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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 AND EXCHANGE ACT OF 1934
Date of Report: September 10, 1998
(Date of earliest event reported)
COMNET Corportion
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(Exact name of registrant as specified in its charter)
Delaware 000-6355 52-0852578
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation
4200 Parliament Place, Suite 600, Lanham, MD 20706-1481
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (301) 918-0400
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ITEM 5. OTHER EVENTS.
On or about September 9, 1998, the Registrant mailed to its stockholders a
quarterly report, a copy of which is attached hereto as Exhibit 99.1, which
provides an update of the Registrant's business activities.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
Exhibit 99.1 Report to stockholders, dated September 9, 1998.
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Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on behalf of the Registrant by the
undersigned thereunto duly authorized.
COMNET CORPORATION
By: /s/
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Name: Edward Weiss
Title: Secretary
Date: September 10, 1998
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Exhibit 99.1
REPORT TO SHAREHOLDERS
FIRST QUARTER ENDED JUNE 30, 1998
Fellow Shareholders:
COMNET Corporation reported revenues of $11.93 million for the first fiscal
quarter ended June 30, 1998, compared with $11.87 million for the previous year.
Net earnings available to common stockholders (after preferred stock dividends)
for the quarter were $0.04 million or $ 0.01 per share, compared with a net loss
of $0.95 million or $ 0.29 per share reported for the prior year.
COMNET's revenue was derived from its 81%-owned subsidiary, Group 1
Software, Inc. Revenue for both Group 1 and COMNET for the prior year included
revenue for Group 1's PC and WorldTrak operations, each of which was transferred
to other companies later in the year. Group 1's net earnings for the quarter
were $50,000 or $0.01 per share, compared with a net loss of $1.09 million or
$0.25 per share reported for the same quarter last year.
The profit improvement compared with the prior years was due primarily to
lower costs as well as the elimination of operating losses associated with PC
and WorldTrak.
Group 1's cash flows during the quarter remained strong. There were no
short-term borrowings at June 30, 1998 or March 31, 1998, compared with
short-term borrowings of $6.03 million at June 30, 1997. Cash and cash
equivalents totaled $8.9 million at June 30, 1998, compared with $3.7 million at
March 31, 1998 and $1.0 million at June 30, 1997.
Major business developments during the quarter and up to the time of this
writing include:
- The introduction of DM 1 at the National Center for Database Marketing
National Conference and Exhibition in Seattle, Washington. DM 1 is a
comprehensive suite of powerful 1-to-1 marketing management tools that
allows businesses to capture, enhance, store and utilize internal and
acquired customer and prospect data. DM 1 also is the first system to
offer access to the new Acxiom(R) DataNetwork(SM) for real-time
customer data. With DM 1, businesses can optimize the value of
their customer communications, maximizing profitability and return on
investment.
DM 1 helps businesses find, profile and understand who their best
customers are and create a variety of integrated target marketing
programs, including direct mail, telemarketing and internet marketing
communications. DM 1 streamlines the business of data management by
allowing organizations to create a customized database marketing
system tailored to their specific business objectives. The system's
core architecture features a scalable, easy-to-use data mart that
includes:
- Data integrity, scrubbing, validation
- Data extraction and transformation
- Demographic and geographic coding
- Data Visualization
- Online analytical processing (OLAP)
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- Data mining
- Campaign and list management
- Database publishing and electronic document composition
DM 1 customers can also choose from a wide range of services, including business
process analysis, system design and development, integration, training and
transition and long-term support.
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The releases of a new version of CODE 1 Plus International. The new release
includes Year 2000 (Y2K) compliance designed to process data accurately into the
twenty-first century.
The new release also includes an upgrade for Singapore addresses. Users can
now perform more extensive and accurate matching for this important and growing
market using street level address validation/correction. CODE 1 Plus
International, combined with Group 1's international postal address database,
allows businesses to manage lists for 207 countries (including all United
Nations-member countries). Organizations using CODE 1 Plus International
maximize their opportunity for higher response rates and realize greater
control, greater deliverability and reduced waste in their global marketing
efforts.
Furthermore, CODE 1 Plus International's "first" name database option
provides nearly 125,000 names (including local spelling and special characters)
for many major countries. By using the name databases, businesses can correctly
identify gender and ensure that the proper salutation is used based upon the
addressee's gender, country and customs. In addition, by correctly identifying
gender, business can personalize messages and enhance the effectiveness of their
multi-national direct marketing campaigns.
The release of MODEL 1 Enterprise Edition, version 4.0. The new release, created
in a client/server environment, supports enterprise needs, including distributed
computing and the ability to handle larger customer information databases.
MODEL 1 is a fully integrated software application package that provides a total
solution approach to predictive modeling, enabling enhanced business
intelligence as well as the ability to create high-impact marketing programs. It
is the most powerful tool available for marketers looking to use response
modeling, cross-selling, valuation and segmentation analysis as a standard
practice for profitable, enterprise decision support.
MODEL 1 Enterprise Edition offers outstanding new features and benefits for
larger organizations with enterprise-scale data mining/modeling requirements on
NT and Unix servers. Major enhancements include:
- - Performance Gains: MODEL 1 Enterprise Edition supports multi-threaded
SMP processing for superior performance on multi-processor machines. The
Enterprise Edition can perform computing-intensive operations at a far
faster rate than the stand-alone version, allowing users to build
hundreds of models very quickly.
- - Scalability: MODEL 1 Enterprise Edition supports larger data sets than
the stand-alone version (2 billion records by 16,350 variables versus 16
million records by 16,350 variables)
- - Multi-Tasking: Users of the MODEL 1 Enterprise Edition can start up
multiple sessions on the same or different servers.
- - Direct Database Access: Users of the MODEL 1 Enterprise Edition can use
Structured Query Language (SQL) to directly access relational databases
such as Oracle, Sybase, DB2, Informix and Microsoft SQL Server.
In July 1998, COMNET Corporation and Group 1 Software, jointly announced
the appointment of Linda Chapman as an officer -- Assistant Secretary -- of both
companies. Ms. Chapman has been with the company since 1979 and has held
positions of increasing responsibility in the Finance Department; she is
currently Tax Manager.
The annual meeting of COMNET Shareholders has been scheduled for
September 25, 1998 at the offices of Prudential Securities, 46th Floor, New York
City. Shareholders will be voting by proxy or in person on the proposed merger
of COMNET and Group 1 Software, its 81%-owned subsidiary. We cordially invite
you to attend this meeting. If you are unable to attend, please be sure to
return your proxy card.
Robert S. Bowen
President and
Chief Executive Officer
Group 1 Software and Code-1 Plus are registered trademarks of Group 1 Software,
Inc. DOC1, DataDesigns, Code-1 Plus International and Canadian Code-1 Plus are
trademarks of Group 1 Software, Inc. All other trademarks referred here in are
the properties of their respective owners.
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<TABLE>
<CAPTION>
Consolidated Statement of Earnings
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(Unaudited)
In thousands, except per share data
THREE MONTHS
ENDED JUNE 30,
1998 1997
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<S> <C> <C>
Revenue $ 11,929 $ 11,870
Operating expenses 11,840 13,350
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Operating earnings (Loss) 89 (1,480)
Non-operating income (expense), net 56 (169)
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Earnings (loss) before provision for income taxes 145 (1,649)
Provision (benefit) for income taxes 55 (534)
Minority interest 9 (206)
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Net earnings (Loss) 81 (909)
Preferred stock dividend 44 44
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Net earnings (loss) available to common stockholders $ 37 $ (953)
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Basic and diluted earnings (loss) per share of common stock $ 0.01 $ (0.29)
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Basic weighted average number of common shares outstanding 3,279 3,272
Diluted weighted average number of common and common
equivalent shares outstanding 3,459 3,272
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</TABLE>
<TABLE>
<CAPTION>
SUMMARIZED CONSOLIDATED BALANCE SHEETS
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In thousands
June 30, 1998 March 31, 1998
(Unaudited) (Audited)
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Assets:
Cash and cash equivalents $ 8,872 $ 3,683
Receivables 22,959 31,043
Other assets 34,978 35,904
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Total Assets $ 66,809 $ 70,630
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Accounts payable, accrued liabilities and debt $ 10,779 $ 13,623
Deferred revenue 20,204 21,137
Deferred income taxes 2,953 3,029
Minority interest 5,692 5,683
Stockholders' equity 27,181 27,158
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Total liabilities and stockholders' equity $ 66,809 $ 70,630
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</TABLE>
