Exhibit 99.1
Per-Se Technologies Completes 2003 10-K Filing;
Receives $20 Million Settlement From Lloyd's of London
ATLANTA--(BUSINESS WIRE)--May 13, 2004--Per-Se Technologies, Inc.
(Nasdaq:PSTIE):
-- Restatements increase net income by $2.1 million from Q1 2001
through Q3 2003
-- Expenses related to additional procedures that caused 10-K
filing delay are in the range of $6 million to $7 million
Per-Se Technologies, Inc. (Nasdaq:PSTIE) announced today that it
has filed its 2003 annual report on Form 10-K with the U.S. Securities
and Exchange Commission (SEC).
"Our SEC filings are the foundation of our financial disclosures
and we take our responsibility to submit accurate and timely filings
seriously. While this process has been extensive, the operations of
our business continue to be strong," stated Philip M. Pead, Per-Se's
chairman, president and chief executive officer. "Additionally, we are
pleased to report the outcome of our litigation with Lloyd's, allowing
us to close both matters and move forward."
2003 Form 10-K Filing
The Company was delayed in filing its 2003 Form 10-K due to
additional procedures requested by the Company's external auditors in
connection with allegations of improprieties made in 2003. These
additional procedures were deemed necessary due to Statement of
Auditing Standards No. 99, which became effective for periods
beginning on or after December 15, 2002. In addition to the 2003
allegations, the Company received an anonymous letter in May 2004 that
also required additional procedures. The Company believes this letter
is from the same source as the November 2003 anonymous letter. The
additional procedures were performed by an outside accounting firm
that had previously assisted the audit committee of the board of
directors in reviewing certain of the allegations.
Due to the volume and the vague nature of many of the allegations,
the scope of the additional procedures was broad and extensive. The
additional procedures included the review of a significant number of
the Company's accounts for the years 2001 through 2003, the evaluation
of more than 500,000 emails and the interviews of both current and
former employees. At times, the outside accountants had as many as 60
people performing the additional procedures. Given the magnitude of
the work, the Company expects to record costs totaling approximately
$6 million to $7 million during 2004 for the additional procedures.
Approximately $4 million of costs associated with the additional
procedures were recorded during the first quarter with the remainder
to be recorded in the second quarter.
At the end of this extensive process, the outside accounting firm
identified certain financial items that it believed warranted further
review by the Company. The Company has reviewed these items and
concluded that it is appropriate to restate its prior period financial
statements. The overall impact of the restatements is a net increase
to reported net income totaling approximately $2.1 million, or $.07
per share on a fully diluted basis for the years 2001 and 2002, and
for the nine months ended September 30, 2003.
As a result of the errors that caused the restatements, the
Company's external auditors determined that a material weakness exists
in the Company's internal controls and procedures primarily related to
the recording of accruals. The Company is taking actions to address
these items.
"While this process identified areas for improvement, my
confidence in our ethical business practices has never wavered. We
place a high regard on integrity and compliance in all areas of our
business dealings. I believe this process confirmed this," stated
Pead.
Net Impact of Restatements
As stated earlier, the restatements resulted in a net increase to
net income. This increase primarily relates to certain liability
accounts that were determined to be over accrued. That determination
was based on the correction of errors and subsequent refinement of
estimates originally made in establishing the accruals.
On an annual basis, the net decrease to the reported net loss for
2001 is approximately $0.2 million or $.01 per share, and the net
increase to reported net income for 2002 is approximately $1.0 million
or $.03 per share on a fully diluted basis, and for the nine months
ended September 30, 2003, is approximately $0.8 million or $.03 per
share on a fully diluted basis. In the periods presented, the impact
of the restatements is a net increase to reported net income in each
quarter, except for the second quarter of 2002, which has a decrease
to reported net income of approximately $0.2 million.
The Company has also revised its previously released unaudited
fourth quarter 2003 financials. The net amount of the revisions is a
net increase to net income of approximately $1.2 million, or $.03 per
share on a fully diluted basis. The revisions relate to an
approximately $0.6 million increase in revenue in the Hospital
Services division primarily due to previously unbilled maintenance for
certain software customers that was to be recognized upon receipt of
payment. This revenue will have a positive impact on future quarters.
The revisions also relate to a net decrease in expenses of
approximately $0.6 million, of which approximately $0.8 million
related to an income tax refund that the Company filed for in April
2004 and that was recorded in the fourth quarter of 2003 (since the
year-end audit was not completed until early May). This refund was for
taxes paid related to a divestiture in 1997.
A table outlining selected financial data by quarter for 2003 and
2002 and annually for 2001 is attached. Segment information is
available in the Investors section of the Company's website at
www.per-se.com under the Supplemental Info link.
Lloyd's of London Settlement
The Company also announced today that on May 10, 2004, it reached
a $20 million settlement with Lloyd's of London (Lloyd's).
As previously reported, the Company was in litigation with Lloyd's
following Lloyd's attempt in May 2002 to rescind certain Errors &
Omissions Liability Policies ("E&O" policies) and Directors and
Officers Liability Policies ("D&O" policies) issued by Lloyd's to the
Company for the period December 31, 1998, to June 30, 2002.
The settlement entails a $20 million cash payment that is payable
by Lloyd's 60 days from the settlement date or in early July 2004.
Lloyd's also agreed to assume responsibility for the two remaining
pending claims under the E&O policies. As of the settlement date, the
Company had an approximately $18.3 million receivable from Lloyd's
associated with legal and settlement costs in excess of the Lloyd's
E&O deductible, of which approximately $5 million has not been paid.
The Company expects to record an approximately $1.7 million gain on
settlement when the cash is received.
First Quarter 2004 10-Q and Earnings Release
Due to the delay in filing its 2003 Form 10-K, the Company is
currently in the process of finalizing its first quarter 2004 results
and is working to file its first quarter 2004 Form 10-Q as quickly as
possible. The Company will issue its first quarter earnings release
and hold a conference call with security analysts and institutional
investors upon filing its first quarter Form 10-Q.
Nasdaq Listing
On April 5, 2004, the Company announced that, as expected, it had
received a noncompliance notification from The Nasdaq Stock Market
(Nasdaq) due to the delay in filing its 2003 annual report on Form
10-K. On April 29, 2004, the Company had its hearing on the matter
before a Nasdaq Listing Qualifications Panel. The Panel is expected to
issue its decision in the coming weeks.
The Company expects that it will also receive a noncompliance
notification from Nasdaq due to the delay in filing its first quarter
2004 Form 10-Q, which was due on May 10, 2004. Upon receipt of the
notification, the Company will issue a press release publicly
disseminating this information per Nasdaq requirements.
When the Company is current with all its SEC filings, the Company
expects to be fully compliant with Nasdaq listing standards.
About Per-Se Technologies
Per-Se Technologies (Nasdaq:PSTIE) is the leader in Connective
Healthcare. Connective Healthcare solutions from Per-Se enable
physicians and hospitals to achieve their income potential by creating
an environment that streamlines and simplifies the complex
administrative burden of providing healthcare. Per-Se's Connective
Healthcare solutions help reduce administrative expenses, increase
revenue and accelerate the movement of funds to benefit providers,
payers and patients. More information is available at www.per-se.com.
Safe Harbor Statement
This Press Release contains statements that 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. Forward-looking
statements contained in this Press Release include the intent, belief
or current expectations of the Company and members of its management
team with respect to the costs of additional procedures performed in
conjunction with the Company's year-end audit, future revenue of
previously unbilled software maintenance, the timing of the release of
the Company's first quarter 2004 earnings, the filing of its first
quarter 2004 Form 10-Q with the SEC, the delisting process with Nasdaq
and the Lloyd's settlement as well as the assumptions upon which such
statements are based. Forward-looking statements include specifically,
but are not limited to the costs and earnings and cash flow impact of
the additional procedures performed in conjunction with the Company's
year-end audit, the impact on future quarters of previously unbilled
software maintenance revenue, the timing of its first quarter 2004
earnings release and Form 10-Q filing, the actions taken or to be
taken to correct material weaknesses identified by the Company's
external auditors, the decision of the Nasdaq Listing Qualifications
Panel, and the timing of cash receipt and the gain to be recognized
with the Lloyd's settlement. 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 contemplated by the forward-looking statements in this Press
Release include, but are not limited to, costs exceeding current
estimates for the additional procedures, adverse developments with
respect to additional work performed in conjunction with the first
quarter 2004 review work by the Company's external auditors and the
delisting of the Company's common stock by Nasdaq. Additional factors
that would cause actual results to differ materially from those
contemplated within this Press Release can also be found in the
Company's Safe Harbor Compliance Statement included in the Company's
Form 10-K for the year ended December 31, 2003. The Company disclaims
any responsibility to update any forward-looking statements.
PER-SE TECHNOLOGIES
SELECTED FINANCIAL DATA - AS REPORTED AND RESTATED
BY QUARTER AND FULL YEAR FOR 2003 AND 2002; FULL YEAR FOR 2001
(in thousands, except per share data)
2003
- ----------------------------------------------------------------------
Q1 Q2 Q3
- ------------------------------ ------------------- -------------------
As As As
reported Restated reported Restated reported Restated
- -------------------- --------- --------- --------- --------- ---------
Revenue $81,903 $81,998 $85,412 $85,456 $84,511 $84,523
- -------------------- --------- --------- --------- --------- ---------
Inc. from
continuing
opera-
tions,
excluding
special
items 3,084 3,342 4,882 5,013 6,020 6,091
- -------------------- --------- --------- --------- --------- ---------
Income from
continuing
operations 2,863 3,121 4,882 5,013 (191) (120)
- -------------------- --------- --------- --------- --------- ---------
Net income 1,578 1,837 2,950 3,081 74 506
- -------------------- --------- --------- --------- --------- ---------
Per diluted
share data:
- -------------------- --------- --------- --------- --------- ---------
Inc. from
cont. ops.,
excl. special
items $.10 $.11 $.15 $.16 $.18 $.18
- -------------------- --------- --------- --------- --------- ---------
Income from
continuing
operations $.09 $.10 $.15 $.16 ($.01) -
- -------------------- --------- --------- --------- --------- ---------
Net income
per share $.05 $.06 $.09 $.10 - $.02
- -------------------- --------- --------- --------- --------- ---------
2003
- ----------------------------------------------------
Q4 Full Year
- ------------------------------ ---------------------
As As Restated/
reported Revised reported Revised
- -------------------- --------- ---------- ----------
Revenue $82,638 $83,192 $334,464 $335,169
- -------------------- --------- ---------- ----------
Inc. from
continuing
opera-
tions,
excluding
special
items 7,240 8,516 21,226 22,962
- -------------------- --------- ---------- ----------
Income from
continuing
operations 6,587 7,863 14,141 15,877
- -------------------- --------- ---------- ----------
Net income 5,373 6,565 9,975 11,989
- -------------------- --------- ---------- ----------
Per diluted
share data:
- -------------------- --------- ---------- ----------
Inc. from
cont. ops.,
excl. special
items $.21 $.25 $.65 $.70
- -------------------- --------- ---------- ----------
Income from
continuing
operations $.19 $.23 $.43 $.49
- -------------------- --------- ---------- ----------
Net income
per share $.16 $.19 $.30 $.37
- -------------------- --------- ---------- ----------
2002
- ----------------------------------------------------------------------
Q1 Q2 Q3
- ------------------------------ ------------------- -------------------
As As As
reported Restated reported Restated reported Restated
- -------------------- --------- --------- --------- --------- ---------
Revenue $79,133 $78,996 $81,657 $81,607 $82,842 $83,048
- -------------------- --------- --------- --------- --------- ---------
Inc. from
continuing
opera-
tions,
excluding
special
items $2,334 $2,725 $2,298 $2,120 $2,474 $2,820
- -------------------- --------- --------- --------- --------- ---------
Income from
continuing
operations $2,334 $2,725 $2,298 $2,120 $2,474 $2,820
- -------------------- --------- --------- --------- --------- ---------
Net income $1,299 $1,792 $2,022 $1,846 $1,287 $1,682
- -------------------- --------- --------- --------- --------- ---------
Per diluted
share data:
- -------------------- --------- --------- --------- --------- ---------
Inc. from
cont. ops.,
excl. special
items $.07 $.08 $.07 $.07 $.08 $.09
- -------------------- --------- --------- --------- --------- ---------
Income per
share from
cont. ops. $.07 $.08 $.07 $.07 $.08 $.09
- -------------------- --------- --------- --------- --------- ---------
Net income
per share $.04 $.05 $.06 $.06 $.04 $.05
- -------------------- --------- --------- --------- --------- ---------
2002
- ----------------------------------------------------
Q4 Full Year
- ------------------------------ ---------------------
As As
reported Restated reported Restated
- -------------------- --------- ---------- ----------
Revenue $82,069 $81,913 $325,701 $325,564
- -------------------- --------- ---------- ----------
Inc. from
continuing
opera-
tions,
excluding
special
items $3,598 $3,825 $10,704 $11,490
- -------------------- --------- ---------- ----------
Income from
continuing
operations $3,598 $3,825 $10,704 $11,490
- -------------------- --------- ---------- ----------
Net income $3,332 $3,669 $7,940 $8,989
- -------------------- --------- ---------- ----------
Per diluted
share data:
- -------------------- --------- ---------- ----------
Inc. from
cont. ops.,
excl. special
items $.11 $.12 $.33 $.36
- -------------------- --------- ---------- ----------
Income per
share from
cont. ops. $.11 $.12 $.33 $.36
- -------------------- --------- ---------- ----------
Net income
per share $.11 $.12 $.25 $.28
- -------------------- --------- ---------- ----------
2001
- ---------------------------------
As
reported Restated
- ---------------------- ----------
Revenue $306,683 $305,822
- ---------------------- ----------
Inc. from
continuing
operations,
excluding
special
items ($2,639) ($2,258)
- ---------------------- ----------
Income from
continuing
operations ($6,655) ($6,274)
- ---------------------- ----------
Net income ($6,338) ($6,109)
- ---------------------- ----------
Per diluted
share data:
- ---------------------- ----------
Inc. from
cont. ops.,
excl. special
items ($.09) ($.08)
- ---------------------- ----------
Income per
share from
cont. ops. ($.22) ($.21)
- ---------------------- ----------
Net income
per share ($.21) ($.20)
- ---------------------- ----------
Special items in 2003:
-- Debt retirement and refinancing costs of $6.3 million, of
which $0.2 million was incurred in the first quarter and the
remainder in the third quarter
-- Restructuring costs related to Company reorganization of $0.9
million, of which $0.2 million was incurred in the third
quarter and the remainder in the fourth quarter
Special items in 2001:
-- Process improvement project costs in the Physician Services
division of $3.4 million, of which $1.0 million was incurred
in the first quarter and $1.2 million in each of the second
and third quarters
-- Executive severance costs of $0.6 million incurred in the
first quarter
CONTACT: Per-Se Technologies, Atlanta
Michele Howard, 770-444-5603
michele.howard@per-se.com
www.per-se.com
or
Manning Selvage & Lee
Mike Manning, 404-877-5534 (Media)
michael.manning@mslpr.com