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FILENET REPORTS PROFITABLE FIRST QUARTER ENDED APRIL 4, 1993

 COSTA MESA, Calif., April 22 /PRNewswire/ -- FileNet Corp. (NASDAQ-NMS: FILE) reported revenue for the three months ended April 4, 1993, of $34.7 million, equal to the prior year's first quarter revenue. Net income and net income per share were $0.2 million, or 2 cents per share, based on 10.8 million weighted average shares outstanding, compared with $2.0 million, or 18 cents per share, on 11.3 million shares in the first quarter of 1992.
 "As we announced at the end of 1992, we have taken several steps to reduce expenses which enabled us to lower our breakeven point and return to profitability during the quarter," stated Ted Smith, president and chief executive officer. "At the same time, we have continued to fund new products development and ongoing customer support programs."
 During the quarter, FileNet shipped 21 systems, 13 domestically and 8 to the international market, compared to 27 systems, 13 domestic and 14 international, in the first quarter of 1992. Add-on revenue accounted for 61 percent of product revenue.
 "The weakness in the western European market continues to affect revenue, despite a large pipeline of active prospects," Smith continued. "As a result, product revenue declined $3.7 million, or 15 percent from the same quarter a year ago. This was offset by higher service and other revenue reflecting an increase in our installed base, ongoing engineering contracts and pass-through sales."
 The larger percentage of lower margin service and other revenue and lower hardware margins offset the benefit of higher software revenue resulting in an overall gross margin for the quarter of 45 percent, compared to 53 percent in the same quarter a year ago.
 "Total operating expenses for the quarter were $15.3 million, equal to the same quarter a year ago, and down almost 19 percent from the fourth quarter of 1992 when we implemented our cost-control efforts," Smith continued. "Selling, general and administrative expenses were $12.7 million, 6-percent above a year ago, reflecting the larger sales force in both the United States and Europe, but down 17 percent compared to the fourth quarter. In addition, while we continue to aggressively pursue new and enhanced products, our research and development costs declined from both the first and fourth quarters of last year as a larger portion of new development activity was funded by third parties.
 "Our balance sheet remains in excellent condition, with cash and marketable securities of $28 million, no significant long-term debt and total stockholder equity of $73 million. Backlog was $2.5 million at the end of the quarter, compared to $2 million last year and $4.5 million in the fourth quarter of 1992.
 "We recently participated in the industry's two most significant trade shows, AIIM (Association for Information and Image Management) in Chicago and CeBIT in Germany. Our product announcements there completed our move to open systems and industry-standard platforms with availability on multiple platforms. These included: Visual WorkFlo, an icon-oriented drag-and-drop WorkFlo routing tool with object-oriented architecture; OS/2 and Windows NT client support; a new low-cost IBM RISC technology server; and the Hewlett Packard jukebox family, with double density 1.3 GB 5-1/4-inch optical drives. We also announced the finalization of our porting and marketing agreement with Hewlett Packard.
 "The new AIIM/Datapro survey was released in April and FileNet has again been rated first in overall customer satisfaction. Our diverse customer base is our most important asset, generating new business through new applications and expansions of current systems while providing examples of highly successful applications to new prospects," Smith concluded.
 FileNet Corp. is a leader in imaging and business process automation solutions. The company's WorkFlo Business System software, a set of products that manages and controls the movement of images, data, text and other information throughout an enterprise, is the most widely installed software of its kind. FileNet customers include paper- intensive organizations in many industries and levels of government. Headquartered in Costa Mesa, FileNet markets its products directly to end users through the company's sales office in the United States, Canada, France, Germany, the United Kingdom and Australia. FileNet systems are also sold in other countries by Inc. C. Olivetti &C, S.p.A.; Toyo Officemation Inc., a Mitsui company; and various distributors.
 -0- 4/22/93
 /CONTACT: Mark St. Clare, chief financial officer of FileNet, 714-966-3577; or Lise Needham of the Financial Relations Board, 415-986-1591, for FileNet/
 (FILE)


CO: FileNet Corp. ST: California IN: CPR SU: ERN

GT-SG -- SF003 -- 9270 04/22/93 10:02 EDT
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Publication:PR Newswire
Date:Apr 22, 1993
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