4FRONT SOFTWARE INTERNATIONAL, INC. ANNOUNCES RECORD THIRD QUARTER AND NINE MONTHS RESULTS.
Third Quarter Ended October 31,
1995 1994 % Increase
Revenues $9,315,000 $2,366,000 294%
Net income before taxes and equity investee loss $ 319,000 $ 125,000 156%
Net income after taxes $ 165,000 $ 100,000 66%
Net income per share $ 0.06 $ 0.04 50%
Nine Months Ended October 31,
1995 1994 % Increase
Revenues $22,603,000 $8,394,000 169%
Net income before taxes and equity investee loss $ 816,000 $ 309,000 165%
Net income after taxes $ 470,000 $ 242,000 94%
Net income per share $ 0.18 $ 0.14 29%
For the third fiscal quarter ended October 31, 1995, revenues for 4Front increased 294% to $9,315,000, versus $2,366,000 reported for the comparable 1994 quarter. The substantial revenue gain is primarily attributable to the recognized revenues of Compass Computer Group and CI Support Limited, which were acquired by 4Front in April 1995 and November 1994, respectively. Net income for the third fiscal quarter of 1995 was up 66% to $165,000, versus $100,000 recorded for the comparable 1994 quarter. Net income per share for the 1995 quarter increased 50% to $0.06, based on 2,764,752 weighted average common shares outstanding, versus $0.04 per share, based on 2,241,804 weighted average common shares outstanding for the 1994 quarter.
For the nine month period ended October 31, 1995, revenues for 4Front increased 169% to $22,603,000, versus $8,394,000 reported for the comparable 1994 period. The substantial revenue gain is primarily attributable to the recognized revenues of Compass Computer Group and CI Support Limited. Net income for the 1995 period was up 94% to $470,000, versus $242,000 for the comparable 1994 period. Net income per share for the 1995 period increased 29% to $0.18, based on 2,672,909 weighted average common shares outstanding , versus $0.14 per share, based on 1,692,068 weighted average common shares outstanding for the 1994 period.
Goodwill amortization rose 296% in the 1995 third fiscal quarter from $14,000 to $54,000, and increased 226% for the 1995 nine month period from $41,000 to $133,000, principally due to increased goodwill arising from the Compass acquisition. The equity investee loss of $(84,000) and $(157,000) recorded for the quarter and nine months, respectively, reflects the Company's proportion of its ActionTrac International Partnership.
Anil J. Doshi, Chairman and Chief Executive Officer of 4Front, said, "All of 4Front's chief operating businesses performed to our expectations during the quarter, enabling us to almost double our net income for the first nine months of this year. Our results prove 4Front continues to strengthen its position as a high quality rapidly growing European computer services company.
"The Compass acquisition continues to generate the results we anticipated. As recently announced, we accelerated the Compass acquisition earn-out in order to fully integrate their operations into 4Front's. Accelerating the earn-out will allow us to advance further our overall growth strategy by removing the operational barriers the earn-out provisions had imposed. With full control and integration of Compass, we expect to realize better economies of scale and experience further consolidation benefits."
Mr. Mark Ellis, President of 4Front, commenting on the quarter's business developments, said, "Significant achievements were made in all areas of operation during the quarter. 4Front is now the largest provider of Seagate high-end storage solutions and products in Europe. Among the new products taken on were US Robotics' latest rack modem communications server and the Silicon Graphics high-end server range. Also, Timeline Inc.'s new data warehousing product, Metaview, was successfully launched and there was encouraging market reception to the Company's own new communications and networking products.
"Major new customers established by the systems integration and specialist solutions and sales operations included Compagnie Generale de Geophysique S.A., a leading French energy group, Computing Devices Ltd., which placed a major order in conjunction with a significant Royal Air Force computer services supply project, and PCSI Inc., a division of Cirrus Logic Inc., a leading US wireless LAN manufacturer which placed large orders in connection with the establishment of its European design headquarters. Furthermore, Interlogic Ltd., formerly British Rail's signalling division, placed one of the first significant orders for a Metaview solution. Existing customer sales included a major order from Baydel Ltd., the leading international RAID manufacturer and orders from GEC Marconi, Nuclear Electric and News International among others.
"Our hardware maintenance and support operations performed well and a new maintenance operation, Storage Support Limited, has been established as the UK's first independent specialist in the support and maintenance of storage systems. Meanwhile, the developing ActionTrac 24 hours software support service (help line) continued to make progress with sales growing at a compound monthly rate of more than 30 per cent over the past four months. The service has now been taken on for distribution by two major UK-based retail outlets, Fenwicks and Selfridges, a further extension of ActionTrac's growing distribution base."
4Front Software International, Inc., a UK-based computer services company provides a wide range of specialized high-end information technology solutions and services to primarily Financial Times UK Top 500 companies and government authorities. The Company provides key elements of distributed computing, including systems development and integration, storage and client-server solutions and products, as well as extensive hardware and software support. The Company's customers include National Westminister Bank PLC, British Aerospace PLC, Oracle Corporation, British Telecom PLC, Alcatel Alsthom, Royal Dutch/Shell Group, Oxford and Cambridge Universities and the British Ministry of Defense. -0-
4FRONT SOFTWARE INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended For the Nine Months Ended October 31, October 31, October 31, October 31, 1995 1994 1995 1994 (unaudited) (unaudited) (unaudited) (unaudited) REVENUES: Sales and services $ 9,314,659 $ 2,365,692 $22,602,763 $ 8,394,472
COSTS AND EXPENSES: Cost of sales and services 5,934,452 1,393,964 14,176,280 5,204,182 Sales and marketing 1,819,427 498,842 4,428,932 1,679,186 General and admin. 1,135,593 302,736 2,810,424 1,033,058 Goodwill amortization 54,028 13,628 132,933 40,747 Interest 51,693 31,720 238,091 128,568 Total Costs and Expenses 8,995,193 2,240,890 21,786,660 8,085,741
NET INCOME BEFORE TAXES AND EQUITY INVESTEE 319,466 124,802 816,103 308,731
(Loss) from equity investee(1) (83,860) 0 (156,807) 0
NET INCOME BEFORE TAXES 235,606 124,802 659,296 308,731
INCOME TAXES 70,298 25,225 189,787 66,609
NET INCOME $ 165,308 $ 99,577 $ 469,509 $ 242,122
NET INCOME PER COMMON SHARE $ 0.06 $ 0.04 $ 0.18 $ 0.14
Weighted Average Number of Common Shares Outstanding 2,764,752 2,241,804 2,672,909 1,692,068
SELECT BALANCE SHEET INFORMATION
Pro Forma(2) October 31, 1995 October 31, 1995 January 31, 1995 (unaudited) (unaudited) (audited)
Current assets $ 13,285,073 $ 13,735,073 $ 6,588,322 Total assets 18,207,158 18,657,158 9,887,099 Current liabilities 14,277,570 14,277,570 7,007,862 Long-term debt 66,473 66,473 74,306 Total liabilities $ 14,344,043 $ 14,344,043 $ 7,082,168 Shareholders' equity $ 3,863,115 $ 4,313,115 $ 2,804,931
(1) The equity investee loss of $(83,860) and $(156,807) for the three and nine months ended October 31, 1995 reflects the Company's proportion of its ActionTrac International partnership.
(2) During November 1995 the Company issued 100,000 shares of its common stock for $450,000 ($4.50 per share) in a private placement.
John Nesbett, ext. 101
Jason Thompson, ext. 124
Mark Ellis or Ken Newell
4Front Software International, Inc.
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|Date:||Dec 14, 1995|
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