Dear David: Yes, here it is (unfortunately)
Command Systems Announces Fourth Quarter Results
FARMINGTON, Conn.--(BUSINESS WIRE)--Feb. 16, 1999--Command
Systems, Inc. (NASDAQ: CMND) today announced financial results for its
fourth quarter and twelve months ended December 31, 1998. Revenue
totaled $9,663,000, compared with revenue of $7,316,000 for the 1997
fourth quarter. The Company's revenue for twelve months totaled
$35,215,000, compared with $25,057,000 for the twelve months of 1997.
The Company reported a net loss of $2,057,000 for the quarter
ended December 31, 1998, against net income of $356,000 for the
comparable 1997 period. The net loss for the twelve-month period was
$1,767,000 compared to a net loss of $497,000 for the same period in
1997. Net income included interest income of $243,000 for the fourth
quarter, and $855,000 for the twelve month period. The Company's
fourth quarter and twelve-month net loss were impacted by the
recognition of one-time charges for costs and expenses of $1,800,000,
relating to the previously-announced proposed settlement of
shareholder litigation. Absent the recognition of these one-time
charges, the Company's net loss reported for the fourth quarter would
have been $381,000, and the net loss for the year would have been
$91,000.
The Company lost $2,503,000 from operations in the quarter
compared with earnings from operations of $585,000 in the fourth
quarter of 1997. The Company lost $3,027,000 from operations in the
twelve months of 1998 compared with earnings from operations of
$829,000 in the comparable 1997 period. Absent the recognition of
one-time settlement and litigation expense, the Company would have
reported a $703,000 loss from operations in the fourth quarter of 1998
and a $1,227,000 loss from operations for the year.
The Company's gross margin was lower than expected for the fourth
quarter and twelve months ended December 31, 1998, reflecting low
rates of employee utilization in the offshore technology resource
center and a less profitable mix of business. Operating results were
also lower than anticipated, primarily due to costs associated with
the Company's increase in sales and project management personnel which
were not accompanied by expected growth in project business. As a
result of diminishing demand for Year 2000 services and the impact of
one of our significant customers recently deciding to discontinue
using outside staff augmentation services, the Company expects to
experience a decline in its revenue in the first quarter. This decline
in revenue, as well as continued pressure on the Company's margins,
will also affect the Company's profitability in the first quarter.
Basic and diluted earnings per share for the 1998 fourth quarter
were a loss of $.27 versus earnings of $.07 in the 1997 fourth
quarter. Basic and diluted earnings per share for the twelve months
ended December 31, 1998, were a loss of $.25 compared to a loss of
13 in 1997. Absent the recognition of one-time settlement and
litigation expense, the basic and diluted loss per share would have
been $.05 for the fourth quarter and $.01 for the year. Earnings
applicable to common stockholders for the quarter ended December 31,
1997 and for the twelve months ended December 31, 1997 and 1998 were
affected by preferred stock dividends and accretion.
The weighted average number of shares outstanding used in the
calculation of basic and diluted earnings per share for both the
quarter ended and twelve months ended December 31, 1998, increased
over the comparable 1997 periods as a result of shares issued in
conjunction with the Company's March 12, 1998 initial public offering.
Command Systems, whose main office is in Farmington, Connecticut,
provides a wide range of information technology solutions and
services, consulting, training and outsourcing to financial services
organizations to support their evolving business processes and systems
requirements. Its web site is commandsys.com.
Statements contained in this document which are not historical
fact are forward-looking statements based upon management's current
expectations that are subject to risks and uncertainties that could
cause actual results to differ materially from those set forth in or
implied by forward-looking statements.
Command Systems, Inc.
Condensed Consolidated Statement of Income
(in thousands, except per share data)
Three Months Ended December 31,
-----------------------------------
-----------------------------------
1998 1997
------------- --------------
------------- --------------
Revenue $ 9,663 $ 7,316
Cost of revenue 7,138 4,760
------------- --------------
Gross profit 2,525 2,556
Selling, general and
administrative expense (1) 4,914 1,971
Amortization of goodwill 114 --
------------- --------------
(Loss) income from operations (2,503) 585
Other income (expense):
Interest income (expense), net 243 (36)
------------- --------------
(Loss) income before benefit for
income taxes and minority
interest (2,260) 549
Benefit for income taxes 203 74
Minority interest -- (267)
------------- --------------
Net (loss) income $ (2,057) $ 356
============= ==============
Preferred stock dividends and
accretion $ -- $ (57)
============= ==============
(Loss) income applicable to
common stockholders $ (2,057) $ 299
============= ==============
(Loss) earnings per
share - Basic $ (0.27) $ 0.07
============= ==============
(Loss) earnings per
share - Diluted $ (0.27) $ 0.07
============= ==============
Weighted average number of
shares outstanding - Basic 7,657 4,275
Weighted average number of
shares outstanding - Diluted 7,657 4,275
(1) Includes for 1998 one time
charges of $1.8 million for the
settlement of claims, and for
payments of related legal fees and
expenses
Condensed Consolidated Balance Sheet
(in thousands)
December 31, December 31,
1998 1997
------------- --------------
Current assets
Cash, cash equivalents and
marketable securities $ 18,994 $ 392
Accounts receivable, net 6,445 4,203
Other current assets 936 407
------------- --------------
Total current assets 26,375 5,002
Property and equipment, net 2,283 2,034
Other assets 7,001 7,389
------------- --------------
Total assets $ 35,659 $ 14,425
============= ==============
Liabilities $ 5,192 $ 4,924
Stockholders' equity 30,467 9,501
------------- --------------
Total liabilities and
stockholders' equity $ 35,659 $ 14,425
============= ==============
Command Systems, Inc.
Condensed Consolidated Statement of Income
(in thousands, except per share data)
Twelve Months Ended December 31,
------------- --------------
1998 1997
------------- --------------
Revenue $ 35,215 $ 25,057
Cost of revenue 24,528 16,973
------------- --------------
Gross profit 10,687 8,084
Selling, general and
administrative expense (1) 13,258 7,255
Amortization of goodwill 456 --
------------- --------------
(Loss) income from operations (3,027) 829
Other income (expense):
Foreign exchange gain 87 --
Interest income (expense), net 855 (277)
------------- --------------
(Loss) income before benefit
(provision) for income taxes and
minority interest (2,085) 552
Benefit (provision) for income taxes 318 (598)
Minority interest -- (451)
------------- --------------
Net loss $ (1,767) $ (497)
============= ==============
Preferred stock dividends and
accretion $ (260) $ (80)
============= ==============
Loss applicable to common
stockholders $ (2,027) $ (577)
============= ==============
Loss per share - Basic $ (0.25) $ (0.13)
============= ==============
Loss per share - Diluted $ (0.25) $ (0.13)
============= ==============
Weighted average number of
shares outstanding - Basic 7,018 4,275
Weighted average number of
shares outstanding - Diluted 7,018 4,275
(1) Includes for 1998 one time
charges of $1.8 million for the
settlement of claims, and for
payments of related legal fees and
expenses
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