4Front Technologies, Inc. Announces First Quarter Results.Business & High Tech Editors LONDON--(BUSINESS WIRE)--June 7, 2000 4Front Technologies, Inc. ("4Front") (Nasdaq NM/EASDAQ: FFTI FFTI Federazione Field Target Italia (Italian) FFTI Feel Free to Ignore ) today announced its results for the first quarter ended April 30, 2000.
HIGHLIGHTS(a)
(in $'000's, except per share data)
First Quarter Ended April 30,
2000(1) 1999
------- ----
(unaudited) (unaudited)
Services revenues $55,199 $38,429
Products revenues $ 2,880 $18,897
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Total revenues $58,079 $57,326
Operating income $ 1,178 $ 3,380
Net income $ 82 $ 1,985
Net income per share (basic) $ 0.01 $ 0.19
Net income per share (diluted) $ 0.01 $ 0.17
Fully diluted shares outstanding 13,573,121 11,886,235
(a) A substantial part of the company's growth in the past three
years has been achieved through acquisition. Accordingly, the results
of operations from period to period are not necessarily comparable.
(1) Operating and net income figures exclude a reorganisation charge.
For the first quarter ended April 30, 2000, total revenues increased 1% to $58.1 million from $57.3 million reported for the comparable year-ago quarter. Within this increase, service revenues increased by 44% and product revenues declined by 85%. The product revenue decline principally reflects 4Front's disposal of its UK product distribution business ("Hammer") in the fourth quarter of last year. Net income for the quarter (excluding the reorganisation Noun 1. reorganisation - the imposition of a new organization; organizing differently (often involving extensive and drastic changes); "a committee was appointed to oversee the reorganization of the curriculum"; "top officials were forced out in the cabinet charge) was $0.1 million, or $0.01 per share (based on 13,573,121 shares), versus net income of $2.0 million, or $0.17 per share diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. (based on 11,886,235 shares). As anticipated, a charge was taken in the first quarter to cover reorganisation costs associated with the streamlining of 4Front's business. This charge amounted to $5.02 million. A further and final charge in connection with this reorganisation of up to approximately $10 million is anticipated in the current second quarter. The reported net loss for the first quarter after the charge was $4.5 million, or $(0.38) per share diluted. Anil Doshi This article is about the Indian surname. For the Japanese village, see Doshi, Yamanashi. Doshi is a fairly common surname in India. While the roots can be traced back a few hundred years, the origin of the name is still a matter of much dispute. , Chairman and Chief Executive of 4Front said: Overall Performance "The first quarter of what is a major year of transformation for 4Front has been successfully completed. Earnings in the quarter before the reorganisation charge were in line with our expectations. Management focus during the quarter centred on the development of our higher margin operations and e-business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. activities, as well as on the streamlining of 4Front's business. I am pleased to report that good progress was made on all of these fronts. E-Business Development Since commencing our e-business initiative in December December: see month. , its performance has been ahead of plan. In making rapid progress with our plan, we have: - Won $3.5 million systems management and consulting contract with Swedish PTT in partnership with Tivoli Systems. - Won $1.5 million IT service contract with Fujitsu Siemens in France - Won $2 million network services contract with Debis in Italy - Won $1 million help desk contract with Unika in UK - Won $1 million of new logistics and support business with UK government in partnership with IBM - Renewed and extended $7 million managed services and support contract with UK arm of Cegedim - Renewed $6 million Halliburton Brown and Root logistics and support contract in UK - Won significant training contract with Rolls Royce. Targets and Overall Strategy It is our principal aim to establish 4Front as a leading pan-European provider of e-business and other higher value IT services and solutions. We are making good progress in the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. roll-out of our higher-margin managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality and initial progress in our e-business and internet training initiatives is very encouraging. 4Front's revenues are now almost totally service-based with increasing emphasis being placed on the provision of higher-margin services. During the quarter we successfully proceeded with our programme to rationalise Verb 1. rationalise - structure and run according to rational or scientific principles in order to achieve desired results; "We rationalized the factory's production and raised profits" rationalize our lower-margin product-related service activities and to reduce the amount of non-strategic lower-margin business. The decline in total revenues versus the preceding quarter (Q4 FY2000) reflects the impact of this programme as well as the recent disposal of our UK product distribution business which contributed revenues to the preceding quarter, but made no contribution to the first quarter. Recent months have seen considerable volatility in the share prices of technology and, in particular, internet-related businesses. We remain, however, enthusiastic about the potential of our e-business and internet opportunities, which are based on solid consultancy and training business models and we are investing in these areas accordingly. Meanwhile, it should be noted that the vast majority of our current revenues, and a significant proportion of anticipated future revenues, are being, and are expected to be, generated in well-established IT service sectors in the European marketplace, which are continuing to see strong growth. Our pan-European network is, in our view, a significant and highly valuable asset in this overall context." Mark Ellis Mark Ellis is the name of:
"Among 4Front's key achievements of the past quarter, and subsequently, were: E-Business - Won $3.5 million systems management and consulting contract with Swedish PTT in partnership with Tivoli Systems. - Won $1.5 million IT service contract with Fujitsu Siemens in France - Won $2 million network services contract with Debis in Italy - Won $1 million help desk contract with Unika in UK - Won $1 million of new logistics and support business with UK government in partnership with IBM - Renewed and extended $7 million managed services and support contract with UK arm of Cegedim - Renewed $6 million Halliburton Brown and Root logistics and support contract in UK - Won significant training contract with Rolls Royce. Other Contract Developments - Won $3.5 million systems management and consulting contract with Swedish PTT in partnership with Tivoli Systems. - Won $1.5 million IT service contract with Fujitsu Siemens in France - Won $2 million network services contract with Debis in Italy - Won $1 million help desk contract with Unika in UK - Won $1 million of new logistics and support business with UK government in partnership with IBM - Renewed and extended $7 million managed services and support contract with UK arm of Cegedim - Renewed $6 million Halliburton Brown and Root logistics and support contract in UK - Won significant training contract with Rolls Royce. During the first quarter, 4Front made good progress with the integration of CVSI and continued its previously announced reorganisation programme. 4Front's involvement in non-strategic, lower margin services has been reduced and associated personnel reductions have been made in both the European and US operations. In addition, further property rationalisation Noun 1. rationalisation - (psychiatry) a defense mechanism by which your true motivation is concealed by explaining your actions and feelings in a way that is not threatening rationalization has been undertaken. The final stages of the programme are now in hand and a further and final charge arising from this programme of up to approximately $10 million is anticipated in the current second quarter. Overall IT service market growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). continue to be
strong. In some sectors, such as network services, there has been a
slower than anticipated pick-up pick-upNoun 1. a small truck with an open body used for light deliveries 2. Informal a casual acquaintance made for a sexual purpose 3. Informal a. in project rollouts following the millennial clampdowns imposed by many European companies It may never be fully completed or, depending on its its nature, it may be that it can never be completed. However, new and revised entries in the list are always welcome. This is a list of companies from the countries in the European Union. , although the network services sector is expected to improve in the second half of the year. Current strong overall economic growth in Europe should provide a further boost to overall growth in the IT service market. With our pan-European network, growing range of services, and motivated mo·ti·vate tr.v. mo·ti·vat·ed, mo·ti·vat·ing, mo·ti·vates To provide with an incentive; move to action; impel. mo workforce, we should continue to be well placed to benefit from further improvement in European market conditions. About 4Front Technologies, Inc. 4Front Technologies, Inc., is a leading provider and integrator (1) In electronics, a device that combines an input with a variable, such as time, and provides an analog output; for example, a watt-hour meter. (2) See systems integrator. of information technology, consisting of specialised Adj. 1. specialised - developed or designed for a special activity or function; "a specialized tool" specialized specific - (sometimes followed by `to') applying to or characterized by or distinguishing something particular or special or unique; "rules with computer services Data processing (timesharing, batch processing), software development and consulting services. See service bureau, SaaS and ASP. and web-based solutions, primarily to blue-chip blue chip also blue-chip·per n. 1. A stock that sells at a high price because of public confidence in its long record of steady earnings. 2. An extremely valuable asset or property. 3. corporations throughout Europe. 4Front's services and solutions include help-desk services, education services, network services, e-business and software solutions, and support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services . 4Front's customers include General Electric, British Telecom The telephone and communications carrier that provides services in Great Britain and Northern Ireland. It used to be a division of the British Post Office, but was privatized in 1984 under Margaret Thatcher's administration. , Telecom Italia Telecom Italia is formerly a partially state-owned Italian telco. It was once known as SIP, and it has the largest user base in Italy. Telecom Italia also owns shares in Telecom Argentina and Telecom Personal, fixed and cellular networks in Argentina. , Lucent, IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , Phillips Phil·lips A trademark used for a screw with a head having two intersecting perpendicular slots and for a screwdriver with a tip shaped to fit into these slots. , Nokia Nokia (nō`kēä), town (1996 pop. 26,326), Western Finland prov., SW Finland, on Lake Näsijärvi. It is an industrial community where wood and rubber products are manufactured. , Siemens, Sony SONY Standard Oil of New York (common, but untrue; it's an urban legend) , Cegedim, Renault Re·nault , Jean Louis 1843-1918. French jurist who represented France at The Hague Conference of 1907. He shared the 1907 Nobel Peace Prize. , Pfizer, Paine Webber Paine Webber and Company was an American stock brokerage firm that was acquired by the Swiss bank UBS AG in 2000. The company was founded in 1880 in Boston, Massachusetts, by William Alfred Paine and Wallace G. Webber. , Societe Generale and the UK Ministry of Defence. Additional information on 4Front can be found on the Company's website at www.4fti.com.
4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended
April 30, April 30,
2000 1999
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$ '000's $ '000's
(unaudited) (unaudited)
REVENUES
Services $ 55,199 $ 38,429
Products 2,880 18,897
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58,079 57,326
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Cost of Services 30,475 18,486
Cost of Products 2,594 16,242
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33,069 34,728
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GROSS PROFIT
Services 24,724 19,943
Products 286 2,655
--- -----
25,010 22,598
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OPERATING EXPENSES
Selling, general and administrative
expenses 21,520 18,024
Depreciation 881 434
Amortization 1,431 760
Re-organization and restructuring
costs 5,018 -
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Total operating expenses 28,850 19,218
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INCOME (LOSS) BEFORE INTEREST, INCOME
TAXES: (3,840) 3,380
Interest income 263 264
Interest expense (713) (222)
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INCOME (LOSS) BEFORE INCOME TAXES: (4,290) 3,422
INCOME TAXES 238 1,437
--- -----
NET INCOME (LOSS) $ (4,528) $ 1,985
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NET INCOME (LOSS) PER COMMON SHARE
(Basic) $ (0.38) $ 0.19
NET INCOME (LOSS) PER COMMON SHARE
(Diluted) $ (0.38) $ 0.17
4FRONT SELECT BALANCE SHEET INFORMATION
April 30, 2000 January 31, 2000
-------------- ----------------
(unaudited) (audited)
$ '000's $ '000's
Current assets $ 125,246 $ 127,722
Current liabilities 118,193 120,578
Total assets 204,699 209,008
Long-term debt 28,494 25,976
Shareholders' equity $ 58,012 $ 62,454
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