Financial Results On Target As New Products Make Their Commercial Debut
OTTAWA, Canada, August 5 /PRNewswire/ - Fulcrum Technologies Inc. (NASDAQ:
FULCF; TSE: FUL) today announced its results for the second quarter of 1997.
All financial figures are stated in Canadian dollars.
Revenue for the second quarter ended June 30, 1997 was $15.5 million,
slightly lower than the $15.9 million revenue in the same quarter in the
previous year. The net loss in the quarter was $2.9 million, or $0.19 per
share, compared to a profit of $1.0 million, or $0.07 cents per share, in the
second quarter of 1996. The loss in the second quarter includes a one-time
charge that reflects the full costs of acquiring clustering technology from
Central Research Laboratories Ltd. to enhance the Fulcrum(R) Knowledge
Network(TM) . In addition, it includes a one-time charge related to the
write-off, in late July, as an event subsequent to the quarter, of the
remainder of Fulcrum's 25-percent interest in Passage Systems, Inc., a
California-based software company, and other assets related to Passage
Systems.
For the first six months of 1997, revenue was $27.1 million, again
slightly lower than revenue in the same period of the previous year. The net
loss for the first six months was $6.8 million or $0.44 per share, compared to
a profit of $1.6 million or $0.11 per share for the same period in the
previous year.
``Our financial results were in line with expectations, and we also
achieved the operational milestones we established at the beginning of the
quarter,'' said Eric Goodwin, chairman and chief executive officer at Fulcrum.
``We delivered the commercial version of the Fulcrum Knowledge Network(TM),
not only in North America but also in Europe and Japan. In the first quarter
that the product was available, we signed some notable customers, including
EDS and Softbank in the US, ENEL in Europe, and CSA Automated in the Pacific
Rim.
``In terms of our SearchServer(TM) products, we generated additional
business with some of our long-standing publishing customers, including
CompuServe, UMI and Multex, and with independent software vendors, such as
Quintus and Connect.
``Fulcrum is still very much in a transition, and we continue to shift our
focus from our traditional information-retrieval markets to a focus on the
emerging market for knowledge management software. In the second quarter, we
continued to see trends in the market that validate our decision to shift to
higher-value products. We are committed to this transition, and the results
of the second quarter - the second full quarter since we officially unveiled
our intention to move into this new space - make us optimistic that we are on
the right track,'' Goodwin concluded.
For 14 years, Fulcrum Technologies Inc. has been a world leader in
providing software solutions that turn enterprise information into knowledge.
Fulcrum's products allow customers to create multi-platform, standards-based
solutions - for customer care, best practices, publishing, and other
applications that require robust underlying search software, and its customers
include some of the world's most important companies, including Microsoft and
Fujitsu. Headquartered in Ottawa, Canada, Fulcrum extends its global reach
with offices throughout the United States, Europe, and in Australia and Japan,
and through a network of partners worldwide. Fulcrum is publicly traded on
the Nasdaq National Market (``FULCF'') and on the Toronto Stock Exchange
(``FUL''). For more information on Fulcrum and Fulcrum products, visit
Fulcrum's Web site: http://www.fulcrum.com.
Any forward-looking statements in this release are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that all forward-looking statements involve risk
and uncertainties, including without limitation, risks of intellectual
property litigation, risks in technology development and commercialization,
risks in product development and market acceptance of and demand for the
Company's products, risks of downturns in economic conditions generally, and
in the software application development tools and information retrieval
software tools markets specifically, risks associated with competition and
competitive pricing pressures, risks associated with foreign sales and higher
customer concentration and other risks detailed in the Company's filings with
the Securities and Exchange Commission.
Fulcrum is a registered trademark of Fulcrum Technologies Inc. and Fulcrum
Knowledge Network and SearchServer are trademarks of Fulcrum. Other trademarks
used throughout this document are trademarks of their respective owners.
FULCRUM TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars, Canadian GAAP)
June 30, December 31,
1997 1996
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 55 $ 3,435
Trade accounts receivable 14,358 9,859
Current portion-extended term receivables 12,206 5,660
Income taxes recoverable - 838
Other receivables 1,032 578
Due from affiliates and majority shareholder 1,049 1,210
Prepaid expenses and deferred charges 2,480 2,546
--------- ----------
31,180 24,126
Capital assets 8,868 8,951
Extended-term trade receivables 10,621 7,173
Investment tax credits 4,175 3,699
Long-term investments - 1,004
Deferred charges 1,516 -
Goodwill 6,364 6,874
Deferred income taxes 8,907 4,402
--------- ----------
$ 71,631 $ 56,229
--------- ----------
--------- ----------
LIABILITIES
Current Liabilities
Bank indebtedness $ 12,332 $ -
Accounts payable 5,297 5,428
Salaries, commissions and related items 4,914 4,011
Accrued liabilities 4,700 4,831
Deferred service revenue 2,439 1,796
--------- ---------
29,682 16,066
--------- ---------
Minority interest 670 401
SHAREHOLDERS' EQUITY
Share capital 48,834 39,449
Cumulative translation adjustment (1,165) (85)
Retained earnings (deficit) (6,390) 398
---------- ---------
41,279 39,762
--------- ---------
$ 71,631 $ 56,229
--------- ---------
--------- ---------
FULCRUM TECHNOLOGIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
(in thousands of Canadian dollars, Canadian GAAP)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenue
License fees $ 12,190 $ 13,163 $ 21,966 $ 21,616
Services 3,294 2,773 5,144 5,880
--------- --------- --------- ---------
15,484 15,936 27,110 27,496
--------- --------- --------- ---------
Operating Expenses
Cost of license revenue 766 968 1,372 1,985
Cost of service revenue 1,251 1,560 2,321 3,128
Selling, general and
administrative 11,254 9,869 22,631 17,183
Research and development 5,138 2,267 8,305 4,159
Investment tax credits (500) (620) (500) (1,921)
Amortization of goodwill 190 190 380 392
Foreign exchange (499) 113 (70) 172
--------- --------- --------- ---------
17,600 14,347 34,439 25,098
--------- --------- --------- ---------
Income (loss) from
operations (2,116) 1,589 (7,329) 2,398
Other expense (income) 1,716 (42) 1,829 (168)
--------- --------- --------- ---------
Income (loss) before
income taxes (3,832) 1,631 (9,158) 2,566
Income tax expense
(recovery) (991) 588 (2,639) 944
--------- --------- --------- ---------
Net income (loss) before
minority interest (2,841) 1,043 (6,519) 1,622
Minority interest 101 0 269 0
--------- --------- --------- ---------
Net income (loss) for
the period (2,942) 1,043 (6,788) 1,622
Retained earnings (deficit),
beginning of period (3,448) 11,953 398 11,374
--------- --------- --------- ---------
Retained earnings (deficit),
end of period $ (6,390) $ 12,996 $ (6,390) $ 12,996
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income (loss)
per share
Basic $ (0.19) $ 0.07 $ (0.44) $ 0.11
Fully diluted $ (0.19) $ 0.07 $ (0.38) $ 0.11
Weighted average shares
outstanding (000's):
Basic 15,783 15,073 15,484 14,969
Fully diluted 17,905 16,580 17,606 16,439
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SOURCE: Fulcrum Technologies Inc.
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CONTACT:
Gillian Brouse, Fulcrum, (613) 238-1761,
ext.251, e-mail: pr(at)fulcrum.com
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