Concerto Software, Inc. Announces Third Quarter 2002 Results; Revenue Increases for Fourth Consecutive Quarter and Company Meets High End of EPS Expectations.Business/Technology Editors WESTFORD, Mass.--(BUSINESS WIRE)--Oct. 17, 2002 Concerto 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 : CRTO CRTO Centro Ricerche Terapie Olistiche (Italian) ), a leading provider of customer interaction management (CIM (1) (Computer-Integrated Manufacturing) Integrating office/accounting functions with automated factory systems. Point of sale, billing, machine tool scheduling and supply ordering are part of CIM. ) solutions, today announced financial results for the third quarter, which ended September 30, 2002. The company's positive financial performance in the third quarter was driven by continued record demand for two of Concerto Software's flagship products - ContactPro(TM) and Ensemble(TM), a strong contribution from its Asia-Pacific operations and a sustained focus on sound fiscal management. Total revenue increased by 14% to $25.5 million for the third quarter of 2002 from $22.3 million in the same period in 2001 and by 3% compared to $24.7 million for the second quarter of 2002. Net income for the third quarter of 2002 on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis was $0.5 million or $0.04 per diluted share, compared to a net loss of $2.7 million or ($0.21) per diluted share for the same period in 2001 and net income of $0.2 million or $0.02 per diluted share for the second quarter of 2002. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income for the third quarter of 2002, which excludes $0.4 million of amortization for purchased intangible assets acquired in connection with the CELLIT merger in January 2002, was $0.8 million or pro forma diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.07, compared to pro forma net income of $0.1 million or $0.01 per diluted share for the same period in 2001, which excludes a $2.8 million restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. due primarily to reduced headcount. On a sequential quarterly basis, pro forma net income increased by $0.3 million or $0.02 per diluted share for the third quarter compared to the second quarter of 2002. Product revenue increased by 28% to $12.0 million for the third quarter of 2002, compared to $9.4 million for the same period in 2001 and by 4% compared to $11.5 million for the second quarter of 2002. Concerto Software again achieved record sales this quarter for two of its product lines - ContactPro and Ensemble. ContactPro product and services revenue for the third quarter totaled $5.9 million, compared to $4.3 million in the second quarter, representing sequential quarterly growth of 37%. Ensemble product revenue totaled $2.7 million, compared to $2.5 million in the second quarter of 2002. "Concerto Software's solid financial performance this quarter, despite the difficult economic environment in which we're operating, demonstrates that companies today want to do business with a stable, reliable technology provider that delivers solutions that provide tangible immediate return on their investment," said James Foy, president and 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. of Concerto Software. "Four consecutive quarters of growth, our financial strength, innovation and proven solutions show that Concerto Software is successfully filling a void in the global customer interaction management market." "We expect to continue our sequential quarterly improvement in the fourth quarter with minimum total revenue of $25.6 million and pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share of $0.07 - $0.08," stated Foy. "For the full year 2002, we expect total revenue to be a minimum of $99.2 million, which is a 5% increase over the $94.3 million we achieved in 2001. In addition, given our very prudent and conservative expense management during 2002, we expect our pro forma earnings per share for the full year 2002 to increase to $0.19 - $0.20, which is essentially double our $0.10 pro forma earnings for 2001." At the end of the third quarter, cash and short-term investments totaled $37.7 million, a decrease of approximately $3.3 million from the previous quarter. The decrease in cash and short-term investments was primarily the result of the company continuing to repurchase shares of stock under its stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program. During the third quarter, 263,000 shares of the company's common stock were repurchased, resulting in cash utilization of approximately $1.7 million. During the quarter, the company also utilized $1.5 million of cash related to capital purchases primarily related to the preparation for the general availability of EnsemblePro in the fourth quarter and the internal deployment of a Customer Relationship Management (CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. ) solution. The company did achieve positive cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses in the third quarter of $0.1 million, compared to cash utilized of $1.6 million for the second quarter of 2002. 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. ) improved as well, decreasing three days from 61 in the second quarter to 58 days for the third quarter, remaining well below the industry average. Third Quarter Business Highlights Concerto Software Adds 22 New Customers, Continues International Momentum During the third quarter, Concerto Software added 22 new name accounts. In the Americas, new customers in the third quarter included Origen Financial, FMT FMT Format FMT Fremont (Fremont, California) FMT FSW (Flight Software) Maintenance Team FMT Flame Maple Top FMT Full Mission Trainer FMT Fissile Material Treaty FMT Filtered Multitone Services, Compass Bank, Ryobi Technologies through channel partner Southeastern Telecom and Daniel Trust through new channel partner Systems Development Integration (SDI (1) (Serial Digital Interface) A physical interface widely used for transmitting digital video in various formats. For electrical transmission, it uses a high grade of coaxial cable and a single BNC connector with Teflon insulation. ). Follow-on orders from existing Americas customers included Ameriquest Mortgage Ameriquest was one of the United States's leading wholesale subprime lenders. Ameriquest was founded in 1979, in Orange County, California, as a bank, Long Beach Savings & Loan. Co., The Associates, AT&T Corp., Discover Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , Greenpoint Credit, Household International, Washington Mutual “WaMu” redirects here. For the Washington, DC radio station, see WAMU. Washington Mutual (or WaMu; NYSE: WM) is the United States' largest savings and loan association. Bank F.A. and Wells Fargo Wells Fargo armored carriers of bullion. [Am. Hist.: Brewer Dictionary, 1147] See : Protectiveness Wells Fargo company that handled express service to western states; often robbed. [Am. Hist. Home Mortgage, Inc. Concerto Software continued to grow its customer base in the Asia-Pacific (APAC APAC Australian Partnership for Advanced Computing APAC Agricultural Policy Analysis Center APAC Asia and Pacific APAC Asian Pacific American Coalition APAC Adapted Physical Activity Council (American Alliance for Health) ) region in the third quarter. New accounts included Cathy Holidays, GIS, Gold Partner and PriceLine through channel partner Advantage Plus Technology Ltd.; AEON through channel partner Teledata International Pte, Ltd.; Hinduja TMT TMT 1 Tarsometatarsal 2 Thermomechanical treatment 3 Treatment, see there through channel partner Global Tele-Systems Limited; Cellbion Interactive Pvt. Ltd. through channel partner WIPRO WIPRO Western India Vegetable Products, Ltd. ; Transworks Pvt. Ltd. through channel partner Network Solutions; Good Morning Security through channel partner Nextwave; Bowen Collingsville Enterprise through channel partner Netstar Australia Pty Ltd PTY LTD Propriety Limited (company structure in Australia) .; Telexpress through channel partner Universal Electronics & Computers, Inc. (UECI); PT.Ciburial Indah Sentosa through new channel partner PT.CSI CSI Crime Scene Investigator CSI CompuServe, Inc. CSI Commodity Systems, Inc. CSI Commodity Systems Inc. (Boca Raton, FL) CSI Crime Scene Investigation (CBS TV show) CSI Christian Schools International Solutions & Services; Maxis Communications Maxis Communications Berhad is a mobile phone service provider based in Malaysia. It was started in the year 1995. It uses the dialling prefix identifier of "012", "0142" and "017". Berhard through new channel partner Lambda Technologies Sdn Bhd SDN BHD Sendirian Berhad (Malay equivalent to incorporated) and Kokunai Shinpan through channel partner Marubeni Information Systems. Follow-on orders from existing APAC customers included Infowavz International Private Limited through channel partner Bay Talkitec (P) Limited; Citibank Korea through channel partner Nextwave; and GE Capital and Commonwealth Bank Australia (CBA See Capital Builder Account. ) through channel partner Lake Corporation Pty Ltd. The company also added new customers in Europe, the Middle East and Africa Europe, the Middle East and Africa, usually abbreviated to EMEA, is a regional designation used for government, marketing and business purposes. It is particularly common amongst North American based companies, who often divide their international operations into the (EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. ) this quarter, which included GE Capital Finance in Denmark and Griffin Customer Management in the UK. Follow-on orders from existing EMEA customers included Reid Kerr College Reid Kerr College is located in Paisley, Scotland. According to its website, it is one of the fastest growing further education colleges in Scotland with over 20,000 students, 650 staff and 300 courses[1]. , GE Capital Bank Denmark, Data Locator LTD, Inkfish through Datapoint UK, an operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. of our channel partner Point-On Holdings and African Bank through channel partner Multi-Connect (Pty) Ltd. in South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. . Concerto Software Strengthens Global Distribution and Partner Network During the third quarter, Concerto Software introduced two initiatives to expand its partner relationships around the world. The effort began in August when the company launched its enhanced Channel Partner Program, designed to accelerate the expansion of the global indirect sales channel and increase distribution by adding new world-class partners to the company's existing roster. As a result, Concerto Software either signed new distribution agreements or expanded relationships with SBC (1) (SBC Communications Inc., San Antonio, TX, www.sbc.com) A large, national telecommunications company that grew from a multitude of local and regional companies, including Southwestern Bell, Pacific Bell and Nevada Bell, into a single, unified brand by 2002. Global Services, Inc. and VortalSoft, Inc. in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. ; SDI in the US; Advantage Plus Technology Ltd in Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. ; Global Tele-Systems Limited, Network Solutions and WIPRO in India; Lambda Technologies Sdn Bhd in Malaysia; Nextwave in Thailand; PT.CSI Solutions & Services in Indonesia; Trends & Technologies, Inc. in the Philippines; UECI in Taiwan; Exchange Communications in Scotland; Call Centre Technology Ltd in the UK and Republic of Ireland; and Point-on Holdings in the UK. In addition, Concerto Software launched its expanded Technology Alliance Program intended to strengthen relationships with existing technology partners and to develop new strategic alliances with complementary solutions providers worldwide. During the third quarter, Concerto Software established technology partnerships with Call Compliance, Inc., EnvoyWorldWide, Inc., Gryphon Networks Corp., Performix Technologies, TARGUS Information Corporation and ThinkDirect Marketing, Inc. "Building a strong global network of distributors and partners is integral to solidifying Concerto Software's leadership position in the CIM market," said Ralph Breslauer, Executive Vice President of Sales and Marketing for Concerto Software. "By fostering relationships with top-tier channel partners and leading technology providers, we are better able to deliver complete CIM solutions and services to a broader base of end-users around the world." Concerto Software Expands Worldwide Support Capabilities As a result of our continued success and leadership position in the CIM market in India, Concerto Software opened its fourth Support Center in Mumbai, India to enhance both local and global customer service capabilities. Concerto Software Recognized by Industry Leaders for Innovation During the third quarter, Concerto Software's CIM products continued to earn awards from respected contact center industry experts. At the International Call Center Management (ICCM ICCM International Conference on Chemicals Management ICCM International Call Center Management ICCM International Centre for Culture and Management ICCM International Committee on Composite Materials ICCM International Council of Catholic Men ) Conference and Expo 2002, one of Concerto Software's flagship products, ContactPro, was named "Best Contact Management Solution." Best of Show Award recipients were chosen from more than 175 exhibitors participating in the event. An independent panel of call center professionals and CRM industry experts judged the competition, recognizing products and services of special distinction within the call center industry. Webcast Concerto Software will host a conference call and Webcast today, October 17, 2002, at 5:00 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT to discuss its third quarter 2002 financial and operating results and its business and financial outlook for the fourth quarter 2002. To participate in the conference call, RSVP (ReSerVation Protocol) A communications protocol that signals a router to reserve bandwidth for real time transmission. RSVP is designed to clear a path for audio and video traffic, eliminating annoying skips and hesitations. to 978-952-0294 before 4:30 p.m. EDT on October 17. This call is being Webcasted by CCBN CCBN Central Coast Bancorp CCBN Charles County Business Network and can be accessed through Concerto Software's Web site at www.concerto.com. The Webcast will also be distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center (www.companyboardroom.com) or by visiting any of the investor sites in CCBN's Individual Investor Network such as America Online's Personal Finance Channel, Fidelity Investments(R) (www.fidelity.com) and others. Institutional investors can access the call via CCBN's password-protected event management site, StreetEvents (www.streetevents.com). A replay of the conference call will be available from October 17, 2002 at 8:00 p.m. EDT until October 24, 2002 at 12 midnight EDT. To access the replay, dial 800-642-1687 (from within the U.S. or Canada) or 706-645-9291 (from outside the U.S. or Canada) and enter the passcode 6019707, or log onto the Concerto Software Web site at www.concerto.com. About Concerto Software, Inc. Concerto Software provides contact center solutions that help companies more effectively manage customer interactions via voice, fax, email and the Web. More than 1,200 companies worldwide - including banks, service bureaus, telecommunications firms, utilities and retailers - use Concerto solutions to deliver superior customer service, and to successfully acquire, retain and grow valuable customer relationships. Concerto Software is headquartered in Westford, Massachusetts, with operations across North America, Europe and Asia. For more information, visit www.concerto.com. Note: Concerto Software, ContactPro, Ensemble and LYRICall are trademarks and CELLIT is a registered trademark of Concerto Software, Inc. All other trademarks are the property of their respective owners. In addition to historical information contained herein, this press release contains forward-looking statements concerning future expected financial, operating results, and product and marketing strategies. Forward-looking statements in this release include, but are not limited to, estimates of future business prospects or financial results and statements containing the words "believe," "estimate," "project," "expect" or similar expressions. Concerto Software's future actual results could differ materially from the forward-looking statements discussed or implied herein because of risks or uncertainties including, but not limited to, the difficulty of converging products, the difficulty in the development, marketing or selling of the company's solutions, difficulty with the recruitment and training of additional partners, risks associated with competition and competitive pricing pressures, technological change, the risk of not releasing products on time, new product introduction and market acceptance, stock price volatility, the ability of Concerto Software to attract and retain key personnel, weakness in IT spending, weakness in the contact center market, general economic conditions in the United States and worldwide markets served by Concerto Software, acts of terrorism, regulatory changes, including restrictions placed on predictive dialing, telemarketing and web technologies and those other factors discussed from time to time in Concerto Software's public reports filed with the Securities and Exchange Commission, such as those discussed under "Certain Factors That May Affect Future Results" in Concerto Software's quarterly reports on Form 10-Q Form 10-Q See 10-Q. and 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. . All forward-looking statements and reasons why results might differ included in this release are made as of the date hereof, and Concerto Software assumes no obligation to update any such forward-looking statements or reasons why results might differ.
CONCERTO SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
(Unaudited) (Unaudited)
Product revenue $ 12,002 $ 9,395 $ 34,171 $ 33,667
Service revenue 13,539 12,916 39,399 39,362
Total revenue 25,541 22,311 73,570 73,029
Cost of product revenue 2,588 1,863 6,750 6,018
Cost of service revenue 6,977 6,724 19,709 21,029
Total cost of revenue 9,565 8,587 26,459 27,047
Gross profit 15,976 13,724 47,111 45,982
Operating expenses:
Research, development
and engineering 4,075 4,491 12,136 14,202
Selling, general
and administrative 10,962 10,095 33,750 32,899
Non-recurring merger
and integration costs -- -- 3,112 --
Non-recurring
restructuring costs -- 2,767 2,030 2,767
Amortization of purchased
intangible assets 441 -- 1,250 --
Total operating expenses 15,478 17,353 52,278 49,868
Income/(loss) from
operations 498 (3,629) (5,167) (3,886)
Other income, net 178 644 689 2,265
Income/(loss) before
provision for
(benefit from)
income taxes 676 (2,985) (4,478) (1,621)
Provision for
(benefit from)
income taxes 169 (297) (1,119) 126
Net income (loss) $ 507 $ (2,688) $ (3,359) $ (1,747)
Pro forma
net income $ 838 $ 79 $ 1,435 $ 1,020
Earnings (loss)
per share:
Basic $ 0.04 $ (0.21) $ (0.28) $ (0.14)
Diluted $ 0.04 $ (0.21) $ (0.28) $ (0.14)
Pro forma earnings
per share:
Basic $ 0.07 $ 0.01 $ 0.12 $ 0.08
Diluted $ 0.07 $ 0.01 $ 0.12 $ 0.08
Weighted average
shares outstanding:
Basic 11,843 12,705 12,174 12,727
Diluted 11,942 12,705 12,174 12,727
Pro forma weighted
average shares
outstanding:
Diluted 11,942 12,910 12,316 13,119
Reconciliation of
net income (loss)
in accordance with
generally accepted
accounting principles
to pro forma
net income:
Income/(loss) before
provision for
(benefit from)
income taxes $ 676 $ (2,985) $ (4,478) $ (1,621)
Amortization
of purchased
intangible assets 441 -- 1,250 --
Non-recurring merger
and integration costs -- -- 3,112 --
Non-recurring
restructuring costs -- 2,767 2,030 2,767
Pro forma net
income/(loss)
before provision
for/(benefit from)
income taxes 1,117 (218) 1,914 1,146
Provision for
(benefit from)
income taxes 279 (297) 480 126
Pro forma net income $ 838 $ 79 $ 1,435 $ 1,020
CONCERTO SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
September 30, December 31,
2002 2001
ASSETS (Unaudited) (Audited)
Current assets:
Cash and short term investments $37,685 $67,943
Accounts receivable, net 16,361 11,007
Prepaid expenses & other current assets 6,115 5,310
Deferred tax assets 5,161 3,791
Total current assets 65,322 88,051
Property and equipment, net 7,628 6,447
Goodwill 17,045 --
Purchased intangible assets, net 5,810 --
Long-term deferred tax asset 2,382 2,382
Other assets 543 276
$98,730 $97,156
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,192 $ 5,307
Accrued expenses 12,641 8,643
Current portion of long-term debt 614 --
Customer deposits 4,724 4,664
Deferred revenue 10,599 8,074
Total current liabilities 35,770 26,688
Long-term debt 244 --
Total liabilities 36,014 26,688
Total stockholders' equity 62,716 70,468
$98,730 $97,156
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