Ross Systems Announces 2nd Quarter Earnings, Return to Profitability Ahead of Expectations, Reduction in Debt
ATLANTA, Jan. 25 /PRNewswire/ -- Ross Systems, Inc. (Nasdaq: ROSS), a leading provider of enterprise management software and e-business solutions for mid-market process manufacturers, today reported results for its second quarter ended December 31, 2000. The net profit for the quarter was $0.2 million or $0.01 per share, this compares to a net loss of $1.1 million or ($0.05) per share in the same quarter of the prior year, and a loss of $4.2 million or ($0.17) per share in the previous quarter. The company had previously announced that it expected a return to profitability in its third quarter.
Revenues in the quarter were $12.6 million, down 42% from $21.8 million in the same quarter of the prior year. Revenues for the six-month period were $26.8 million, down 41% from $45.1 million in the prior year same period. The net loss for the six-month period was $4.0 million or ($0.16) per share, compared to a net loss of $0.7 million or ($0.03) per share in the prior year same period. The loss for the current year included a charge of $0.8 million for non-recurring severance costs in the prior quarter.
Operating cash flow during the quarter was positive and continued to improve from the previous quarter. Current debt, primarily the asset based line of credit, declined by $1.7 million during the quarter to $8.7 million. Long-term debt also declined by $0.7 million to $1.1 million. Accounts receivable management continued to improve to 73 days of sales outstanding. Lower license revenues, attributable to the general slowdown in new license contracts, resulted in reduced consulting demand for new installations. Operating expenses for the quarter however continued to improve and declined by 46% from the same quarter of the prior year.
"The profit improvement initiatives implemented in the prior quarter are complete. However, the full positive effects will not be realized until the 3rd quarter of the fiscal year," said Bob Webster, Ross' Executive Vice President. "We have completed the steps required to return this business to consistent profitability at a sustainable revenue level, and increases in revenue from this level will provide strong leverage to profitability."
The company also continued its strategy of increasing market penetration in the process-manufacturing segment, where its product suite is highly regarded:
* The customer base continued to expand their usage of products and
services in the quarter. Additional contracts included AJM Packaging,
Bacardi, Cambrex, Cititrust Bahamas, Corning, Deluca, Hussey Copper,
Nelson Neutraceutical, Nucor, Oxford Frozen Foods, Tembec, Vi-Jon Labs,
and Wedtech among others.
* The company will continue with a direct sales organization in North
America and Western Europe but is leveraging its indirect distribution
channels in Eastern Europe, Latin America, and Asia to maximize its
profitability while maintaining a productive sales presence in markets
where a direct presence is not cost effective. During the quarter, the
company signed new customer agreements in Poland, Mexico, Russia, and
Japan.
* In the prior quarter the company announced a partnership with Integris
US to provide IT outsourcing and ASP software solutions called "Ross
eSourcing". "We believe that Ross eSourcing which provides
manufacturers with compelling solutions tailored to their technology
needs with minimal front-end investment provides a significant growth
opportunity," said Rod Jones, Ross' President. "Packaging a
streamlined implementation at a price that permits a matching of
investment with returns is the type of solution the market is
demanding." This new offering will provide Ross' customers a hosted,
subscription-based, alternative for their enterprise software
solutions.
* The company also continues to expand its eBusiness solutions and during
the quarter signed new eBusiness contracts with Gensci, Torrecid, and
Santa Barbara. In Europe, the eBusiness practice had its largest
growth quarter to date.
"We are pleased that our actions of the last several quarter have resulted in a return to profitability ahead of our expectations," said Pat Tinley, Ross' CEO. "As we predicted last quarter, the reduced operational costs combined with our improving market momentum will provide for balanced growth and more consistent profitability going forward. The management team believes that completed expense reduction actions, combined with programs designed to achieve both technology-based and process-based productivity improvements, will permit the company to continue to accelerate its rate of profitability." About Ross Systems
Ross Systems Inc. is a leading supplier of enterprise resource planning (ERP) and management software and e-business solutions for process manufacturing industries including food, beverage, chemical, pharmaceutical, paper and metals. The Ross Systems family of solutions includes the award- winning iRenaissance, a broad range of Internet-enabled enterprise resource planning and management applications for financials, manufacturing, advanced planning, supply-chain management, maintenance management, transportation management, materials management and human resources/payroll. Ross Systems' Resynt e-business product family includes digital marketplace applications spanning procurement, sales, Internet trading exchange connectivity, collaboration and employee productivity. More than 3,400 companies around the world use Ross Systems solutions in open systems environments including NT and UNIX. Ross Systems has offices around the world to serve its customers. Ross Systems Inc., Two Concourse Parkway, Suite 800, Atlanta, Ga. 30328, 770-351-9600, 1-877-ROSS-INC rossinc.com .
STATEMENTS IN THIS ANNOUNCEMENT WHICH EXPRESS THAT THE COMPANY "BELIEVES", "ANTICIPATES", "EXPECTS", "PLANS TO..." OR "SHOULD BEGIN TO..." AS WELL AS OTHER STATEMENTS WHICH ARE NOT HISTORICAL FACT, ARE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY AS A RESULT OF RISKS AND UNCERTAINTIES, INCLUDING QUARTERLY FLUCTUATION OF SOFTWARE PRODUCT LICENSE REVENUE, WEAKENING OF CUSTOMER DEMAND FOR ENTERPRISE SYSTEMS, THE COMPANY'S MAINTENANCE OF A MINIMAL BACKLOG, THE UNCERTAINTY OF DEMAND FOR NEW PRODUCT OFFERINGS AND OTHER RISKS AND UNCERTAINTIES DESCRIBED IN REPORTS FILED BY THE COMPANY WITH THE SEC, INCLUDING THE ANNUAL REPORT ON FORM 10-K FILED FOR THE YEAR ENDED JUNE 30, 2000 AND THE QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000.
Resynt and "The business of e-Commerce" are trademarks of Ross systems, Inc. Renaissance and GEMBASE are registered trademarks of Ross Systems, Inc. Throughout this release, software and hardware products are mentioned by name. In most, if not all, cases, these product names are claimed as trademarks by the companies that manufacture the products. It is not our intention to claim these names or trademarks as our own.
ROSS SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three months ended Six months ended
December 31, December 31,
2000 1999 2000 1999
Revenues:
Software product licenses $1,940 $5,077 $4,356 $11,047
Consulting and other
services 4,162 9,834 9,130 20,035
Maintenance 6,496 6,931 13,264 14,023
Total revenues 12,598 21,842 26,750 45,105
Operating expenses:
Costs of software product
licenses 325 781 809 1,933
Costs of consulting,
maintenance and other
services 3,596 11,025 10,114 21,905
Sales and marketing 3,463 5,426 8,506 10,640
Product development 3,076 2,311 6,121 4,765
General and administrative 1,215 1,870 2,752 3,867
Provision for uncollectible
accounts 283 835 835 1,236
Amortization of other assets 135 260 360 520
Non-recurring costs 0 0 790 0
Total operating
expenses 12,093 22,508 30,287 44,866
Operating earnings (loss) 505 (666) (3,537) 239
Other expenses, net (276) (324) (613) (676)
Earnings (loss) before
extraordinary item 229 (990) (4,150) (437)
Extraordinary expense, net
of tax effect 0 0 0 0
Income tax expense 62 83 (122) 291
Net earnings (loss) $167 $(1,073) $(4,028) $(728)
Net earnings (loss) per share
Basic $0.01 $(0.05) $(0.16) $(0.03)
Diluted * $0.01 $(0.05) $(0.16) $(0.03)
Shares used in per share
computation - diluted
Basic 25,690 23,336 24,432 23,155
Diluted 25,690 23,336 24,432 23,155
ROSS SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share related data)
December 31, June 30
2000 2000
ASSETS
Current assets:
Cash and cash equivalents $683 $2,010
Accounts receivable, less
allowance
for doubtful accounts and
returns 13,427 21,927
Prepaids and other current assets 2,354 1,501
Total current assets 16,464 25,438
Property and equipment 2,145 3,009
Computer software costs 32,139 32,637
Other assets 2,749 3,211
Total assets $53,497 $64,295
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of debt $8,653 $10,148
Accounts payable 7,718 6,949
Accrued expenses 4,242 5,459
Income taxes payable 207 248
Deferred revenues 13,335 17,974
Total current liabilities 34,155 40,778
Long-term debt, less current
installments 1,087 2,627
Shareholders' equity:
Common stock 26 24
Additional paid-in capital 86,918 85,780
Accumulated deficit (67,062) (63,034)
Accumulated comprehensive income
(deficit) (1,627) (1,880)
Total shareholders' equity 18,255 20,890
Total liabilities and
shareholders' equity $53,497 $64,295
ROSS SYSTEMS, INC. AND SUBSIDIARIES
SELECTED UNAUDITED QUARTERLY INFORMATION
(In thousands, except for per share data)
Rolling
12 Month
Total Quarter Ended
Dec. 31, Sept. 30, June 30, March 31,
2000 2000 2000 2000
Total revenues $61,648 $12,598 $14,152 $16,421 $18,477
Total operating expenses 73,383 12,093 18,193 21,130 21,967
Operating earnings (11,735) 505 (4,041) (4,709) (3,490)
Net earnings $(12,961) $167 $(4,195) $(5,080) $(3,853)
Net earnings per common
share - diluted $(0.54) $0.01 $(0.17) $(0.22) $(0.16)
Common and common equivalent
shares used
in computing diluted
earnings per share 24,176 25,690 24,119 23,480 23,416
/CONTACT: Robert B. Webster of Ross Systems, 770-351-9600, or bobwebster@rossinc.com / |
