SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
December 20, 1996
Commission File No. 1-9158
________________________
MAI SYSTEMS CORPORATION
(Exact name of Registrant as Specified in its Charter)
Delaware 22-2554549
(State of Incorporation) (I.R.S. Employer
Identification Number)
9600 Jeronimo Road
Irvine, California 92718
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (714) 580-0700
_______________________________
<PAGE>
Item 5. Other Events
MAI Adjusts Expected Fourth Quarter Results
Irvine, California, December 20, 1996. MAI Systems Corporation (AMEX: NOW)
said today that its previously announced fourth quarter revenue expectations are
no longer reflective of the company's current anticipations. The company said it
will end the quarter with substantially higher bookings and backlog than its
earlier internal projections had indicated, but that revenues would be less than
previously announced.
MAI now expects fourth quarter revenue to be approximately $16 million
based on bookings of approximately $12.7 million for the quarter and a year-end
backlog in excess of $12.0 million. These expectations compare with fourth
quarter revenue of $17.0 million, based on bookings of $4.8 million and a
year-end backlog of $3.0 million for the comparable period 1995. The company's
previously announced revenue expectations for the fourth quarter of
approximately $19 million were based on anticipated bookings of $8.3 million for
the quarter and a year-end backlog of approximately $5.0 million.
The company attributed the increase in bookings and backlog and the
lower-than-expected revenues primarily to higher demand for the company's
products and services, a longer decision-making cycle on the part of its
customers resulting in later-in-the-quarter bookings and longer-than-expected
project implementation periods.
The company said the current backlog includes 69% of higher-margin software
and professional services and 31% of lower-margin hardware sales. 1995 year-end
backlog included 48% of higher-margin software and professional services and 51%
of lower-margin hardware sales.
MAI's fourth-quarter profitability will continue to be burdened by expenses
associated with internal process changes for delivering more complex multi-site
information systems. In addition, as previously announced, integration expenses
for recent acquisitions have continued to negatively impact profitability in the
fourth quarter.
The company's profitability for the fourth quarter may also be impacted by
several one-time charges. These potential charges relate principally to the
elimination of intangibles and other non-cash write-offs associated with the
completion of recent acquisitions, and may also include personnel reductions and
other operating expenses from the recently-announced outsource of its field
service operations to Olivetti North America. The company estimates that these
potential one-time expenses, principally relating to acquired intangibles, could
result in a charge of up to $20 million for the quarter.
MAI also announced that it had reorganized its professional services and
project management group which it anticipates will substantially improve
efficiency and profitability in the implementation and delivery of its products
and services.
"The bookings we experienced in the fourth quarter and the operational
changes put in place during the last six months have combined to make our
management team extremely enthusiastic and optimistic about our business
prospects for 1997 and beyond ," said Richard S. Ressler, MAI's chairman and
chief executive officer.
The company also announced that it was implementing changes in its
international operations. The European distributor of the HIS products has been
terminated and the company is assuming its sales and service obligations. It
announced that its CLS Software hospitality products would be distributed in
Asia through its Hong Kong and Singapore-based subsidiaries and that the CLS
Software distributor in that territory had been terminated. The company
responded to its former distributors in Europe and Asia who said they would
contest their terminations by informing them that MAI believed the terminations
were proper, in accordance with all agreements and in the best interest of its
customers in the affected territories.
The company also announced that it had nearly completed the issuance of
shares to its former creditors pursuant to its 1994 court-approved plan of
reorganization. Due to favorable resolution of several significant creditors'
claims and the failure of certain creditors to claim their shares, a maximum of
6,800,000 shares are expected to be issued to creditors, rather than 7,356,250
shares which had originally been anticipated. The company also announced that it
may realize a purchase price reduction and corresponding reduction in the number
of shares issued in connection with the HIS acquisition. This reduction may be
offset by an upward adjustment in the number of shares issued to certain HIS
shareholders based on the fair market value of the company's shares in 1997.
The statements of the company and Mr. Ressler are forward looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended,
and are subject to the safe harbor created thereby. They involve a number of
risks and uncertainties. Among the factors that could cause actual results to
differ materially are the following: business conditions and growth in the
hospitality and gaming industries, in the networked computing industry and
general economy; competitive factors, such as competitive hospitality and gaming
solutions and competition from other companies offering similar networking
design, installation, implementation and support; pricing pressures; operational
factors related to the integration of the company's acquisitions; changes in
product mix which affect overall profit margins; and the risk factors listed
from time to time in the company's SEC reports, including but not limited to its
1995 annual report on Form 10-K ("Factors That May Affect Future Results").
MAI Systems Corporation is a world-wide provider of total information
system solutions for the hospitality, process manufacturing and gaming markets.
Headquartered in Irvine, California, MAI has offices world-wide. For sales or
product information, contact MAI Systems Corporation at (800) NOW-4MAI,
[email protected] or visit MAI's Web site at http://www.maisystems.com/.
<TABLE>
<CAPTION>
Comparison of Revenues, Bookings and Backlog
Expectations at Comparable
Current Expectations September 11, 1996 Period 1995
<S> <C> <C> <C>
Fourth Quarter $16,000,000 $19,000,000 $17,000,000
Revenues
Fourth Quarter 12,700,000 8,300,000 4,800,000
Bookings
Backlog at Year-End 12,000,000 5,000,000 3,000,000
</TABLE>
<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.
MAI SYSTEMS CORPORATION
(Registrant)
Date: January 2, 1996 /s/ Stanley P. Witkow
Stanley P. Witkow
Vice President Corporate and Legal
Affairs and Secretary
