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Letter to Shareholders:
2000 First Quarter Report
It was a disappointing start of the new millennium for us. Revenue for the quarter ended March 31, 2000 decreased 8% to $12,340,000 from
$13,341,000 in the same quarter a year ago, and net income declined 57% to $948,000, or $.07 per diluted share compared to $2,230,000, or $.17
per diluted share for the first quarter of 1999.
Software license revenue decreased 26% to $5,550,000 for the first quarter of 2000 from $7,472,000 for the comparable period in 1999. Several
factors contributed to this decline. First, we did not see the expected significant business this quarter from construction companies wanting to upgrade
their software because of Y2K-related problems. Many industry experts had projected continuing demand from the Y2K issue well into the year
2000, but that activity has failed to materialize. Another factor was the significant slowdown in sales leads we experienced at the end of 1999, which
curtailed software orders. We also were delayed in our introduction of new products into the specialty contractor area. Finally, there was no
comparable order in the first quarter this year to what we experienced during last year?s first quarter, when the Company received the largest single
software order in its history, which was for more than $1,000,000.
Revenue from service fees, however, continued to grow, increasing 18% to $6,475,000 for the first quarter from $5,500,000 for the same period last
year. Revenue from service plans increased nearly 27% this year and consulting fees increased 9%. This was partially offset by lower fees from
training, primarily due to the decline in new software orders.
Operating expenses for the quarter increased 15% to $9,928,000 from $8,649,000 in 1999. The increase was primarily due to an increase in
personnel and outside service costs in the product development, client services and general and administrative areas. Operating expenses for the
quarter were reduced by $633,000 of capitalized software development costs related to new software products.
In March, the Board of Directors authorized management to repurchase up to 1,300,000 shares of the Company?s common stock in the open
market. This action by the Board reflects its confidence in the Company?s future prospects and the outstanding value of the Company?s stock at
current market prices.
Our recently announced acquisition of a service billing application will allow us to compete more effectively in the specialty contractor market, a very
significant segment within the construction industry, commencing in the third quarter. We are also working on significant, new software products that
will propel us into the Project Management/ E-Commerce market for the construction industry.
Curtis Peltz
President and CEO
Timberline Software Corporation
April 2000 |
