COSTA MESA, Calif., April 15 /PRNewswire/ -- FileNET Corporation
(Nasdaq: FILE) today reported results for its first quarter ended March 31,
1999. Revenue was $81.4 million, up 11 percent from $73.6 million for the
first quarter of 1998. Net income for the quarter was $2.0 million or 6 cents
per diluted share, compared to a net income of $2.5 million or 8 cents per
diluted share for the first quarter of 1998.
As of March 31, 1999, FileNET's financial condition included total cash
and marketable securities of $82 million, total stockholders' equity of
$130 million and no long-term debt.
"During the first quarter software revenue declined 3% from the first
quarter of 1998," said Lee Roberts, president and CEO. The Company's
professional services revenue grew 83% and its customer support revenue grew
30% from last year. Our investments in Europe have begun to bear fruit,
where we saw solid growth in new orders, particularly in new markets we
entered during 1998: BeneLux, Eastern Europe, Spain and Scandinavia.
Worldwide, six customers ordered systems valued at more than $1 million
with the largest order exceeding $2.7 million. The insurance, banking,
telecommunication, manufacturing and government sectors continue to implement
large applications. The softness in add-on orders for our traditional
WorkFlo(R) Business Systems products, however, continues to unfavorably impact
overall software revenue growth. We will continue our focus on our installed
base of customers to ensure we meet their expansion requirements and support
their long-term transition plans.
At the same time we continue to see significant interest and acceptance of
our new Panagon product family. During the first quarter, we added 135 new
customers to our installed base. In a little over a year since its delivery
to the market, we have sold 339,000 Panagon seats, have 100 Independent
Software Vendors (ISVs) building applications and extensions to the product,
and have seen 220 applications delivered to the market. In our view, Panagon
represents the most successful product launch in the Company's history."
"As we have previously discussed, FileNET is in a transition phase to
becoming a solutions company focused on six major industries. We have made
substantial progress in verticalizing and specializing our sales force and in
rapidly scaling our professional services business. These actions together
with the applications provided by our third party ISVs, and soon from us, will
give FileNET the capability we need to fulfill this shift. We see the
combination of services and applications as a way to enhance our overall value
proposition and expand our core business," continued Roberts. "The Company is
also increasing its focus on the exploding Internet market. We believe our
technology can be a significant component of the Enterprise Information Portal
space."
According to Roberts, "We continue to be well positioned from both a
financial and product standpoint, ready to take advantage of the projected
growth in this market in 1999 and beyond. The highly publicized Y2K issue is
sure to have some impact on the number of prospects that will be ready to roll
out new IDM applications this year, which could have a negative impact on
future results. However, at the same time, many of our customers have told us
they will continue to further deploy existing and proven FileNET applications
throughout the year. As a company, we continue to focus aggressively on
expense management and operating margin improvement."
This press release contains forward-looking statements regarding the
Company's future performance. Those statements and the Company's future
results of operations are subject to risks and uncertainties. Revenues and
operating results for the period discussed in this release and prior
periods may not be predictive of the Company's future financial results. For
a detailed discussion of the risk factors and uncertainties that may affect
the Company's future results, please refer to "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Certain
Considerations" in the Company's Annual Report for the year ended December 31,
1998; "Business - Certain Considerations" in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998. Such risk factors and
uncertainties include, but are not limited to, the timing of, and fluctuations
in, orders for the Company's products; the mix of products and services sold
by the Company; general conditions in the worldwide economy and the
software/technology sector; timely development and introduction of new
products to respond to customer demands; announcements of technological
innovations, new products or product enhancements by the Company or its
competitors; issues related to the Year 2000 problem; key management changes;
changes in joint marketing and development programs; developments relating to
patents or other intellectual property rights or disputes; and developments in
the Company's relationships with its customers, distributors and suppliers.
The actual results that the Company achieves may differ materially from any
forward-looking statements due to such risks and uncertainties.
About FileNET
FileNET Corp. (http://www.FileNET.com) is a proven leader in delivering
integrated document management (IDM) software to harness the power of
information for corporate and government organizations. FileNET's Internet
and client server solutions provide standards-based workflow, document
imaging, electronic document management, and report management (COLD) software
for managing information and enhancing productivity. Costa Mesa, Calif.-based
FileNET markets its innovative products in more than 70 countries
through global FileNET sales, professional services and support organizations,
including its ValueNET(R) partner program of resellers, system integrators and
application developers.
FileNET, ValueNET and WorkFlo Business Systems are registered trademarks
and Panagon is a trademark of FileNET Corp. All other named products
mentioned in this release may have been identified by trademarks or registered
trademarks of their respective holders.
FILENET CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Quarter Ended March 31,
1999 1998
(Unaudited) (Unaudited)
Revenue:
Software $41,984 $43,247
Service 33,427 23,471
Hardware 6,031 6,891
Total revenue 81,442 73,609
Costs and expenses:
Cost of software revenue 3,961 3,686
Cost of service revenue 20,304 14,346
Cost of hardware revenue 3,166 3,360
Research and development 13,102 12,074
Selling, general and administrative 39,445 37,567
Total costs and expenses 79,978 71,033
Operating income 1,464 2,576
Other income, net 1,461 979
Income before income taxes 2,925 3,555
Provision for income taxes 877 1,031
Net income $2,048 $2,524
Earnings per share: (A)
Basic and Diluted $0.06 $0.08
Weighted average shares outstanding:
Basic 31,915 30,204
Diluted 32,554 32,962
(A) Earnings per share for all periods presented have been restated to
reflect a two-for-one stock split in June 1998.
Note: Certain reclassifications have been made to the prior-year's
balances to conform to the current year's presentation.
FILENET CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
1999 1998
(Unaudited)
ASSETS
Current assets:
Cash and short-term
marketable securities $60,520 $71,304
Accounts receivable, net 60,381 61,636
Inventories 1,716 2,419
Prepaid and other expenses 7,737 8,865
Total current assets 130,354 144,224
Property, net 43,573 44,177
Long-term marketable securities 21,444 10,885
Deferred income taxes 6,393 6,385
Other 1,244 1,151
Total assets $203,008 $206,822
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $12,822 $21,022
Accrued liabilities 58,802 54,538
Deferred income taxes 949 942
Total current liabilities 72,573 76,502
Stockholders' equity 130,435 130,320
Total liabilities and stockholders' equity $203,008 $206,822
SOURCE FileNET Corporation
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Related links:
http://www.FileNET.com
CONTACT:
Mark St. Clare, Chief Financial Officer,
714-966-3577, or e-mail, mstclare@filenet.com, or Colleen
Edwards, 714-966-3218, or e-mail, cedwards@filenet.com, both of
FileNET Corp.; or Shareholder communications, Shareholder Direct,
888-444-FILE; General Information, Lise Needham, or Investors,
Nancy Hansen, both of The Financial Relations Board, 415-986-1591
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