QAD Reports Fourth Quarter and Fiscal Year Financial Results.CARPINTERIA, Calif.--(BUSINESS WIRE)--March 11, 1999--QAD Inc. (Nasdaq:QADI) Thursday announced financial results for the fourth quarter and fiscal year ended Jan. 31, 1999. For the 1999 fourth quarter, revenue increased 20 percent to $65.4 million, compared with $54.5 million for the same quarter last year. Excluding non-recurring charges and assuming a normalized tax rate of 38 percent, net income for the quarter would have been $124,000. Including the items outlined below, QAD QAD Quality Assurance Division QAD Quality Assurance Department QAD Quick And Dirty QAD Quality Audit Division QAD Quick Attach/Detach QAD Question Answer Detail (language arts education) QAD Quality Application Development reported a fourth quarter net loss of $4.9 million, or $0.16 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. loss per share. This compares with net income of $6.2 million, or $0.21 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of , in the fourth quarter of fiscal 1998. Non-recurring items impacting this quarter's results were: -- A restructuring charge 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. , as previously announced, which totaled $2.4 million. The restructuring is expected to lower annual expenses by more than $20 million. -- A $1.5 million write-down to adjust an investment to its current estimated fair market value. -- A tax expense of $1.1 million associated with taxes provided in certain profitable jurisdictions. In addition, the company has analyzed its Net 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. (NOL NOL - Never Offline ) carryforward and carryback position and has provided reserves against the future benefit associated with NOL carryforwards, as required by FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). 109. For the fiscal year 1999, revenue totaled $193.3 million compared with $170.8 million last year. QAD reported a net loss (including non-recurring items) of $35.9 million, or $1.22 diluted loss per share. This compares with fiscal 1998 net income of $9.9 million, or $0.38 diluted earnings per share. The fourth quarter included significant developments in the areas of customer wins, new product introductions, acquisitions, services and cost controls. Highlights included: -- Twelve deals exceeding $1 million to customers including Stryker, Sherwin-Williams, Framatome, Philips, Unilever, Schlumberger, Lucent Technologies, Johnson Controls Johnson Controls, Inc. (NYSE: JCI) is a United States company, based in Milwaukee, Wisconsin, specializing in the design, manufacturing, and installation of automotive systems, automotive batteries (Optima[1] based in Denver, Colorado) and climate control systems. , Ingersoll Rand Ingersoll Rand (NYSE: IR) is a diversified industrial firm founded in 1871. The Ingersoll Rand name came into use in 1905 through the combination of Ingersoll-Sargeant Drill Company and Rand Drill Company. , Avon and Speedline Technologies. -- APS (Advanced Planning and Scheduling Advanced Planning & Scheduling (APS) refers to a manufacturing management process by which raw materials and production capacity are optimally allocated to meet demand. APS is especially well-suited to environments where simpler planning methods can not adequately address complex supply chain solution) sales to Philips, among others, which brought total sales of APS for fiscal 1999 to approximately $2.1 million. -- The successful launch of QAD & IBM's Powersystem(tm) marketing partnership, which features 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) Netfinity servers and QAD MFG/PRO software in a pre-tested, pre-integrated, scalable, guaranteed results solution. Initial key wins included Caterpillar and Stryker. Acknowledging this successful campaign, IBM awarded QAD its IBM Netfinity Partner Excellence Award on Feb. 23, 1999. -- The targeted acquisition and ongoing integration of four QAD distributors: TRW TRW The Real World (TV reality show) TRW The Right Way TRW Tactical Reconnaissance Wing TRW The Retriever Weekly (University of Maryland, Baltimore, MD) TRW Thompson Ramo Wooldridge Inc Integrated Supply Chain Solutions (formerly Largotim), based in the U.K. and the Netherlands; Iris-Ifec in Thailand; CSBI CSBI console screen buffer information in Poland; and Sistemas Integrados in Mexico. These acquisitions in aggregate contributed incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. revenue of approximately $12 million during the quarter, of which approximately $7 million represented services revenue. Additionally, services bookings increased as a result of last quarter's launch of QAD's Global Services Operations, which landed important services wins from companies including Firmenich, Valmont Europe, Siebe, Schlumberger, Sherwin-Williams and Avon. -- Achieving substantially lowered expenses by reducing staff, optimizing existing facilities usage, narrowing facilities expansion plans, and transferring staff to revenue-generating service positions. In addition, the company's new financial reporting structure assigns profit and loss accountability across a broader number of managers. "QAD has taken aggressive action toward improving operations throughout the organization," said Chief Executive Officer, Karl F. Lopker. "Through the strengthening of our corporate infrastructure we are not only better equipped to weather the short-term industry challenges, but we are more strategically positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the healthy industry growth that is anticipated later this year for mid-market enterprise applications." About QAD Founded in 1979, QAD is a leading provider of enterprise and extended supply chain management software and services to multinational companies of all sizes, with special focus on the mid-market. Available in 26 languages and able to support multiple currencies, QAD software helps speed business processes for more than 300,000 licensed users at more than 4,200 licensed sites in more than 80 countries. Ideal for distributed operations Distributed Operations (DO) is a new warfighting concept being adopted by the United States Marine Corps and is being developed by their Warfighting Laboratory as a response to the changing environment of the Global War on Terror. , QAD's MFG/PRO software is specifically designed for global manufacturers in the following industries: automotive, consumer products, food and beverage F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods. , industrial, electronics, and medical. To receive any of QAD's press releases via facsimile, contact 213/253-5647 or 800/356-0747 -- within the U.S. only. Visit the QAD web site at http://www.qad.com. Note to Investors This news release contains certain 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. made under the "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. " provisions 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. A number of risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements. They include risks involving demand for the company's software products and products that operate with the company's products; the publication of opinions by industry analysts about the company, its products and technology; the entry of new competitors and their technological advances; delays in localizing the company's products for new markets; delays in sales as a result of lengthy sales cycles; changes in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. ; pricing; timing of new product releases; the method of product distribution or product mix; and general economic factors. In addition, revenue and earnings in the enterprise resource planning See ERP. (application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses. ("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. ") software industry are subject to fluctuations and the growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. recently experienced by the company do not necessarily represent future operating results. Investors should not use any one quarter's results as a benchmark for future growth. For a more detailed description of the risk factors associated with the company and the enterprise resource planning industry, please refer to the company's registration statement on Form S-1 dated Aug. 6, 1997. QAD is a trademark and MFG/PRO is a registered trademark of QAD Inc. All other products or company names herein may be trademarks of their respective owners. -0-
QAD Inc.
Consolidated Statements of Income
(in thousands, except per share amounts)
Three Months Ended Fiscal Year Ended
Jan. 31, Jan. 31,
1999 1998 1999 1998
Revenues:
License fees $ 33,010 $ 39,723 $ 105,928 $ 113,447
Maintenance and other 32,350 14,756 87,416 57,323
Total revenues 65,360 54,479 193,344 170,770
Costs and expenses:
Cost of revenues 25,130 11,636 59,015 41,551
Sales and marketing 21,561 19,212 91,128 65,785
Research and development 9,780 8,648 48,332 29,317
General and administrative 8,224 5,813 25,361 19,422
Restructuring charge 2,425 - 4,314 -
Total costs and
expenses 67,120 45,309 228,150 156,075
Operating income (loss) (1,760) 9,170 (34,806) 14,695
Total other (income)
expense 1,965 (1,228) (23) (2,320)
Income (loss) before income
taxes (3,725) 10,398 (34,783) 17,015
Income tax expense 1,138 4,152 1,138 7,159
Net income (loss) $(4,863) $ 6,246 $ (35,921) $ 9,856
Diluted income (loss)
per share $ (0.16) $ 0.21 $ (1.22) $ 0.38
Diluted weighted shares 29,604 29,648 29,356 26,283
Basic income (loss) per share $ (0.16) $ 0.21 $ (1.22) $ 0.38
Basic weighted shares 29,604 29,107 29,356 25,701
QAD Inc.
Consolidated Balance Sheets
(in thousands)
Jan. 31,
1999 1998
Assets
Current assets
Cash and investments $ 19,078 $ 70,082
Accounts receivable 95,344 75,683
Other current assets 19,680 10,442
Total current assets 134,102 156,207
Property and equipment, net 36,835 25,717
Other assets, net 29,118 8,582
Total Assets 200,055 190,506
Liabilities & Stockholders' Equity
Current liabilities
Current portion of notes payable and
capital lease obligations 7,166 143
Accounts payable and accrued expenses 46,247 33,170
Deferred revenue and deposits 59,946 43,636
Total current liabilities 113,359 76,949
Notes payable and capital lease obligations 6,526 39
Other deferred liabilities 741 1,143
Stockholders' equity
Common stock 99,596 97,238
Retained earnings
(accumulated deficit) (18,526) 17,395
Receivable from stockholders (54) (397)
Unearned compensation - restricted stock (970) (1,510)
Cumulative other comprehensive loss (617) (351)
Total stockholders' equity 79,429 112,375
Total Liabilities & Stockholders' Equity $200,055 $190,506
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