KANATA, Ontario--(BUSINESS WIRE)--June 3, 1999--CrossKeys Systems
Corporation (Nasdaq:CKEY.O) (TSE:CKY), a leading supplier of software
for telecommunication service providers, today announced financial
results for both its fourth quarter and fiscal year, ended May 2,
1999. These results were consistent with the Company's preliminary
release dated May 10, 1999.
For the year ended May 2, 1999, CrossKeys reported revenue of
$43.8 million versus $38.7 million for the fiscal year ended April 30,
1998. Fiscal 1999 revenue produced net income, excluding restructuring
provisions and one time charges, of $2.1 million or $0.11 per share
compared to net income of $4.8 million or $0.28 per share reported in
the previous twelve months ended April 30, 1998.
Including restructuring provisions and one time charge, CrossKeys
reported a net loss of $1.5 million or ($0.08) per share for the year
ended May 2, 1999. Fully diluted loss per share for the year ended May
2, 1999 was $(0.08) Cdn based on 18.4 million average shares
outstanding versus earnings per share of $0.28 Cdn for the fiscal 1998
year end, based on 17.0 million average shares outstanding. Fully
diluted loss per share for the year ended May 2, 1999 was $(0.05) US
translated at the average exchange rate for the fiscal year of $0.6626
as reported by the Federal Reserve Bank of New York.
For the fourth quarter ended May 2, 1999, CrossKeys reported
revenue of $5.2 million versus $11.1 million for the corresponding
period in the prior year. The net loss for the three months ended May
2, 1999, excluding restructuring provisions, was $4.0 million or
($0.21) per share compared to a net income of $1.6 million or $0.08
per share reported in the same period in the prior year.
Including restructuring provisions, CrossKeys reported a net loss
for the three months ended May 2, 1999 of $6.8 million or ($0.37) per
share. These restructuring charges which totaled $3.8 million before
income taxes, included writedownsof fixed assets and provisions for
excess facilities and planned restructuring of the Company's
operations.
Fully diluted earnings per share for the fourth quarter of fiscal
1999 were $(0.37) Cdn based on 18.5 million average shares
outstanding, versus $0.08 Cdn per share in the fourth quarter of
fiscal 1998 based on 19.3 million average shares outstanding. Fully
diluted earnings per share for the fourth quarter of fiscal 1999 were
$(0.25) US, translated at the average exchange rate for the quarter of
$0.6709 as reported by the Federal Reserve Bank of New York.
As part of its technology strategy, during the fiscal year
CrossKeys continued to invest in the development of industry leading
performance management software in an effort to expand the Company's
addressable markets. In order to achieve this, CrossKeys is continuing
to strengthen its product portfolio with multi-technology,
multi-platform and multi-vendor capabilities.
"We are in the middle of a corporate shift at CrossKeys," said
Ian McLaren, President and CEO of CrossKeys. "Our impressive growth
over the past several years has been fueled by technological
leadership demonstrated by the scale of projects we have completed for
major telecommunication equipment manufacturers and some of the
world's largest service providers. We are leveraging this
technological leadership to broaden our product offering while
expanding our market reach through direct sales and new distribution
channels."
In January 99, the Company added the capability to integrate
Internet Protocol (IP) data into its CrossKeys Resolve(tm) portfolio
of service and network management software. This capability will give
Crosskeys strong access to the highest growth technology segment in
the performance management market. In addition to this development,
CrossKeys made other significant additions to its product portfolio in
fiscal 99, including the launch of CrossKeys Resolve Ni, a new network
intelligence software for Carrier-Class Networks.
Throughout fiscal 1999, CrossKeys continued to enhance sales and
marketing activities while expanding its distribution channels. In
March of 1999, Crosskeys expanded distribution capabilities in Latin
America with an agreement with Promon, one of Brazil's largest
telecommunication companies and systems integrators. Over the past
year, CrossKeys has also added agreements with Ascend Communications
and Newbridge.
Finally, the Company announced the appointment of Ian McLaren to
the position of President and CEO on April 7, 1999. Mr. McLaren brings
20 years of experience in the high technology and networking industry.
McLaren's expertise in sales and marketing is a substantial benefit to
CrossKeys as it moves forward. Prior to joining CrossKeys, Mr. McLaren
was President of Canadian, UK and International Operations of the
computing and telecommunications company MCI Systemhouse.
"The pipeline of opportunity that lies ahead for this company is
outstanding," concluded McLaren. "We have compelling products,
exploding markets, a growing list of satisfied customers and extremely
talented people. In addition, we are well positioned to capitalize on
this opportunity with over $56 million in cash. I truly believe that
we are only beginning to scratch the surface of what is possible for
CrossKeys."
CrossKeys also announced that its Board of Directors has approved
a change in the Company's fiscal year end from May 2 to May 31. "We
feel this is an important planning measure," said Steve Spooner, Vice
President and Chief Financial Officer. "The change in reporting period
will help us improve our business skew, provide earlier earnings
visibility and enhance our ability to support our major channel
partners."
About CrossKeys
CrossKeys Systems Corporation (www.crosskeys.com) is a leading
developer of service, network, and element management solutions for
over 180 of the world's telecommunication service providers, helping
them gain a competitiveadvantage in deregulated markets. CrossKeys
combines a commitment to research and development with experience in
the world's most demanding telecommunication markets to deliver highly
advanced software applications. A leading supplier to Newbridge
Networks Corporation, Compaq, Siemens AG and Ascend, CrossKeys help
service providers deliver differentiated services, implement new
technologies, and manage multiple vendor networks. CrossKeys has been
ISO 9001 certified since 1995.
CrossKeys Systems Corporation is a public company whose common
shares are listed for trading on NASDAQ (CKEY) in the United States
and on The Toronto Stock Exchange (CKY) in Canada. CrossKeys and logo
are registered trademarks of CrossKeys Systems Corporation. All other
trademarks are the property of their respective holders and are
acknowledged by CrossKeys Systems Corporation.
This announcement may contain forward-looking statements as
defined by the US Private Securities Litigation Reform Act of 1995,
such as statements related to the industry motivators, market and
partnership opportunities. The Company cautions that these statements
are based on current expectations that are subject to risks and
uncertainties. Actual results may differ due to factors such as
customer demand, product shipping schedules, product mix, competitive
products and pricing pressures, and changes in the service, network
and element management software applications market specifically.
Additional information identifying risks and uncertainties is
contained in the Company's filings with the Ontario Securities
Commission and the Securities and Exchange Commission. Summary of
financials follows:
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*T
CROSSKEYS SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Canadian dollars, amounts in thousands, except per share data,
US GAAP)
Fiscal quarters ended For the Year ended
May 2, April 30, May 2, April 30,
1999 1998 19991998
-------- ---------- ------- ----------
(unaudited) (unaudited)
Product revenue $ 4,147 $ 8,895 $36,254 $ 28,908
Service revenue 1,008 2,247 7,551 9,772
------- -------- ------- ---------
Total revenue 5,155 11,142 43,805 38,680
------- -------- ------- ---------
Product costs 2,156 2,282 9,951 7,069
Service costs 517 992 3,354 4,406
------- -------- ------- ---------
Total cost of
sales 2,673 3,274 13,305 11,475
------- -------- ------- ---------
Gross margin 2,482 7,868 30,500 27,205
------- -------- ------- ---------
Expenses
Research and
development 3,224 1,891 9,781 6,879
Selling, general and
Administration 5,323 4,130 20,191 14,834
Provision for uncollectible
Amounts -- -- 1,000 --
Restructuring
charge 3,765 -- 3,765 --
------- -------- ------- ---------
Total expenses 12,312 6,021 34,737 21,713
------- -------- ------- ---------
Income (loss) from
operations (9,830) 1,847 (4,237) 5,492
Interest income
(expense), net 690 595 2,787 1,054
------- -------- ------- ---------
Income (loss) before
income taxes (9,140) 2,442 (1,450) 6,546
Income tax (provision)
Recovery 2,301 (822) -- (1,780)
Net income (loss) (6,839) 1,620 (1,450) 4,766
------- -------- ------- ---------
------- -------- ------- ---------
Earnings per share
Basic $ (0.37) $ 0.09 $ (0.08) $ 0.30
Fully Diluted $ (0.37)$ 0.08 $ (0.08) $ 0.28
Weighted average number of
common shares outstanding
Basic 18,503 18,279 18,386 15,831
Fully Diluted 18,503 19,275 18,386 16,981
CROSSKEYS SYSTEMS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Canadian dollars, amounts in thousands, except per share data,
US GAAP)
May 2, April 30,
1999 1998
---------- --------
ASSETS
Cash and short-term investments $ 56,477 $ 54,567
Accounts receivable 4,824 12,010
Unbilled receivables 4,385 3,540
Fixed assets 5,959 6,930
Other assets 6,858 4,015
--------- --------
$ 78,503 $ 81,062
--------- --------
--------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued
Liabilities $ 5,489 $ 5,316
Deferred revenue 1,552 3,036
--------- --------
7,041 8,352
Shareholders' equity 71,462 72,710
--------- --------
$ 78, --------- --------
--------- --------
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--30--lr/da*
CONTACT: CrossKeys Systems Corporation
John Blackmore, 613/599-2300 ext. 8936
E-mail: johnblac@crosskeys.com
Web site: www.crosskeys.com
or
CrossKeys Systems Corporation
Shelley Moorhead, 613/599-2300 ext. 8336
E-mail: moorhead@crosskeys.com
KEYWORD: NEW YORK INTERNATIONAL CANADA
INDUSTRY KEYWORD: TELECOMMUNICATIONS COMED
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