<PAGE> 1
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): August 22, 2000
----------------
PHOENIX INTERNATIONAL LTD., INC.
--------------------------------
(Exact Name of Registrant
as Specified in its Charter)
Florida 0-20397 59-3171810
-------------------------------------------------------------------------------
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
500 International Parkway, Heathrow, Florida 32746
-------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (407) 548-5100
--------------
N/A
-----------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS
1. ACCOUNTING MATTERS. Phoenix issued a press release on August
22, 2000 in which it announced that the company and its auditors, Ernst & Young
LLP, are reviewing the revenue recognition accounting treatment of several
contracts, including four contracts with international customers, for the
fiscal years 1997-1999. Until this review is completed, Phoenix's financial
statements for these periods should not be relied upon.
2. FORM 10-Q. Pursuant to its Form 12b-25 filed on August 15,
2000, Phoenix's Form 10-Q was due to be filed on August 21, 2000. However,
Phoenix has not filed its Form 10-Q. Phoenix is unable to prepare reliable
financial statements for the three months and the six months ended June 30,
2000 because of uncertainty with respect to the impact the ongoing revenue
recognition review for prior years may have on current periods. Until that
impact is known, the publication of financial statements for the three months
and the six months ended June 30, 2000 might be affirmatively misleading.
Without taking into account that impact, and if reporting its results in a
manner consistent with prior periods, Phoenix would have reported net losses
for the three months and the six months ended June 30, 2000, substantially
larger than the losses for the corresponding periods in 1999. Phoenix also
would have reported cash and cash equivalents at June 30, 2000 of $1.6 million,
and long-term investments of $5.4 million.
Factors contributing to these losses included:
- increases in general and administrative expenses, caused
primarily by increased provisions for doubtful accounts
related to three of the four international contracts under
review and mentioned in Accounting Matters above. The
increased provisions are due in part to the cancellation by
the customers of the implementation of Phoenix's software
under these contracts,
- severance costs incurred in connection with the May staffing
adjustment and reorganization which was described in
Phoenix's 10-Q for the three month period ended March 31,
2000,
- significant increases in cost of license fees over prior
periods, and
- less than expected revenues from new customer contracts,
which the company believes to be primarily attributable to
potential customer concerns about Phoenix's future financial
performance.
We believe our cash balances, investments, and cash flow from
operations will be sufficient to meet working capital, capital expenditure, and
software development requirements through the beginning of the 4th quarter
2000, assuming no new customer contracts or capital infusions. Cash flows from
operating activities are dependent on continued advance payments from new
customers, and we cannot be sure that we will have enough new customers, that
we will continue to receive advance payments, or that we will continue to
receive these payments in advance of contract performance on the same terms as
we have in the past. We expect that operating and investing activities will use
cash in the future, due primarily to a shortfall in revenues and cash
collections. Consequently, future operations and growth, including
acquisitions, may require additional equity or debt financing. These statements
are "forward looking" statements which are subject to risks and uncertainties
as previously discussed.
3. POTENTIAL CHANGE OF CONTROL. On February 15, 2000, we
announced the sale of 861,623 shares of Phoenix's common stock to London Bridge
Software Holdings plc in a private placement, and London Bridge
contemporaneously filed a From 13D in which it stated that it had no intention
of seeking control of Phoenix. London Bridge amended its Form 13D to state that
London Bridge and Phoenix have executed an Exclusivity Agreement, which, among
other things, provides for a 30 day period of exclusivity during which Phoenix
and London Bridge have agreed to work towards definitive
2
<PAGE> 3
agreements regarding an acquisition of Phoenix by London Bridge, and that
Phoenix will not solicit, initiate or encourage other acquisition proposals
during such period. London Bridge also issued a press release dated August 22,
2000, a copy of which is attached as an exhibit.
4. LEGAL PROCEEDINGS. For a discussion of legal proceedings,
please see our Annual Report on Form 10-K for 1999, and our quarterly report on
form 10-Q for the period ended March 31, 2000, which include a summary of a
lawsuit filed in the District Court for the Middle District of Florida as a
purported class action initiated by George Taylor, a former Phoenix employee.
The defendants in the suit include Phoenix and its chief executive officer. The
lawsuit alleges, among other things, violations of Section 10(b) of the
Securities Exchange Act of 1934. Phoenix and its CEO, and separately its
President, filed motions to dismiss the lawsuit in June, both of which were
denied in August. As previously stated, Phoenix intends to vigorously defend the
case.
Phoenix has been corresponding with counsel to IBM regarding Phoenix's
1998 contract with IBM's Turkish affiliate, pursuant to which Phoenix was to
provide software to IBM's customer in Turkey, Sekerbank. Originally, IBM
contracted with Sekerbank to provide a banking system, including implementation
and other services. IBM subcontracted Phoenix to provide a portion of the
system and certain related services. After many delays caused, among other
things, by the actual project being much larger than expected, Sekerbank
cancelled their contract with IBM, called in an IBM performance bond from a
bank, and received most of its money back from IBM. IBM then purported to
cancel its contract with Phoenix. IBM has paid Phoenix over $1 million under
the subcontract, has requested a return of all funds, and has indicated they
may have claims against Phoenix up to $5.2 million in damages. Phoenix
disagrees with IBM's position and has claims against IBM arising out of this
contract, including for amounts owed of at least $3.9 million. The parties are
in negotiation to resolve the dispute. The contract calls for arbitration of
disputes; however, no arbitration or other action has been filed by either
party.
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.
99.1 Press Release issued by Phoenix on August 22, 2000
99.2 Press Release issued by London Bridge Software Holdings plc
on August 22, 2000.
99.3 Exclusivity Agreement dated August 22, 2000 between Phoenix
International Ltd., Inc., and London Bridge Software Holdings
plc.
3
<PAGE> 4
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 hereunto duly authorized.
PHOENIX INTERNATIONAL LTD., INC.
By: /s/ Bahram Yusefzadeh
------------------------------
Name: Bahram Yusefzadeh
Title: Chairman and CEO
Dated: August 22, 2000
4
