ARI Reports Increased Third Quarter Revenues and Net Income; Core electronic catalog and new Dealer Marketing Services businesses continue to grow.MILWAUKEE Milwaukee (mĭlwŏk`ē), city (1990 pop. 628,088), seat of Milwaukee co., SE Wis., at the point where the Milwaukee, Menominee, and Kinnickinnic rivers enter Lake Michigan; inc. 1846. -- ARI ARI Acute respiratory infection, see there (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :ARIS ARIS American Religious Identification Survey ARIS Architecture of Integrated Information Systems ARIS Active Rack Isolation System ARIS Aggregate Route-based IP Switching ARIS Agentia Romana pentru Investitii Straine ), a leading provider of technology-enabled business solutions that help equipment dealers build sales and profits, today reported increased revenues and net income for the third quarter ended April 30, 2006. Third Quarter Fiscal 2006 Highlights --Revenues increased 3% to $3.6 million in the third quarter of fiscal 2006 from $3.5 million for the third quarter of fiscal 2005. --Operating income was $456,000 for the third quarter of fiscal 2006 compared to operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $554,000 for the same period in the prior year. --Net income was $1.5 million or $0.22 per 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. share for the third quarter of fiscal 2006, compared to net income of $495,000 or $0.08 per diluted share for the same period in the prior year. Net income for the third quarter of fiscal 2006 includes an income tax benefit of $1.0 million. First Nine Months Fiscal 2006 Highlights --Revenues increased 5% to $10.6 million for the first nine months of fiscal 2006, from $10.0 million for the first nine months of fiscal 2005. --Operating income was $1.5 million for the first nine months of fiscal 2006, compared to operating income of $1.6 million for the same period in the prior year. --Net income was $2.5 million or $0.38 per diluted share for the first nine months of fiscal 2006, compared to net income of $1.4 million or $0.24 per diluted share for the same period in fiscal 2005. Operations Review "There were many bright spots in our third quarter performance. Recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenues in our core U.S. electronic catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. business continued to grow and our new Dealer Marketing Services (DMS (1) (Document Management System) See document management. (2) (Defense Messaging System) An X.500-compliant messaging system developed by the U.S. Dept. of Defense. ) business is gaining traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. in the market," said Brian The name Brian (sometimes spelled Bryan) comes from an Irish backround. It is of Celtic origin and its meaning may be "hill" or "strong, noble, and high"[1]. E. Dearing Dearing, as a name, may refer to:
Dearing said the company made good progress on two of its strategic growth initiatives -- growing its core electronic catalog business and expanding the new Dealer Marketing Services offering. "North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. catalog subscriptions and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. together grew 3% in the third quarter and 6% for the first nine months of fiscal 2006. This growth more than compensated compensated /com·pen·sat·ed/ (kom´pen-sa?tid) counterbalanced; offset. for a decline in European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. catalog revenues," said Dearing. "Revenues from the small but fast-growing adj. 1. tending to spread quickly; - used mostly of plants. Adj. 1. fast-growing - tending to spread quickly; "an aggressive tumor" strong-growing, aggressive Dealer Marketing Services area almost doubled in the third quarter and increased 50% for the first nine months of the fiscal year. These services help manufactured equipment dealers efficiently and cost-effectively market their business to their customers. The positive response from dealers indicates our DMS services are meeting a need in the marketplace, and we anticipate that this business will continue to increase in the fourth quarter," said Dearing. "While many areas of our business improved in the third quarter, the performance of our European operations did not meet our expectations. We remain committed to this market and to the dealer-direct strategy that has been successful for ARI in the U.S. We are focusing on strengthening our European sales force and adding the catalogs to our PartSmart offering that have the highest demand in the marketplace. However, it may take several quarters to reap the benefits of these strategies," Dearing said. Dearing noted that the decrease in operating income for the quarter reflected increased investments in the Dealer Marketing Services business and the European operations. "In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite these investments, our cash position remained strong and we continued to pay down debt. We also invested in our infrastructure with a new business enterprise system and software to improve efficiency and increase capacity. In addition, we moved our office in Colorado Springs Colorado Springs, city (1990 pop. 281,140), seat of El Paso co., central Colo., on Monument and Fountain creeks, at the foot of Pikes Peak; inc. 1886. It is a year-round resort and a booming military, technological, and commercial city. to newer and lower-cost facilities," Dearing added. Dearing said the income tax benefit recognized in the third quarter reflected the Company's continual evaluation of deferred tax assets that had been previously offset by a deferred tax valuation allowance. The Company performs regular quarterly assessments of the likelihood of the realizability Realizability is a part of proof theory which can be used to handle information about formulas instead of about the proofs of formulas.[1] A natural number n is said to realize a statement in the language of arithmetic of natural numbers. of the deferred tax assets based on the expected levels and sustainability of profits over a three-year period, which is the time frame for which the Company believes reasonable forecasting can be conducted. Outlook "We expect that our results for the fourth quarter will be consistent with the third quarter. We anticipate that we will maintain profitability and positive cash flow, while continuing to invest in the key business areas that offer good long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth potential for ARI," added Dearing. About ARI ARI is a leading provider of electronic parts catalogs Noun 1. parts catalog - a list advertising parts for machinery along with prices parts catalogue catalogue, catalog - a complete list of things; usually arranged systematically; "it does not pretend to be a catalog of his achievements" and related technology and services to increase sales and profits for dealers in the manufactured equipment markets. ARI currently provides approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 91 parts catalogs (many of which contain multiple lines of equipment) for approximately 72 equipment manufacturers in the U.S. and 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). .
Approximately 81,000 catalog subscriptions are provided through ARI to
approximately 29,000 dealers and distributors in approximately 89
countries in a dozen segments of the worldwide equipment market
including outdoor power, power sports, ag equipment, recreation vehicle,
floor maintenance, auto and truck parts aftermarket AftermarketSee: Secondary market. aftermarket See secondary market. , marine and construction. The Company builds and supports a full suite of multi-media electronic catalog publishing and viewing software for the Web or CD and provides expert catalog publishing and consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" . ARI also provides dealer marketing services, including technology-enabled direct mail, email and a award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" dealer website service that makes it quick and easy for an equipment dealer to have a professional and attractive website. In addition, ARI e-Catalog systems support a variety of electronic pathways for parts orders, warranty An assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party. Warranties are used in a variety of commercial situations. In many instances a business may voluntarily make a warranty. claims and other transactions between manufacturers and their networks of sales and service points. ARI currently operates three offices in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and one in Europe and has sales and service agents in England England, the largest and most populous portion of the United Kingdom of Great Britain and Northern Ireland (1991 pop. 46,382,050), 50,334 sq mi (130,365 sq km). It is bounded by Wales and the Irish Sea on the west and Scotland on the north. and France providing marketing and support of its products and services. Third Quarter Earnings Conference Call ARI's Third Quarter Conference Call is scheduled for Thursday Thursday: see week. , May 25, 2006 at 3:30 p.m. Central Time/4:30 p.m. Eastern Time. If you would like to participate, please pre-register at https://www.myrcplus.com/rsvp-index.asp?BWebID=&CID Cid or Cid Campeador (sĭd, Span. thēth kämpāäthōr`) [Span.,=lord conqueror], d. 1099, Spanish soldier and national hero, whose real name was Rodrigo (or Ruy) Díaz de Vivar. =4303652. At that time you will be provided with the numbers to use to join the conference call. A replay of ARI's conference call, as well as notes and financial information presented in the call, will also be available on ARI's website, www.arinet.com, after 6:00 p.m. Central Time on 6:00, May 26, 2006. Click on the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " tab to access the information. Statements in this news release are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and . The forward-looking statements can generally be identified by words such as "believes," "anticipates," "expects" or words of similar meaning. Forward-looking statements also include statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's future performance, such as future prospects, revenues, profits and cash flows. The forward-looking statements are subject to risks and uncertainties, which may cause actual results to be materially different from any future performance suggested in the forward-looking statements. Such risks and uncertainties include those factors described under "Forward Looking Statements Disclosure" in Exhibit 99.1 of the Company's annual report on Form 10-KSB for fiscal year ended July July: see month. 31, 2005 filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements are made only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , and the Company undertakes no obligation to publicly release the result of any revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to these forward-looking statements. For more information, please refer to the Company's filings with the Securities and Exchange Commission.
ARI Network Services, Inc.
Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
April 30 April 30
2006 2005 2006 2005
--------- --------- --------- ---------
Net revenues:
Subscriptions, support and
other services fees $2,621 $2,534 $7,733 $7,358
Software licenses and
renewals 498 552 1,531 1,686
Professional services 434 373 1,302 994
--------- --------- --------- ---------
3,553 3,459 10,566 10,038
Operating expenses:
Cost of products and services
sold:
Subscriptions, support and
other services fees 265 186 653 612
Software licenses and
renewals (a) 168 153 490 452
Professional services 81 134 276 264
--------- --------- --------- ---------
514 473 1,419 1,328
Depreciation and amortization
(exclusive of amortization
of software products
included in cost of products
and services sold) 104 67 278 190
Customer operations and
support 273 265 855 784
Selling, general and
administrative 1,862 1,805 5,561 5,259
Software development and
technical support 344 295 924 855
--------- --------- --------- ---------
Net operating expenses 3,097 2,905 9,037 8,416
--------- --------- --------- ---------
Operating income 456 554 1,529 1,622
Other income (expense)
Interest expense 46 (49) (53) (140)
Other, net (45) 3 3 25
--------- --------- --------- ---------
Total other expense 1 (46) (50) (115)
--------- --------- --------- ---------
Income before provision for
income taxes 457 508 1,479 1,507
Income tax benefit
(provision) 1,008 (13) 1,008 (63)
--------- --------- --------- ---------
Net income $1,465 $495 $2,487 $1,444
========= ========= ========= =========
Average common shares
outstanding:
Basic 6,175 6,008 6,152 5,812
Diluted 6,621 6,598 6,597 6,066
Basic and diluted net
income (loss) per share:
Basic $0.24 $0.08 $0.40 $0.25
========= ========= ========= =========
Diluted $0.22 $0.08 $0.38 $0.24
========= ========= ========= =========
(a) includes amortization of software products of $161,$143,$458 and
$417, respectively and excluding other depreciation and
amortization shown separately
ARI Network Services, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
April 30 July 31
ASSETS 2006 2005
--------- ---------
Current Assets:
Cash $3,652 $3,651
Trade receivables, less allowance for doubtful
accounts of $133 and $71 at April 30, 2006
and July 31, 2005, respectively 1,308 1,023
Prepaid expenses and other 253 203
Deferred income taxes 747 160
--------- ---------
Total Current Assets 5,960 5,037
Equipment and leasehold improvements:
Computer equipment 4,961 4,813
Leasehold improvements 111 73
Furniture and equipment 2,010 1,702
--------- ---------
7,082 6,588
Less accumulated depreciation and amortization 6,171 5,893
--------- ---------
Net equipment and leasehold improvements 911 695
Deferred income taxes 1,156 705
Other assets 7 10
Capitalized software product costs 11,395 10,927
Less accumulated amortization 9,899 9,441
--------- ---------
Net capitalized software product costs 1,496 1,486
--------- ---------
Total Assets $9,530 $7,933
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of notes payable $1,400 $1,200
Accounts payable 322 323
Deferred revenue 5,585 5,441
Accrued payroll and related liabilities 793 1,134
Accrued sales, use and income taxes 52 74
Accrued vendor specific liabilities 607 530
Other accrued liabilities 351 242
Current portion of capital lease obligations - 4
--------- ---------
Total Current Liabilities 9,110 8,948
Long term liabilities:
Notes payable (net of discount) 940 2,037
Long term payroll related 480 461
Other long term liabilities 41 96
Capital lease obligations - -
--------- ---------
Total Long Term Liabilities 1,461 2,594
Shareholders' equity (deficit):
Cumulative preferred stock, par value $.001 per
share, 1,000,000 shares authorized; 0 shares
issued and outstanding at April 30, 2006 and
July 31, 2005, respectively - -
Common stock, par value $.001 per share,
25,000,000 shares authorized; 6,197,529 and
6,064,534 shares issued and outstanding at April
30, 2006 and July 31, 2005, respectively 6 6
Common stock warrants and options 36 36
Additional paid-in-capital 93,832 93,751
Accumulated deficit (94,915) (97,402)
--------- ---------
Total Shareholders' Equity (Deficit) (1,041) (3,609)
--------- ---------
Total Liabilities and Shareholders'
Equity (Deficit) $9,530 $7,933
========= =========
ARI Network Services, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended Nine months ended
April 30 April 30
2006 2005 2006 2005
------------------- -------------------
Operating activities
Net income $1,465 $495 $2,487 $1,444
Adjustments to reconcile net
income to net cash provided by
operating activities:
Amortization of software
products 161 143 458 417
Amortization of deferred
financing costs, debt
discount and excess carrying
value over face amount of
notes payable (13) (16) (44) (58)
Depreciation and other
amortization 104 67 278 190
Deferred income taxes (1,038) 0 (1,038) -
Stock issued as contribution
to 401(k) plan 0 0 21 37
Net change in receivables,
prepaid expenses and other
short term assets 177 (77) (335) 376
Net change in accounts
payable, deferred revenue,
accrued liabilities and long
term liabilities 18 208 (70) (272)
--------- --------- -------------------
Net cash provided by operating
activities 874 820 1,757 2,134
Investing activities
Purchase of equipment and
leasehold improvements (294) (79) (494) (232)
Software product costs
capitalized (158) (193) (468) (939)
--------- --------- -------------------
Net cash used in investing
activities (452) (272) (962) (1,171)
Financing activities
Payments under notes payable (350) (250) (850) (750)
Payments of capital lease
obligations (4) (1) (4) (7)
Proceeds from issuance of
common stock 0 9 60 69
--------- --------- -------------------
Net cash used in financing
activities (354) (242) (794) (688)
--------- --------- -------------------
Net increase in cash 68 306 1 275
Cash at beginning of period 3,584 3,326 3,651 3,357
--------- --------- -------------------
Cash at end of period $3,652 $3,632 $3,652 $3,632
========= ========= ===================
Cash paid for interest $83 $66 $190 $197
========= ========= ===================
Cash paid for income taxes $- $- $- $55
========= ========= ===================
Revenue by Location and Service
(In Thousands)
Three months Nine months
ended ended
April 30 Percent April 30 Percent
2006 2005 Change 2006 2005 Change
------- ------- ------- -------- -------- -------
North American
Catalog
subscriptions $2,562 $2,526 1% $7,721 $7,416 4%
Catalog
professional
services 418 377 11% 1,212 990 22%
Dealer marketing
services 147 77 91% 322 214 50%
Dealer &
distributor
communications 216 241 -10% 631 753 -16%
------- ------- -------- --------
Subtotal 3,343 3,221 4% 9,886 9,373 5%
Rest of the World
Catalog
subscriptions 195 236 -17% 579 653 -11%
Catalog
professional
services 15 3 100% 101 13 677%
------- ------- -------- --------
Subtotal 210 239 -12% 680 666 2%
Total Revenue
Catalog
subscriptions 2,757 2,762 0% 8,300 8,069 3%
Catalog
professional
services 433 380 14% 1,313 1,003 31%
Dealer marketing
services 147 77 91% 322 214 50%
Dealer &
distributor
communications 216 241 -10% 631 753 -16%
------- ------- -------- --------
Total $3,553 $3,460 3% $10,566 $10,039 5%
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