PRGS Reports Second Quarter Results and Three-For-Two Stock Split +3 1/8 at open...still climbing.
Company's Growth Fueled by High Demand for Packaged Software
Applications
BEDFORD, Mass.--(BUSINESS WIRE)--June 17, 1998--Progress Software Corporation
(NASDAQ:PRGS - news), a leading supplier of application development tools, database
technology and support services for business applications, announced today record revenue for the
second quarter ended May 31, 1998. Revenue for the quarter increased 27 percent to $57.1
million, up from $44.8 million in the same quarter last year. Operating income for the second quarter
of 1998 was $5.9 million and net income was $4.7 million, up from $1.4 million and $2.0 million,
respectively, in the second quarter of 1997. Diluted earnings per share of $0.36 represented an
increase of 125 percent over the $0.16 achieved in the same period last year.
Progress Software also announced its board of directors has approved a three-for-two stock split
that will be effected as a 50 percent stock dividend. Shareholders of record on June 29, 1998 will
be entitled to one additional share for every two shares held on that date. The distribution date will
be July 13, 1998.
For the six months ended May 31, 1998, revenue increased 23 percent to $111.3 million from
$90.2 million in 1997. Operating income increased 202 percent to $10.8 million from $3.6 million in
1997. Net income increased 104 percent to $8.2 million from $4.0 million in 1997 and diluted
earnings per share increased 110 percent to $0.65 from $0.31 in 1997.
The company's revenue in the second quarter and first six months was adversely affected by the
strengthening of the U.S. dollar during 1998 as compared to 1997. On a constant currency basis,
revenue in the second quarter grew by 31 percent as compared to the second quarter of 1997. On a
constant currency basis, revenue in the first six months of 1998 grew by 28 percent as compared to
the first six months of 1997.
During the second quarter, Progress Software purchased 264,342 shares of its stock at a cost of
$8.4 million. Since beginning its share buybacks in the first quarter of 1996, the company has
purchased approximately 2.8 million shares of its common stock at an average price of $18.78. The
company's cash and short-term investments at the end of the second quarter totaled $96.3 million.
The company's accounts receivable days sales outstanding was 58 days at the end of the second
quarter of 1998 as compared to 62 days a year ago.
The surge in demand for packaged software helped fuel revenue growth during the quarter,
according to Joseph W. Alsop, president of Progress Software. ''Industry analysts such as IDC
estimate that the size of the packaged applications market will more than double by the year 2002,
and Progress Software is in an ideal position to take advantage of that growth. Our primary selling
model is to partner with application providers and deliver the technology they need to build
packaged solutions that are fast, easy to install and inexpensive to maintain. Mid-sized businesses in
particular are rapidly adopting these partner-built applications which, combined with our application
development tools, offer a 'buy-build-both' approach to rapidly implementing customized business
solutions.''
In The Quarter
During the second quarter, Progress Software made several significant announcements. In May, the
company began shipping the latest version of its popular application server and development tool for
Java, Apptivity(TM) 2.1. Apptivity has garnered extremely favorable reviews in the press, and this
version incorporates a number of new features, such as firewall tunneling, that make it an excellent
choice for companies that want to create mission-critical business applications for Internet
environments.
The company also announced that its Apptivity product will be the first Java business application
development and deployment tool to support the Enterprise JavaBeans 1.0 specification. This Sun
Microsystems' technology standard will make it easier for Apptivity users to create, deploy and
manage large-scale Java business applications, consisting of JavaBeans distributed across clients and
servers, within the framework of their existing systems.
In March, Progress Software appointed Scott McGregor to its Board of Directors. Mr. McGregor
is currently senior vice president and general manager of the Emerging Business Unit for Philips
Semiconductors, and is responsible for directing that company's innovative product groups.
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