-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EaFeq1OSyoxw3ANpAKNLtW7rENVJQQ5+NG+wlJlUUGnHnrtCaJkB8RNtxukY5pml 23rSAEkGIPaAl5cjhiGegg== 0000950135-97-003461.txt : 19970815 0000950135-97-003461.hdr.sgml : 19970815 ACCESSION NUMBER: 0000950135-97-003461 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANSITION SYSTEMS INC CENTRAL INDEX KEY: 0001009301 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-FACILITIES SUPPORT MANAGEMENT SERVICES [8744] IRS NUMBER: 042887598 STATE OF INCORPORATION: MA FISCAL YEAR END: 0928 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-28182 FILM NUMBER: 97659855 BUSINESS ADDRESS: STREET 1: ONE BOSTON PLACE CITY: BOSTON STATE: MA ZIP: 02108 BUSINESS PHONE: 6177234222 MAIL ADDRESS: STREET 1: ONE BOSTON PLACE CITY: BOSTON STATE: MA ZIP: 02108 10-Q 1 TRANSITIION SYSTEMS, INC. 1 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 June 30, 1997 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 0-28182 TRANSITION SYSTEMS, INC. ----------------------- (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2887598 ------------- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation) Identification Number) ONE BOSTON PLACE, BOSTON, MASSACHUSETTS 02108 --------------------------------------------- (Address of principal executive offices) (Zip Code) (617) 723-4222 -------------- (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 the issuer's classes of common stock, as of the latest practicable date. CLASS AUGUST 5, 1997 ----- -------------- COMMON STOCK, 17,315,392 $.01 PAR VALUE SHARES NON-VOTING COMMON STOCK, 356,262 $.01 PAR VALUE SHARES
2 TRANSITION SYSTEMS, INC. FORM 10-Q FOR THE THREE MONTHS ENDED JUNE 30, 1997 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Page No. -------- ITEM 1. FINANCIAL STATEMENTS: Consolidated Balance Sheets as of June 30, 1997 (unaudited) and September 30, 1996.................. 3 Consolidated Statements of Operations for the Three Months and Nine Months Ended June 30, 1997 and 1996 (unaudited) ......... 4 Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 1997 and 1996 (unaudited).......................... 5 Notes to Interim Consolidated Financial Statements................ 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............................... 8 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................. 12 SIGNATURES................................................................. 13 2 3 TRANSITION SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS
JUNE 30, SEPTEMBER 30, 1997 1996 ----------- ----------- ASSETS (unaudited) Current assets: Cash and cash equivalents $54,386,000 $51,505,000 Short term investments 251,000 -- Accounts receivable, net 17,559,000 13,419,000 Other current assets 1,992,000 1,831,000 Deferred income taxes 653,000 2,062,000 ----------- ----------- Total current assets 74,841,000 68,817,000 ----------- ----------- Property and equipment, net 1,340,000 1,108,000 Capitalized software costs, net 1,411,000 1,399,000 Purchased technology, net 1,435,000 1,612,000 Intangible assets, net 307,000 120,000 Long-term deferred income taxes 1,228,000 1,228,000 Equity investment 6,000,000 -- ----------- ----------- Total assets $86,562,000 $74,284,000 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 306,000 $ 595,000 Accrued expenses 5,708,000 4,280,000 Income taxes payable 2,483,000 2,015,000 Deferred revenue 6,578,000 6,255,000 ----------- ----------- Total current liabilities 15,075,000 13,145,000 ----------- ----------- Notes payable 15,000 21,000 Deferred income taxes 485,000 485,000 ----------- ----------- Total liabilities 15,575,000 13,651,000 ----------- ----------- Commitments Stockholders' equity: Common stock 173,000 166,000 Non-voting common stock 4,000 4,000 Non-voting common stock warrant 395,000 395,000 Additional paid-in capital 41,980,000 39,161,000 Retained earnings 28,435,000 20,907,000 ----------- ----------- Total stockholders' equity 70,987,000 60,633,000 ----------- ----------- Total liabilities and stockholders' equity $86,562,000 $74,284,000 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. 3 4 TRANSITION SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended Nine Months Ended ----------------------------- ----------------------------- June 30, June 30, June 30, June 30, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Revenues: Software and implementation $ 9,651,000 $ 7,718,000 $22,537,000 $17,348,000 Maintenance 2,919,000 2,384,000 8,338,000 6,830,000 ----------- ----------- ----------- ----------- Total revenues 12,570,000 10,102,000 30,875,000 24,178,000 ----------- ----------- ----------- ----------- Cost of Revenues: Software and implementation 2,623,000 1,827,000 7,293,000 5,335,000 Maintenance 726,000 800,000 2,062,000 2,322,000 Research and development 948,000 816,000 2,709,000 2,444,000 Sales and marketing 2,023,000 1,156,000 5,067,000 3,177,000 General and administrative 965,000 770,000 2,996,000 1,996,000 Compensation charge -- -- -- 3,024,000 ----------- ----------- ----------- ----------- Total operating expenses 7,285,000 5,369,000 20,127,000 18,298,000 ----------- ----------- ----------- ----------- Income from operations 5,285,000 4,733,000 10,748,000 5,880,000 Interest income 651,000 468,000 1,798,000 677,000 Interest expense -- (337,000) -- (1,236,000) ----------- ----------- ----------- ----------- Income before income taxes and extraordinary item 5,936,000 4,864,000 12,546,000 5,321,000 Provision for income taxes 2,374,000 1,994,000 5,018,000 2,182,000 ----------- ----------- ----------- ----------- Net income before extraordinary item 3,562,000 2,870,000 7,528,000 3,139,000 Extraordinary item: Loss on early extinguishment of debt, net of taxes -- (2,149,000) -- (2,149,000) ----------- ----------- ----------- ----------- Net income $ 3,562,000 $ 721,000 $ 7,528,000 $ 990,000 =========== =========== =========== =========== Series A non-voting preferred stock dividends -- 593,000 -- 593,000 ----------- ----------- ----------- ----------- Net income allocable to common stockholders $ 3,562,000 $ 128,000 $ 7,528,000 $ 397,000 =========== =========== =========== =========== Income per share: Net income before extraordinary item $ 0.17 $ 0.15 $ 0.37 $ 0.20 Extraordinary item $ -- $ (0.11) $ -- $ (0.13) Net income allocable to common stockholders $ 0.17 $ 0.01 $ 0.37 $ 0.02 Weighted average common shares outstanding (1) 20,462,000 19,629,000 20,474,000 15,931,000
(1) See note 2 of notes to interim consolidated financial statements. The accompanying notes are an integral part of the consolidated financial statements. 4 5 TRANSITION SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended -------------------------------- June 30, June 30, 1997 1996 ----------- ------------- Cash flows from operating activities: Net income $ 7,528,000 $ 990,000 Adjustments to reconcile net income to net cash provided by operating activities: Extraordinary item, gross -- 3,642,000 Deferred income taxes -- (55,000) Depreciation and amortization 1,195,000 1,033,000 Compensation charge in connection with the recapitalization -- 3,024,000 Other (92,000) 43,000 Tax benefit from stock option exercises 2,162,000 -- Changes in operating assets and liabilities: Increase in accounts receivable (4,140,000) (1,717,000) Increase in other current assets (161,000) (1,379,000) Decrease in deferred tax asset 1,409,000 -- (Decrease) increase in accounts payable (289,000) 531,000 Increase in accrued expenses 1,428,000 342,000 Increase (decrease) in taxes payable 468,000 (1,132,000) Increase in deferred revenue 323,000 569,000 ----------- ------------- Net cash provided by operating activities 9,831,000 5,891,000 Cash flows (used by) provided by investing activities: Purchases of investments (250,000) -- Sales and maturities of investments -- 7,324,000 Purchases of property and equipment (699,000) (414,000) Additions to capitalized software costs (537,000) (525,000) Additions to intangible assets (212,000) (9,000) Equity investment (6,000,000) -- ----------- ------------- Net cash (used by) provided by investing activities (7,698,000) 6,376,000 Cash flows provided by financing activities: Proceeds from initial public offering -- 114,468,000 Redemption of Series A preferred stock -- (20,000,000) Payment of Series A preferred stock dividends -- (593,000) Proceeds of issuance of debt -- 49,605,000 Early extinguishment of debt -- (50,000,000) Net proceeds from issuance of Preferred Stock -- 53,585,000 Purchase of Common Stock -- (111,410,000) Payment of fees related to Recapitalization (3,336,000) Exercise of options 760,000 767,000 Proceeds from warrants issued -- 395,000 Other (12,000) (121,000) ----------- ------------- Net cash provided by financing activities 748,000 33,360,000 Net increase in cash and cash equivalents 2,881,000 45,627,000 Cash and cash equivalents - beginning of period 51,505,000 3,844,000 ----------- ------------- Cash and cash equivalents - end of period $54,386,000 $ 49,471,000 =========== ============= Supplemental information: Income taxes paid $ 956,000 $ 2,488,000 Interest paid -- 1,119,000
The accompanying notes are an integral part of the consolidated financial statements. 5 6 TRANSITION SYSTEMS, INC. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, and have been prepared by the Company without audit. In the opinion of management, the accompanying consolidated financial statements contain all adjustments, consisting only of those of a normal recurring nature, except for the effects of the Recapitalization effected by the Company in January 1996 and the Company's initial public offering in April 1996, necessary for a fair presentation of the Company's financial position, results of operations and cash flows at the dates and for the periods indicated. While the Company believes that the disclosures presented are adequate to make the information not misleading, these financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended September 30, 1996 which are contained in the Company's Annual Report on Form 10-K for such fiscal year. The results of operations for the three and nine months ended June 30, 1997 are not necessarily indicative of the results to be expected for the entire fiscal year ending September 30, 1997. 2. COMPUTATION OF PRO FORMA EARNINGS PER SHARE Net income per common share is computed based upon the weighted average number of common shares and common equivalent shares outstanding during each period. Common equivalent shares are included in the per share calculations where the effect of their inclusion would be dilutive. Net income per share for the three and nine month periods ended June 30, 1996, on a pro forma basis, gives effect to the Company's Recapitalization and the issuance of common stock in the initial public offering. In accordance with the Securities and Exchange Commission's Staff Accounting Bulletin No. 83 ("SAB 83") all common and common equivalent shares and other potentially dilutive instruments, including stock options, warrants and preferred stock issued during the twelve-month period prior to the effective date (April 18, 1996) of the Company's registration statement for its initial public offering have been included in the calculation as if they were outstanding for all periods presented. 3. EQUITY INVESTMENT On January 31, 1997, the Company acquired a 19.5% equity interest in HealthVISION, Inc. for $6 million in cash. HealthVISION is a provider of electronic medical record software based in Santa Rosa, California. This investment is being accounted for on the cost basis. 4. RECENT ACCOUNTING PRONOUNCEMENTS In 1997, the Financial Accounting Standards Board ("FASB") released the Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings per Share". SFAS 128 simplifies the standards for computing earnings per share ("EPS") and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. SFAS 128 is effective for financial statements issued for periods ending after December 15, 1997, including interim periods. SFAS 128 requires restatement of all prior-period EPS data presented. Management has not yet determined the impact of SFAS 128 on the Company's financial statements. 6 7 5. EXTRAORDINARY ITEM In the three months ended June 30, 1996, the Company incurred an extraordinary loss of $2,149,000 representing the after tax effect of the write-off of $3,642,000 of unamortized capitalized financing costs. These costs were attributable to indebtedness incurred in the Recapitalization that was repaid out of the proceeds of the Company's initial public offering. 6. PREFERRED STOCK DIVIDEND The holders of the Series A Preferred Stock (issued in connection with the Recapitalization on January 24, 1996) were entitled to receive, when and as declared by the Board of Directors, out of funds legally available therefor, preferential cumulative dividends at the rate of 12% per annum. The Company was not obligated to pay dividends prior to the redemption of the Series A Preferred Stock, and no dividends were declared by the Board. The Series A Preferred Stock was subject to mandatory redemption, provided funds were legally available therefor, upon the closing of an initial public offering or the sale of the Company, but in no event later than January 2006. Upon the closing of the Company's initial public offering, on April 23, 1996, at which time funds became legally available for the redemption of the Series A Preferred Stock and payment of dividends, the Company redeemed in full the Series A Preferred Stock and accrued and paid dividends thereon from the date of the Recapitalization. 7 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF - -------------------------------------------------------------------------- OPERATIONS - ---------- This document contains forward-looking statements which involve risks and uncertainties. The Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that may contribute to such differences include those listed under "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1996, File No. 0-28182. The following information should be read in conjunction with the consolidated financial statements included herein and the notes thereto as well as the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1996. OVERVIEW - -------- The Company provides integrated clinical and financial decision support systems to hospitals, integrated delivery systems and other health care institutions. The Company was founded in 1985 to apply management control techniques to the health care delivery process, with the objective of improving quality and lowering costs. The Company has experienced a seasonal pattern in its operating results, in which the first quarter of each fiscal year typically has the lowest revenue and net income, frequently lower than the last quarter of the previous fiscal year, and the fourth quarter typically has the highest revenue and net income. While the Company has taken steps to moderate this seasonal pattern, there can be no assurance that it will be able to eliminate the seasonality of its operating results. RESULTS OF OPERATIONS - --------------------- REVENUES The Company's total revenues increased 24% to $12.6 million for the three months ended June 30, 1997 from $10.1 million for the same period in the prior year. For the nine months ended June 30, 1997, total revenues increased 28% to $30.9 million from $24.2 million for the same nine month period in the prior year. Software and implementation revenue increased 25% to $9.7 million for the three months ended June 30, 1997 from $7.7 million for the same period in the prior year and increased 30% to $22.5 million for the nine months ended June 30, 1997 from $17.3 million for the same period in the prior year. The increase in software and implementation revenue was due primarily to increased market penetration of the Company's mid-range and mainframe products and continued increases in add-on software sales to its existing customer base. Maintenance revenue increased 22% to $2.9 million for the three months ended June 30, 1997 from $2.4 million for the same period in the prior year, and increased 22% to $8.3 million for the nine months ended June 30, 1997 from $6.8 million for the same period in the prior year. The growth in maintenance revenue is attributable to the growth in the Company's installed base. 8 9 COST OF REVENUE Cost of software and implementation revenue consists primarily of the cost of third-party software that is resold by the Company or included in the Company's products, personnel costs, the cost of related benefits, travel and living expenses, costs of materials and other costs related to the installation and implementation of the Company's products, and amortization of capitalized software development costs. Cost of maintenance revenue consists primarily of maintenance costs associated with the third-party software included in the Company's products and personnel costs incurred in providing maintenance and technical support services to the Company's customers. Cost of software and implementation revenue increased 43% to $2.6 million for the three months ended June 30, 1997 from $1.8 million for the same period in the prior year. For the nine months ended June 30, 1997, cost of software and implementation revenue increased 37% to $7.3 million from $5.3 million for the same period last year. As a percentage of software and implementation revenue, cost of software and implementation revenue increased to 27% for the three months ended June 30, 1997 from 24% for the same period in the prior year, and increased to 32% for the nine months ended June 30, 1997 from 31% for the same period in the prior year. The increase in spending was primarily due to a net increase of twenty-one persons in the Company's implementation staff, as well as higher third-party software costs. Cost of maintenance revenue decreased 9% to $0.7 million for the three months ended June 30, 1997 from $0.8 million for the same period in the prior year, and decreased 11% to $2.1 million for the nine months ended June 30, 1997 from $2.3 million for the same period in the prior year. As a percentage of maintenance revenue, cost of maintenance revenue decreased to 25% from 34% for the three months ended June 30, 1997 and June 30, 1996, respectively, and decreased to 25% from 34% for the nine months ended June 30, 1997 and June 30, 1996, respectively. The decrease was primarily due to the reorganization of the Company's technical support department. Several employees in the technical support department were reassigned to research and development due to the maturation of the Company's midrange product, reducing support needs. RESEARCH AND DEVELOPMENT Research and development expense increased 16% to $0.9 million for the three months ended June 30, 1997 from $0.8 million for the same period in the prior year. For the nine months ended June 30, 1997, research and development expenses increased 11% to $2.7 million from $2.4 million for the same period in the prior year. As a percentage of total revenues, research and development expense remained constant at 8% for the three months ended June 30, 1997 and 1996, and decreased to 9% from 10% for the nine months ended June 30, 1997 and 1996, respectively. The increase in spending was mainly due to the reorganization of the Company's technical support department. This increase was partly offset by an increased investment in research and development resources for the continued development of additional products to compliment the Company's existing product line. The decrease as a percentage of revenues from the nine month period ended June 30, 1996 was mainly due to the Company's investment in technology and development tools in prior years, resulting in increased productivity and less rapid growth in research and development expenditures. The Company expects that research and development expenses will increase as a percentage of revenue in future periods as new development projects are undertaken. 9 10 SALES AND MARKETING Sales and marketing expense increased 75% to $2.0 million for the three months ended June 30, 1997 from $1.2 million for the same period in the prior year, and increased 60% to $5.1 million for the nine months ended June 30, 1997 from $3.2 million for the same period in the prior year. As a percentage of total revenues, sales and marketing expense increased to 16% for the three months ended June 30, 1997 from 11% for the three months ended June 30, 1996 and increased to 16% from 13% for the nine months ended June 30, 1997 and 1996 respectively. The increase was primarily due to a net increase of twelve new sales and sales support personnel. Sales commissions also increased over the prior year due to increased sales volume. GENERAL AND ADMINISTRATIVE General and administrative expense increased 25% to $1.0 million for the three months ended June 30, 1997 from $0.8 million for the same period in the prior year, and increased 50% to $3.0 million for the nine months ended June 30, 1997 from $2.0 million for the same period in the prior year. As a percentage of total revenues, general and administrative expense remained constant at 8% for the three months ended June 30, 1997 and 1996, and increased to 10% from 8% for the nine months ended June 30, 1997 and 1996, respectively. The increase was primarily due to increased costs related to being a publicly-traded company, and expenses related to Enterprising HealthCare, Inc., which the Company acquired in July 1996. OTHER OPERATING EXPENSES Other operating expenses for the nine months ended June 30, 1996 included a compensation charge of $3.0 million arising from the acquisition by the Company, in connection with the January 1996 Recapitalization, of shares of Common Stock issued to certain executive officers pursuant to the exercise of options. INTEREST INCOME (EXPENSE) Interest income for the three months ended June 30, 1997 was $0.7 million, compared to $0.5 million in interest income and $0.3 million in interest expense for the same period in the prior year. During the nine months ended June 30, 1997, the Company had $1.8 million in interest income compared to $0.7 million in interest income and $1.2 million in interest expense for the same period in the prior year. The increase in interest income, and the decrease in interest expense is related to the extinguishment in April 1996 of the debt related to the January 1996 Recapitalization, as well as the interest income earned on the cash balances that the Company generated from operations and the proceeds of the Company's April 1996 initial public offering. PROVISION FOR INCOME TAXES The Company's effective income tax rate decreased to 40% for the nine months ended June 30, 1997 from 41% for the same period in the prior year. The decrease was primarily attributable to the tax benefit obtained by the Company's investing a portion of its cash in tax exempt securities during the current year. 10 11 EXTRAORDINARY ITEM For the three and nine months ended June 30, 1996, the Company incurred an extraordinary loss of $2.1 million representing the after tax effect of the write-off of $3.6 million of unamortized capitalized financing costs attributable to indebtedness incurred in the Recapitalization that was repaid out of the proceeds of the Company's initial public offering. PREFERRED STOCK DIVIDEND The holders of the Series A Preferred Stock (issued in connection with the Recapitalization on January 24, 1996) were entitled to receive, when and as declared by the Board of Directors, out of funds legally available therefor, preferential cumulative dividends at the rate of 12% per annum. The Company was not obligated to pay dividends prior to the redemption of the Series A Preferred Stock, and no dividends were declared by the Board. The Series A Preferred Stock was subject to mandatory redemption, provided funds were legally available therefor, upon the closing of an initial public offering or the sale of the Company, but in no event later than January 2006. Upon the closing of the Company's initial public offering, on April 23, 1996, at which time funds became legally available for the redemption of the Series A Preferred Stock and payment of dividends, the Company redeemed in full the Series A Preferred Stock and accrued and paid dividends thereon from the date of the Recapitalization. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents increased to $54.4 million at June 30, 1997 from $51.5 million at September 30, 1996. The increase is primarily attributable to cash provided by operations, which was partially offset by the Company's January 1997 acquisition of a 19.5% equity interest in HealthVISION for $6 million in cash. The Company believes that available funds, cash generated from operations and its unused line of credit of $15 million, will be sufficient to finance the Company's operations and planned capital expenditures for at least the next twelve months. There can be no assurance, however, that the Company will not require additional financing during that time or thereafter. 11 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS EXHIBIT NUMBER DESCRIPTION ------ ----------- *3.2 Amended and Restated Articles of Organization *3.4 Amended and Restated By-Laws *3.5 Articles of Amendment to the Articles of Organization, as filed with the Secretary of State of the Commonwealth of Massachusetts on April 3, 1996. *4.1 Specimen Certificate for Common Stock 11.1 Computation of Per Share Earnings 27 Financial Data Schedule * Incorporated herein by reference to the similarly-numbered exhibit included in the Company's registration statement on Form S-1, File No. 333-01758. (b) REPORTS ON FORM 8-K None. 12 13 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. Transition Systems, Inc. (Registrant) Dated: August 13, 1997 /s/ Robert F. Raco --------------------------------------- Robert F. Raco President, Chief Executive Officer and Director (principal executive officer) Dated: August 13, 1997 /s/ Paula J. Malzone --------------------------------------- Paula J. Malzone Chief Financial Officer and Treasurer (principal financial and accounting officer) 13 EX-11.1 2 COMPUTATION OF EARNINGS PER SHARE 1 Exhibit 11.1 TRANSITION SYSTEMS, INC COMPUTATION OF EARNINGS PER SHARE
For the three month period ended: June 30, 1997 June 30, 1996 ------------- ------------- Weighted averages shares outstanding: Common stock outstanding ........................... 17,433,000 15,638,000 Common stock equivalent ............................ 3,029,000 3,991,000 Weighted average number of common shares and common equivalent shares outstanding (1) ..... 20,462,000 19,629,000 =========== ============ Net income: Net income before extraordinary item ............... $ 3,562,000 $ 2,870,000 Extraordinary item ................................. -- (2,149,000) Net income allocable to common stockholders ...................................... $ 3,562,000 $ 128,000 Earnings per share: Net income before extraordinary item ............... $ 0.17 $ 0.15 Extraordinary item ................................. -- (0.11) Net income allocable to common stockholders ...................................... $ 0.17 $ 0.01 For the nine months ended: Weighted averages shares outstanding: Common stock outstanding ........................... 17,306,000 11,951,000 Common stock equivalent ............................ 3,168,000 3,980,000 Weighted average number of common shares and common equivalent shares outstanding (1) ..... 20,474,000 15,931,000 =========== ============ Net income: Net income before extraordinary item ............... $ 7,528,000 $ 3,139,000 Extraordinary item ................................. -- (2,149,000) Net income allocable to common stockholders ...................................... $ 7,528,000 $ 397,000 Earnings per share: Net income before extraordinary item ............... $ 0.37 $ 0.20 Extraordinary item ................................. -- (0.13) Net income allocable to common stockholders ...................................... $ 0.37 $ 0.02
(1) Gives effect to the Recapitalization. See Note 9 of Notes to Consolidated Financial Statements for the fiscal year ended September 30, 1996 which are contained in the Company's Annual Report on Form 10-K for such fiscal year, File No. 0-28182. EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 9-MOS SEP-30-1997 OCT-01-1996 JUN-30-1997 1 54,386 251 18,863 1,304 0 74,841 4,761 3,421 86,562 15,075 0 0 0 173 70,814 86,562 0 30,875 0 9,355 0 146 0 12,546 5,018 0 0 0 0 7,528 .37 .37
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