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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
Notification of Late Filing
Commission File Number 0-26238
(Check One)
|_| Form 10-K and Form 10-KSB |_| Form 11-K
|_| Form 20-F |X| Form 10-Q and 10-QSB |_| Form N-SAR
For period ended October 31, 1998
|_| Transition Report on Form 10-K and Form 10-KSB
|_| Transition Report on Form 20-P
|_| Transition Report on Form 11-K
|_| Transition Report on Form 10-Q and Form 10-QSB
|_| Transition Report on Form N-SAR
For the transition period ended
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Nothing in this form shall be construed to imply that the Commission
has verified any information contained herein.
If the notification relates to a portion of the filing checked above,
identify the Item(s) to which the notification
relates:
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Part I - Registrant Information
The Source Information Management Company
(Full name of registrant)
11644 Lilburn Park Road
(Address of principal executive office)
St. Louis, Missouri 63146
(City, State and Zip Code)
Part II - Rules 12b-25 (b) and (c)
If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12b-25(b), the
following should be completed. (Check box if appropriate)
|X| (a) The reasons described in reasonable detail in Part III of this
form could not be eliminated without unreasonable effort or expense.
|X| (b) The subject annual report, semi-annual report, transition
report on Form 10-K, Form 20-F, 11-K or Form N-SAR, or portion thereof will be
filed on or before the fifteenth calendar day following the prescribed due date;
or the subject quarterly report or transition report on Form 10-Q, or portion
thereof will be filed on or before the fifth calendar day following the
prescribed due date; and
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|_| (c) The accountant's statement or other exhibit required by Rule
12b-25 has been attached if applicable.
Part III - Narrative
The Company is unable to timely file its report on Form 10-QSB for the
quarter ended October 31, 1998, because the Company sustained smoke and water
damage to its facilities and computer equipment at its headquarters on Saturday,
December 12, 1998 due to a fire on the premises. The report on Form 10-QSB has
not been able to be completed without unreasonable effort and expense. The
Company expects to file its third quarter report on Form 10-QSB not later than
December 22, 1998.
Part IV - Other Information
(1) Name and telephone number of person to contact in regard to this
notification.
W. Brian Rodgers (314) 995-9040
(Name) (Telephone Number)
(2) Have all other periodic reports required under section 13 or 15(d)
of the Securities Exchange Act of 1934 or section 30 of the Investment Company
Act of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If the answer is no,
identify report(s).
|X| Yes |_| No
(3) Is it anticipated that any significant changes in results of
operations from the corresponding period for the last fiscal year will be
reflected by the earnings statements to be included in the subject report or
portion thereof?
|X| Yes |_| No
If so: attach an explanation of the anticipated change, both
narratively and quantitatively, and, if appropriate, state the reasons why a
reasonable estimate of the results cannot be made.
The Source Information Management Company has caused this notification
to be signed on its behalf by the undersigned thereunto duly authorized.
Date: December 15, 1998 By: /s/ W. Brian Rodgers
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W. Brian Rodgers, Chief Financial Officer
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THE SOURCE INFORMATION MANAGEMENT COMPANY
UNAUDITED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
October 31, October 31,
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1998 1997 1998 1997
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Service Revenues $ 3,960,409 $2,943,766 $11,136,199 $8,411,782
Cost of Service Revenues 1,651,341 1,522,201 4,797,247 4,406,778
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Gross Profit 2,309,068 1,421,565 6,338,952 4,005,004
Selling, General and Administrative
Expense 612,701 536,058 1,832,621 1,598,231
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Operating Income 1,696,367 885,507 4,506,331 2,406,773
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Other Income (Expense)
Interest income 11,991 1,198 22,270 14,860
Interest expense (46,108) (192,494) (264,986) (680,245)
Other (3,244) (20,955) (9,194) (61,579)
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Total Other Income (Expense) (37,361) (212,251) (251,910) (645,964)
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Income Before Income Taxes 1,659,006 673,256 4,254,421 1,751,809
Income Tax Expense 700,000 296,000 1,778,000 785,000
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Net Income $ 959,006 $ 377,256 $ 2,476,421 $ 966,809
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Earnings per Share
Basic $ .10 $ .06 $ .28 $ .14
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Diluted $ .10 $ .06 $ .27 $ .14
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Weighted Average of Shares Outstanding
Basic 9,586,239 6,535,980 8,783,125 6,064,476
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Diluted 10,030,461 6,724,638 9,247,799 6,147,243
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SERVICE REVENUES
Increased retailer participation in the Advance Pay Program, the
acquisitions of Mike Kessler and Associates, Inc. ("MKA") and Periodical
Concepts and the growth in subscriptions to PIN contributed to an increase in
Service Revenues during both the quarter and the nine month period ended October
31, 1998 of approximately $1,017,000, or 35%, and $2,724,000, or 32%,
respectively, over the comparable periods in fiscal 1998. The acquisition of MKA
had little impact on the comparison between the quarter ended October 31, 1998
and the quarter ended October 31, 1997 since it was acquired on May 30, 1997. Of
the total, claims, PIN and Advance Pay Program revenues increased approximately
$599,000, or 23%, and $1,881,000, or 25%, respectively, over the comparable
periods in fiscal 1998. Revenue from front-end management services increased
from $287,000 for the quarter ended October 31, 1997 to $705,000 for the quarter
ended October 31, 1998, or 146%, and from $982,000 for the nine month period
ended October 31, 1997 to $1,825,000 for the nine month period ended October 31,
1998, or 159%. This growth resulted from an increase in the number of
reconfiguration programs undertaken by the Company on behalf of its retailer
clients. Historically, front-end management revenues have fluctuated as a result
of a variety of factors including the number and magnitude of reconfiguration
programs undertaken by the Company's retailer clients and the timely shipping of
front-end merchandising fixtures by manufacturers. Consequently, variations in
the timing and amounts of front-end management revenues could have a material
positive or negative effect on the Company's operating results of any given
quarter.
COST OF SERVICE REVENUES AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSE ("TOTAL
COSTS")
Despite a 34% increase in Service Revenues for the quarter ended
October 31, 1998, Total Costs increased only $206,000, or 10%, over the third
quarter of the prior year. The acquisition of Periodical Concepts (PC2) led to
increased costs in amortization, wages and other expenses of approximately
$88,000. Consulting expenses increased approximately $40,000 over the comparable
period of the prior year due to valuation services utilized and for fees paid to
financial and business consultants. Travel and entertainment expenses increased
over the same quarter in the prior year by approximately $26,000 and $20,000,
respectively. An increase in rental rates and the addition of another office
caused rent expense to increase over the prior year's third quarter by
approximately $16,000. Moving expenses were approximately $9,000 during this
quarter due to the relocation of several employees compared to no moving expense
in the prior year. Lastly, the expenses for meetings and seminars increased
approximately $14,000 over the prior year's third quarter.
The year-to-date expenses also increased at a rate lower than revenues.
Despite a 32% increase in Service Revenues for the nine month period ended
October 31, 1998, Total Costs increased only $658,000, or 11%, over the first
nine months of the prior year. The acquisition of PC2 led to increased costs in
amortization, wages and other expenses of approximately $88,000. The acquisition
of Mike Kessler and Associates, Inc. (MKA) led to increased costs, including
wages, amortization and rent of approximately $105,000. Wages, other than MKA's
and PC2's employees, increased approximately $99,000 over the same period of
last year, due primarily to increases in employee compensation. Consulting
expenses increased approximately $129,000 over the comparable period of the
prior year due to valuation services utilized and for fees paid to financial and
business consultants. Approximately $38,000 more bonus expense was accrued
during the first nine months of this year than last year. Equipment leases,
telephone expenses, depreciation and rent increased $18,000, $22,000, $24,000
and $28,000, respectively, over the first nine months of the prior year. Travel
and entertainment expenses also increased over the prior year by $28,000 and
$34,000, respectively. Additionally, costs for personal property taxes increased
approximately $20,000 due to filing 1996, 1997 and 1998 North Carolina returns
during this fiscal year. Moving expenses were approximately $20,000 during this
year due to the relocation of several employees compared to no moving expense in
the prior year. Expenses related to seminars and meetings increased
approximately $26,000. However, bad debt expense decreased approximately $82,000
from last year to partially offset these increases.
INTEREST EXPENSE
Interest Expense decreased for the quarter and the nine month period
ended October 31, 1998 by $146,000 and $343,000, respectively, compared to the
quarter and nine month period ended October 31, 1997. $4,213,000 of the net
proceeds from the Company's public offering of Common Stock on June 19, 1998 was
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used to temporarily reduce the balance under the Company's credit facility.
Additionally, as the Advance Pay Program matures, it becomes increasingly funded
by collections under the Program rather than by borrowings.
INCOME TAX EXPENSE
The effective income tax rates for the three months and nine months
ended October 31, 1998 were 42.2% and 41.8%, respectively. These rates varied
from the statutory rate due to expenses not deductible for income tax purposes.
Such non-deductible expenses include meals and entertainment, goodwill
amortization, and officers' life insurance premiums.