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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 11-K/A
 
AMENDMENT NO. 1
 
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
(Mark One):
 
x
 
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2001 .
 
OR
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                              to                             
 
Commission file number:  000-49796
 
A.    Full title of the plan and the address of the plan, if different from that of the issuer named below:
 
CPSI 401(k) Retirement Plan
 
B.    Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
 
 
Computer Programs and Systems, Inc.
6600 Wall Street
Mobile, Alabama 36695
 

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REQUIRED INFORMATION
 
Explanatory Note:  This Amendment No. 1 to the Annual Report on Form 11-K filed on August 22, 2002 is filed in order to correct the Independent Auditors’ Report.
 
Item  4.
 
The CPSI 401(k) Retirement Plan (the “Plan”) is subject to the Employee Retirement Income Security Act of 1974 (“ERISA”), and the Plan’s financial statements and schedules have been prepared in accordance with the financial reporting requirements of ERISA. Such financial statements and schedules are included in this Report in lieu of the information described in Items 1-3 of Form 11-K.
 
Index to Financial Statements and Exhibits
 
(a)
 
Financial Statements
 
  
3
 
Audited Financial Statements:
    
 
  
5
 
  
6
 
  
7
 
(b)    Supplemental Schedule:
    
 
  
11
 
(c)
 
Exhibit
 
23.1    Consent of Wilkins Miller, P.C.

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INDEPENDENT AUDITORS’ REPORT
 
The Plan Administrator
CPSI 401(k) Retirement Plan
Computer Programs and Systems, Inc.
Mobile, Alabama
 
We have audited the accompanying statements of net assets available for benefits of CPSI 401(k) Retirement Plan (the Plan) as of December 31, 2001 and 2000, and the related statement of changes in net assets available for benefits for the year ended December 31, 2001. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 

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INDEPENDENT AUDITORS’ REPORT (CONTINUED)
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of CPSI 401(k) Retirement Plan as of December 31, 2001 and 2000, and the changes in net assets available for benefits for the year ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.
 
Our audit of the Plan’s financial statements as of and for the year ended December 31, 2001, was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental information included in Schedule H, “Assets Held for Investment Purposes at End of Year,” (IRS Form 5500) as of and for the year ended December 31, 2001 are presented for the purpose of additional analysis and are not a part of the basic financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental information is the responsibility of the Plan’s management. The supplemental information has been subjected to the auditing procedures applied in the audit of the basic financial statements for the year ended December 31, 2001, and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
 
/s/    Wilkins Miller, P.C.
 
August 28, 2002
Mobile, Alabama

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CPSI 401(k) RETIREMENT PLAN
 
S TATEMENTS OF N ET A SSETS A VAILABLE FOR B ENEFITS
 
    
December 31
    
2001
  
2000
Assets
             
Investments, at fair value
  
$
7,811,981
  
$
6,755,351
Receivable
             
Employer’s contribution
  
 
375,412
  
 
341,000
    
  
Total assets
  
 
8,187,393
  
 
7,096,351
    
  
Net assets available for benefits
  
$
8,187,393
  
$
7,096,351
    
  
 
 
 
 
 
See accompanying notes to financial statements

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CPSI 401(k) RETIREMENT PLAN
 
S TATEMENT OF C HANGES IN N ET A SSETS A VAILABLE FOR B ENEFITS
Y EAR E NDED D ECEMBER 31, 2001
 
Additions to net assets attributed to:
        
Investment income (loss)
        
Net depreciation in fair value of investments
  
$
(725,005
)
Interest
  
 
2,059
 
Dividends
  
 
225,620
 
    
    
 
(497,326
)
    
Contributions
        
Employer’s
  
 
730,784
 
Participants’
  
 
1,087,302
 
Rollover
  
 
11,843
 
    
    
 
1,829,929
 
    
Total additions
  
 
1,332,603
 
    
Deductions from net assets attributed to:
        
Benefits paid to participants
  
 
241,561
 
    
Total deductions
  
 
241,561
 
    
Net increase
  
 
1,091,042
 
Net assets available for benefits
        
Beginning of year
  
 
7,096,351
 
    
End of year
  
$
8,187,393
 
    
 
 
See accompanying notes to financial statements

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CPSI 401(k) RETIREMENT PLAN
 
N OTES TO F INANCIAL S TATEMENTS
D ECEMBER 31, 2001 AND 2000
 
N OTE 1—P LAN DESCRIPTION
 
The following description of the CPSI 401(k) Retirement Plan (the Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
 
General.     The Plan is a defined contribution plan covering all full-time employees of Computer Programs and Systems, Inc. (the Company) who have one year of service and are age twenty-one or older. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
 
Contributions.     The Plan is funded primarily by salary reductions employees elect to defer, a matching contribution equal to the first $1,000 deferral per participant, plus a discretionary amount determined by the Company. Participants may also contribute amounts representing distributions from other qualified plans.
 
Participant Accounts.     The Company will allocate the amount the participant elects to defer to an account maintained by the Trustee on the participant’s behalf. If the participant is eligible, the Company will also allocate the matching contribution made to the Plan on the participant’s behalf. The Company’s discretionary contribution will be “allocated” or divided among participants eligible to share in the contribution for the Plan year. In addition, the participant’s account will be credited with a share of the investment earnings or losses of the trust fund.
 
Vesting.     Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the Company’s matching and discretionary contribution portion of their accounts plus actual earnings thereon is based on vesting years of service as follows:
 
Years of Service
  
Percentage
Less than 2
  
0
2
  
20
3
  
40
4
  
60
5
  
80
6
  
100
 
Payment of Benefits.     Payment of a participant’s account balance is available upon death, disability or retirement. If employment terminates for reasons other than those listed above, the participant will be entitled to receive only the “vested percentage” of his account balance and the remainder of his account will be forfeited. Only employer matching and discretionary contributions are subject to forfeiture.
 
Forfeited Accounts.     At December 31, 2001 and 2000, forfeited nonvested account balances totaled $29,040 and $10,258, respectively. This amount will be used to reduce future employer contributions to the Plan.

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CPSI 401(k) RETIREMENT PLAN
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001 AND 2000

 
N OTE 2—S UMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of accounting
 
The financial statements of the Plan are prepared using the accrual method of accounting.
 
Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates.
 
Investment valuation and income recognition
 
The Plan’s investments are stated at fair value. Units of separate accounts are valued at quoted market prices that represent the net asset value of shares held by the Plan at year-end.
 
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis.
 
Payment of benefits
 
Benefits are recorded when paid.
 
N OTE 3—A DMINISTRATIVE EXPENSES
 
The Plan’s sponsor paid the administrative expenses incurred by the Plan for the year ended December 31, 2001.
 
N OTE 4—P LAN TERMINATION
 
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.

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CPSI 401(k) RETIREMENT PLAN
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001 AND 2000

 
N OTE 5—T AX STATUS
 
In 2001 the Plan adopted the Invesco Prototype Plan and Trust which obtained its latest determination letter on August 30, 2001, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Company believes that the Plan currently is designed and being operated in compliance with the applicable requirements of the Internal Revenue Code and therefore, the Plan qualifies under Section 401(a) and the related trust is tax-exempt as of December 31, 2001. Therefore, no provision for income taxes is included in the Plan’s financial statements.
 
N OTE 6—I NVESTMENTS
 
The following presents investments at December 31, 2001 and 2000 that represent 5% or more of the Plan’s net assets. All investments are participant directed.
 
Description
  
2001
  
2000
Federated Max-Cap Institution Service Fund
  
$
701,740
  
$
708,256
Dreyfus Disciplined Stock Fund
  
 
593,593
  
 
670,660
AmSouth Stable Principal Fund
  
 
1,471,489
  
 
924,330
AmSouth Balanced Fund
  
 
672,702
  
 
471,868
AmSouth Value Fund
  
 
1,227,728
  
 
1,028,420
Fidelity Advisor Equity Growth Fund
  
 
1,979,685
  
 
409,440
Fidelity Advisor Growth Opportunity Fund
  
 
366,214
  
 
2,192,901
Franklin Balance Sheet Investment Fund
  
 
453,579
  
 
155,051
 
During the year ended December 31, 2001, the Plan’s investments, including gains and losses on investments bought, sold, and held during the year, depreciated in value by $725,005 as follows:
 
Appreciation (depreciation) of investments at fair
value as determined by quoted market price
        
Common/collective fund
  
$
18,562
 
Mutual funds
  
 
(743,567
)
    
    
$
(725,005
)
    
 

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CPSI 401(k) RETIREMENT PLAN
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2001 AND 2000

 
N OTE 7—B ENEFITS PAYABLE
 
Net assets available for benefits include benefits due to participants in the Plan as of December 31, 2001 and 2000. Benefits are recorded when paid.
 
N OTE 8—C OMMITMENTS AND CONTINGENT LIABILITIES
 
There are no known lease commitments, other commitments, or known contingent liabilities as of December 31, 2001 and 2000.
 
N OTE 9—R ELATED PARTY TRANSACTIONS
 
Certain Plan investments are shares of mutual funds managed by AmSouth Bank. AmSouth Bank is the Trustee as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. Fees for these services were paid by the Plan sponsor.
 
N OTE 10— S UBSEQUENT EVENTS
 
The Plan was amended effective January 1, 2002 to reflect certain provisions of the Economic Growth and Tax Relief Act of 2001. Significant changes are as follows:
 
 
•
 
Rollover contributions will no longer be accepted
 
 
•
 
Allows Catch-Up of contributions for participants who have attained age 50 before the end of the year
 
Subsequent to December 31, 2001, the equity markets experienced wide fluctuations in value. In addition, there were various transactions with the plan in the normal course of business. The following is a summary of the plan’s assets at December 31, 2001, and the value of those assets at the June 30, 2002 prices, which were the latest prices, supplied by the third party administrator:
 
    
Shares
  
December 31, 2001
  
June 30, 2002
       
Price
  
Value
  
Price
  
Value
AmSouth Stable Principal Fund
  
147,149
  
$
10.00
  
$
1,471,489
  
$
10.00
  
$
1,471,489
AmSouth Value Fund
  
69,324
  
 
17.71
  
 
1,227,728
  
 
15.04
  
 
1,042,633
AmSouth Large Cap Fund
  
3,113
  
 
19.57
  
 
60,918
  
 
16.60
  
 
51,676
AmSouth Balanced Fund
  
56,059
  
 
12.00
  
 
672,702
  
 
11.29
  
 
632,906
Dow Jones Global 40% Portfolio Index Fund
  
5,298
  
 
14.41
  
 
76,363
  
 
14.34
  
 
75,973
Franklin Balance Sheet Investment Fund
  
11,334
  
 
40.02
  
 
453,579
  
 
42.02
  
 
476,255
Federated Max-Cap Institution Service Fund
  
30,208
  
 
23.23
  
 
701,740
  
 
20.01
  
 
604,462
Dreyfus Disciplined Stock Fund
  
18,567
  
 
31.97
  
 
593,593
  
 
27.81
  
 
516,348
Dreyfus Appreciation Fund
  
2,375
  
 
38.02
  
 
90,290
  
 
34.59
  
 
82,151
Fidelity Advisor Equity Growth Fund
  
40,659
  
 
48.69
  
 
1,979,685
  
 
39.22
  
 
1,594,646
Fidelity Advisor Dividend Growth Fund
  
10,067
  
 
11.69
  
 
117,680
  
 
9.93
  
 
99,965
Fidelity Advisor Growth Opportunities Fund
  
12,733
  
 
28.76
  
 
366,214
  
 
24.89
  
 
316,924
    
  
  
  
  
                
$
7,811,981
         
$
6,965,428
                
         

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CPSI 401(k) RETIREMENT PLAN
 
A SSETS H ELD FOR I NVESTMENT P URPOSES
AT END OF YEAR
D ECEMBER 31, 2001
 
EIN/PN 63-0765345/001
Form 5500, Schedule H, Part IV, i
Schedule of Assets Held for Investment Purposes at End of Year
 
(a)
  
(b)
Identity of issue, borrower, lessor or similar party
  
(c)
Description of investment including
maturity date, rate of interest,
collateral, par or maturity value
  
(d)
Cost
  
(e)
Current
Value
*
  
AmSouth Bank
  
147,148.9333 units Stable Principal Fund
  
$
1,404,551
  
$
1,471,489
*
  
AmSouth Bank
  
69,324.0248 units Value Fund
  
 
1,244,716
  
 
1,227,728
*
  
AmSouth Bank
  
3,112.8501 units Large Cap Fund
  
 
58,031
  
 
60,918
*
  
AmSouth Bank
  
56,058.5151 units Balanced Fund
  
 
672,469
  
 
672,702
    
Dow Jones
  
5,297.8345 units Dow Jones 40 Global Portfolio Index Fund
  
 
73,983
  
 
76,363
    
Franklin
  
11,333.8116 units Franklin Balance Sheet Investment Fund
  
 
404,585
  
 
453,579
    
Federated
  
30,208.3364 units Federated Max Cap Institution Service Fund
  
 
801,147
  
 
701,740
    
Dreyfus
  
18,567.1813 units Dreyfus Disciplined Stock Fund
  
 
717,423
  
 
593,593
    
Dreyfus
  
2,374.8129 units Dreyfus Appreciation Fund
  
 
98,901
  
 
90,290
    
Fidelity
  
40,658.9552 units Fidelity Advisor Equity Growth Fund
  
 
2,548,193
  
 
1,979,685
    
Fidelity
  
10,066.6907 units Fidelity Advisor Dividend Growth Fund
  
 
105,775
  
 
117,680
    
Fidelity
  
12,733.4455 units Fidelity Advisor Growth Opportunity Fund
  
 
544,403
  
 
366,214
*    Party-in-interest

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SIGNATURES
 
The Plan .    Pursuant to the requirements of the Securities Exchange Act of 1934, the administrator of the Plan has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
 
Dated:  September 4, 2002.
 
CPSI 401(K) R ETIREMENT P LAN
By:
 
Computer Programs and Systems, Inc.
   
By:
 
/s/    M. S TEPHEN W ALKER        
       
M. Stephen Walker
Vice President—Finance and Chief Financial Officer
 
 
 
 
EXHIBIT INDEX
 
No.
  
Description of Exhibit
23.1
  
Consent of Wilkins Miller, P.C.
 
Exhibit 23.1
 
Consent of Wilkins Miller, P.C., Independent Auditors
 
We consent to the incorporation by reference in the Registration Statement on Form S-8 (Reg. No. 333-98543) of Computer Programs and Systems, Inc. of our report dated August 28, 2002, with respect to the financial statements of CPSI 401(k) Retirement Plan, which appears in this Form 11-K/A.
 
/s/    W ILKINS M ILLER , P.C.
 
Mobile, Alabama
September 4, 2002