.23 v .21 estimate.
Wednesday October 20, 5:06 pm Eastern Time
Company Press Release
AremisSoft Reports Record Third Quarter Results
Revenue Up 46.2% To $20.3 Million
Net Income Increases 153% to $3.3 Million
NEW YORK--(BUSINESS WIRE)--Oct. 20, 1999--AremisSoft Corporation (Nasdaq:AREM - news) today announced its financial results for the third quarter and nine months ended September 30, 1999. The Company reported revenue of $20.3 million, a 46.2% increase from $13.9 million for the third quarter of 1998, and a sequential increase of 21.1% from $16.7 million in the second quarter of 1999. Net income for the quarter increased 153.2% to $3.3 million, or $0.23 per diluted share, as compared to $1.3 million, or $0.13 per diluted share, for the year-ago quarter. Net income increased 28.7%, sequentially, from $2.5 million in the second quarter.
Software license revenue increased 47.0% to $11.1 million for the three months ended September 30, 1999, from $7.5 million in the third quarter of 1998, and increased 24.5% from $8.9 million in the second quarter of 1999. Maintenance and services revenue was $8.5 million, a 46.2% increase from $5.8 million in the year-ago quarter, and a 28.8% sequential increase from $6.6 million in the first quarter. Hardware sales increased 35.5% to $721,000 from $532,000 in the year ago period, but decreased 42.9% sequentially, from $1.3 million, reflecting management's success in reducing sales and installations of lower margin third party hardware.
``We had a phenomenal quarter despite the Y2K-related market dynamics faced by other software vendors,' stated Roys Poyiadjis, President. ``All four divisions of AremisSoft continued to experience significant revenue growth. The Manufacturing and Hospitality divisions did particularly well with growth rates of 51% year over year. Our third quarter performance was fueled by our ability to further penetrate our existing client base with new and higher margin products and services. At the same time, we were successful in landing contracts with new customers in mature international regions while furthering expansion into emerging markets, particularly in Eastern Europe and the Middle East.
``During the third quarter, we targeted a significant part of our R&D effort toward our overall Internet strategy. We continued to launch additional modules of our products to address our clients needs for Internet-enabled solutions. We are also considering partnerships and acquisitions with other Internet product providers to enhance our Internet product portfolio.'
Revenue for the nine months ended September 30, 1999 was $50.1 million, 38.2% higher than $36.3 million reported in the prior comparable period. Net income was $6.6 million, an 115.7% increase from $3.1 million in the prior comparable period, and earnings per diluted share for the nine months ended September 30, 1999 increased 74.2% to $0.54 from $0.31.
AremisSoft develops, markets, implements and supports enterprise-wide applications software targeted at mid-sized organizations in the manufacturing, healthcare, hospitality and construction industries. The Company's software products help streamline and enhance an organization's ability to manage and execute mission-critical functions such as accounting, purchasing, manufacturing, customer service and sales and marketing. AremisSoft reported total revenue of $50.1 million for the nine months ended September 30, 1999 and net income of $6.6 million for the same period. AremisSoft has a total of 470 employees, with sales in 10 countries and a customer base in excess of 5,000. The Company also operates a software development and support facility in India, with 120 employees, which provides significant organizational efficiencies and cost advantages in software development and support.
Cautionary Statement for Purposes of the ``Safe Harbor' Provisions of the Private Securities Litigation Reform Act of 1995: All statements, other than historical facts, included in the foregoing press release regarding the Company's financial position, business strategy, and plans of management for future operations are ``forward looking statements.' These statements are based on management's beliefs and assumptions, and on information currently available to management. Forward looking statements include, but are not limited to, statements in which words such as ``expect,' ``see,' ``anticipate,' ``intend,' ``plan,' ``believe,' ``estimate,' ``consider,' or similar expressions are used. Forward looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions, including the risks discussed under ``Risk Factors' in the Company's prospectus included in its registration statement on Form S-1, SEC File No. 333-58351, all of which are incorporated herein by reference. The Company's actual results and stockholder values may differ materially from those anticipated or expressed in these forward looking statements. Many of the factors that will determine these results and values are beyond the Company's ability to control or predict. Readers of this press release are cautioned not to put undue reliance on any forward looking statement. The Company undertakes no obligation to publicly update these forward looking statements, whether as a result of new information, future events or otherwise.
AremisSoft Corporation
Consolidated Statements of Operations (unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
Revenues
Software licenses $11,071 $7,532 $25,321 $18,175
Maintenance and services 8,486 5,804 21,350 15,243
Hardware and other 721 532 3,461 2,852
Total revenues 20,278 13,868 50,132 36,270
Cost of revenues
Software licenses 1,373 735 3,150 1,855
Maintenance and services 2,732 1,379 6,778 3,776
Hardware and other 566 322 2,487 2,023
Amortization of purchased
software and capitalized
capitalized software
development costs 58 17 182 51
Total cost of revenues 4,729 2,453 12,597 7,705
Gross profit 15,549 11,415 37,535 28,565
Operating expenses:
Sales and marketing 7,329 5,936 17,968 14,386
Research and development 1,205 1,518 3,866 4,164
General and administrative 1,773 1,269 4,457 3,348
Amortization of intangible
assets 88 100 264 241
Total operating expenses 10,395 8,823 26,555 22,139
Profit from operations 5,154 2,592 10,980 6,426
Other income
Interest expense, net 290 483 1,138 1,415
Income before income taxes 4,864 2,109 9,842 5,011
Income tax expense 1,605 822 3,247 1,953
Net income $3,259 $1,287 $6,595 $3,058
Basic net income per share $0.24 $0.13 $0.55 $0.31
Diluted net income per share $0.23 $0.13 $0.54 $0.31
Basic weighted average
shares outstanding 13,530 10,000 12,038 9,762
Diluted weighted average
shares outstanding 14,200 10,015 12,335 9,777
AremisSoft Corporation
Consolidated Balance Sheets
(In thousands, except per share data)
As of As of
September 30, December 31,
1999 1998
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $6,537 $149
Accounts receivable, less allowances for
doubtful accounts of $639 at
Dec. 31, 1998 and Sept. 30, 1999 17,746 16,166
Other receivables 1,456 903
Inventory 711 787
Deposit paid on service and
maintenance contracts 945 3,531
Prepaid expenses and other assets 2,213 1,135
Total Current Assets 29,608 22,671
Loan receivable-related party 1,898 1,886
Property and equipment, net 1,855 1,774
Purchased and developed software, net of
accumulated amortization of
$6,075 and $6,257 at Dec. 31, 1998 and
Sept. 30, 1999, respectively 1,102 1,284
Intangible assets, net of accumulated
amortization of $13,036 and $13,300
at Dec. 31, 1998 and Sept. 30,
1999, respectively 73 337
Total assets $34,536 $27,952
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $2,862 $3,669
Accrued payroll taxes 524 586
Accrued value-added taxes 301 1,649
Accrued income taxes 5,306 2,059
Current portion of capital lease obligations 35 55
Other accrued expenses 475 2,946
Bank loans and short term demand facility - 15,530
Deferred revenue 4,793 6,693
Total current liabilities 14,296 33,187
Long-term debt 7,908 -
Loan and accrued interest payable-related
party - 1,781
Capital lease obligations, less
current portion 67 93
Total liabilities $22,271 $35,061
Stockholders' equity (deficit):
Series-A convertible preferred stock, par
value $0.001; authorized 2,100 shares;
no shares issued and outstanding:
liquidating preference at par value - -
Series-B convertible preferred stock, par
value $0.001; authorized 3,500 shares;
no shares issued and outstanding,
liquidating preference at par value - -
Common stock, par value $0.001; authorized
75,000 shares; 10,000 shares
and 13,530 issued and outstanding
at Dec 31, 1998 14 10
Additional paid-in capital 39,971 27,107
Accumulated deficit (25,606) (32,201)
Accumulated other comprehensive
income (loss) (2,114) (2,025)
Total stockholders' equity (deficit) 12,265 (7,109)
Total liabilities and stockholders'
equity (deficit) $34,536 $27,952
AremisSoft Corporation
Consolidated Statements of Cash Flows
(In thousands, except per share data)
For nine For nine
months ended months ended
September 30, September 30,
1999 1998
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $6,595 $3,058
Adjustments to reconcile net income
to net cash provided in
operating activities:
Depreciation 979 432
Amortization and write-off of
capitalized software and
intangible assets 446 292
Changes in assets and liabilities:
Accounts receivable (1,580) (8,906)
Other receivables (553) (2,027)
Inventory 76 124
Deposits paid on service and
maintenance contracts 2,586 -
Prepaid expenses and other assets (1,078) 353
Accounts Payable (807) 4,033
Deferred revenue (1,900) (1,086)
Accrued taxes payable 1,837 (778)
Other accrued expenses (2,491) (2,127)
Net cash provided (used) in
operating activities 4,110 (6,632)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (1,060) (585)
Capitalized software development costs - (38)
Net cash (used) in
investing activities (1,060) (623)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of stock 12,868 9,302
Principal repayments of long-term
borrowings (7,622) (1,480)
Loan from related party (1,793) -
Principal payments of capital
lease obligations (26) (96)
Short-term demand facility - 8
Net cash provided by
financing activities 3,427 7,734
Net increase in cash and
cash equivalents 6,477 479
Effect of foreign currency
exchange rates on cash and
cash equivalents (89) (262)
Cash and cash equivalents, at
beginning of period 149 239
Cash and cash equivalents, at end
of period $6,537 $456
Supplemental disclosure:
Interest paid $1,138 $1,415
--------------------------------------------------------------------------------
Contact:
AremisSoft Corporation
Roys Poyiadjis
President
212-765-7383
roys.poyiadjis@aremissoft.com
or
Morgen-Walke Associates
Michele Katz/Connie Bienfait
Press: Brian Maddox
212-850-5600 |
