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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
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 000-19480
PER-SE TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 58-1651222
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2840 MT. WILKINSON PARKWAY 30339
ATLANTA, GEORGIA (Zip code)
(Address of principal executive
offices)
(770) 444-5300
Registrant's telephone number, including area code
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
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 of stock outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
SHARES OUTSTANDING
TITLE OF CLASS AT NOVEMBER 6, 2000
- -------------- -------------------
Common Stock $0.01 Par Value................................ 29,901,554 Shares
Non-voting Common Stock $0.01 Par Value..................... 0 Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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PER-SE TECHNOLOGIES, INC.
FORM 10-Q
FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2000
PAGE
----
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Balance Sheets as of September 30, 2000 and
December 31, 1999....................................... 2
Consolidated Statements of Operations for the three and
nine months ended September 30, 2000 and 1999........... 3
Consolidated Statements of Cash Flows for the nine
months ended September 30, 2000 and 1999................ 4
Notes to Consolidated Financial Statements.............. 5
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 11
PART II: OTHER INFORMATION
Item 1: Legal Proceedings....................................... 17
Item 5: Other Information....................................... 17
Item 6: Exhibits and Reports on Form 8-K........................ 18
20
Index to Exhibits................................................
------------------------------------
THIS FORM 10-Q AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY THE
COMPANY OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. 15 U.S.C.A. SECTIONS 77Z-2 AND 78U-5 (SUPP.
1996). THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR
CURRENT EXPECTATIONS OF THE COMPANY AND MEMBERS OF ITS MANAGEMENT TEAM AS WELL
AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED. PROSPECTIVE INVESTORS ARE
CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS.
IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE IN FORWARD-LOOKING STATEMENTS ARE SET FORTH IN
THE SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS
EXHIBIT 99.1 TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED MARCH 27, 2000,
WHICH IS INCORPORATED HEREIN BY REFERENCE. THE COMPANY UNDERTAKES NO OBLIGATION
TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED ASSUMPTIONS,
THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES TO FUTURE OPERATING RESULTS
OVER TIME.
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT PAR VALUE DATA)
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
CURRENT ASSETS:
Cash and cash equivalents................................. $ 55,660 $ 74,354
Restricted cash........................................... 9,696 7,519
--------- ---------
Total cash............................................. 65,356 81,873
Accounts receivable, billed............................... 48,834 46,097
Accounts receivable, unbilled............................. 3,709 42,813
Other..................................................... 5,886 7,394
--------- ---------
Total current assets................................... 123,785 178,177
Property and equipment, net................................. 28,321 34,103
Intangible assets........................................... 46,753 46,446
Other....................................................... 5,478 6,291
--------- ---------
$ 204,337 $ 265,017
========= =========
CURRENT LIABILITIES:
Accounts payable.......................................... $ 7,853 $ 10,005
Accrued compensation...................................... 14,159 21,842
Accrued expenses.......................................... 16,865 26,449
Accrued legal settlements................................. 1,709 4,043
Current portion of long-term debt......................... 2,103 2,138
--------- ---------
42,689 64,477
Deferred revenue.......................................... 19,017 20,396
--------- ---------
Total current liabilities.............................. 61,706 84,873
Long-term debt.............................................. 175,000 175,000
Other obligations........................................... 2,990 3,704
--------- ---------
Total liabilities...................................... 239,696 263,577
--------- ---------
Stockholders' Equity:
Preferred stock, no par value, 20,000 authorized; none
issued................................................. -- --
Common stock, voting, $0.01 par value, 200,000 authorized;
29,902 and 29,575 issued and outstanding in 2000 and
1999, respectively..................................... 299 296
Common stock, non voting, $0.01 par value, 600 authorized;
none issued............................................ -- --
Paid-in capital........................................... 774,509 771,864
Warrants.................................................. 1,495 1,495
Accumulated deficit....................................... (811,662) (772,215)
--------- ---------
Total stockholders' (deficit) equity................... (35,359) 1,440
--------- ---------
$ 204,337 $ 265,017
========= =========
See notes to consolidated financial statements.
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PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ --------------------
2000 1999 2000 1999
------- ------- -------- --------
Revenue......................................... $75,381 $81,270 $233,089 $245,001
------- ------- -------- --------
Salaries and wages.............................. 46,921 53,388 146,260 160,311
Other operating expenses........................ 22,202 26,363 69,397 84,260
Depreciation.................................... 3,457 4,189 11,904 16,629
Amortization.................................... 2,658 2,357 7,465 6,872
Interest expense, net........................... 3,601 4,075 10,913 11,858
Legal settlements............................... -- (4,439) -- 24,811
------- ------- -------- --------
Total expenses............................. 78,839 85,933 245,939 304,741
------- ------- -------- --------
Loss before income taxes........................ (3,458) (4,663) (12,850) (59,740)
Income tax expense (benefit).................... 111 22 (633) (502)
------- ------- -------- --------
Loss from continuing operations................. (3,569) (4,685) (12,217) (59,238)
------- ------- -------- --------
Discontinued operations, net of tax:
Income from discontinued operations........... -- 1,351 -- 2,012
(Loss) gain on sale of subsidiaries........... (351) (5,955) 10,545 (1,468)
------- ------- -------- --------
(351) (4,604) 10,545 544
------- ------- -------- --------
Loss before cumulative effect of accounting
change........................................ (3,920) (9,289) (1,672) (58,694)
Cumulative effect of accounting change, net of
tax........................................... -- -- 37,684 --
------- ------- -------- --------
Net loss................................... $(3,920) $(9,289) $(39,356) $(58,694)
======= ======= ======== ========
Basic net (loss) income per common share:
Loss from continuing operations............... $ (0.12) $ (0.17) $ (0.41) $ (2.15)
(Loss) income from discontinued operations,
net of tax................................. (0.01) (0.16) 0.35 0.02
Cumulative effect of accounting change, net of
tax........................................ -- -- (1.26) --
------- ------- -------- --------
Net loss................................... $ (0.13) $ (0.33) $ (1.32) $ (2.13)
======= ======= ======== ========
Weighted average shares outstanding............. 29,882 28,465 29,836 27,524
======= ======= ======== ========
See notes to consolidated financial statements.
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5
PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................... $(39,356) $(58,694)
Adjustments to reconcile net loss to net cash used for
operating activities:
Income from discontinued operations....................... -- (2,012)
Depreciation and amortization............................. 19,369 23,501
(Gain) loss on sale of subsidiaries....................... (10,545) 1,141
Cumulative effect of accounting change.................... 37,684 --
Non-cash legal settlement costs........................... -- 21,433
Changes in assets and liabilities, excluding effects of
acquisitions and divestitures:
Restricted cash........................................ (3,384) 392
Accounts receivable, billed............................ (2,665) 6,438
Accounts receivable, unbilled.......................... 1,420 3,290
Accounts payable....................................... (2,152) (1,507)
Accrued compensation................................... (7,699) 153
Accrued expenses....................................... (11,501) (8,572)
Accrued legal settlements.............................. (2,334) (8,153)
Deferred revenue....................................... (1,379) 2,471
Other, net............................................. 2,019 3,811
-------- --------
Net cash used for continuing operations................ (20,523) (16,308)
Net cash used for discontinued operations.............. -- (3,292)
-------- --------
Net cash used for operating activities............... (20,523) (19,600)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of subsidiaries, net..................... 10,545 12,664
Proceeds from sale of property and equipment................ 5,655 2,751
Software development costs.................................. (4,827) (5,777)
Purchases of property and equipment......................... (8,991) (6,210)
Other....................................................... (1,051) --
-------- --------
Net cash provided by investing activities............ 1,331 3,428
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock...................... 292 920
Proceeds from the exercise of stock options................. 302 214
Proceeds from borrowings.................................... -- --
Payments of debt............................................ (35) (1,038)
Deferred financing costs.................................... (61) (232)
-------- --------
Net cash provided by (used for) financing
activities.......................................... 498 (136)
-------- --------
CASH AND CASH EQUIVALENTS:
Net change.................................................. (18,694) (16,308)
Balance at beginning of period.............................. 74,354 54,409
-------- --------
Balance at end of period.................................... $ 55,660 $ 38,101
======== ========
See notes to consolidated financial statements.
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6
PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Per-Se Technologies, Inc. (the "Company") are presented in accordance with the
requirements of Form 10-Q and Rule 10-01 of Regulation S-X. For further
information, the reader of this Form 10-Q may wish to refer to the audited
consolidated financial statements of the Company for the fiscal year ended
December 31, 1999 included in the Company's Annual Report on Form 10-K filed
March 27, 2000.
The unaudited condensed financial information has been prepared in
accordance with the Company's customary accounting policies and practices. In
the opinion of management, all adjustments, consisting of normal recurring
adjustments considered necessary for a fair presentation of results for the
interim period, have been included.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses. Actual results could differ from those estimates.
Basic net loss per common share is based on the weighted average number of
shares of common stock outstanding during the period. Diluted net loss per
common share is not presented, as it is antidilutive. Stock options and warrants
are the only securities issued that would have been included in the diluted
earnings per share calculation.
As more thoroughly discussed in Note 3, the Medaphis Services Corporation
("Hospital Services") and Impact Innovations Group ("Impact") segments have been
presented as discontinued operations for all periods presented.
NOTE 2 -- RESTRICTED CASH
At September 30, 2000, restricted cash is primarily comprised of $5.6
million related to the Company's letters of credit. In addition, the Company
held $3.2 million in escrow, the majority of which will be released to cash and
cash equivalents in the fourth quarter of 2000. The remaining restricted cash
balance represents amounts collected on behalf of certain clients, a portion of
which is held in trust until remitted to such clients.
NOTE 3 -- DISCONTINUED OPERATIONS
On November 30, 1998, the Company completed the sale of Hospital Services
to NCO Group, Inc. ("NCO") for initial consideration of $107.5 million. During
the first quarter of 1999, the Company received additional consideration of $0.8
million based on the Hospital Services final closing balance sheet and payment
on certain Hospital Services accounts receivable retained by the Company. The
additional consideration resulted in the recognition of an additional gain of
$0.5 million, net of tax of $0.3 million.
In addition, the Company received a purchase price adjustment of $10.0
million cash from NCO on May 5, 2000 based on Hospital Services' achievement of
various operational targets in 1999. The purchase price adjustment resulted in
the recognition of an additional gain of approximately $9.2 million in the
quarter ended June 30, 2000.
In 1999, the Company completed the sale of both divisions of Impact. The
Company sold the commercial division of Impact to Complete Business Solutions,
Inc. ("CBSI") effective April 15, 1999 for $14.4 million, net of the final
closing balance sheet adjustment of $0.6 million which was paid on July 16,
1999. Final CBSI post acquisition matters were resolved in the third quarter of
2000 resulting in an additional charge to discontinued operations of $0.4
million. The government division of Impact was sold on December 17, 1999 to J3
Technology Services Corp. for $46.5 million, including a purchase price
adjustment of $1.5 million received on March 30, 2000 based on the division's
tangible net worth at closing. The purchase price adjustment resulted in the
recognition of an additional gain of $1.5 million.
5
7
The Company accrued $5.3 million for the period ended September 30, 1999 as
a result of an agreement with SCI Management Corporation ("SCI"), a former
client of the commercial division of Impact. SCI filed a complaint against the
commercial division of Impact in January of 1998 seeking recovery for alleged
damages in connection with work performed by Impact under a consulting contract.
Although the commercial division of Impact was sold effective April 15, 1999,
the Company remained responsible for the SCI complaint. The Company paid $3.2
million to SCI on November 4, 1999. The Company issued a promissory note for the
balance of $2.1 million bearing interest at 8.25%, which was paid on October 31,
2000. This matter is now settled.
Pursuant to APB No. 30, Reporting the Results of Operations -- Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions, the consolidated financial
statements of the Company have been presented to reflect both Hospital Services
and Impact as discontinued operations for all periods presented.
The net operating results of these segments have been reported in the
Consolidated Statements of Operations as "Income from discontinued operations"
and the net cash flows have been reported in the Consolidated Statements of Cash
Flows as "Net cash used for discontinued operations."
Summarized financial information for the discontinued operations is as
follows:
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1999
------------- -------------
IMPACT
-----------------------------
(IN THOUSANDS)
Revenue.................................................... $11,234 $44,411
======= =======
Income from discontinued operations before income taxes.... 1,351 2,210
Income tax expense......................................... -- 198
------- -------
Income from discontinued operations, net of tax............ $ 1,351 $ 2,012
======= =======
NOTE 4 -- RECENT ACQUISITION
On February 9, 2000, the Company acquired the outstanding capital stock of
Knowledgeable Healthcare Solutions, Inc. ("KHS") for consideration of $3.1
million, consisting of $1.1 million cash and $2.0 million of the Company's
Common Stock. In addition, the purchase agreement provides for a purchase price
adjustment of up to $6.0 million, payable in cash and the Company's Common
Stock, should KHS meet certain operational targets over the next three years.
KHS has developed a managed care software product that is used by the Company to
provide business management services to numerous independent physician
associations and sold as turnkey software to healthcare payers and providers.
The KHS acquisition was recorded using the purchase method of accounting
and, accordingly, the purchase price has been allocated to the assets acquired
and the liabilities assumed based on their estimated fair market value at the
date of acquisition. Approximately $2.9 million of the purchase price has been
allocated to intangible assets and will be amortized using the straight-line
method over five years. The operating results of KHS, which were not material to
the Company's operations, are included in the Company's Consolidated Statements
of Operations from the date of acquisition.
NOTE 5 -- CUMULATIVE EFFECT OF ACCOUNTING CHANGE
On December 3, 1999, the Securities and Exchange Commission (the
"Commission") issued Staff Accounting Bulletin Number 101, Revenue Recognition
in Financial Statements ("SAB 101"). SAB 101 summarizes certain of the
Commission's views in applying generally accepted accounting principles to
revenue recognition in financial statements. SAB 101 provides interpretative
guidance on the unbilled accounts receivable and related revenue recognition
within the Company's industry. The Commission's guidance encouraged the
accounting change to be reflected by the Company's quarter ended March 31, 2000.
6
8
Therefore, consistent with the Commission's guidance and changing industry
practice, the Company began recognizing revenue in its Physician Services
segment on an "as billed" basis January 1, 2000. The Company does not expect
this change to significantly impact annual recognized revenue amounts. There is
no effect on cash flow resulting from this change.
The change in accounting method resulted in the elimination of $37.7
million of unbilled accounts receivable. The one-time, cumulative non-cash
charge in the Company's statement of operations for the nine months ended
September 30, 2000 reflects the $22.7 million elimination of the unbilled
accounts receivable on a net of tax basis and a corresponding $15.0 million
increase in the Company's deferred tax valuation allowance. See Note 9 for
further discussion of income taxes.
NOTE 6 -- LEGAL MATTERS
The Company is subject to claims, litigation and official billing inquiries
in the ordinary course of its business. Within the Company's industry, federal
and state civil and criminal laws govern medical billing and collection
activities. These laws provide for various fines, penalties, multiple damages,
assessments and sanctions for violations, including possible exclusion from
federal and state healthcare programs.
On January 8, 1997, the Commission notified the Company that it was
conducting a formal, non-public investigation into, among other things, former
officers and Company transactions including the restatements of the Company's
consolidated financial statements for the three months and year ended December
31, 1995 and its unaudited balance sheets as of March 31, 1996 and June 30,
1996. The Company has cooperated with the Commission during its investigation.
The Company and the Commission staff entered into an Offer of Settlement and
Consent Order in June 2000, subject to approval by the Commission. In the
proposed Consent Order, the Company, while neither admitting nor denying
wrongdoing, agrees not to violate certain of the federal securities laws,
including books and records requirements and filing requirements, in the future.
The Company expects the Consent Order to be approved by the Commission and, if
approved, as proposed, the Commission investigation will be concluded with no
fines or monetary penalties on the Company.
In December 1995, the Company acquired Medical Management Sciences, Inc.
("MMS") (now a part of the Company's Physician Services segment). At
acquisition, a lawsuit was pending against MMS for the alleged breach of two
related billing and asset purchase contracts entered into by MMS in 1994. In
November 1996, a jury in that lawsuit returned a verdict that produced a net
award to MMS of approximately $900,000. The trial court reversed the net award
to MMS and awarded the plaintiffs approximately $1.2 million in 1998, which was
reduced to $950,000 by appeals court in May 2000. In July 2000, MMS was granted
a stay of the judgment against it pending a petition by MMS to the U.S. Supreme
Court. MMS filed a Petition for Writ of Certiorari (the "Petition") with the
U.S. Supreme Court on October 5, 2000 seeking to overturn the decision of the
Sixth Circuit Court of Appeals and reinstate the jury verdict in MMS' favor. The
Petition is currently pending.
The Company believes that it has meritorious defenses to the claims and
other issues asserted in existing legal matters. There can be no assurance that
existing or future claims, government investigations and legal matters will not
have an adverse effect on the Company. Since the Company is often unable to
estimate a range of awards or losses, if any, on pending legal matters, amounts
have not been reflected in the financial statements unless estimable and
probable.
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9
NOTE 7 -- RESTRUCTURING AND OTHER CHARGES
The description of the type and amount of restructuring costs recorded and
applied against each reserve in the nine months ended September 30, 2000 is as
follows:
RESERVE RESERVE
BALANCE COSTS APPLIED BALANCE
DECEMBER 31, AGAINST SEPTEMBER 30,
1999 RESERVE 2000
------------ -------------- -------------
(IN THOUSANDS)
Lease termination costs......................... $3,528 $(574) $2,954
Severance....................................... 273 -- 273
------ ----- ------
$3,801 $(574) $3,227
====== ===== ======
NOTE 8 -- LONG-TERM DEBT
Under the indenture governing the 9 1/2% $175 million of Senior Notes due
2005 (the "Notes"), the balance of the net sale proceeds, as defined, from the
sale of Hospital Services, the commercial division of Impact, the government
division of Impact or from the sale of any other asset having a fair value in
excess of $1.0 million, must be invested in the Company's business within 360
days of receipt of proceeds related to the sale. To the extent that such net
proceeds are not invested within 360 days, such amount constitutes "excess
proceeds." If the aggregate amount of excess proceeds is greater than $10.0
million, the Company is required to offer to repurchase the Notes at par with
such excess proceeds.
As of September 30, 2000, uninvested net proceeds related to the sale of
non-core operations and other assets totaled approximately $64.4 million. The
net proceeds are the result of various asset sales and, as such, under the
Indenture, must be invested in the Company's business by varying points. The
Company will have to invest a minimum of approximately $37.9 million by December
11, 2000 to preclude the Company's obligation to make an offer to repurchase the
Notes at par in the first quarter of 2001. As of November 14, 2000, aggregate
excess proceeds did not exceed $10.0 million.
NOTE 9 -- INCOME TAXES
As of September 30, 2000, the Company reassessed the recoverability of its
deferred tax asset. Based on its analysis, the Company determined a full
valuation allowance of $243.4 million against the deferred tax asset was
required. The increase in the valuation allowance from December 31, 1999 is
primarily related to the elimination of the Company's unbilled accounts
receivable (see Note 5) and as such, $15.0 million was recorded against the
cumulative effect of accounting change. The increase was offset by an adjustment
to the Company's net operating loss carryforwards ("NOLs") based on 1999 actual
tax returns. When it becomes more likely than not that the Company will generate
sufficient taxable income to realize the deferred tax asset, the Company will
adjust this valuation allowance accordingly.
The Company recognized a net tax benefit of $0.6 million for the nine month
period ended September 30, 2000 related to state income tax refunds offset by
state tax payments.
NOTE 10 -- SEGMENT REPORTING
The Company's reportable segments are strategic business units that offer
different services and products. The Company provides its services and products
through its three operating segments: Physician Services, Application Software
and e-Health Solutions.
Physician Services provides business management services to physicians and
healthcare organizations, including clinical data collection, data input,
medical coding, billing, contract management, cash collections and accounts
receivable management. These services are designed to assist healthcare
providers with the business management functions associated with the delivery of
healthcare services, allowing physicians and hospital staffs to focus on
providing quality patient care. These services also assist physicians and
healthcare organizations in improving cash flows and reducing administrative
costs and burdens.
8
10
The Application Software segment provides financial and clinical software
including patient scheduling, staff management, clinical information systems and
patient financial management software. These applications enable healthcare
organizations to simultaneously optimize the quality of care delivered and the
profitability of business operations.
The e-Health Solutions segment offers Internet-enabled and private network
connectivity to both integrated healthcare delivery networks and physician
practices, including electronic claims processing, referral submissions,
eligibility verification and other electronic and paper transaction processing.
In addition, e-Health Solutions offers physician practice management software as
an application service provider to physician practices.
The Company evaluates each segment's performance based on operating profit
or loss. The Company accounts for intersegment sales as if the sales were to
third parties.
Information concerning the operations in these reportable segments is as
follows:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
(IN THOUSANDS)
Revenue:
Physician Services.................................. $55,042 $60,224 $171,633 $183,143
Application Software................................ 14,719 16,298 44,322 47,411
e-Health Solutions.................................. 8,365 7,641 25,452 23,089
Eliminations........................................ (2,745) (2,893) (8,318) (8,642)
------- ------- -------- --------
$75,381 $81,270 $233,089 $245,001
======= ======= ======== ========
Operating profit (loss)(1):
Physician Services.................................. $ 1,889 $(1,468) $ 4,593 $ (5,974)
Application Software................................ 1,026 1,127 1,297 (1,371)
e-Health Solutions.................................. 587 (165) 2,492 (613)
Corporate........................................... (3,359) (4,521) (10,319) (15,113)
------- ------- -------- --------
$ 143 $(5,027) $ (1,937) $(23,071)
======= ======= ======== ========
Interest expense, net................................. $ 3,601 $ 4,075 $ 10,913 $ 11,858
======= ======= ======== ========
Restructuring and other charges (including legal
settlements):
Physician Services.................................. $ -- $ -- $ -- $ 1,750
Corporate........................................... -- (4,439) -- 23,061
------- ------- -------- --------
$ -- $(4,439) $ -- $ 24,811
======= ======= ======== ========
Loss before income taxes.............................. $(3,458) $(4,663) $(12,850) $(59,740)
======= ======= ======== ========
Depreciation and amortization:
Physician Services.................................. $ 2,916 $ 3,270 $ 10,026 $ 12,384
Application Software................................ 1,932 1,600 5,459 5,034
e-Health Solutions.................................. 619 586 1,860 1,823
Corporate........................................... 648 1,090 2,024 4,260
------- ------- -------- --------
$ 6,115 $ 6,546 $ 19,369 $ 23,501
======= ======= ======== ========
Capital expenditures:
Physician Services.................................. $ 655 $ 1,111 $ 4,730 $ 4,252
Application Software................................ 354 195 1,232 691
e-Health Solutions.................................. 303 176 1,964 608
Corporate........................................... 29 187 1,065 659
------- ------- -------- --------
$ 1,341 $ 1,669 $ 8,991 $ 6,210
======= ======= ======== ========
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AS OF AS OF
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
(IN THOUSANDS)
Identifiable Assets:
Physician Services........................................ $ 69,831 $116,423
Application Software...................................... 41,787 39,265
e-Health Solutions........................................ 19,212 18,904
Corporate................................................. 73,507 90,425
-------- --------
$204,337 $265,017
======== ========
- ---------------
(1) Includes depreciation and amortization expense; excludes legal settlements,
restructuring and other charges and interest expense, net.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Per-Se Technologies, Inc. (the "Company"), a corporation organized in 1985
under the laws of the State of Delaware, is a global leader in delivering
technology-enabled business management services, financial and clinical software
solutions and Internet-enabled connectivity and e-health solutions to healthcare
providers and payers. The Company delivers its services and products through its
three operating segments: Physician Services, Application Software and e-Health
Solutions.
The Physician Services segment provides business management services to
physicians and healthcare organizations, including clinical data collection,
data input, medical coding, billing, contract management, cash collections and
accounts receivable management. These services are designed to assist healthcare
providers with the business management functions associated with the delivery of
healthcare services, allowing physicians and hospital staffs to focus on
providing quality patient care. These services also assist physicians and
healthcare organizations in improving cash flows and reducing administrative
costs and burdens.
The Application Software segment provides financial and clinical software
including patient scheduling, staff management, clinical information systems and
patient financial management software. These applications enable healthcare
organizations to simultaneously optimize the quality of care delivered and the
profitability of business operations.
The e-Health Solutions segment offers Internet-enabled and private network
connectivity to both integrated healthcare delivery networks and physician
practices, including electronic claims processing, referral submissions,
eligibility verification and other electronic and paper transaction processing.
In addition, e-Health Solutions offers physician practice management software as
an application service provider to physician practices.
The Company markets its products and services primarily to integrated
healthcare delivery networks, hospitals, physician practices, long-term care
facilities, acute care facilities, healthcare payers and managed care
organizations.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1999
Revenue. Revenue classified by the Company's different operating segments
is as follows:
THREE MONTHS ENDED
SEPTEMBER 30,
------------------
2000 1999
------- -------
(IN THOUSANDS)
Physician Services.......................................... $55,042 $60,224
Application Software........................................ 14,719 16,298
e-Health Solutions.......................................... 8,365 7,641
Eliminations................................................ (2,745) (2,893)
------- -------
$75,381 $81,270
======= =======
Physician Services' revenue decreased 8.6% to $55.0 million in the third
quarter of 2000 from $60.2 million in the same period in 1999. The revenue
decline is primarily attributable to Company and client-initiated
discontinuances throughout 1999 and 2000. Client discontinuances initiated by
the Company are a result of management's ongoing review and evaluation of
marginally profitable clients that yield returns unacceptable to management.
These discontinuances were partially offset by the addition of new business in
2000.
Application Software's revenue decreased 9.7% to $14.7 million for the
third quarter of 2000 from $16.3 million in the same period in 1999. The revenue
decline is primarily the result of lower consulting revenue due to fewer
conversion services being performed related to the date change to the year 2000.
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e-Health Solutions' revenue increased 9.5% to $8.4 million in the third
quarter of 2000 from $7.6 million in the same period in 1999. This increase is
primarily a result of higher volume in external claims processing at both the
statement processing center and the electronic exchange center.
Operating Profit (Loss). Operating profit (loss), which excludes legal
settlements, restructuring and other charges and interest expense, classified by
the Company's reportable segments is as follows:
THREE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
(IN THOUSANDS)
Physician Services.......................................... $ 1,889 $(1,468)
Application Software........................................ 1,026 1,127
e-Health Solutions.......................................... 587 (165)
Corporate................................................... (3,359) (4,521)
------- -------
$ 143 $(5,027)
======= =======
Physician Services' had an operating profit of $1.9 million for the three
months ended September 30, 2000 as compared to an operating loss of $1.5 million
for the same period in 1999. The increase is attributable to management's
efforts to focus on profitable business, as well as workforce reductions,
process improvements and productivity enhancements.
Application Software's operating profit decreased slightly for the three
months ended September 30, 2000 as compared to the same period in 1999. The
decrease is primarily attributable to the revenue decrease previously mentioned
partially offset by the Company's cost containment measures, specifically in the
areas of salaries and wages and outside services.
e-Health Solutions had an operating profit of $0.6 million for the three
months ended September 30, 1999 as compared to an operating loss of $0.2 million
for the same period in 1999. The increase is related to the revenue increase
previously discussed, operational improvements and decreased operating expenses.
The Company's Corporate overhead decreased 25.7% for the three months ended
September 30, 2000 as compared to the to the same period in 1999. This decrease
is related to management's continued commitment to reduce corporate overhead
costs wherever feasible.
Interest. Net interest expense was $3.6 million for the three months ended
September 30, 2000 as compared with $4.1 million for the three months ended
September 30, 1999. The decrease is primarily attributable to interest income of
$1.0 million generated from the short-term investment of cash in the third
quarter of 2000 compared to $0.6 million generated in the third quarter of 1999.
Legal Settlements. The Company did not incur legal settlement charges for
the three months ended September 30, 2000. In September 1999, the Company
reduced its legal settlement expense by $4.4 million related to the Company's
legal dispute with Foundation Health Services, Inc. ("Foundation"), formerly
Heath Systems International, Inc., arising from Per-Se's June 1996 acquisition
of Health Data Sciences Corporation ("HDS"). The Company had recorded an
estimated litigation settlement expense of $21.5 million in the quarter ended
June 30, 1999 based on an agreement in principle with Foundation. When the
agreement was finalized in October of 1999, the cost to the Company was reduced
to approximately $17.0 million and as a result, the legal settlement expense was
reduced by $4.4 million.
Income Taxes. The Company recognized a $0.1 million net tax expense in the
quarter ended September 30, 2000 related to state tax payments offset by state
tax refunds from prior periods.
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Discontinued Operations. Summarized financial information for the
discontinued operations for the three-month period ended September 30, 1999 is
as follows (the results exclude the commercial division of Impact which was sold
effective April 15, 1999):
FOR THE THREE
MONTHS ENDED
SEPTEMBER 30, 1999
------------------
IMPACT
------------------
(IN THOUSANDS)
Revenue.................................................. $11,234
=======
Income from discontinued operations before income
taxes.................................................. 1,351
Income tax expense....................................... --
=======
Income from discontinued operations, net of tax.......... $ 1,351
=======
On November 30, 1998, the Company completed the sale of Hospital Services
to NCO Group, Inc. ("NCO") for initial consideration of $107.5 million. During
the first quarter of 1999, the Company received additional consideration of $0.8
million based on the Hospital Services final closing balance sheet and payment
on certain Hospital Services accounts receivable retained by the Company. The
additional consideration resulted in the recognition of an additional gain of
$0.5 million, net of tax of $0.3 million.
In addition, the Company received a purchase price adjustment of $10.0
million cash from NCO on May 5, 2000 based on Hospital Services' achievement of
various operational targets in 1999. The purchase price adjustment resulted in
the recognition of an additional gain of approximately $9.2 million in the
quarter ended June 30, 2000.
In 1999, the Company completed the sale of both divisions of Impact. The
Company sold the commercial division of Impact to Complete Business Solutions,
Inc. ("CBSI") effective April 15, 1999 for $14.4 million, net of the final
closing balance sheet adjustment of $0.6 million which was paid on July 16,
1999. Final CBSI post acquisition matters were resolved in the third quarter of
2000 resulting in an additional charge to discontinued operations of $0.4
million. The government division of Impact was sold on December 17, 1999 to J3
Technology Services Corp. for $46.5 million, including a purchase price
adjustment of $1.5 million received on March 30, 2000 based on the division's
tangible net worth at closing. The purchase price adjustment resulted in the
recognition of an additional gain of $1.5 million.
The Company accrued $5.3 million for the period ended September 30, 1999 as
a result of an agreement with SCI Management Corporation ("SCI"), a former
client of the commercial division of Impact. SCI filed a complaint against the
commercial division of Impact in January of 1998 seeking recovery for alleged
damages in connection with work performed by Impact under a consulting contract.
Although the commercial division of Impact was sold effective April 15, 1999,
the Company remained responsible for the SCI complaint. The Company paid $3.2
million to SCI on November 4, 1999. The Company issued a promissory note for the
balance of $2.1 million bearing interest at 8.25%, which was paid on October 31,
2000. This matter is now settled.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1999
Revenue. Revenue classified by the Company's different operating segments
is as follows:
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
(IN THOUSANDS)
Physician Services.......................................... $171,633 $183,143
Application Software........................................ 44,322 47,411
e-Health Solutions.......................................... 25,452 23,089
Eliminations................................................ (8,318) (8,642)
-------- --------
$233,089 $245,001
======== ========
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Physician Services' revenue decreased 6.3% to $171.6 million for the nine
months ended September 30, 1999 from $183.1 million in the same period in 1999.
The revenue decline is primarily attributable to Company and client-initiated
discontinuances throughout 1999 and 2000. Client discontinuances initiated by
the Company are a result of management's ongoing review and evaluation of
marginally profitable clients that yield returns unacceptable to management.
These discontinuances were partially offset by the addition of new business in
2000.
Application Software's revenue decreased 6.5% to $44.3 million for the nine
months ended September 30, 2000 from $47.4 million in the same period in 1999.
The decline is attributable to a decrease in the software, hardware and
consulting revenue offset by an increase in software maintenance revenue.
e-Health Solutions' revenue increased 10.2% to $25.5 million for the nine
months ended September 30, 2000 from $23.1 million in the same period in 1999.
This increase is primarily a result of higher volume in external claims
processing at both the statement processing center and the electronic exchange
center.
Operating Profit (Loss). Operating profit (loss), which excludes legal
settlements, restructuring and other charges and interest expense, classified by
the Company's reportable segments is as follows:
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
(IN THOUSANDS)
Physician Services.......................................... $ 4,593 $ (5,974)
Application Software........................................ 1,297 (1,371)
e-Health Solutions.......................................... 2,492 (613)
Corporate................................................... (10,319) (15,113)
-------- --------
$ (1,937) $(23,071)
======== ========
Physician Services' had an operating profit of $4.6 million for the nine
months ended September 30, 2000 as compared to an operating loss of $6.0 million
for the same period in 1999. The improvement is related to management's efforts
to focus on profitable business, as well as workforce reductions, process
improvements and productivity enhancements.
Application Software had an operating profit of $1.3 million for the nine
months ended September 30, 2000 as compared to an operating loss of $1.4 million
for the same period in 1999. The increase is primarily attributable to the
Company's cost containment measures, specifically in the areas of salaries and
wages and outside services.
e-Health Solutions' had an operating profit of $2.5 million for the nine
months ended September 30, 2000 as compared to an operating loss of $0.6 million
for the same period in 1999. The increase is related to the revenue increase
previously discussed, operational improvements and decreased operating expenses.
For the nine months ended September 30, 2000, Corporate overhead expenses
decreased 31.7% to $10.3 million from $15.1 million for the same period in 1999.
The decrease is related to management's efforts to create more efficient
processes and reduce overhead costs where feasible.
Interest. Net interest expense was $10.9 million for the nine-month period
ended September 30, 2000 as compared to $11.9 million in the same period of
1999. The decrease is attributable to additional interest income generated from
the short-term investment of cash in 2000 offset by interest related to the
deferred portion of a prior period legal settlement.
Legal Settlements. The Company did not incur legal settlement charges for
the nine months ended September 30, 2000. During the nine months ended September
30, 1999, the Company recorded legal settlement charges of $17.0 million and
$6.0 million related to legal disputes arising from Per-Se's June 1996
acquisition of HDS and December 1995 acquisition of Medical Management Sciences,
Inc. ("MMS"), respectively. In addition, the Company paid $1.8 million to settle
contract claims against the Emergency Medicine division that arose in January
1998 in the ordinary course of business.
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Income Taxes. As of September 30, 2000, the Company reassessed the
recoverability of its deferred tax asset. Based on its analysis, the Company
determined a full valuation allowance of $243.4 million against the deferred tax
asset was required. The increase in the valuation allowance from December 31,
1999 is primarily related to the elimination of the Company's unbilled accounts
receivable (see Cumulative Effect of Accounting Change discussion below) and as
such, $15.0 million was recorded against the cumulative effect of accounting
change. The increase was offset by an adjustment to the Company's net operating
loss carryforwards ("NOLs") based on 1999 actual tax returns. When it becomes
more likely than not that the Company will generate sufficient taxable income to
realize the deferred tax asset, the Company will adjust this valuation allowance
accordingly.
The Company recognized a net tax benefit of $0.6 million for the nine month
period ended September 30, 2000 related to state income tax refunds offset by
state tax payments.
Discontinued Operations. Summarized financial information for the
discontinued operations for the nine-month period ended September 30, 1999 is as
follows (the results include the commercial division of Impact through April 15,
1999 -- the effective date of the sale):
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30, 1999
------------------
IMPACT
------------------
(IN THOUSANDS)
Revenue.................................................. $44,411
=======
Income from discontinued operations before income
taxes.................................................. 2,210
Income tax expense....................................... 198
-------
Income from discontinued operations, net of tax.......... $ 2,012
=======
Cumulative Effect of Accounting Change. On December 3, 1999, the
Securities and Exchange Commission (the "Commission") issued Staff Accounting
Bulletin Number 101, Revenue Recognition in Financial Statements ("SAB 101").
SAB 101 summarizes certain of the Commission's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
SAB 101 provides interpretative guidance on the unbilled accounts receivable and
related revenue recognition within the Company's industry. The Commission's
guidance encouraged the accounting change to be reflected by the Company's
quarter ended March 31, 2000. Therefore, consistent with the Commission's
guidance and changing industry practice, the Company began recognizing revenue
in its Physician Services segment on an "as billed" basis January 1, 2000. The
Company does not expect this change to significantly impact annual recognized
revenue amounts. There is no effect on cash flow resulting from this change.
The change in accounting method resulted in the elimination of $37.7
million of unbilled accounts receivable. The one-time, cumulative non-cash
charge in the Company's statement of operations for the nine months ended
September 30, 2000 reflects the $22.7 million elimination of the unbilled
accounts receivable on a net of tax basis and a corresponding $15.0 million
increase in the Company's deferred tax valuation allowance.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $62.1 million at September 30, 2000,
including $55.7 million of unrestricted cash and cash equivalents. The $31.2
million decrease in working capital from December 31, 1999 is primarily the
result of the timing of payments on accruals, the payment of semi-annual
interest payments required under the $175 million of 9 1/2% Senior Notes due
2005 (the "Notes") and investment in the Company's operations offset by cash
flow generated by operations.
The Company completed its divestiture of non-core operations in December
1999. The Company sold Hospital Services on November 30, 1998 for $103.2 million
net proceeds. In February 1999, the Company received additional proceeds of $0.5
million based on Hospital Services' tangible net worth at closing. In
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addition, the Company received a purchase price adjustment of $10.0 million cash
from NCO in May 2000 based on Hospital Services' achievement of various
operational targets in 1999.
The Company sold the commercial division of Impact effective April 15, 1999
for $14.4 million, net of the final closing balance sheet adjustment of $0.6
million that was paid on July 16, 1999. The Company sold the government division
of Impact on December 17, 1999 for approximately $46.5 million, including a
purchase price adjustment of $1.5 million received in March 2000 based on the
division's tangible net worth at closing.
Under the Indenture governing the Notes, the balance of the net proceeds,
as defined, from the sale of Hospital Services, the two divisions of Impact and
the sale of any other asset having a fair value in excess of $1.0 million, must
be invested in the Company's business within 360 days of receipt of proceeds
related to the sale. To the extent that such net proceeds are not invested
within 360 days, such amount constitutes "excess proceeds." If the aggregate of
excess proceeds is greater than $10.0 million, the Company is required to offer
to repurchase the Notes at par with such excess proceeds.
As of September 30, 2000, uninvested net proceeds related to the sale of
non-core operations and other assets totaled approximately $64.4 million. The
net proceeds are the result of various asset sales and, as such, under the
Indenture, must be invested in the Company's business by varying points. The
Company will have to invest a minimum of approximately $37.9 million by December
11, 2000 to preclude the Company's obligation to make an offer to repurchase the
Notes at par in the first quarter of 2001. As of November 14, 2000, aggregate
excess proceeds did not exceed $10.0 million.
The Company believes that its current cash flow is sufficient to permit the
Company to meet its operating expenses, service its debt requirements as they
become due in the next twelve months and for the long term and to invest in the
business.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information required by this Item is included in Note 6 of Notes to
Consolidated Financial Statements in Item 1 on page 7.
ITEM 5. OTHER INFORMATION
On November 10, 2000, Allen W. Ritchie, President and Chief Executive
Officer and a member of the Board of Directors of the Company, tendered his
resignation to the Board. On November 13, 2000, the Board accepted Mr. Ritchie's
resignation and elected Philip M. Pead to succeed Mr. Ritchie as President and
Chief Executive Officer of the Company and appointed Mr. Pead to the Board.
Prior to his election, Mr. Pead was serving as Executive Vice President and
Chief Operating Officer of the Company.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
EXHIBIT
NUMBER DOCUMENT
- ------- --------
2.1 -- Stock Purchase Agreement dated as of October 15, 1998,
between Registrant and NCO Group, Inc. (incorporated by
reference to Exhibit 2.1 to Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998).
2.2 -- Stock Purchase Agreement dated as of April 20, 1999, among
Complete Business Solutions, Inc., E-Business Solutions.com,
Inc., Impact Innovations Holdings, Inc. and Registrant
(incorporated by reference to Exhibit 2.1 to Current Report
on Form 8-K filed on May 5, 1999).
2.3 -- Stock Purchase Agreement dated as of November 4, 1999, among
J3 Technology Services Corp., Impact Innovations Holdings,
Inc., Impact Innovations Government Group, Inc. and
Registrant (incorporated by reference to Exhibit 2.3 to
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999).
3.1 -- Restated Certificate of Incorporation of Registrant
(incorporated by reference to Exhibit 3.1 to Annual Report
on Form 10-K for the year ended December 31, 1999).
3.2 -- Restated By-laws of Registrant (incorporated by reference to
Exhibit 3.2 to Annual Report on Form 10-K for the year ended
December 31, 1999).
4.1 -- Indenture dated as of February 20, 1998, among Registrant,
as Issuer, the Subsidiary Guarantors named in the Indenture
and State Street Bank and Trust Company, as Trustee
(including form of note) (incorporated by reference to
Exhibit 10.3 to Current Report on Form 8-K filed on March 3,
1998).
4.2 -- Warrant Agreement dated as of July 8, 1998, between
Registrant and SunTrust Bank, Atlanta, as Warrant Agent
(including form of warrant certificate) (incorporated by
reference to Exhibit 4.2 to Registration Statement on Form
8-A filed on July 21, 1998).
4.3 -- Rights Agreement dated as of February 11, 1999, between
Registrant and American Stock Transfer & Trust Company
(including form of rights certificates) (incorporated by
reference to Exhibit 4 to Current Report on Form 8-K filed
on February 12, 1999).
4.4 -- First Amendment to Rights Agreement dated as of February 11,
1999, between Registrant and American Stock Transfer & Trust
Company, entered into as of May 4, 2000 (incorporated by
reference to Exhibit 4.4 to Quarterly Report of Form 10-Q
for the quarter ended March 31, 2000).
27 -- Financial Data Schedule (for SEC use only)
99.1 -- Safe Harbor Compliance Statement for Forward-Looking
Statements. (incorporated by reference to Exhibit 99.1 to
Annual Report on Form 10-K for the year ended December 31,
1999).
(B) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter ended
September 30, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PER-SE TECHNOLOGIES, INC.
(Registrant)
By: /s/ WAYNE A. TANNER
------------------------------------
Wayne A. Tanner
Executive Vice President and
Chief Financial Officer
By: /s/ MARY C. BLACKADAR
------------------------------------
Mary C. Blackadar
Vice President and Controller
(Chief Accounting Officer)
Date: November 14, 2000
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DOCUMENT
- ------- --------
2.1 -- Stock Purchase Agreement dated as of October 15, 1998,
between Registrant and NCO Group, Inc. (incorporated by
reference to Exhibit 2.1 to Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998).
2.2 -- Stock Purchase Agreement dated as of April 20, 1999, among
Complete Business Solutions, Inc., E-Business Solutions.com,
Inc., Impact Innovations Holdings, Inc. and Registrant
(incorporated by reference to Exhibit 2.1 to Current Report
on Form 8-K filed on May 5, 1999).
2.3 -- Stock Purchase Agreement dated as of November 4, 1999, among
J3 Technology Services Corp., Impact Innovations Holdings,
Inc., Impact Innovations Government Group, Inc. and
Registrant (incorporated by reference to Exhibit 2.3 to
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999).
3.1 -- Restated Certificate of Incorporation of Registrant
(incorporated by reference to Exhibit 3.1 to Annual Report
on Form 10-K for the year ended December 31, 1999).
3.2 -- Restated By-laws of Registrant (incorporated by reference to
Exhibit 3.2 to Annual Report on Form 10-K for the year ended
December 31, 1999).
4.1 -- Indenture dated as of February 20, 1998, among Registrant,
as Issuer, the Subsidiary Guarantors named in the Indenture
and State Street Bank and Trust Company, as Trustee
(including form of note) (incorporated by reference to
Exhibit 10.3 to Current Report on Form 8-K filed on March 3,
1998).
4.2 -- Warrant Agreement dated as of July 8, 1998, between
Registrant and SunTrust Bank, Atlanta, as Warrant Agent
(including form of warrant certificate) (incorporated by
reference to Exhibit 4.2 to Registration Statement on Form
8-A filed on July 21, 1998).
4.3 -- Rights Agreement dated as of February 11, 1999, between
Registrant and American Stock Transfer & Trust Company
(including form of rights certificates) (incorporated by
reference to Exhibit 4 to Current Report on Form 8-K filed
on February 12, 1999).
4.4 -- First Amendment to Rights Agreement dated as of February 11,
1999, between Registrant and American Stock Transfer & Trust
Company, entered into as of May 4, 2000 (incorporated by
reference to Exhibit 4.4 to Quarterly Report of Form 10-Q
for the quarter ended March 31, 2000).
27 -- Financial Data Schedule (for SEC use only)
99.1 -- Safe Harbor Compliance Statement for Forward-Looking
Statements (incorporated by reference to Exhibit 99.1 to
Annual Report on Form 10-K for the year ended December 31,
1999).
20