Centra Reports 2005 Third Quarter Results; Company Achieves Second Consecutive Quarter of Profitability.LEXINGTON, Mass. -- Centra Software, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CTRA CTRA Canadian Therapeutic Recreation Association CTRA College Terrace Residents' Association CTRA Canadian Telecommunications Resellers Alliance CTRA Committee To Restore America ), a leading provider of software and services for online learning and training, today announced financial results for the third quarter ended September 30, 2005. Revenues for the third quarter were $9.4 million, compared with $10.3 million in the second quarter of 2005, and $9.7 million in the third quarter of 2004. Software license revenue for the third quarter was $2.6 million, or 27 percent of total revenues, compared with $3.0 million in the second quarter of 2005, and $2.8 million in the third quarter of 2004. Software services revenues were $2.5 million for the third quarter, or 27 percent of total revenues, compared with $2.6 million in the second quarter of 2005 and $2.7 million in the same period last year. Maintenance and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. revenues were $4.3 million in the third quarter, or 46 percent of total revenues, compared with $4.7 million in the second quarter of 2005, and $4.2 million in the third quarter of 2004. Net income for the third quarter improved to $795,000, or $0.03 per share. Expenses included a one-time charge of $310,000, or $0.01 per share, for merger-related costs associated with the prospective business combination with Saba Software Saba Software is a software company, with headquarters in Redwood City, California. Saba sells Human Capital Management and Talent Management software. History Saba was founded by Bobby Yazdani in April 1997 and has been a public company (NASDAQ: SABA) since April 2000. , Inc. This compares with net income of $148,000, or $0.01 per share, in the second quarter of 2005, and a net loss of $1.8 million, or $0.07 per share, for the third quarter of 2004. Gross margin percentage for the third quarter of 2005 was 81.8 percent, compared with 82.5 percent in the second quarter of 2005. Centra's cash, cash equivalents and short- and 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. investments totaled $24.5 million as of September 30, 2005, compared with $26.0 million as of June 30, 2005. The Company's days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). (DSO See CSO. ) was 55 days at the end of the third quarter, compared with 45 days at the end of the second quarter of 2005. CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Comments "We were pleased with many aspects of our third quarter financial results, especially the Company's continuing ability to generate profits," said Leon Navickas, Centra's chairman and CEO. "In addition, we sold four Enterprise Advantage contracts in the third quarter. This expands the roster of customers who chose to standardize stan·dard·ize v. 1. To cause to conform to a standard. 2. To evaluate by comparing with a standard. on our collaborative learning Collaborative learning is an umbrella term for a variety of approaches in education that involve joint intellectual effort by students or students and teachers. Collaborative learning refers to methodologies and environments in which learners engage in a common task in which each system across their organization" "Looking ahead, we are excited about our opportunity to combine with Saba. This merger will create the largest enterprise learning software company in the world, able to deliver the only comprehensive blended learning Blended Learning is the combination of multiple approaches to learning. Blended learning can be accomplished through the use of 'blended' virtual and physical resources. A typical example of this would be a combination of technology-based materials and face-to-face sessions used solution to a growing market of Global 5000 customers worldwide. In the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified" meantime, meanwhile , Centra continues to focus on sustaining a profitable, growing application software business and increasing shareholder value with tight fiscal controls and solid business execution," said Mr. Navickas. Third Quarter Highlights --In October, Centra announced the signing of a definitive merger agreement with Saba Software, Inc. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the agreement, Centra shareholders will receive a mix of cash and stock. The consideration per share to be received by the stockholders of Centra will be comprised of $0.663 in cash and Saba stock at a fixed exchange ratio of 0.354 of a share of Saba stock for each share of Centra stock. The merger is expected to close in the first quarter of 2006. --Centra was honored hon·or n. 1. High respect, as that shown for special merit; esteem: the honor shown to a Nobel laureate. 2. a. Good name; reputation. b. with two prestigious industry awards. Centra 7.5 won a Best of Show award from the TechLearn organization. The awards, sponsored by Questex Media Group, Inc., honor As a verb, to accept a bill of exchange, or to pay a note, check, or accepted bill, at maturity. To pay or to accept and pay, or, where a credit so engages, to purchase or discount a draft complying with the terms of the draft. exhibitors and products with the best potential to change the future of the learning and training industry. In addition, Centra 7.5, was named a winner of the Human Resource Executive Magazine Top Training Product of the Year Award for 2005. For this year's competition, editors of Human Resource Executive Magazine selected five top products that clearly met their stated criteria of innovation and value to the Human Resource function. --Centra added 32 new customers in the third quarter, including major accounts such as The Bank of Nova Scotia Nova Scotia (nō`və skō`shə) [Lat.,=new Scotland], province (2001 pop. 908,007), 21,425 sq mi (55,491 sq km), E Canada. Geography , Baylor Health Care and PHH PHH Provinciale Handelsschool Hasselt (school) PHH Pasukan Anti Huru-Hara (Anti Riot Task Force) PHH Phillips Head (screw) PHH Planar Halogenated Hydrocarbon Corporation. The Company also expanded sales to its installed base, including additional contracts with Blue Cross/Blue Shield of Tennessee, Clark County School District The Clark County School District, as of 2005, is the 5th largest school district in the United States. It serves all of Clark County, Nevada, including the cities of Las Vegas, Henderson, North Las Vegas, Boulder City, and Mesquite; plus the census-designated places of Laughlin, and NationsRent. --Over 1,000 attendees participated in a two-day Centra eConference that focused on Winning Online Training Strategies. The 2005 program featured a series of interactive online presentations by leading research analysts and training executives, including Century 21, DaimlerChrysler, and the University of Missouri. Third Quarter Conference Call Centra will host a conference call on Thursday, November 3rd at 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy to discuss these results in more detail. The call will be simultaneously Webcast over the Internet. To access the Webcast, go to the Company's Web site at www.centra.com/investorrelations. Due to the Company's proposed merger with Saba Software, Inc., Centra will not be holding a Q&A session following the prepared remarks portion of the conference call. About Centra Online learning and training solutions from Centra create workforce efficiencies and enable organizations to share and exchange business-critical information with geographically distributed customers, partners, prospects and employees. Centra enables groups to work faster and more effectively by automating critical learning and training initiatives online through virtual classrooms, online meetings and Web conferences. From enterprise-application training and support to workforce development and more, Centra's software and services help organizations deliver critical information and skills to support their most challenging business initiatives. Currently available in nine languages, Centra solutions can be deployed as on-site software or through its ASP asp, popular name for several species of viper, one of which, the European asp (Vipera aspis), is native to S Europe. It is also a name for the Egyptian cobra (Naja haja). service. Organizations across every major industry and market sector choose Centra, including Wyndham International, Weyerhaeuser, Underwriters Laboratories Underwriters Laboratories Inc. is a U.S. not-for-profit, privately owned and operated product safety testing and certification organization. Based in Northbrook, Illinois, UL develops standards and test procedures for products, materials, components, assemblies, tools and , BMW BMW in full Bayerische Motoren Werke AG German automaker. Founded as an aircraft engine manufacturer in 1916, the company assumed the name Bayerische Motoren Werke and became known for its high-speed motorcycles in the 1920s. and Stanford University Stanford University, at Stanford, Calif.; coeducational; chartered 1885, opened 1891 as Leland Stanford Junior Univ. (still the legal name). The original campus was designed by Frederick Law Olmsted. David Starr Jordan was its first president. . Headquartered in Lexington, Massachusetts Lexington is a town in Middlesex County, Massachusetts, United States. The population was 30,355 at the 2000 census. The town is famous for being the site of the opening shots of the Battles of Lexington and Concord, the first engagement of the American Revolution. , Centra serves a worldwide customer base throughout the Americas, Europe, Asia and Australia. For more information, visit www.centra.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Regarding 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. With the exception of the historical information contained in this release, the matters described herein contain forward-looking statements 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 of 1995, including but not limited to, statements about the beliefs and expectations of management regarding the Company's future performance, the Company's strategic initiatives, its ability to achieve and maintain a leadership position in conferencing See teleconferencing. and collaboration, demand for the Company's software services and management's goals and objectives regarding future results of operations. These statements reflect management's beliefs and expectations as of the date of this statement, and involve risk and uncertainties that may cause actual results, events and performance to differ materially. These risk factors include, but are not limited to, risks and uncertainties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's announced plan to combine with Saba Software, Inc., including but not limited to: the possibility that the market for the sale of certain products and services may not develop as expected; the possibility that the proposed merger does not close; unanticipated delays in completing the merger; the possibility that the parties will be unable to successfully execute their integration strategies or achieve planned synergies; the possibility that prior to the closing of the transaction, the businesses of both Saba and Centra might suffer due to customer uncertainty; unanticipated delays and difficulties in the integration of the two companies' technologies; unanticipated costs relating to the transaction and the integration of the two companies; and other risks. These risk factors also include risks and uncertainties relating to Centra's ongoing business, including uncertainty about the Company's ability to successfully execute its strategic plan and sustain profitability, the Company's ability to control costs and the effect of the Company's cost-cutting measures on its operations, uncertainty of market reaction to the Company's sales and marketing efforts, product demand for and market acceptance of the Centra 7.5 platform, the possibility of defects in our products, which could delay or prevent market acceptance of such products, the Company's ability to sell and deliver its online learning and training solutions, add-on modules and other future products, the effect of economic conditions generally on the market for IT spending and for the Company's products, the impact of competitive products and pricing, technological difficulties or other factors outside the control of the Company. There is no assurance that the Company will be able to implement its growth and operating plans as anticipated, or achieve its revenue and earnings goals. For a description of additional risks, and uncertainties, please refer to the Company's filings with the SEC, including its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004 and its Form 10-Q Form 10-Q See 10-Q. for the three months ended June 30, 2005, which are available at www.centra.com/investorrelations. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak 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" . The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof or to reflect the occurrence of unanticipated events. Centra is a registered trademark of Centra Software, Inc. All other trademarks referenced herein are the property of their respective owners.
CENTRA SOFTWARE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
December September
31, 30,
2004 2005
Assets
Current assets
Cash, cash equivalents and short-term
investments $25,135 $24,536
Restricted cash 233 -
Accounts receivable, net 7,887 5,703
Prepaid expenses and other current assets 1,374 1,977
-------- ---------
Total current assets 34,629 32,216
Property and equipment, net 1,440 1,138
Long-term investments 743 -
Restricted cash 400 400
Other assets 16 15
-------- ---------
Total assets $37,228 $33,769
======== =========
Liabilities and stockholders' equity
Current liabilities
Current maturities of long-term debt $1,049 $759
Accounts payable 939 376
Accrued expenses 5,677 4,796
Deferred revenue 14,360 12,330
-------- ---------
Total current liabilities 22,025 18,261
Long-term debt, net of current maturities 1,012 784
Total stockholders' equity 14,191 14,724
-------- ---------
Total liabilities and stockholders' equity $37,228 $33,769
======== =========
CENTRA SOFTWARE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2004 and 2005
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Nine Months
Ended September Ended September
30, 30,
2004 2005 2004 2005
Revenues
License $2,829 $2,564 $7,972 $7,654
Software services 2,670 2,502 7,671 7,874
Maintenance and professional
services 4,202 4,306 11,951 13,159
-------- ------- -------- -------
Total revenues 9,701 9,372 27,594 28,687
-------- ------- -------- -------
Cost of revenues
License 63 158 194 415
Amortization of acquired developed
technology - - 233 -
Software services 555 548 1,784 1,674
Maintenance and professional
services 1,208 1,003 3,244 3,253
-------- ------- -------- -------
Total cost of revenues 1,826 1,709 5,455 5,342
-------- ------- -------- -------
Gross profit 7,875 7,663 22,139 23,345
-------- ------- -------- -------
Operating expenses
Sales and marketing 4,763 3,060 16,815 10,487
Product development 2,313 2,134 7,889 6,716
General and administrative 2,443 1,838 6,583 6,553
Restructuring charges 241 - 788 -
-------- ------- -------- -------
Total operating expenses 9,760 7,032 32,075 23,756
-------- ------- -------- -------
Operating (loss) income (1,885) 631 (9,936) (411)
Other income, net 78 164 152 394
-------- ------- -------- -------
Net (loss) income $(1,807) $795 $(9,784) $(17)
======== ======= ======== =======
Net (loss) income per share, basic
and diluted $(0.07) $0.03 $(0.36) $-
Weighted average shares outstanding
Basic 27,410 27,951 27,299 27,844
Diluted 27,410 28,546 27,299 27,844
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