<PAGE>
================================================================================
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: October 28, 1997
Donnelley Enterprise Solutions Incorporated
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-21525 13-316071
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
161 North Clark Street, Suite 2400, Chicago, IL 60601
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (312) 419-7600
N/A
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
================================================================================
<PAGE>
Item 5. Other Events.
On October 28, 1997, the Company issued a press release reporting the third
quarter results of the Company.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired:
Not applicable.
(b) Pro forma financial information:
Not applicable.
(c) Exhibits:
20.1 Press release issued by the Company on October 28, 1997.
-2-
<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.
Date: October 30, 1997
Donnelley Enterprise Solutions Incorporated
By: Rhonda I. Kochlefl
----------------------------------------
Name: Rhonda Kochlefl
Title: Chairman, President and Chief
Executive Officer
-3-
<PAGE>
EXHIBIT INDEX
-------------
The following exhibits are filed herewith:
Exhibit No.
- -----------
20.1 Press release issued by the Company on October 28, 1997.
-4-
<PAGE>
Exhibit 20.1
Media Contact: Investor Contact:
Leo Spiegel Rhonda Kochlefl
Senior Vice President/ Chairman, President & CEO
Chief Technology Officer 312-419-7661
312-419-7665
FOR IMMEDIATE RELEASE
DONNELLEY ENTERPRISE SOLUTIONS INCORPORATED ANNOUNCES THIRD QUARTER LOSS;
REFLECTS $6.1 MILLION CHARGE
CHICAGO, October 28, 1997 -- Donnelley Enterprise Solutions
Incorporated (Nasdaq: DEZI), today reported, as previously announced, a loss in
the third quarter 1997 as a result of a charge relating substantially to the
company's integration division.
Loss from operations for the third quarter of 1997 was $5.9 million,
compared to earnings of $1.1 million in the third quarter of 1996. Loss from
operations for the first nine months of 1997 was $4.2 million as compared to
earnings of $2.6 million for the comparable period of 1996.
Net loss for the third quarter of 1997 was $4.2 million, or a loss of $.84
per share, compared to net income of $474,000 or $.09 per share, in the similar
quarter of 1996. For the nine-months ended September 30, 1997, net loss was $3.4
million, or a loss of $.68 per share, compared with net income of $1.1 million,
or $.22 per share for the nine months ending September 30, 1996.
The charge of $6.1 million relates substantially to the company's
integration division and includes: a $3.6 million increase in the allowance for
doubtful accounts; a $2.3 million decrease in gross profit for changes in
estimates relating to percentage of completion accounting; and a $250,000
increase in the inventory obsolescence reserve.
"We have confidence in our company because of our strong fundamentals and
growing client-base. These actions have strengthened our balance sheet to
better position the company for the future," said Rhonda I. Kochlefl, Chairman,
President and CEO of Donnelley Enterprise Solutions Incorporated.
<PAGE>
Revenues for the third quarter were $25.5 million, compared to $25.8
million for the same period of 1996, a 1.1% decline. Revenues for the nine-
months ended September 30, 1997 grew by 14.4% to $81.3 million as compared to
$71.0 million for the comparable period of 1996.
Gross profit for the third quarter of 1997 declined by 37.4% to $3.6
million, or 14.1% of revenues, compared to $5.7 million, or 22.2 % of revenues,
in the third quarter of 1996, reflecting the $2.3 million decrease in gross
profit resulting from the change in estimate described above. For the first
nine months of 1997, gross profit improved by 3.0% to $16.6 million, or 20.4% of
revenues, compared with $16.1 million, or 22.6% of revenues, in 1996.
Selling, general and administrative expenses increased by $5.2 million
primarily due to the $3.6 million increase in the allowance for doubtful
accounts described above, incremental investment associated with new services,
and expenses associated with operating as a public company.
Donnelley Enterprise Solutions Incorporated is a single-source provider of
integrated information management solutions to professional service
organizations, primarily large law firms, investment banks, and accounting
firms. The Company offers its clients the opportunity to focus on their core
businesses by outsourcing a variety of functions, including business services
and information technology services. The Company has operations in six major
cities in the United States and two locations internationally.
The statements in this press release that are not historical fact are
forward-looking statements that involve risks and uncertainties, including but
not limited to service demand and market acceptance risks, the effect of
economic conditions, the impact of competitive services and pricing, and other
risks detailed in the Company's Form 10-K, dated March 27, 1997, and other
filings with the Securities and Exchange Commission.
# # #
<PAGE>
DONNELLEY ENTERPRISE SOLUTIONS INCORPORATED
Financial Information
(in thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
Income Statement September 30 September 30
- ---------------- ------------- -----------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Business Services
Outsourcing Revenues 16,987 14,733 50,544 41,164
Information Technology
Revenues 8,522 11,047 30,730 29,859
Total Revenues 25,509 25,780 81,274 71,023
Cost of Revenues 21,919 20,049 64,720 54,957
Gross Profit 3,590 5,731 16,554 16,066
Selling General &
Administrative Expenses 9,230 4,066 19,963 12,635
Amortization of Goodwill 270 229 802 534
Special Charge 300 300
Earnings (Loss) from
Operations (5,910) 1,136 (4,211) 2,597
Interest Expense, net 235 187 307 313
Earnings (Loss) Before
Income Taxes (6,145) 949 (4,518) 2,284
Income Taxes (1,923) 475 (1,109) 1,188
Net Income (Loss) (4,222) 474 (3,409) 1,096
Earnings (Loss) Per Share (0.84) 0.09 (0.68) 0.22
Common Shares Outstanding 5,005,000 5,005,000 5,005,000 5,005,500
Percent to Total
Revenues:
Gross Profit 14.1% 22.2% 20.4% 22.6%
Selling General &
Administrative Expenses 36.2% 15.8% 24.6% 17.8%
Earnings (Loss) from Operations (23.2%) 4.4% (5.2%) 3.7%
Pretax Earnings (Loss) (24.1%) 3.7% (5.6%) 3.2%
Net Income (Loss) (16.6%) 1.8% (4.2%) 1.6%
</TABLE>
SOURCE: Donnelley Enterprise Solutions Incorporated
