PeopleSoft Inc. Reports Sales and Earnings for the Quarter and Six
Months Ended June 30, 1998
Business Wire - July 21, 1998 17:16
PLEASANTON, Calif.--(BUSINESS WIRE)--July 21, 1998--PeopleSoft Inc. (NASDAQ:PSFT), announced today the
financial results for the quarter and six months ended June 30, 1998.
Revenues, net income and net income per share for the second quarter of 1998 were $320.5 million, $39.2 million, and $0.15,
respectively. This compares with revenues, net income and net income per share for the second quarter of 1997 of $184.4
million, $22.3 million and $0.09, respectively. Diluted common shares outstanding were 258,969,000 and 249,208,000 for the
quarters ended June 30, 1998 and 1997, respectively.
Revenues for the six months ended June 30, 1998 increased 77% to $598.2 million from $338.0 million for the corresponding
period in 1997. Net income was $73 million, or 12% of revenues, for the first six months of 1998 while earnings for the same
period in 1997 were $40.1 million, or 12% of their respective revenues. Net income per share was $0.28 compared to net
income per share of $0.16 for the same six month period of the prior year.
Revenues from license fees for the second quarter of 1998 increased 53% over the comparable period of the prior year.
Revenue from services for the second quarter increased 97% over the comparable period of the prior year and accounted for
54% and 47% of total revenues for the second quarters of 1998 and 1997, respectively. Revenues from international
operations increased by 100% to $46.4 million or 14% of total revenues for the second quarter of 1998, compared to $23.2
million or 13% of total revenues for the same quarter of the prior year.
Continued strong demand for PeopleSoft's client/server product offerings resulted in 1998 second quarter contracting activity
for software products and related bundled services of $219.8 million. Total contracting activity for the comparable quarter of
the prior year was $146.4 million. The second quarter contracts included 56 agreements each in excess of $1 million.
Quarterly Highlights
The following highlights in the company's Commercial sector were announced or occurred since PeopleSoft's last earnings
release:
-- The general availability of PeopleSoft 7.5 -- a major
multi-product release for the commercial sector which
delivers significant global functionality, new and enhanced
business process applications, and industry specific
functionality. PeopleSoft has extended its global enterprise
solution with global manufacturing and supply chain
management, support for European Economic and Monetary Union
(EMU) requirements, and additional financial accounting
functionality including support for the Latin accounting
model. New applications available now include general
releases of Treasury, Expenses, and Quality, and beta
releases of Stock Administration, Demand Planning and
Performance Measurement. The PeopleSoft 7.5 European payroll
module is expected to be available in 1999. PeopleSoft 7.5
also includes many currently available industry specific
enhancements for manufacturing, financial services,
healthcare, retail, communications, transportation and
utilities;
-- PeopleSoft entered into a definitive agreement to acquire
all outstanding equity interests of Intrepid Systems Inc.,
a leading provider of retail management solutions.
PeopleSoft will issue up to 1,372,744 shares of common stock
and options to purchase all of Intrepid's capital stock and
stock options in a transaction that will be accounted for as
a pooling of interests provided that requisite shareholder
approval and other conditions are satisfied. The transaction
is expected to close around the end of the third quarter of
1998, subject to requisite shareholder approval and the
satisfaction of customary closing conditions;
-- PeopleSoft executed a definitive agreement to acquire all
outstanding equity interests of TriMark Technologies Inc.,
a leading provider of software solutions for the life
insurance industry. PeopleSoft will issue shares of common
stock and options for all of the outstanding equity
interests of TriMark in a transaction that is expected to be
accounted for as a pooling of interests. The transaction is
expected to close prior to the end of the first half of
1999;
-- PeopleSoft signed joint development and marketing agreements
with SPL WorldGroup (SPL) and Andersen Consulting
(Andersen). SPL's CIS PLUS(R) customer information system
for utility companies will be integrated with PeopleSoft's
applications providing investor-owned and municipal utility
companies a fully integrated, best of breed, flexible
solution to meet the challenges posed by a business
environment undergoing rapid deregulation. Andersen and
PeopleSoft will collaborate on developing a suite of
profitability management software solutions for the
financial services industry; and
-- PeopleSoft signed joint sales, marketing, and product
integration alliances with CAPS Logistics Inc., CrossRoute
Software, Data Collection Systems Inc. (DCSI), DOCUMENTUM
Inc., Indus International Inc., Intermec Technologies Corp.,
McHugh Software International, OPTUM Software, and PSDI. The
combined solutions will help manufacturing and distribution
organizations more effectively manage the manufacturing and
supply chain resources that are required to build and
deliver products for the customer on time and at the lowest
cost possible.
The following highlights in the company's Education and
Government sector were announced or occurred since PeopleSoft's last
earnings release:
-- The University of Massachusetts system, including all five
campuses, and two Louisiana State University system schools
licensed PeopleSoft Student Administration, PeopleSoft
Financial Management for Education and Government, and
PeopleSoft Human Resources Management for Education and
Government. In addition, the School of the Art Institute of
Chicago, Claremont Graduate University, Cleveland State
University, James Madison University, Southern Methodist
University, University of Phoenix, and the University of
Utah have all implemented components of PeopleSoft Student
Administration; and
-- The Department of Navy selected PeopleSoft human resources
management applications to consolidate its personnel and
payroll management processes in the continental U.S.,
overseas, and aboard ships, servicing over 800,000
personnel, in over 800 duty locations.
Business Outlook
The following statements are based on current expectations and
analysis. These statements, as well as certain others within this
press release, are forward-looking and actual results may differ
materially:
-- Based on management's current expectations of contracting
activity, and an analysis of the company's service delivery
capacity and the expected customer utilization of such
services, PeopleSoft expects total revenues for the third
quarter of 1998 to increase approximately 60% over total
revenues recorded in the same quarter of the prior year. For
the 1998 calendar year, PeopleSoft expects total revenues to
increase between 60% and 65% over the total revenues
recorded for the prior full year. As with any forecast,
actual results could vary within a few percentage points on
either side of these estimates even if there are no material
changes to the underlying assumptions, and forecasts beyond
one quarter can be expected to have relatively higher
variability;
-- The company's operating model is based on a rolling four
quarter target operating margin of between 18% and 20%. The
company expects that the 1998 full year results will fall
within this range;
-- Based on projected cash and investment balances, constant
interest rates and no unusual items of other income or
expense, the company expects other income for the third
quarter of 1998 to be flat to slightly up compared to the
level of other income recorded in the second quarter of
1998;
-- Based on current tax law and the company's present forecast
of operating results by country, the company expects its
effective tax rate in 1998 to be 38%.
Special Note
The Business Outlook and certain other announcements referenced
above contain forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to risks and uncertainties which could cause
actual results to differ materially from those anticipated. Such risks
and uncertainties include, but are not limited to:
-- Contracting activity may be impacted by the increasing
intensity of competition from other application vendors,
increasingly difficult and protracted contract negotiations,
fluctuations in customer demand, and the timing and
complexity of large transactions. During the second quarter
of 1998, certain competitors became more aggressive with
their product pricing and license fee payment terms. If this
trend continues, it may have an adverse impact on
PeopleSoft's future results and the company's ability to
meet financial expectations in the future. In addition,
contracting activity may be impacted by the company's
ability to grow its direct sales capacity and the timing,
quality and acceptance of new software products and
releases, the influence, if material, of the Year 2000
problem on overall aggregate demand, and general economic,
seasonal and industry conditions;
-- License agreements executed during the quarter may not meet
the company's revenue recognition criteria; as a result, the
company may meet or exceed its forecast of aggregate
contracting activity, but not meet its forecast for license
revenues. In addition, Statement of Position (SOP) 97-2,
"Software Revenue Recognition" was issued in October 1997
and addresses software revenue recognition matters primarily
from a conceptual level and does not include specific
implementation guidance. The SOP supersedes SOP 91-1 and is
effective for transactions entered into for fiscal years
beginning after December 15, 1997. Based on its reading and
interpretation of SOP 97-2, the company believes it is
currently in compliance with the final standard. However,
detailed implementation guidelines for this standard have
not yet been issued. Once issued, such detailed
implementation guidance could lead to unanticipated changes
in the company's current revenue accounting practices, and
such changes could be material to the company's revenues and
earnings;
-- The company's expense levels are based, in significant part,
on the company's expectations as to future revenues, and are
therefore relatively fixed in the short term. If revenue
levels fall below expectations, operating margins and net
income will be disproportionately adversely affected. In
addition, the company continues to evaluate opportunities to
enhance and expand its technology and product offerings
through potential partnerships, licenses or acquisitions.
Such activities, to the extent they are material, could
adversely impact the company's operating results;
-- The company has experienced an extended period of growth,
which has resulted in a significant expansion in the number
of its employees. As a consequence, the company may commit
to real estate projects in order to expand its operations to
accommodate expected growth. Such real estate projects
typically have a lead time of over one year from commit date
to occupancy. There can be no assurance that the anticipated
growth projections will be realized, and therefore, the
company may be subject to increased fixed costs which cannot
be recovered from operations, resulting in material
reductions to net income and cash flows;
-- Other risks which are detailed in the company's filings with
the Securities and Exchange Commission, including, but not
limited to, the March 31, 1998 Quarterly Report (Form 10-Q)
and the 1997 Annual Report to Shareholders (Form 10-K).
About PeopleSoft
PeopleSoft Inc. (NASDAQ:PSFT), was established in 1987 to provide
innovative software solutions that meet the changing business demands
of enterprises worldwide. A client/server applications pioneer and
market leader, PeopleSoft develops, markets, and supports a complete
suite of enterprise solutions for finance, materials management,
distribution, supply chain planning, manufacturing, and human
resources. In addition, PeopleSoft provides industry-specific
enterprise solutions to customers in select markets including
communications, financial services, healthcare, manufacturing, higher
education, public sector, retail, services, transportation, U.S.
federal government, and utilities. The company also offers PeopleSoft
Select, a complete packaged solution including software, hardware, and
services to address the needs of medium-sized organizations.
With more than 2,500 customers around the world, PeopleSoft has
been recognized for both its award-winning customer service and its
remarkable growth. It was listed by Fortune as one of the fastest
growing companies in America in 1994, 1995, 1996 and again in 1997.
PeopleSoft product and service information is located on the World
Wide Web at peoplesoft.com and, for recent press releases
and financial information, via fax-on-demand at 800/296-0937.
PEOPLESOFT INC.
---------------
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------------------------------
1997 1998 1997 1998
-------------------------------------------------
Revenues:
License fees $ 97,028 $ 148,525 $ 180,441 $ 285,459
Services 87,348 171,997 157,589 312,737
-------- --------- --------- ---------
Total revenues 184,376 320,522 338,030 598,196
Costs and expenses:
Cost of license fees 4,887 11,040 9,328 22,236
Cost of services 55,234 98,248 98,545 184,952
Sales and marketing 50,160 84,579 94,472 157,269
Product development 29,580 51,038 54,838 93,899
General and
administrative 10,441 17,351 19,569 30,579
-------- -------- -------- --------
Total costs
and expenses 150,302 262,256 276,752 488,935
-------- -------- -------- --------
Operating income 34,074 58,266 61,278 109,261
Other income,
interest expense
and other 2,436 4,922 4,475 8,408
-------- -------- -------- --------
Income before
income taxes 36,510 63,188 65,753 117,669
Provision for
income taxes 14,239 23,987 25,643 44,714
-------- -------- -------- --------
Net income $ 22,271 $ 39,201 $ 40,110 $ 72,955
======== ======== ======== ========
Basic income
per share $ 0.10 $ 0.17 $ 0.18 $ 0.32
======== ======== ======== ========
Shares used in
basic per share
computation 218,713 228,001 217,745 226,748
======== ======== ======== ========
Diluted income
per share $ 0.09 $ 0.15 $ 0.16 $ 0.28
======== ======== ======== ========
Shares used in
diluted per share
computation 249,208 258,969 248,790 257,635
======== ======== ======== ========
DECEMBER 31, JUNE 30,
1997 1998
------------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 267,897 $ 349,860
Short term investments 124,565 127,517
Accounts receivable, net 299,243 341,201
Deferred income taxes 25,320 33,526
Other current assets 9,021 24,345
--------- ---------
Total current assets 726,046 876,449
Property and equipment, at cost 195,667 229,541
Less accumulated depreciation
and amortization (78,492) (100,746)
--------- ---------
117,175 128,795
Investments 26,783 91,933
Deferred income taxes 7,371 7,371
Capitalized software, less
accumulated amortization 9,706 9,070
Other assets 11,255 13,209
--------- ---------
$ 898,336 $ 1,126,827
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $ 63,508 $ 76,525
Accrued compensation and
related expenses 67,486 92,725
Income taxes payable 22,370 25,806
Deferred revenue 327,668 396,238
--------- ---------
Total current liabilities 481,032 591,294
Stockholders' equity:
Common stock 2,237 2,410
Additional paid-in capital 219,005 264,830
Accumulated foreign
currency translation adjustment (1,292) (2,016)
Retained earnings 197,354 270,309
--------- ---------
417,304 535,533
--------- ---------
$ 898,336 $ 1,126,827
========= ==========
Worldwide employee count 4,452 5,827
CONTACT: PeopleSoft Inc.
Ronald E.F. Codd, 925/694-1278
ron_codd@peoplesoft.com
a friend on mine daytrades this alot, SR |
