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):
March 11, 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)
<PAGE>
Item 5. Other Events
On March 11, 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 March 11, 1999
<PAGE>
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: March 11, 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 March 11, 1999
<PAGE>
Exhibit 99
Contacts: Chris Hanson Vicki Nahrung
Chief Financial Officer Director of Investor Relations
Saville Systems Saville Systems
(781) 270-6500 (781) 270-6500
Saville Voluntarily Revalues In-Process Research and Development Charge
and Revises 1998 Financial Results
Burlington, Mass., March 11, 1999 -- Saville Systems PLC (NASDAQ: SAVLY)
previously announced that it was evaluating the application of recently
expressed U.S. Securities and Exchange Commission ("SEC") views on valuation
methods for purchased in-process research and development ("IPRD") with respect
to the charge taken by the Company in the second quarter of 1998. The Company
has completed the evaluation and decided to adjust its IPRD charge voluntarily
and, consequently, to restate its second and third quarter results and revise
its previously announced fourth quarter and annual results for the year ended
December 31, 1998.
The Company originally recorded a one-time charge for IPRD in its operating
results for the second quarter of 1998 in the amount of $18.8 million. After
revaluing the IPRD charge, the Company adjusted the one-time charge to $9.2
million ($8.4 million net of related tax benefits), representing a reduction of
$9.6 million that will be amortized in subsequent periods. As a result of the
adjustment, net of the effect of the corresponding increased amortization, the
Company's previously announced net income for the year ended December 31, 1998
increased by approximately $8.2 million from $18.9 million, or $0.47 per diluted
share, to $27.1 million, or $0.67 per diluted share. As a consequence of this
adjustment, the Company's revised consolidated balance sheet as of December 31,
1998 reflects an increase of approximately $7.4 million in other assets, total
assets and total liabilities and shareholders' equity for the year ended
December 31, 1998. Excluding the IPRD charge, the Company's previously announced
net income decreased by approximately $1.1 million from $36.5 million, or $0.90
per diluted share, to $35.4 million, or $0.87 per diluted share, due to the
increased amortization described above.
"Our original purchased IPRD charges were made based on valuations provided by
independent valuation experts, and were in accordance with the established
industry practices at the time," said Chris Hanson, Saville's Chief Financial
Officer. "In light of the recently released views of the SEC with respect to
valuation and accounting for purchased IPRD, we believe that taking a
conservative approach and revising our earnings, which has no impact on our
financial condition or liquidity, is in the best interest of Saville and its
shareholders."
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 that involve a number of
risks and uncertainties. Important factors that could cause actual results to
differ materially from those indicated by such forward-looking statements are
set forth in Item 2 of the company's Quarterly Report on Form 10-Q for the
quarter ended Sept. 30, 1998, including risks associated with customer
concentration, intense competition, product development, the management of rapid
operations expansion and the availability of favorable tax treatment.
Note: Revised 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>
Quarter Ended Year Ended
-------------------------------- -----------
March 31 June 30 Sept. 30 Dec. 31
1998 1998 1998 1998
(restated)(restated)(revised)1 (revised)1
- ------------------------------- -------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Revenue
Services $29,939 $31,114 $31,332 $32,345 $124,730
License fees 8,083 11,797 11,245 11,850 42,975
- ------------------------------- -------- --------- -------- -------- ----------
Total Revenue 38,022 42,911 42,577 44,195 167,705
- ------------------------------- -------- --------- -------- -------- ----------
Expenses
Cost of services 14,048 16,063 15,505 15,972 61,588
Cost of license fees 280 270 372 347 1,269
Sales and marketing 1,922 2,186 2,194 2,366 8,668
Research and development 3,931 5,968 5,362 6,128 21,389
General and administrative 6,543 8,108 9,373 8,170 32,194
Charge for purchased
in-process research - 9,168 - - 9,168
and development
- ------------------------------- -------- --------- -------- -------- ----------
Total Expenses 26,724 41,763 32,806 32,983 134,276
- ------------------------------- -------- --------- -------- -------- ----------
Income from operations 11,298 1,148 9,771 11,212 33,429
Other income, net 723 631 837 1,173 3,364
- ------------------------------- -------- --------- -------- -------- ----------
Income before income taxes 12,021 1,779 10,608 12,385 36,793
Provision for income taxes 2,825 1,743 2,440 2,733 9,741
- ------------------------------- -------- --------- -------- -------- ----------
Income before minority interest 9,196 36 8,168 9,652 27,052
Minority interest share in
subsidiaries' net income - - - - -
- ------------------------------- -------- --------- -------- -------- ----------
Net income $9,196 $ 36 $8,168 $9,652 $27,052
- ------------------------------- -------- --------- -------- -------- ----------
Basic earnings per share $0.24 $0.00 $0.21 $0.25 $0.70
Diluted earnings per share $0.23 $0.00 $0.20 $0.24 $0.67
- ------------------------------- -------- --------- -------- -------- ----------
(in thousands)
Ordinary Shares 37,822 38,554 38,679 38,827 38,471
Ordinary Shares assuming
dilution 40,845 41,269 40,271 39,794 40,545
- -------------------------------- -------- --------- -------- --------- ----------
1 Revised from results previously announced on January 26, 1999
</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)
(revised)1
- ------------------------------------------------------------------- ------------
<S> <C> <C>
ASSETS
Current Assets:
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 13,346 -
- ------------------------------------------------------------------- ------------
Total assets $161,645 $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 8,804 7,167
Deferred revenue 947 3,402
Current portion of long-term liabilities 1,116 134
- ------------------------------------------------------------------- ------------
Total current liabilities 28,016 24,371
Long-term liabilities 1,178 336
Minority interest 361 366
- ------------------------------------------------------------------- ------------
Total liabilities 29,555 25,073
- ------------------------------------------------------------------- ------------
Commitments and Contingencies
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 69,802 42,750
Accumulated other comprehensive income (1,623) (324)
- ------------------------------------------------------------------- ------------
Total shareholders' equity 132,090 80,302
- ------------------------------------------------------------------- ------------
Total liabilities and shareholders' equity $161,645 $105,375
- ------------------------------------------------------------------- ------------
</TABLE>
1 Revised from results previously announced on January 26, 1999
