Daleen Reports Second Quarter 2001 Operating Results.Business Editors/High-Tech Writers BOCA RATON Boca Raton (bō`kə rətōn`), city (1990 pop. 61,492), Palm Beach co., SE Fla., on the Atlantic; inc. 1925. Boca Raton is a popular resort and retirement community that experienced significant industrial development in the 1970s and 80s. , Fla.--(BUSINESS WIRE)--July 25, 2001 Daleen Technologies Inc. (Nasdaq:DALN), a global provider of software that manages the revenue chain for next-generation service, enterprise business and technology solutions providers, today reported revenue of $3.4 million for the second quarter of 2001. Revenue for the six months ended June June: see month. 30, 2001 was $8.5 million. Net loss for the second quarter, on an adjusted basis, was $7.6 million or $.35 per share. Net loss for the six months ended June 30, 2001, on an adjusted basis was $18.4 million or $.84 per share. See "Note on Adjusted Results of Operations" below for a description of the methods used to calculate net loss and net loss per share on an adjusted basis. Second Quarter Highlights: -- Significant reduction in quarterly expense levels, resulting in a decrease in net loss on an adjusted basis of 30 percent from the first quarter of 2001 -- 45 percent reduction in cash used from operations compared to the first quarter of 2001 -- Strengthened balance sheet with receipt of net proceeds from the private placement of convertible preferred stock -- Added four new RevChain(TM) customers -- Delivered the RevChain solution to customers through an OEM agreement with i2 Technologies Inc. -- RevChain achieved record levels of throughput and scalability, supporting 48 million subscribers "Over the past several months, we have taken actions to improve our financial position including streamlining our operations, executing our restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plans and strengthening our balance sheet," said Steve v. t. 1. To pack or stow, as cargo in a ship's hold. See Steeve. Wagman, chief financial officer for Daleen. "These actions support achieving our key financial objective of driving toward profitability." The company continued to execute the strategic shift in its business to focus on building major new partnerships and started seeing the results of this shift in the second quarter. Following the signing of an OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and agreement with i2 Technologies in the first quarter of 2001, the company recognized an important milestone in its partner-focused strategy with the successful delivery of its RevChain solution to companies in the healthcare, retail and distribution industries. The company expects to achieve positive momentum resulting from this and other partnerships during the remainder of 2001. The company completed new performance benchmark tests on its RevChain product line and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the Integration Architecture (IIA (1) (Information Industry Association, Washington, DC) In 1999, IIA merged with SPA (Software Publishers Association) to become the Software & Information Industry Association. See SIIA. (TM)) at Hewlett-Packard's lab facility in Cupertino Cu·per·ti·no A city of western California west of San Jose. It has an electronics industry. Population: 50,000. , Calif. The test resulted in record levels of throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. and scalability How much a system can be expanded. See scalable. scalability - How well a solution to some problem will work when the size of the problem increases. For example, a central server of some kind with ten clients may perform adequately but with a thousand clients it . RevChain Commerce successfully billed for 120 million complex service usage records (SURs) per hour, which equates to billing more than 48 million subscribers per month on a single server. RevChain Commerce also pre-processed and rated 22 million SURs per hour, 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. the benefits of using open Internet standards See Internet Engineering Task Force. to enhance scalability and meet the rigorous demands of leading tier-one service providers. "Although we are disappointed with our second quarter revenue performance, four new customers acquired software licenses In computing, software that is copyrighted and licensed under a software license is done under a variety of licensing schemes. For end-users there are proprietary licenses and there are free software licenses, and there are proprietary Within these schemes are further classifications. for our RevChain product line, demonstrating continued acceptance in the marketplace," said James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. Daleen, chairman and chief executive officer for the company. "We remain confident in our ability to deliver stakeholder stakeholder n. a person having in his/her possession (holding) money or property in which he/she has no interest, right or title, awaiting the outcome of a dispute between two or more claimants to the money or property. value with the combination of the company's improved financial position, the demonstrated performance of our RevChain products and the successful execution of our partner strategy." Daleen has the following key financial objectives: -- Revenue is expected to increase in each of the coming quarters -- 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. will be below current levels until profitability is achieved; which is currently targeted at the first quarter of 2002 -- Quarterly cash used will continue to be reduced The company will hold a conference call on July July: see month. 26, 2001 at 8:00 a.m. ET to discuss its quarterly results. The conference call will be available as an audio Webcast via the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of Daleen's Website at http://www.daleen.com/investor. Alternatively, the teleconference may also be accessed by dialing 1-800-289-0579 or, outside the U.S, +1-719-457-2550, and referencing confirmation code 758137. About Daleen Daleen Technologies Inc. is a global provider of Internet software solutions that manage the revenue chain for next-generation service providers, enterprise business and technology solutions providers. Daleen's RevChain product line automates and manages service providers' revenue chains by providing functionality including service creation and management, customer management, order and fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. , billing and settlement across the span of the enterprise. The Daleen RevChain product line is comprised of a set of industry-focused software suites and core applications built on the Daleen Internet Integration Architecture (IIA) system, which leverages open Internet technologies to integrate seamlessly with legacy and existing systems while requiring zero code on the client. Additional information is available at http://www.daleen.com. Note on Adjusted Results of Operations: Net loss and net loss per share on an adjusted basis are computed by excluding acquisition-related charges, non-cash stock compensation charges related to the issuance of certain stock options, restructuring and impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges and preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. dividends. The acquisition-related charges were incurred in connection with the company's December December: see month. 1999 acquisition of Inlogic Software Inc. The restructuring and impairment charges are related to the January January: see month. 5 and April 10, 2001 restructuring actions. The preferred stock dividends relate to the beneficial conversion feature and warrant valuation recorded in connection with the Series F preferred stock offering. For the three and six months ended June 30, 2001 these non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. are approximately $36.5 million and $48.0 million, respectively. Including these adjustments described in this note, the historical net loss per share for the three and six months ended June 30, 2001 is $2.02 and $3.05 per share, respectively. See "Information with Respect to 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. " below. Information with Respect to Forward-Looking Statements. Statements in this release may be considered "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. by 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. These include statements regarding the intent, belief or current expectations of the company and the assumptions on which these statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include the company's ability to continue as a going concern; the fact that the company has not yet achieved profitability; variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality of quarterly operating results; low price and volatility of the company's common stock and uncertainty as to the company's ability to maintain compliance with the continued listing requirements Listing requirements Requirements, including minimum shares outstanding, market value, and income, that are laid down by an exchange for any stock to be listed for trading. of The Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. ; competition; general market conditions; lengthy sales cycles and timing of contract awards; use of strategic relationships to implement and sell our products; the costs and success of the company's international expansion; and recent introduction of our RevChain product family. These factors and others are described in the company's most recent SEC filings including the most recently filed 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 in the company's Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. . The company undertakes no obligation to update the forward-looking statements in this news release. Daleen, RevChain and IIA are registered trademarks or trademarks of Daleen Technologies Inc. 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 other countries. All other trademarks and registered trademarks are property of their respective owners.
Daleen Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
June 30 December 31
2001 2000
-------- -----------
Assets
Current assets:
Cash and cash equivalents $25,721 $22,268
Restricted Cash -- 931
Accounts receivable, net 8,458 13,929
Costs in excess of billings 422 2,213
Other current assets 478 904
------- -------
Total current assets 35,079 40,245
Property and equipment, net 5,808 10,146
Goodwill and other intangibles,
net 34,603 44,726
Other assets 4,100 4,345
------- -------
Total assets $79,590 $99,462
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Accrued payroll and other
accrued expenses 8,525 12,731
Accounts payable 1,918 2,968
Billings in excess of costs 1,176 1,466
Deferred revenue 2,085 2,944
Other current liabilities 674 1,061
------- -------
Total current liabilities 14,378 21,170
Long term portion of
capitalized lease -- 607
------- -------
Total liabilities 14,378 21,777
Total stockholders' equity 65,212 77,685
------- -------
Total liabilities and
stockholders' equity $79,590 $99,462
======= =======
Daleen Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands except per share data)
(unaudited)
Three Months ended Six Months ended
June 30 June 30 June 30 June 30
2001 2000 2001 2000
-------- -------- -------- --------
Revenue:
License fees $ 1,063 7,091 2,775 12,793
Professional
services and
other 2,351 4,382 5,750 7,651
-------- -------- -------- --------
Total revenue 3,414 11,473 8,525 20,444
-------- -------- -------- --------
Cost of revenue:
License fees 321 193 368 351
Professional
services and other 1,608 3,548 5,044 6,333
-------- -------- -------- --------
Total cost
of revenue 1,929 3,741 5,412 6,684
-------- -------- -------- --------
Gross margin 1,485 7,732 3,113 13,760
Operating expenses:
Sales and
marketing 2,632 2,518 6,955 5,836
Research and
development 3,179 6,746 8,505 11,749
General and
administrative 9,279 7,445 17,515 15,109
Restructuring
and impairment
charges 4,773 -- 11,071 --
-------- -------- -------- --------
Total operating
expenses 19,863 16,709 44,046 32,694
-------- -------- -------- --------
Operating loss (18,378) (8,977) (40,933) (18,934)
-------- -------- -------- --------
Total interest
income and
nonoperating
income, net 373 625 619 1,427
-------- -------- -------- --------
Net loss $(18,005) (8,352) (40,314) (17,507)
Less: preferred
stock dividends (26,065) -- (26,065) --
-------- -------- -------- --------
Net loss
applicable to
common
shareholders $(44,070) (8,352) (66,379) (17,507)
======== ======== ======== ========
Net loss per
share - basic
and diluted $ (2.02) (0.38) (3.05) (0.81)
======== ======== ======== ========
Weighted average
outstanding
shares - basic
and diluted 21,812 21,700 21,799 21,574
======== ======== ======== ========
Adjustments to
net loss for
goodwill and
other intangibles,
stock compensation
expense,
restructuring
and impairment:
Goodwill, other
intangibles,
non-cash stock
compensation
expense,
restructuring
and impairment 10,405 3,918 21,915 7,737
-------- -------- -------- --------
Adjusted net loss
(see note in
press release): (7,600) (4,434) (18,399) (9,770)
======== ======== ======== ========
Adjusted net loss
per share -
basic and
diluted $ (0.35) (0.20) (0.84) (0.45)
-------- -------- -------- --------
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