Frontstep Reports Fourth Quarter Profit and Year-End Results.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)--Aug. 5, 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 provider of business solutions for manufacturers, today reported profitable financial results for the fourth fiscal quarter ended June June: see month. 30, 2002. Total revenues for the quarter were $22.7 million, an increase of $900,000 sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen over $21.8 million reported for the third fiscal quarter ended March 31, 2002. License fees revenue grew $1.7 million, or 23%, to $9.2 million over the $7.5 million reported for the third 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. in the fourth quarter was $1.0 million and net income was $487,000, or $0.05 per share, as compared to 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 $1.2 million and a net loss of $1.2 million, or $(0.15) per share reported for the third quarter. For the same quarter in the prior fiscal year, total revenue was $28.8 million, however the Company reported an operating loss of $5.0 million and a net loss of $5.2 million, or $(0.69) per share. The prior year operating loss included a special charge of $3.7 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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. 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
tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. that our efforts of the last twelve months have now produced these positive results. We have returned the Company to profitability and positive cash flow, important steps in advancing our business. Our 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. , despite the difficult economic climate and we are effectively managing our costs. Business within our customer base continues to improve and we are encouraged by the increase in license fees revenue from new customer contracts, both of which we believe are signs that demand for our products is improving." Recent Highlights -- Rearchitected Advanced Flagship Product. On July 24th, the Company announced SyteLine 7, its extended ERP suite with advanced functionality architected on the Microsoft.NET platform. With the launch of SyteLine 7, the Company is delivering a global, integrated enterprise suite -- including Extended ERP, Customer Relationship Management, and Supply Chain Management -- on a single technology platform. -- Customer Wins. The Company signed 60 new agreements with new customers in the current quarter. -- Convertible Note Transaction. The Company completed the final phase of its previously announced $5.0 million Convertible Note transaction that makes available an additional $3.5 million to support working capital and operating needs. "With improving cash flows from operations and the additional funds available from this transaction, we believe the Company is better positioned from a cash perspective for the year ahead. Our continued efforts to deliver our complete suite on a single technology platform during a tough environment were courageous. We believe these efforts will now begin to pay off. Early response from our current customers and the market are positive and 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. ," said Sasser. For the year ended June 30, 2002, total revenue was $92.8 million compared to $117.1 million for the prior fiscal year. The reported net loss for the current year was $3.3 million, or $(0.44) per share compared to a net loss of $26.1 million, or $(3.46) per share. The prior year loss included restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $6.4 million. Outlook "For the foreseeable fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. future, we remain focused on maintaining the stability of our current revenue levels, delivering consistent profitability and improving our cash flows," added Sasser. "Although the environment for selling enterprise solutions continues to be challenging, we are pleased to have seen a modest pick up in new deals and increased pipeline activity. All of our efforts are designed to make us financially stronger and to position us to be more competitive when the market recovers. We believe the value of our product advancements and breadth Breadth The percentage of assets or stocks advancing relative to those unchanged or declining. Also the number of independent forecasts available per year. A stock picker forecasting returns to 100 stocks every quarter exhibits a breadth of 400, assuming each forecast is and depth of our solutions will help move the company forward in the coming fiscal year." Other Matters Today the Company filed a current report on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. with the Securities and Exchange Commission that provides the details of a voluntary restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of previously reported financial results. The Company identified an error in the third-party software it uses to calculate and report revenue from renewals of ongoing maintenance and support contracts with its customers. The error, which only occurred in a limited and specific process, had no effect on results for the current quarter but caused reported revenues for the nine-months ended March 31, 2002 to be overstated o·ver·state tr.v. o·ver·stat·ed, o·ver·stat·ing, o·ver·states To state in exaggerated terms. See Synonyms at exaggerate. o by $312,000 or 0.4% of reported revenues for that period. For the prior fiscal year ended June 30, 2001, the overstatement o·ver·state tr.v. o·ver·stat·ed, o·ver·stat·ing, o·ver·states To state in exaggerated terms. See Synonyms at exaggerate. o was $1.2 million or 1.0% of the previously reported revenue amount. The adjusted financial results for all of the affected period have been included in the Form 8-K report and are reflected in the attached financial statements. The Company believes that the impact of this restatement to future periods is positive since the balance of deferred revenue, revenue to be recorded in future periods, increased by $1,522,000 as of March 31, 2002. The Company will host a conference call with investors, Tuesday Tuesday: see week. August 6th, at 10:30 .am. 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 A component or device that is separate and distinct and treated as a singular unit. , to-order manufacturers. With more than 20 years of experience, Frontstep leverages the Microsoft .NET See .NET. platform to help 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 customer 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 26 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.
FRONTSTEP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
June 30, June 30,
---------------------- ------------------------
2002 2001 2002 2001
---------------------- ------------------------
(unaudited) (restated) (unaudited) (restated)
Revenue:
License fees $ 9,195 $ 11,519 $ 35,372 $ 51,309
Services 4,815 7,773 21,787 30,921
Maintenance
and support 8,680 9,529 35,676 34,845
----------- ----------- ----------- ---------
Net revenue 22,690 28,821 92,835 117,075
Cost of revenue:
License fees 4,668 5,414 17,464 21,885
Service,
maintenance
and support 6,241 7,341 27,238 36,941
----------- ----------- ----------- ---------
Total cost of
revenue 10,909 12,755 44,702 58,826
----------- ----------- ----------- ---------
Gross margin 11,781 16,241 48,133 58,250
Operating expenses:
Selling, general
and administrative 9,090 14,205 41,958 62,847
Research and
development 1,256 2,406 6,316 13,332
Amortization of
intangibles
from acquisitions 433 789 1,776 3,285
Restructuring and
other charges -- 3,660 -- 6,403
----------- ----------- ----------- ---------
Total operating
expenses 10,779 21,060 50,050 85,867
----------- ----------- ----------- ---------
Operating income
(loss) 1,002 (4,994) (1,917) (27,617)
Other expense, net (515) (203) (2,106) (510)
----------- ----------- ----------- ---------
Income (loss)
before income
taxes 487 (5,197) (4,023) (28,127)
Provision for
income taxes -- -- (693) (2,063)
----------- ----------- ----------- ---------
Net income (loss) $ 487 $ (5,197) $ (3,330) $ (26,064)
========= ========== ========= ==========
Net income (loss)
per share $ 0.06 $ (0.69) $ (0.44) $ (3.46)
========= ========== ========= ==========
Net income (loss)
per share,
assuming
dilution $ 0.05 $ (0.69) $ (0.44) $ (3.46)
========= ========== ========= ==========
Weighted average
shares outstanding 7,568 7,568 7,568 7,535
Weighted average
shares outstanding,
assuming dilution 11,037 7,568 7,568 7,535
FRONTSTEP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, June 30,
2002 2001
---------- -----------
(unaudited) (restated)
Assets
Current assets:
Cash and cash equivalents $ 3,389 $ 1,512
Trade accounts receivable, net 28,985 31,446
Prepaid expenses 6,224 3,756
Income tax receivable -- 47
Deferred income taxes 3,386 2,026
Inventories 491 738
Other current assets 362 979
-------- --------
42,836 40,504
Capitalized software, net 16,237 15,094
Intangibles, net 8,039 7,911
Equipment and improvements, net 5,030 7,646
Deposits and other assets 1,074 1,438
-------- --------
Total assets $ 73,217 $ 72,593
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 12,630 $ 15,610
Deferred revenue 18,546 20,278
Current portion of long-term obligations 7,217 1,967
-------- --------
38,392 37,896
Noncurrent liabilities:
Long-term obligations 9,828 8,337
Deferred income taxes 5,399 2,891
Other -- 405
-------- --------
15,227 11,633
Minority interest -- 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) (26,102) (22,773)
Accumulated other comprehensive loss (3,265) (3,318)
-------- --------
19,598 20,962
-------- --------
Total liabilities and shareholders' equity $ 73,217 $ 72,593
======== ========
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