Well Here it is.
SLM Software Triples 1998 Revenues
TSE Symbol: ESP
TORONTO, May 19 /CNW/ - SLM Software Inc., a leading global provider of
electronic financial transaction solutions for the e-commerce market, today
announced its financial results for the fiscal year ended December 31, 1998.
In the past year, SLM has doubled the size of its operations, greatly expanded
its e-commerce solution suite and extended its market reach into the U.S.
Acquisitions were a driving force behind this growth and have given the
Company the breadth of products its customers need, and future revenue,
particularly a higher recurring revenue stream. SLM also adopted a
conservative accounting approach as expected for the U.S. market and
consistent with its increasing recurring revenue business.
''1998 was an aggressive growth year for SLM. Through strong growth in
our core business, partnerships and focused acquisitions, we have built a
sizeable organization with an unrivaled breadth of e-commerce solutions for
the financial service, health care, retail and government sectors,'' said
Govin Misir, Chairman and CEO, SLM Software Inc. ''We now have over 600
employees, a solution set of 10 products and 30 offices worldwide. Growth from
existing businesses continued to drive our strong performance, rising 96% from
1997. Acquisitions and enriching partnerships with Cognos and JetForm rounded
out our product suite. Through our Bankline acquisition in September, 1998, we
also achieved an immediate 5% share of the U.S. market, and aim to leverage
this strong foothold to drive greater expansion in that region.''
BUILDING RECURRING REVENUE
In 1998, SLM changed its revenue recognition policy to reflect the
changing nature of its business - greater recurring revenue and
transaction-fee based business as well as increased long-term revenues from
its license contracts. As a result, contracted revenue of $13.3 million from
long-term license contracts will be recognized in 1999, with subsequent
revenues from these contracts being recognized as they come due. This
treatment eliminates long-term receivables. Accordingly, 1997 and 1996
financial results have been restated to reflect this accounting treatment.
Revenues for the year ended December 31, 1998 more than tripled to $36.8
million (1997: $11.8 million), 63% of which was attributable to SLM's core
business and 37% to new acquisitions. In 1998, recurring revenue represented a
higher percentage and amounted to 39% of total sales or $14.4 million (1997:
17% or $2.0 million), and is expected to be at least 60% on a going forward
basis. This increase in recurring revenue was largely due to the acquisition
of Bankline Holdings, Inc., adding transaction processing services revenue of
$10.6 million for the period commencing in the fourth quarter of 1998. The
Company has accumulated approximately $50 million in contracted backlog
recognizable in 1999, providing predictable revenue stream. SLM's North
American sale base continued to increase as planned, reaching 53% in 1998 from
38% in 1997.
Net income for the year was $1.3 million ($0.11 per share) compared $2.3
million last year ($0.25 per share). This decrease was attributed to the above
mentioned change in accounting for long-term contracts resulting in the
deferral of $13.3 million in future revenue to be recognized in 1999 and
beyond, as well as integration costs of acquired companies. SLM believes it
will be able to return to its targeted margin levels around 20% in 1999, as it
achieves operational synergies and realizes cross selling opportunities of its
acquisitions.
''We were recognized among the top Canadian software companies, ranking
18th in revenues according to Branham 200 reported in the March 1999 edition
of the Financial Post Magazine. In 1999, we will continue to stay our proven
course, and build on our substantial growth. We will further expand our global
market share, with an emphasis on the U.S., through continued growth in our
core business, partnerships and selected in-market acquisitions. With the
management bandwidth, breadth of our solution suite and our unique position to
leverage e-commerce opportunities, we are poised to realize greater market
leadership,'' added Mr. Misir.
''With the acquisition of Bankline, our business has grown considerably
and now comprises a greater percentage of recurring revenue. Our 1998 results
are reflective of this change in the nature of the company's business and our
new accounting approach effectively captures the revenue visibility inherent
in the new model,'' said Eddie Law, Chief Financial Officer, SLM Software Inc.
''Furthermore, we expect that 1998 acquisitions will begin to generate
long-term benefits in 1999. For example, opportunities to cross sell our
solutions to existing customers of our acquired companies, such as our ATM
services and a full service e-commerce network to Bankline's 400 financial
institution customers, is expected to result in considerable revenue and
earnings in 1999 and thereafter.''
Annual Meeting
The Company's annual meeting has been scheduled for Monday, June 21, 1999
at 11:30 a.m. in the Civic Ballroom, Sheraton Hotel, 123 Queen Street West,
Toronto, Ontario.
About SLM Software Inc.
Founded in 1986, Toronto-based SLM Software Inc. is a single source
global provider of end-to-end electronic commerce solutions for financial
institutions, health care and retail organizations using open system
technologies. SLM is the first to offer the financial market the
compatibility, flexibility and upward scalability necessary for global
electronic service delivery. Its ESP-Link(TM) suite of totally secure
e-commerce solutions include ATM networks and services; point-of-sale; debit,
credit and smart cards; and Internet and personal computer banking, including
cheque imaging and core processing. SLM, with over 600 employees and 30
offices worldwide, serves 1,500 customers in 52 countries on five continents.
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SLM SOFTWARE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31 1998 1997
Restated
-------------------------------------------------------------------------
REVENUES
License fees $ 19,001,972 $ 8,800,441
Post contract services 3,800,514 1,951,255
Installation and other services 3,405,288 1,020,516
Transaction processing services 10,585,782 -
------------- -------------
36,793,556 11,772,212
------------- -------------
EXPENSES
Data centre operation 8,755,889 -
Selling, marketing and operating 11,811,820 5,224,468
General and administrative 9,938,564 3,031,732
Interest on long term debt 411,279 60,254
Amortization 4,851,305 1,459,827
------------- -------------
s 35,768,857 9,776,281
------------- -------------
INCOME - Before income taxes 1,024,699 1,995,931
INCOME TAXES (293,143) (323,475)
------------- -------------
NET INCOME $ 1,317,842 $ 2,319,406
------------- -------------
------------- -------------
BASIC EARNINGS PER SHARE $ 0.11 $ 0.25
------------- -------------
------------- -------------
FULLY DILUTED EARNINGS PER SHARE $ 0.11 $ 0.24
------------- -------------
------------- -------------
SLM SOFTWARE INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
s FOR THE YEAR ENDED DECEMBER 31 1998 1997
Restated
-------------------------------------------------------------------------
RETAINED EARNINGS - Beginning of year
As previously reported $ 8,063,511 $ 3,960,091
Restatement of prior years (3,526,764) (1,742,750)
------------- -------------
Retained earnings - As restated 4,536,747 2,217,341
Net income 1,317,842 2,319,406
------------- -------------
RETAINED EARNINGS - End of year $ 5,854,589 $ 4,536,747
------------- -------------
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SLM SOFTWARE INC.
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31 1998 1997
Restated
-------------------------------------------------------------------------
A S S E T S
-----------
CURRENT
Cash $ 46,404 $ 2,118,328
Short term investments 6,177,747 -
Accounts receivable 30,999,230 10,916,290
Prepaid expenses and sundry assets 3,702,197 1,960,798
Income taxes recoverable 160,432 1,134,773
------------- -------------
41,086,010 16,130,189
SOFTWARE DEVELOPMENT COSTS 9,774,356 2,410,377
CAPITAL ASSETS 42,987,228 7,544,671
FUTURE INCOME TAX ASSET 8,488,168 1,668,116
------------- -------------
$102,335,762 $ 27,753,353
------------- -------------
------------- -------------
L I A B I L I T I E S
---------------------
CURRENT
Bank indebtedness $ 9,482,808 $ 2,468,303
Accounts payable and accrued
liabilities 15,465,114 3,273,435
Unearned revenues 4,911,915 660,991
Current portion of obligations under
capital leases 1,282,178 113,805
Current portion of long term debt 2,609,883 103,000
------------- -------------
33,751,898 6,619,534
OBLIGATIONS UNDER CAPITAL LEASES 1,396,780 55,785
LONG TERM DEBT 22,462,271 525,000
DEFERRED TAX BENEFIT ON ACQUISITION 4,604,606 -
------------- -------------
62,215,555 7,200,319
------------- -------------
S H A R E H O L D E R S' E Q U I T Y
-------------------------------------
CAPITAL STOCK 34,265,618 16,016,287
RETAINED EARNINGS 5,854,589 4,536,747
------------- -------------
40,120,207 20,553,034
------------- -------------
$102,335,762 $ 27,753,353
------------- -------------
------------- -------------
SLM SOFTWARE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31 1998 1997
Restated
-------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,317,842 $ 2,319,406
Items not affecting cash
Amortization of software
development costs 2,830,257 1,146,786
Amortization of capital assets 2,021,048 313,041
Future income tax expense (759,762) (1,308,747)
------------- -------------
5,409,385 2,470,486
Net change in non-cash operating
items not listed below (3,408,765) (8,060,834)
------------- -------------
CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES 2,000,620 (5,590,348)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Long term debt 12,122,180 (1,091,072)
Issuance of capital stock, net of
share issue costs 1,963,821 14,809,674
Obligations under capital leases 620,074 (111,920)
Convertible term bank loan - (750,000)
Shareholder advances, net - (543,397)
------------- -------------
CASH FLOWS PROVIDED BY FINANCING
ACTIVITIES 14,706,075 12,313,285
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Software development costs, net (8,952,937) (2,427,851)
Purchase of capital assets, net (8,869,619) (408,366)
Acquisition of subsidiaries, net
of cash acquired (6,492,887) (2,923,431)
Purchase of assets (1,477,681) -
------------- -------------
CASH FLOWS USED IN INVESTING ACTIVITIES (25,793,124) (5,759,648)
------------- -------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (9,086,429) 963,289
CASH AND CASH EQUIVALENTS -
Beginning of Year (349,975) (1,313,264)
------------- -------------
CASH AND CASH EQUIVALENTS -
End of Year $ (9,436,404) $ (349,975)
------------- -------------
------------- -------------
CASH AND CASH EQUIVALENTS CONSIST OF:
Cash $ 46,404 $ 2,118,328
Bank indebtedness (9,482,808) (2,468,303)
------------- -------------
$ (9,436,404) $ (349,975)
------------- -------------
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For further information: please contact: Nancy Chan-Palmateer, Director,
Communications Tel: (416) 767-8884 ext. 2523 |
