Fourth Q Earnings Out - Looks great to me! Comments?
Thursday August 13, 7:01 am Eastern Time
Company Press Release
PC DOCS Group Momentum Continues
with 71 Percent Growth in Fourth Quarter
Revenues
TORONTO--(BUSINESS WIRE)--Aug. 13, 1998--PC DOCS Group
International Inc.(NASDAQ:DOCSF - news; TSE:DXX. - news), today announced record results for the
fourth quarter and the year ending June 30, 1998.
Financial highlights (U.S. GAAP)
Revenues for the fourth quarter were $46.2 million, a 71 percent increase over the $27.1 million for the
same quarter last year and 34 percent over the $34.5 million reported for the third quarter of fiscal 1998. In
particular, software license revenues were $27.4 million, a 72 percent increase over the $15.9 million in the
same quarter last year and 47 percent over the $18.6 million in the third quarter this year. Net earnings
were $1.5 million compared to $1.2 million for the fourth quarter last year and $1.9 million, before taxes
and unusual items, for the third quarter this year. Fully diluted earnings per share were $0.06 for the fourth
quarter, compared to $0.06 for the same quarter last year and $0.10, excluding unusual items, in the third
quarter this year.
Revenues for the year ended June 30, 1998 were $136.4 million, 42 percent over the $96.2 million for
fiscal 1997. Earnings before one time charges were $4.3 million. This compared to earnings of $3.9 million
in the previous year. Earnings per share for the year, before one time charges, were $0.19 compared to
$0.18 in fiscal 1997. After one-time charges of $92.8 million, related to the Fulcrum acquisition and other
unusual items taken in the third quarter, net loss for the year was $79.4 million.
The Company maintained its strong financial position including cash of approximately $62 million, working
capital of $66 million, shareholders' equity of $82 million and total assets of $185 million.
''Our revenues are above target this quarter as a direct result of our relentless focus on expansion into new
vertical and international markets,'' said Rubin Osten, Chairman and CEO of PC DOCS Group
International. ''We now have installations in 45 percent of Fortune 500 companies worldwide, including
over 65 percent of the top 100.
At the same time, our new Internet products have proven extremely successful -- winning us a number of
important new accounts in the manufacturing, pharmaceutical and financial services sectors. This is a clear
indication of the strength of our company, our products and our distribution channel. We have the critical
mass and the momentum to continue to lead the market.'' Corporate Highlights
The company announced that the Board of Directors has approved a share repurchase program. The
company believes that its shares are undervalued and that it may be advantageous to continue its share
repurchase plan at this time. Under the plan, the Company may repurchase for cancellation in the next
twelve months a maximum of 1,974,667 common shares, at prevailing market prices.
The company is pleased to announce the appointment of Giancarlo Giglio to its Board of Directors. Giglio is
president, CEO and managing director of Datamat S.p.A, a leading European system integration company.
He has more than 20 years' experience in the technology industry and is one of the founders of Datamat.
Operating Highlights
The sales, marketing and R&D teams of Fulcrum(R) Technologies Inc. and PC DOCS(R) Inc. have now
been integrated under a single management structure. The company launched a comprehensive strategy for
the fast-growing knowledge management market, flexing its combined strengths in information access and
document management, to provide fully-integrated solutions for enterprise customers. This new integrated
strategy was successfully launched in May at the AIIM (Association for Image & Information Management)
tradeshow in Anaheim, California.
In this quarter, the company introduced major enhancements to its breakthrough DOCSFusion(TM)
product family, on schedule. The foundation of these new and improved releases is DOCSFusion 2.5, the
NT server-based document management engine for the company's expanded three-tier architecture.
DOCSFusion allows customers to distribute powerful, scaleable document management throughout their
enterprise, across corporate intranets and the Internet -- all from a common server platform. The company
released an enhanced CyberDOCS(R)2.5 product, for Internet-based access to DOCSFusion, and
PowerDOCS(TM), a revolutionary thin-client document management system that seamlessly integrates with
the Windows environment using the latest Microsoft technologies.. In addition, the company made an
aggressive entry into the complex, compound document management market with DOCSBinder -- a
sophisticated, XML-based module that adds rich compound document publishing facilities to its existing
product architecture.
Expansion continued into new geographical and vertical markets, in line with company objectives. One of
the strongest areas of growth was in the manufacturing sector, with the most significant win being 5,500
licenses to Houston-based Equistar Chemicals, who will use the DOCSFusion Server to deliver
PowerDOCS and CyberDOCS services for document management integrated with their SAP R/3
environment. Other new clients in the high-tech, manufacturing, pharmaceutical and petrochemical markets
included PeopleSoft, who selected Fulcrum's Knowledge Network, Navistar International Transportation
Corp., Exxon Research & Engineering, SmithKline Beecham, United Technologies, GE Lighting and
Extract Technology, a leading UK supplier to the pharmaceutical industry.
Strong growth was also seen in the financial and professional services sector, another key area of focus for
the company. The most notable wins in this area included: Grant Thornton, one of the world's largest
accounting and management consulting organizations; a new document management implementation for
Deloitte & Touche, covering 61 sites of their audit reporting department, and Conseco, one of America's
leading insurance and consumer financial services providers.
The company's continued aggressive pursuit of new geographic markets led to a number of successes in
areas such as South America, Europe and the Pacific Rim. Some significant new sales included Codelco,
Chile's largest copper mining company, who selected PC DOCS to integrate document management with
their SAP R/3 environment. AMEC, a major European construction company signed a site license
agreement for CyberDOCS, PowerDOCS and DOCSRouting, and Telstra, one of Australia's largest and
longest-established telecommunications companies became one of the latest adopters of the Fulcrum
Knowledge Network(TM) product.
Rubin Osten commented, ''Fiscal '98 saw us hitting important strategic targets in three areas -- we
delivered new industry-leading products, grew revenues significantly and built on the strongest global
installed base in the market through expansion into new sectors and countries. We will continue to evaluate
and seek to optimize all areas of the company, building on our position as a global market leader, as
highlighted in recent studies by IDC and Delphi Consulting. We continue to win significant deals against the
competition, adding more than 220 new customers in this quarter alone. We signed more than 800 new
accounts this year, bringing us to over 6000 customers using our products in twenty languages and over
thirty countries, worldwide.'' About PC DOCS Group
PC DOCS Group International Inc. (NASDAQ:DOCSF, TSE:DXX) and its subsidiaries, PC DOCS,
Inc., Fulcrum Technologies Inc., CMS/Data Corporation and CompInfo, Inc., develop, market and
support object-oriented client/server, internet and corporate intranet enterprise document and knowledge
management systems and information management systems for professionals. The Company's customers
include Fortune 1000 companies, financial institutions, healthcare providers, manufacturing, consumer
products, communications and pharmaceutical companies, utilities, government agencies, the legal industry,
and accounting and other professions in North America, Latin America, Europe, Australia and the Far East.
Forward-looking statements
Certain of the above statements are forward-looking statements that involve risks and uncertainties. Actual
results could differ materially as a consequence of a number of factors, including: fluctuations in the
Company's operating results due to product demand, length of the sales cycle, size and timing of individual
customer transactions and similar matters; changes in the client/server application software market, including
technology change, changes in customer requirements, frequent new product introductions by competitors
and emerging standards; dependence of the Company on the legal services market; reliance by the
Company on its third-party resellers; dependence of the Company on its key management; uncertainties
relating to acquisitions, including operational disruptions, unexpected operating expenses and losses, and
expenses associated with the integration of such acquisitions; and other factors set forth in the Company's
Securities and Exchange Commission and Ontario Securities Commission reports and filings. Trademarks
PC DOCS and CyberDOCS are registered trademarks and DOCSFusion and PowerDOCS are
trademarks of PC DOCS, Inc. Fulcrum is a registered trademark of Fulcrum Technologies Inc. CMS
Open is a registered trademark of CMS/Data Corporation. All other products mentioned are trademarks of
their respective companies.
For a copy of Canadian GAAP Financial Statements, please fax your request to PC DOCS Group
Investor Relations at 416/495-6585 or email investor@pcdocs.com
PC DOCS GROUP INTERNATIONAL INC.
FINANCIAL HIGHLIGHTS (UNAUDITED) U.S. GAAP
---------------------------------------------------------------
(Canadian dollars, in thousands except per share amounts)
for the periods ended June 30
---------------------------------------------------------------
Quarter Year
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
Revenues $46,245 $27,111 $136,429 $96,174
------- ------- ------- -------
Earnings before
income taxes
excluding one
time charges $ 1,447 $ 2,048 $ 5,913 $ 6,483
------- ------- ------- -------
Earnings after
taxes excluding
one time charges $ 1,535 $ 1,213 $ 4,284 $ 3,879
------- ------- ------- -------
------- ------- ------- -------
Earnings per share
Diluted (earnings after
taxes excluding one
time charges) $ 0.06 $ 0.06 $ 0.19 $ 0.18
Average number of
shares,
diluted (000's) 24,964 21,289 22,508 21,369
PC DOCS GROUP INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME U.S. GAAP
---------------------------------------------------------------
In Accordance with U.S. Generally Accepted Accounting Principles
(Canadian dollars, in thousands except per share amounts) for the
periods ended June 30
---------------------------------------------------------------
Quarter Year
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
(unaudited) (unaudited) audited audited
Revenues
Software sales $27,424 $15,932 $76,198 $52,387
Software support,
services and
other sales 17,646 10,434 54,831 36,837
Hardware sales 395 121 2,347 3,018
Interest income
and other revenues 780 624 3,053 3,932
------- ------- ------- -------
Total revenues 46,245 27,111 136,429 96,174
------- ------- ------- -------
Cost of sales 3,594 3,259 12,932 12,965
------- ------- ------- -------
Gross profit 42,651 23,852 123,497 83,209
------- ------- ------- -------
Expenses
Selling and marketing 16,106 8,972 46,020 29,735
Support and services 6,477 3,069 19,172 10,243
Research and
development 9,498 2,766 20,314 12,281
General and
administration 6,364 4,864 21,044 16,270
Depreciation and
amortization 2,364 2,110 10,502 8,038
Interest on
long-term debt 395 23 532 159
Restructuring and other
unusual charges - - 21,368 -
Write-down of product
development costs - - 16,564 -
Purchased in-process
research and development - - 54,823 -
------- ------- ------- -------
Total expenses 41,204 21,804 210,339 76,726
------- ------- ------- -------
Earnings (loss) before
income taxes and
minority interest 1,447 2,048 (86,842) 6,483
Income tax expense
(recovery) (88) 835 (7,461) 2,604
Minority interest - - 34 -
------- ------- ------- -------
Net earnings
(loss) $ 1,535 $ 1,213 $(79,415) $ 3,879
------- ------- ------- -------
------- ------- ------- -------
Earnings (loss) per share
Basic $ 0.07 $ 0.06 $ (3.79) $ 0.20
Diluted $ 0.06 $ 0.06 Antidilutive $ 0.18
Average number of shares,
basic (000's) 23,401 19,863 20,944 19,756
Average number of shares,
diluted (000's) 24,964 21,289 22,508 21,369
PC DOCS GROUP INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS U.S. GAAP
---------------------------------------------------------------
In Accordance with U.S. Generally Accepted Accounting Principles
(Canadian dollars, in thousands)
as of June 30
---------------------------------------------------------------
1998 1997
--------- ---------
audited audited
ASSETS
---------------------------------------------------------------
Current
Cash and short-term investments $ 62,537 $ 89,708
Trade receivables 65,717 27,008
Unbilled receivables 11,146 10,392
Prepaid expenses and other assets 8,039 4,176
Loan receivable - 1,259
--------- ---------
147,439 132,543
--------- ---------
Fixed assets 13,813 9,820
Product development costs 1,832 13,457
Acquired software 3,011 -
Deferred income taxes 12,695 2,708
Investment 2,762 1,723
Goodwill 3,742 2,148
--------- ---------
$ 185,294 $ 162,399
--------- ---------
--------- ---------
LIABILITIES
---------------------------------------------------------------
Current
Accounts payable and
accrued liabilities $ 55,299 $ 14,093
Deferred revenues 25,548 12,867
--------- ---------
80,847 26,960
--------- ---------
Long-term debt 22,044 2,228
Minority interest 297 -
--------- ---------
103,188 29,188
--------- ---------
SHAREHOLDERS' EQUITY
---------------------------------------------------------------
Share capital, 23,644,147 shares
outstanding (1997 - 19,908,303) 146,456 119,606
Cumulative translation adjustments 2,371 911
Retained earnings (deficit) (66,721) 12,694
--------- ---------
82,106 133,211
--------- ---------
$ 185,294 $ 162,399
--------- ---------
--------- ---------
PC DOCS GROUP INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. GAAP
In Accordance with U.S. Generally Accepted Accounting Principles
(Canadian dollars, in thousands except per share amounts) for the
periods ended June 30
---------------------------------------------------------------
Quarter Year
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
(unaudited) (unaudited) audited audited
Operating activities
Net earnings (loss) $ 1,535 $ 1,213 $ (79,415) $ 3,879
Adjustments to reconcile
net income to net
cash provided by
operating activities
Depreciation and
amortization 2,364 2,110 10,502 8,038
Write-down of product
development costs - - 16,564 -
Purchased in-process
research and
development - - 54,823 -
Restructuring and other
unusual charges (636) - 19,241 -
Loss on disposal
of fixed assets 229 - 229 -
Minority interest - - 34 -
Increase in accounts
receivable (15,863) (2,559) (22,213) (1,272)
Decrease (increase)
in unbilled
receivables 1,690 865 (754) (1,194)
Increase in prepaid
expenses and
other assets (697) (1,170) (1,657) (2,484)
Decrease (increase)
in deferred
income taxes (2,393) (333) (9,987) 85
Increase (decrease)
in accounts payable
and accrued
liabilities (1,861) 2,886 526 (2,282)
Increase (decrease) in
deferred revenues 4,428 (125) 9,751 4,223
------- ------- ------- -------
Net cash provided by
(used for) operating
activities (11,204) 2,887 (2,356) 8,993
------- ------- ------- -------
Investing activities
Decrease (increase)
in loan receivable - (392) 1,259 (1,259)
Proceeds on disposal
of fixed assets 555 - 555 -
Additions to
fixed assets (1,937) (1,776) (5,612) (6,649)
Additions to product
development costs - (2,492) (7,870) (7,655)
Acquisitions - - (36,986) -
Increase in investment - (817) (2,762) (1,723)
Cumulative translation
adjustments 667 (44) 616 250
------- ------- ------- -------
Net cash used for
investing activities (715) (5,521) (50,800) (17,036)
------- ------- ------- -------
Financing activities
Increase (decrease)
in long-term debt (242) 768 (865) (6)
Share capital issued
for acquisition 1,782 - 28,527 -
Repurchase of
common stock - - (3,832) -
Net proceeds from
issuance of
common stock 1,989 118 2,155 1,886
------- ------- ------- -------
Net cash provided
by financing
activities 3,529 886 25,985 1,880
------- ------- ------- -------
Decrease in cash
and cash equivalents (8,390) (1,748) (27,171) (6,163)
Cash and cash equivalents
Beginning of period 70,927 1,456 89,708 95,871
------- ------- ------- -------
End of period $ 62,537 $ 89,708 $ 62,537 $ 89,708
------- ------- ------- -------
------- ------- ------- -------
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