TREV news alert:
Wednesday July 22, 2:08 pm Eastern Time
Company Press Release
SOURCE: TREEV, Inc.
TREEV Reports Sales Up 58% for the Second Quarter of
1998; Company Reduces Operating Loss from $3.4
Million to $995,000; Net Loss Per Share Cut to $0.05
HERNDON, Va., July 22 /PRNewswire/ -- TREEV, Inc. (Nasdaq: TREV - news) today announced financial results for the quarter and the six months ended June 30, 1998. Sales for the second quarter of 1998 were $7.9 million compared to $5.0 million in the same quarter of last
year, an increase of 58%. The operating loss was cut from $3.4 million in the second quarter of 1997 to $995,000 in the second quarter of 1998. The net loss was reduced from $4.3 million, or $0.17 per share, in the second quarter of last year to a net loss of $2.8 million, or $0.10 per share, in the second quarter of this year.
The 1998 second quarter EPS figure includes the one-time $1.5 million charge that was taken in association with the restructuring announced in May. Excluding the one-time charge, the Company's net loss would have been $1.3 million and its net loss per share would have been
$0.05.
According to Jim Leto, chairman and CEO, ''The record revenues this quarter prove that our investment in sales and marketing have paid off and that our new, integrated document management product suite is generating growing interest among our customers. Our potential is
only beginning to be realized as the Internet gains capacity and the market expands its need for storing and managing a wide range of data, particularly unstructured data such as engineering drawings, photographs and video.
''We've also made great inroads in streamlining our costs, resulting in a profit margin increase from 38% in the second quarter of 1997 to 52% in the second quarter of this year,'' he continues. ''The
combination of our top-line growth, continued cost controls, and the restructuring we announced in May to reduce annual costs by $4.8 million have put us in a great position to achieve our primary
goal-profitability by the latter part of this year.''
The Company will host a conference call for investors to review the financial and operational highlights for the quarter. The call is scheduled for 11 a.m. Eastern time on Thursday, July 23. The
conference call phone number is 703-925-2511.
Financial Results
Revenues
-- For the quarter, product revenues increased dramatically, from
$2.7 million in the second quarter of 1997 to $5.1 million in the second quarter of this year-an 85% increase. The product revenue rise was attributable to increased sales in all of the Company's product lines.
-- Service revenues increased 25%, from $2.3 million in last year's second quarter to $2.8 million in the same quarter of this year. The increase in service revenues was due to continued emphasis on custom development, professional services and maintenance.
-- Total revenues increased from $10.5 million for the first half of 1997 to $14.1 million for the same period of 1998.
-- For the six-month period, product revenues increased 46%, from
$5.9 million in the first half of last year to $8.6 million in the same period this year.
-- Service revenues for the same period rose from $4.6 million to
$5.5 million, an increase of 19%.
Gross Margins/Operating Loss
-- The product gross margin increased from 57% in the second quarter of
1997 to 64% in the second quarter of 1998. This was due to the
increased sales mix of the Company's internally developed software
products. The service gross margin during the comparable period rose
from 14% to 32%, an increase attributable to the rise in custom
development, professional services and maintenance.
-- Sales and marketing expenses increased from $2.8 million in the second
quarter of 1997 to $3.1 million in the second quarter of this year,
reflecting the Company's increased investment in this activity in order
to accelerate revenue growth.
-- General & administrative costs were reduced from $1.3 million in the
second quarter of last year to $1.1 million in the comparable quarter
of 1998. Product development expenses declined as well, from $1.1
million in the second quarter of 1997 to $965,000 in the same quarter
of 1998.
-- If the Company's French subsidiary Dorotech (sold in December 1997) had
been included in last year's results, the Company's net loss would have
been $4.4 million, or $0.18 per share, for the quarter ended June 30,
1997. The 1997 quarterly results, represented in this news release and
in the attached income statement, have been restated to adjust for the
divestiture.
-- For the first six months of 1998, the gross profit margin was 47%
versus 40% for the same period of 1997. The product gross margin was
58% in the first half of 1998, compared to 60% in the first half of
1997, and the service gross margin improved from 14% in the first six
months of last year to 31% for the comparable period this year.
Cash
-- On June 30, 1998, the Company had $4.1 million in cash and equivalents,
compared to $3.8 million on December 31, 1997.
Operational Highlights
Product Sales
-- The Company signed a three-year, $6 million contract in the second
quarter. This is one of TREEV's largest single contracts, and will
expand the implementation of its products with an existing
telecommunications customer.
-- Several new contracts were announced during the second quarter,
including an $841,000 contract with Warga Media in Malaysia. The
Company continued to be successful in building its customer base,
signing contracts with more than 50 new customers during the quarter,
including Bear Stearns, Bancorp South, Farm Credit Services of the
Midlands, FLCA and the U.S. Fish and Wildlife Service. The Company
also signed its first contract with EDS for its public sector group.
Product Development/Recognition
-- The U.S. Patent and Trademark Office announced that the Company's
workflow technology had been patented; this is the Company's second
patent.
-- DocuLabs, an independent testing organization, evaluated three of
TREEV's four products, with a number of positive results. The
Company's imaging product, DocuTREEV(TM) was rated the top product in
two out of three assessment categories against six other comparable
products, including one from competitor Filenet (Nasdaq: FILE - news). Its
COLD product, DataTREEV(TM) was the leader in one of the three
assessment categories against a field of nine other competitors.
New Business Partners
-- During the second quarter of 1998, the Company entered into partnership
agreements with StorageTek and Scangraphics.
TREEV(R) is a leading developer and marketer of integrated document management solutions.
The Company's integrated software suite allows businesses to quickly and easily build or
customize client/server and Web- based document management applications. TREEV's
standards-based component architecture consists of four core technologies: DocuTREEV(TM)
(imaging), DataTREEV(TM) (COLD), AutoTREEV(TM) (workflow) and OmniTREEV(TM)
(document management). Built on its award-winning patented object management technology, the
TREEV suite of software products extends a company's investment in legacy and client/server
applications by providing users with flexible, cost-effective document management solutions. The
Company's software is marketed through partners such as Sybase (Nasdaq: SYBS - news),
Lockheed Martin (NYSE: LMT - news), ALLTEL (NYSE: AT - news), EDS (NYSE: EDS -
news) and Intergraph Corporation (Nasdaq: INGR - news).
''Safe Harbor'' statement under the Private Securities Litigation Reform Act of 1995: Except for
historical information, all of the statements, expectations and assumptions contained in the
foregoing are forward looking statements that involve a number of risks and uncertainties. Although
the Company has used its best efforts to be accurate in making these forward looking statements,
it is possible that the assumptions made by management are not necessarily the most likely and
may not materialize. In addition to those factors, other important factors that could cause actual
results to differ materially include the following: business conditions and the amount of growth in the
computer industry and general economy; competitive factors; ability to attract and retain
customers; ability to attract business partners and maintain and increase their levels of sales and
marketing; ability to attract and retain personnel, including key management personnel; and the risk
factors set forth from time to time in the Company's SEC reports, including but not limited to its
annual report on Form 10-K and its quarterly reports on Forms 10-Q.
TREEV, INC.
PRO FORMA STATEMENTS OF OPERATIONS
(Excluding Results of Dorotech in 1997 and Restructuring Costs)
(In thousands, except per-share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
(Unaudited) (Unaudited)
Revenues:
Products $5,085 $2,749 $8,636 $5,911
Services 2,844 2,271 5,493 4,626
7,929 5,020 14,129 10,537
Cost of sales:
Products 1,846 1,182 3,661 2,357
Services 1,941 1,951 3,786 3,968
3,787 3,133 7,447 6,325
Gross margin 4,142 1,887 6,682 4,212
Gross margin % 52% 38% 47% 40%
Sales and marketing 3,103 2,800 5,837 5,576
General and administrative 1,075 1,327 2,250 2,546
Product development 965 1,099 1,961 1,898
Other income (expense) 6 (77) (62) (62)
5,137 5,303 10,110 10,082
Operating loss (995) (3,416) (3,428) (5,870)
Preferred stock preferences (337) (930) (674) (1,906)
Net loss applicable to common shares$(1,332)$(4,346) $(4,102) $(7,776)
Net loss per common share $(0.05) $(0.17) $(0.15) $(0.31)
Weighted average shares 29,331 24,964 27,316 24,715
Note: These pro forma statements of operations are intended to disclose the results of operations
for the Company's continuing operations and therefore exclude the results of the Company's
former subsidiary Dorotech, which was sold during the fourth quarter of 1997. The one-time
charges associated with the restructuring in May 1998 also have been excluded from the 1998
second quarter and first half results. Refer to the earnings release, which is part of this document,
for the earnings per share results from the second quarter and first half of 1997 that include
Dorotech and to the Company's quarterly report on form 10-Q, which the Company expects to
file before the end of the day on July 23, 1998.
TREEV, INC.
CONDENSED BALANCE SHEETS
(In thousands)
June 30, December 31,
1998 1997
(unaudited)
ASSETS
Cash and cash equivalents $4,092 $3,816
Accounts and notes receivable, net 7,954 8,569
Notes receivable Dorotech sale -- 7,000
Other current assets 1,290 1,830
Total current assets 13,336 21,215
Other assets 5,136 5,645
$18,472 $26,860
LIABILITIES AND EQUITY
Current liabilities $11,320 $11,235
Long term-debt 77 1,108
Redeemable Series F Preferred Stock -- 6,548
Stockholders' equity 7,075 7,969
$18,472 $26,860
SOURCE: TREEV, Inc.
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