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                                                                    EXHIBIT 99.1
 
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
                        SAFE HARBOR COMPLIANCE STATEMENT
                         FOR FORWARD-LOOKING STATEMENTS
 
     In passing the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"), 15 U.S.C.A. Sections 77z-2 and 78u-5 (Supp. 1996), Congress
encouraged public companies to make "forward-looking statements" by creating a
safe harbor to protect companies from securities law liability in connection
with forward-looking statements. Medaphis Corporation ("Medaphis" or the
"Company") intends to qualify both its written and oral forward-looking
statements for protection under the Reform Act and any other similar safe harbor
provisions.
 
     "Forward-looking statements" are defined by the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All
forward-looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events and they are subject to
numerous known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those projected. Due to those
uncertainties and risks, the investment community is urged not to place undue
reliance on written or oral forward-looking statements of Medaphis. The Company
undertakes no obligation to update or revise this Safe Harbor Compliance
Statement for Forward-Looking Statements (the "Safe Harbor Statement") to
reflect future developments. In addition, Medaphis 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.
 
     Medaphis provides the following risk factor disclosure in connection with
its continuing effort to qualify its written and oral forward-looking statements
for the safe harbor protection of the Reform Act and any other similar safe
harbor provisions. Important factors currently known to management that could
cause actual results to differ materially from those in forward-looking
statements include the disclosures contained in the Quarterly Report on Form
10-Q to which this statement is appended as an exhibit and also include the
following:
 
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE DEBT
 
     The Company has substantial indebtedness and, as a result, significant debt
service obligations. The Company's ability to make payments on its debt
obligations will depend on its future operating performance, which will be
affected by prevailing economic conditions and financial, business and other
factors, certain of which are beyond the Company's control. If the Company is
unable to service its indebtedness, it will be required to adopt alternative
strategies, which may include actions such as reducing or delaying capital
expenditures, selling assets, restructuring or refinancing its indebtedness or
seeking additional equity capital. There can be no assurance that any of these
strategies could be effected on satisfactory terms.
 
     The degree to which the Company is leveraged could have important
consequences, including: (i) the Company's ability to obtain additional
financing in the future for working capital, capital expenditures, acquisitions
or other general corporate purposes may be impaired; (ii) a substantial portion
of the Company's cash flow from operations may be dedicated to the payment of
principal and interest on its indebtedness, thereby reducing the funds available
to the Company for its operations; (iii) the Company's existing indebtedness
contains, and future financings are expected to contain, financial and other
restrictive covenants, including without limitation those restricting the
incurrence of additional indebtedness, the creation of liens, the payment of
dividends, sales of assets, capital expenditures, and prepayment of indebtedness
and those requiring maintenance of minimum net worth, minimum EBITDA and minimum
interest coverage and limiting leverage; (iv) certain of the Company's
borrowings are and will continue to be at variable rates of interest which
expose the Company to the risk of increases in interest rates; and (v) the
Company may be more leveraged than certain of it competitors, which may place
the Company at a relative competitive disadvantage and make the Company more
vulnerable to changes in its industry and changing economic
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conditions. As a result of the Company's level of indebtedness, its financial
capacity to respond to market conditions, extraordinary capital needs and other
factors may be limited.
 
LITIGATION AND GOVERNMENT INVESTIGATIONS
 
     Numerous federal and state civil and criminal laws govern medical billing
and collection activities. In general, these laws provide for various fines,
penalties, multiple damages, assessments and sanctions for violations, including
possible exclusion from Medicare, Medicaid and certain other federal and state
healthcare programs.
 
     The United States Attorney's Office for the Central District of California
is conducting an investigation of the billing and collection practices in two
offices of the Company's wholly owned subsidiary, Medaphis Physician Services
Corporation ("MPSC"), which offices are located in Calabasas and Cypress,
California (the "Designated Offices") (the "California Investigation"). Medaphis
first became aware of the California Investigation on June 13, 1995 when search
warrants were executed on the Designated Offices and it and MPSC received grand
jury subpoenas. Medaphis received an additional grand jury subpoena on August
22, 1997, with which it has complied. The subpoena required, among other things,
records of any audit or investigative reports relating to the billing of payors
globally for radiological services during the period January 1, 1991 to date and
any refunds owed to or issued to payors with respect to such global billing
reports in the Company's various offices, including the Designated Offices.
 
     Investigations such as the California Investigation can be initiated
following the commencement of qui tam litigation which is commenced under
applicable state and federal statutes and is maintained under court seal without
disclosure to the defendant. Under the applicable statutes, the United States
and the State of California may elect to intervene fully or partially in qui tam
litigation, and proceed with the action. The United States typically will
provide a defendant with the opportunity to enter into settlement negotiations
prior to the intervention of the United States in the matter. An application by
the United States to partially lift the seal in qui tam litigation in order to
make disclosure of the complaint available to the defendant often precedes such
settlement discussions.
 
     On February 6, 1998, on application of the United States, the United States
District Court for the Central District of California issued an order partially
lifting the seal on the qui tam suit entitled United States of America and State
of California, ex rel. Relator I and Relator II v. Compmed Corporation, Medaphis
Corporation, Does 1 to 200, Inclusive. Civil Action No. 94-8158 LGB (kx) (the
"Complaint"). On February 11, 1998, the United States provided Medaphis with a
copy of the Complaint, Substitution of Attorney, and Order which prohibited the
Company from making any use of the Complaint, including any public disclosure,
other than for the purposes of settlement negotiations, without further order of
the Court. On February 12, 1998, upon the joint application of Medaphis and the
United States, the Court issued an order modifying its February 6, 1998 order to
allow Medaphis to make public disclosures concerning the Complaint and its
contents to the extent that Medaphis determined such disclosures were required
by applicable securities laws, provided that such disclosures did not reveal the
Relators' identities.
 
     According to the Complaint, filed December 20, 1995 by the Relators and
which contains allegations raised by them, the action is to recover damages and
civil penalties on behalf of the United States and the State of California
arising out of alleged false claims presented by the defendants on behalf of
their clients for payment under various state and federal insurance programs.
The Complaint includes causes of action under the Federal False Claims Act, 31
U.S.C. sec 3729 et seq., and the California False Claims Act, Cal. Gov't Code
sec. 12650 et seq. The Complaint also includes causes of action relating to
Medaphis' termination of Relator II, including a count under the state and
federal whistleblower protection statutes. The Complaint alleges overpayments of
approximately $20,500,000 together with treble damages and additional penalties
based on statutory civil penalties. The Complaint alleges that at least 50,000
separate false claims were filed under federal programs and at least 8,000
separate false claims were filed under state programs. The Complaint also
alleges unspecified compensatory, general and punitive damages on behalf of
Relator II on his or her employment claims. The allegations in the Complaint are
limited to the office of CompMed (acquired by Medaphis) in Culver City,
California. Medaphis believes that this Complaint relates to and concerns the
 
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California Investigation. Medaphis is engaged in negotiations with both the
civil and criminal divisions of the U.S. Attorney's office to settle those
portions of the Complaint as to which the United States has indicated that it
intends to proceed and any criminal charges that the United States may intend to
pursue. The Company has also contacted the State of California concerning civil
settlement of the portions of the Complaint as to which California intends to
proceed. The Company has not yet initiated discussions with the Relators
concerning the other portions of the Complaint, but the Company is seeking to
reach a global civil settlement with the United States, the State of California
and the Relators. To facilitate further negotiations with the United States and
California governments, the Company has agreed with such governments to toll
applicable statutes of limitations through November 2, 1998.
 
     Although the Company continues to believe that the principal focus of the
California Investigation remains on the billing and collection practices in the
Designated Offices, there can be no assurance that the California Investigation
will not expand to other offices, that the California Investigation or the qui
tam suit will be resolved promptly, that additional subpoenas or search warrants
will not be received by Medaphis or MPSC or that the California Investigation or
the qui tam suit will not have a material adverse effect on the Company. The
Company recorded charges of $12 million in the third quarter of 1995 solely for
legal and administrative fees, costs and expenses it anticipates incurring in
connection with the California Investigation and the putative class action
lawsuits described below which were filed in 1995 following the Company's
announcement of the California Investigation. Since the third quarter of 1995,
the Company has periodically adjusted the reserve, as necessary, including a
$0.3 million increase in the second quarter of 1998. Such adjustments to the
reserve have aggregated to a net reduction of $0.5 million. The reserve
currently covers only the anticipated expenses of the California Investigation
and the related lawsuits and does not include any provision for fines,
penalties, damages, assessments, judgments or sanctions that may arise out of
such matters, as such amounts are not currently estimable.
 
     In September 1996, MPSC became aware of apparently inadvertent computer
software errors affecting some of its electronic billing to carriers in the
State of California. The error relates to global billing (i.e., billing for the
professional and technical components of a service) for certain radiological
services under circumstances where the radiologist is only entitled to bill for
the professional component of such services. The Company believes such
inadvertent errors may have caused overpayments on certain claims submitted on
behalf of clients in the State of California. The full extent of overpayments by
carriers and beneficiaries, which impacts only certain managed care plans,
cannot be determined by the Company, but as notifications to the affected
clients and carriers occur, and refunds or offsets are sought, the Company may
be required to return to clients its portion of fees previously collected, and
may receive claims for alleged damages as a result of the error. The Company is
unable to estimate the possible range of loss, if any.
 
     Following the announcement of the investigation by the United States
Attorney's Office for the Central District of California, Medaphis, various of
its current and former officers and directors and the lead underwriters
associated with Medaphis' public offering of voting common stock ("Common
Stock") in April 1995, were named as defendants in putative shareholder class
action lawsuits filed in the United States District Court for the Northern
District of Georgia. In general, these lawsuits alleged violations of the
federal securities laws in connection with Medaphis' public statements and
filings under the federal securities acts, including the registration statement
filed in connection with Medaphis' public offering of Common Stock in April
1995. On October 13, 1995, the named plaintiffs in these lawsuits filed a
consolidated class action complaint (the "Consolidated Complaint"). On January
3, 1996, the court denied defendants' motion to dismiss the Consolidated
Complaint, which argued that the Consolidated Complaint failed to state a claim
upon which relief may be granted. On April 11, 1996, certain of the named
plaintiffs to the Consolidated Complaint voluntarily dismissed with prejudice
all of their claims. As a result of these dismissals, the Consolidated Complaint
no longer contained any claims based on the Securities Act and the Company's
underwriters and outside directors were no longer named as defendants. On June
26, 1996, the court denied plaintiffs' motion to certify plaintiffs' class. On
May 19, 1997, the plaintiffs and the defendants entered into a stipulation and
settlement agreement, pursuant to which the parties agreed to settle this action
on a class-wide basis for $4.75 million, subject to court approval (the "1995
Class Action Settlement"). The 1995 Class Action Settlement included the related
putative class action lawsuit filed in the Superior Court of Cobb
 
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County, Georgia, described more fully below. On October 28, 1997, the court
certified a class for settlement purposes, approved the settlement and entered
final judgment dismissing the action with prejudice. One of Medaphis' directors'
and officers' liability insurance carriers has paid $3.7 million of the 1995
Class Action Settlement directly for the benefit of the plaintiffs. The Company
accrued approximately $1.2 million in the quarter ended December 31, 1996 for
the anticipated balance of the 1995 Class Action Settlement and to pay certain
fees incident thereto. On November 6, 1997, the Company paid the remaining $1.05
million balance of the settlement.
 
     On November 5, 1996, Medaphis, Randolph G. Brown, a former officer and
director, and Michael R. Cote and James S. Douglass, former officers, were named
as defendants in a putative shareholder class action lawsuit filed in Superior
Court of Cobb County, State of Georgia. This lawsuit was brought on behalf of a
putative class of purchasers of Medaphis Common Stock during the period from
March 29, 1995 through June 15, 1995. Plaintiffs sought compensatory damages and
costs. Pursuant to the 1995 Class Action Settlement, the claims in this state
action were settled and were dismissed without prejudice.
 
     The Company learned in March 1997 that the United States Department of
Justice and the United States Attorney in Grand Rapids, Michigan are
investigating allegations concerning the Company's wholly owned subsidiary,
Gottlieb's Financial Services, Inc. ("GFS") (the "GFS Investigation"). Beginning
in February 1998, the Office of the Inspector General of Health and Human
Services has requested information from GFS following an audit of a GFS client.
GFS has complied with those requests. In 1993, Medaphis acquired GFS, an
emergency room physician billing company located in Jacksonville, Florida, which
had developed a computerized coding system. In 1994, Medaphis acquired and
merged into GFS another emergency room physician billing company, Physician
Billing, Inc., located in Grand Rapids, Michigan. For each of the years ended
December 31, 1996 and 1997, GFS represented approximately 7% of Medaphis'
revenue. During those years, GFS processed approximately 5.6 million and 6.25
million claims, respectively, approximately 2 million and 2.3 million of which,
respectively, were made to government programs. The government has requested
that GFS voluntarily produce records, and GFS has complied with that request.
Although the precise scope and subject matter of the GFS Investigation are not
known to the Company, Medaphis believes that the GFS Investigation, which is
being participated in by federal law enforcement agencies having both civil and
criminal authority, involves GFS's billing procedures and the computerized
coding system used in Jacksonville and Grand Rapids to process claims and may
lead to claims of errors in billing. The Company is actively pursuing settlement
discussions with the United States and representatives of various states. There
can be no assurance that the GFS Investigation will be resolved promptly, that
it can be settled on terms acceptable to the Company or that the GFS
Investigation will not have a material adverse effect upon Medaphis. No charges
or claims by the government have been made. The Company has recorded charges of
$2 million and $1 million in the second and third quarters of 1997,
respectively, and $0.7 million in the second quarter of 1998 solely for legal
and administrative fees, costs and expenses in connection with the GFS
Investigation, which charges do not include any provision for fines, penalties,
damages, assessments, judgments or sanctions that may arise out of this matter,
as such amounts cannot be estimated.
 
     In addition, the Company decided in April 1998 to transition GFS from a
computerized coding system to manual coding. There can be no assurances that the
Company will not be subject to customer complaints, claims and contract
terminations as a result of the coding system transition or modifications
previously made to the system. See "Management's Discussion and Analysis of
Results of Operations -- Liquidity and Capital Resources."
 
     The Company and its clients from time to time have received, and the
Company anticipates that they will receive in the future, official inquiries
(including subpoenas, search warrants, as well as informal requests) concerning
particular billing and collection practices related to certain subsidiaries of
the Company and its many clients.
 
     Following the Company's August 14, 1996 announcement regarding earnings
expectations and certain charges, Medaphis and certain of its then current and
former officers, one of whom was also a director, were named as defendants in
nineteen putative shareholder class action lawsuits filed in the United States
District Court for the Northern District of Georgia. On November 22, 1996, the
plaintiffs in these lawsuits filed a Consolidated Amended Class Action
Complaint. On February 3, 1997, the plaintiffs filed a Consolidated
 
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Second Amended Complaint (the "Consolidated Second Amended Complaint"). In
general, the Consolidated Second Amended Complaint alleged violations of the
federal securities laws in connection with Medaphis' filings under the federal
securities acts and public disclosures. The Consolidated Second Amended
Complaint was brought on behalf of a class of persons who purchased or otherwise
acquired Medaphis Common Stock between February 6, 1996 and October 21, 1996.
The Consolidated Second Amended Complaint also asserted claims on behalf of a
sub-class of all persons who acquired Medaphis Common Stock pursuant to the
merger between Medaphis and Health Data Services Corporation ("HDS"). The
Consolidated Second Amended Complaint sought compensatory and rescissory
damages, as well as fees, interest and other costs. On February 14, 1997, the
defendants moved to dismiss the Consolidated Second Amended Complaint in its
entirety. On May 27, 1997, the court denied defendants' motion to dismiss.
 
     The parties entered into a Stipulation and Agreement of Settlement dated
December 15, 1997 (the "Stipulation") to settle the 1996 putative shareholder
class action litigation which is the subject of the Consolidated Second Amended
Complaint on a class-wide basis for $20 million in cash (to be paid by the
Company's directors' and officers' liability insurance carriers), 3,955,556
shares of Medaphis Common Stock, and warrants to purchase 5,309,523 shares of
Medaphis Common Stock at $12 per share for a five-year period. The Stipulation
included, among other things: (i) a complete release of claims against the
Company, the individual defendants and certain related persons and entities; and
(ii) certain anti-dilution rights in favor of plaintiffs with respect to certain
future issuances of shares of Medaphis Common Stock or warrants or rights to
acquire Medaphis Common Stock to settle certain existing civil litigation and
claims pending or asserted against the Company, subject to a 5.0 million share
basket below which there will be no dilution adjustments. The Stipulation also
contained other conditions including, but not limited to, consent and approval
of the Company's insurance carriers and the insurance carriers' payment of the
cash portion of the settlement, and the final approval of the settlement by the
court. On December 15, 1997, the court granted preliminary approval to the
settlement and conditionally certified the classes for settlement purposes only.
The Company's insurance carriers consented to the settlement and funded the $20
million cash portion. On March 25, 1998, the Court granted final approval of the
settlement and entered final judgment dismissing the action.
 
     The Company recorded a $52.5 million charge in the quarter ended September
30, 1997 in connection with the Stipulation. This charge is comprised of the
following: (i) $30.2 million representing the original 3,355,556 shares of
Common Stock valued at the fair value per share on the date that the material
terms of the agreement were reached or approximately $9 per share and (ii) $22.3
million representing the fair value of the warrants on the date the material
terms of the agreement were reached, valued using the Black-Scholes option
pricing model with the following assumptions: expected life -- 5 years, risk
free interest rate -- 6%, dividend rate -- 0% and expected volatility
factor -- 60%. No accounting recognition was required for the additional 600,000
shares to be issued pursuant to the agreement as these shares represent the
maximum number of contingent shares that were issuable based on certain stock
price contingencies during the ten day period prior to October 11, 1997. As a
result of the actual decline in the Company's stock price during such period,
the Stipulation required that the maximum number of contingent shares be
awarded; however, no additional accounting charge was required in connection
with the award of such contingent shares. The 3,955,556 shares were issued in
April 1998. Additionally, no accounting recognition was afforded the cash
portion of the Stipulation as this amount is the responsibility of the insurance
carriers. Such amount has been paid by the insurance carriers directly to an
escrow account for the benefit of the plaintiffs.
 
     On November 1, 1996, Thomas W. Brown, Administrator, Thomas W. Brown Profit
Sharing Plan filed a shareholder derivative lawsuit in the United States
District Court for the Northern District of Georgia alleging that certain of
Medaphis' current and former directors breached their fiduciary duties, were
grossly negligent, and breached various contractual obligations to Medaphis by
allegedly failing to implement and maintain an adequate system of internal
accounting controls, allowing Medaphis to commit securities law violations and
damaging Medaphis' reputation (the "Derivative Suit"). The plaintiff seeks
unspecified compensatory damages and costs on behalf of the Company. On January
28, 1997, Medaphis and certain individual defendants filed a motion to dismiss
the complaint. On February 11, 1997, the plaintiff filed an amended complaint
adding as defendants, additional current and former directors and officers of
Medaphis. On April 23, 1997, Medaphis and all other defendants filed a motion to
dismiss the amended complaint, which
 
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motion was denied without prejudice. The parties entered into a Stipulation and
Settlement Agreement dated June 26, 1998 (the "Derivative Stipulation") to
settle the Derivative Suit. The Derivative Stipulation provides for the
enactment of procedures for governance of the Audit Committee of the Board of
Directors and for such attorney's fees and expenses as may be awarded by the
court in an amount not to exceed $250,000 (to be paid by the Company's
directors' and officers' liability insurance carrier). The Derivative
Stipulation is subject to certain conditions including, but not limited to,
consent and approval of the insurance carrier (which has been requested by the
Company), payment of the cash portion of the settlement by the insurance carrier
and final approval of the settlement by the court. On June 26, 1998, the court
granted preliminary approval to the settlement. The court has scheduled a final
fairness hearing concerning the settlement for September 29, 1998.
 
     On November 7, 1996, Health Systems International, Inc. filed suit in the
Superior Court for the State of California, County of Los Angeles against
Medaphis, Randolph G. Brown and "Does 1-50," who are alleged to be unnamed
Medaphis directors, officers and employees. Generally, this lawsuit alleges that
the defendants violated federal and California securities laws and common law
by, among other things, making material misstatements and omissions in public
and private disclosures in connection with the acquisition of HDS. Plaintiff
seeks rescissory, compensatory and punitive damages in excess of $100 million,
rescission, injunctive relief and costs. The Company is unable to estimate a
possible range of loss. On January 10, 1997, the defendants filed a demurrer to
the complaint. On February 5, 1997 the Court overruled defendants' demurrer. On
March 18, 1997, the court denied the plaintiff's motion for a preliminary
injunction. On July 16, 1997, plaintiff filed an amended complaint adding
several new parties, including current and former directors and former and
current officers of Medaphis. All of the newly added defendants have responded
to the amended complaint. As a result of the Company's restatement of its fiscal
1995 financial statements, the Company may not be able to sustain a defense to
strict liability on certain claims under the Securities Act, but the Company
believes that it has substantial defenses to the alleged damages relating to
such Securities Act claims.
 
     A putative class action complaint was filed by Ernest Hecht and Stephen D.
Strandberger against Steven G. Papermaster, Robert E. Pickering, Jr., David S.
Lundeen, Norman Smith, Raymond J. Noorda, Gregory A. Grosh, Medaphis and
Randolph G. Brown on November 12, 1996 in the Superior Court, Law Division,
Essex County, State of New Jersey. The alleged class consists of persons and
entities whose options to purchase BSG Corporation ("BSG") common stock were
converted to Medaphis stock options in connection with Medaphis' acquisition of
BSG. The plaintiffs allege failure to perform diligence, breaches of fiduciary
duties of candor, loyalty and fair dealing and negligence against the BSG
defendants (Papermaster, Pickering, Lundeen, Smith, Noorda and Grosh) and fraud
and deceit against the Medaphis defendants (Medaphis and Brown). Plaintiffs seek
unspecified compensatory and punitive damages, as well as fees, interest and
other costs. The Company is unable to estimate a possible range of loss. On
April 18, 1997, the Medaphis defendants and BSG defendants filed motions to
dismiss the complaint. On or about July 3, 1997, in lieu of responding to these
motions, the plaintiffs filed an amended complaint, adding new claims under the
Securities Act and common law and new parties, including former officers of
Medaphis, Medaphis' former independent accountants and BSG. On or about October
29, 1997, all defendants filed motions to dismiss the amended complaint. On May
12, 1998, the court ruled in favor of defendants on the motions, dismissing all
of plaintiffs' claims with prejudice and without leave to amend. On May 15,
1998, the Judge signed an order to that effect. The plaintiffs filed a notice of
appeal of such order on June 25, 1998.
 
     On February 28, 1997, Steven G. Papermaster, Raymond J. Noorda and two
entities they control (collectively, the "BSG Principals") made a demand for
indemnification under an indemnification agreement executed by Medaphis in
connection with its acquisition of BSG in May 1996. The indemnification demand
claims damages of $35 million (the maximum damages payable by Medaphis under the
indemnification agreement) for the alleged breach by Medaphis of its
representations and warranties made in the merger agreement between Medaphis and
BSG. On December 31, 1996, Medaphis entered into a standstill and tolling
agreement with Mr. Noorda, Mr. Papermaster and other former BSG shareholders,
which, as extended, runs through August 31, 1998. The standstill and tolling
agreement extends any applicable statute of limitations for claims by the former
BSG shareholders and provides that neither party will file suit against the
other prior to the expiration of the agreement. The Company and the BSG
Principals have reached an
 
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agreement in principle to settle the claims made on behalf of the former BSG
shareholders in exchange for approximately 3.2 million shares of Medaphis Common
Stock, subject to negotiation and definitive documentation of other terms and
conditions of the settlement. There can be no assurance that such settlement
will be completed or that such settlement, if completed, will be in accordance
with the above mentioned terms. The Company recorded a litigation settlement
charge of $21.3 million in the quarter ended June 30, 1998 in connection with
this agreement in principle. The charge reflects 3.2 million shares of Medaphis
Common Stock valued at the fair value per share on the date on which the
material terms of the agreement in principle was reached. The Company has
classified the entire $21.3 million liability associated with the proposed
settlement as noncurrent since such obligation will be settled with Common Stock
rather than current assets, and the exact timing of the payment of claims
pursuant to such settlement is not determinable.
 
     On April 21, 1997, James F. Thacker, Alyson T. Stinson, Carol T. Shumaker,
Lori T. Caudill, William J. Dezonia, the James F. Thacker Retained Annuity Trust
and the Paulanne H. Thacker Retained Annuity Trust filed a complaint against the
Company and Randolph G. Brown in the United States District Court for the
Southern District of New York arising out of Medaphis' acquisition of Medical
Management Sciences, Inc. ("MMS") in December of 1995. The complaint is brought
on behalf of all former shareholders of MMS who exchanged their MMS holdings for
unregistered shares of Medaphis Common Stock. In general, the complaint alleges
both common law fraud and violations of the federal securities laws in
connection with the merger. In addition, the complaint alleges breaches of
contract relating to the merger agreement and a registration rights agreement,
as well as tortious interference with economic advantage. The plaintiffs seek
rescission of the merger agreement and the return of all MMS shares, as well as
damages in excess of $100 million. The Company is unable to estimate a possible
range of loss. Additionally, plaintiffs seek to void various non-compete
covenants and contract provisions between Medaphis and plaintiffs. Defendants
have filed a motion to dismiss the complaint. Discovery has been stayed pending
resolution of the motion to dismiss.
 
     On August 12, 1997, George D. Stickel filed a putative class action
complaint against Medaphis, Randolph W. Brown, Michael R. Cote and James S.
Douglass in the United States District Court for the Northern District of
Georgia. The complaint asserts claims under the Exchange Act on behalf of all
persons who purchased or otherwise acquired Medaphis Common Stock between
February 6, 1996 and October 21, 1996. The complaint also asserts claims under
the Securities Act on behalf of a subclass consisting of all persons and
entities who, in connection with the merger of the Company and HDS, acquired
options to purchase shares of Medaphis Common Stock between February 6, 1996 and
October 21, 1996. The complaint seeks rescission, unspecified rescissory and
compensatory damages, and interest, fees and other costs. The parties entered
into a Stipulation and Agreement of Settlement dated June 26, 1998 (the "Stickle
Stipulation") to settle the Stickle putative class action suit on a class wide
basis for $137,500 in cash (to be paid by the Company's directors' and officers'
liability insurance carrier) and 52,252 shares of Medaphis Common Stock (based
on a price per share of Medaphis Common Stock of approximately $7). The Company
recorded a litigation settlement charge of approximately $0.4 million in the
quarter ended June 30, 1998 in connection with this agreement. The number of
shares of Medaphis Common Stock is subject to adjustment upward or downward by
up to 9,301 shares depending upon the average closing price of Medaphis Common
Stock for a specified period. Under the adjustment, the minimum number of shares
of Medaphis Common Stock to be issued pursuant to the Stickle Stipulation is
42,951 and the maximum number of shares is 61,553. The Stickle Stipulation is
subject to certain conditions including, but not limited to, consent and
approval of the Company's insurance carrier (which has been requested by the
Company), payment of the cash portion of the settlement by the insurance
carrier, and final approval of the settlement by the court. On June 26, 1998,
the court entered an order substituting Peter Gladkin as lead plaintiff in lieu
of George Stickle, granted preliminary approval of the settlement and
conditionally certified the class for settlement purposes only. The court has
scheduled a final fairness hearing concerning the settlement for September 29,
1998.
 
     The Company also has received other written demands from various
stockholders, including stockholders of recently acquired companies. To date,
these other stockholders have not filed lawsuits.
 
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     On January 8, 1997, the Securities and Exchange Commission (the
"Commission") notified the Company that it was conducting a formal, non-public
investigation into, among other things, certain trading and other issues related
to Medaphis' August 14, 1996 and October 22, 1996 announcements of the Company's
loss for the quarter ended September 30, 1996 and its restated consolidated
financial statements for the three months and year ended December 31, 1995 and
its restated unaudited balance sheets as of March 31, 1996, and June 30, 1996.
In addition, the Company believes that the Commission is investigating the
Company's restatement of its interim financial statements for each quarter of
1996 and the November 19, 1997 and December 23, 1997 restatements of the
Company's financial statements. The Company intends to cooperate fully with the
Commission in its investigation.
 
     Although the Company believes that it has meritorious defenses to the
claims of liability or for damages in the actions against and written demands
placed upon the Company, there can be no assurance that additional lawsuits will
not be filed against the Company. Further, there can be no assurance that the
lawsuits, the written demands and the pending governmental investigations will
not have a disruptive effect upon the operations of the business, that the
written demands, the defense of the lawsuits and the pending investigations will
not consume the time and attention of the senior management of the Company, or
that the resolution of the lawsuits, the written demands and the pending
governmental investigations will not have a material adverse effect upon the
Company, including, without limitation, the Company's results of operations,
financial position and cash flow. Because the Company is unable to estimate a
range of loss with respect to certain of the pending claims, the Company has not
accrued any amounts for any damages, settlements, penalties or awards with
respect to such unsettled claims, except as otherwise disclosed.
 
PRIOR PERIOD LOSSES
 
     The Company has had net losses in each of 1995, 1996, 1997 and the first
half of 1998. Such losses have resulted in substantial part from restructuring
and other charges and litigation settlements and to a lesser extent from
amortization relating to acquisitions. There can be no assurance when or if the
Company will generate net income in the future.
 
INTANGIBLE ASSETS
 
     As of June 30, 1998, the Company's balance sheet included approximately
$500 million of unamortized intangible assets, which is greater than 58% and 96%
of the Company's total assets and stockholders' equity, respectively. The
current amortization rate on the unamortized intangible assets is in excess of
$20 million per year.
 
     Goodwill represents the excess of the cost of the businesses acquired over
the fair value of net identifiable assets. GAAP requires goodwill and other
intangibles to be amortized over the period benefited, which management has
determined to be no less than 40 years.
 
     The Company amortizes goodwill over a period of 40 years as management
believes that these assets have an indeterminate life. Management believes that
Medaphis' value is in the differentiated service business it operates, which
outlasts the individual clients that make it up, and that the current base of
business, which has made Medaphis a leader in healthcare business management
services, provides the foundation for continued growth. Management continually
monitors events and circumstances both within the Company and within the
industry which could warrant revisions to the Company's estimated useful life of
goodwill. If the Company ever determines that a reduction in the amortization
period is necessary, it could have a material impact on the Company's results of
operations.
 
     During 1996 and 1997, management of the Company believed there were events
and changes in circumstances that warranted a re-assessment as to whether the
carrying amount of the intangible assets (approximately $434 million at December
31, 1997) for the Company's Physician Services segment was still recoverable.
These events included: (i) operating losses reported for two consecutive years,
(ii) significant restructuring charges within the Physician Services segment and
(iii) absence of revenue growth within the Physician Services segment.
Therefore, in accordance with applicable accounting rules, management prepared a
40 year undiscounted cash flow analysis to determine if these intangible assets
were still recoverable.
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<PAGE>   9
 
Management prepared the analysis with assumptions that reflected its current
outlook on the business. In all instances, management believes the assumptions
inherent in the analysis were reasonable and supportable. The following key
assumptions were used in management's undiscounted cash flow analysis: revenue
growth was forecasted at an average rate of 3.4% and the EBITDA margin was
forecasted at approximately 3.5 percentage points above the current level. Such
analysis indicated that no impairment of these intangible assets had occurred.
However, the Company recognizes that modest adjustments to the assumptions could
have a material impact on the analysis and related conclusions. For example, if
the Physician Services segment is unable to improve its EBITDA margin, revenue
growth of at least 4.1% would be required to allow for recoverability of these
assets over the 40 year life. As of June 30, 1998, the Physician Services
segment has not realized the revenue growth and EBITDA margin that was projected
at December 31, 1997. Management continues to monitor its results of operations
and other developments within the industry to adjust its cash flow forecast as
necessary. If the projected undiscounted cash flows used in the Company's
recoverability analysis decreased to one dollar below the carrying value of the
intangible assets, the Company would be required to record a non-cash impairment
charge that may exceed $300 million to reduce the Physician Services segment's
intangible assets to their fair value, as determined by discounting the future
cash flows of this segment. Management still believes the current intangible
asset balance is recoverable.
 
     Management has reviewed with its independent accountants all of the factors
and related future cash flows which it considered in determining that the
amortization period of goodwill is appropriate and that goodwill is not
impaired. Management concluded that, based on the assumptions used, the
anticipated future cash flows associated with the goodwill recognized in the
acquisitions will continue indefinitely, and, based on such assumptions, there
is no persuasive evidence that any material portion will dissipate over a period
shorter than 40 years.
 
DEPENDENCE ON TURNAROUND; FUTURE OPERATING RESULTS; MANAGEMENT
 
     The Company suffered several setbacks in recent years, including (i)
government investigations into: (a) the California Investigation, and (b) the
GFS Investigation; (ii) the failure of prior managements' acquisition strategy
to integrate companies acquired; (iii) several restatements of various financial
statements of the Company, including restatements of the Company's fiscal 1994,
1995, 1996 and interim 1997 financial statements; (iv) the discontinuance of the
operations of one of the businesses acquired; (v) the abandonment of an
extensive reengineering program that failed to realize the improvement in
customer service and reduction of costs that were expected; (vi) a steep drop in
the price of its common stock; and (vii) the filing of various lawsuits and
claims made against the Company, including multiple putative shareholder class
action lawsuits alleging violations of the federal securities laws.
Consequently, the Company has been operating in what is commonly described as a
"turnaround" situation. In addition to the risks generally associated with any
entity in a turnaround situation, the Company faces certain challenges more
specific to its operations, including: (i) integrating several recent
acquisitions into its ongoing operations; (ii) shifting its strategic focus from
acquiring compatible businesses to running its existing businesses efficiently
and profitably; (iii) successfully completing the combination of the operations
of BSG Corporation ("BSG") and Healthcare Information Technologies ("HIT") under
the Per-Se name, following the reorganization of its Imonics Corporation
("Imonics"), BSG and BSG Government Solutions, Inc. (formerly Rapid Systems
Solutions, Inc.) ("BSG Government") subsidiaries and the shutdown of Imonics;
(iv) managing existing customers' perceptions of the Company's continued
viability and refocusing on the high levels of customer service required to
develop new customers and retain existing customers; (v) combating employee
turnover, particularly in light of declines in the market value of the Company's
common stock (the value of which often plays a role in compensation of
employees); (vi) reducing costs and increasing efficiencies; and (vii)
reevaluating the efficiency of its operations following the Company's 1996
abandonment of its reengineering initiative to develop a unified billing and
information hardware and software system across all of its operating platforms,
the costs of which were subsequently determined to outweigh the benefits.
 
     There can be no assurance that the Company will successfully meet these or
other operating challenges or that the Company's operating plans ultimately will
be successful. Any failure with respect to the foregoing
 
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<PAGE>   10
 
could have a material adverse effect on the Company which could require the
Company to seek appropriate amendments to its existing credit facility.
 
     The Company's success in general, and the successful implementation of its
operating plans in particular, is dependent upon, among other things, the
continued contributions of the Company's senior management. There can be no
assurance that the Company's management will be successful and the loss of
services of those members could have a material adverse effect on the Company's
businesses.
 
ACCOUNTING ISSUES
 
     The Company received a subpoena from the Securities and Exchange Commission
(the "Commission") in connection with an on-going Commission investigation on
January 2, 1998. The subpoena seeks information in connection with the November
19 and December 23, 1997 restatements and certain charges taken by the Company
in the third quarter of 1997. There can be no assurances that the results of
such inquiry will not have a material adverse effect on the Company or that
further restatements of the Company's financial statements will not be required.
 
     There can be no assurance that there will not be additional adjustments to
or reserves taken in the Company's financial statements in respect of the
pending or future lawsuits and government investigations.
 
EVOLVING INDUSTRY STANDARDS; RAPID TECHNOLOGICAL CHANGES
 
     The markets for Medaphis' software products and services are characterized
by rapidly changing technology, evolving industry standards and frequent new
product introductions. Medaphis' success in its business will depend in part
upon its continued ability to enhance its existing products and services, to
introduce new products and services quickly and cost-effectively to meet
evolving customer needs, to achieve market acceptance for new product and
service offerings and to respond to emerging industry standards and other
technological changes. There can be no assurance that Medaphis will be able to
respond effectively to technological changes or new industry standards.
Moreover, there can be no assurance that competitors of Medaphis will not
develop competitive products, or that any such competitive products will not
have an adverse effect upon Medaphis' operating results.
 
     The Company intends further to refine, enhance and develop certain of the
Company's existing software and billing systems and to change all of the
Company's billing and accounts receivable management services operations over to
the Company's most proven software systems and technology to reduce the number
of systems and technologies that must be maintained and supported. Moreover,
management intends to continue to implement "best practices" and other
established process improvements in its operations going forward. There can be
no assurance that the Company will be successful in refining, enhancing and
developing its software and billing systems going forward, that the costs
associated with refining, enhancing and developing such software and systems
will not increase significantly in future periods, that the Company will be able
successfully to migrate the Company's billing and accounts receivable management
services operations to the Company's most proven software systems and technology
or that the Company's existing software and technology will not become obsolete
as a result of ongoing technological developments in the marketplace.
 
CLIENT/SERVER INFORMATION TECHNOLOGY PRODUCTS
 
     Medaphis' client/server information technology business involves, among
other things, projects designed to reengineer significant customer operations
through the strategic use of imaging, client/server and other advanced
technologies. Failure to meet expectations with respect to a major project could
damage the Company's reputation and standing in the client/server information
technology marketplace, affect its ability to attract new client/server
information technology business, result in the payment of damages to the
customer, jeopardize the Company's ability to collect for services already
performed on the project and otherwise adversely affect its results of
operations.
 
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<PAGE>   11
 
YEAR 2000
 
     It is possible that the Company's currently installed computer systems,
software products or other business systems, or those of the Company's
customers, vendors or resellers, working either alone or in conjunction with
other software or systems, will not accept input of, store, manipulate and
output dates for the years 1999, 2000 or thereafter without error or
interruption (commonly known as the "Year 2000" problem). The Company has
conducted a review of its business systems, including its computer systems, and
is querying its customers, vendors and resellers as to their progress in
identifying and addressing problems that their computer systems may face in
correctly interrelating and processing date information as the year 2000
approaches and is reached. Through its review, the Company has identified a
number of older legacy systems that will be abandoned in favor of a limited
number of more efficient processing systems, rather than make all the systems
Year 2000 compatible. GFS's computerized coding system is one of the legacy
systems from which the Company has determined to transition. The Company
believes that it is on target to have completed these system migration efforts
with respect to its Physician Services and Hospital Services businesses in the
first half of 1999. The detail planning and inventory for the majority of the
Company's legacy systems that are being modified for Year 2000 compatibility has
been completed and such systems are in remediation. Per-Se Technologies products
are scheduled to be Year 2000 compatible with releases due out in the third
quarter of 1998. Customers, vendors and resellers have been identified and
requests for information distributed regarding the Year 2000 readiness of such
parties. Responses are expected through the first quarter of 1999. The Company
will develop contingency plans during the fourth quarter of 1998 through the
second quarter of 1999 in response to assessments of the Year 2000 readiness of
customers, vendors and resellers. The estimated cost of the Company's Year 2000
efforts is $10 million to $15 million over 1998 and 1999, the majority of which
represents redirection of internal resources. However, there can be no assurance
that the Company will identify all such Year 2000 problems in its computer
systems or those of its customers, vendors or resellers in advance of their
occurrence or that the Company will be able to successfully remedy any problems
that are discovered. The expenses of the Company's efforts to identify and
address such problems, or the expenses or liabilities to which the Company may
become subject as a result of such problems, could have a material adverse
effect on the Company's business, financial condition and results of operations.
The revenue stream and financial stability of existing customers may be
adversely impacted by Year 2000 problems, which could cause fluctuations in the
Company's revenue. In addition, failure of the Company to identify and remedy
Year 2000 problems could put the Company at a competitive disadvantage relative
to companies that have corrected such problems.
 
COMPETITION; INDUSTRY AND MARKET CHANGES
 
     The business of providing management services and information technology to
physicians and hospitals is highly competitive. Medaphis competes with certain
national and regional physician and hospital reimbursement organizations and
collection businesses (including local independent operating companies), certain
national information and data processing organizations and certain physician
groups and hospitals that provide their own business management services.
Potential industry and market changes that could adversely affect the billing
and collection aspects of Medaphis' business include (i) a significant increase
in managed care providers relative to conventional fee-for-service providers,
potentially resulting in substantial changes in the medical reimbursement
process, or the Company's failure to respond to such changes and (ii) new
alliances between healthcare providers and third-party payors in which
healthcare providers are employed by such third-party payors. The business of
providing application software, information technology and consulting services
is also highly competitive and Medaphis faces competition from certain national
and regional companies in connection with its technology operations. Certain of
Medaphis' competitors have longer operating histories and greater financial,
technical and marketing resources than Medaphis. There can be no assurance that
competition from current or future competitors will not have a material adverse
effect upon Medaphis.
 
     The Company's business is affected by, among other things, trends in the
U.S. healthcare industry. As healthcare expenditures have grown as a percentage
of the U.S. Gross National Product, public and private healthcare cost
containment measures have applied pressure to the margins of healthcare
providers.
 
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<PAGE>   12
 
Historically, some healthcare payors have paid the prices established by
providers while other healthcare payors, notably government agencies and managed
care companies, have paid less than established prices (in many cases less than
the average cost of providing the services). As a consequence, prices charged to
healthcare payors willing to pay established prices have increased in order to
recover the cost of services purchased by government agencies and others but not
paid for by them (i.e., "cost shifting"). The increasing complexity in the
reimbursement system and assumption of greater payment responsibility by
individuals have caused healthcare providers to experience increased accounts
receivable and bad debt levels and higher business office costs. Healthcare
providers historically have addressed these pressures on profitability by
increasing their prices, by relying on demographic changes to support increases
in the volume and intensity of medical procedures and by cost shifting.
Notwithstanding the providers' responses to these pressures, management believes
that the revenue growth rate experienced by the Company's clients continues to
be adversely affected by increased managed care and other industry factors
affecting healthcare providers in the United States. At the same time, the
process of submitting healthcare claims for reimbursement to third party payors
in accordance with applicable industry and regulatory standards continues to
grow in complexity and to become more costly. Management believes that these
trends have adversely affected and could continue to adversely affect the
revenues and profit margins of the Company's operations.
 
GOVERNMENTAL INVESTIGATORY RESOURCES AND HEALTHCARE REFORM
 
     The federal government in recent years has placed increased scrutiny on the
billing and collection practices of healthcare providers and related entities,
and particularly on possibly fraudulent billing practices. This heightened
scrutiny has resulted in a number of high profile civil and criminal
investigations, lawsuits and settlements.
 
     In 1996, Congress enacted the Health Insurance Portability and Accounting
Act of 1996, Pub. L. No. 104-191, 1996 U.S.C.C.A.N. (110 Stat. 1936) (codified
in scattered sections of the United States Code, including 18, 26, 29 and 42
U.S.C.), which includes an expansion of provisions relating to fraud and abuse,
creates additional criminal offenses relating to healthcare benefit programs,
provides for forfeitures and asset-freezing orders in connection with such
healthcare offenses and contains provisions for instituting greater coordination
of federal, state and local enforcement agency resources and actions.
 
     In recent years, the focus of healthcare legislation has been on budgetary
and related funding mechanism issues. Both the Congress and the Clinton
Administration have made proposals to reduce the rate of increase in projected
Medicare and Medicaid expenditures and to change funding mechanisms and other
aspects of both programs. In late 1995, Congress passed legislation that would
substantially reduce projected expenditure increases and would make significant
changes in the Medicare and Medicaid programs. The Clinton Administration has
proposed alternate measures to reduce, to a lesser extent, projected increases
in Medicare and Medicaid expenditures. Neither proposal has become law and
Medaphis anticipates that both the Clinton Administration and the Republican
majorities in Congress will introduce legislation in 1998 designed to reduce
projected increases in Medicare and Medicaid expenditures and to make other
changes in the Medicare and Medicaid programs. Medaphis anticipates that such
proposed legislation would, if adopted, change aspects of the present methods of
paying physicians under such programs and provide incentives for Medicare and
Medicaid beneficiaries to enroll in health maintenance organizations and other
managed care plans. Medaphis cannot predict the effect of any such legislation,
if adopted, on its operations.
 
     A number of states in which Medaphis has operations either have adopted or
are considering the adoption of healthcare reform proposals at the state level.
Medaphis cannot predict the effect of proposed state healthcare reform laws on
its operations. Additionally, certain reforms are occurring in the healthcare
market, including certain employer initiatives such as creating purchasing
cooperatives and contracting for healthcare services for employees through
managed care companies (including health maintenance organizations), and certain
provider initiatives such as risk-sharing among healthcare providers and managed
care companies through capitated contracts and integration among hospitals and
physicians into comprehensive delivery systems. Consolidation of management and
billing services through integrated delivery systems may result in a decrease in
demand for Medaphis billing and collection services for particular physician
practices.
 
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<PAGE>   13
 
EXISTING GOVERNMENT REGULATION
 
     Existing government regulation can adversely affect Medaphis' business
through, among other things, its potential to reduce the amount of reimbursement
received by Medaphis' clients for healthcare services. Medaphis' medical billing
and collection activities are also governed by numerous federal and state civil
and criminal laws. In general, these laws provide for various fines, penalties,
multiple damages, assessments and sanctions for violations, including possible
exclusion from Medicare, Medicaid and certain other federal and state healthcare
programs.
 
     Submission of claims for services or procedures that are not provided as
claimed, or which otherwise violate the regulations, may lead to civil monetary
penalties, criminal fines, imprisonment and/or exclusion from participation in
Medicare, Medicaid and other federally funded healthcare programs. Specifically,
the Federal False Claims Act allows a private person to bring suit alleging
false or fraudulent Medicare or Medicaid claims or other violations of the
statute and for such person to share in any amounts paid to the government in
damages and civil penalties. Successful plaintiffs can receive up to 25-30% of
the total recovery from the defendant. Such qui tam actions or "whistle-blower"
lawsuits have increased significantly in recent years and have increased the
risk that a company engaged in the healthcare industry, such as Medaphis and
many of its customers, may become the subject of a federal or state
investigation, may ultimately be required to defend a false claims action, may
be subjected to government investigation and possible criminal fines, may be
sued by private payors and may be excluded from Medicare, Medicaid and/or other
federally funded healthcare programs as a result of such an action. Some state
laws also provide for false claims actions, including actions initiated by a qui
tam plaintiff. Medaphis is currently the subject of several federal
investigations, and there can be no assurance that Medaphis will not be the
subject of false claims or qui tam proceedings relating to its billing and
collection activities or that Medaphis will not be the subject of further
government scrutiny or investigations relating to its billing and accounts
receivable management services operations. Any such proceeding or investigation
could have a material adverse effect upon the Company.
 
     Credit collection practices and activities are regulated by both federal
and state law. The Federal Fair Debt Collection Practices Act (the "Federal Fair
Debt Act") sets forth various provisions designed to eliminate abusive,
deceptive and unfair debt collection practices by debt collectors. Various
states have also promulgated laws and regulations that govern credit collection
practices. AssetCare, Inc. a subsidiary of the Company, is registered as a debt
collector in 26 states; however, there can be no assurance that the Company and
its subsidiaries (other than AssetCare), will not be subjected to regulation as
a "debt collector" under the Federal Fair Debt Act or as a "collection agency"
under certain state collection agency laws and regulations. In the event that
the Company or a subsidiary of the Company other than AssetCare is subjected to
such regulation, its impact on the Company cannot be predicted.
 
     The ownership and operation of hospitals is subject to comprehensive
regulation by federal and state governments which may adversely affect hospital
reimbursement. Such regulation could have an adverse effect on the operations of
hospitals in general, and consequently reduce the amount of the Company's
revenue related to its hospital clients.
 
     There can be no assurance that current or future government regulations or
healthcare reform measures will not have a material adverse effect upon
Medaphis' business.
 
     VOLATILITY OF STOCK PRICE.  Medaphis believes factors such as announcements
with respect to the investigation of the billing practices of certain offices of
MPSC by the United States Attorney's Office for the Central District of
California, the Company's liquidity and financial resources, divestiture of
businesses, the ongoing governmental investigations, putative class action
lawsuits, other lawsuits or demands, healthcare reform measures and
quarter-to-quarter and year-to-year variations in financial results could cause
the market price of Medaphis Common Stock to fluctuate substantially. Any
adverse announcement with respect to such matters or any shortfall in revenue or
earnings from levels expected by securities analysts could have an immediate and
material adverse effect on the trading price of Medaphis Common Stock in any
given period. As a result, the market for Medaphis Common Stock may experience
material adverse price and volume fluctuations and an investment in the
Company's Common Stock is not suitable for any investor who is unwilling to
assume the risk associated with any such price and volume fluctuations.
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<PAGE>   14
 
     This Safe Harbor Statement supersedes the Safe Harbor Statements filed as
Exhibit 99.1 to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1998 and as Exhibit 99.13 to the Company's Annual Report
on Form 10-K/A for the year ended December 31, 1997.
 
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