Safeguard Scientifics Announces First Quarter Operating
Results and Successful Completion of the DocuCorp
International Rights Offering
WAYNE, Pa., April 21 /PRNewswire/ -- Safeguard Scientifics, Inc. (NYSE: SFE - news), the New
York Stock Exchange listed strategic information systems company, announces operating results for
the first quarter ended March 31, 1998, and the successful completion of the DocuCorp International
Rights Offering.
Net earnings for the first quarter of 1998 were $5.06 million, or $.15 a share (diluted), compared to
$4.49 million, or $.14 a share (diluted), in 1997. Net sales for the three months ended March 31,
1998 were $441.9 million compared to $447.6 million for the same period in 1997. While
CompuCom's and Tangram's sales increased slightly, overall sales declined modestly in 1998 due to
the sale of Pioneer Metal Finishing and Premier Solutions in 1997.
DocuCorp International, Inc. (Nasdaq: DOCC - news), a leading provider of document automation
software and services, completed its rights offering to Safeguard's shareholders in March. Of the
7,460,000 shares sold in the offering, 4,000,000 were sold by DocuCorp yielding net proceeds to
the company of approximately $18.5 million. Offered initially at $5 per share, the stock has traded
recently in the $9-$10 range.
''The momentum we built in 1997 has continued right into 1998. Safeguard's stock price is up nearly
30% in 1998 as we continue to create value for our shareholders through the rights offering process,
the increased value of our public portfolio and the strengthening of our private holdings,'' said Warren
V. Musser, chairman and chief executive officer, Safeguard Scientifics, Inc. ''The rights offering of
DocuCorp International to Safeguard shareholders was successfully completed this past quarter and
we are pleased with its strong aftermarket performance.''
Selected Public Partnership Company Developments
Safeguard's stock price has risen nearly 30% in 1998 significantly driven by the increased stock
prices of the following partnership companies in 1998:
Partnership Company 1998 Market Appreciation
Cambridge Technology Partners 35%
Coherent Communications 77%
Diamond Technology Partners 86%
DocuCorp International 100%(from offering price)
USDATA Corporation 51%
The public partnership companies that have already announced first quarter operating results include
CompuCom, Cambridge and Coherent. While CompuCom's sales were slightly better in 1998, its
earnings decreased primarily due to its investment in sales representatives and training to bolster
future product and services growth. Cambridge reported increased sales and earnings of 62% and
52%, respectively, and Coherent reported increased sales and earnings of 20% and 27%,
respectively, as each company continued to experience increased demand for its product and service
offerings.
The following are selected developments at the public partnership companies:
-- CompuCom Systems, Inc. (Nasdaq: CMPC - news) recently announced two
acquisitions with 1997 aggregate annual sales of $500 million as it
executes on its acquisition strategy designed to increase its presence
in targeted, high potential geographical markets. CompuCom expects
both acquisitions will be completed by the end of the second quarter.
-- Coherent Communications Systems Corporation (Nasdaq: CCSC - news) announced in
February it had agreed to merge with Tellabs. The transaction is
pending governmental and shareholder approval and will generate a
significant book gain for Safeguard upon completion. As noted above,
Coherent's stock has risen significantly since the announcement of the
proposed merger.
-- Diamond Technology Partners Incorporated (Nasdaq: DTPI - news) completed a
secondary offering of its common shares in April at $26.75 versus its
December 31, 1997 stock price of $15.50. Goldman Sachs, Lehman
Brothers and Adams, Harkness and Hill were the underwriters.
-- Sanchez Computer Associates, Inc. (Nasdaq: SCAI - news) continued to add to
its impressive list of global customers by signing substantial
agreements with Bankers Trust, Kredyt Bank PBI (one of Poland's top
ten financial institutions), and Inter Advies N.V. (a subsidiary of
ING Group N.V.). Also in the first quarter of 1998, Sanchez announced
its acquisition of Greystone Technology Corporation, a developer of
high performance database and language components that operate on IBM,
Hewlett-Packard, Digital and Sun Microsystems hardware.
-- OAO Technology Solutions, Inc. (Nasdaq: OAOT - news) announced it had expanded
its strategic relationship with IBM Global Services by entering into a
10-year commitment to provide applications maintenance and
enhancements for IBM Global Services' Raleigh, NC, Applications
Development and Maintenance group.
-- ChromaVision Medical Systems, Inc. (Nasdaq: CVSN - news) continues to make
progress with its ongoing clinical trials and development milestones
in the areas of HIV, cancer and Down Syndrome, among others. The
company's Automated Cellular Imaging System was featured at the Health
Industry Manufacturers Association's national conference in March as a
showcase of emerging medical technology.
Significant Corporate and Private Partnership Company Developments
-- Safeguard's Board of Directors renewed the Company's authority to
repurchase up to $20 million of its common stock.
-- Safeguard added to its strong pipeline of rights offering candidates by
investing in Who?Vision Systems, Inc., a personal identification
company that applies unique imaging technologies to create highly
reliable, cost-effective fingerprint authentication solutions.
Who?Vision has already established a contractual relationship with
Mag Technology, Co., Ltd. (Taiwan), a leading computer peripheral
manufacturer. It also signed a letter of intent with National
Registry Inc. (Nasdaq:NRID - news; NRI) to license a substantial number of seats of NRI's
biometric authentication software suite.
-- Safeguard has also committed to invest in the newly formed MegaSystems,
Inc., a full range provider of equipment, content and services to the
giant-screen film and theater industry.
-- Whisper Communications, Inc., a Safeguard partnership company since
1996, announced that, in partnership with Schlumberger, it will supply
its wireless two-way automatic meter reading system to Illinois Power
as part of what is believed to be the largest customer communications
network ever undertaken in the United States.
-- The Intellisource Group, Inc., a national outsourcing company with
established long-term contracts with Shell Oil and Oglethorpe Power,
announced recently it was selected by Avon Products, Inc., the world's
leading direct seller of beauty and related products with over
$5 billion in annual sales, and three electric cooperatives in the
Greater Washington, DC area, to provide its services on a long-term
basis.
Commented Donald R. Caldwell, president and chief operating officer, Safeguard Scientifics, Inc.,
''We continue to build on our success in 1998. The DocuCorp rights offering was successful and its
stock is performing well, several of our partnership companies completed or announced certain
significant events which demonstrate execution of their strategic directions, and the value created by
the Coherent and Tellabs merger draws closer to realization. Also, we continue to work hard to
grow and develop the private company pipeline to ensure our success in future periods.''
Safeguard Scientifics, Inc. is a unique partnership of entrepreneurial companies focused on
information technology markets. Safeguard has a proven track record of bringing emerging
companies to market through rights offerings to Safeguard shareholders. Past Safeguard rights
offerings include Novell, Inc., CompuCom Systems, Inc., Cambridge Technology Partners
(Nasdaq:CATP - news; Massachusetts), Inc., Coherent Communications Systems Corporation,
USDATA Corporation, Integrated Systems Consulting Group, Inc., Sanchez Computer Associates,
Inc., Diamond Technology Partners Incorporated, ChromaVision Medical Systems, Inc., OAO
Technology Solutions, Inc., and DocuCorp International, Inc.
Safeguard Scientifics, Inc.
Comparative financial data
Consolidated Statements of Operations
Quarter Ended March 31,
1998 1997
(000's omitted, except
per share data)
Product sales $376,778 $385,405
Service sales 65,120 62,171
Net sales $441,898 $447,576
Pre-tax earnings $8,433 $7,487
Net earnings $5,060 $4,492
Earnings per share
Basic $.16 $.14
Diluted $.15 $.14
Average common shares outstanding
Basic 31,714 31,122
Diluted 32,403 32,032
Diluted earnings per share calculations adjust net earnings for the dilutive effect of public investee
common stock equivalents and convertible securities.
Condensed Consolidated Balance Sheets
March 31, December 31,
1998 1997
(000's omitted)
Receivables less allowances $182,985 $187,385
Inventories 232,575 198,053
Other current assets 10,957 11,841
Investments and notes receivable 247,379 206,146
Other assets 126,421 111,116
$800,317 $714,541
Current liabilities $202,493 $169,278
Long-term debt 149,517 127,089
Other liabilities 130,215 120,223
Convertible subordinated notes 72,345 90,881
Shareholders' equity 245,747 207,070
$800,317 $714,541
SOURCE: Safeguard Scientifics, Inc. |
