenses 31.7 34.7 33.6 36.3
Depreciation and amortization 9.9 12.9 10.8 13.4
Interest and other income (2.2) (0.1) (1.9) (0.1)
Interest expense 1.3 5.2 1.6 5.4
Merger costs 11.1 -- 5.9 --
Restructuring charge 24.2 -- 12.9 --
------ ------ ------ -----
Income (loss) before income taxes (benefit) (28.6) (2.9) (15.6) (6.8)
Income taxes (benefit) 6.1 0.4 3.4 1.4
------ ------ ------ -----
Net income (loss) (22.5)% (2.5)% (12.2)% (5.4)%
------ ------ ------ -----
------ ------ ------ -----
7
Revenues
Revenues increased approximately 39% from $7,431,000 for the three months
ended June 30, 1995 to $10,337,000 for the three months ended June 30, 1996
and 36% from $14,263,000 for the six months ended June 30, 1995 to $19,389,000
for the six months ended June 30, 1996. Such increases resulted primarily from
businesses acquired during the three and six months ended June 30, 1996, and
increases in the number of clients served by the Company in the three and six
months ended June 30, 1996 compared to the three and six months ended June
30, 1995. In addition, the Company's revenues during the three months ended June
30, 1996 were adversely affected by operating inefficiencies in the
processing of physician charges at The Spring Anesthesia Group, Inc.,
('Spring') the Company's subsidiary located in Stockton, California. See
'Restructuring Charge and Merger Costs.'
Salaries and Wages
Salaries and wages increased approximately 46% from $3,732,000 for the
three months ended June 30, 1995 to $5,436,000 for the three months ended June
30, 1996 and 38% from $7,388,000 for the six months ended June 30, 1995 to
$10,227,000 for the six months ended June 30, 1996. Such increases resulted
primarily from businesses acquired during the three and six months ended June
30, 1996, and increases in the number of clients served by the Company. In
addition, the Company incurred increased salary and wage expenses during the
three months ended June 30, 1996 in an attempt to increase the processing of
physician charges at Spring. See 'Restructuring Charge and Merger Costs.'
General and Administrative Expenses
General and administrative expenses increased approximately 27% from
$2,577,000 for the three months ended June 30, 1995 to $3,280,000 for the three
months ended June 30, 1996 and 26% from $5,173,000 for the six months ended
June 30, 1995 to $6,516,000 for the six months ended June 30, 1996. Such
increases resulted primarily from businesses acquired during the three and six
months ended June 30, 1996 and increases in the number of clients served by the
Company. In addition, the Company incurred increased general and administrative
expenses during the three months ended June 30, 1996 in an attempt to increase
the processing of physician charges at Spring. See 'Restructuring Charge and
Merger Costs.'
Depreciation and Amortization
Depreciation and amortization increased approximately 7% from $959,000 for
the three months ended June 30, 1995 to $1,022,000 for the three months ended
June 30, 1996 and 9% from $1,909,000 for the six months ended June 30, 1995
to $2,089,000 for the six months ended June 30, 1996. Such increases resulted
primarily from businesses acquired during the three and six months ended June
30, 1996.
Interest and Other Income
Interest and other income increased from $4,000 for the three months ended
June 30, 1995 to $227,000 for the three months ended June 30, 1996 and from
$8,000 for the six months ended June 30, 1995 to $376,000 for the six months
ended June 30, 1996 as a result of interest earned on excess cash proceeds from
the Company's initial public offering of common stock.
Interest Expense
Interest expense decreased approximately 65% from $384,000 for the three
months ended June 30, 1995 to $137,000 for the three months ended June 30,
1996 and 61% from $769,000 for the six months ended June 30, 1995 to $303,000
for the six months ended June 30, 1996. Such decreases resulted from
decreased levels of short and long-term debt after repayment of such
borrowings out of proceeds from the Company's initial public offering of common
stock.
Restructuring Charge and Merger Costs
In June 1996, the Company recorded a restructuring charge of $2,500,000
related to the write-off of certain computer hardware and software and certain
non-recurring expenses associated with a limited restructuring of operations at
Spring, and to the write-off of certain computer hardware and software at SSI.
Spring's results in the three months ended June 30, 1996 were adversely
affected by operating inefficiencies in the processing of physician charges
which resulted in lower revenues during the period. In addition, the Company
incurred increased salary and general and administrative expenses in an attempt
to increase production. To address these operating inefficiencies, among other
actions, the Company decided to replace certain computer hardware and software
at Spring with its proprietary operating software. The Company recorded a
restructuring charge in the three months ended June 30, 1996 of approximately
$1,600,000 related to the write-off of certain computer hardware and
software, and costs associated with the introduction of a new management team,
some limited severance activity and other transition items.
At the time of the SSI merger, the Company determined that it would replace
certain SSI computer hardware and software with its proprietary operating
software, and accordingly recorded a charge of approximately $900,000 in the
three months ended June 30, 1996. In addition, the Company incurred
approximately $1,150,000 in transaction fees and other merger related costs in
connection with the SSI merger which are reflected in the Company's results of
operations for the three months ended June 30, 1996.
The Company intends to replace both the Spring and SSI operating software
with its proprietary operating software as soon as is practicable.
8
Income Taxes (Benefit)
The Company's effective rate for income taxes (benefit) increased from 16%
for the three months ended June 30, 1995 to 21% for the three months ended
June 30, 1996 and from 21% for the six months ended June 30, 1995 to 22% for the
six months ended June 30, 1996. Such increases resulted from differing levels in
each year of projected annual pretax income or loss and the effect on such
projected levels of items not deductible for federal income tax purposes.
Net Loss and Net Loss Per Share
Net loss and net loss per share result from the accumulation of the items
described above and the increase in the weighted average number of shares
outstanding resulting from the Company's initial public offering of common
stock.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital and cash and cash equivalents were
$18,649,000 and $15,060,000, respectively, at June 30, 1996 compared to
$2,996,000 and $1,020,000, respectively, at December 31, 1995. Such increases
in working capital and cash and cash equivalents result primarily from excess
cash proceeds from the Company's initial public offering of common stock. Such
excess proceeds are primarily invested in obligations of the U.S. Treasury
or other U.S. government agencies or other highly liquid short-term corporate
securities.
The Company's total short and long-term debt was $5,751,000 at June 30,
1996 compared to $16,290,000 at December 31, 1995. The Company repaid all
outstanding short and long-term debt, except for the Spring subordinated note,
out of proceeds from its initial public offering of common stock.
On May 2, 1996, the Company received a commitment from its bank for a $15
million line of credit through June 30, 1998.
The Company believes anticipated cash flow from operations, cash and cash
equivalents on hand and borrowing capacity from its line of credit commitment
are adequate for its anticipated financing needs.
9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
2.1 Asset Purchase Agreement among PBS Northwest Incorporated, the
shareholders of PBS Northwest, Incorporated and PSS PBS
Northwest, Inc. dated May 8, 1996 (incorporated herein by
reference to the Company's Current Report on Form 8-K dated May
14, 1996, as amended by Amendment No. 1 thereto dated July 15,
1996).
2.2 Asset Purchase Agreement among ALM, Inc., the Shareholders of
ALM, Inc. and PSS-ALM, Inc. dated May 21, 1996 (incorporated
herein by reference to the Company's Current Report on Form
8-K dated June 4, 1996, as amended by Amendment No. 1 thereto
dated August 2, 1996).
2.3 Agreement and Plan of Merger dated as of June 28, 1996 among the
Company, PSS Synergistic Systems, Inc. and Synergistic Systems,
Inc. (incorporated herein by reference to the Company's Current
Report on Form 8-K dated July 8, 1996).
3.1 Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference to the Company's
Registration Statement on Form S-1 dated December 21, 1995
(Registration No. 33-80731), as amended by Amendment No. 2
thereto dated January 29, 1996).
3.2 ByLaws of the Company (incorporated by reference to the
Company's Registration Statement on Form S-1 dated December 21,
1995 (Registration No. 33-80731)).
27 Financial Data Schedule
(b) Reports on Form 8-K.
The Company filed the following reports on Form 8-K during the quarter
ended June 30, 1996:
1. Current Report dated May 14, 1996, as amended by Amendment No. 1
thereto dated July 15, 1996, reporting the Company's acquisition on May 8,
1996 of substantially all the assets of PBS Northwest, Incorporated
('PBS'). Said report, as amended, includes (i) the financial statements of
PBS as of December 31, 1994 and 1995 and for the two years then ended and
as of March 31, 1996 and for the three months ended March 31, 1995 and 1996
and (ii) the pro forma financial statements of the Company, giving effect
to the acquisition of PBS, for the year ended December 31, 1995 and the
three months ended March 31, 1996 and as of March 31, 1996.
2. Current Report dated June 4, 1996, as amended by Amendment No. 1
thereto dated August 2, 1996, reporting the Company's acquisition on May
21, 1996 of substantially all the assets of ALM, Inc. ('ALM'). Said
report as amended, includes (i) the financial statements of ALM as of
December 31, 1995 and for the year then ended and as of March 31, 1996 and
for the three months ended March 31, 1995 and 1996 and (ii) the pro forma
financial statements of the Company, giving effect to the acquisiton of
ALM, for the year ended December 31, 1995 and the three months ended March
31, 1996 and as of March 31, 1996.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, on August 16, 1996.
PHYSICIAN SUPPORT SYSTEMS, INC.
By: /s/ DAVID S. GELLER
...................................
DAVID S. GELLER
SENIOR VICE PRESIDENT
CHIEF FINANCIAL OFFICER
(Duly Authorized Officer and
Principal Financial Officer)
11
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
2.1 Asset Purchase Agreement among PBS Northwest Incorporated,
the shareholders of PBS Northwest, Incorporated and PSS
PBS Northwest, Inc. dated May 8, 1996 (incorporated herein by
reference to the Company's Current Report on Form 8-K dated
May 14, 1996, as amended by Amendment No. 1 thereto dated
July 15, 1996).
2.2 Asset Purchase Agreement among ALM, Inc., the Shareholders of
ALM, Inc. and PSS-ALM, Inc. dated May 21, 1996 (incorporated
herein by reference to the Company's Current Report on Form
8-K dated June 4, 1996, as amended by Amendment No. 1 thereto
dated August 2, 1996).
2.3 Agreement and Plan of Merger dated as of June 28, 1996 among
the Company, PSS Synergistic Systems, Inc. and Synergistic
Systems, Inc. (incorporated herein by reference to the
Company's Current Report on Form 8-K dated July 8, 1996).
3.1 Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference to the Company's
Registration Statement on Form S-1 dated December 21, 1995
(Registration No. 33-80731), as amended by Amendment No. 2
thereto dated January 29, 1996).
3.2 ByLaws of the Company (incorporated by reference to the
Company's Registration Statement on Form S-1 dated December
21, 1995 (Registration No. 33-80731)).
27 Financial Data Schedule