ISOCOR Announces Improved Second Quarter 1999 Financial Results.SANTA MONICA Santa Monica (săn`tə mŏn`ĭkə), city (1990 pop. 86,905), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1886. Tourism and retailing are important, and the city has motion-picture, biotechnology, and software industries. , Calif.--(BUSINESS WIRE)--July 22, 1999-- ISOCOR (Nasdaq:ICOR ICOR International Consortium for Organizational Resilience (Lombard, IL) ICOR Incremental Capital-Output Ratio ICOR First Corinthians ICOR Infantry Combat Regiment (US Army; Korean war era) ) today reported increased revenues and a significantly decreased net loss in the second quarter 1999 as compared to the first quarter of 1999. In addition, the Company indicated substantial progress had been made over the past several months against the Company's strategic initiatives that were announced earlier this year. Summary of Results Revenues for the second quarter ended June 30, 1999 increased by 15% to $8.0 million as compared to $6.9 million for the first quarter ended March 31, 1999 and increased by 32% compared to $6.1 million for the second quarter ended June 30, 1998. Net loss was $1.1 million or a net loss of $0.10 per share, for the second quarter of 1999, improved from a net loss of $1.9 million or a net loss of $0.19 per share, for the first quarter of 1999 and as compared to a net loss of $536,000 or a net loss of $0.05 per share, for the second quarter of 1998. The Company's Markets Paul Gigg, ISOCOR's President and Chief Executive Officer, commented: "ISOCOR competes in the 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 Middleware Software that functions as a conversion or translation layer. It is also a consolidator and integrator. Custom-programmed middleware solutions have been developed for decades to enable one application to communicate with another that either runs on a different platform or comes from a market, which independent industry analysts estimate at $2 billion in revenues in 1998 and growing to $7 billion by 2002. Within the Internet Middleware market, ISOCOR is focused on the directory and messaging segment, where we deliver world-class, high-performance directory and messaging software and services. "Based largely upon analysts' estimates, ISOCOR believes that this subset A group of commands or functions that do not include all the capabilities of the original specification. Software or hardware components designed for the subset will also work with the original. of the Internet Middleware market is $600 million in 1999 and growing at 30% per year." Gigg continued: "Within our chosen markets, ISOCOR is primarily focused on corporate customers, where we expect to generate about two-thirds of our revenues. In the corporate market, we currently expect directory software, and more specifically our new meta-directory product, MetaConnect, to be our key product in late 1999 and beyond. "We currently expect the remaining one-third of revenues to come from internet service provider Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. (`ISP') customers. Messaging software, in the form of our N-PLEX product family, is our primary product within the ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. market." Developments in and Progress Against First Strategic Initiative in the Corporate Market - Partnering with Directory Vendors -0- -- ISOCOR is now the only independent meta-directory vendor -- ISOCOR is positioned complementarily with Novell -- Netscape ships first ISOCOR products -- ISOCOR product to be included in SUN solutions Gigg commented on recent developments in the corporate market: "Microsoft recently announced that it had acquired ZOOMIT Corporation, a provider of meta-directory products whose technology will be integrated into Microsoft's directory contained in Windows 2000. This is great news for ISOCOR; Microsoft's action suggests that meta-directories will be important to all large corporations thus presenting a huge market opportunity. "Microsoft's action leaves ISOCOR as the only independent meta-directory vendor. The Microsoft solution is suitable for those organizations where Microsoft's directory is chosen as the only enterprise directory. Our key differentiator is that ISOCOR's meta-directory is designed for organizations that have enterprise directories from various vendors. "We believe that the vast majority of organizations will have a mix of enterprise directories from vendors such as IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , Microsoft, Netscape, Novell, SUN and others. This is a key selling point selling point n. An aspect of a product or service that is stressed in advertising or marketing. Noun 1. selling point - a characteristic of something that is up for sale that makes it attractive to potential customers for our solution. In addition, for those organizations that choose Microsoft's directory as their only enterprise directory, ISOCOR's meta-directory can add value and remains complementary to Microsoft's solution." Commenting further Gigg said: "Additional support for the role of meta-directories has come from Novell who recently announced extensions to its directory product portfolio. We believe Novell's announcements are complementary to our meta-directory strategy and we were included in the Novell press release. We intend to continue to support Novell's directory within our meta-directory strategy." Regarding second quarter progress against strategic initiatives, Gigg said: "During the first quarter of 1999 we announced our relationship with Netscape where ISOCOR's meta-directory product will form the basis of the Netscape meta-directory offering. I am pleased to report that Netscape has formally accepted the product and shipped its first ISOCOR-based meta-directory products. "Our relationship with Netscape is a multi-year arrangement in which ISOCOR should receive a royalty stream, including minimum guaranteed royalties, which we expect to include in our revenues beginning in late 1999. "Based upon recent discussions with Netscape and SUN, we expect that our meta-directory product will be included in the SUN product portfolio which will further increase the size of our addressable Reachable. When something is addressable, it can be identified and manipulated independently of its surroundings. For example, screen pixels and RAM memory are addressable. Each of the screen's picture elements can be individually turned on and off, and each of the memory's bytes can be market," stated Gigg. "ISOCOR's stature stature /sta·ture/ (stach´ur) the height or tallness of a person standing.stat´ural stat·ure n. The height of a person. stature the height of an animal in the standing position. in the meta-directory market was evidenced by the recent invitation from Novell and IBM to be one of the founding members of the Directory Interoperability The capability of two or more hardware devices or two or more software routines to work harmoniously together. For example, in an Ethernet network, display adapters, hubs, switches and routers from different vendors must conform to the Ethernet standard and interoperate with each other. Forum announced earlier this month. The Forum's goal is to establish common capabilities and practices so that software vendors and customers can use directories interchangeably INTERCHANGEABLY. Formerly when deeds of land were made, where there Were covenants to be performed on both sides, it was usual to make two deeds exactly similar to each other, and to exchange them; in the attesting clause, the words, In witness whereof the parties have hereunto ," said Gigg. Progress Against Second Strategic Initiative in the Corporate Market - Expansion of Meta-directory Market Opportunity Gigg stated: "I am pleased to report that we have expanded further the market for our meta-directory product by supporting SAP and PeopleSoft environments. These environments are present in many of the customers in our corporate market and addressing those environments will allow the customer to leverage its existing investment in enterprise software." Progress Against Third Strategic Initiative in the Corporate Market - Alliances with System Integrators See systems integrator. Commenting on the third strategic initiative, Gigg stated: "We indicated earlier this year that we planned to create alliances with large systems integrators An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. in order to maximize the opportunity presented by business-to-business e-Commerce. Recently we announced alliances with Ernst & Young, SAIC SAIC - http://saic.com. , Inacom Corp. and Banyan banyan (băn`yən), species of fig (Ficus bengalensis) of the family Moraceae (mulberry family), native to India, where it is venerated. Its seeds usually germinate in the branches of some tree where they have been dropped by birds. . We currently expect that these alliances will contribute to ISOCOR's revenues next year." Progress Against Strategic Initiatives in the Internet Service Provider Market Gigg continued: "In the ISP market, our strategy is to provide world-class, high-performance messaging and directory software. ISOCOR's key initiatives for 1999 are first, to continue to expand our customer base and secondly, to broaden the market appeal for our ISP products by making the products available on a wider range of hardware platforms Each hardware platform, or CPU family, has a unique machine language. All software presented to the computer for execution must be in the binary coded machine language of that CPU. Following is a list of the major hardware platforms in existence today. See platform. . "We are very pleased with our recent customer additions and that we have licensed 20 million mailboxes worldwide. We believe that this demonstrates the growing demand for ISOCOR's messaging products and strengthens our position as a leading supplier to Internet service providers. "In addition, we announced in February a relationship with Silicon Graphics, a leading supplier of visual computing The use of computers for 3D modeling and animation. See visualization. and high-performance systems. This relationship will further allow us to expand our ability to provide scalable messaging solutions for high end users by providing our products on their hardware platform." Revenue Breakdown Product revenues in the quarter ended June 30, 1999 increased to $4.7 million from $4.2 million in the second quarter of 1998. Segmenting product revenues further, Internet Messaging accounted for $2.7 million or 57% of product revenues in the second quarter of 1999, which increased from the second quarter of 1998 level of $2.5 million. Directory revenues, which accounted for $324,000 or 7% of product revenues in the second quarter of 1999, decreased from the second quarter of 1998 level of $645,000. The remainder of product revenues relates primarily to ISOCOR's older, non-Internet related product lines and totaled $1.7 million in the second quarter of 1999, as compared to $1.1 million for the second quarter of 1998. Total services revenues increased to $3.3 million in the second quarter of 1999, a 79% increase from the second quarter 1998 level of $1.8 million. This is a result of increased customer demand for ISOCOR's solutions incorporating both products and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. . Other Financial Information Janine Bushman, Chief Financial Officer of ISOCOR stated: "ISOCOR's gross margin percentage for the quarter ended June 30, 1999 was 65% compared to 73% in the quarter ended June 30, 1998. The principal reason for the decline in gross margin percentage between 1998 and 1999 is the combination of a lower 1999 gross margin percentage on the services business and an increasing percentage of total revenues attributable to the services business." Addressing ISOCOR's 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 , Bushman stated: "At June 30, 1999 the Company's cash, cash equivalents and marketable securities position was approximately $19 million, providing the Company with a solid financial foundation." Conference Call ISOCOR's conference call with investors and analysts, to be held on Thursday, July 22 at 8 a.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT , will be available over the Internet through Vcall at http://www.vcall.com. To listen to the live call, go to the Web site at least 15 minutes early to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call. About ISOCOR ISOCOR (www.isocor.com) is a leading provider of world-class Internet software, supplying high-quality, high-performance software designed to handle an organization's messaging and directory requirements. ISOCOR customers represent Fortune 1000 companies and service providers in the manufacturing, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , financial, government, health care, entertainment and other markets around the world. Customers include Texas Instruments See TI. (company) Texas Instruments - (TI) A US electronics company. A TI engineer, Jack Kilby invented the integrated circuit in 1958. Three TI employees left the company in 1982 to start Compaq. , UUNET (UUNET Technologies, Inc., Fairfax, VA, www.uunet.net) Founded in 1987, UUNET was the first commercial Internet service provider. Originally offering e-mail and news, it became a full Internet service organization providing dial-up and leased line accounts as well as archive space for and New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Life, among others. With headquarters in California, ISOCOR is a global organization with major development centers in Santa Monica, Dublin and Berlin. ISOCOR has sales/support offices in key international business centers including London, Paris, Turin, Berlin and Bern. For more information on ISOCOR via facsimile at no cost, call 800/PRO-INFO and dial client code ICOR. Except for the historical information, the matters discussed in this news release are 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 subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could affect results include the mix of business between products and services; the type and size of customers doing business with the Company and the structure of those transactions, their product and services requirements and the impact of the timing of revenues relative to expenses; timely development, introduction and acceptance of new products and enhancements to existing products in evolving markets; expansion of the Company's products to support additional enterprise software environments and hardware platforms; continued broad deployment and use of the Internet for electronic messaging See e-mail and messaging system. ; the Company's ability to consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. relationships with alliance partners; the impact of competitive announcements and products; the rate of growth of the markets in which the Company competes; acquisition activities and the ability to integrate acquired businesses successfully; the impact of changes in accounting standards; the effect and rate of change in standards and platforms for messaging products; the risks associated with the Year 2000; as well as the risk factors listed from time to time in the Company's Securities and Exchange Commission reports, including but not limited to the 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. for the year ended Dec. 31, 1998, and/or Form 10-Q Form 10-Q See 10-Q. for the quarters ended in 1999, copies of which are available from ISOCOR's Investor Relations Investor relations The process by which the corporation communicates with its investors. Department or through the Electronic Data Gathering, Analysis and Retrieval system (EDGAR Edgar or Eadgar (both: ĕd`gər), 943?–975, king of the English (959–75), son of Edmund, king of Wessex. In 957 the Mercians and Northumbrians rebelled against Edgar's brother Edwy and chose Edgar as their king. ) at www.sec.gov. The Company assumes no obligation to update the forward-looking statements included in this news release. Note to Editors: ISOCOR, MetaConnect and N-PLEX are registered trademarks of ISOCOR. All other trademarks and registered trademarks are the property of their respective holders. -0-
ISOCOR
Statement of Operations Highlights - Unaudited
(amounts in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Total revenues, net $ 7,968 $ 6,052 $14,897 $11,098
Gross profit 5,219 4,426 9,213 8,007
Engineering expenses 1,411 1,475 2,806 2,930
Selling, general &
administrative expenses 4,936 3,813 9,165 8,184
Operating loss (1,128) (862) (2,758) (3,107)
Income (loss) from
currency fluctuations (102) 86 (582) (77)
Interest income, net 196 260 418 571
Loss before income taxes
and minority interest (1,034) (516) (2,922) (2,613)
Provision for income taxes 33 20 79 37
Net loss before
minority interest (1,067) (536) (3,001) (2,650)
Minority interest -- -- (19) --
Net loss $(1,067) $ (536) $(2,982) $(2,650)
Net loss per share,
basic and diluted $ (0.10) $ (0.05) $ (0.29) $ (0.27)
Weighted average
shares outstanding 10,267 9,786 10,149 9,738
Balance Sheet Summary
(amounts in thousands)
June 30, 1999 Dec. 31, 1998
(Unaudited) (Audited)
Cash and cash equivalents $10,141 $9,656
Marketable securities 9,010 9,456
Accounts receivable, net 6,498 8,900
Other current assets 3,306 1,805
Property and equipment, net 2,294 2,380
Other assets 1,300 928
Total assets $32,549 $33,125
Current liabilities $14,424 $13,214
Other liabilities 127 146
Shareholders' equity 17,998 19,765
Total liabilities and
shareholders' equity $32,549 $33,125
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