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 30, 1998
---------------
Information Management Associates, Inc.
(Exact name of registrant as specified in its charter)
Connecticut
(State or Other Jurisdiction of Incorporation)
001-13211 06-1289928
(Commission File Number) (I.R.S. Employer Identification No.)
One Corporate Drive, Suite 414, Shelton, Connecticut, 06484
(Address of Principal Executive Offices) (Zip Code)
(203) 925-6800
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS.
Attached hereto as Exhibit 99.1 and incorporated herein by reference is the
press release issued by Information Management Associates, Inc. (the
"Registrant") on October 30, 1998.
The following exhibit is filed as part of this report:
99.1 Press Release dated October 30, 1998.
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: November 2, 1998 INFORMATION MANAGEMENT
ASSOCIATES, INC.
By: /s/ Gary R. Martino
-------------------------------------
Name: Gary R. Martino
Title: Chairman of the Board of
Directors, Chief Financial
Officer and Treasurer
Information Management Associates, Inc. Announces Record Third Quarter
Revenues Exceeding Analysts Estimates, with Lower than Expected EPS; Second
Quarter Results to be Restated.
SHELTON, Conn. -- Oct. 30, 1998 -- Information Management Associates, Inc.
(NASDAQ: IMAA) announced today revenues and earnings for the third quarter ended
Sept. 30, 1998.
IMA's revenues for the third quarter of 1998 increased 70% to a record $15.8
million from $9.3 million in the third quarter of 1997. Software license
revenues increased 93% to a record $8.7 million, from $4.5 million in the third
quarter of 1997. Revenues from services and maintenance increased 48% in the
third quarter of 1998 compared to the third quarter of 1997.
IMA reported a net loss of approximately ($1.9 million) or ($.20) per share
(basic) for the third quarter of 1998 compared with net income of $895,000 or
$.11 per share for the third quarter of 1997. Earnings per share were lower than
previously estimated as a result of several factors. IMA's net loss in the third
quarter was primarily attributable to a one time litigation settlement charge of
approximately $2.2 million, the strengthening of accounts receivable reserves by
approximately $1.8 million and higher sales and marketing and outsourcing costs.
On a pro forma basis, IMA earned approximately $2.1 million or $.21 per share
($.13 fully taxed at 38%) prior to the effect of one time settlement charges and
accounts receivable reserves.
The previously announced one-time litigation settlement charge of approximately
$2.2 million for settlement and legal fees was related to a settlement agreement
with Rockwell International Corporation and certain of its affiliates
("Rockwell"). IMA agreed to pay Rockwell $1,750,000 in four installments over
one year in connection with claims by Rockwell regarding IMA's provision of a
call center solution to United States Cellular Corporation ("USCC"). The
settlement enabled IMA to resume its business relationship with USCC and allowed
USCC to license additional software from IMA for a fee of $1,750,000 in the
third quarter.
Following a comprehensive review of its accounts receivable, after taking into
account the company's rapid growth in revenues and corresponding growth in
accounts receivable as well as certain economic uncertainties, the company
elected to strengthen its accounts receivable reserves by recording a third
quarter charge of $1.8 million.
The company also experienced higher than expected sales and marketing expenses
as a result of substantially higher license revenues and the hiring of sales and
marketing professionals, as well as a higher cost of services due to
partnerships with large systems integrators sub-contracting through IMA for
large customer engagements. Sales and marketing expense rose 83% when compared
with the third quarter of 1997. This increase in sales and marketing expense
supports IMA's aggressive efforts to expand market coverage and visibility
worldwide. Revenue growth was aided by the successful hiring of additional field
sales professionals, bringing the total to 38 as of Sept. 30, 1998.
In light of recent focus and attention by the Securities and Exchange Commission
on the guidelines surrounding the recognition of liabilities in connection with
a business combination, IMA also announced today that based on further review it
would restate second quarter results to reflect $650,000 of operating expenses
that were originally recorded as charges against reserves established in
connection with the acquisitions of Marketing Information Systems, Inc. and
Telemar Software International LLC. In connection with the restatement, during
the third quarter, IMA reduced goodwill and restructuring reserves by $650,000.
Revenues for the second quarter will remain at approximately $13.1 million and
restated net income for the second quarter will be $629,000. EPS for the second
quarter, as restated, will be $.06 per share.
Al Subbloie, president and CEO of IMA, said, "In recent weeks we have taken
rapid and prudent actions to address certain current or potential issues
affecting IMA, such as the Rockwell litigation and the growth in accounts
receivable at a time of increasing economic uncertainty. We believe that these
actions strengthen IMA's balance sheet and competitive position going forward."
Subbloie also commented, "Our growth demonstrates that our overall business has
never been stronger, and market demand for IMA's award-winning customer
interaction software products and services continues to grow worldwide, as
evidenced by our record quarterly revenues. We signed a number of significant
accounts during the quarter, and our increased market visibility and expanded
sales force has generated a substantial pipeline that sets the stage for
continued growth in future quarters."
The following highlights also were announced or occurred since IMA's last
earnings release:
- -- IMA's EDGE(R) customer interaction software suite was named "Best of CTI EXPO
Spring '98." CTI EXPO is the leading industry event focused on computer
telephony integration (CTI) and call center products and services
- -- IMA was selected as one of the hottest U.S. technology companies by Facts
Online, and was ranked among the top 50 percent of all companies surveyed by
Software Magazine in their annual ranking of the world's 500 largest software
providers
- -- IMA announced the general availability of AdvantEDGE 4.0(TM), a front-office
software suite that delivers fully integrated sales, marketing and customer
service applications with imbedded workflow in a single, easy to deploy
package
- -- IMA made a minority equity investment of approximately $1.6 million in
Mitsucon Tecnologia S/A, a Brazilian corporation which distributes IMA
products in the fast-growing Brazilian call center market
- -- IMA announced that it is the call center applications market share leader in
Europe according to a report by Datamonitor, a leading technology analyst
firm
- -- The company announced the general availability of EDGE(R) 4.0, the latest
version of the company's award-winning customer interaction software
architecture. EDGE 4.0 offers a number of new and expanded features for
inbound and outbound call center environments, including software-based
predictive dialing, comprehensive support of a wide set of computer telephony
integration (CTI) interfaces and expanded currency and language functionality
for international use
- -- IMA announced the release of IMA SoftDial Plug-In(TM), a revolutionary and
powerful software-based predictive dialing solution that significantly
improves the productivity and efficiency of call center agents making
outbound calls.
- -- IMA announced a seminar series for telecommunications and utilities industry
executives, in conjunction with partners PricewaterhouseCoopers and Southern
New England Telecommunications ("SNET"). The seminars were held in October.
About IMA
IMA is a global leader in front office customer interaction solutions for call
centers used for sales, marketing and customer service. The company's Web- and
CTI-enabled software helps companies maximize the revenue and loyalty-generating
potential of each customer contact. IMA is the choice of over 400 leading
organizations including Bose Corporation, Dakotah Direct, Lloyds TSB Bank,
Pacific Gas and Electric, SNET and Xerox. IMA has headquarters in Shelton,
Conn., offices in Atlanta, Chicago, Frankfurt, Irvine, London, Melbourne and
Paris, and representatives worldwide. More information about IMA's products and
services can be found on the World Wide Web at www.imaedge.com, requested via
e-mail at [email protected], or by calling 1-800-776-0462.
NOTE: IMA and EDGE are registered trademarks, and AdvantEDGE and SoftDial
Plug-In are trademarks, of IMA. All other products or company names mentioned
are used for identification purposes only, and may be trademarks of their
respective owners.
Except for the historical information contained in this announcement, the
matters discussed in this announcement are "forward-looking statements" (as that
term is used in the Private Securities Litigation Reform Act of 1995) that
involve risks and uncertainties detailed from time to time in the Company's
filings with the Securities and Exchange Commission (the "SEC"). In particular,
IMA draws the reader's attention to the "Risk Factors" stated in the Company's
Registration Statement on Form S-1 dated July 30, 1997 and its accompanying
Prospectus, the Company's Quarterly Reports on Form 10-Q dated August 14, 1997,
November 14, 1997, May 15, 1998, August 14, 1998, and October 8, 1998, the
Company's Annual Report on Form 10-K dated March 30, 1998, as well as to the
Company's periodic and current reports as they are filed with the SEC.
CONTACTS:
Financial: Gary R. Martino, CFO Press: Robert A. Ventresca
(203) 925-6800 (203) 925-6878
[email protected]
<PAGE>
INFORMATION MANAGEMENT ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
License fees................................................ $ 8,706 $ 4,506 $21,429 $12,985
Services and maintenance ................................... 7,098 4,784 17,615 12,459
Total revenues ......................................... 15,804 9,290 39,044 25,444
Cost of revenues ................................................ 4,408 2,600 11,181 7,000
Gross profit .................................................... 11,396 6,690 27,863 18,444
Operating expenses:
Sales and marketing ........................................ 5,807 3,169 14,729 8,859
Product development ........................................ 2,167 1,552 5,879 4,648
General and administrative ................................. 3,216 1,223 6,166 3,538
Acquired product development costs ......................... - - 7,658 -
One time settlement charges............................... 2,163 - 2,163 -
Total operating expenses ............................... 13,353 5,944 36,595 17,045
Operating income (loss) ......................................... (1,957) 746 (8,732) 1,399
Other income (expense) .......................................... 179 206 716 (261)
Income (loss) before provision for foreign income taxes (1,778) 952 (8,016) 1,138
Provision for foreign income taxes .............................. 119 57 273 159
Net income (loss) ............................................... $(1,897) $ 895 $(8,289) $ 979
======== ======== ======== ========
Basic net income (loss) per common share (b).................... $ (.20) $ .11 $ (.87) $ .10
======== ======== ======== ========
Shares used in computing basic earnings per share................ 9,675 7,607 9,557 5,410
Pro forma effect of certain 1998 items on earnings per share:
Basic net income (loss) per common share exclusive
of one time costs and charges (a)......................... $ .21 $ .35
Acquired product development costs.......................... - (.80)
One time settlement charges................................. (.22) (.23)
Third quarter A/R reserve charge (G&A)...................... (.19) (.19)
Basic net income (loss) per common share.................... $ (.20) $ (.87)
======== ========
</TABLE>
(a) The three and nine months ended September 30, 1998 net incomes per common
share, exclusive of acquired product development costs, one time settlement
charges and accounts receivable reserve of $1.8 million would be $0.13 and
$0.22 respectively per share assuming a 38% effective tax rate.
(b) Reflects the new accounting standard FASB 128, Earnings Per Share which was
adopted as of December 31, 1997. The September 30, 1997 earnings per share
have been restated to reflect the adoption of this standard. The net income
per common share for the quarter ended September 30, 1997 reflects $66,000
of preferred dividends. The net income per common share for the nine months
ended September 30, 1997 reflects $454,000 of preferred dividends.
<PAGE>
INFORMATION MANAGEMENT ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and short term investments ........................... $ 13,798 $ 24,271
Accounts receivable, net .................................. 21,203 14,815
Other current assets ...................................... 3,092 1,420
Total current assets ...................................... 38,093 40,506
Equipment, net ................................................. 3,021 2,279
Other assets, net .............................................. 4,226 1,137
TOTAL ASSETS ................................................... $ 45,340 $ 43,922
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of capital lease obligations ........... $ 131 $ 232
Accounts payable and accrued liabilities .................. 8,761 4,375
Deferred revenues ......................................... 2,965 1,686
Total current liabilities ............................. 11,857 6,293
Other long-term liabilities .................................... 502 599
Shareholders' equity (deficit):
Common stock .............................................. 54,586 51,102
Shares to be issued ....................................... 564 -
Cumulative translation adjustment ......................... 91 (101)
Accumulated deficit ....................................... (22,260) (13,971)
Total shareholders' equity............................. 32,981 37,030
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ..................... $ 45,340 $ 43,922
======== ========
</TABLE>
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