Concord Reports First Quarter Results.Business Editors/High-Tech Writers MARLBORO Marlboro or Marlborough (märl`bərō), city (1990 pop. 31,813), Middlesex co., E Mass.; settled on the site of a Native American village 1657, inc. as a city 1890. , Mass.--(BUSINESS WIRE)--April 14, 2004 Concord Concord, cities, United States Concord (kŏng`kərd, kŏn`kôrd'). 1 city (1990 pop. 111,348), Contra Costa co., W central Calif.; settled c.1852, inc. 1906. Communications Inc. (Nasdaq: CCRD CCRD Colorado Civil Rights Division CCRD Clear Certainty Rundown CCRD Center for Community Research and Development CCRD Climate Change Research Division (US DoE) CCRD Certified Chiropractic Rehabilitation Doctor ) today announced revenue and earnings for its first quarter ended March 31, 2004. Total revenue was $23.8 million. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). loss per share was $0.03 and 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 loss per share was $0.02. (See below for pro forma/GAAP reconciliation). "We have had an opportunity to review our performance during the first quarter and we are currently developing and prioritizing the steps necessary to increase revenue growth and return the company to profitability. Our financial goal is to make progress towards our target of 14-16% operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. . We are confident that our core markets will continue to produce well and that we will see increased growth in our emerging markets such as VoIP, wireless and business service management," said Concord 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. Jack Blaeser. Future Expectations Second quarter 2004 revenue is expected to be between $26.5 million and $27.5 million, within the range of previously set expectations. 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. is expected to be between $0.00 and $0.04 on a GAAP basis and $0.01 and $0.05 on a pro forma basis. (See below for a reconciliation of GAAP and pro forma guidance). Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. are expected to increase approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1 million over the first quarter to $21 million. First Quarter Results Cash Increases $2M and Deferred Revenue Increases $3M -- Cash was $164.3 million in Q1-04, up from $162.1 million in Q4-03. -- Deferred revenue was $29.5 million in Q1-04, up from $26.5 million in Q4-03 Average Deal Size Remains High -- Average deal size for new customers was $126,000. -- Number of deals over $100,000 was 35. Market Segment Sales Remain Close to Historical Averages -- Enterprise customers accounted for 64% of revenue. Managed service provider customers accounted for 22% of revenue. Telco infrastructure customers accounted for 14% of revenue. -- International customers accounted for $9.3 million or 41% of revenue. -- The installed base revenue was 88%. Of the revenue from existing customers, 38% was from existing customers expanding deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. of their existing Concord products across a larger portion of their IT infrastructure and 62% was from customers expanding toward an end-to-end solution (jargon) end-to-end solution - (E2ES) A term that suggests that the supplier of an application program or system will provide all the hardware and/or software components and resouces to meet the customer's requirement and no other supplier need be involved. Compare: turn-key solution. by purchasing new products in the eHealth eHealth (also written e-health) is a relatively recent term for healthcare practice which is supported by electronic processes and communication. The term is inconsistently used: some would argue it is interchangeable with health care informatics, while others use it in the (R) Suite. Other Metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. -- Gross margin was 80%. -- DSO See CSO. was 74 days. Conference Call: April 14th, at 8:30 AM EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT Concord will hold a conference call to discuss results on April 14th at 8:30AM EDT. The phone number for the call is 888-889-5345 (domestic) and 973-339-3086 (international). The call will be available on April 14th and will be available for approximately two weeks thereafter. The number for the replay is 877-519-4471 for U.S./Canada and 973-341-3080 for international callers. The access code is 4686290. The information in this press release, call replay and reconciliation of non-GAAP financials is posted at www.concord.com. About Concord Communications Concord Communications, Inc. (Nasdaq: CCRD) optimizes application performance and availability across networks and systems. Concord's 3000 eHealth(R) customers worldwide use the eHealth(R) Suite as the software solution to manage their IT infrastructure to drive profitable business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets , reduce costs, and increase competitive positioning. Concord is headquartered in Marlboro, Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. . For more
information on Concord, call 1-800-851-8725 or visit Concord on the Web
at www.concord.com. Concord Communications, Inc., the Concord logo and
eHealth are trademarks of Concord Communications, Inc. All other
trademarks are the property of their respective owners.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. 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. , including statements regarding revenue and profit expectations, revenue growth, goals for profitability, operating profit, market opportunities and business growth. These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Such risks and uncertainties include, without limitation, the magnitude and duration of the current domestic financial crisis and economic slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. and specifically their impact on the software, networking and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industries; our customers' ability to obtain funding, specifically in light of the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. financial and economic climate, and the resulting potential delay of customer purchasing decisions; risks of continued operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. ; the ability to attract and retain quality professional employees; uncertainties involving intellectual property rights and 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. ; litigation in general; risks in technology development and commercialization; risks in product development and market acceptance of and demand for the Company's products; risks associated with competition and competitive pricing pressures; risks associated with international sales, including foreign currency risks; and other risks detailed in the Company's filings with the Securities and Exchange Commission, including but not limited to, the Company's 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 fiscal year ended December December: see month. 31, 2003 and quarterly reports on Form 10-Q Form 10-Q See 10-Q. . Any forward-looking statements should be considered in light of all these factors. The information contained in this press release is applicable only as of today and should thereafter be considered historical and will no longer constitute the Company's current expectations. The company undertakes no obligation to update information contained in this press release.
Concord Communications, Inc.
Condensed Consolidated
Statement of Operations
(Unaudited, in thousands, except share data)
Three Months Ended
March 31, March 31,
2004 2003
----------- -----------
Revenues:
Licenses $10,350 $12,909
Services 13,495 11,208
----------- -----------
Total revenues 23,845 24,117
----------- -----------
Cost of revenues:
Cost of license and service revenues 4,638 4,631
netViz technology amortization 133 -
----------- -----------
Total cost of revenues 4,771 4,631
----------- -----------
Gross profit 19,074 19,486
----------- -----------
Operating expenses:
Research and development 5,765 5,427
Sales and marketing 11,470 11,365
General and administrative 2,643 2,245
Acquisition-related charges, in-process R&D,
amortization, and equity-based compensation
expense 70 20
----------- -----------
Total operating expenses 19,948 19,057
----------- -----------
Operating (loss) income (874) 429
Other income, net 97 493
----------- -----------
(Loss) income before income taxes (777) 922
----------- -----------
(Benefit from) provision for income taxes (295) 86
----------- -----------
Net (loss) income $(482) $836
=========== ===========
Net (loss) income per common and potential
common share:
Basic $(0.03) $0.05
Diluted $(0.03) $0.05
Pro forma diluted $(0.02) $0.04
Weighted average common shares outstanding 18,159,503 17,254,342
Diluted weighted average common and potential
common shares outstanding 18,159,503 17,448,566
Pro Forma Financial Results We prepare and release quarterly unaudited financial statements prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP"). We also disclose and discuss certain pro forma financial information, used to evaluate our performance, in this and other earnings releases and investor conference calls. We believe that current shareholders and potential investors in our company use multiples of pro-forma EPS in making investment decisions about our company. We use pro-forma EPS to evaluate the results of our ongoing operations and to assist in historical comparisons. This measure, and other pro-forma information, should not be considered an alternative to measurements required by accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, such as net income and net cash provided by operations and should not be considered measures of our liquidity. In addition, our non-GAAP measures may not be comparable to similar measures reported by other companies. Our key non-GAAP measure is: Pro-forma EPS Pro-forma EPS is calculated by dividing pro-forma net income by the 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. number of shares. Pro-forma Net Income excludes certain non-cash and special charges, consisting primarily of non-cash compensation charges, in-process-research-and-development costs, amortization of 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. and transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). associated with acquisitions. This pro forma calculation also substitutes current period GAAP tax provisions with a pro forma tax rate of 28%. Historically, we have had significant deferred tax assets and have not recorded a significant federal tax provision and so the GAAP tax provision related primarily to state and foreign taxes and has been minimal. From a tax return perspective, and thus cash flow perspective, we do not believe Concord will pay significant state or federal income taxes for at least 2 years. We will continue incurring in·cur tr.v. in·curred, in·cur·ring, in·curs 1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash. 2. small foreign, federal minimum and state minimum tax payments. Due to the release of our valuation allowance in the fourth quarter of 2003, our GAAP tax rate has increased to 38%. We will continue providing pro forma guidance and results at a 28% tax rate to normalize normalize to convert a set of data by, for example, converting them to logarithms or reciprocals so that their previous non-normal distribution is converted to a normal one. our results against historical reported results and are provided for comparative purposes only.
Reconciliation
The table below reconciles Net (Loss) Income to Pro forma Net
(Loss) Income for the first quarter ended 2004 vs. 2003:
Three Months Ended
-----------------------
In thousands, except per share data March 31, March 31,
2004 2003
----------- -----------
Reconciliation of GAAP & Pro forma Net (Loss)
Income:
Net (loss) income $(482) $836
Add: (Benefit from) provision for income
taxes (295) 86
netViz technology amortization 133 -
Acquisition-related charges, in-
process R&D, amortization,
and equity-based compensation
expense 70 20
----------- -----------
Pro forma (loss) income before income taxes (574) 942
----------- -----------
Pro forma income taxes (Pro-forma rate: 28%) (161) 264
----------- -----------
Pro forma net (loss) income $(413) $678
=========== ===========
Pro forma net (loss) income per diluted share: $(0.02) $0.04
Diluted weighted average common and potential
common shares outstanding 18,159,503 17,448,566
Q2 2004 Guidance
The table below reconciles Q2 2004 Pro forma EPS guidance
to GAAP EPS:
Guidance for
Quarter ending
June 30, 2004
--------------
Pro forma EPS guidance $0.01 - $0.05
Estimated:
Income taxes (0.00)
Estimated amortization of intangible assets (0.01)
--------------
Estimated GAAP EPS $0.00 - $0.04
==============
Concord Communications, Inc.
Condensed Consolidated Balance Sheets
As of
(Unaudited, in thousands)
--------------------------------------
March 31, December 31,
2004 2003
------------- ------------
Assets
Current assets:
Cash, cash equivalents and marketable
securities $164,314 $162,085
Accounts receivable, net 19,620 22,194
Deferred tax assets 5,351 4,638
Prepaid expenses and other current assets 4,641 4,851
------------ ------------
Total current assets 193,926 193,768
Equipment and improvements, net 6,564 6,697
Goodwill 6,225 6,225
Other intangible assets, net 2,800 3,004
Long-term deferred tax assets 4,245 4,962
Unamortized debt issuance costs and other
long-term assets 3,607 3,770
------------ ------------
Total assets $217,367 $218,426
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $13,167 $17,845
Deferred revenue 29,451 26,490
------------ ------------
Total current liabilities 42,618 44,335
Convertible notes 86,250 86,250
------------ ------------
Common stock, additional paid-in capital,
deferred compensation and accumulated
other comprehensive income 113,788 112,648
Accumulated deficit (25,289) (24,807)
------------ ------------
Total stockholders' equity 88,499 87,841
------------ ------------
Total Liabilities and Stockholders' Equity $217,367 $218,426
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