Frontstep Reports Financial Results for the Third Quarter 2002 - Business Stabilizing, Return to Profitability Expected -.Business Editors COLUMBUS Columbus. 1 City (1990 pop. 178,681), seat of Muscogee co., W Ga., at the head of navigation on the Chattahoochee River; settled and inc. 1828 on the site of a Creek village. , Ohio--(BUSINESS WIRE)--May 1, 2002 Frontstep, Inc. (Nasdaq:FSTP FSTP Foiled Shielded Twisted Pair (network cable) FSTP Full Spectrum Threat Protection (Army) FSTP Financial Services Transfer Pricing FSTP Federal Surface Transportation Program ), a leading global provider of business software and services for discrete A component or device that is separate and distinct and treated as a singular unit. , to-order manufacturers, today reported its financial results for the third fiscal quarter ended March 31, 2002. Total revenue for the third quarter 2002 was $22.0 million. The Company reported an operating loss 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. of $986,000 and a net loss of $951,000 or $0.13 per share. In the comparable period of the prior year, the Company reported revenues of $27.2 million, an operating loss of $15.1 million and a net loss of $15.3 million or $2.03 per share. The results for the year earlier period included a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge for 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). of the Company of $8.5 million. On a sequential One after the other in some consecutive order such as by name or number. basis, the Company reported that revenues were down slightly from $22.7 million from the second fiscal quarter ended December December: see month. 31, 2001, after adjusting to exclude revenues from the Company's annual user conference. Compared to the second fiscal quarter, operating costs operating costs npl → gastos mpl operacionales declined $1.8 million, on the same adjusted basis, reflecting the results of cost reduction actions announced in January January: see month. . "Although we were expecting a loss in the March quarter, and naturally disappointed that we did not yet return the Company to profitability, we are encouraged and believe revenues have stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. and our cost reduction efforts are on track," stated Stephen Stephen, 1097?–1154, king of England (1135–54). The son of Stephen, count of Blois and Chartres, and Adela, daughter of William I of England, he was brought up by his uncle, Henry I of England, who presented him with estates in England and France and A. Sasser Sasser is
"The environment remains difficult, and we are still feeling the effects of a recession in industrial manufacturing," added Sasser. "We have not yet seen any real change in buying behavior of new customers, particularly 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. . However, we are beginning to see increased activity with prospective new customers. In addition, we are pleased that during the quarter our international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. and our services and maintenance operations for North America performed consistently and to our expectations. We are particularly pleased with the strong support from our customer base for our new product offerings that resulted in a significant improvement in revenues from these customers over the December quarter. We continue to work with our customers to make them indispensable to their customers." Third Quarter Highlights -- The Company announced the availability of its newest release of Frontstep CRM, which extends traditional customer relationship management with order management and information from SyteLine(R), Frontstep's extended ERP solution. Frontstep CRM, a Web-based application, is also architected to integrate with other enterprise and supply chain management systems. -- The Company also recently announced the availability of Frontstep Capacity Promiser, which is a Microsoft .NET based Web service that allows companies to automate the promising of delivery dates that accurately reflect inventory and capacity. -- The Company completed the first phase of the $5.0 million Convertible Note transaction previously announced and received $1.5 million in funding under that agreement. -- The Company recorded a special receivable in the quarter for Federal income tax refunds and expects to receive more than $1.1 million in the current quarter as a result of the President's economic stimulus legislation. Outlook The Company expects that it will return to profitability in the June June: see month. quarter and will report positive cash flows from operations in the June quarter as well. While the Company does not expect that any significant positive impact of an economic recovery will be felt until later this calendar year, revenues are expected to grow slightly in the fourth fiscal quarter ending June 30, 2002 as a result of new product releases. The Company plans to continue its significant development efforts in coming quarters. From these efforts, the Company plans additional new product releases and upgrades to existing products that should support an increase in license revenues in future periods. The Company also expects that its cost structure will continue to decrease in the June quarter as its actions to align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. costs with revenue expectations are fully realized. As a result, the Company expects that its return to profitability and positive cash flows in the June quarter will continue going forward. Specifically, the Company expects revenues to be in the range of $22.5 to $23.5 million in the June and September September: see month. quarters, and in the range of $24.0 to $26.0 million in the December quarter. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. is expected to be in the range of 2% to 5% in the June and September quarters, and in the range of 5% to 10% in the December quarter. Year to Date 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 Information For the nine months ended March 31, 2002, the Company reported revenues of $70.5 million compared to $89.3 million in the same period in the prior year. For the nine-month period, the Company has reported an operating loss of $2.6 million and a net loss of $3.5 million or $0.46 per share. In the same period a year earlier, the reported operating loss was $21.6 million and a net loss of $19.9 million or $2.64 per share. The Company does not consider implementation of Financial Accounting Standard Board Statement No. 142 to be material to the presentation of its financial results for the three months and nine months ended March 31, 2002. Therefore, additional pro forma information regarding our results to exclude amortization of goodwill in each of the presented periods has been omitted from this press release. Such disclosures may be found, however, in the Company's periodic filings with the Securities and Exchange Commission. The company will hold a conference call Thursday Thursday: see week. , May 2, at 10:30 a.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 for investors and analysts. The conference call will be web cast at http://ir.ccbn.com/ir.zhtml?t=FSTP&s=100. About Frontstep Frontstep is a leading global provider of software and services for discrete, to-order manufacturers. With more than 20 years of experience, Frontstep helps manufacturers create and implement solutions - including extended ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. , customer relationship management, and supply chain management - that simplify and streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. business processes and operations. Through these innovative and practical solutions, manufacturers can respond better and faster to customers' demands for quality products and services. Frontstep, formerly Symix, is headquartered in Columbus, Ohio Columbus is the capital and the largest city of the American state of Ohio. Named for explorer Christopher Columbus, the city was founded in 1812 at the confluence of the Scioto and Olentangy rivers, and assumed the functions of state capital in 1816. and has more than 4,400 customer sites and 28 offices worldwide. For more information visit www.frontstep.com. 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. under 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: This press release may contain 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. that are not historical facts and involve risks and uncertainties that could cause actual results to vary materially from the forward-looking statements. These risks and uncertainties include, but are not limited to, the demand for and market acceptance of the company's products and services, the impact of competitive products, the company's ability to increase sales and earnings, the current economic climate, the worldwide political uncertainties and other factors detailed in Frontstep's filings with the Securities and Exchange Commission. We undertake no obligation to revise or update or publicly release the results of any revision (programming) revision - A release of a piece of software which is not a major release or a bugfix, but only introduces small changes or new features. or update to these forward-looking statements. Frontstep is a trademark of Frontstep Solutions Group, Inc. All other trademarks mentioned are the property of their respective owners. (Tables to Follow)
FRONTSTEP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------- --------------------
2002 2001 2002 2001
-------- -------- -------- --------
(unaudited)
Revenue:
License fees $ 7,482 $ 10,724 $ 26,177 $ 39,790
Service, maintenance
and support 14,542 16,448 44,280 49,478
-------- -------- -------- --------
Net revenue 22,024 27,172 70,457 89,268
Cost of revenue:
License fees 4,125 4,624 12,796 14,558
Service, maintenance
and support 6,745 10,192 20,997 29,600
-------- -------- -------- --------
Total cost of revenue 10,870 14,816 33,793 44,158
-------- -------- -------- --------
Gross margin 11,154 12,356 36,664 45,110
Operating expenses:
Selling, general
and administrative 10,050 14,388 32,867 42,642
Research and development 1,657 3,737 5,060 10,926
Amortization of
intangibles from
acquisitions 433 828 1,342 2,496
Restructuring and
other charges -- 8,493 -- 10,656
-------- -------- -------- --------
Total operating
expenses 12,140 27,446 39,270 66,720
-------- -------- -------- --------
Operating income (loss) (986) (15,090) (2,606) (21,610)
Other expense, net (683) (258) (1,591) (307)
-------- -------- -------- --------
Loss before income taxes (1,669) (15,348) (4,197) (21,917)
Provision for income taxes (719) -- (693) (2,063)
-------- -------- -------- --------
Net loss $ (950) $(15,348) $ (3,504) $(19,854)
======== ======== ======== ========
Net loss per share $ (0.13) $ (2.03) $ (0.46) $ (2.64)
======== ======== ======== ========
Net loss per share,
assuming dilution $ (0.13) $ (2.03) $ (0.46) $ (2.64)
======== ======== ======== ========
Weighted average
shares outstanding 7,568 7,563 7,568 7,524
Weighted average
shares outstanding,
assuming dilution 7,568 7,563 7,568 7,524
FRONTSTEP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, June 30,
2002 2001
---------- --------
Assets
Current assets:
Cash and cash equivalents $ 3,942 $ 1,512
Trade accounts receivable, net 26,206 31,446
Prepaid expenses 5,639 3,756
Income tax receivable -- 47
Deferred income taxes 3,157 2,026
Inventories 535 738
Other current assets 254 979
-------- --------
39,733 40,504
Capitalized software, net 15,655 15,094
Intangibles, net 7,883 7,911
Equipment and improvements, net 5,543 7,646
Deposits and other assets 1,155 1,438
-------- --------
Total assets $ 69,969 $ 72,593
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
expenses $ 12,435 $ 15,610
Deferred revenue 15,398 19,067
Current portion of
long-term obligations 7,039 1,967
-------- --------
34,872 36,644
Noncurrent liabilities:
Long-term obligations 10,867 8,337
Deferred income taxes 3,595 2,891
Other 97 405
-------- --------
14,559 11,633
Minority interest 105 2,102
Preferred stock -- --
Shareholders' equity:
Preferred stock 10,865 10,865
Common stock 79 79
Additional paid-in capital 39,341 37,470
Common stock in treasury, at cost (1,320) (1,320)
Retained earnings (deficit) (25,066) (21,562)
Accumulated other comprehensive loss (3,466) (3,318)
-------- --------
20,433 22,214
-------- --------
Total liabilities and
shareholders' equity $ 69,969 $ 72,593
======== ========
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