Company Reports Second Consecutive Profitable Quarter
OAKLAND, Calif., Jan. 21 /PRNewswire/ -- Forte Software, Inc.
(Nasdaq: FRTE), a leading supplier of development and integration environments
for enterprise networked applications, today reported financial results for
its third quarter and nine months ended December 31, 1998. In addition, the
Company announced changes in the management structure of its key business
units and sales organization.
Total revenue for the quarter increased to $20.4 million, a 17 percent
increase over total revenue of $17.3 million in the same period last year.
Net income for the quarter was $0.5 million as compared to a net loss of
$6.3 million in the same period last year. Accordingly, net income per share
for the third quarter was $.03 per share as compared to a net loss of $.32 per
share in the same period last year.
Total revenue for the nine months ended December 31, 1998 increased to
$57.0 million, a 15 percent increase over total revenue of $49.5 million in
the same period last year. Net loss for the nine-month period decreased
$10.0 million to $1.5 million, an 87 percent improvement over the
$11.5 million net loss for the same period last year. The net loss per share
for the nine months ended December 31, 1998 was $.07 as compared to a net loss
per share of $.60 for the same period last year.
Marty Sprinzen, President and Chief Executive Officer commented, "Domestic
revenue increased by 20 percent during the current quarter to $10.6 million
due primarily to a strong contribution to license fee revenue from our VAR
channel and progress in our realignment of the North American sales
organization. International revenue increased by 15 percent to $9.8 million.
We are pleased with the initial performance of our newly opened sales offices
in Holland and Italy. During the current quarter we continued to make
selective investments in our Integration Business Unit, in the Java product
development project and marketing activities to enhance our product solutions.
We believe our investments in these activities combined with our increased
emphasis and investment in alternate sales channels (VARs and system
integrators) should enable us to consistently leverage the opportunities in
our market and provide for long-term growth."
License fee revenue in the recent quarter ended December 31, 1998
increased sequentially by 23 percent from the immediately preceding quarter
ended September 30, 1998. License fee revenue totaled $10.7 million for the
recent quarter, a 12 percent increase, as compared to $9.6 million in the same
period last year. Maintenance and services revenue increased 24 percent for
the quarter to $9.6 million as compared with $7.8 million for the same period
last year. License fees represented 53 percent, and maintenance and services
contributed 47 percent of total revenue for this quarter.
Sprinzen continued, "We have more clearly organized for greater focus on
market opportunities. We have formed two business units with general managers
to accelerate our business opportunities in the Integration and Java markets.
The Java product went into beta in December 1998 and we anticipate new
Integration products will be available for shipment in the March quarter."
Additionally, the Company announced that John Hubinger has been named to
Acting Vice President of North American Sales and Mike Hedger, Executive Vice
President of Worldwide Sales, has left the Company to pursue other interests.
Hubinger has been with the Company for over three years and his
responsibilities most recently were Director of Business Development. In this
role he was primarily responsible for managing the Company's strategic thrust
into the indirect sales channel with VARs and system integrators, which is a
key strategic component of the Company's future. The international sales
organization will report directly to Sprinzen.
The following table provides a summary of financial performance for the
third quarter and nine months ended December 31, 1998, as compared to the same
periods last year (in millions, except per share data):
Quarter Ended Nine Months Ended
December 31, December 31,
1998 1997 1998 1997
Revenue $20.4 $17.3 $ 57.0 $ 49.5
Operating income (loss) $ 0.2 $ (6.1) $ (2.3) $(13.0)
Net income (loss) $ 0.5 $ (6.3) $ (1.5) $(11.5)
Net income (loss) per share $ .03 $ (.32) $ (.07) $ (.60)
New Accounts
During the quarter, 21 new accounts were added including CIBA Vision
Corporation, Nu Skin International, IONA Technologies, Inc., NSW (Australia)
Department of Education and Training and SNS Reaal Group.
Third Quarter Highlights
During the quarter, the Company:
-- Announced the availability of the Forte Application Server(TM) for
OS/390(R), which gives customers the flexibility to deploy
Forte(R)-based applications originally built on NT, UNIX or VMS to
powerful IBM S/390 enterprise servers.
-- Announced the results of a 2,000-concurrent-user benchmark conducted
with IBM and United Services Automobile Association (USAA). The
tests, which provided subsecond response time, were designed to ensure
the ability of Forte for OS/390 to scale from 4,000 to 15,000 users in
USAA's environment.
-- Announced at its November Partner Summit that EPIC Solutions, Inc.
became the 100th VAR to select Forte for its development initiatives.
-- Was named by World Trade magazine as one of the fastest-growing
high-tech exporters in the U.S. Companies were selected based on a
ratio of export to total sales and 1997 revenue and employment growth.
-- Was named by IT industry analysts Butler Consulting Group, Ltd. as the
industry leader for support component technologies with both breadth
and depth of support. The Butler Group evaluation considered 15
market leaders ranging from Microsoft through enterprise vendors.
About Forte Software
Forte Software, Inc. is a pioneer in advanced development and integration
software for scalable distributed applications. IT organizations, systems
integrators, and independent software vendors use the Forte product family as
their application environment to more efficiently build, integrate, deploy and
manage powerful business solutions that run on the Internet and enterprise
networks. Forte technology is used as the foundation for 100 application
packages, and Forte products are marketed worldwide through direct operations,
subsidiaries, distributors and value-added resellers. For additional
information, contact Forte Software at info@forte.com or http://www.forte.com/
Forte is a registered trademark, and Forte Application Environment, Forte
Application Server, Forte Open Mainframe Architecture and Forte WebDesigner
are trademarks, of Forte Software, Inc. OS/390 is a registered trademark of
IBM. Other brand or product names may be trademarks or registered trademarks
of their respective owners.
The statements in this release that relate to future plans, events, or
performance are forward-looking statements. Actual results might differ
materially due to a variety of factors. Forte Software cannot guarantee
completion of any future products or product features mentioned in this
release, and no reliance should be placed on their availability. Additional
information about factors that may impact results is contained in Forte
Software's Annual Report on Form 10-K under the sections entitled Business
Risks and Management's Discussion and Analysis of Financial Condition and
Results of Operations, and in other SEC filings including Forte Software's
most recent Form 10-Q.
Forte Software, Inc.
Condensed Consolidated Statements Of Operations
(in thousands, except per share amounts)
Three months ended Nine months ended
December 31, December 31,
1998 1997 1998 1997
Revenues
License fees $10,741 $9,575 $27,804 $27,459
Maintenance and services 9,625 7,770 29,230 22,048
Total revenues 20,366 17,345 57,034 $49,507
Cost of revenues
License fees 194 220 540 460
Maintenance and services 5,546 4,874 15,648 13,512
Total Cost of revenues 5,740 5,094 16,188 13,972
Gross profit 14,626 12,251 40,846 35,535
Operating expenses
Sales and marketing 9,371 12,365 27,435 32,374
Product development
and engineering 3,872 4,074 11,889 10,787
General and administrative1,152 1,933 3,841 5,387
Total operating expenses14,395 18,372 43,165 48,548
Income (loss) from
operations 231 (6,121) (2,319) (13,013)
Interest income and
expense, net 328 462 1,073 1,530
Income (loss) before
income taxes 559 (5,659) (1,246) (11,483)
Provision for income taxes 25 630 234 35
Net income (loss) $534 ($6,289) ($1,480) ($11,518)
Income (loss) per share
-- Basic $0.03 ($0.32) ($0.07) ($0.60)
Income (loss) per share
-- Diluted $0.03 ($0.32) ($0.07) ($0.60)
Shares used in per
share calculation
Basic 19,962 19,424 19,839 19,275
Diluted 21,009 19,424 19,839 19,275
Forte Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
December 31, March 31,
1998 1998
ASSETS
Current assets:
Cash and cash equivalents $13,255 $13,358
Short-term investments 11,710 20,802
Accounts receivable, net 21,241 20,277
Prepaid expenses and other
current assets 4,212 1,635
Total current assets 50,418 56,072
Equipment and leasehold
improvements, net 5,544 7,416
Other assets 145 250
Total assets $56,107 $63,738
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,917 $1,530
Accrued expenses and other
liabilities 7,856 11,503
Deferred revenue 8,353 12,312
Current portion of capital
lease obligations 92 695
Total current liabilities 18,218 26,040
Capital lease obligations,
due after one year 131 123
Deferred revenue 175 265
Commitments
Stockholders' equity:
Common stock 200 195
Additional paid-in capital 68,219 66,851
Accumulated deficit (31,143) (29,663)
Foreign currency translation
adjustments 307 (73)
Total stockholders' equity 37,583 37,310
Total liabilities and
stockholders' equity $56,107 $63,738
SOURCE Forte Software, Inc.
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Related links:
http://www.forte.com
CONTACT:
Bob L. Corey, Senior Vice President, CFO of
Forte Software, Inc., 510-869-2013; or general, Lisa Horn
Chainey, investors, Nancy Hansen, or media, Scott Marx, all of
The Financial Relations Board, 415-986-1591
NOTE TO EDITORS: For investment professionals and shareholders
who would like more information on Forte Software, Inc., at no
cost, please call 800-PRO-INFO (U.S.) or 908-544-2850 (Int'l),
ticker symbol, FRTE.
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