SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported:) May 15, 1998
Commission File Number 0-28840
Information Management Resources, Inc.
(Exact Name of Registrant as Specified in its Charter)
Florida 59-2911475
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
26750 U.S. Highway 19 North
Suite 500
Clearwater, Florida 33761
(Address of Principal Executive Offices and Zip Code)
(813)797-7080
(Registrant's Telephone Number, Including Area Code)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired:
December 31, 1997 Audited Financial Statements of Lyon
Consultants, S.A. are attached hereto.
(b) Pro Forma Financial Information:
December 31, 1997 and March 31, 1998 Pro Forma Consolidated
Financial Statements (Unaudited) of Information Management
Resources, Inc. are attached hereto.
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.
INFORMATION MANAGEMENT RESOURCES, INC.
Date July 29, 1998 /s/ Satish K. Sanan
------------------------------- -------------------
Satish K. Sanan
Chief Executive Officer
Date July 29, 1998 /s/ Robert M. Molsick
------------------------------- ---------------------
Robert M. Molsick
Chief Financial Officer
3
<PAGE>
INFORMATION MANAGEMENT RESOURCES, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
December 31, 1997 Audited Financial Statements of Lyon Consultants, S.A. and Subsidiary
Report of Independent Statutory Auditor (France)....................................... F-3
Accounting Rules and Methods........................................................... F-4
Consolidated Balance Sheets............................................................ F-6
Consolidated Statements of Income...................................................... F-7
Notes to Financial Statements.......................................................... F-8
December 31, 1997 Information Management Resources, Inc. and Subsidiaries
Pro Forma Consolidated Financial Statements (Unaudited)
Pro Forma Consolidated Balance Sheets.................................................. F-18
Pro Forma Consolidated Statements of Income............................................ F-19
March 31, 1998 Information Management Resources, Inc. and Subsidiaries
Pro Forma Consolidated Financial Statements (Unaudited)
Pro Forma Consolidated Balance Sheets.................................................. F-20
Pro Forma Consolidated Statements of Income............................................ F-21
Notes to Pro Forma Consolidated Financial Statements......................................... F-22
</TABLE>
F-1
<PAGE>
LYON CONSULTANTS SA
--------
CONSOLIDATED FINANCIAL
STATEMENTS
FISCAL YEAR ENDED AS AT
DECEMBER 31, 1997
LYON CONSULTANTS SA
20, Avenue de l'Opera 75001 PARIS
F-2
<PAGE>
LYON CONSULTANTS GROUP
June 22nd, 1998 DECEMBER 31st, 1997
AUDITOR'S REPORT
to the shareholders of
LYON CONSULTANTS SA
We have audited the consolidated financial statements of the Group formed by
LYON CONSULTANTS (FRANCE) SA and LYON CONSULTANTS (UK) LIMITED.
Respective responsibilities of directors and auditors
The directors of LYON CONSULTANT SA are responsible for the preparation of
financial statements. It is our responsibility to form an independent opinion,
based on our audit, on those statements and to report our opinion to you.
Basis of opinion
We conducted our audit in accordance with Auditing Standards. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures of the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the group's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the consolidated financial statements give a true and fair view
of the state of affairs of the group LYON CONSULTANTS as at December 31, 1997
and of its profit for the period then ended.
/s/ Cyrille Brouard et Associes
- -------------------------------
Cyrille Brouard et Associes
Statutory Auditor
June 22, 1998
Paris, France
F-3
<PAGE>
LYON CONSULTANTS GROUP DECEMBER 31, 1997
June 22nd, 1998
- --------------------------------
1 - ACCOUNTING RULES AND METHODS
- --------------------------------
The Group books its operations and prepares its financial statements, according
to the generally accepted accounting principles in France, for the Mother
Company, in the UK, for its recently incorporated fully-owned subsidiary :
- going concern,
- consistency,
- carefulness,
- independence of the fiscal years,
- valuation at cost.
The financial statements of the French Company have been adjusted in order to
comply with the US GAAPS in the following fields:
- correction of accelerated depreciation of certain fixed assets,
- reevaluation of negociable securities according to their year-end market
value,
- record of the potential exchange gains according to the currency
exchange rate year-end,
- deferred taxation.
The capital leases contracts have not been adjusted because they are not
significant.
The proportion of the future rights acquired by the employees, according to
their age and seniority in the Company at year-end, for retirement allowances,
has been valuated at 264,928 USD. Nevertheless the chance for the Company to pay
part of this amount can be considered as nil. Therefore no liability has been
recorded.
The main methods are:
- ---------------------
- Intangible fixed assets
The Research and development costs are never activated.
The Softwares purchased by the Company are depreciated on a two-year basis.
- Tangible fixed assets
The premises are depreciated over a eight-year period.
The computers and other hardwares on a three-year basis with the maximum
acceleration authorized by the tax authorities which has allowed the Company
to use rates of 50 and 83,33% on the net book value according to the period
of acquisition.
The cumulative anticipated depreciation has been estimated at:
- USD 8,200 at december 1995;
- USD 68,670 at december 1996;
- USD 81,148 at december 1997.
F-4
<PAGE>
LYON CONSULTANT SA December 31, 1997
- - Consolidated subsidiary
In the course of 1997 a fully-owned subsidiary has been incorporated in the
United Kingdom.
All the balances and transactions have been translated at the official
year-end exchange rate of 1 Pound for 9,92 Ff.
The intercompany transactions do match.
- - Exchange rates used for the conversion of French francs into US dollars
Retained earnings of 1992: weighted average rate of 5,2838 ff for 1 usd
1993 5,6623
1994 5,5483
1995 4,9802
1996 5,107
1997 5,7964
Closing exchange rates at December 31, 1996 5,2370
December 31, 1997 5,9881
- - Tax pooling
We must precise that there is no tax pooling within the frame of the Group
Lyon Consultants.
F-5
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
LYON CONSULTANTS Currency: USD
December, 31 December, 31
1996 % 1997 %
- ---------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<S> <C> <C> <C> <C> <C>
Current assets
Cash and cash equivalents ....................... 658 238 5,95 721 024 6,23
Short-term investments
Marketable securities........................ 2 263 908 20,47 5 221 002 45,10
Deposits ................................ 0 0,00
Accounts receivable:
Trade.................................... 6 045 320 54,66 3 757 905 32,46
Related parties............................
Other and prepaid expenses.................... 1 700 857 15,38 1 509 361 13,04
-------------------------------------------------------------------
10 668 323 96,47 11 209 293 96,83
-------------------------------------------------------------------
Net assets from discontinued operations
Long-term loans and investments
Investment in securities
Long-term loans
Fixed assets (Intangible, tangible ss Financial)
Cost ............................................ 551 468 4,99 598 587 5,17
Accumulated depreciation ........................ 160 734 1,45 231 651 2,00
390 734 3,53 366 936 3,17
- --------------------------------------------------------------------------------------------------------------------------------
Balance-sheet total 11 059 057 100,00 11 576229 100,00
- --------------------------------------------------------------------------------------------------------------------------------
Current liabilities
-----------------------------------
Short-term credits 2 956 0,03
-----------------------------------
Accounts payable:
Trade ................................... 376 213 3,40 749 536 6,47
Related parties...........................
Other and accrued liabilities................. 3 870 252 35,00 2 943 960 25,43
-------------------------------------------------------------------
4 246 465 38,40 3 693 497 31,91
-------------------------------------------------------------------
Long-term debt
-----------------------
359 546 3,11
-----------------------
Accrued severance pay, net
Minority interest
-------------------------------------------------------------------
Commitments, contingent liabilities and charges 85 927 0,78 33 400 0,29
-------------------------------------------------------------------
Shareholders' equity
Share capital
Ordinary shares of FF.250 par value
Authorized, issued and outstanding:
1,000 shares december 31, 1996 47 737 0,43
16,900 shares December 31,1997 705 566 6,09
Additional paid-in capital
Foreign currency translation adjustment -2 419 -0,02 -892 613
Retained earnings................................. 6 678 390 60,39 7 676 833 66,32
-------------------------------------------------------------------
6 723 708 60,80 7 489 786 64,70
- --------------------------------------------------------------------------------------------------------------------------------
Balance-sheet total 11 059 057 l00,00 11 576 229 100,00
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
LYON CONSULTANT USD December, 31 % December, 31 %
1996 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PROFIT AND LOSS ACCOUNT
3.1 Sales 14 332 223 100,00 14 159 519 100,00
Costs
-----
4.1 Employees charges 9 682 288 67,56 10 092 084 71,27
4.2 General expenses and taxes (4.3) 2 408 109 16,80 1 886 795 13,33
Depreciation 150 031 1,05 191 227 1,35
4.4 Financial expenses 2 331 0,02 4 123 0,03
----------------------------------------------------------
12 242 759 85,42 12 174 229 85,98
----------------------------------------------------------
----------------------------------------------------------
Operating profit (loss) 2 089464 14,58 1 985 290 14,02
----------------------- ----------------------------------------------------------
4.5 Other operating results 99 054 0,69 110 668 0,78
4.6 Financial income 225 829 1,58 250 830 1,77
4.7 Extraordinary items 0 0
----------------------------------------------------------
324 883 2,27 361 498 2,55
----------------------------------------------------------
4.8 Year-end bonuses 443 621 3,10 404 343 2,86
----------------------------------------------------------
4.9 Corporation-tax -10184 -0,07 292 710 2,07
----------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
NET PROFIT 1 980 910 13,82 1 649 735 11,65
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-7
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
LYON CONSULTANTS Group Currency: USD June 22nd, 1998
------------------------------------------------------------------------
December, 31 Exchange rate December, 31
1996 Additions Deductions adjustment 1997
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GROSS VALUE
1.1 FIXED ASSETS
------------
1.11 INTANGIBLE FIXED ASSETS
. Goodwill
. Costs of development and research
. Other 14,828 13,089 4 577 -1 859 21 481
------------------------------------------------------------------------
14,828 13,089 4 577 -1 859 21 481
------------------------------------------------------------------------
1.12 TANGIBLE FIXED ASSETS
1.211 Premises 60 359 4 476 9 803 -7 571 47 461
1.122 Cars 21 845 37 526 19 105 -2 740 37 526
1.123 Other tangible fixed assets 418 805 156 803 77 103 -52 532 445 973
Purchase in course 0 6 680 0 0 6 680
------------------------------------------------------------------------
501 008 205 484 106 010 -62 843 537 640
------------------------------------------------------------------------
1.13 FINANCIAL FIXED ASSETS
(long-term)
1.131 Non consolidated participations
1.134 Other receivables 35 631 8 304 -4 469 39 466
35 631 8 304 -4 469 39 466
</TABLE>
F-8
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
LYON CONSULTANTS Group Currency: USD June 22nd, 1998
------------------------------------------------------------------------
December, 31 Exchange rate December, 31
1996 Additions Deductions adjustment 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DEPRECIATION
- ----------------------------------------------
FIXED ASSETS
- ------------
INTANGIBLE FIXED ASSETS
. Goodwill
. Costs of development and research
. Other 10 838 8 690 4 577 -1 638 13 313
----------------------------------------------------------------------------
10 838 8 690 4 577 -1 638 13 313
----------------------------------------------------------------------------
TANGIBLE FIXED ASSETS
Premises 11 047 8 894 9 803 -1 670 8 468
Cars 11 120 7 250 11 808 -1 627 4 935
Other tangible fixed assets 127 730 166 392 67 840 -21 348 204 934
----------------------------------------------------------------------------
149 897 182 536 89 450 -24 645 218 337
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-9
<PAGE>
- -------------------------------------------------------------
LYON CONSULTANTS Group Currency: USD
- -------------------------------------------------------------
AMOUNTS RECEIVABLE
Trade debtors 3 757 905
Less : provision for bad debts 0
----------------
Bad debts included in trade debtors 0
Other amounts receivable
Staff 17 309
Prepaid -income tax and tax credit 1 329 013
VAT 144 330
Prepaid expenses/accrued income 12 063
UK 6 645
----------------
TotaL amounts receivables * 5 267 265
----------------
Claimable after one year: 0
GROUP COMPANIES
- -------------------------------------------------------------
December, 31
SECURITIES 1997
Market-value --------------
. shares
negociable bonds ( sicav ) 5 221 002
CASH
. cash in hand 4 835
. deposits
. current account bankers 716 189
--------------
721 024
--------------
F-10
<PAGE>
- ---------------------------------------------------------
LYON CONSULTANTS Group Currency: USD
- ---------------------------------------------------------
December, 31
SHAREHOLDERS' FUNDS 1997
-------------
Subscribed and paid up capital 705 566
Capital surplus
Revaluation on reserve
Legal and statutory reserves 4 175
Other reserves and retained earnings 5 910 557
Foreign currency translation adjustment -780 247
Profit of the year 1 649 735
-------------
7 489 786
-------------
GOVERNMENT GRANTS
PROVISIONS
-------------
Litigations 33 400
-------------
Pensions 0
Total amounts falling due after one year
LONG TERM LIABILITIES
ANVAR 333 996
CCIP 25 551
-------------
Total 359 546
-------------
Repayable over more than 5 years: 0
Average interest rate : 0
- ---------------------------------------------------------
CURRENT LIABILITIES
Bankers (overdrafts)
Trade creditors 749 536
Vacation accruals 682 630
Year-end bonuses 391 398
Wages 71 464
Other social liabilities 677 536
VAT 759 934
Other taxes 106 541
Prepaid services by customers 173 967
Other creditors ss accruals UK 80 490
-------------
3 693 497
- ---------------------------------------------------------
F-11
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name of the Group :LYON CONSULTANTS June 22nd, 1998 USD
- --------------------------------------------------------------------------------
-----------------------------
3.1 SALES 14 332 223 14 159 519
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
1996 % Net sales 96 % Net sales 97 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4. COSTS
4.1 Employee charges
-----------------------------------------------------------------
Staff at december 31 : 153 9 682 288 67,56% 71.27% 10 092 084
-----------------------------------------------------------------
4.2. General expenses
-----------------------------------------------------------------
2 281 363 15,92% 12,18% 1 724 230
-----------------------------------------------------------------
4.3 Taxes
-----------------------------------------------------------------
126 746 0,88% 1,15% 162 566
-----------------------------------------------------------------
4.4. Financial expenses
-----------------------------------------------------------------
2 331 0,02% 0,03% 4 123
- ------------------------------------------------------------------------------------------------------------------
4.5. Other operating results
-----------------------------------------------------------------
99 054 0,69% 0,78% 110 668
-----------------------------------------------------------------
4.6 Financial income
-----------------------------------------------------------------
225 829 1,58% 1,77% 250 830
-----------------------------------------------------------------
</TABLE>
F-12
<PAGE>
<TABLE>
<CAPTION>
Name of the Group : LYON CONSULTANTS June 22nd, 1998 USD
- -------------------------------------------------------------------------------------------------------
<S> <C>
4.7 Extraordinary item
4.8 Year-end bonuses
---------------------------------------------------
Legal compulsory bonus (staff over 5O) 443 621 3,10% 2,86% 404 343
- -------------------------------------------------------------------------------------------------------
4.9 Corporation tax
Current income tax 701 753 818 179
Income tax credit due to R & D -663 021 -506 423
Income tax credit due to training -71 945 0
Deffered taxation effect 23 028 -19 046
---------------------------------------------------
-10 184 NS NS 292 710
- -------------------------------------------------------------------------------------------------------
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Name of the Group : LYON CONSULTANT Currency : USD
June 22nd, 1998
- ------------------------------------------------------------------------------------------------
DETAILS OF ADJUSTMENTS 1996 and prior 1997 variation
-----------------------------------------
OF THE DRAFT STATEMENTS
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Reevaluation of negociable securities 89 785 52 463
Potential exchange gains 7 955 -1 320
Adj.Accelerated depreciation of fixed assets 78 519 12 891
Deferred taxation 135 869 19 046
Total incidence
-------------
on the retained earnings 312 128
------------- ------------
on the net income 83 081
------------
VALUATION OF THE RIGHT FOR RETIREMENT ALLOWANCES
- ------------------------------------------------------------------------------------------------
Allowances estimation regarding the future rights 182 709
Theoratical social charges ( 45% ) 82 219
Probability per capita 0
- ------------------------------------------------------------------------------------------------
</TABLE>
F-14
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Name of the Group : LYON CONSULTANT Currency : USD
June 22nd, 1998
- ------------------------------------------------------------------------------------------------
LYON EQUITY ROLL
- ------------------------------------------------------------------------------------------------
DESCRIPTION COMMON STOCK RETAINED EARNINGS exc.rate adjust. TOTAL
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance 12/31/96 47 737 6 678 390 -2 419 6 723 708
---------------------------------------------------------------------
Net income 1 649 735 0 1 649 735
Foreign currency adjustment -777 828 -777 828
Issue 75,000 shares 12 525 12 525
Incorporation of retained
earnings 651 292 -651 292 0
Exchange rate adjust. related
to incorporation of
Retained Earnings
(see foot note) -5 988 0 -112,366 -118 354
---------------------------------------------------------------------
Balance per roll forward
12/31/97 705 566 7 676 833 -892 613 7 489 786
- ------------------------------------------------------------------------------------------------
</TABLE>
foot note: FF 3,900,000 of retained earnings have been incorporated.
As at 12/31/96 they were translated at a rate of 5.107 FF per 1 USD and,
as at 12/31/97, at a rate of 5.9881.
F-15
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Name of the Group : LYON CONSULTANT Currency : USD
June 22nd, 1998
- ------------------------------------------------------------------------------------------------
COMMITMENTS, CONTINGENT LIABILITIES AND CHARGES
-------------------------------------------------------------------------------------
December 31, 1996 Additions Deductions Exchange rate adj. December 31, 1997
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Litigation 85 927 34 504 85 927 - 1 104 33 400
- ------------------------------------------------------------------------------------------------
</TABLE>
F-16
<PAGE>
INFORMATION MANAGEMENT RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
F-17
<PAGE>
INFORMATION MANAGEMENT RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEETS
December 31, 1997
(Unaudited and in thousands)
<TABLE>
<CAPTION>
Pro Forma
IMR Lyon Adjustments Combined
------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 85,819 $ 721 (17,110) (A) $ 69,430
Marketable securities.................................... 4,453 5,221 9,674
Accounts receivable...................................... 11,156 3,758 14,914
Unbilled work in process................................. 6,390 - 6,390
Other current assets..................................... 6,553 1,509 8,062
------------ ------------ ------------
Total current assets............................... 114,371 11,209 108,470
Property and equipment,
net of accumulated depreciation.......................... 9,818 367 10,185
Capitalized software costs,
net of accumulated amortization.......................... 47 - 47
Deposits and other assets................................... 960 - 28,023 (A) 960
(28,023) (B)
Goodwill, net of accumulated amortization................... 10,157 - 5,900 (B) 15,372
(685) (C)
------------ ------------ ------------
Total assets....................................... $ 135,353 $ 11,576 $ 135,034
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................... $ 3,136 $ 750 $ 3,886
Accrued compensation..................................... 8,430 - 8,430
Deferred revenue......................................... 4,413 - 4,413
Other current liabilities................................ 4,599 2,944 700 (A) 8,243
------------ ------------ ------------
Total current liabilities.......................... 20,578 3,694 24,972
Long-term debt.............................................. 885 359 1,244
Deferred tax liability...................................... 546 - 546
Other liabilities........................................... 133 33 166
------------ ------------ ------------
Total liabilities.................................. 22,142 4,086 26,928
------------ ------------ ------------
Minority interest .......................................... 4 - 4
------------ ------------ ------------
Shareholders' equity:
Preferred stock ......................................... - - -
Common stock............................................. 2,565 706 50 (A) 2,615
(706) (B)
Additional paid-in capital............................... 98,735 - 10,163 (A) 108,898
Retained earnings........................................ 12,564 7,677 (21,419) (B) (1,863)
(685) (C)
Cumulative foreign currency translation adjustment....... (657) (893) 2 (B) (1,548)
------------ ------------ ------------
Total shareholders' equity......................... 113,207 7,490 108,102
------------ ------------ ------------
Total liabilities and shareholders' equity......... $ 135,353 $ 11,576 $ 135,034
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these pro forma
consolidated financial statements.
F-18
<PAGE>
INFORMATION MANAGEMENT RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
Year ended December 31, 1997
(Unaudited and in thousands except per share data)
<TABLE>
<CAPTION>
Pro Forma
IMR Lyon Adjustments Combined
------------- -------------- -------------- --------------
<S> <C> <C> <C>
Revenue........................................ $ 83,550 $ 14,159 $ 97,709
Cost of revenue................................ 45,959 7,504 53,463
-------------- -------------- -------------
Gross profit.......................... 37,591 6,655 44,246
Selling, general and administrative expenses... 20,865 4,959 25,824
Goodwill amortization.......................... 1,123 - 685 (C) 1,808
In-process purchased technology................ - - 15,400 (B) 15,400
-------------- -------------- -------------
Income from operations................ 15,603 1,696 1,214
Other income (expense):
Interest expense...................... (175) (2) (177)
Interest income and other............. 1,947 249 2,196
-------------- -------------- -------------
Total other income (expense).......... 1,772 247 2,019
-------------- -------------- -------------
Income before provision for income taxes and
minority interest..................... 17,375 1,943 3,233
Provision for income taxes..................... 5,432 293 5,725
-------------- -------------- -------------
Income (loss) before minority interest 11,943 1,650 (2,492)
Minority interest in net income................ (48) - (48)
-------------- -------------- -------------
Net income (loss)..................... $ 11,895 $ 1,650 $ (2,540)
============== ============== =============
Net loss per share:
Basic and diluted............................................................................. $(0.10)
=======
Shares outstanding:
Basic and diluted............................................................................. 24,628
</TABLE>
The accompanying notes are an integral part of these pro forma
consolidated financial statements.
F-19
<PAGE>
INFORMATION MANAGEMENT RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEETS
March 31, 1998
(Unaudited and in thousands)
<TABLE>
<CAPTION>
Pro Forma
IMR Lyon Adjustments Combined
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 87,042 $ 676 (17,110) (A) $ 70,608
Marketable securities................................. 5,643 5,532 11,175
Accounts receivable................................... 17,046 5,338 22,384
Unbilled work in process.............................. 6,980 - 6,980
Other current assets.................................. 4,400 - 4,400
----------------- -------------- --------------
Total current assets............................ 121,111 11,546 115,547
Property and equipment,
net of accumulated depreciation....................... 12,871 275 13,146
Deposits and other assets................................ 1,540 11 28,023 (A) 1,551
(28,023) (B)
Goodwill, net of accumulated amortization................ 9,870 - 5,900 (B) 14,914
(856) (C)
----------------- -------------- --------------
Total assets.................................... $ 145,392 $ 11,832 $ 145,158
================= ============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable...................................... $ 2,792 $ 706 $ 3,498
Accrued compensation.................................. 6,936 - 6,936
Deferred revenue...................................... 4,337 - 4,337
Other current liabilities............................. 9,678 3,224 700 (A) 13,602
----------------- -------------- --------------
Total current liabilities....................... 23,743 3,930 28,373
Long-term debt........................................... 693 359 1,052
Deferred tax liability................................... 545 - 545
Other liabilities........................................ 130 - 130
----------------- -------------- --------------
Total liabilities............................... 25,111 4,289 30,100
----------------- -------------- --------------
Minority interest ....................................... 6 - 6
----------------- -------------- --------------
Shareholders' equity:
Preferred stock ...................................... - - -
Common stock.......................................... 2,580 706 50 (A) 2,630
(706) (B)
Additional paid-in capital............................ 100,356 - 10,163 (A) 110,519
Retained earnings..................................... 17,988 8,090 (21,419) (B) 3,803
(856) (C)
Cumulative foreign currency translation adjustment.... (649) (1,253) 2 (B) (1,900)
----------------- -------------- --------------
Total shareholders' equity...................... 120,275 7,543 115,052
----------------- -------------- --------------
Total liabilities and shareholders' equity...... $ 145,392 $ 11,832 $ 145,158
================= ============== ==============
</TABLE>
The accompanying notes are an integral part of these pro forma
consolidated financial statements.
F-20
<PAGE>
INFORMATION MANAGEMENT RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF
INCOME Three months ended March 31, 1998
(Unaudited and in thousands except per share data)
<TABLE>
<CAPTION>
Pro Forma
IMR Lyon Adjustments Combined
------------- -------------- -------------- --------------
<S> <C> <C> <C>
Revenue........................................ $ 31,460 $ 4,015 $ 35,475
Cost of revenue................................ 16,981 2,128 19,109
----------------- ----------------- ----------------
Gross profit.......................... 14,479 1,887 16,366
Selling, general and administrative expenses... 7,574 1,332 8,906
Goodwill amortization.......................... 290 - 171 (C) 461
----------------- ----------------- ----------------
Income from operations................ 6,615 555 6,999
Other income (expense):
Interest expense...................... (27) - (27)
Interest income and other............. 1,114 81 1,195
----------------- ----------------- ----------------
Total other income (expense).......... 1,087 81 1,168
----------------- ----------------- ----------------
Income before provision for income taxes....... 7,702 636 8,167
Provision for income taxes..................... 2,278 223 2,501
----------------- ----------------- ----------------
Net income............................ $ 5,424 $ 413 $ 5,666
================= ================= ================
Earnings per share:
Basic......................................................................................... $0.22
=====
Diluted....................................................................................... $0.15
=====
Shares outstanding:
Basic......................................................................................... 26,297
Diluted....................................................................................... 37,496
</TABLE>
The accompanying notes are an integral part of these pro forma
consolidated financial statements.
F-21
<PAGE>
INFORMATION MANAGEMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation -
Pursuant to an Agreement signed May 15, 1998, Information
Management Resources, Inc. ("IMR") agreed to acquire 100% of the
outstanding shares of Lyon Consultants, S.A. ("Lyon"), a privately held
software engineering company headquartered in Paris, France from its five
owners. Lyon specializes in rapid software application development,
utilizing reusable business and technical software objects, and
information technology consulting. Lyon currently provides these services
to large European and American companies, with a strong emphasis on the
insurance, banking, utility and manufacturing industries.
The Lyon acquisition is accounted for as a purchase pursuant to
APB No. 16, "Business Combinations". A portion of the acquisition price
was expensed in the quarter ended June 30, 1998 as acquired in-process
technology in accordance with Financial Accounting Standards (FAS) No. 2.
(See Note 3.)
The Pro Forma Consolidated Balance Sheet as of December 31, 1997
and March 31, 1998 and the Pro Forma Consolidated Statements of Income for
the year ended December 31, 1997 and the three months ended March 31, 1998
give affect to the acquisition of Lyon assuming the acquisition occurred
on January 1, 1997. These Pro Forma Consolidated Financial Statements have
not been restated to give affect to the business combination of RHO
Transformation Technologies Pty. Ltd. which was effective June 30, 1998
and was accounted for as a pooling-of-interests combination.
The Pro Forma Consolidated Financial Statements have been
prepared based on the historical financial statements of IMR and Lyon for
the periods stated above. Such pro forma statements may not be indicative
of the results that would have occurred if the acquisitions had been
consummated on the dates indicated, or of the operating results that may
be achieved in the future. The pro forma statements should be read in
conjunction with the audited consolidated financial statements for the
year ended December 31, 1997, which are contained in IMR's Annual Report
on Form 10-K as filed with the Securities and Exchange Commission.
2. Pro Forma Adjustments -
The pro forma adjustments to the consolidated financial
statements are summarized as follows:
(A) Reflects the acquisition of Lyon Consultants, S.A.
(B) Reflects the elimination of the investment in Lyon
Consultants, S.A. and the allocation of the purchase price
to goodwill, acquired in-process technology and certain
other intangible assets.
(C) Reflects current and prior years' amortization of intangible
assets.
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INFORMATION MANAGEMENT RESOURCES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. In-Process Purchased Technology -
The purchased assets and assumed liabilities in connection with
the acquisition of Lyon were recorded at their estimated fair values at
the acquisition date. During July 1998, the Company received an appraisal
of the intangible assets which indicated that approximately $15.4 million
of the acquired intangible assets was in-process purchased technology that
had not yet reached technological feasibility. This appraisal was also
utilized for the attached pro forma financial statements, which give
affect to the Lyon acquisition assuming the acquisition occurred on
January 1, 1997. Because there can be no assurance that the Company will
be able to successfully complete the development and integration of the
in-process technology into its suite of software products or that the
acquired technology has any alternative future use, the acquired
in-process technology was charged to expense, for pro forma purposes, in
the year ended December 31, 1997.
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