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To: Seb Maitra who wrote (773)	4/6/1998 7:52:00 PM
From: PCSS	Read Replies (1) \| Respond to of 1069

YES, I did listen in to the cc: 1) Announcements coming a) TODAY - An arrangement with Condor Technology (CNDR) to license tech and Y2K factory aimed at midmarket target companies. CNDR just went public about 1 month ago (I was and am in big/long on their IPO). CNDR is a consolidated consulting co of 5 separate cons and recruiting firms..the CEO used to head up EDS. CNDR will control the contracts, do the prep work and the use ISLI Factory 2K. b) TOMORROW - Deutche Telecom - Application renewal contract to build for their clients an SCM infrastructure and Euro$. c) NEXT WEEK - An Enterprise ASQ/SCM 7 fig contract with DST, a Major mutual processor. 2) In general, this forward looking FY99 cc is the 3rd one originally implemented 2 years ago. More people/analysts are taking advantage of the cc than before...a "transcript" will be available on ISLI's web site by tomorrow. 3) I gathered a lot of information during the cc but don't want to detail all that was said so therefore I will summarize what "I" deem important: a) Mgmnt brought up and the analysts questions honed in on the fact that MCI, one of ISLI's largest customers is reviewing their IS commitments in light of the WorldCom merger. The result could be good or not so good but should be known by month end. This FUD unnerves analysts, yet ISLI mgmnt kept saying that since this review is occurring that they should let everyone be aware of it but "expect" all will be well. This review/delay could slightly affect the current qtr and FY99. b) Rev for 4Q98 looks to be 55-57mil with an EPS of .27-.35. At this time (with still 1 month to go) ISLI mgmnt is most comfortable with the lower end BUT it could be better. ISLI's comfortability is based on their conservative revenue recognition attitude. FY99 a) Still focus on their 3 main businesses (1) ASQ, (2) EAR - Enterprise Application Renewal and (3) Data Connectivity. b) ASQ - (1) ISLI is th dominant player, (2) Enterprise ASQ Structure is important and ISLI has all the pieces (SCM, PVCS, Issues Tracking, Automated Software Testing, (3) It's both product and services, (4) FY98 will show a Y-Y 30+% incr (100 mil) and FY99 "will" have a Y-Y 30-35% incr (130-135 mil) c) EAR - it's broader the just Y2k and includes Euro and other uses such as in helping Banks upon mergers and Telecoms with restructuring (1) FY97 minimal, FY98 grew 300-400% (easy), FY99 expect 40-60% growth d) Data Connectivity - ISLI is the leading provider and dominant player, although IDC projects some market slowing yet ISLI sees it growing, in the FY98 figure the Asian effect will be small. A minor point of interest is that some e-commerce systems are using ISLI's data connectivity software. e) FY99 Acquisition Strategy - same as FY98 "tuck-in" to existing lines of business f) FY99 Revenue - 20-30% growth (mainly in NA and Europe with Asia insignificant) ...235-245 million with Q1 (19-20%), Q2 (22-23%), Q3 (26-27%), Q4 (remainder) g) Earnings ....Operating Margins 15-17%, Tax Rate 35%, EPS .95-1.05/sh, Q1 (10%0, Q2 (15-25%). Q3 (25-35%), Q4 (remainder) SUMMARY 1) FY99 Revenue expectations are modest but ISLI goals are to exceed 2) In FY98 ISLI wanted to Focus on 3 businesses and in FY99 ISLI wants to take advantage of the continued and growing focus. 3) All-in-all the cc went well and the analysts congratulated mgmnt on a job well done yet as always there was a haze, this time it's MCI. Again, this and all other things said will be on the web tomorrow GOOD ISLI HOLDING AND GROWING TO ALL Michael