PeopleSoft, Inc. Reports Sales and Earnings for the Fourth Quarter and Year Ended Dec. 31, 1996.

PLEASANTON, Calif.--(BUSINESS WIRE)--Feb. 4, 1997--PeopleSoft, Inc. (NASDAQ: PSFT) announced today the financial results for the quarter and year ended December 31, 1996, which include, as previously announced, certain non-recurring charges related to two recent acquisitions.

Revenues, net income and net income per share for the fourth quarter of 1996 were $147.7 million, $1.7 million and $0.01, respectively. The results for the fourth quarter of 1996 include a one time write-off of in-process research and development and other acquisition related costs of $26.5 million incurred in connection with the acquisition of PMI and other non-recurring charges of $2.9 million associated with the October 1996 merger with Red Pepper Software Company. Without the write-off of in-process research and development, the non-recurring acquisition and merger costs and their related tax effects, net income and net income per share for the fourth quarter of 1996 would have been $20.5 million and $0.17, respectively.

This compares with revenues, net income and net income per share of $78.2 million, $11.0 million and $0.09, respectively, recorded during the corresponding period of 1995. After adjustment of the prior period shares to reflect the Company's recent two-for-one stock split, weighted average shares outstanding were 123,028,000 and 116,536,000 for the quarters ended December 31, 1996 and 1995, respectively. All consolidated financial information and share data applicable to prior periods have been restated to reflect the acquisition of Red Pepper Software Company, accounted for as a pooling of interests.

For the year ended December 31, 1996, revenues, net income and net income per share were $450.1 million, $35.9 million, and $0.30 per share, respectively. Without the aforementioned write-off of in-process research and development, the non-recurring acquisition and merger costs and their related tax effects, net income and net income per share for the year ended December 31, 1996 would have been $54.7 million and $0.46, respectively. This compares with revenues, net income and net income per share of $232.1 million, $27.3 million and $0.24, respectively, for the corresponding period of 1995. Weighted average shares outstanding were 120,032,000 and 114,062,000 for the years ended December 31, 1996 and 1995, respectively.

Revenues from license fees for the fourth quarter of 1996 increased 72% over the comparable period of the prior year. PeopleSoft HRMS software products accounted for $43.3 million of license fees recognized during the fourth quarter of 1996 compared to $30.5 million for the same quarter of the prior year, an increase of 42%, while PeopleSoft Financials, PeopleSoft Distribution and PeopleSoft Manufacturing software products accounted for $41.8 million in license fees recognized in the fourth quarter of 1996 compared to $18.9 million for the same quarter of the prior year, an increase of 121%. For the year ended December 31, 1996, revenue generated from PeopleSoft HRMS license fees totaled $142.5 million compared to $87.8 million for the prior year, while PeopleSoft Financials, PeopleSoft Distribution and PeopleSoft Manufacturing license fees totaled $110.3 million and $50.0 million for the years ended December 31, 1996 and 1995, respectively.

Revenue from services for the fourth quarter increased 117% over the comparable period of the prior year and accounted for 42% and 37% of total revenues for the fourth quarters of 1996 and 1995, respectively. Revenues from international operations increased by 67% to $23.3 million or 16% of total revenues for the fourth quarter of 1996, compared to $14.0 million or 18% of total revenues for the same quarter of the prior year.

Continued strong demand for PeopleSoft's client/server product offerings resulted in 1996 fourth quarter contracting activity for software products and related bundled services of $135.5 million, including $65.8 million related to its PeopleSoft Financials, PeopleSoft Distribution and PeopleSoft Manufacturing software products. Total contracting activity for the comparable quarter of the prior year was approximately $76.6 million, including $34.1 million related to the PeopleSoft Financials, PeopleSoft Distribution and PeopleSoft Manufacturing software products.

The fourth quarter contracts included 24 license agreements in excess of $1 million, including a significant enterprise license agreement with Ford Motor Company for PeopleSoft Financials and PeopleSoft HRMS. For the year ended December 31, 1996, total contracting activity was approximately $407.6 million, including $184.4 million for PeopleSoft Financials, PeopleSoft Distribution and PeopleSoft Manufacturing software products, compared to $218.6 million and $88.4 million, respectively, for the prior year.

Quarterly Highlights

The following highlights were announced or occurred since PeopleSoft's last earnings release:

-- The general availability of PeopleSoft 6, a major new release of PeopleSoft's entire applications suite. Designed for the global enterprise, PeopleSoft 6 features 11 new software products (including a new product line, PeopleSoft Manufacturing), numerous functional enhancements, and new technology including on-line distributed processing, electronic commerce support and a 32-bit architecture. In addition, industry specific solutions for the public, federal and higher education sectors and additional multilanguage support for PeopleSoft 6 will be available in the first half of 1997;

-- The acquisition of PeopleSoft Manufacturing, Inc. and PeopleMan, LP (collectively referred to as PMI) for $30.1 million in stock, stock options and other consideration. PMI was engaged in developing new applications to meet the demands of discrete manufacturers using PeopleTools, PeopleSoft's rapid application development environment;

-- Business partnerships with Intrepid Systems, Inc. (Intrepid), The Vantive Corporation (Vantive) and Universal Algorithms. Intrepid will port its Evolution software product for retail management to PeopleTools and both parties will jointly market a comprehensive, integrated enterprise solution for retail customers. PeopleSoft and Vantive will jointly design, develop and market integrated versions of Vantive's leading field service application with PeopleSoft Manufacturing. Universal Algorithms' advanced space management and CollegeNET admissions software will be bundled with PeopleSoft Student Administration;

-- Support for PeopleSoft HRMS and PeopleSoft Financials on Microsoft's SQL Server 6.5 and Windows NT 4.0, as well as IBM's AS/400 PowerPC platform, the 64-bit RISC-based successor to IBM's CISC-processor AS/400 systems;

-- The results of a customer implementation survey which provides PeopleSoft customers and prospects key implementation data on phased implementations, project team sizes, implementation times and degrees of customization. Of the 700 customers polled, 259 responded and 99% reported that they would choose PeopleSoft again.

Special Note

The quarterly highlights and certain announcements referenced above contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those anticipated.

Such risks and uncertainties include, but are not limited to, fluctuations in customer demand, the timing and complexity of large transactions, intensity of competition from other application vendors, timing and acceptance of new products, the Company's significant operating leverage, and general economic, seasonal and industry conditions, as well as other risks detailed in the Company's filings with the Securities and Exchange Commission, including, but not limited to, the Form S-3 Registration Statement filed on January 29, 1997, the report on Form 10-Q for the quarter ended September 30, 1996 (Part I, Item 2, Factors That May Affect Future Results) and the 1995 Annual Report to Shareholders (Form 10- K). PeopleSoft assumes no obligation to update the information contained in this press release or the announcements referenced above.

About PeopleSoft

PeopleSoft, Inc. (NASDAQ:PSFT) was established in 1987 to provide innovative software solutions that meet the changing business demands of enterprises worldwide. A client/server applications pioneer and a market leader, PeopleSoft develops, markets, and supports a complete suite of enterprise solutions for accounting, materials management, distribution, manufacturing, and human resources. In addition, PeopleSoft provides industry-specific enterprise solutions to customers in select markets including financial services, healthcare, manufacturing, retail, higher education, the public sector, and the U.S. federal government.

With more than 1,300 customers around the world, the Company has been recognized for both its award-winning customer service and its remarkable growth. PeopleSoft was listed by Fortune Magazine as one of the fastest growing companies in America in 1994, 1995, and again in 1996. PeopleSoft product and service information is located on the World Wide Web at http://www.peoplesoft.com, and, for recent press releases and financial information, via fax-on-demand at 800/296-0937. -0-

                         PeopleSoft, Inc.
          Condensed Consolidated Financial Information
      (In thousands, except per share and employee amounts)

                                 Three Months        Year Ended
                                 Ended Dec. 31,      Ended Dec. 31,
                                 1995    1996        1995    1996
Revenues:
 License fees                $ 49,377 $ 85,112   $ 137,808 $ 252,799
 Services                      28,780   62,555     94,331    197,253

   Total revenues              78,157  147,667     232,139   450,052

Costs and Expenses:
 Cost of license fees           2,218    4,083       8,503    12,357
 Cost of services              17,925   38,481      56,789   118,906
 Sales and marketing           23,302   42,101      70,052   135,757
 Product development           12,740   21,042      38,625    70,653
 General and administrative     4,764    9,279      16,182    27,162
 In-process research and
  development and non-recurring
  acquisition costs                --   29,393          --    29,393

   Total costs and expenses    60,949  144,379     190,151   394,228

Operating income               17,208    3,288      41,988    55,824
Other income, net               1,216    1,561       4,149     5,888
Income before taxes            18,424    4,849      46,137    61,712
Provision for income taxes      7,392    3,105      18,799    25,851

Net income                   $ 11,032  $ 1,744    $ 27,338  $ 35,861

Net income per share         $   0.09  $  0.01    $   0.24  $   0.30

Shares used in computation    116,536  123,028     114,062   120,032


                                          Dec. 31,     Dec. 31,
                                            1995         1996
Current Assets:
 Cash and investments                   $  128,369    $ 197,013
 Receivables                               100,151      163,676
 Deferred income taxes                      14,170       28,246
 Other current assets                        7,894        7,703

   Total current assets                    250,584      396,638

Property and equipment, net                 64,315       96,698
Long-term investments                           --       18,270
Long-term deferred income taxes                 --       13,302
Capitalized software, net                    7,342       11,173
Other assets                                    --        3,999

   Total assets                          $ 322,241    $ 540,080

Current Liabilities:
 Accounts payable and accrued expenses   $  51,245    $  84,809
 Taxes payable                              11,779       18,771
 Deferred revenue                           98,123      183,252

   Total current liabilities               161,147      286,832

Stockholders' Equity:
 Paid in capital                           107,649      163,767
 Foreign currency translation adjustment      (264)         (89)
 Retained earnings                          53,709       89,570
   Total stockholders' equity              161,094      253,248
   Total liabilities and
    stockholders' equity                 $ 322,241    $ 540,080

Worldwide employee count                     1,393        2,490

    Note To Editors: All share and per share amounts have been
restated to reflect a two for one split of the Company's common stock
in November 1996.  All prior period amounts have been restated to
reflect the merger with Red Pepper Software Company in October 1996
which was accounted for as a pooling of interests.

CONTACT: PeopleSoft, Inc.

Ronald E. F. Codd, 510/468-1278

[e-mail]

or

The Horn Group

Sabrina Horn, 415/579-6400

[e-mail]