UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 4, 1999
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DATASTREAM SYSTEMS, INC.
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(Exact name of Registrant as specified in Its Charter)
DELAWARE 0-25590 57-0813674
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(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
50 DATASTREAM PLAZA, GREENVILLE, SC 29605
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(Address of principle executive offices) (Zip Code)
(Telephone number of registrant) (864) 422-5001
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NOT APPLICABLE
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(Former Name, Former Address and Former Fiscal Year, if changed since last
report)
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ITEM 5. OTHER EVENTS
On February 4, 1999, Datastream Systems, Inc., a Delaware corporation
(the "Registrant"), announced results for the fourth quarter and year ended
December 31, 1998, as set forth in a press release of the Company dated
February 4, 1999 attached hereto as Exhibit 99.1 and incorporated herein by
reference. In the press release, the Company announced its voluntary
restatement of results of operations for the first, second and third quarters
of fiscal year 1998 to reduce the charge for in-process research and
development and to increase the related goodwill amortization expense in
connection with the acquisitions of Insta Instandhaltung Technischer Anlagen
GmbH on March 31, 1998 and Strategic Information Systems PTE. Ltd. on June
16, 1998. Although the Registrant believes that its original accounting
treatment was in accordance with generally accepted accounting principles, it
has made the adjustments to be consistent with the new methodology set forth
by the Staff of the Securities and Exchange Commission in its letter dated
September 15, 1998 to the American Institute of Certified Public Accountants.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a)Financial Statements.
Not applicable.
(b)Pro Forma Financial Information.
Not applicable.
(c)Exhibits.
The following exhibits are filed herewith in accordance with
the provisions of Item 601 of Regulation S-K:
Exhibit No. Description of Exhibit
99.1 Text of press release of the Registrant, dated February 4,1999.
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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 hereunto duly authorized.
DATASTREAM SYSTEMS, INC.
Date: February 16, 1998 By: /s/ Daniel H. Christie
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Daniel H. Christie
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
99.1 Text of press release of the Registrant, dated February 4, 1999.
<PAGE>
[GRAPHIC OMITTED]
February 4, 1999
CONTACT:
Dan Christie
Chief Financial Officer
1-864-422-5281
DATASTREAM SYSTEMS ANNOUNCES RECORD
REVENUE AND EARNINGS FOR 1998
License revenue grows 29% sequentially; increased investments in
Internet applications
GREENVILLE, SC (February 4, 1999) - Datastream Systems, Inc. (Nasdaq:
DSTM) today announced record revenue and earnings for both fourth
quarter and year-end 1998.
Total revenue for the quarter ended December 31, 1998 was $29.8 million,
a 43% increase from $20.9 million in the fourth quarter of 1997.
Software sales rose 22% annually to $12.1 million, consulting services
rose 68% to $12.7 million, and technical support rose 51% to $5.0
million from the same quarter a year ago.
Net income in the fourth quarter was $4.4 million before one-time
charges related to restructuring. Excluding the charges, fourth quarter
income increased 13% from $3.9 million in the same quarter of 1997.
Diluted earnings per share for the quarter, before restructuring related
charges, were $0.22 based on 20.0 million weighted average shares, a 16%
gain from $0.19 per share based on 20.0 million weighted average shares
in the fourth quarter of 1997.
For the year, Datastream's revenues increased 41% to $98.6 million from
$69.8 million in 1997. Software sales rose 23% to $38.2 million,
consulting services rose 61% to $42.6 million, and technical support
rose 46% to $17.7 million.
Prior to accounting for restructuring charges and charges related to
acquisitions made during the year, net income rose 34% to $15.3 million
from $11.4 million in the previous year. Diluted earnings per share for
the year increased 29% to $0.76 based on 20.3 million weighted average
shares, compared with $0.59 last year based on 19.2 million weighted
average shares.
"1998 was an important year for Datastream," said Larry Blackwell,
Datastream's President and CEO. "During this year, the Company
successfully achieved its strategy to expand international presence,
enhance ERP integration capabilities and initiate web and electronic
commerce applications."
"During the fourth quarter, we recognized the importance of
streamlining our product offerings and increasing our focus on
Internet-centric product development. In addition, we looked at ways
to improve operating efficiencies in the international businesses we
acquired during the first three quarters of 1998," continued Mr.
Blackwell. "This review culminated in a restructuring plan for 1999
that includes (i) an aggressive consolidation of non-strategic
products, both domestically and internationally, and (ii) a
centralization of certain financial and operational aspects of our
international offices to eliminate redundancies and enhance customer
service." The restructuring plan is reflected in a non-cash, one-time
charge of $8.8 million.
During the first and second quarter of 1998, the Company accounted for
acquired in-process R&D in accordance with established accounting
practices and as valued by an independent valuation expert. On
September 15, 1998, several months after the consummation of these
acquisitions, the SEC released a new methodology for accounting for
acquired in-process R&D. In response to the SEC's recent
interpretation of the accounting of acquired in-process R&D, the
Company has voluntarily reduced first and second quarter one-time
charges by an aggregate $1.96 million.
Information contained in this release is adjusted for a two-for-one
stock split effective January 30, 1998.
Datastream Systems, Inc. is the leading* provider of Computerized
Maintenance Management Systems (CMMS) and Enterprise Asset Management
(EAM) systems aimed at improving plant efficiency, increasing equipment
uptime and reducing costs. The Company has sold over 47,000 system
units worldwide, accounting for more than 55 percent of the unit market
share* in CMMS/EAM. Headquartered in Greenville, South Carolina,
Datastream has offices in 10 countries and software products in 15
languages. Datastream's customers are located in 129 countries and
include over 60 percent of the Fortune 500. For more information,
please visit our multilingual Web site at http://www.dstm.com.
* Based on number of system units sold, as reported by Automation
Research Corporation, 1998.
# # #
CONSOLIDATED FINANCIAL DATA ARE ATTACHED
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Page 3
DATASTREAM SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
Three Months Ended Twelve Months Ended
December 31, December 31,
1997 1998 1997 1998
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Software Product $9,980,112 12,127,878 $31,174,408 38,226,287
Consulting Services 7,559,208 12,664,883 26,437,697 42,621,294
Technical Support 3,332,847 5,029,522 12,156,190 17,707,276
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Total Revenues $20,872,167 29,822,283 $69,768,295 98,554,857
Cost of Software Product 848,464 1,087,284 3,132,996 3,679,607
Cost of Consulting Services 4,180,200 7,064,271 15,160,409 22,401,797
Cost of Technical Support 925,758 1,430,826 3,837,565 4,730,756
Software Write-off - 3,345,600 - 3,943,544
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Cost of Sales 5,954,422 12,927,981 22,130,970 34,755,704
Gross Profit 14,917,745 16,894,302 47,637,325 63,799,153
Operating Expenses:
Sales & Marketing 5,045,114 7,030,334 18,616,981 25,397,349
Research & Development 1,313,669 2,835,604 4,364,234 8,174,226
General & Administration 2,564,654 3,349,655 8,094,762 9,688,883
Write-off in process R&D,
Restructuring and
other charges - 5,469,281 - 9,990,256
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Operating Expenses 8,923,437 18,684,874 31,075,977 53,250,714
Operating Income 5,994,308 (1,790,572) 16,561,348 10,548,439
Other Income, Net 248,104 30,731 986,861 536,264
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Income Before Provision
for Income Taxes 6,242,412 (1,759,841) 17,548,209 11,084,703
Provision for Income Taxes 2,359,500 (663,460) 6,110,312 6,384,198
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Net Income $3,882,912 (1,096,381) $11,437,897 4,700,504
Diluted net income per share $ .19 (.05) $ .59 .23
Diluted weighted average
common shares outstanding 20,028,000 19,987,000 19,246,000 20,279,000
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Net Income before one-time
charges $3,882,912 4,395,290 $11,437,897 15,311,094
Diluted net income per share
before one-time charges $ .19 .22 $ .59 .76
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Page 4
DATASTREAM SYSTEMS, INC. AND SUBSIDIARIES
Balance Sheet
ASSETS
December 31, December 31,
1997 1998
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Cash and Cash Equivalents $ 2,409,387 6,739,209
Accounts Receivable, Net 21,968,539 32,440,963
Investments, Current 9,735,585 2,574,898
Other Current Assets 4,670,756 9,058,238
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Total Current Assets 38,784,267 50,813,308
Investments, Non-current 6,637,286 2,034,744
Net Property and Equipment 10,166,101 12,535,165
Goodwill 6,545,747 18,272,157
Capitalized Software Development Costs, Net 2,963,842 3,134,779
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Total Assets $65,097,243 86,790,153
LIABILITIES AND STOCKHOLDERS EQUITY
December 31, December 31,
1997 1998
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Total Current Liabilities $16,494,448 24,597,377
Long Term Debt, less Current Portion 603,098 317,951
Deferred Income Taxes 892,000 1,268,400
Total Stockholders' Equity 47,107,697 60,606,425
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Total Liabilities and Stockholders' Equity $65,097,243 86,790,153
This news release contains forward-looking statements which involve a number of
risks and uncertainties that could cause actual results to differ materially
from historical results or those anticipated. Potential risks and uncertainties
include, but are not limited to, those described in the Company's Quarterly
Report on Form 10-Q, filed with the Securities and Exchange Commission for the
quarter ended September 30, 1998. With respect to such forward-looking
statements, Datastream seeks the protections afforded by the Private Securities
Litigation Reform Act of 1995.
Datastream is a trademark of Datastream Systems, Inc. All other products or
company names mentioned are used for identification purposes only and may be
trademarks of their respective owners.
DATASTREAM SYSTEMS, INC.
50 Datastream Plaza Greenville, South Carolina 29605
1-864-422-5001 Fax 1-864-422-5000
