Concerto Software Announces Full Year and Fourth Quarter 2002 Results; Company Reports Record Revenue and Doubles Pro Forma Earnings Per Share in 2002.Business Editors/High-Tech Writers WESTFORD Westford, town (1990 pop. 16,392), Middlesex co., NE Mass., a suburb of the greater Boston area; settled 1653, set off from Chelmsford and inc. 1729. Although chiefly residential, there are apple orchards, granite quarries (which have long been in operation), and a , Mass.--(BUSINESS WIRE)--Jan. 28, 2003 Concerto concerto (kənchâr`tō), musical composition usually for an orchestra and a soloist or a group of soloists. In the 16th cent. concertare and concertato implied an ensemble, either vocal or instrumental. Software, Inc.(TM) (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 fourth quarter and full year of 2002, which ended December December: see month. 31, 2002. The company continues its revenue 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. growth in a challenging economic environment. For the year ended December 31, 2002, Concerto Software generated total revenue of $99.5 million, an increase of 5% over 2001 total revenue of $94.9 million. 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 year ended December 31, 2002 was $2.4 million or $0.20 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, an increase from $1.3 million or double the $0.10 per diluted share reported for the year ended December 31, 2001. Pro forma results for both periods exclude the impact of restructuring charges 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. . The 2002 pro forma results also exclude a $2.35 million litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement of intellectual property matters with MAMS MAMS Multispectral Atmospheric Mapping Sensor MAMS Military Airspace Management System MAMS Maintenance Assist Modules MAMS Matawan Avenue Middle School MAMS Max Abbott Middle School (Fayetteville, NC) MAMS Multi-Access Memory System , one-time merger related expenses and amortization expense of purchased intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , both associated with the CELLIT merger, and assumes a pro forma tax rate of 25%. The company reported a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss of $8.0 million, or $0.66 diluted loss per share, for the year ended December 31, 2002, compared with a GAAP net loss of $1.3 million or $0.11 diluted loss per share for the year ended December 31, 2001. For the fourth quarter of 2002, total revenue increased by 18% to $25.9 million from $21.9 million in the same period in 2001 and from $25.5 million for the third quarter of 2002. Product revenue increased by 24% to $12.0 million for the fourth quarter of 2002, compared to $9.7 million for the same period in 2001. Product revenue was $12.0 million for the third quarter of 2002. Along with continued demand for Concerto Software's range of contact center solutions including Unison unison, in music, tones identical in pitch produced by two or more parts or voices. In popular usage a vocal composition is said to be sung in unison even though some of the voices are separated from others by the interval of an octave. (R), Ensemble The word ensemble can refer to
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 $0.08, compared to pro forma net income of $0.3 million or $0.02 per diluted share for the same period in 2001 and pro forma net income of $0.8 million or $0.07 per diluted share for the third quarter of 2002. Pro forma results for the fourth quarter exclude the charges associated with the previously mentioned MAMS litigation settlement, a non-recurring restructuring charge primarily related to the future rent expense from a leased training facility that is being consolidated into the company's headquarters, the impact of the amortization of the purchased intangible assets associated with the CELLIT merger and assumes a pro forma tax rate of 25%. Net loss for the fourth quarter of 2002 on a GAAP basis was $4.6 million or $0.39 per diluted share, compared to net income of $0.4 million or $0.03 per diluted share for the same period in 2001 and net income of $0.5 million or $0.04 per diluted share for the third quarter of 2002. Net loss on a GAAP basis for the fourth quarter of 2002 includes the reversal of a $1.4 million benefit for income taxes, which was recorded in the first quarter of 2002, due to the fourth quarter GAAP loss as a result of the MAMS litigation settlement and non-recurring restructuring charges recorded. "Our ability to release and record revenue from EnsemblePro within one year of the merger with CELLIT is a strong indicator of the success of the merger. EnsemblePro is able to deliver the benefits of a unified solution, while connecting and adding value to existing contact center investments and is the most profound differentiator for Concerto Software in the competitive landscape," 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. "Concerto Software's performance throughout the whole of 2002 is evidence that companies regard customer service as a critical component to their overall business strategy and success, and even in this difficult climate customers are choosing to invest in innovative solutions from a trusted, established technology provider." In light of the continuing difficult economic environment, Concerto Software expects to achieve total revenue of at least $25.0 million in the first quarter of 2003 and pro forma earnings per share of $0.06 - $0.07. The company also expects total revenue and earnings per share to increase sequentially throughout 2003, resulting in total revenue of approximately $105.0 million and pro forma earnings per share of approximately $0.30, which represents 6% and 50% growth in revenue and pro forma earnings, respectively. "We believe that our combination of dedicated, talented people, leading technology and strong leadership has enabled Concerto Software to lay a solid foundation for continued success in 2003," stated Foy. At the end of the fourth quarter, cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments totaled $35.0 million, a decrease of approximately $2.6 million from the previous quarter. The decrease in cash and short-term investments was primarily the result of repurchasing 75,900 shares of the company's stock for $0.5 million and $1.4 million of capital expenditures for the period. 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. ) continues to remain well below the industry average at 61 days. Business Highlights Revenue From New Name Accounts Increases 21% as Company Adds 100 New Customers in 2002 During the fourth quarter of 2002, Concerto Software added 22 new name accounts, bringing total new customers for the year to 100. Product revenue from new name accounts increased by 21% to $12.1 million in 2002 from $10.0 million in 2001 and as a percentage of total product revenue, new name accounts represented 26% and 23% in 2002 and 2001, respectively. "Concerto Software has a strong and diverse customer base around the world and has improved the way our 1,200 customers manage their customer interactions," said Foy. "Adding 100 new names this year to our prestigious customer list demonstrates that companies are becoming increasingly aware of the strategic value that our solutions can bring to their businesses and of the positive impact that the contact center can have on their top and bottom lines." Frost & Sullivan Names Concerto Software Contact Center "Company of the Year" Concerto Software recently announced it has been recognized as "Company of the Year" by Frost & Sullivan. The award is presented annually to one company in a given industry that has demonstrated unparalleled excellence in several areas including financial performance, business development, competitive strategy, customer service leadership, technological innovation, management and marketing. Concerto Software was the only company to receive this award in the contact center space. Concerto Software 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. for its consistent growth and outstanding management following the merger of Davox Corporation and CELLIT Technologies in January 2002, its strong and growing market presence, its execution of innovative strategies within the competitive contact center market and demonstrating the ability to combine technology with successful marketing initiatives. "Succeeding in 2002 was critically important for Concerto Software. Being our first year as a new company, we had set forth an aggressive strategy and needed to execute 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. plan. We are honored to have our efforts validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. by the highly-regarded experts at Frost & Sullivan," said Foy. Industry Experts Recognize Concerto Software's Unified Solution Further validating val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. Concerto Software's successful 2002, Technology Marketing Corporation's Customer Inter@ction Solutions(R) magazine and Internet Telephony Another term for IP telephony and VoIP. In the late 1990s, some people made a distinction between Internet Telephony and VoIP: Internet telephony referred to voice over the public Internet, while VoIP referred to voice over private IP networks. (R) magazine each named Concerto Software's ContactPro 4.2 Product of the Year for 2002. The unified solution was recognized for technological excellence and vision. Webcast Concerto Software will host a conference call and Webcast today, Tuesday, January 28, 2003 at 5:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. to discuss its fourth quarter 2002 and fiscal year 2002 financial and operating results, in addition to its expectations for 2003. 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. EST on January 28. 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 Fidelity Investments is a group of privately held companies in the financial services industry. It is made up by two independent but closely cooperating companies, Fidelity Management and Research Corporation (FMR Co. (R) (www.fidelity.com) and others. Institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. can access the call via CCBN's password-protected event management site, StreetEvents (www.streetevents.com). Investors can also access the audio portion of this event through the Vcall Website, located at http://www.vcall.com. To listen, please go to the Vcall Website at least fifteen minutes early to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. , and install any necessary audio software. A replay of the conference call will be available from January 28, 2003, at 8:00 p.m. EST until February 4, 2003, at 12 midnight EST EST electroshock therapy. EST abbr. electroshock therapy . 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 7500302, 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 Communicating information, including data, text, pictures, voice and video over long distance. See communications. firms, utilities and retailers - use Concerto Software solutions to deliver superior customer service, and to successfully acquire, retain and grow valuable customer relationships. Concerto Software is headquartered in Westford, Massachusetts Westford is a town in Middlesex County, Massachusetts, United States. The population was 20,754 at the 2000 census. History Westford was first settled in 1635. Originally a part of neighboring Chelmsford, West Chelmsford soon grew large enough to sustain its own , with operations across 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. , Europe and Asia. For more information, visit www.concerto.com. Note: Concerto Software, Ensemble, ContactPro and EnsemblePro are trademarks and Unison 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 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. 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 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 United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and worldwide markets served by Concerto Software, acts of terrorism, regulatory changes, including restrictions placed on predictive dialing, telemarketing telemarketing, the practice of selling goods or services to customers by means of the telephone or of surveying consumer preferences in telephone conversations. 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 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" , 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 Twelve Months
Ended Ended
December 31, December 31,
2002 2001 2002 2001
-------- ------- -------- --------
Product revenue $12,043 $9,699 $46,214 $43,366
Service revenue 13,877 12,218 53,275 51,579
-------- ------- -------- --------
Total revenue 25,920 21,917 99,489 94,945
-------- ------- -------- --------
Cost of product revenue 2,543 1,511 9,292 7,528
Cost of service revenue 7,250 6,058 26,959 27,087
-------- ------- -------- --------
Total cost of revenue 9,793 7,569 36,251 34,615
-------- ------- -------- --------
Gross profit 16,127 14,348 63,238 60,330
Operating expenses:
Research, development and
engineering 4,228 3,754 16,364 17,954
Selling, general and administrative 10,792 10,826 44,542 43,726
Litigation settlement 2,350 - 2,350 -
Non-recurring restructuring costs 1,718 (144) 3,748 2,623
Non-recurring merger and
integration costs - - 3,112 -
Amortization of purchased
intangible assets 441 - 1,691 -
-------- ------- -------- --------
Total operating expenses 19,529 14,436 71,807 64,303
-------- ------- -------- --------
Loss from operations (3,402) (88) (8,569) (3,973)
Other income, net 151 491 840 2,755
-------- ------- -------- --------
Income (loss) before provision
for income taxes (3,251) 403 (7,729) (1,218)
Provision for income taxes 1,345 - 225 126
-------- ------- -------- --------
Net income (loss) $(4,596) $403 $(7,954) $(1,344)
======== ======= ======== ========
Earnings (loss) per share:
Basic $(0.39) $0.03 $(0.66) $(0.11)
======== ======= ======== ========
Diluted $(0.39) $0.03 $(0.66) $(0.11)
======== ======= ======== ========
Weighted average shares outstanding:
Basic 11,675 12,361 12,049 12,636
======== ======= ======== ========
Diluted 11,675 12,583 12,049 12,636
======== ======= ======== ========
Reconciliation of net income (loss) in accordance
with generally accepted accounting principles to
pro forma net income:
Income (loss) before provision for
income taxes $(3,251) $403 $(7,729) $(1,218)
Litigation settlement 2,350 - 2,350 -
Non-recurring restructuring costs 1,718 (144) 3,748 2,623
Non-recurring merger and
integration costs - - 3,112 -
Amortization of purchased
intangible assets 441 - 1,691 -
-------- ------- -------- --------
Pro forma income before provision
for income taxes 1,258 259 3,172 1,405
Pro forma provision for income taxes 315 - 793 126
-------- ------- -------- --------
-------- ------- -------- --------
Pro forma net income $944 $259 $2,379 $1,279
======== ======= ======== ========
Pro forma earnings per share:
Diluted $0.08 $0.02 $0.20 $0.10
======== ======= ======== ========
Pro forma weighted average shares
outstanding:
Diluted 11,775 12,583 12,177 12,980
======== ======= ======== ========
CONCERTO SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
Dec. 31, Dec. 31,
ASSETS 2002 2001
-------- --------
Current assets:
Cash and short term investments $35,064 $67,943
Accounts receivable, net 17,234 11,007
Prepaid expenses & other current assets 5,536 5,310
Deferred tax assets 5,373 3,791
-------- --------
Total current assets 63,207 88,051
Property and equipment, net 7,910 6,447
Other assets 541 276
Long-term deferred tax asset - 2,382
Goodwill 17,182 -
Purchased intangible assets, net 5,369 -
-------- --------
$94,209 $97,156
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $7,015 $5,307
Accrued expenses 15,551 8,643
Current portion of long-term debt 616 -
Deferred revenue 13,406 12,738
-------- --------
Total current liabilities 36,588 26,688
Long-term debt 19 -
-------- --------
Total liabilities 36,607 26,688
Total stockholders' equity 57,602 70,468
-------- --------
$94,209 $97,156
======== ========
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