AremisSoft's Second Quarter Revenue Increases 36% To A Record $16.7 Million - Record Net Income Increases 57% to $2.5 Million.NEW YORK--(BUSINESS WIRE)--July 27, 1999-- AremisSoft Corporation (Nasdaq: AREM) today announced its financial results for the second quarter and six months ended June 30, 1999. The Company reported revenue of $16.7 million, a 36.0% increase from the $12.3 million reported for the second quarter of 1998, and a sequential increase of 27.7% from $13.1 million in the first quarter of 1999. Net income for the quarter increased 56.8% to $2.5 million, or $0.20 per diluted share, as compared to $1.6 million, or $0.16 per diluted share, for the year-ago quarter. Net income increased 215.4%, sequentially, from $803,000 in the first quarter. Software license revenue increased 36.0% to $8.9 million for the three months ended June 30, 1999, from $6.5 million in the second quarter of 1998, and increased 65.9% from $5.4 million in the first quarter of 1999. Maintenance and services revenue was $6.6 million, a 35.2% increase from $4.9 million in the year-ago quarter, and a 5.0% sequential increase from $6.3 million in the first quarter. Hardware sales decreased 14.6% sequentially to $1.3 million from $1.5 million. This reflects management's strategy to reduce the sale and installation of lower margin third party hardware. "During our first quarter as a public company, we successfully executed our business initiatives in each of our four divisions," said Roys Poyiadjis, President and Vice Chairman. "Specifically, AremisSoft won new contracts, extended its large customer base and created significant backlog, providing visibility into the next few quarters. Additionally, during the second quarter, the Company experienced strong sequential, as well as, year over year revenue growth. Looking ahead, we do not see any slowdown in our momentum due to Y2K issues and we remain positive on our business outlook." Revenue for the six months ended June 30, 1999 was $29.9 million, 33.3% higher than $22.4 million reported in the prior comparable period. Net income was $3.3 million, an 88.4% increase from $1.8 million in the prior comparable period, and earnings per diluted share for the six months ended June 30, 1999 increased 55.6% to $0.28 from $0.18. AremisSoft develops, markets, implements and supports enterprise-wide applications software targeted at mid-sized organizations in the manufacturing, healthcare, hospitality and construction industries. The Company's software products help streamline and enhance an organization's ability to manage and execute mission-critical functions such as accounting, purchasing, manufacturing, customer service and sales and marketing. Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995: All statements, other than historical facts, included in the foregoing press release regarding the Company's financial position, business strategy, and plans of management for future operations are "forward looking statements." These statements are based on management's beliefs and assumptions, and on information currently available to management. Forward looking statements include, but are not limited to, statements in which words such as "expect," "see," "anticipate," "intend," "plan," "believe," "estimate," "consider," or similar expressions are used. Forward looking statements are not guarantees of future performance. They involve risks, uncertainties, and assumptions, including the risks discussed under "Risk Factors" in the Company's prospectus included in its registration statement on Form S-1, SEC File No. 333-58351, all of which are incorporated herein by reference. The Company's actual results and stockholder values may differ materially from those anticipated or expressed in these forward looking statements. Many of the factors that will determine these results and values are beyond the Company's ability to control or predict. Readers of this press release are cautioned not to put undue reliance on any forward looking statement. The Company undertakes no obligation to publicly update these forward looking statements, whether as a result of new information, future events or otherwise.
AremisSoft Corporation
Consolidated Statements of Operations (unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1999 1998 1999 1998
------- ------- ------- -------
Revenues
Software licenses $8,890 $6,535 $14,250 $10,643
Maintenance and services 6,590 4,876 12,864 9,439
Hardware and other 1,262 895 2,740 2,320
------- ------- ------- -------
Total revenues 16,742 12,306 29,854 22,402
------- ------- ------- -------
Cost of revenues
Software licenses 1,061 640 1,777 1,120
Maintenance and services 2,059 1,140 4,046 2,397
Hardware and other 884 596 1,921 1,735
Amortization of purchased
software and
capitalized software
development costs 62 17 124 34
------- ------- ------- -------
Total cost of revenues 4,066 2,393 7,868 5,286
------- ------- ------- -------
Total cost of revenues 4,066 2,393 7,868 5,286
Gross profit 12,676 9,913 21,986 17,116
------- ------- ------- -------
Operating expenses:
Sales and marketing 5,774 4,549 10,639 8,450
Research and development 1,197 1,150 2,661 2,646
General and
administrative 1,496 1,069 2,684 2,138
Amortization of
intangible assets 88 24 176 48
------- ------- ------- -------
Total operating expenses 8,555 6,792 16,160 13,282
------- ------- ------- -------
Profit from operations 4,121 3,121 5,826 3,834
Other income
Interest expense, net 341 475 848 932
Income before income taxes 3,780 2,646 4,978 2,902
Income tax expense 1,247 1,031 1,642 1,131
Net income $2,533 $1,615 $3,336 $1,771
======= ======= ======= =======
Basic net income per share $0.20 $0.16 $0.28 $0.18
Diluted net income per share $0.20 $0.16 $0.28 $0.18
Basic weighted average
shares outstanding 12,589 10,000 11,849 9,641
Diluted weighted average
shares outstanding 12,604 10,015 11,864 9,656
AremisSoft Corporation
Consolidated Balance Sheets
(In thousands, except per share data)
As of As of
June 30, December 31,
--------------------------
1999 1998
--------------------------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $4,844 $149
Accounts receivable, less allowances for
doubtful accounts of $639 at
June 30, 1999 and Dec. 31, 1998 16,195 16,166
Other receivables 953 903
Inventory 1,090 787
Deposit paid on service and
maintenance contracts 975 3,531
Prepaid expenses and other assets 1,862 1,135
-------- --------
Total Current Assets 25,919 22,671
Loans receivable-related party 1,898 1,886
Property and equipment, net 2,155 1,774
Purchased and developed software, net of
accumulated amortization of $5,951 and
$6,075 at June 30, 1999 and
Dec. 31, 1998, respectively 1,160 1,284
Intangible assets, net of accumulated
amortization of $12,860 and
$13,036 at June 30, 1999 and Dec.
31, 1998, respectively 161 337
-------- --------
Total assets $31,293 $27,952
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payables $2,756 $3,669
Accrued payroll taxes 526 586
Accrued value-added taxes 300 1,649
Accrued income taxes 3,702 2,059
Current portion of capital lease obligations 45 55
Other accrued expenses 1,575 2,946
Bank loans and short term demand facility - 15,530
Deferred revenue 5,347 6,693
-------- --------
Total current liabilities 14,251 33,187
Long-term debt 7,908 -
Loan and accrued interest
payable-related party - 1,781
Capital lease obligations,
less current portion 87 93
Total liabilities $22,246 $35,061
Stockholders' equity (deficit):
Series-A convertible preferred stock par
value $0.001; authorized 2,100 shares;
and no shares issued and outstanding,
liquidating preference at par value - -
Series-B convertible preferred stock, par
value $0.001; authorized 3,500 shares;
no shares issued and outstanding,
liquidating preference at par value - -
Common stock, par value $0.001, authorized
75,000 shares; 10,000 shares and 13,530
issued and outstanding at Dec. 31, 1998
and June 30, 1999 14 10
Additional paid-in capital 39,971 27,107
Accumulated deficit (28,865) (32,201)
Accumulated other comprehensive
income (loss) (2,073) (2,025)
-------- --------
Total stockholders' equity (deficit) 9,047 (7,109)
-------- --------
Total liabilities and stockholders'
equity (deficit) $31,293 $27,952
======== ========
AremisSoft Corporation
Consolidated Statements of Cash Flows (unaudited)
(In thousands)
As of As of
June 30, June 30,
--------------------------
1999 1998
--------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,336 $1,771
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 615 402
Amortization and write-off of capitalized
software and intangible assets 300 82
Changes in assets and liabilities:
Accounts receivable (29) (4,547)
Other receivables (50) (2,559)
Inventory (303) 12
Deposits paid on service and maintenance
contract 2,556 -
Prepaid expenses and other assets (727) 178
Accounts payable (913) 1,673
Deferred revenue (1,346) 3,320
Accrued taxes payable 234 (1,925)
Other accrued expenses (1,371) (2,178)
-------- --------
Net cash provided by operating activities 2,302 (3,767)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (996) (594)
Capitalized software development costs - (38)
-------- --------
Net cash provided by investing activities (996) (632)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of stock 12,868 9,302
Principal repayments of
short-term borrowings (7,622) 137
Loan from related party (1,793) -
Principal payments of capital
lease obligations (16) (111)
Short-term demand facility - (1,507)
-------- --------
Net cash provided by financing activities 3,437 7,821
-------- --------
Net increase in cash and cash equivalents 4,743 3,422
Effect of foreign currency exchange rates
on cash and cash equivalents (48) (202)
Cash and cash equivalents, at
beginning of period 149 239
-------- --------
Cash and cash equivalents, at end of period $4,844 $3,459
======== ========
Supplemental disclosure:
Interest paid $848 $932
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