Cintech announces 3rd quarter results and adjustments to financial projections.

CINCINNATI--(BUSINESS WIRE)--Jan. 12, 1995--Cintech (TSE:CTM.S) Cintech Tele-Management Systems announced its financial results for the third quarter ended Nov. 30, 1994.

Sales for the third quarter of fiscal 1995 were US$1.1 million, which represents a 6% increase over the company's second quarter results and a 16% increase over the third quarter of fiscal 1994. The Gross Profit Margin for the third quarter was 59% compared with 58% in the third quarter of fiscal 1994. This resulted in a Gross Profit of US$659,000 for the third quarter, compared with US$559,000 for the third quarter of fiscal 1994. Selling, General, and Administrative Expenses increased to $999,000, up from $644,000 for the third quarter of fiscal 1994.

This increase, resulting from the additional staffing and expenses related to new product development, is offset by the improvement in Other Income and Expense of $214,000 resulting from the elimination of interest expense and earnings from cash reserves and investments. The Company had a Net Loss for the third quarter of US$280,000 compared to US$240,000 for the third quarter last year. Loss per Share was US$(0.02) compared to US$(0.03) in the third quarter of fiscal 1994.

Sales for the first three quarters were US$3.0 million, representing an 8% increase over the comparable period in fiscal 1994. The Gross Margin remained at 57%, equal to the same period in fiscal 1994. This resulted in Gross Profit for the nine month period of US$1.7 million. Selling, General, and Administrative Expenses increased from US$1.9 million to US$2.7 million.

Again, these increases are a direct result of the costs associated with increasing staff by 24% and expenses related to new product development. These expenses are partially offset by the improvement in Other Income and Expense, with income of US$82,000 for the first three quarters of fiscal 1995 compared to expenses of US$414,000 for the same period in fiscal 1994.

The reduction in expense is due to Cintech's retirement of debt after the Initial Public Offering last January. The income results from the investment income from Cintech's cash reserves. The resulting Net Loss was US$914,000 compared with US$679,000 in fiscal 1994. On a per share basis, the Net Loss of US$(0.07) was less than the comparable period in fiscal 1994 US$(0.09). This was due to the increase in the number of outstanding shares between the two periods. The Company remains debt free with a balance of US$2.8 million in cash and marketable securities at the end of the third quarter.

Cintech also announced an adjustment in its projections for the 1995 fiscal year ending Feb. 28, 1995. Sales for the year are projected to be US$4.5 million, with the resulting Net Loss of US$1.2 million or US$(0.10) per share. This is a revision from the former projections of US$8 million in Sales with a Net Income per Share of US$0.05 to US$0.07. Cintech's fiscal 1994 Sales were $3.9 million with a resulting Net Loss before Extraordinary Item of US$(0.12).

"The projected growth in sales is delayed by a number of factors relating to the marketing of Cintech's products," commented Diane Kamionka, president of Cintech. "Several of the activities and strategies we undertook following the IPO in January of 1994 did not impact sales as quickly as expected during this time period.

"For example, our distributors, many of them giant telecommunications entities who historically built their success on selling telephone hardware equipment and services, have been slow to mainstream our products. Our computer software applications represent a break from their traditional line of business, requiring a different approach to selling, support and compensation.

"We have reviewed the assumptions related to marketing upon which we based our initial projections, and remain convinced that the competitive environment, pricing, product acceptance and potential of the target market are valid. It is clear that there remains a strong market for our applications for Norstar.

"Cintech took several proactive steps to quicken the sales process and to improve the effectiveness of the distribution channel. We now have an in-house telemarketing group that is calling to the installed base of Norstar users. The result is a qualified lead generation program to shorten the sales cycle. We have identified and researched key vertical markets, and developed specific action plans to take advantage of the opportunities within these markets.

"Early in the year, we made a change in executive sales management to more aggressively work with our distributors and to build a more effective sales organization. One step was to reorganize the sales team based on Major Account opportunities and geographic territories to both increase individual effectiveness and reduce time and costs associated with travel.

"We have made great strides in strengthening our relationships with many of the key distributors, especially at the executive management level. Through key, top level management, who recognize the value and potential of our applications, we are working to make the required adjustments within their organizations that are necessary to promote the sale and support of our computer software applications. Making our applications a core, strategic product at the sales level, with the appropriate infrastructure to back it up, allows us to leverage one of our most valuable assets - the size and accompanying resources of our distributors.

In November, Northern Telecom began shipping its long anticipated Norstar Interactive Communications System (ICS) with highly competitive features. Our products are all compatible with this new system and are expected to benefit from the momentum of the Norstar product rollout.

"Computer-to-Telephone Integration, as an industry, is growing rapidly, which is spawning numerous business opportunities. Cintech's CTI expertise and knowledge of the small office customer profile, has generated a variety of opportunities for the Company.

Specifically, we have been aggressively researching the area of desktop CTI or personal CTI as an area for business expansion. This would include products targeted to the Small Office/Home Office (SOHO), a market that has grown nearly 200% since 1988, with over 35 million SOHOs in the United States alone, according to BIS Strategic Decision.

Since Microsoft began promoting their TAPI standard interface between computers and the telephone, a number of products have been developed by companies who have no clear path for distribution or technical support. Cintech has the infrastructure and resources to bring these products to market quickly. We had earlier expected revenue from these types of products to impact fiscal 1995, however product evaluation and contract negotiation has taken longer than we hoped. This line of business is now expected to impact revenues in fiscal 1996.

"The Company continues to maintain upward growth in the first three quarters of fiscal 1995. In the first month of the 4th quarter, the Company had record revenues, an indication that the revenue ramp is in fact accelerating. Based on our market potential, we are in the early stages of the growth cycle with our existing product line. Looking to the future, as the distribution side of the CTI industry continues to mature, Cintech's position as a provider of CTI expertise and solutions will provide even greater opportunities for growth."

Cintech provides the means for small to mid-size office customers to take advantage of the rapid advances and emerging capabilities of computer-to-telephone integration technologies. Cintech brings application software, services and CTI information to departments and distributed offices of large organizations and to small to mid-sized businesses.

The Company has focused primarily on applications for Northern Telecom's Norstar, a leading business telephone system. Cintech was the first company to write a successful CTI-based application for Norstar, and is now the leader in developing and distributing business applications for Norstar. Cintech has an extensive distribution network in the US and Canada, through which the Company markets its own products as well as those of other development companies.

CONTACT: Cintech Tele-Management Systems

Joel Christman, 513/861-2000