Ouch !!!!!!!!!!!
MetaCreations Announces Fourth Quarter and 1997 Results in Line with Previous Estimates
CARPINTERIA, Calif.--(BUSINESS WIRE)--Jan. 29, 1998--MetaCreations Corp. (Nasdaq: MCRE) Thursday reported that net income was $1,003,000, or $0.04 per share, for the fourth quarter ended Dec. 31, 1997, compared to net income of $1.7 million, or $0.07 per share, for the fourth quarter ended Dec. 31, 1996, excluding acquisition costs in that quarter.
Fourth quarter 1997 net revenues were $16.1 million, compared to $15.9 million for the fourth quarter of 1996.
For the year ended Dec. 31, 1997, the company reported net revenues of $69.1 million compared to $62.9 million for the year ended Dec. 31, 1996.
Net income on a pro forma basis before acquisition and merger costs for the year 1997 would have been $5.9 million, or $0.24 per share, compared to net income on a pro forma basis before acquisition and merger costs of $8.7 million, or $0.38 per share, for 1996.
Including acquisition and merger costs of $16.2 million during the year, MetaCreations reported a net loss of $8.2 million, or $0.36 per share for the year ended Dec. 31, 1997.
As the company previously noted, net revenues for the fourth quarter were adversely affected by significantly lower than anticipated OEM and licensing sales, among other factors.
The company also noted that retail demand for its professional 2D and home photo digital imaging products was not as strong as anticipated during the fourth quarter holiday buying season. On the other hand, the company's professional 3D products showed strong growth in the fourth quarter of 1997 -- which included the shipment of Bryce 3D -- as compared to the fourth quarter of 1996.
International revenues represented 39% of net revenues in the fourth quarter of 1997 and 38% for the year 1997, compared to 41% for the year 1996. Lower OEM and licensing revenues resulted in weak European results in the fourth quarter of 1997, compared to the fourth quarter of 1996.
Demand for Windows and cross platform versions of MetaCreations' products represented 78% of net revenues in the fourth quarter of 1997, compared to 56% of net revenues in the fourth quarter of 1996. Revenues from Windows and cross platform versions of MetaCreations' products grew 39% during the year 1997 over 1996.
Gross profits increased to 84% of net revenues in the fourth quarter of 1997 and 83% for the year, compared to 81% for both the fourth quarter of 1996 and the year 1996. These increases were principally attributed to stronger overall OEM sales during the year and operating efficiencies achieved from the consolidation of the Fractal Design and MetaTools operations in June 1997.
"The company has now completed revising the 1998 operating plan, and the management team is implementing the various tasks. We are also making progress in our search for a new CEO and are optimistic that a successor will be announced within the next 45 days," stated Bill Lane, MetaCreations' Acting President and COO.
MetaCreations, the visual computing software company, designs, develops, publishes, markets and supports software tools and enabling technologies for creating, editing and manipulating computer graphic images, digital art and Internet/on-line content on the desktop for both professionals and consumers.
Working with distributors in North America, Europe and Asia, MetaCreations' professional and consumer software is available in more than fifty countries. The company's headquarters are located in Santa Barbara County at 6303 Carpinteria Ave., Carpinteria, Calif. 93013; telephone 805/566-6200; fax 805/566-6365.
The company also has significant operations in Scotts Valley, Calif., and Princeton, N.J. MetaCreations' International Operations Center is located at Wilson House, Fenian St., Dublin 2, Ireland. Tel: 353(1)662-9333; metacreations.com. -0- For a more detailed discussion of factors that affect the company's operating results, interested parties should review the company's SEC reports, including the MetaTools Inc. Annual Report on Form 10-K for the year ended Dec. 31, 1996, the MetaTools Inc. S-4 dated April 28, 1997, and Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30, and Sept. 30 of 1997. MetaCreations was formed as a result of the merger of MetaTools Inc. and Fractal Design Corp. in May 1997. -0- *T
MetaCreations Corp.
Consolidated Condensed Statements of Operations
(In thousands, except per share data)
Three Months Ended Year Ended
Dec. 31, Dec. 31, 1997 1996 1997 1996
Net revenues $ 16,065 $ 15,924 $ 69,074 $ 62,936 Cost of revenues 2,605 2,982 11,859 11,677 Gross profit 13,460 12,942 57,215 51,259
Operating expenses: Sales and marketing 7,890 7,712 32,043 28,936
General and administrative 1,766 1,779 6,410 5,883
Research and development 3,789 2,219 14,122 8,224
Write-off of acquired in
process technology and
other merger costs -- 14,449 16,185 17,047 Total operating expenses 13,445 26,159 68,760 60,090
Income (loss) from
operations 15 (13,217) (11,545) (8,831) Other income 741 839 3,157 3,397
Income (loss) before
provision (benefit) for
income taxes 756 (12,378) (8,388) (5,434) Provision (benefit) for
income taxes (247) 92 (210) 2,216 Net income (loss) $ 1,003 $ (12,470) $ (8,178) $ (7,650)
Net income (loss) per
common share $ 0.04 $ (0.60) $ (0.36) $ (0.37)
Weighted average number of
shares outstanding 25,263 20,895 22,965 20,590
MetaCreations Corp.
Consolidated Condensed Balance Sheets
(In thousands)
Dec. Dec.
31, 31, 1997 1996 Assets Current assets: Cash and short-term investments $ 50,002 $ 66,293
Accounts receivable, net 26,604 16,619
Inventories 1,667 1,512
Income taxes receivable and deferred income
taxes 5,958 2,827
Prepaid expenses 3,494 3,826
Total current assets 87,725 91,077
Property and equipment, net 7,577 5,581 Other assets 1,988 1,277
Total assets $ 97,290 $ 97,935
Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $ 8,831 $ 11,067
Royalties payable 1,217 756
Total current liabilities 10,048 11,823
Stockholders' equity 87,242 86,112
Total liabilities and stockholders' equity $ 97,290 $ 97,935 *T
--30--TJJ/la* MT/la
CONTACT:
MetaCreations Corp., Carpinteria
Terry Kinninger, Chief Financial Officer, 805/566-6321
Sallie Olmsted, Media Contact, 805/566-6263
Betty Franklin, Investor Relations, 805/566-6289
or
The Financial Relations Board
Edward Stansfield, General Information, 310/442-0599
Moira Conlon, Analyst Contact, 310/442-0599
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