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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 19, 1997
Medaphis Corporation
(Exact name of registrant as specified in its charter)
DELAWARE 000-19480 58-1651222
(State or other jurisdiction Commission File Number (IRS Employer
of incorporation) Identification Number)
2700 CUMBERLAND PARKWAY
SUITE 300
ATLANTA, GEORGIA 30339
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 444-5300
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index Located on Page: 5
Total Number of Pages: 15
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Item 5. Other Events
As disclosed in prior press releases of the Registrant, in connection
with its review of the Registrant's financial statements as of January 1, 1997
and for the three- and nine-month periods ended September 30, 1997, Price
Waterhouse reviewed unbilled receivables as of January 1, 1997 and raised
certain issues with the Registrant with respect to certain accounting matters,
relating primarily to revenue recognition practices on specific contracts of the
Registrant's Health Data Sciences Corporation. ("HDS") subsidiary. These
practices related principally to revenue recognized in fiscal 1994, 1995 and
1996. The Registrant acquired HDS in a merger transaction in June 1996 which
was accounted for as a pooling of interests.
As a result of this evaluation, management of the Registrant
determined that certain revenue was improperly recognized and, accordingly, made
a determination to restate the Company's financial statements for the fiscal
years ended December 31, 1994, 1995 and 1996 and the six month period ended June
30, 1997. The Audit Committee of the Board approved the restatement on November
19, 1997 and recommended the action to the Board. The Board accepted the Audit
Committee's recommendation and approved the restatement on November 19.
As previously disclosed, Deloitte & Touche, the Registrant's former
independent auditor, has stated to the Registrant that it does not agree with
the restatement of Registrant's financial statements based on revenue
recognition at HDS. Deloitte & Touche orally advised the Registrant on November
19, 1997 that it withdrew its report dated March 31, 1997, on the consolidated
financial statements of the Registrant as of December 31, 1995 and 1996 and for
the three years in the period ended December 31, 1996 (the "Deloitte & Touche
Report"). By letter, dated November 20, 1997, to the Chairman and Chief
Executive Officer of the Registrant, Deloitte & Touche confirmed the oral
withdrawal of the Deloitte & Touche Report. In addition, Deloitte & Touche
notified the Registrant in the November 20, 1997 letter that
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Deloitte & Touche was also withdrawing its report dated May 23, 1996 on the
financial statements of Health Data Sciences Corporation for the years ended
March 31, 1995 and 1996. Deloitte & Touche also notified the Registrant that
Deloitte & Touche's reports on the financial statements referenced above should
no longer be relied upon or associated with the aforementioned financial
statements.
As a result, at the direction of the Board pursuant to action taken by
the Audit Committee and the Board on November 19, 1997, the Registrant has
engaged Price Waterhouse to reaudit the Registrant's financial statements for
fiscal 1995 and 1996.
Because of the restatement of its financial statements for each of the
years ended December 31, 1994, 1995 and 1996 and the first six months of 1997,
the Registrant has determined that revisions to the financial statements
contained in the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996, filed with the Securities and Exchange Commission (the
"Commission") on March 31, 1997 and the Registrant's Quarterly Reports on Form
10-Q for the Quarterly Periods ended March 31, 1997 and June 30, 1997 filed
with the Commission on May 6, 1997 and August 14, 1997, respectively, will be
required. Filings amending such reports to reflect the restatement will be
made as soon as practicable after completion of the reaudit of the 1995 and
1996 fiscal years by Price Waterhouse.
Investors and other individuals and entities should not rely upon the
Deloitte and Touche Report or associate the Deloitte & Touche Report with the
Registrant's financial statements as of December 31, 1995 and 1996 and for the
three years in the period ended December 31, 1996.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
(99.1) Letter from Deloitte & Touche LLP, dated November 20, 1997,
advising the Registrant as to the withdrawal of certain
reports of Deloitte & Touche with respect to certain financial
statements of the Registrant.
(99.2) Press Release issued by the Registrant on November 19, 1997.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: December 2, 1997
MEDAPHIS CORPORATION
By: /s/ Jerome H. Baglien
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Jerome H. Baglien
Senior Vice President,
Chief Financial Officer and
Assistant Secretary
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INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION PAGE NUMBER
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99.1 .........Letter from Deloitte & Touche LLP, dated
November 20, 1997, advising the Registrant
as to the withdrawal of certain reports of
Deloitte & Touche with respect to certain
financial statements of the Registrant............. 7
99.2 .........Press Release issued by the Registrant on
November 19,1997................................... 9
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