ARI Reports Strong First Quarter.Business Editors MILWAUKEE--(BUSINESS WIRE)--Nov. 30, 2000 Revenues Increase 42%; EBITDA, Bottom Line Show Dramatic Improvement ARI Network Services, Inc. (NASDAQ/NMS:ARIS), a leading provider of Partner Relationship Management (PRM) and business-to-business (B2B) Internet e-Commerce solutions for equipment manufacturers with shared service and distribution networks, today reported results for the first quarter of fiscal 2001 ended October 31, 2000. The Milwaukee-based firm reported revenues of $4.8 million for the first quarter of fiscal 2001, compared to $3.4 million for the same quarter in the previous fiscal year, a 42% increase. EBITDA (earnings before interest, taxes, depreciation and amortization) for the first quarter of fiscal 2001 improved dramatically to positive $791,000, compared to negative $31,000 in the prior year's first quarter. ARI had a net loss of $859,000 or $0.14 per share in the first quarter of fiscal 2001, compared to a loss of $1.3 million or $0.23 per share in the previous year's first quarter, a 35% improvement. On a trailing twelve month basis through the first quarter, revenues were $16.0 million while EBITDA was $271,000 -- both significant improvements over the prior quarter. "I'm very pleased with both our top and bottom line performance during the first quarter. The results confirm that the hard work we did last year to improve our development process and to complete the integration of our recent acquisitions has paid off," commented Brian E. Dearing, chairman and chief executive officer of ARI. "The first quarter of fiscal 2001 was a very strong and significant quarter for ARI and we expect to see good performance continue throughout the balance of the fiscal year," Dearing added. "EBITDA, one of the leading indicators of future profitability, improved greatly in the first quarter of 2001 and is again positive on a trailing twelve month basis," Dearing said. "This is not a `flash in the pan': trailing 12-month EBITDA has been positive for nine of the past 10 quarters." Dearing also pointed to substantial improvements in cash flow as another sign of strength of the firm. "Net cash from operations before changes in working capital improved to a positive $660,000 from a negative $129,000 in the same period of the prior year," Dearing said. Dearing indicated that first quarter 2001 revenues grew because of increased renewal revenue, a price increase on ARI's PartSmart(TM) electronic catalog, continued strength in sales to the equipment industry and the growth of international business. "Revenue from products sold to the manufactured equipment industry grew 70% in the first quarter, continuing to drive our overall growth. Additionally, our international sales doubled over the same period of the previous year," Dearing said. He also attributed some of the first quarter success to the Company's new program to develop strategic alliances with partners who sell ARI products, incorporate ARI products into broader, integrated offerings or extend ARI products into new markets. "In particular, we reached an agreement with a significant new partner close to the end of the first quarter, and we've already begun to see benefits from that alliance," Dearing said. Dearing indicated that ARI has produced year-over-year quarterly revenue increases for 18 of the past 19 quarters. "We expect this pattern to continue and that overall revenue growth will be in the 20% to 30% range for the fiscal year," Dearing concluded. ARI Network Services, Inc. is a leading provider of PRM/e-Commerce solutions for sales, service and life-cycle product support in the manufactured equipment market. ARI currently serves over 100 manufacturers and 20,000 dealers in more than 100 countries in 12 segments of the worldwide manufactured equipment market including outdoor power, recreation vehicle, floor maintenance, auto and truck parts aftermarket, 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/DVD. ARI communications systems provide a global electronic pathway for parts orders, product registrations, warranty claims and other transactions between manufacturers and their networks of sales and service points. ARI currently operates three offices in the United States and one in Europe and has sales and service agents in Australia, England, France, Germany and Italy providing marketing and support of its electronic catalog and dealer communications products. Statements in this news release include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. 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 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 risk and uncertainties include those factors described under "Risk Factors" in the Company's Registration Statement on Form S-3 filed on May 12, 2000, as amended. 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, and the Company undertakes no obligation to publicly release the result of any revisions 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.
Balance Sheets
(In thousands, except share and per share data)
October 31 July 31
2000 2000
ASSETS (Unaudited) (Audited)
------------ ------------
Current Assets:
Cash and cash equivalents $ 299 $ 563
Trade receivables, less allowance for
doubtful accounts of $746 at October 31,
2000 and $697 at July 31, 2000 3,585 3,282
Prepaid expenses and other 106 109
------------ ------------
Total Current Assets 3,990 3,954
Equipment & leasehold improvements:
Computer equipment 4,394 4,389
Leasehold improvements 239 239
Furniture and equipment 967 846
------------ ------------
5,600 5,474
Less accumulated depreciation and
amortization 5,130 5,038
------------ ------------
Net equipment and leasehold improvements 470 436
Goodwill, less accumulated amortization of
$1,578 at October 31, 2000 and $1,413 at
July 31, 2000 1,711 1,876
Deferred finance costs, less accumulated
amortization of $94 at October 31, 2000 and
$59 at July 31, 2000 316 321
Capitalized software development:
Network platform 11,467 11,467
Software products 29,749 29,317
------------ ------------
41,216 40,784
Less accumulated amortization 29,905 28,883
------------ ------------
Net capitalized software development 11,311 11,901
------------ ------------
Total Assets $ 17,798 $ 18,488
============ ============
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable to
shareholder $ 361 $ 361
Current portion of notes payable 492 461
Accounts payable 634 836
Unearned income 3,112 3,117
Accrued payroll and related liabilities 1,325 1,182
Other accrued liabilities 1,424 1,310
Current portion of capital lease obligations 148 111
------------ ------------
Total Current Liabilities 7,496 7,378
Long term liabilities:
Notes payable to shareholder (net of
discount) 239 313
Notes payable (net of discount) 2,253 2,168
Capital lease obligations 254 214
------------ ------------
Total Long Term Liabilities 2,746 2,695
Shareholders' equity:
Cumulative preferred stock, par value
$.001 per share, 1,000,000 shares
authorized; 20,350 shares issued and
outstanding at October 31, 2000 and July
31, 2000 - -
Common stock, par value $.001 per share,
25,000,000 shares authorized; 6,168,270
shares issued and outstanding at October
31, 2000 and July 31, 2000 6 6
Common stock warrants and options 2,459 2,459
Additional paid-in-capital 91,781 91,781
Accumulated deficit (86,690) (85,831)
------------ ------------
Total Shareholders' Equity 7,556 8,415
------------ ------------
Total Liabilities & Shareholders'
Equity $ 17,798 $ 18,488
============ ============
See notes to unaudited condensed financial statements.
ARI Network Services, Inc.
Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended
October 31
2000 1999
------------ ------------
Net revenues:
Subscriptions, support and transaction fees $ 2,552 $ 2,500
Software licenses and renewals 1,422 427
Professional services 831 458
------------ ------------
4,805 3,385
Operating expenses:
Variable cost of products and services
sold (exclusive of depreciation and
amortization shown separately below):
Subscriptions, support and
transaction fees 373 318
Software licenses and renewals 88 157
Professional services 502 364
------------ ------------
963 839
Depreciation and amortization 1,279 1,199
Customer operations and support 404 484
Selling, general and administrative 2,233 1,805
Software development and support 845 656
------------ ------------
Operating expenses before amounts capitalized 5,724 4,983
Less capitalized portion (432) (372)
------------ ------------
Net operating expenses 5,292 4,611
------------ ------------
Operating loss (487) (1,226)
Other income (expense)
Interest expense (371) (98)
Other, net (1) (4)
------------ ------------
Total other expense (372) (102)
------------ ------------
Net loss $ (859) $ (1,328)
============ ============
Average common shares outstanding 6,168 5,712
Basic and diluted net loss per share ($0.14) ($0.23)
See notes to unaudited condensed financial statements.
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