Concord Reports Third Quarter Results; Company Sees Growth in New Customer Accounts and an Increase in Large Deals; Signs New EVP of Sales.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. -- 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 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 : 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 ), a global provider of Business Service Management (BSM BSM Business Service Management BSM Basic Security Module BSM Best Stations Memory (Pioneer car stereos) BSM Business Systems Modernization BSM Bronze Star Medal BSM Black Student Movement BSM Benilde-St. ) software solutions, today announced its financial results for the third quarter ended September September: see month. 30, 2004. Revenue was $26.9 million, up from $26.7 million in the second quarter of 2004, and up from $26.6 million in the third quarter of 2003. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). earnings per share were $0.01, compared to $0.02 in the prior quarter and earnings of $0.03 in the third quarter of 2003. 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 were $0.02, compared to pro forma earnings per share of $0.03 in the prior quarter and pro forma earnings of $0.07 in the third quarter of 2003. (See the table below for reconciliation from GAAP to 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 ). "The operational improvements we have made, and continue to make, are paying off," explained Jack Blaeser, Concord's 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. and president. "Since the last quarter, we increased cash, more than doubled the number of new customer accounts, maintained our trend of higher ASP asp, popular name for several species of viper, one of which, the European asp (Vipera aspis), is native to S Europe. It is also a name for the Egyptian cobra (Naja haja). and signed an exceptional new EVP EVP Executive Vice President EVP EGR (Exhaust Gas Recirculation) Valve Position Sensor EVP Electronic Voice Phenomenon EVP Europäische Volkspartei (Germany) EVP Employee Value Proposition of sales. We remain steadfast in our pursuit of operational excellence and increased growth." Third Quarter Results New 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 Customer Account Wins Increase and ASP Remains High --New eHealth Suite customer account wins increased to 30, from 12 in the previous quarter. This increase is a result of Concord's focus on initiatives, programs, and products that attract new customers. New customers included The French Ministry of the Interior and United Healthcare. --Revenue from existing eHealth Suite customers was 81%. --Average deal size for new eHealth Suite customer accounts was $167,000. Number of Large eHealth Suite Deals Increases --Number of eHealth Suite deals over $100,000 increased to 40, from 32 in the previous quarter. Continued Execution in Key Market Segments --BSM - Concord secured validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. from Siebel Systems Siebel is a brand name of Oracle Corporation. Siebel Systems, Inc., founded by Thomas Siebel in 1993, was principally engaged in the design, development, marketing and support of CRM applications. , Inc. for an integration between eHealth Suite and Siebel For the tech company, see . Siebel, originally Flugzeugbau Halle, was a German aircraft manufacturer in Halle an der Saale. Siebel aircraft included:
--VoIP - Customers like the Depository Trust Company Depository Trust Company (DTC) DTC is the world's largest central securities depository. It accepts deposits of over 2 million equity and debt securities issues (valued at $23 trillion) from over 65 countries for custody, executes book-entry deliveries (valued at over $116 trillion purchased eHealth Suite's VQM VQM Visual Quantum Mechanics VQM Video Quality Model VQM Voice Quality Metric VQM Visual Quality Metrics VQM Voice Quality Metrics VQM Voice Quality Monitor VQM Video Quality Measurement solution to monitor their VoIP rollout. --Mobile Wireless - New account Cosmote, the #2 wireless carrier in Greece Greece, Gr. Hellas or Ellas, republic (2005 est. pop. 10,668,000), 50,944 sq mi (131,945 sq km), SE Europe. It occupies the southernmost part of the Balkan Peninsula and borders on the Ionian Sea in the west, on the Mediterranean Sea in the south, on , selected eHealth Suite to manage its IP core network. Balance Sheet Improves --Total cash, composed of cash, cash equivalents and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has , was $163.4 million in Q3. Cash and marketable securities increased nearly $5 million. --Deferred revenue was $28.1 million, up from $27.9 million in the previous quarter. --DSO was 74 days, down 1 day from the prior quarter. Market Segments Remain Consistent --Managed service provider customers accounted for 28% of revenue, up from 23% in the previous quarter. These customers include Getronics Getronics N.V. (Euronext: GTN) is a largely Dutch-based Information and Communication Technology (ICT) Company whose stated focus is on creating value for business through Workspace Management Services and Application Services. and Unisys. Telco infrastructure customers like Rainbow Media accounted for 22% of revenue. --Enterprise customers accounted for 50% of revenue, from customers like the Chicago Board of Trade Chicago Board of Trade (CBOT) The second largest futures exchange in the US, and a pioneer in the development of financial futures and options. and Shoprite ShopRite, Shoprite, and Shop Rite are names of companies based in the United States, South Africa and Isle of Man.
--International customers accounted for $9.2 million, or 36% of revenue, up slightly from the previous quarter. Customers include Vodafone Vodafone Group Plc is a mobile network operator headquartered in Newbury, Berkshire, England, UK. It is the largest mobile telecommunications network company in the world by turnover and has a market value of about £84.7 billion (July 2007). , Telekom Austria Telekom Austria is a provider of a range of fixed line, mobile, data, and Internet communications services. In addition to its operations in Austria, Telekom Austria also has a wireline segment represented in the Czech Republic with Czech On Line, a leading Internet service and Bayer AG Bayer AG German chemical and pharmaceutical company. Founded in 1863 by Friedrich Bayer (1825–1880), it now operates plants in more than 30 countries. Bayer has originated scores of pharmaceuticals, chemicals, and synthetic materials; it was the first developer and . --netViz revenue for Q3 was $1.2 million. Future Expectations Fourth quarter 2004 revenue is expected to be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $28 million and 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 approximately $0.04 on a pro forma and ($0.11) on a GAAP basis. A reconciliation of GAAP and pro forma guidance is provided in the attachment See attach a file. . Conference Call Concord will hold a conference call today, October October: see month. 21st, 2004, to discuss results, product direction and future expectations at 8:30 a.m. ET. The number for the call is 800-370-0740 (domestic) and 973-409-9255 (international). The call will be available for approximately two weeks. The number for the replay is 877-519-4471 for U.S./Canada and 973-341-3080 for international callers. The access code is 5288656. 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) provides an integrated solution that enables companies to map their IT services to business needs, measure their actual end-user (job) end-user - The person who uses a computer application, as opposed to those who developed or support it. The end-user may or may not know anything about computers, how they work, or what to do if something goes wrong. experience, and manage their applications, systems, and networks. More than 3,000 companies worldwide rely on Concord's eHealth(R) Suite, and its components, to optimize optimize - optimisation IT services to drive business success. Based in Marlboro, Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. ,
USA, Concord maintains offices around the globe, and can be found 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. 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. made in this press release, including forward-looking statements regarding revenue and profit and loss expectations, are made pursuant to the 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. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Readers are cautioned that all forward-looking statements involve risks and uncertainties, and actual results could differ materially from the forward-looking statements contained herein. Risks and uncertainties include, without limitation, continuation of the slower than expected economic recovery in certain of our markets; 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. economic climate, and the resulting potential delay or cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. of pending customer purchases; risks of 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. including the cost of development and sale of our products; the integration of acquired products and technologies; the ability to attract and retain key employees; issues that impact the use of our intellectual property; risks associated with our debt service obligations; market acceptance of, and demand for, our products; risks associated with competition, including competition in the business service management market and the network, system, and application fault and performance markets; risks associated with international sales, including foreign currency risks and longer payment cycles; 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. 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 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. 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 and 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 and 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. . 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. Accordingly 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 option tender offer in the fourth quarter of 2004, we have calculated that our GAAP tax rate has decreased to 14%. 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 such pro forma guidance and results are provided for comparative purposes only. Below are the Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statements of Operations, Condensed Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. , Condensed Consolidated Statements of Cash Flows, Table of Reconciliation from GAAP to Pro forma and Table of Reconciliation for Q4 2004 Pro forma EPS to GAAP EPS.
CONCORD COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share and share data)
Three Months Ended Nine Months Ended
------------------------- -------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Revenues:
License
revenues $ 12,636 $ 13,683 $ 35,578 $ 39,746
Service
revenues 14,261 12,877 41,869 36,546
----------- ----------- ----------- -----------
Total revenues 26,897 26,560 77,447 76,292
----------- ----------- ----------- -----------
Costs of Revenues:
Cost of license
revenues 902 826 2,572 2,098
Cost of service
revenues 4,429 4,085 12,741 12,172
----------- ----------- ----------- -----------
Total cost of
revenues 5,331 4,911 15,313 14,270
----------- ----------- ----------- -----------
Gross profit 21,566 21,649 62,134 62,022
----------- ----------- ----------- -----------
Operating Expenses:
Research and
development 5,990 5,911 17,742 16,794
Sales and
marketing 12,607 12,490 36,516 36,434
General and
administrative 2,886 2,156 8,264 6,462
Acquisition
related
charges - 40 40
Acquired in-
process research
and development - 994 100 994
----------- ----------- ----------- -----------
Total operating
expenses 21,483 21,591 62,622 60,724
----------- ----------- ----------- -----------
Operating
income (loss) 83 58 (488) 1,298
----------- ----------- ----------- -----------
Other Income:
Interest income 1,105 684 3,267 2,110
Interest
expense (821) - (2,463) -
Other expense (33) (168) (222) (538)
----------- ----------- ----------- -----------
Total other
income, net 251 516 582 1,572
----------- ----------- ----------- -----------
Income before
income taxes 334 574 94 2,870
Provision for
income taxes 104 93 13 355
----------- ----------- ----------- -----------
Net income $ 230 $ 481 $ 81 $ 2,515
=========== =========== =========== ===========
Net income per
common and
potential common
share:
Basic $ 0.01 $ 0.03 $ 0.00 $ 0.14
=========== =========== =========== ===========
Diluted $ 0.01 $ 0.03 $ 0.00 $ 0.14
=========== =========== =========== ===========
Weighted average common and
potential common shares
outstanding:
Basic 18,303,533 17,500,200 18,240,493 17,375,680
=========== =========== =========== ===========
Diluted 18,456,498 18,238,417 18,705,474 17,916,872
=========== =========== =========== ===========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
CONCORD COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share data)
September 30, December 31,
2004 2003
-------------- ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 22,934 $ 69,436
Marketable securities 140,370 92,455
Restricted cash 65 194
Accounts receivable, net of allowance
of $1,349 and $1,050 at September 30,
2004 and December 31, 2003,
respectively 22,168 22,194
Deferred tax assets 1,456 4,638
Prepaid expenses and other current
assets 4,130 4,851
-------------- ------------
Total current assets 191,123 193,768
Equipment and improvements, net 6,306 6,697
Goodwill 6,225 6,225
Other intangible assets, net 2,394 3,004
Deferred tax assets 8,631 4,962
Unamortized debt issuance costs and
other long-term assets 3,075 3,770
-------------- ------------
Total assets $ 217,754 $ 218,426
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,547 $ 5,218
Accrued expenses 12,010 12,627
Deferred revenue 28,138 26,490
-------------- ------------
Total current liabilities 42,695 44,335
Convertible senior notes 86,250 86,250
-------------- ------------
Total liabilities 128,945 130,585
-------------- ------------
Stockholders' Equity:
Common stock, $0.01 par value:
Authorized - 50,000,000 shares
Issued and outstanding -
18,307,402 and 18,121,211 shares
at September 30, 2004 and December
31, 2003, respectively 183 181
Additional paid-in capital 113,323 111,651
Accumulated other comprehensive
income 29 816
Accumulated deficit (24,726) (24,807)
-------------- ------------
Total stockholders' equity 88,809 87,841
-------------- ------------
Total liability and stockholders'
equity $ 217,754 $ 218,426
============== ============
The accompanying notes are an integral part of these condensed
consolidated financial statements.
CONCORD COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Three Months Ended Nine Months Ended
------------------- -------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2004 2003 2004 2003
--------- --------- --------- ---------
Cash Flows from Operating
Activities:
Net income $ 230 $ 481 $ 81 $ 2,515
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 1,118 1,348 3,355 3,966
Stock-based compensation - 14 - 48
Amortization of debt
issuance costs 271 - 623 -
Deferred income taxes (11) - 39 -
Changes in assets and
liabilities:
Accounts receivable (54) (921) 26 (2,080)
Prepaid expenses and
other current assets 206 (74) 721 667
Other assets 54 23 72 (82)
Accounts payable 208 778 (2,671) (530)
Accrued expenses 2,354 834 (617) 1,549
Deferred revenue 243 (1,903) 1,648 2,499
-------- -------- -------- --------
Net cash provided
by operating
activities 4,619 580 3,277 8,552
-------- -------- -------- --------
Cash Flows from Investing
Activities:
Purchases of equipment and
improvements (798) (605) (2,354) (2,435)
Purchases of marketable
securities (17,537) (11,104) (78,250) (27,092)
Proceeds from maturities
and sale of marketable
securities 4,118 10,853 29,022 21,541
Deposit of restricted cash - - (65) -
Release of restricted cash (1) 150 194 450
Acquisition of business -
net of cash acquired - (4,968) - (4,968)
-------- -------- -------- --------
Net cash used for
investing
activities (14,217) (5,674) (51,453) (12,504)
-------- -------- -------- --------
Cash Flows from Financing
Activities:
Proceeds from issuance of
common stock 48 470 1,674 1,740
-------- -------- -------- --------
Net cash provided by
financing activities 48 470 1,674 1,740
-------- -------- -------- --------
Net decrease in cash and cash
equivalents (9,550) (4,624) (46,502) (2,212)
Cash and cash equivalents,
beginning of period 32,484 12,774 69,436 10,362
-------- -------- -------- --------
Cash and cash equivalents, end
of period $ 22,934 $ 8,150 $ 22,934 $ 8,150
======== ======== ======== ========
Supplemental Disclosure of
Cash Flow Information:
Cash paid for income taxes $ 243 $ 105 $ 552 $ 352
Supplemental Disclosure of Noncash
Investing Transactions:
Unrealized loss on
available-for-sale
securities $ 996 $ (445) $ (1,313) $ (626)
The accompanying notes are an integral part of these condensed
consolidated financial statements.
CONCORD COMMUNICATIONS, INC.
TABLE OF RECONCILIATION FROM GAAP TO PRO FORMA (Unaudited)
(In thousands, except share data)
Three Months Ended Nine Months Ended
------------------------- -------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Reconciliation of
GAAP & Pro Forma
Net Income:
Net income $ 230 $ 481 $ 81 $ 2,515
Add:
Provision for
income taxes 104 93 13 355
From Cost of
revenues
netViz
technology
amortization 133 133 399 133
net Viz deal
charges - 40 - 40
From Operating
expenses
Amortization
expenses,
relating to
the netViz
acquisition
and equity-
based
compensation
charges 70 84 210 118
Acquired in-
process
research and
development - 994 100 994
----------- ----------- ----------- -----------
Pro forma income
before income
taxes 537 1,825 803 4,155
----------- ----------- ----------- -----------
Pro forma income
taxes (Pro
forma rate:
28%) 150 511 225 1,163
----------- ----------- ----------- -----------
Pro forma net
income $ 387 $ 1,314 $ 578 $ 2,992
=========== =========== =========== ===========
Pro forma net
income per
diluted share: $ 0.02 $ 0.07 $ 0.03 $ 0.17
Diluted weighted
average common
and potential
common shares
outstanding 18,456,498 18,238,417 18,705,474 17,916,872
CONCORD COMMUNICATIONS, INC.
TABLE OF RECONCILIATION FROM Q4 2004 PRO FORMA EPS TO GAAP EPS
(unaudited)
Guidance for Quarter
ending December 31,
2004
---------------------
Proforma EPS guidance $ 0.04
Estimated:
Income taxes 0.03
Estimated cost of stock option buy-back (0.17)
Amortization of intangibles (0.01)
--------------------
Estimated GAAP EPS $ (0.11)
====================
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