UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date Of Report
(Date Of Earliest Event Reported):
January 26, 1999
Saville Systems PLC
(Exact name of registrant as specified in its charter)
Commission File Number 0-27176
Republic of Ireland
(State or other jurisdiction of incorporation or organization)
Not Applicable
(I.R.S. Employer Identification No.)
IDA Business Park, Dangan, Galway, Ireland
(Address of principal executive offices, including
zip code)
011-353-9-152-6611
(Registrant's telephone number, including area code)
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Item 5. Other Events
On January 26, 1999, Saville Systems Plc. ("Saville") issued a press release
which is attached hereto as Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired: not applicable.
(b) Pro Forma Financial Information: not applicable.
(c) Exhibits.
Exhibit 99: Press Release of the Company, dated January 26, 1999
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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.
SAVILLE SYSTEMS PLC
(Registrant)
Date: January 26, 1999 By: /s/ Christopher A. Hanson
Christopher A. Hanson
Chief Financial Officer
(Principal Financial and Accounting Officer)
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SAVILLE SYSTEMS PLC
FORM 8-K REPORT
INDEX TO EXHIBITS
Exhibit No. Description
99 Press Release of the Company, dated January 26, 1999
<PAGE>
Exhibit 99
Contacts: Chris Hanson Vicki Nahrung Winnie Loeffler
Chief Financial Officer Director of Vice President
Saville Systems Investor Relations Abernathy MacGregor
Saville Systems Frank
(781) 270-6500 (781) 270-6500 (212) 371-5999
SAVILLE CLOSES 1998 WITH RECORD RESULTS
Fourth Quarter Revenue and Earnings at Record Levels
Burlington, Mass., January 26, 1999 -- Saville Systems PLC (NASDAQ: SAVLY), a
leading provider of convergent billing and customer care software solutions for
the telecommunications industry, today announced record fourth quarter revenue
of $44.2 million, representing a 35% increase over revenue of $32.8 million for
the same period in the previous year. Net income for the fourth quarter was also
a record at $10.1 million, or $0.25 per diluted share, compared to $7.8 million,
or $0.20 per diluted share for the fourth quarter of 1997.
Annual revenue for 1998 was $167.7 million, representing a 57% increase over
1997 results of $107.0 million. Net income for 1998, excluding a one-time charge
for purchased in-process research and development, was $36.5 million, or $0.90
per diluted share, as compared to $23.9 million, or $0.61 per diluted share, for
1997. Including the one-time charge of $17.7 million (net of an associated tax
benefit of $1.1 million) taken in the second quarter of 1998 for certain
technology under development at the time of acquisition and associated
acquisition costs and expenses, net income for 1998 was $18.9 million, or $0.47
per diluted share. Cash and short-term investment balances increased 28% to an
all-time high of $87.8 million from $68.8 million at December 31, 1997.
Jack Boyle, Saville's Chairman and CEO, commented: "Looking back on 1998, we are
pleased with our international expansion, the introduction of our new products
and corporate initiatives, and our overall financial performance. Our fourth
quarter saw strong growth in our worldwide customer base with new customers
licensing our products in Latin America, Europe and North America. In addition,
non-U.S. revenue grew to almost 40% of total annual revenue, and new 1998
contracts represent a balanced mix of our AS/400 and Unix product offerings."
Boyle added, "In 1999, we look forward to continued international growth and the
release of new products which will significantly broaden our product suite. We
are committed to providing our customer base with the strategic and competitive
advantages they require to succeed in this highly competitive marketplace and we
will continue to invest in our products and people in order to achieve this
objective."
As mentioned above, the Company recorded a one-time charge for purchased
in-process research and development ("IPRD") in its operating results for the
second quarter of 1998. This one-time charge was recorded in accordance with
U.S. generally accepted accounting principles and established industry practice,
and was supported by an independent third party valuation. Since that time,
however, the U.S. Securities and Exchange Commission ("SEC") has expressed views
on valuation methods for purchased IPRD, which differ from prior industry
practice. The Company has been advised that the SEC and the accounting
profession are currently in a dialogue regarding specific guidelines and their
possible retroactive application. The Company is working closely with its
independent auditors to make a determination as to the application of the SEC's
recent statements to the Company's IPRD valuation, and the resulting effect on
the charge taken in the second quarter. An adjustment to the IPRD valuation, if
any, would have no effect upon the financial condition or liquidity of the
Company. The Company will issue a press release announcing its final
determination and any resulting accounting adjustments.
Founded in 1982, Saville is a leading provider of convergent billing and
customer care solutions for the telecommunications industry. Saville operates
globally with offices in the U.S., Canada, Ireland, Australia, U.K. and Germany,
and has more than 1,400 employees worldwide. Saville is a publicly held company,
traded on the Nasdaq National Market (US) market under the symbol SAVLY. For
more information, Saville can be reached at www.savillesys.com, or call (+1)
781-270-6500.
This press release contains forward-looking statements, as that term is used in
Section 21E of the Securities Exchange Act of 1934, that involve a number of
risks and uncertainties. These forward-looking statements include Mr. Boyle's
comments on expected growth, the release of new products and product line
investments. Important factors that could cause actual results to differ
materially from those indicated by such forward-looking statements are set forth
in the company's periodic reports and registration statements filed with the
Securities and Exchange Commission, including in Item 2 of the company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, which
risks include those associated with customer concentration, intense competition,
product development and market acceptance, international market fluctuations,
the management of rapid operations expansion and the availability of favorable
tax treatment.
Note: Consolidated Statements of Income and Consolidated Balance Sheets follow.
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Saville Systems PLC
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands of U.S. dollars, except share and per share data)
<TABLE>
Three months ended Year ended
Dec. 31 Dec. 31 Dec. 31 Dec. 31
1998 1997 1998 1997
(unaudited)(unaudited)(unaudited)
- ------------------------------------ ---------- -------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE
Services $32,345 $25,678 $124,730 $84,856
License fees 11,850 7,163 42,975 22,189
- ------------------------------------ ---------- -------- ----------- -----------
Total revenue 44,195 32,841 167,705 107,045
- ------------------------------------ ---------- -------- ----------- -----------
EXPENSES
Cost of services 15,972 11,266 61,588 39,603
Cost of license fees 347 198 1,269 579
Sales and marketing 2,366 1,942 8,668 6,266
Research and development 6,128 3,330 21,389 10,146
General and administrative 7,642 6,297 30,816 20,444
Charge for purchased
in-process and development - - 18,808 -
- ------------------------------------ ---------- -------- ----------- -----------
Total expenses 32,455 23,033 142,538 77,038
- ------------------------------------ ---------- -------- ----------- -----------
Income from operations 11,740 9,808 25,167 30,007
Other income, net 1,173 645 3,364 2,154
- ------------------------------------ ---------- -------- ----------- -----------
Income before income taxes 12,913 10,453 28,531 32,161
Provision for income taxes 2,850 2,573 9,664 7,989
- ------------------------------------ ---------- -------- ----------- -----------
Income before minority interest 10,063 7,880 18,867 24,172
Minority interest share in
subsidiaries'net income - 70 - 235
- ------------------------------------ ---------- -------- ----------- -----------
Net income $10,063 $7,810 $18,867 $23,937
- ------------------------------------ ---------- -------- ----------- -----------
Basic earnings per share $0.26 $0.21 $0.49 $0.65
Diluted earnings per share $0.25 $0.20 $0.47 $0.61
- ------------------------------------ ---------- -------- ----------- -----------
(in thousands)
Ordinary shares 38,827 37,356 38,471 36,745
Ordinary shares assuming dilution 39,794 40,012 40,545 39,323
- ------------------------------------ ---------- -------- ----------- -----------
</TABLE>
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Saville Systems PLC
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share data amounts)
<TABLE>
As of December 31
1998 1997
(unaudited)
- -------------------------------------------------- ------------- -------------
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents $40,330 $55,785
Short-term investments 47,492 13,015
Accounts receivable, less allowance
for doubtful accounts of $1,943 and
$1,687, respectively 43,729 22,373
Prepaid expenses and other assets 4,471 3,581
- -------------------------------------------------- ------------- -------------
Total current assets 136,022 94,754
Property and equipment, net 12,277 10,621
Other assets, net 5,915 -
- -------------------------------------------------- ------------- -------------
Total assets $154,214 $105,375
- -------------------------------------------------- ------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable 5,377 5,336
Accrued compensation and related benefits 7,128 5,248
Accrued expenses and other liabilities 4,644 3,084
Income taxes payable 9,116 7,167
Deferred revenue 947 3,402
Current portion of long-term liabilities 1,116 134
- -------------------------------------------------- ------------- -------------
Total current liabilities 28,328 24,371
Long-term liabilities 1,178 336
Minority interest 361 366
- -------------------------------------------------- ------------- -------------
Total liabilities 29,867 25,073
- -------------------------------------------------- ------------- -------------
Shareholders' equity
Ordinary Shares, nominal value $0.0025 per share
Authorized: 75,000,000
Issued and outstanding: 38,938,488
and 37,504,596 97 94
Deferred Ordinary Shares, nominal value
IR(pound)1.00 per share
Authorized, issued and outstanding: 30,000 48 48
Additional paid-in capital 63,766 37,734
Retained earnings 61,617 42,750
Accumulated other comprehensive income (1,181) (324)
- -------------------------------------------------- ------------- -------------
Total shareholders' equity 124,347 80,302
- -------------------------------------------------- ------------- -------------
Total liabilities and shareholders' equity $154,214 $105,375
- -------------------------------------------------- ------------- -------------
</TABLE>
