NetSolve Incorporated Announces Fourth Quarter Results.Business Editors AUSTIN Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum , Texas--(BUSINESS WIRE)--April 18, 2001 NetSolve Incorporated (Nasdaq:NTSL NTSL Nonintegrated Two-Stage Liquid ), a leading provider of managed network services, reported today that despite softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. economic conditions and the generally recognized deceleration deceleration /de·cel·er·a·tion/ (de-sel?er-a´shun) decrease in rate or speed. early deceleration in corporate network technology spending, fourth quarter network management services revenues increased slightly over the previous quarter. The company also reported that while both network management services revenues and total revenues for its fiscal year ended March 31, 2001 increased significantly over the previous fiscal year, the impact of maintaining operational capacity, additions to infrastructure and increased sales and marketing spending caused a decline in operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: percentages for the year ended March 31, 2001. Fiscal Year Results For the full fiscal year ended March 31, 2001, NetSolve posted network management services revenues of $33.0 million, compared with $24.0 million the previous fiscal year, an increase of 37.4%. Total revenues for fiscal 2001 increased by 20.2% to $46.5 million from $38.7 million the year before. 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 fiscal year 2001 was $4.7 million, up by 10.8% from $4.2 million for the previous fiscal year. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net income equaled $0.34 per share for fiscal year 2001, a 30.8% increase compared with diluted net income of $0.26 per share for fiscal year 2000 on a pro-forma fully-taxed basis. The company noted that its balance sheet remained strong at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . Cash and cash equivalents at March 31, 2001 were $45.4 million and the company generated $11.6 million of cash from operations for the fiscal year. Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying remained within the company's target range with average days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). at 31 days. Commenting on the past year's results as a whole Craig Craig , Edward Gordon 1872-1966. British theatrical producer, director, and designer whose innovative productions and simplified stage designs influenced modern theater. Tysdal, NetSolve president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. stated, "While we did manage to generate an increase in revenues, declining nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. revenues in each of the last three quarters resulted in flat network management services revenues on a quarterly basis. Nevertheless, increases in recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. network management services revenues, upon which our business model is based, have provided some insulation insulation (ĭn'səlā`shən, ĭn'sy  –), use of materials or devices to inhibit or prevent the conduction of heat or of electricity. from revenue declines. Fortunately,
a strong operating cash flow Operating cash flowEarnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. and a solid balance sheet have allowed us to continue to invest in new product and channel developments. We continue to believe in our business model and the recent Comdisco (Comdisco, Inc., Rosemont, IL, www.comdisco.com) A technology services company, originally founded as Computer Discount Company in 1969 by Ken Pontikes. By the mid-1990s, Comdisco had become one of the largest independent computer and electronics equipment leasing companies as well as a and NEC-Japan announcements speak to NetSolve's leadership role in the development and management of leading remote network management tools and processes." Fourth Quarter Results Network management services revenues rose to $8.3 million from $7.7 million in the same quarter a year earlier, an increase of 8.6%. Total revenues for the quarter were $11.8 million, an increase of 5.2% over the $11.2 million recorded in the same quarter a year ago. Operating income in the fourth quarter of fiscal 2001 was $636,000 as compared to $1.5 million in the year-ago period. Diluted net income equaled $0.07 per share for the quarter compared with pro-forma diluted net income of $0.09 per share for the same quarter a year ago. Excluding the impact of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $579,000 in acquisition costs in connection with the transaction with Comdisco during the quarter, diluted net income for the quarter would have been $0.10 per share. The company noted that it continued to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. shares during the fourth quarter. A total of 325,316 shares were repurchased in a series of transactions at an aggregate price of $2.2 million. Outlook Tysdal added that he remains confident about the future of NetSolve. "We believe that our focus on new products and channels, and their potential to produce higher average recurring network management services revenues per customer should have a positive impact on our business despite anticipated lower levels of nonrecurring network management services revenues. Additionally, with the recent appointment of Bob Pojman as vice president of Business Development, we intend to seek additional opportunities similar to the recent transactions with Comdisco and NEC-Japan. As our reputation as a leading provider of remote network management services continues to grow through these and similar partnerships, we are confident that resellers and others will increasingly view NetSolve as an obvious choice as a partner for network management services." About NetSolve NetSolve is a leading provider of managed network services delivering life-cycle life-cycle - software life-cycle management of WAN, LAN (Local Area Network) A communications network that serves users within a confined geographical area. The "clients" are the user's workstations typically running Windows, although Mac and Linux clients are also used. and network security to its customers. NetSolve's services augment aug·ment v. aug·ment·ed, aug·ment·ing, aug·ments v.tr. 1. To make (something already developed or well under way) greater, as in size, extent, or quantity: existing IT management staff, which enables customers to focus internal resources on business-critical initiatives. Its customer base consists of more than 1,250 companies representing more than 30,000 sites in 42 countries. NetSolve is headquartered in Austin, Texas and can be reached at 800/NETSOLVE or at www.netsolve.com. NetSolve's common shares are traded on 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. under the symbol NTSL. This earnings release includes "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. " within the meaning of 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. Such statements include those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our belief in our business model and all of the statements under the heading "Outlook," including, without limitation, those regarding the potential from new products and channels, the potential to produce higher average recurring network management services revenues per customer, the positive impact on our business, anticipated lower levels of nonrecurring network management services revenues, the likelihood of additional opportunities similar to the recent Comdisco and NEC-Japan transactions, the growth of our reputation as a leading provider of remote network management services, the perception of resellers and others, and the growth of our network management services. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such statements. Such factors include, but are not limited to, general economic and business conditions, conditions affecting the industries served by the Company, conditions affecting the Company's customers, resellers, partners and suppliers, the ability and willingness of resellers and other partners to devote their resources to sales of our services, the willingness of existing resellers and partners to continue to sell the Company's services, competition, the market acceptance of the company's services, and other factors disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in the company's Prospectus A document, notice, circular, advertisement, letter, or communication in written form or by radio or television that offers any security for sale, or confirms the sale of any security. dated September September: see month. 29, 1999, and the company's subsequent filings with the Securities and Exchange Commission, which are incorporated herein by this reference. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Tables Follow NetSolve Incorporated (Nasdaq:NTSL) Conference Call Announcement You are invited to participate in a conference call to review NetSolve's fourth quarter results for fiscal year 2001. The conference call will be held on Thursday Thursday: see week. , April 19, 2001 at 10:00 A.M. (CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. ). Craig Tysdal, president and chief executive officer will serve as the chairperson chairperson Chairman The head of an academic department. See 'Chair.', Cf Chief. and Ken Kieley, vice president and chief financial officer and secretary will present financial information. Prepared remarks will take approximately 20 minutes and will be followed by a brief question and answer period. You can participate in the conference call by dialing 800/621-5270 and entering reservation number 17770968. Additionally, you can listen to the conference call simultaneously via webcast at http://www.netsolve.com/investor. The release will also be available for post-review 24 hours after the call by dialing 800/633-8284 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 by dialing 858/812-6440 internationally and entering reservation number 17770968. Additionally it will be available on the NetSolve Web site (http://www.netsolve.com). If you would like to have information emailed to you in the future, please send your email address See Internet address. to smartblast@ccbn.com or fax to 617/912-0081 and we will add you to our distribution list.
NETSOLVE, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
3/31/00 3/31/01
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 57,185 $ 45,411
Restricted cash 395 306
Accounts receivable, net of allowance for
doubtful accounts of $219 at March 31,
2000 and $207 at March 31, 2001 4,913 4,013
Inventory 252 52
Prepaid expenses and other assets 2,139 1,314
Deferred tax assets 3,682 1,647
------------ ------------
Total current assets 68,566 52,743
Restricted cash 306 --
Property and equipment:
Computer equipment and software 5,696 9,277
Furniture, fixtures and leasehold
improvements 1,765 1,983
Equipment held under capital leases 1,701 1,343
Other equipment 363 393
------------ ------------
9,525 12,996
Less accumulated depreciation and
amortization (5,230) (7,163)
------------ ------------
Net property and equipment 4,295 5,833
Other assets 47 1,275
Deferred tax assets, net of current portion 1,305 2,980
------------ ------------
Total assets $ 74,519 $ 62,831
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,174 $ 954
Accrued liabilities 2,526 4,576
Capital leases obligation 537 324
------------ ------------
Total current liabilities 5,237 5,854
Capital leases obligation, net of current
portion 324 --
Stockholders' equity:
Common stock, $.01 par value; 25,000,000
shares authorized at March 31, 2000 and
March 31, 2001; 14,485,586 issued and
outstanding at March 31, 2000 and
14,858,021 issued and 12,062,705
outstanding at March 31, 2001 145 148
Additional paid-in capital 77,578 80,574
Treasury Stock -- (20,179)
Deferred compensation (257) (69)
Accumulated deficit (8,508) (3,497)
------------ ------------
Total stockholders' equity 68,958 56,977
------------ ------------
Total liabilities and stockholders' equity $ 74,519 $ 62,831
============ ============
NETSOLVE, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
------------------- -------------------
3/31/00 3/31/01 3/31/00 3/31/01
-------- --------- --------- --------
(unaudited)
Revenues:
Network management services $ 7,663 $ 8,322 $ 24,048 $ 33,032
Equipment and other 3,536 3,462 14,613 13,420
-------- --------- --------- --------
Total revenues 11,199 11,784 38,661 46,452
Costs of revenues:
Cost of network management
services 3,993 5,226 13,095 19,311
Cost of equipment and other 2,647 2,432 11,202 9,536
-------- --------- --------- --------
Total cost of revenues 6,640 7,658 24,297 28,847
-------- --------- --------- --------
Gross profit 4,559 4,126 14,364 17,605
Operating expenses:
Development 723 792 2,503 3,169
Selling and marketing 1,389 1,850 4,486 6,149
General and administrative 922 839 3,095 3,559
Amortization of deferred
compensation 20 9 65 58
-------- --------- --------- --------
Total operating expenses 3,054 3,490 10,149 12,935
-------- --------- --------- --------
Operating income 1,505 636 4,215 4,670
Other income (expense):
Interest income 752 647 1,570 3,319
Interest expense (26) (11) (117) (53)
Other, net (10) 7 10 19
-------- --------- --------- --------
716 643 1,463 3,285
-------- --------- --------- --------
Income before income taxes 2,221 1,279 5,678 7,955
Income tax expense (benefit) (2,318) 473 (4,875) 2,944
-------- --------- --------- --------
Net income $ 4,539 $ 806 $ 10,553 $ 5,011
-------- --------- --------- --------
Dividends on redeemable
convertible preferred stock $ -- $ -- $ (1,260) $ --
-------- --------- --------- --------
Net income applicable to
common stock $ 4,539 $ 806 $ 9,293 $ 5,011
======== ========= ========= ========
Basic net income per share(1) $ 0.10 $ 0.07 $ 0.30 $ 0.37
Weighted average shares used
in basic per share
calculation (1) 14,269 12,230 11,963 13,495
Diluted net income per share
(1) $ 0.09 $ 0.07 $ 0.26 $ 0.34
Weighted average shares used
in diluted per share
calculation (1) 16,296 12,263 13,648 14,540
(1) The per share amounts above for the prior year have been presented
on a pro forma basis, as if all preferred stock were converted to
common shares at the time of issuance and all earnings were taxed
at the same rate as the twelve months ended March 31, 2001.
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