Inprise Reports Third Quarter 1998 Results
BusinessWire, Wednesday, October 21, 1998 at 16:45
Business Wire's Home Page at www.businesswire.com
SCOTTS VALLEY, Calif.--(BUSINESS WIRE)--Oct. 21, 1998--
-- Net revenue of $48 million -- up from $46.5 million
previous quarter
-- Record revenue and growth from enterprise products
& services
-- Number of six- and seven-figure sales transactions
up 43% quarter-on-quarter
-- Company invests in all areas of its enterprise business
Inprise Corporation (NASDAQ:INPR) today announced earnings for its third quarter ended September 30, 1998, reporting net revenues of $48.0 million, a 70-percent increase in year-on-year revenues from enterprise products and services(a), plus approximately $2 million in additional deferred revenues.
(Note: A chart showing Inprise's enterprise revenue growth is located at inprise.com )
All figures reported reflect pooling of interests with Visigenic Software, Inc., acquired in February, 1998.
Net revenues for the third quarter were flat compared with the same quarter a year ago. Year-to-date revenues were $141.0 million, compared with $139.7 million for the nine months ended September 30, 1997.
In the quarter ended September 30, 1998, Inprise experienced a gain of $15.4 million in non-operating income from the sale of the Company's interest in Starfish Software to Motorola.
With the gain and taxes, net income for the quarter ended September 30, 1998, was $16.4 million, compared with a net loss of $2.1 million in the same quarter last year.
Net income for the nine months ended September 30, 1998, was $4.8 million -- which included a $19.3 million charge for restructuring and acquisition costs from the purchase of Visigenic, a U.S. tax benefit of $3.8 million, and the gain of $15.4 million in the third quarter. The Company reported a net loss of $49.2 million for the nine-month period ended September 30, 1997, which included a $23.1 million charge for restructuring and other non-recurring costs aimed at returning the Company to profitability.
Diluted earnings per share were $0.29 for the quarter ended September 30, 1998, compared with a loss per share of $0.05 for the same quarter a year ago. Diluted earnings per share for the nine months ended September 30, 1998, were $0.08. This is compared with a loss per share of $1.03 for the nine months ended September 30, 1997, with restructuring and other non-recurring costs.
Inprise reported income before the gain and taxes of approximately $1.1 million for the quarter ended September 30, 1998, compared with a net loss of $1.8 million in the same quarter a year ago. Earnings per share before the gain and taxes were $0.02 for the third quarter, compared with a loss per share of $0.04 a year ago.
Inprise showed year-to-date income of $5.4 million, which excludes restructuring and acquisition costs from the purchase of Visigenic, a U.S. tax benefit, and the gain from the Starfish/Motorola transaction. This is compared with a loss of $25.1 million for the nine months ended September 30, 1997, which excludes charges for restructuring and non-recurring costs.
Common shares and dilutive securities outstanding were 56.8 million for the quarter ended September 30, 1998.
Cash, cash equivalents, and short-term investments as of September 30, 1998, were $81.0 million, compared with $101.4 million in the same quarter a year ago. The $81.0 million does not include the proceeds from the Starfish/Motorola transaction, which had not been received by the end of the quarter but were recorded as a gain on the sale of a long-term investment and were considered marketable securities.
Record Growth In Enterprise-Computing Business
"The third quarter was one of excellent growth for Inprise's enterprise business - validating our strategy to become a leading provider of solutions that help companies integrate their enterprises," said Delbert W. Yocam, Inprise chairman and CEO. "In every area of Inprise - sales, marketing, R&D, and our Professional Services Organization - we have increased the focus on enterprise customers. We experienced growth in revenue from our enterprise-computing products, in the number of six- and seven-figure transactions that were closed, and in the number of new enterprise customers. We also continued making significant investments in our IT infrastructure to increase our effectiveness in meeting the needs of our growing base of enterprise customers, suppliers, and partners."
US & International Sales Highlights
Direct sales in the United States were strong in the third quarter because of the growing maturity of the sales teams operating in 11 regions. Total net revenues in the U.S. constituted 46 percent of total revenues, compared with 36 percent in Europe, 9 percent in Japan, and 9 percent in the rest of the world. Inprise's business in Asia remained flat in the third quarter, and declined approximately 35 percent from the comparable quarter last year.
The growth in enterprise-computing products and services in the quarter was led by VisiBroker, whose sales grew 86 percent over the year-ago quarter. Revenues from enterprise products and services were 30 percent of total revenues, compared with 18 percent in the third quarter a year ago. Revenues from client/server and Internet products and services were 41 percent of total revenues, compared with 42 percent in the third quarter a year ago. Revenues from Windows desktop products and services were 29 percent of total revenues, compared with 40 percent in the third quarter a year ago.
Net revenues from professional services -- the consulting and maintenance required by enterprise-level customers -- constituted approximately 11 percent of revenues in the third quarter. Net revenues from professional services increased 14 percent over the comparable quarter a year ago. License revenues comprised 89 percent of revenues in the quarter ended September 30, 1998.
The number of six- and seven-figure transactions closed in the third quarter rose 43 percent, compared with the quarter ended June 30, 1998. Among these were a multi-year, multimillion-dollar licensing agreement with Hitachi and multi-year agreements with Sun Microsystems, HAHT Software, Ascend Communications, and Inso. The Company also entered into large engagements with banking and finance companies such as Merrill Lynch, T. Rowe Price, Barclays Bank Group, Swiss Bank, and First Union Bank; with tele- and data-communications companies such as AT&T Wireless, British Telecom, QUALCOMM, German Telecom, and GTE; and with other companies such as American Stores, Florida Power & Light, GeoCities, The Money Store, SalesLogix, and the American Automobile Association.
European operations showed significant growth in the third quarter of 1998. Revenues from Europe grew 45 percent over the third quarter a year ago.
Highlights & Activities in Other Areas of Inprise
Enterprise Marketing
Inprise garnered record enterprise-class media coverage in the major trade journals - InformationWeek, PCWeek, Computerworld, InfoWorld, etc. -- achieving higher recognition within Inprise's installed customer base. To broaden this recognition to more enterprises and into executive suites, Inprise plans to roll out two marketing programs, coinciding with the scheduled launch of the Inprise Application Server:
-- New campaign of corporate advertising and Inprise-brand
promotion
-- Enterprise Solutions Program: goal is to partner with some
of the largest systems integrators in the world to create
and deliver solutions to Global 2000 enterprises in four
vertical segments -- financial services, healthcare &
insurance, telecom/datacom services, and energy.
Research & Development
Inprise R&D continued to focus on delivering new enterprise-class development tools and middleware in the third quarter. Accomplishments included:
-- Shipped VisiBroker 3.3
-- Shipped the VisiBroker Integrated Transaction Service
-- Shipped the Inprise DCE-CORBA Bridge
-- Began development of JBuilder for the Sun Solaris platform
-- Entered Beta-testing for the Inprise Application Server and
its key development and management components with 100
customers and prospective customers.
Professional Services Organization (PSO)
Key initiatives were undertaken to strengthen the company's enterprise-level consulting and support services, including:
-- Expansion of the U.S. consulting group by 50 percent.
-- Expanded two-day, for-pay enterprise seminar program to 23
cities, including venues outside the U.S. for the first
time.
-- Launched initial worldwide support infrastructure, including
a unified support call system.
IT Infrastructure
Inprise made major investments to integrate its own enterprise, to respond more effectively to the needs of its customers, suppliers, partners, and employees. These investments included enterprise software for sales, finance, human resources, and technical support, as well as upgrades to its telecommunications/data communications infrastructure.
Stock Buy-back Program
Inprise commenced a stock buy-back program to repurchase up to 10 percent of the Company's outstanding shares of common stock on a fully diluted basis, or approximately 5.9 million shares. Approximately 1.6 million shares of the Company's stock had been repurchased as of September 30, 1998, at an average price per share of $6.44.
Executive Appointments
During the quarter, Inprise made a number of appointments to the senior management team: Jay R. Leite as vice president of business development, James L. Moore Jr. as chief information officer, Robert Perreault as vice president of worldwide professional services, Marc H. Rudov as vice president of enterprise marketing, Joe Nicholson as director of marketing for enterprise tools, and David Curtis as director of enterprise technologies.
Company Defers Revenues in Third Quarter
As Inprise extends its focus on enterprise computing, the Company has increased the revenue that has been deferred to $15.5 million, an increase of 32 percent compared to the third quarter a year ago, and an increase of 14 percent compared to the prior quarter. This revenue will be recognized over the life of each contract.
In the past, the Company's contracts for enterprise products were generally of a short-term nature comprised principally of development licenses. For the quarter ended September 30, 1998, several large contracts were for longer terms with significant prepaid deployment license revenues with prepaid technical support and rights to future product upgrades. Because of the services and upgrades to be delivered, the Company has deferred approximately $2.0 million of revenue under these contracts.
"These long-term contracts prove how positive our growing numbers of enterprise-level customers feel toward Inprise and its products," said Yocam. "The growth in these contracts shows that our customers are confident in our products and services, and they are willing to sign multi-year contracts and prepay non-refundable deployment royalties."
About Inprise Corporation
Inprise Corporation is a leading provider of software and services that simplify the complexity of enterprise application development, integration, deployment, and management. The company is distinguished for its award-winning Borland family of rapid application development products and for proven scalable middleware. Inprise integrates these offerings with application-management products to provide customers with end-to-end solutions. Inprise customers include leading enterprises and independent software vendors around the world. Founded in 1983, Inprise is headquartered in Scotts Valley, California, and has operations around the world. Inprise has more than 900 employees worldwide. For more information on Inprise, customers can visit the company's Web site at inprise.com .
Inprise product names are trademarks or registered trademarks of Inprise Corporation. Other product names mentioned herein may be trademarks of the party using such names.
Forward-looking statements in this release, including but not limited to, those concerning Inprise's future financial performance, product availability dates, and the potential features of or benefits to be derived from the Company's products, involve a number of uncertainties and risks, and actual events or results may differ materially. Factors that could cause actual events or results to differ materially include, among others, the following: difficulties in integrating the operations and technology of Visigenic Software or other companies or technologies which the Company may acquire, possible disruptive effects of organizational or personnel changes, shifts in customer demand, market acceptance of the Company's new or enhanced products, delays in scheduled product availability dates, actions or announcements by competitors, software errors, general business conditions and market growth rates in the client/server and Internet software markets, and other factors described in the Company's S.E.C. reports on forms 10-K, 10-Q, 8-K, and the Inprise prospectus relating to the acquisition of Visigenic Software.
(a) Consists of licensing, consulting, and support services for the Company's enterprise development tool and middleware products.
*T
INPRISE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues
Licenses and other $ 42,481 $ 43,267 $124,696 $125,444
Services 5,482 4,797 16,276 14,222
-------- -------- -------- -------- Total revenues 47,963 48,064 140,972 139,666
Cost of revenues 8,037 8,473 22,155 25,338
Gross profit 39,926 39,591 118,817 114,328
Operating expenses
Research and
development 11,509 12,446 34,906 41,986
Selling, general
and administrative 28,450 29,763 81,407 99,380
------ ------ ------ ------ Total continuing
expenses 39,959 42,209 116,313 141,366
Provision for
restructuring and
acquisition charges --- --- 19,281 5,976
Other non-recurring
charges --- --- --- 17,100
------- ------- -------- ------- Total restructuring,
acquisition and
non-recurring charges --- --- 19,281 23,076
Total operating expenses 39,959 42,209 135,594 164,442
Operating
income (loss) (33) (2,618) (16,777) (50,114)
Interest income,
net and other 1,149 790 2,873 1,934 Gain on long-term
investment 15,439 --- 15,439 ---
Income (loss)
before taxes 16,555 (1,828) 1,535 (48,180)
Provision (benefit)
for income taxes 150 270 (3,312) 979
Net income (loss) $ 16,405 $ (2,098) $ 4,847 $(49,159)
Income (loss)
per share -
Basic (1) $ 0.32 $ (0.05) $ 0.09 $ (1.03)
Income (loss)
per share -
Diluted (1) $ 0.29 $ (0.05) $ 0.08 $ (1.03)
Shares used in the
calculation of basic
income (loss)
per share 50,509 49,869 50,825 48,179
Shares used in the
calculation of
diluted income
(loss) per share 56,812 49,869 57,494 48,179
(1) The calculation of income per share for the three and nine months ended September 30, 1998 includes an accretion to the Mandatorily Redeemable Convertible Preferred Stock of $164,000 and 306,000, respectively. The calculation of loss per share for the three and nine months ended September 30, 1997 includes an accretion to the Mandatorily Redeemable Convertible Preferred Stock of $383,000.
INPRISE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, unaudited)
September 30, 1998 December 31, 1997
ASSETS Current assets $153,187 $144,463 Property and equipment, net 109,521 104,944 Other non-current assets 6,290 6,417
------- ------- Total assets $268,998 $255,824
LIABILITIES AND STOCKHOLDERS' EQUITY Deferred revenue $ 14,086 $ 12,429
Other current liabilities 67,725 67,454
Long-term deferred revenue 1,391 ---
Long-term debt and other 22,346 22,025
Mandatorily redeemable
convertible preferred stock 38,374 27,358
Stockholders' equity 125,076 126,558
------- ------- Total liabilities and
stockholders' equity $ 268,998 $ 255,824
*T
CONTACT: Inprise Corporation
Denise Franklin, 831/431-1525 (Financial)
dfranklin@inprise.com
or
Neale-May & Partners
Susan Walker, 650/328-5555, ext. 119 (Media)
swalker@nealemay.com
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS COMED PRODUCT
PHOTO: snr4
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