Stac Software Reports Earnings for Second Fiscal Quarter of 1999; 45%
Revenue Growth; Key HP, Tivoli Partnerships Boost Replica Product Line
Monday, April 26, 1999 04:10 PM
SAN DIEGO, April 26 /PRNewswire/ -- Stac Software, Inc. (Nasdaq:
STAC), the leader in recovery solutions for remote Windows networks,
today reported better than expected results for its second fiscal
quarter which ended March 31, 1999. The first full quarter for Stac
since the spin-off of its former semiconductor subsidiary, Hi/fn,
Inc., showed strong revenue growth from its flagship product,
Replica, which for the first time surpassed ReachOut in revenues for
the quarter. New strategic partner announcements, a significant
reduction in expenses, an increase in its cash position, new product
releases, and a major new technology agreement, position the company
for future growth.
Stac reported software revenues of $3,370,000 for its second fiscal
quarter, compared to software revenues of $3,803,000 in the second
quarter of fiscal 1998. Software revenues for the six months ended
March 31, 1999 were $6,375,000, compared to $7,509,000 for the six
months ended March 31, 1998. In the prior fiscal year royalty
revenues of $1,111,000 and $5,111,000 were recorded for the quarter
and six months ended March 31, 1998, respectively. The royalty
revenues were received under software and patent licenses to
Microsoft and IBM, which became fully paid-up in January 1998. No
such royalty revenues were received, or are expected to be received,
in the current fiscal year.
Net loss from continuing operations, for the quarter ended March 31,
1999 was $188,000 or $0.01 per common share, compared to a net income
from continuing operations of $139,000 or $0.01 per common share,
diluted, for the second fiscal quarter of 1998. There was a net loss
from continuing operations of $2,114,000 or $0.09 per common share,
for the six month period ended March 31, 1999, compared to net income
of $942,000, or $0.04 per common share, diluted, for the comparable
period of the prior fiscal year. The net loss from continuing
operations for the six months ended March 31, 1999 is inclusive of
non-recurring restructuring charges of $822,000; $452,000 or $0.02
per share on an after-tax basis. The six months ended March 31, 1998
included a restructuring charge of $350,000; $208,000 or $0.01 per
share after taxes. Absent royalty revenues and the restructuring
charge, there would have been a net loss from continuing operations
of $522,000, or $0.02 per share and $1,891,000, or $0.07 per share in
the quarter and six month period ended March 31, 1998, respectively.
Revenues
Revenues from the Company's award-winning Replica product line
increased 75% and 45% over the comparable quarter and six month
periods of the prior fiscal year, respectively. The Replica product
line includes Replica Network Data Manager (NDM), the first
centrally-managed systems and data recovery solution for desktops and
mobile PCs, and Replica Tape. Replica Tape is the fastest, easiest to
use and most reliable backup and bare-metal disaster recovery for
remote Windows NT and Novell NetWare servers. Revenues from Replica
NDM and Replica Tape during the March 1999 quarter include sales to
several global 2000 corporations.
During the quarter, Stac and Hewlett-Packard announced the industry's
first One-Button Disaster Recovery feature, a major advance in system
recovery capabilities, which will ship with HP NetServer LC3 servers
and SureStore DAT 8 and DAT 24 tape drives. Also of significance,
Stac entered into a broad technology license agreement with Tivoli
Systems, an IBM company, the details of which are expected to be
announced soon.
This quarter Stac also introduced a new product version, Replica Tape
4 for Microsoft Windows NT, as well as upgrades to its ReachOut and
Replica NDM products. "During our first full quarter as a stand-alone
software company, Stac has made significant achievements by growing
year to date Replica product line revenues 45% and forming key
partnerships with HP and IBM Tivoli," said John Ticer, president and
chief executive officer of Stac. "With our unique capability to
protect and fully recover large numbers of remote systems, and
corporations' growing awareness of the high costs of ownership,
downtime, and repair for those systems, Stac is well-positioned for
growth in the coming quarters."
Also included in revenues are sales of Stac's ReachOut remote access
software and other software and service revenues.
Stac Operating Expenses
Operating expenses for were $4,067,000 for the quarter ended March
31, 1999, compared to operating expenses of $5,084,000 for the
quarter ended March 31, 1998, and $10,686,000 for the six months
ended March 31, 1999, compared to $11,507,000 for the comparable
period in the prior fiscal year. Research and development expenses
for the March 1999 quarter decreased to $1,388,000 from $1,814,000
for the same quarter in the prior year, and to $3,372,000 for the six
months ended March 31, 1999 from $3,678,000 for the six months ended
March 31, 1998, primarily due to the timing of localization costs
associated with new product versions. The Company expects to continue
to spend significant resources on the development of the Replica
product line. Sales and marketing expenses for the March 1999 quarter
were $1,925,000, compared to $2,470,000 in the previous year's
comparable quarter, and $4,337,000 and $5,242,000 for the six months
ended March 31, 1999 and 1998, respectively. The decrease in sales
and marketing expenses was the result of a reorganization of the
sales and marketing functions to focus on OEM sales and on developing
partnerships with resellers. General and administrative expenses in
the March 1999 quarter were $754,000 compared to $800,000 in the
previous year's quarter and were $2,155,000 in the six months ended
March 31, 1999, compared to $2,237,000 in the comparable period of
the prior fiscal year. Included in general and administrative costs
for the six month period ending March 31, 1999, were non-recurring
costs of $443,000 related to the Hi/fn spin-off. Non-recurring
restructuring charges for the six month period ended March 31, 1999
were $822,000. The restructuring charges were composed of fixed asset
disposals, severance and benefit payments and lease termination costs
related to a reorganization completed during the December 1998
quarter that was initiated to better align Stac Software's resources
with the needs of a stand-alone, partner-focused software company.
Hi/fn
As previously announced, Stac completed the spin-off of its Hi/fn
semiconductor subsidiary to Stac stockholders in the form of a
dividend on December 16, 1998. Accordingly, Hi/fn results for year-
to-date and prior periods have been reclassified and reported as
discontinued operations on Stac's financial statements.
Balance Sheet
Cash and short-term investments were $29,378,000 at March 31, 1999,
an increase of $4,946,000 from September 30, 1998. The increase of
cash is primarily due to repayment of a $5,000,000 note from the
Company's Hi/fn subsidiary, received during the quarter. The Company
has no short or long-term debt.
Stac Software, Inc.
Founded in 1983, Stac Software, Inc. is known worldwide for its
innovations in data compression. The company builds on these
advancements to create high-performance systems recovery software
solutions to protect business-critical data in networked enterprises.
Stac has established strategic relationships with Hewlett-Packard,
IBM, Legato Systems, Microsoft, Novell, and other industry leaders.
Stac's products are sold through a variety of domestic and
international channels. Information on Stac's award-winning products
can be accessed via the Internet at stac.com, by calling
the company's North American Headquarters in San Diego, California:
1-800-279-7822 (U.S. and Canada), Stac's European Headquarters in the
United Kingdom: +44(0) 1344-302900 (Europe) or +1 (619) 794-3741 in
other countries.
* Except for the historical information contained herein, this
newsrelease contains forward-looking statements that involve risks
anduncertainties. The Company makes no assurances regarding the
future successof its products. Those risks include, but are not
limited to, delays in thedevelopment or introduction of products,
customer or sales channel acceptance of products and competitive
product introductions from new or established competitors. The
Company does not project future financial results and
expressly disclaims responsibility for any such projections released
by third-partyanalysts. The above risk factors are more fully
discussed in the Company's Form 10-K for the year ended September 30,
1998 and its quarterly reports onForm10-Q. Stac Software, Inc.,
Stac, ReachOut, and Replica are trademarks orregistered trademarks of
Stac Software, Inc. All other trademarks are theproperty of their
respective owners.
STAC SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited)
Three Months Ended Six Months Ended March 31, March 31, 1999 1998 1999 1998
Revenues:
Software and service $3,370 $3,803 $6,375 $7,509
Royalties -- 1,111 -- 5,111
Net revenues 3,370 4,914 6,375 12,620
Cost of revenues 205 213 396 460
Gross margin 3,165 4,701 5,979 12,160
Operating expenses:
Research and development 1,388 1,814 3,372 3,678
Sales and marketing 1,925 2,470 4,337 5,242
General and administrative 754 800 2,155 2,237
Restructuring -- -- 822 350
Total operating expenses 4,067 5,084 10,686 11,507
Operating income (loss) (902) (383) (4,707) 653
Interest income 420 643 860 1,356
Income (loss) before
income taxes (482) 260 (3,847) 2,009
Provision (benefit) for
income taxes (294) 121 (1,733) 1,067
Income (loss) from
continuing operations (188) 139 (2,114) 942
Discontinued operations:
Income from discontinued
operations, net of taxes of
$550 in 1999 and $426 and
$1,052 in the three and six
months ended 3/31/98
respectively -- 625 885 1,547
Net income (loss) $(188) $764 $(1,229) $2,489
Earnings per common share,
basic Income (loss) from
continuing operations $(0.01) $0.01 $(0.09) $ 0.04
Income from discontinued
operations 0.00 0.02 0.04 0.06
Net income (loss) (0.01) 0.03 (0.05) 0.10
Earnings per common share,
diluted Income (loss) from
continuing operations $(0.01) $0.01 $(0.09) $ 0.03
Income from discontinued
operations 0.00 0.02 0.05 0.06
Net income (loss) (0.01) 0.03 (0.04) 0.09
Weighted average common shares
outstanding, basic 23,705 25,699 23,586 26,264
Weighted average common shares
outstanding, diluted 23,705 26,294 23,586 27,023
(a) Net income and income per share for the six months ended March 31,1999 include non-recurring restructuring charges net of tax benefitsrecognized, of $452,000 and $0.02 per common share, and for the six monthsended March 31, 1998, $208,000 or $0.01 per common share.
STAC SOFTWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
ASSETS
March 31, September 30, 1999 1998 (unaudited)
Current assets:
Cash and short-term investments $29,378 $24,432
Accounts receivable 1,707 777
Inventories 257 197
Income taxes receivable 1,675 1,314
Other current assets 502 317
Total current assets 33,519 27,037
Property and equipment, net 2,132 3,329
Net assets of discontinued operations -- 12,995
Other assets 474 505
$36,125 $43,866
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,058 $1,458
Accrued expenses and other
current liabilities 3,037 3,022
Total current liabilities 4,095 4,480
Other liabilities 157 173
4,252 4,653
Stockholders' equity
Common stock at par value 31 31
Additional paid in capital 76,401 75,143
Treasury stock (41,347) (41,347)
Cumulative translation adjustment (27) (29)
Retained earnings (3,185) 5,415
Total stockholders' equity 31,873 39,213
$36,125 $43,866
SOURCE Stac Software, Inc.
CONTACT: Clifford Flowers or Sylvia Evans of Stac Software, Inc., 619-794-4399
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