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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): February 5, 1998
Donnelley Enterprise Solutions Incorporated
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-21525 13-316071
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
161 North Clark Street, Suite 2400, Chicago, IL 60601
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (312) 419-7600
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
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On February 5, 1998, the Company issued a press release reporting the
fourth quarter and year-end results of the Company.
Item 7. Financial Statements and Exhibits.
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(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 February 5, 1998.
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SIGNATURES
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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: February 5, 1998
Donnelley Enterprise Solutions Incorporated
By: Rhonda Kochlefl
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Name: Rhonda Kochlefl
Title: Chairman, President and Chief
Executive Officer
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EXHIBIT INDEX
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The following exhibits are filed herewith:
Exhibit No.
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20.1 Press release issued by the Company on February 5, 1998.
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Exhibit 20.1
[LETTERHEAD OF DONNELLEY ENTERPRISE SOLUTIONS]
Media Contact: Investor Contact:
Tammy Pryor Rhonda Kochlefl
Marketing Manager Chairman, President &
212-995-7765 Chief Executive Officer
312-419-7661
FOR IMMEDIATE RELEASE
Donnelley Enterprise Solutions Announces Year End Results; Full-Year Revenues
Grow 15%; Fourth Quarter Net Income Increases Significantly
CHICAGO, February 5, 1998 - Donnelley Enterprise Solutions Incorporated
(DESI) (Nasdaq:DEZI), a leading provider of information management solutions,
today reported strong fourth quarter results, solid revenue growth in its core
outsourcing businesses, and improved performance from its integration division.
Fourth quarter revenues grew 16% to $29.6 million, up from $25.4 million in the
fourth quarter of 1996. Fourth quarter gross profit grew 18% to $5.7 million, or
19.4% of revenues, compared to $4.9 million, or 19.1% of revenues, in the fourth
quarter of 1996, due to a stronger mix of higher value services. Net income for
the fourth quarter of 1997 grew to $129,000 or income of $.03 per basic and
diluted share, compared to a net loss of $471,000 or $.09 per basic and diluted
share, in the comparable quarter of 1996.
Chairman and Chief Executive Officer Rhonda I. Kochlefl stated, "Our fourth
quarter results reflect the continued strong performance of our core outsourcing
business coupled with the progress we have made at LANSystems. Our success in
building new services such as desktop publishing and systems management
outsourcing contributed to our solid improvement in gross margin performance."
Revenues for the full year grew 15% to $110.8 million from 1996 revenues of
$96.5 million. Total revenues reflected a 21% increase in business services
outsourcing revenues to $69 million, a 9% decrease in integration services
revenues to $35 million and strong growth in systems management outsourcing
revenues to $7 million.
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Gross profit for 1997 grew 6.6% to $22.3 million, or 20.1% of revenues,
compared to $20.9 million, or 21.7% of revenues, in 1996. Total gross profit
reflected a 41% increase in business services outsourcing gross profit to $14.5
million, a 42% decrease in integration services gross profit to $5.9 million and
systems management outsourcing gross profit of $1.9 million.
For the year, the Company has reported a net loss of $3.3 million, or $.66
per basic and diluted share, compared to net income of $625,000 or $.12 per
basic and diluted share, in 1996.
Kochlefl noted, "During 1997, we made investments in our infrastructure,
addressed the performance issues within the integration business and streamlined
our delivery processes to drive improved financial performance. We are very
focused on enhancing shareholder value through profitable growth, strong
processes, migration to higher value services and expansion of our relationships
with the top legal and financial institutions, and are confident that the
actions taken in 1997 will result in improved performance in the future."
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 across the United States and two locations internationally in Singapore
and Hong Kong.
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.
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<CAPTION>
Donnelley Enterprise Solutions Incorporated
Financial Information (in thousands, except per share data)
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Quarter Ended Twelve Months Ended
Income Statement December 31 December 31
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<S> <C> <C> <C> <C>
1997 1996 1997 1996
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Business services outsourcing revenues $18,304 $15,885 $68,848 $57,048
Integration services revenues 8,907 9,043 35,145 38,460
Systems management outsourcing revenues 2,359 513 6,851 966
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Total Revenues 29,570 25,441 110,844 96,464
Business services outsourcing cost of revenues 14,788 13,006 54,301 46,756
Integration services cost of revenues 7,175 7,396 29,258 28,300
Systems management outsourcing cost of revenues 1,862 178 4,986 481
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Total Cost of revenues 23,825 20,580 88,545 75,537
Business services outsourcing Gross Profit 3,516 2,879 14,547 10,292
Integration services Gross Profit 1,732 1,647 5,887 10,150
Systems management outsourcing Gross Profit 497 335 1,865 485
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Total Gross Profit 5,745 4,861 22,299 20,927
Selling Expenses 2,018 3,072 8,973 9,929
General & Administrative Expenses 3,374 2,034 16,381 7,812
Amortization of Goodwill 270 269 1,072 804
Special Charge - - 300
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Earnings (Loss) from Operations 83 (514) (4,127) 2,082
Interest Expense 246 71 553 384
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Earnings (Loss) Before Income Taxes (163) (585) (4,680) 1,698
Income Tax Expense (Benefit) (292) (114) (1,400) 1,073
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Net Income (Loss) 129 (471) (3,280) 625
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Basic and Diluted Earnings (Loss) Per Share $0.03 ($0.66)
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Common Shares Outstanding 5,005,000 5,005,000
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Proforma Earnings (Loss) Per Share ($0.09) $0.12
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Proforma Common Shares Outstanding 5,005,000 5,005,000
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Percent to Revenues:
Business service outsourcing Gross Profit 19.2% 18.1% 21.1% 18.0%
Integration services Gross Profit 19.4% 18.2% 16.8% 26.4%
Systems management outsourcing Gross Profit 21.1% 65.3% 27.2% 50.2%
Total Gross Profit 19.4% 19.1% 20.1% 21.7%
Selling General & Administrative Expenses 18.2% 20.1% 22.9% 18.4%
Earnings (Loss) from Operations 0.3% -2.0% -3.7% 2.2%
Pretax Earnings (Loss) -0.6% -2.3% -4.2% 1.8%
Net Income (Loss) 0.4% -1.9% -3.0% 0.6%
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