HERNDON, Va., Nov. 3 /PRNewswire/ -- Network Imaging Corporation
(Nasdaq: IMGX) today announced financial results for the quarter and the nine
months ended September 30, 1997. The operating loss was cut from $3.7 million
in the third quarter of last year to $2.9 million in the third quarter of
1997. The net loss in the third quarter of 1997 was $4.6 million -- virtually
the same as the net loss recorded in last year's third quarter. The net loss
per share was $0.18 in this year's third quarter versus a net loss per share
of $0.22 for the same quarter last year.
The Company's net loss and net loss per share were negatively affected by
the impact of a new accounting methodology required by the Securities and
Exchange Commission. The Company was required to post a $774,000 non-cash
charge for imputed dividends associated with the sale of preferred stock.
Without this non-cash charge, the net loss would have been $3.9 million and
the net loss per share would have been $0.15.
Revenues increased from $9.4 million in the third quarter of last year to
$9.9 million for the quarter ended September 30, 1997. Sales from U.S.
operations increased more than 18%, from $5.5 million in the third quarter of
1996 to $6.5 million in the third quarter of this year. Sales from Network
Imaging's French subsidiary, Dorotech, declined $800,000 -- a decrease due to
a temporary slowdown in a major service contract and the weakening of the
French franc against the U.S. dollar.
Commenting on the third quarter's results, Jim Leto, Network Imaging's
chairman and chief executive officer, noted, "The positive trend in U.S.
sales reflects the growing customer support of our flagship product line,
1View. Many of our 1View product installations are moving from pilot to full
implementation at a variety of the largest and most successful enterprises in
the world, and the company's new sales and marketing infrastructure also has
begun to demonstrate solid success in generating product sales."
Leto will review the quarter's financial and operational results in a
conference call for investors. The call is scheduled for 11 a.m. EST on
Tuesday, November 4. The conference call phone number is 703-736-7227.
Financial Results
Revenues
* For the quarter ended September 30, 1997, worldwide revenues were
9.9 million compared to $9.4 million for the prior year's third
quarter.
* Revenues for U.S. operations rose from $5.5 million in the third
quarter of 1996 to $6.5 million in the third quarter of 1997 -- an
increase of 18%.
* Total product revenues increased $1.1 million from the third quarter of
last year to the third quarter of this year, while service revenues
dropped about $550,000. The service revenue decline was the result of
an $800,000 decrease associated with the contract slowdown in Dorotech
and the devaluation of the French franc, which was offset by a $250,000
increase in U.S service revenues.
* Product sales from U.S. operations increased $790,000, or 24%, from the
third quarter of 1996 to the third quarter of this year. The product
sales increase was due primarily to deeper penetration into the
telecommunications marketplace.
* For the nine months ended September 30, 1997, worldwide revenues were
28.4 million compared to $29.0 million for the same period of 1996.
The decrease was due to the sale of Symmetrical Technologies, Inc.
(which contributed $1.7 million to revenues in the first six months of
last year) and a $2.3 million decline in Dorotech revenues.
* U.S. sales (excluding Symmetrical) for the nine months increased 24%,
from $13.8 million in the first nine months of 1996 to $17.1 million in
the first nine months of 1997.
Net Income/Loss
* The net loss in the third quarter of 1997 was $4.64 million versus a
net loss of $4.61 million in the third quarter of last year.
* On a per-share basis, the net loss was $0.18 compared to a net loss of
0.22 for the prior year's third quarter. Without the non-cash
dividend charge, noted earlier, the net loss per share for the third
quarter of 1997 would have been $0.15. The weighted average shares
outstanding increased from 21.1 million in the third quarter of last
year to 25.4 million in this year's third quarter, due to increased
equity financing.
* The net loss for U.S. operations was 4.1 million in the third quarter
of 1997 compared to $4.2 million in last year's third quarter.
* The operating loss was cut from $3.7 million in the third quarter of
1996 to $2.9 million in the third quarter of 1997 -- a decrease of 22%.
* The gross profit margin declined from 37% in the third quarter of 1996
to 35% in the third quarter of 1997. The product gross profit margin
improved from 47% in the third quarter of last year to 51% in this
year's third quarter, but the service gross profit margin was 18%
versus 30% last year. The service gross profit margin decrease
reflected the impact of the contract delays in Dorotech. The product
gross profit margin increase was attributable to the higher proportion
of the Company's internally developed products, such as 1View:Unity and
1View:COLD, within the total sales mix.
* General and administrative expenses were cut from $2.0 million in the
third quarter of 1996 to $1.6 million in this year's third quarter.
* Sales and marketing costs rose from $3.3 million in last year's third
quarter to $3.6 million in the 1997 third quarter, reflecting the
company's decision to make an increased investment in sales/marketing
organization. Product development costs remained stable.
* For the first nine months of 1997, the net loss was $12.7
million versus a net loss of $18.1 million for the same period a year
ago.
* The Company cut its net loss per share 43%, from $0.90 in the first
nine months of 1996 to $0.51 in the first nine months of 1997. The net
loss per share for the nine months ended September 30, 1997, would have
been $0.48 without the impact of the new SEC regulation, noted earlier.
The weighted average shares outstanding increased from 20.1 to
25 million.
* The net loss for U.S. operations was cut from $16.2 million in the
first nine months of 1996 to a net loss of $11.9 million in the same
period this year.
* The company's operating loss was reduced from $15.4 million in the
first nine months of 1996 to $9.1 million in the comparable period this
year.
* General and administrative expenses accounted for the greatest cost
reduction, decreasing from $7.5 million in the first nine months of
1996 to $4.9 million in the first nine months of this year. Sales and
marketing expenses decreased from $11.7 million to $10.9 million, while
product development costs dropped from $4.2 million to $3.5 million.
Cash
* On September 30, 1997, the company had cash and equivalents of
3.8 million compared to $1.8 million on June 30, 1997, reflecting the
benefit of the initial phase of $11 million equity offering announced
in July.
Balance Sheet
* During the quarter, the Company announced the selection of BT Alex.
Brown Inc. to assist in developing capitalization alternatives. In
addition to suspending dividend payments for the Preferred Series A
stock, and the Company announced its plan to convert the Preferred A
stock to common stock. This would eliminate a $3.2 million annual
dividend expense. The Company plans two special shareholders meetings
in November and December to complete its capital restructuring plan.
Operational Highlights
Pipeline
* The company ended the third quarter of 1997 with an $81 million
pipeline of identified new business opportunities, versus $71 million
at the end of the second quarter of 1997.
Product Sales
* The Company signed new contracts worth $2.4 million for its 1View(TM)
multimedia and COLD products during the quarter. In late October, a
640,000 contract was announced in which the Allegheny County, PA,
prothonotary will use two 1View products to accept electronic filings
from attorneys and to make legal records available for simultaneous
viewing by legal professionals and court-authorized users. This
represents a new potential vertical market for the Company, in addition
to its existing vertical markets -- telecommunications, banking and
financial services, manufacturing, health care and government.
* During the third quarter, the Company was awarded $1.0 million for
TREEV Voyager II(TM) and TREEV Explorer contracts. Most recently, the
Company was awarded in September a $100,000 contract by the Lubbock
National Bank in Texas for the TREEV Voyager II product.
Alliances
* The Company's newly established VAR Services Group solidified several
new alliances and partnerships during the quarter. These include a new
Value-Added-Reseller agreement with Reams Computer Corporation, a
reseller of document management systems, as well as alliances with
Product Document Management Information Company (PDMIC) and Greenway
Corporation.
* Earlier this year, Network Imaging announced plans to devote increased
attention to selling its products to the federal government market
through relationships with major systems integrators. In September,
Intergraph Corporation signed an OEM agreement to use the Company's
1View:Object Manager product as the key component in its Maps Online
digital map repository application.
Customer Growth
* In September, Sybase announced the integration of 1View:Object Manager
with its new Adaptive Server(TM) database server. Network Imaging was
one of only four Sybase partners whose products were showcased at the
IT Forum in September in New York -- a major industry event.
Summary
"I'm optimistic about the steps we have taken to restructure the balance
sheet, and specifically the plan to convert our Preferred A stock to common
shares," states Chairman/CEO Leto. "This would eliminate a $3.2 million
annual dividend expense and improve our earnings per share. Once we have laid
the capital structure issues to rest by the end of 1997, we're looking forward
to moving out aggressively and capturing the numerous opportunities available
in the multimedia storage and management market."
|
