Portal Software Reports Fourth Quarter and Fiscal Year 2002
CUPERTINO, Calif., Feb 20, 2002 (BUSINESS WIRE) -- Portal Software, Inc. (Nasdaq: PRSF chart, msgs) today reported financial results for the fourth quarter and fiscal year 2002 ended January 31, 2002. Revenue for the fourth quarter was $33.7 million, a 6% increase over the third quarter of fiscal 2002 and a 58% decrease from revenue of $81.1 million for the fourth quarter of fiscal 2001. License revenue for the fourth quarter was $16.1 million, a 62% increase over the third quarter fiscal 2002. Pro forma net loss for the fourth quarter of fiscal 2002 was $9.3 million, or 5 cents per share. This compares to a pro forma net loss of $26.6 million, or 15 cents per share in the third quarter fiscal 2002 and a pro forma net income of $6.9 million, or 4 cents per diluted share in the fourth quarter of fiscal 2001.
Pro forma amounts in Q4 include the reversal of excess sales commission accruals of $2.1 million and exclude certain charges including a restructuring charge of $10.4 million due to lowered expectations of sub-lease opportunities on vacated facilities, the write-off of goodwill and purchased developed technology of $3.3 million, and the amortization of goodwill and purchased developed technology of $1.0 million. Net loss for the fourth quarter fiscal 2002 was $24.0 million or 14 cents per share, in accordance with generally accepted accounting principles, compared to a net loss of $50.1 million or 29 cents per share for the third quarter fiscal 2002, and a net loss of $18.0 million or 11 cents per share for the fourth fiscal quarter of fiscal 2001.
Revenue for fiscal year 2002 ended January 31, 2002 was $154.8 million, a 42% decrease from revenue of $268.3 million for fiscal year 2001. Pro forma net loss for fiscal year 2002 was $85.9 million or 50 cents per share, compared to a pro forma net income of $22.6 million, or 13 cents per diluted share for fiscal year 2001. Pro forma amounts for fiscal 2002 exclude certain charges including a restructuring charge of $71.0 million, the write-off of purchased developed technology and goodwill of $199.2 million, amortization of acquisition-related costs of $35.4 million, and a write-off for impairment of equity investments of $4.0 million. Pro forma amounts for fiscal 2001 exclude amortization of acquisition-related costs of $24.9 million. Fiscal year ended January 31, 2002 net loss was $395.5 million or $2.30 per share, in accordance with generally accepted accounting principles, compared to a net loss of $2.3 million or 1 cent per share for the fiscal year ended January 31, 2001.
"We are pleased with the results of the fourth quarter which reflect the positive steps taken to refocus the business," said Chief Executive Officer John Little. "2001 was a year of tremendous change in the market, and we're gratified to see service providers select Portal's software as the solution that offers the flexibility and return on investment needed to be competitive in today's market."
Throughout the year, Portal continued to expand its strategic customer base with companies such as AOL Time Warner, Vodafone, Toshiba, Sprint, and Telus Mobility. The company also escalated efforts in the Asia Pacific region, announcing licensing agreements with market leaders such as Mweb, China's leading Internet service provider, China Mobile, China Telecom, and So-Net in Hong Kong.
In addition, Portal made significant investment in the platform, delivering architectural enhancements to Infranet(R) to support fully convergent services such as voice, data, and content. These sophisticated capabilities give providers a leading edge in customer satisfaction and retention, and help them maximize revenue potential. Customers such as Monaco Telecom and Vivendi Telecom Hungary have implemented the convergent capabilities of Infranet.
Architectural breakthroughs:
-- Infranet 6.2 and Infranet Wireless(TM): the first convergent
billing platform capable of supporting prepaid and postpaid
communications and content services with both transactional
real-time and high-performance batch processing for optimal
performance characteristics in a single convergent platform.
-- Infranet Content Connector(TM) (ICC): a scalable, secure, and
distributed billing interface that links communications
providers, content providers, and value-added service
providers in a value chain to build a vast network of content,
commerce and application partners.
-- Infranet Interconnect(TM): a convergent interconnection
billing system for fixed and mobile service providers.
-- Infranet Cable & Satellite: industry-leading support for cable
and satellite services including digital TV, pay-per-view,
video on demand, interactive TV, high-speed data, content,
telephony, and other services.
Business Outlook
The following statements are based on current expectations and are forward-looking. They are subject to a number of uncertainties and risks, including those discussed below, and actual results may differ materially.
Portal's business continues to be impacted by the slow pace of capital expenditures in the communications and content provider sectors. Continuing uncertainty makes it difficult to predict future business.
-- Portal currently believes that expected revenues in the first
quarter of fiscal year 2003 will be flat to slightly down to
the fourth quarter fiscal year 2002. Portal currently expects
to see sequential revenue growth following Q1 FY03
-- Total cost and expenses for the first quarter fiscal year 2003
are expected to be between $44 and $46 million.
-- Pro forma earnings for the quarter are expected to be at a
loss of 8 to 9 cents per share.
-- In the quarter, Portal expects to use less than $10 million of
cash for operations, approximately $6 million for
restructuring and other activities, and expects to have
approximately $113 million in cash and investments at the end
of the first quarter of fiscal year 2003. The company believes
it has sufficient cash to manage through current conditions.
Portal Software, Inc. does not intend to update these estimates during the quarter or to report on its progress toward them. Portal will not comment on, or update, these expectations to analysts or investors except by its next press release announcing its first quarter fiscal year 2003 results or by other public disclosure. Any statements by persons outside Portal speculating on the progress of the quarter will not be based on authorized Company information and should be assessed accordingly by investors.
Portal will discuss its fourth quarter and fiscal year 2002 results and other financial and business information in a conference call and an audio web cast on February 20, 2002, beginning at 2:00 p.m. pacific time. The web cast is available to all interested parties and can be accessed at www.companyboardroom.com.
About Portal Software, Inc.
Portal Software develops customer management and billing software for communications and content service providers. Portal's real-time, convergent platform enables its customers to rapidly define, deploy, and bill for services with flexible business models. Portal's software is licensed by a majority of the world's largest communications providers to deliver voice, data, video, and content services across wireless, wireline, cable, and satellite networks. Customers include Vodafone, AOL Time Warner, Deutsche Telekom, NTT, WorldCom, China Telecom, Reuters, Telstra, Sprint, China Mobile, Telenor Mobil, and France Telecom. For more information, visit www.portal.com.
Statements in this release concerning Portal Software, Inc.'s business outlook, future financial and operating results, future expense reductions and Portal's overall future prospects are forward looking statements that involve a number of uncertainties and risks. Factors that could cause actual events or results to differ materially include the following: General business and economic conditions and changes in the amount of technology spending by our customers and prospects; market acceptance of Portal's products and services; customer and industry analyst perceptions of Portal and its technology vision and future prospects; difficulties in implementing or realizing the benefits of cost reduction efforts, such as our ability to sublease excess office facilities in a timely and cost effective manner; sales force training and productivity; challenges associated with recruiting, training, and retaining skilled management and other personnel; ability to establish, maintain, and effectively implement relationships with system integrators and other strategic resellers and vendors; rapid technological changes; competitive factors; and unanticipated delays in scheduled product availability. Portal undertakes no obligation to update the information in this release in the event facts or circumstances subsequently change after the date of this press release.
Trademark
Infranet is a U.S. registered trademark, and Portal and the Portal logo are trademarks of Portal Software, Inc. All statements made in this press release are made only as of the date set forth at the beginning of this release. Portal undertakes no obligation to update the information in the event facts or circumstances subsequently change.
Pro Forma Statement of Operations
(In thousands, except per share data, unaudited)
Three Months Ended Year Ended
January 31, January 31,
--------------------- -------------------
2002 2001 2002 2001
Revenues
License fees $ 16,127 $ 54,049 $ 70,598 $180,334
Services 17,613 27,064 84,192 87,973
------- ------- ------- ------
Total revenues 33,740 81,113 154,790 268,307
Costs and expenses
Cost of license fees 54 1,698 1,349 4,917
Cost of services 10,748 21,462 61,182 59,555
Research and development 13,175 17,932 59,795 57,685
Sales and marketing 12,628 24,745 81,309 96,836
General and administrative 6,091 9,698 38,508 31,886
Amortization of deferred
stock compensation 353 721 1,992 3,726
----- ----- ----- -----
Total costs and expenses 43,049 76,256 244,135 254,605
Pro forma income (loss)
from operations (9,309) 4,857 (89,345) 13,702
Interest and other
income, net 1,497 3,271 8,120 12,898
------ ------ ------ ------
Pro forma income (loss)
before income taxes (7,812) 8,128 (81,225) 26,600
Provision for income taxes (1,527) (1,224) (4,720) (3,981)
------- ------- ------- -------
Pro forma net income (loss) $(9,339) $6,904 $(85,945) $22,619
========= ======== ========= ========
Items excluded from pro forma
net income (loss)
Reduction in intangibles
due to impairment (3,317) - (199,158) -
Amortization of
acquisition-related
costs (A) (967) (24,926) (35,377) (24,926)
Restructuring costs (10,397) - (71,020) -
Impairment of equity
investments - - (4,000) -
------- ------- ------- ------
GAAP net income (loss) $ (24,020)$ (18,022) $ (395,500) $ (2,307)
======== ========= ========= =========
Pro forma earnings per share
Basic pro forma net
income (loss) per share $ (0.05) $ 0.04 $ (0.50) $ 0.14
======== ======= ======== =======
Shares used in computing
basic pro forma net income
(loss) per share 174,219 168,190 171,989 159,865
======== ======== ======== =======
Diluted pro forma net
income (loss) per share $ (0.05) $ 0.04 $ (0.50) $ 0.13
======== ======= ======== =======
Shares used in computing
diluted pro forma net
income (loss) per share 174,219 179,031 171,989 174,839
======== ======== ======== =======
GAAP earnings per share
Basic net income (loss)
per share $ (0.14) $ (0.11) $ (2.30) $ (0.01)
======== ======== ======== ========
Shares used in computing
basic net income (loss)
per share 174,219 168,190 171,989 159,865
======== ======== ======== =======
Diluted net income
(loss) per share $ (0.14) $ (0.11) $ (2.30) $ (0.01)
======== ======== ======== ========
Shares used in computing
diluted net income
(loss) per share 174,219 168,190 171,989 159,865
======== ======== ======== =======
Notes:
A) Acquisition-related costs include amortization for goodwill and
other purchased intangibles.
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
Jan. 31, 2002 Jan. 31, 2001
------------- -------------
Assets
Current assets
Cash and short-term investments $ 113,499 $ 217,796
Accounts receivable, net 22,323 83,225
Deferred income taxes 2,733 5,045
Other current assets 5,083 11,302
--------- ---------
Total current assets 143,638 317,368
Property and equipment, net 43,146 54,209
Goodwill, net -- 229,301
Purchased research & development, net 7,315 12,938
Restricted long-term investments 15,414 3,466
Other assets 3,693 12,772
--------- ---------
Total assets $ 213,206 $ 630,054
========= =========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 4,079 $ 9,923
Accrued compensation 12,136 24,198
Other accrued liabilities 52,552 30,612
Short-term notes payable -- 2,250
Current portion of capital
lease obligations 587 2,093
Deferred revenue 37,466 66,937
--------- ---------
Total current liabilities 106,820 136,013
Notes payable and other long-term
liabilities 1,718 2,607
Long-term deferred income taxes 2,733 5,045
--------- ---------
Total liabilities 111,271 143,665
Stockholders' equity
Common stock 175 171
Additional paid-in capital 536,249 526,732
Accumulated other comprehensive
income and (loss) (709) 132
Notes receivable from stockholders (79) (127)
Deferred stock compensation (335) (2,653)
Accumulated deficit (433,366) (37,866)
--------- ---------
Total stockholders' equity 101,935 486,389
Total liabilities and stockholders' equity $ 213,206 $ 630,054
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