Concerto Software Announces Second Quarter 2002 Results.Business/Technology Editors WESTFORD, Mass.--(BUSINESS WIRE)--July 23, 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 EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. , Operational Results Exceed Expectations; Record ContactPro(TM) and Ensemble(TM) Sales Drive sales drive n → promoción f de ventas sales drive n → campagne commerciale, animation f des ventes Early Return to Operating Profitability Concerto Software(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 proven 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 second quarter, which ended June 30, 2002. The company's strong financial performance in the second quarter was driven by unprecedented demand for two of Concerto Software's flagship products, ContactPro and Ensemble, and a sustained focus on sound fiscal management. Concerto Software sequentially increased total revenue by 6% to $24.7 million for the second quarter of 2002, compared to $23.3 million for the first quarter of 2002 and $25.8 million for the same period in 2001. Pro forma net income for the second quarter of 2002, which excludes $441,000 of amortization expense associated with purchased intangible assets, was $576,000 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 $0.05. This significantly exceeded management's previous estimate of pro forma diluted earnings per share for the second quarter of $0.01 - $0.03. Net income for the second quarter of 2002 on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis, which includes the amortization expense associated with the purchased intangible assets, was $245,000 or $0.02 per diluted share, compared to a net loss of $4.1 million or $0.33 per diluted share in the first quarter of 2002 and net income of $610,000 or $0.05 per diluted share for the same period in 2001. The company's first quarter results included a non-recurring $5.1 million charge associated with the acquisition of CELLIT. Also during the second quarter of 2002, the company generated profits from operations on a pro forma basis of $585,000 and on a GAAP basis, of $144,000, reaching profitability from operations one quarter ahead of management's original expectations. During the second quarter of 2002, Concerto Software sequentially grew product revenue by 9% to $11.5 million, compared to $10.6 million in the first quarter and $12.4 million for the same period in 2001. Concerto Software achieved record sales this quarter for two of its product lines - ContactPro and Ensemble. ContactPro product and services revenue for the second quarter totaled $4.3 million, compared to $1.1 million in the first quarter. New ContactPro customers included All American Management Systems American Management Systems (previous NASDAQ symbol: AMSY) was founded in 1970 as a technology and management consulting firm. It was founded by a group of five former United States Department of Defense officials who worked under Robert McNamara in the Kennedy and Johnson Group and Comtec Teleservices, Inc., a provider of state-of-the-art voice and data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. products. In addition, Concerto Software achieved another record amount of Ensemble business this quarter, with product revenue totaling approximately $2.6 million, compared to $2.5 million in the first quarter of 2002. New Ensemble customers included Daksh eServices Pvt. LTD LTD 1 Laron-type dwarfism 2 Leukotriene D 3 Long-term depression, see there 4. Long-term disability ., a leading eCRM co-sourcing company in India, and Network Solutions, one of the top ten network integration firms, also in India. "Concerto's strong financial performance this quarter, despite an ongoing difficult economic environment, is another measurable proof point that the company continues to meet the ambitious goals we set forth at the beginning of the year," said James Foy, 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. "Growing demand for our expanded product line, evidenced by our quarterly sequential product revenue growth and record ContactPro and Ensemble sales, has enabled us to exceed expectations for a second consecutive quarter and return to operating profitability one quarter ahead of schedule." In light of the continuing difficult economic environment, especially 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. , combined with the historical slowness of the third quarter in European markets due to the summer months, Concerto Software expects to achieve total revenues of at least $25.0 million in the third quarter of 2002 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 $0.06 - $0.07. The company also expects total revenues and earnings per share to continue to increase sequentially through the remainder of 2002, with modest improvement in total pro forma earnings per share for the full year as compared to 2001. At the end of the second quarter, cash and short-term investments totaled $41.0 million, a decrease of approximately $5.2 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 second quarter, 451,600 shares of the company's common stock were repurchased, resulting in cash utilization of approximately $3.9 million. 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. ) were consistent from the first quarter to the second, at 61 days, remaining well below the industry average and in line with management's expectations. Second Quarter Business Highlights Concerto Software Completes 154 Transactions, Maintains Strong International Momentum During the second quarter, Concerto Software completed 154 total transactions, including adding a significant number of new name accounts. In the Americas, new customers in the second quarter included All American Management Systems Group, Baxter Healthcare through channel partner 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. , The Bon Ton Department Stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. , Inc., Centurytel Service Group, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , Comtec Teleservices, Inc., Hamilton TeleCommunications, Remote Response Corp. and Schindler Elevator Corporation. Follow-on orders from existing Americas customers included American Healthways, Inc., AT&T Corp., Blue Shield of California Blue Shield of California is a not-for-profit health insurance provider headquartered in San Francisco, California. An independent licensee of the Blue Cross and Blue Shield Association, Blue Shield of California is an incorporated, wholly owned subsidiary of California Physicians' , Greenpoint Credit, InPhonic, Inc., Option One Mortgage, Thomson Financial Thomson Financial A major provider of information, analytical tools, and consulting services to the financial community. The firm, a division of Thomson Corporation, is best known to investors for its First Call segment, which publishes consensus earnings 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. Financial Information Services See Information Systems. . Concerto Software continued to enhance its leadership position 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 throughout the second quarter. New accounts included Infowavz Intl Private Ltd, Goldstone gold·stone n. An aventurine with gold-colored inclusions. Noun 1. goldstone - aventurine spangled densely with fine gold-colored particles Teleservices and Netwiser through channel partner Bay Talkitec (P) LTD; First Card Payment Services through channel partner UECI (Universal Electronics and Computers Inc.); M/s Sara Tele Systems P Ltd through channel partner Ramco Systems Ramco Systems Limited is an international company which provides enterprise software and information technology services. It was originally established in 1989 as part of Ramco Industries. Ramco Systems was spun off as an independent company in 1999. Limited; Australian Cable & Telephony through channel partner NetStar Australia Pty Lmt; AOBA through channel partner Tomen Telecom Corporation in Japan; and Daksh eServices Pvt. LTD., operator of the largest contact center in India. Daksh recently implemented Ensemble and LYRICall(TM), integrating inbound and outbound voice, email and Web functionality to support Fortune 500 clients including Amazon, Sprint and Yahoo!. The company also realized significant growth 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, with new customers in the region including Data Locator, Ltd., Icordia Solutions and Insurance Advisory Services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal plc in the United Kingdom; BuW in Germany through channel partner TietoEnator GmbH; Eskom and Vodacom though channel partner Multi-Connect (Pty) Lmt, and Sage Life through channel partner ATIO ATIO Association of Translators and Interpreters of Ontario Corporation (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 Expands Partnerships During the second quarter, Concerto Software continued to expand its partner relationships around the world. Working together to address the mid-sized contact center market, Concerto Software and Siebel recently completed phase two of a 15-city joint seminar series designed to educate companies on the value of implementing unified CIM/CRM solutions. Concerto Software also entered into new agreements with Southeastern Telecom, Inc. and NETCO Communications, Inc. under which the companies will distribute ContactPro. In addition, Concerto Software grew its strategic partnerships throughout APAC this quarter, signing new agreements with NetStar Australia Pty Lmt, and Intranet Business Systems, Inc. and Trends & Technologies, Inc. in the Philippines, under which the companies will distribute and implement Concerto Software solutions. Plans are in place for additional expansion into Thailand, Sri Lanka Sri Lanka (srē läng`kə) [Sinhalese,=resplendent land], formerly Ceylon, ancient Taprobane, officially Democratic Socialist Republic of Sri Lanka, island republic (2005 est. pop. and Japan via new and existing partner relationships. In EMEA this quarter, Concerto Software entered into a new partnership with NTI NTI NewTech Infosystems (software company, Irvine, California) NTI Nuclear Threat Initiative NTI National Transit Institute (New Brunswick, New Jersey) NTI Nunavut Tunngavik Incorporated in Italy and participated in lead-generation events with Datapoint Iberica, S.A. and Multi-Connect (Pty) Lmt, both existing channel partners whose relationships continue to expand and yield new business opportunities in the region. "Concerto regards strategic partners as an extension of our own sales force and as a critical component for success," said Foy. "We take great care to align ourselves with leading companies that deliver our solutions along with the expertise and value customers demand." Product News In June, Concerto Software released the latest version of LYRICall(TM), its browser-based desktop automation solution. LYRICall 3.0, now fully integrated with Concerto Software's unified CIM solution, ContactPro, demonstrates continued execution of Concerto Software's aggressive strategy to converge the product lines brought together by the merger of Davox and CELLIT. LYRICall is now fully integrated with all of Concerto Software's CIM solutions, including Unison(R) and Ensemble(TM). During the quarter, Concerto Software also released Ensemble 3.1, which is designed to improve contact center efficiency for corporations running multiple Ensemble systems in multiple sites across the enterprise. In addition, Concerto Software shipped the latest release of its Voice over Internet Protocol See Internet and TCP/IP. (networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. (VoIP) technology in ContactPro Version 4.2. VoIP enables companies to operate multiple contact centers and support remote agents from a single centralized location, as well as standardize all voice and data requirements on a single network. "Concerto recognizes that leading-edge products, financial stability and long-standing contact center expertise have an enormous impact on the technology purchase decisions being made by executives today," Foy added. "We strive to ensure that we deliver value to our customers around the world - before, during and after the transaction is complete." Webcast Concerto Software will host a conference call and Webcast today, July 23, 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 second quarter 2002 financial and operating results and its business and financial outlook for the third quarter and remainder of fiscal 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 July 23. 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 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 July 23, 2002 at 8:00 p.m. EDT until July 30, 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 4891137, or log on to the Concerto Software Web site at www.concerto.com. About Concerto Software(TM) Concerto Software provides contact center solutions that help companies more effectively manage customer interactions via voice, fax, email and the Web. More than 1,100 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 Davox, CELLIT and Unison are registered trademarks of Concerto Software, Inc., formerly known as Davox Corporation. 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, risks associated with competition and competitive pricing pressures, technological change, 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 Six Months Ended
June 30, June 30,
(Unaudited) (Unaudited)
2002 2001 2002 2001
Product revenue $ 11,544 $ 12,369 $ 22,169 $ 24,273
Service revenue 13,160 13,417 25,860 26,445
Total revenue 24,704 25,786 48,029 50,718
Cost of product revenue 2,147 2,171 4,161 4,154
Cost of service revenue 6,391 7,010 12,732 14,305
Total cost of revenue 8,538 9,181 16,893 18,459
Gross profit 16,166 16,605 31,136 32,259
Operating expenses:
Research, development
and engineering 3,996 4,966 8,060 9,712
Selling, general
and administrative 11,585 11,438 22,789 22,803
Non-recurring merger
and integration costs -- -- 3,112 --
Non-recurring
restructuring costs -- -- 2,030 --
Amortization of
purchased intangible
assets 441 -- 809 --
Total operating expenses 16,022 16,404 36,800 32,515
Income/(loss) from
operations 144 201 (5,664) (256)
Other income, net 183 683 511 1,621
Income/(loss) before
provision for
(benefit from)
income taxes 327 884 (5,153) 1,365
Provision for
(benefit from)
income taxes 82 274 (1,288) 424
Net income (loss) $ 245 $ 610 $ (3,865) $ 941
Pro forma net
income (1) $ 576 $ 610 $ 599 $ 941
Earnings (loss) per share:
Basic $ 0.02 $ 0.05 $ (0.31) $ 0.07
Diluted $ 0.02 $ 0.05 $ (0.31) $ 0.07
Pro forma earnings per share (1):
Basic $ 0.05 $ 0.05 $ 0.05 $ 0.07
Diluted $ 0.05 $ 0.05 $ 0.05 $ 0.07
Weighted average shares outstanding:
Basic 12,152 12,784 12,440 12,737
Diluted 12,313 13,218 12,440 13,229
Pro forma weighted average shares outstanding:
Diluted 12,313 13,218 12,619 13,229
(1) Pro forma results exclude the non-recurring restructuring and
merger and integration costs and the amortization of purchased
intangible assets as a result of the acquisition of CellIt on
January 14, 2002.
CONCERTO SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
June 30, December 31,
2002 2001
ASSETS (Unaudited) (Audited)
Current assets:
Cash and short term investments $40,988 $67,943
Accounts receivable, net 16,619 11,007
Prepaid expenses & other current assets 5,914 5,310
Deferred tax assets 5,161 3,791
Total current assets 68,682 88,051
Property and equipment, net 7,380 6,447
Goodwill 17,160 -
Purchased intangible assets, net 6,251 -
Long-term deferred tax asset 2,382 2,382
Other assets 518 276
$102,373 $97,156
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $7,152 $5,307
Accrued expenses 12,670 8,643
Current portion of long-term debt 828 -
Customer deposits 4,908 4,664
Deferred revenue 12,504 8,074
Total current liabilities 38,062 26,688
Long-term debt 421 -
Total liabilities 38,483 26,688
Total stockholders' equity 63,890 70,468
$102,373 $97,156
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