-----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, LbkhsIHmzukfXHZ+cuJ/29GH4xXwZzgI/e9c6dPaKU+qh7xOuNQgB8nsMs5fJHK2 Ylz9lY4JpuoPgbt6ivOtKQ== 0000950109-96-003063.txt : 19960515 0000950109-96-003063.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950109-96-003063 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHARED MEDICAL SYSTEMS CORP CENTRAL INDEX KEY: 0000089415 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 231704148 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07416 FILM NUMBER: 96564322 BUSINESS ADDRESS: STREET 1: 51 VALLEY STREAM PKWY CITY: MALVERN STATE: PA ZIP: 19355 BUSINESS PHONE: 2152196300 MAIL ADDRESS: STREET 1: 51 VALLEY STREAM PKWY CITY: MALVERN STATE: PA ZIP: 19355 10-Q 1 FORM 10-Q 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 March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to___________ Commission file number 0-7416 SHARED MEDICAL SYSTEMS CORPORATION (Exact name of registrant as specified in its charter) Delaware 23-1704148 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 51 Valley Stream Parkway 19355 Malvern, Pennsylvania (Zip Code) (Address of principal executive offices) (610) 219-6300 (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 ----- ----- On April 30, 1996, there were 23,449,879 shares of Common Stock outstanding. PART I - FINANCIAL INFORMATION Item 1. Financial Statements. SHARED MEDICAL SYSTEMS CORPORATION CONSOLIDATED BALANCE SHEET ---------------------------------- (Amounts in thousands)
March 31 December 31 1996 1995 ----------- ----------- (unaudited) ASSETS Current Assets: Cash and short-term investments................... $ 15,520 $ 23,310 Accounts receivable, net.......................... 179,966 171,320 Prepaid expenses and other current assets......... 27,830 25,975 -------- -------- Total Current Assets............................ 223,316 220,605 Property and Equipment, net........................ 98,253 101,164 Computer Software, net............................. 43,987 42,955 Other Assets....................................... 65,857 70,249 -------- -------- $431,413 $434,973 ======== ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities: Notes payable..................................... $ 37,851 $ 20,920 Current portion of long-term debt and capital leases................................... 3,346 4,654 Dividends payable................................. 4,917 4,885 Accounts payable.................................. 17,163 28,301 Accrued expenses.................................. 25,617 39,469 Current deferred revenues......................... 21,790 23,557 Accrued and current deferred income taxes......... 11,764 10,913 -------- -------- Total Current Liabilities....................... 122,448 132,699 -------- -------- Deferred Revenues.................................. 10,301 13,209 -------- -------- Long-Term Debt and Capital Leases.................. 16,766 16,960 -------- -------- Deferred Income Taxes.............................. 23,817 23,285 -------- -------- Commitments Stockholders' Investment: Preferred stock, par value $.10; authorized 1,000,000 shares; none issued........ - - Common stock, par value $.01; authorized 60,000,000 shares; 27,452,290 shares issued in 1996 and 27,288,942 in 1995..................... 274 273 Paid-in capital.................................. 43,755 39,561 Retained earnings................................ 270,895 265,010 Common stock in treasury, at cost, 4,031,078 shares in 1996 and 4,027,815 in 1995............ (55,599) (55,286) Cumulative translation adjustment................ (1,244) (738) -------- -------- Total Stockholders' Investment.................. 258,081 248,820 -------- -------- $431,413 $434,973 ======== ========
The accompanying notes are an integral part of this statement. 2 SHARED MEDICAL SYSTEMS CORPORATION CONSOLIDATED STATEMENT OF INCOME ---------------------------------- (Amounts in thousands, except for per share amounts)
Three Months Ended March 31 ----------------------------- 1996 1995 ---------- ---------- (unaudited) Revenues: Service and system fees.................... $159,482 $134,138 Hardware sales............................. 10,870 11,201 -------- -------- 170,352 145,339 -------- -------- Cost and Expenses: Operating and development.................. 75,130 63,291 Marketing and installation................. 52,846 44,050 General and administrative................. 14,591 12,586 Cost of hardware sales..................... 9,444 9,240 Interest................................... 804 450 -------- ------- 152,815 129,617 -------- -------- Income Before Income Taxes.................. 17,537 15,722 Provision for Income Taxes.................. 6,734 6,131 -------- -------- Net Income.................................. $ 10,803 $ 9,591 ======== ======== Net Income Per Common Share................. $.45 $.41 ======== ======== Number of shares used to compute per share amounts.................................... 24,085 23,565 ======== ======== Dividends Declared Per Common Share......... $.21 $.21 ======== ========
The accompanying notes are an integral part of this statement. 3 SHARED MEDICAL SYSTEMS CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ (Amounts in thousands)
Three Months Ended March 31 --------------------------- 1996 1995 -------- -------- (unaudited) Cash Flows from Operating Activities: Net Income...................................... $ 10,803 $ 9,591 Adjustments to reconcile net income to net cash used for operating activities - Depreciation and amortization................ 9,243 8,632 Asset (increase) decrease - Accounts receivable........................ (8,646) (2,066) Prepaid expenses and other current assets.. (1,854) (2,471) Other assets............................... 3,885 650 Liability increase (decrease) - Accounts payable and accrued expenses...... (24,987) (18,138) Accrued and current deferred income taxes.. 851 3,336 Deferred revenues.......................... (4,678) (2,478) Deferred income taxes...................... 532 252 Other........................................ (396) 928 -------- -------- Net cash used for operating activities..... (15,247) (1,764) -------- -------- Cash Flows from Investing Activities: Property and equipment additions................ (4,109) (4,075) Investment in computer software................. (3,493) (2,917) Dispositions of equipment....................... 205 20 -------- -------- Net cash used for investing activities..... (7,397) (6,972) -------- -------- Cash Flows from Financing Activities: Dividends paid.................................. (4,885) (4,818) Change in treasury stock........................ (313) 19 Payments on long-term obligations............... (1,074) (790) Increase in notes payable....................... 16,931 6,169 Exercise of stock options....................... 4,195 1,885 -------- -------- Net cash provided by financing activities.. 14,854 2,465 -------- -------- Net Decrease in Cash and Short-Term Investments.. (7,790) (6,271) Cash and Short-Term Investments, Beginning of Period....................................... 23,310 21,249 -------- -------- Cash and Short-Term Investments, End of Period... $ 15,520 $ 14,978 ======== ========
The accompanying notes are an integral part of this statement. 4 SHARED MEDICAL SYSTEMS CORPORATION ---------------------------------- Notes to Consolidated Financial Statements March 31, 1996 (unaudited) - Note 1 - The information furnished in this Form 10-Q reflects all normal and ------ recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the financial statements as of March 31, 1996. Note 2 - At March 31, 1996 and December 31, 1995, the Company's trade ------ accounts receivable were reduced by allowances for doubtful accounts of $4,595,000 and $4,847,000, respectively. Note 3 - The major classes of property and equipment at March 31, 1996 and ------ December 31, 1995 were as follows (amounts in thousands):
March 31 December 31 1996 1995 ---------- ----------- (unaudited) Land and land improvements...... $ 10,719 $ 10,719 Buildings....................... 60,676 60,597 Equipment....................... 171,629 172,335 ---------- ----------- 243,024 243,651 Less accumulated depreciation and amortization.............. 144,771 142,487 ---------- ----------- $ 98,253 $101,164 ========== ===========
Note 4 - The accumulated amortization for capitalized internally produced ------ computer software and purchased software at March 31, 1996 and December 31, 1995 was $47,440,000 and $45,317,000, respectively. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Material Changes in Financial Condition - --------------------------------------- The Company's financial condition has remained strong throughout the three months ended March 31, 1996. Management is not aware of any potential material impairments to, or material changes in, the Company's current financial position. The most significant requirements for funds now anticipated are for purchases of equipment and payment of cash dividends. The Company plans to fund anticipated expenditures primarily through internally generated funds supplemented from time to time by bank borrowings. At March 31, 1996, the Company had lines of credit with banks of approximately $71,400,000, generally at their prime interest rates. At March 31, 1996, approximately $33,600,000 of these lines of credit were unused. 5 SHARED MEDICAL SYSTEMS CORPORATION ---------------------------------- Material Changes in Results of Operations - ----------------------------------------- Three Months Ended March 31, 1996 Compared to the Three Months Ended March 31, 1995. Revenues -------- Service and system fees revenues were $159,452,000, an increase of 18.9% compared to the first quarter of 1995. This increase was primarily due to higher levels of professional services, system processing fees and system sales. The higher level of professional services was generally attributable to system installations and support. The increase in system processing fees was primarily due to the higher level of customer applications processed at the Company's Information Services Center. Also affecting this change were revenues associated with the acquisitions of two businesses in Europe in June and September 1995. Hardware sales revenues decreased to $10,870,000 for the first quarter of 1996 from $11,201,000 in the first quarter of 1995, primarily due to differences in the timing and product mix of systems installed. Cost and Expenses ----------------- Operating and development expenses decreased to 47.1% of service and system fees revenues in the first quarter of 1996 from 47.2% for the first quarter 1995. This change was primarily due to efficiencies gained through decreased costs for computer hardware at the Company's Information Services Center and a lower rate of growth for personnel costs as compared to the growth in service and system fees revenues, partially offset by increased costs for certain customer related expenses. Marketing and installation expenses increased to 33.1% of service and system fees revenues in the first quarter of 1996 from 32.8% in the first quarter of 1995, primarily due to higher levels of installations and support services provided to the Company's customers. General and administrative expenses, as a percentage of service and systems fees revenues, decreased to 9.1% in the first quarter of 1996 from 9.4% in the first quarter of 1995, primarily due to the Company's continuing efforts to leverage administrative costs over an increasing revenue base. Cost of hardware sales increased to 86.9% of hardware sales revenues in the first quarter of 1996 from 82.5% in the first quarter of 1995. This change was primarily due to the different product mixes of systems installed in each quarter. Interest expense was $804,000 in the quarter ended March 31, 1996 compared to $450,000 in the same period in 1995. This change was primarily due to a higher level of outstanding borrowings which was partially attributable to funds used for the acquisitions of two businesses in Europe in June and September 1995. 6 SHARED MEDICAL SYSTEMS CORPORATION ---------------------------------- Provision for Income Taxes -------------------------- Income taxes increased $603,000 in the quarter ended March 31, 1996 when compared to the same period in 1995. This change was primarily due to an increase of $1,815,000 in income before income taxes. The Company's effective tax rate for federal, state and foreign income taxes was 38.4% in the first quarter of 1996 and 39.0% in the first quarter of 1995. The change in the effective tax rate was primarily due to a decrease in the Company's effective state income tax rate. Net Income ---------- Net income was $10,803,000 in the quarter ended March 31, 1996 compared to $9,591,000 in the quarter ended March 31, 1995 for the reasons discussed above. 7 SHARED MEDICAL SYSTEMS CORPORATION ---------------------------------- PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) The following exhibits are included in this report: No. Description ---- ----------------------------------------------------------- (10) Material Contract Deferred compensation agreement: Robert J. McNeill (27) Financial Data Schedule (b) No reports on Form 8-K were filed during the three-month period ended March 31, 1996. 8 SHARED MEDICAL SYSTEMS CORPORATION ---------------------------------- 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. SHARED MEDICAL SYSTEMS CORPORATION ---------------------------------- Registrant May 14, 1996 /S/ Terrence W. Kyle - ------------ ---------------------------------- Date Terrence W. Kyle Vice President of Finance Principal Financial Officer and Duly Authorized Officer 9 SHARED MEDICAL SYSTEMS CORPORATION ---------------------------------- Exhibit Index No. Description --- ------------------------------------ (10) Material Contract - Deferred compensation agreement: Robert J. McNeill (27) Financial Data Schedule 10 EX-10 2 DEFERRED COMPENSATION AGREEMENT Exhibit (10) DEFERRED COMPENSATION AGREEMENT THIS AGREEMENT is made this 29th day of March, 1996, between SHARED MEDICAL SYSTEMS CORPORATION (the "Company") and ROBERT J. MCNEILL ("Employee"), who is a member of a select group of management or highly compensated employees within the meaning of section 201(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The parties hereto, intending to be legally bound, agree as follows: 1. Grantor Trust; Deferred Compensation Account. -------------------------------------------- The Company has established an irrevocable grantor trust (the "Trust") within the meaning of section 671 of the Internal Revenue Code of 1986, as amended (the "Code"), pursuant to a trust agreement (the "Trust Agreement") executed on March 29, 1996 with a trustee selected by the Company (the "Trustee"). Concurrent with the execution of this Agreement, the Company will contribute to the Trust 10,000 newly-issued shares of Company Common Stock ("Original Shares") by delivery of such Shares to the Trustee. The Trustee shall, on behalf of the Company, hold a deferred compensation account for Employee (the "Deferred Compensation Account" or the "Account"). The Account shall have two sub-accounts, the Stock Account and the Cash Account. The Trustee shall hold the Original Shares in the Stock Account. Any stock dividends, stock splits, and other non-cash distributions received on the Original Shares shall be held in the Stock Account, while any cash dividends received on the Original Shares shall be held in the Cash Account and shall be invested in accordance with investment guidelines established by the Company. The Accounts shall also be reduced for distributions made under the terms of this Agreement. Notwithstanding the foregoing, the Trust assets shall be treated as assets of the Company and shall remain, in the event the Company becomes Insolvent (as such term is defined in Section 5(a)(i) of the Trust Agreement) subject to the claims of the Insolvency Creditors (within the meaning of Section 5(a)(ii) of the Trust Agreement) of the Company. Employee shall not have any property interest in the assets held in the Trust. Employee shall have only the rights of an unsecured creditor against the Company for any distribution due under this Agreement, and this Agreement shall constitute a mere promise by the Company to make such distributions in the future. It is the intention of the parties -1- that the Agreement be unfunded for Federal income tax purposes and for purposes of Title I of ERISA. 2. Entitlement to Benefits. ----------------------- (a) Benefits at Normal Retirement. ----------------------------- Upon the termination of Employee's employment with the Company occurring on or after the Employee attains the age of 65 (his "Normal Retirement Age"), Employee shall be entitled to receive and shall have distributed to him the balance in his sub-accounts, as provided in Exhibit A. (b) Termination Before Normal Retirement Age. ---------------------------------------- If Employee's employment with the Company is terminated for any reason prior to his Normal Retirement Age, Employee shall not be entitled to receive any amount in his Account, and no distributions shall be made to Employee, except under the following circumstances: (i) Disability. ---------- If Employee's termination of employment results from his permanent disability prior to his Normal Retirement Age, Employee shall be entitled to receive and shall have distributed to him the balance in his sub-accounts, as provided in Exhibit A. Employee shall be deemed "permanently disabled," only if he can no longer perform the duties of his position, as determined by the Management and Compensation Committee of the Company's Board of Directors, in his or their sole discretion. (ii) Death. ----- If Employee's termination of employment results from the Employee's death prior to his Normal Retirement Age, Employee's beneficiary designated pursuant to Section 3(b) below shall be entitled to receive within 30 days of Employee's death and shall have distributed to him or her the balance in Employee's sub-accounts, in a lump sum. -2- (iii) Discharge After Age 55. ---------------------- Except as otherwise provided in Section 2(b)(iv) below, if Employee is discharged by the Company for any reason other than "cause" after he reaches age 55 but prior to his Normal Retirement Age, the balance in his sub-accounts shall be reduced to the balance in his sub-accounts as of his date of termination multiplied by the Adjustment Fraction. For purposes of this subsection only, "Adjustment Fraction" shall mean a fraction, the numerator of which shall be the number of full months the Employee worked for the Company after attaining age 55, and the denominator of which shall be 120. The balance in his sub-accounts shall be distributed to the Employee, as provided in Exhibit A. As used herein, the term "cause" shall mean Employee's (A) dishonest or illegal conduct, (B) conduct contrary to the best interests of the Company, (C) insubordination, incompetence, misconduct, or neglect of his duties, or (D) willful violation of any express direction of the senior management or the Board of Directors of the Company, as determined by the Management and Compensation Committee of the Company's Board of Directors, in his or their sole discretion. (iv) Change in Control. ----------------- (A) Acceleration of Account. ----------------------- If, prior to Employee's Normal Retirement Age, (aa) there is a "Change in Control" of the Company, (bb) the Chief Executive Officer of the Company immediately prior to the Change in Control is replaced, and (cc) within 3 months subsequent thereto Employee is discharged by the Company or Employee resigns because his place of work is changed such that his commute would be increased by 50 miles or more or his responsibilities or his aggregate compensation is reduced, Employee shall be entitled to receive and shall have distributed to him the balance in his sub- accounts, as provided in Exhibit A. -3- (B) Definition. ---------- As used herein, the term "Change in Control" shall mean the acquisition by any person (other than the Company or any affiliate or associate of the Company), as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of 40% or more of the combined voting power of the Company's then outstanding securities, or the approval by the stockholders of the Company of (aa) any merger or consolidation where stockholders of the Company immediately prior to the merger or consolidation do not immediately thereafter hold more than 50% of the combined voting power of the surviving company's then outstanding securities, (bb) a liquidation or dissolution of the Company, or (cc) a sale of all or substantially all of the Company's assets. (c) Forfeiture of Benefits. ---------------------- Notwithstanding the foregoing, if at any time after the date hereof, Employee, without the express written consent of the Company, manages, operates, or controls, or becomes an officer, director or employee of, or consultant to, any business or enterprise determined by the Company to be engaged in the manufacture, distribution or marketing of any product, or the provision of any service, substantially similar to or in competition with any product or service offered by the Company, Employee shall forfeit all rights to receive any benefits under this Agreement, and no distributions under this Agreement shall be made to Employee, or continued to be made, as the case may be. (d) Acceleration of Payments. ------------------------ Notwithstanding any other provision of this Agreement or the Trust Agreement, if the Company's independent public accountants determine, based on a change in the tax or revenue laws of the United States of America, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury or his delegate, a final decision by a court of competent jurisdiction involving the Employee, or a closing agreement -4- involving the Employee made under section 7121 of the Code that is approved by the Commissioner, that the Employee has recognized or will recognize income for Federal income tax purposes with respect to benefits that are or will be payable to the Employee hereunder, before they otherwise would be paid to the Employee, the Company shall discuss with the Employee appropriate measures to eliminate a negative economic impact on the Employee, including if approved by the Company, an immediate distribution by the Trustee from the Trust to the Employee or Beneficiary of the amount so taxable. 3. Beneficiaries. ------------- (a) Death of Employee Entitled to Benefits. -------------------------------------- If Employee dies after becoming entitled to benefits under Section 2(a) or 2(b)(i), 2(b)(iii) or 2(b)(iv), the balance then in his Account, shall, within 30 days of Employee's death, be distributed in a lump sum to Employee's beneficiary designated pursuant to Section 3(b) below. (b) Beneficiary Designation. ----------------------- Employee shall have the right to designate a beneficiary or beneficiaries to receive any benefits hereunder which may be distributed upon Employee's death. Employee shall have the right to change any beneficiaries so designated, provided, however, that a change of a beneficiary designation will be effective only if made in a manner acceptable to the Company. If Employee fails to designate a beneficiary or if no designated beneficiary survives the Employee, his estate shall be his beneficiary. 4. Claims and Appeals Procedure. ---------------------------- The Company has provided to the Employee a copy of the Claims and Appeals procedures which will be followed under this Agreement and which are incorporated herein by reference. 5. Non-alienation. -------------- No benefits under this Agreement shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, or encumbrance, and any attempt to do so shall be void and unenforceable. Such benefits shall not be subject to or liable for the debts, contracts, liabilities, engagements, or torts of Employee or his beneficiary or beneficiaries. -5- 6. Investment Purposes. ------------------- Unless the Company has theretofore notified Employee that a registration statement covering Shares deposited with the Trustee has become effective under the Securities Act of 1933 and the Company has not thereafter notified Employee that such registration is no longer effective, it shall be a condition of this Agreement that any Shares to be distributed to Employee hereunder shall be acquired for investment and not with a view to distribution in violation of the Securities Act of 1933 (or of any rules or regulations promulgated thereunder), and Employee hereby agrees to submit to the Company a certificate of such investment intent, together with such other evidence supporting the same as the Company may request. The Company shall be entitled to restrict the transferability of any Shares distributed hereunder to the extent necessary to avoid a risk of violations of the Securities Act of 1933 (or of any rules or regulations promulgated thereunder) or of any state laws or regulation. Such restrictions may, at the option of the Company, be noted or set forth in full on the Share certificates. 7. Amendment or Termination of Agreement. ------------------------------------- This Agreement may be amended or terminated upon the mutual agreement of Company, by resolution of the Management and Compensation Committee of its Board of Directors adopted at a duly held meeting of said Committee or by unanimous written consent of said Committee, and Employee. 8. Authority to Interpret Agreement Vested in Company. -------------------------------------------------- The Company shall have full power and authority to interpret, construe, administer and make factual determinations with respect to this Agreement, and the interpretation and construction thereof, and actions thereunder, including any valuation of the Deferred Compensation Account, or any decisions regarding the amount or recipient of any distribution to be made therefrom, shall be binding and conclusive on all persons for all purposes. The Company shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Agreement unless attributable to its own willful misconduct or lack of good faith. 9. No Contract of Employment. ------------------------- Nothing contained herein shall be construed as conferring upon the Employee the right to continue in the employ of the Company. -6- 10. Right to Withhold. ----------------- The Company and the Trustee shall have the right to withhold from all distributions under the Agreement any Federal, state, or local taxes required by law to be withheld with respect to such distributions. 11. Governing Law. ------------- This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania to the extent not preempted by federal law. 12. Agreement Binding. ----------------- This Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Employee and his heirs, executors, administrators and legal representatives. IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written. ATTEST: SHARED MEDICAL SYSTEMS CORPORATION [SEAL] /s/ Bonnie L. Shuman By: /s/ Terrence W. Kyle - --------------------- -------------------------- Assistant Secretary Name: Terrence W. Kyle Title: Vice President of Finance WITNESS: /s/ John P. Dougherty /s/ Robert J. McNeill - ---------------------- ------------------------------ Robert J. McNeill -7- Exhibit A I. Distribution of Benefits. ------------------------ (a) Timing of Distributions. ----------------------- Distributions pursuant to Section 2(a) shall be made in 20 annual installment payments, commencing on a date no later than 30 days after the date of Employee's termination of employment. Distributions pursuant to Sections 2(b)(i), 2(b)(iii), and 2(b)(iv) shall be made in 20 annual installment payments, commencing on a date no later than 30 days after the date the Employee reaches his Normal Retirement Age. Annual installments shall be distributed on the anniversary of the first such distribution. (b) Amount of Distributions Under Sections 2(a), 2(b)(i) and 2(b)(iv). ----------------------------------------------------------------- For each installment payment made pursuant to Sections 2(a), 2(b)(i) and 2(b)(iv), the Employee shall receive (i) an amount (payable in Shares, or with respect to non-cash assets other than Company stock, in kind) equal to the percentage of the Original Shares (and the stock dividends, stock splits and other non-cash distributions deemed received on the Original Shares) as indicated for the installment under II below, and (ii) cash in the amount of $11,100. In the event that the amount of cash to be distributed in an installment exceeds the current balance in the Cash Account on the date of such distribution, then the amount of the cash distribution shall be limited to the balance in the Cash Account on such date. In the event that the balance in the Cash Account on the date of the last installment is greater than $11,100 then the entire balance in the Cash Account shall be distributed with such last installment. Fractional Shares shall be disregarded in computing the amount of distributions hereunder. All applicable taxes shall be withheld from distributions under the Agreement. (c) Amount of Distributions under Section 2(b)(iii). ----------------------------------------------- For each installment payment made pursuant to Section 2(b)(iii), the Employee shall receive (i) an amount (payable in Shares, or with respect to non- cash assets other than Company stock, in kind) equal to the percentage of the Original Shares then remaining in the Stock Account, as provided in Section 2(b)(iii) (and the stock dividends, stock splits and other non-cash distributions received on such remaining Original Shares) indicated A-i for the installment under II below, and (ii) cash in an amount equal to (aa) $11,100, multiplied by (bb) the Adjustment Fraction set forth in Section 2(b)(iii). In the event that the amount of cash to be distributed in an installment exceeds the current balance in the Cash Account on the date of such distribution, then the amount of the cash distribution shall be limited to the balance in the Cash Account on such date. In the event that the balance in the Cash Account on the date of the last installment is greater than the amount of cash determined pursuant to subclause (ii) of the preceding sentence, then the entire balance in the Cash Account shall be distributed with such last installment. Fractional Shares shall be disregarded in computing the amount of distributions hereunder. All applicable taxes shall be withheld from distributions under the Agreement. II. Distribution Schedule. ---------------------
Percentage of Original Shares (and other assets in Stock Account) Installment Distributed #1 8.8% #2 8.2% #3 7.6% #4 7.0% #5 6.5% #6 6.0% #7 5.6% #8 5.2% #9 4.9% #10 4.7% #11 4.4% #12 4.2% #13 3.9% #14 3.7% #15 3.6% #16 3.4% #17 3.3% #18 3.2% #19 3.0% #20 2.8% ---- Total: 100%
A-ii EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 15,520 0 184,561 4,595 0 223,316 243,024 144,771 431,413 122,448 16,766 0 0 274 257,807 431,413 10,870 170,352 9,444 127,976 14,591 0 804 17,537 6,734 10,803 0 0 0 10,803 .45 .45
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