Smallworldwide plc Reports Results for Fourth Quarter and Fiscal 1997.
Company Reports 30.3% Rise in Revenues to $14.2 Million During
Quarter; Software License Revenues Increased 63.9%
to $10.4 Million
Excluding R&D Write-off for Acquisition of Software Product Line,
Smallworld Reports Net Income of $1.5 Million,
or $0.19 Per Share
Smallworldwide plc (Nasdaq: SWLDY) today announced unaudited results for the fourth quarter and fiscal 1997.
Smallworld develops and markets engineering, business and operations support software for utilities, telecommunications companies and other public and private enterprises.
For the quarter ended June 30, 1997, revenues reached $14.2 million compared with revenues of $10.9 million for last year's comparable period on a pro forma basis, an increase of 30.3%. Software license revenues increased 63.9% during the quarter to $10.4 million, or 73.5% of total revenues, from $6.4 million on a pro forma basis, or 58.4% of total revenues last year. Revenues generated from services and maintenance were $3.5 million versus $4.0 million in the comparable 1996 pro forma period resulting from the Company's strategy to reduce the amount of consulting services that it provides directly and refer such business to its business partners.
The rise in total revenues was due to increasing sales of software licenses to existing customers such as National Land Survey of Finland, Deutsche Post, Niagara Mohawk and Deutsche Telekom, which purchased 462 software licenses as part of its Megaplan project, together with new customers including Tacoma Public Utilities; Helix Water, a U.S. municipal water authority; National Land Agency of Indonesia; and Bayernwerke Netcom, the German telecommunications services provider.
Gross profit for the fourth quarter increased 67.6% to $10.6 million from $6.4 million pro forma last year, reflecting continued gross margin improvement.
The Company reported an operating loss of $399,000 for the quarter versus pro forma operating income of $159,000 last year. The loss includes a write-off for acquired research and development of approximately $2.0 million, or $0.26 per share, for Smallworld's acquisition of a software product line and related operational support from Integration Technologies. Excluding the write-off, operating income would have been $1.6 million.
Operating expenses, excluding the acquisition-related writeoff, were $9.0 million versus $6.2 million in last year's pro forma fourth quarter. The increase reflects higher than expected one-time costs in its German subsidiary, related primarily to the Deutsche Telekom order and launch of Smallworld GIS Version 2.2, together with the continuing global expansion of the Company's operations.
Smallworld reported a net loss of $339,000, or a loss of $0.04 per share, compared with a net loss of $67,000, or a loss of $0.01 per share, in last year's fourth quarter. Excluding the write-off, net income would have been $1.5 million, or $0.19 per share.
For the full year ended June 30, 1997, Smallworld's revenues rose 47.8% to $48.3 million from $32.7 million on a pro forma basis during the prior fiscal year. Software license revenues increased 64.0% during the year to $31.5 million, or 65.1% of total revenues, from $19.2 million, or 58.7% of total revenues last year on a pro forma basis. Revenues generated from services and maintenance were $16.2 million versus $12.7 million in the comparable 1996 pro forma period. Gross profit for the year grew 62.3% to $34.3 million, versus pro forma gross profit of $21.2 million in last year's comparable period.
Smallworld reported operating income of $2.4 million for fiscal 1997, versus pro forma operating income of $1.0 million last year, and net income of $1.4 million, or $0.20 per share, compared with pro forma net income of $2.1 million last year. Excluding the write-off, the Company's operating income, net income and earnings per share for fiscal 1997 would have been $4.4 million, $3.3 million, and $0.46 per share, respectively.
The pro forma results reflect Smallworld's acquisitions in 1995 and early 1996 of its German, Spanish, Australian and Swedish distributors as if the acquired businesses had been consolidated with effect from January 1, 1995.
Smallworld's Chairman, Dick Newell, said, "We are particularly pleased with the continued rapid growth in license revenues, which rose 64% during the year, as well as our impressive new business win rate. During the year, we made substantial progress in expanding our presence around the world and are now approaching 500 customers. We expect to continue growing our market share rapidly in fiscal 1998."
Mr. Newell added, "We are also encouraged by the increasing number of customers that are using our software as the foundation for operations support, like managing power outages, as well as traditional GIS applications, such as mapping and facilities documentation." GIS represents geographic information systems technology.
Mr. Andy Stafford, Smallworld's Chief Executive Officer, noted that the acquisition of the product line from Integration Technologies reflects the broader usage of Smallworld's technology, as well as the Company's decision to develop selected applications for its focus markets. "These particular products were developed under a Smallworld licensing agreement and have been designed initially to automate business processes which help communications companies plan, design, build and manage their complex broadband networks which integrate voice, video and data services. These are applications that take our technology beyond the historic limitations of GIS." He noted that Smallword added 15, Denver-based, members of Integration Technologies' operations support group to its development staff as a result of the acquisition and also assumed the company's customer base, which includes five U.S. communications companies.
Mr. Stafford also said that the Company intends to continue to place a high priority on expanding its marketing efforts during fiscal 1998 under the leadership of Peter Morse, who was appointed to a new position as Smallworld's international marketing director in early July. Smallworld now has 46 sales and marketing professionals located in 14 offices worldwide, including a new office in Korea opened during the quarter.
Another priority will be continuing to expand the number of Smallworld's business partners and the scope of their activities. Most recently, Smallworld's U.S. subsidiary, Smallworld Systems, formed a marketing alliance with Digital Equipment Corporation and Convergent Group, a consulting firm, to provide electric and gas utilities with a single-source solution for the engineering and management of complex physical networks.
Smallworld (http://www.smallworld-us.com) develops and markets engineering, business and operations support software for utilities, telecommunications companies and other public and private enterprises. The Company's technology automates business processes that are critical for enhancing customer service, business planning, network engineering and facilities maintenance. Smallworld's object- oriented software is designed to deliver a low cost of ownership while supporting rapid deployment of enterprise applications and seamless integration with other systems. The Company, headquartered in Cambridge, England, has over 470 customers in more than 20 countries around the world.
Please note: Some statements contained within this report may be of a forward-looking nature and may involve risks and uncertainties. Actual future results and outcomes may differ materially from those discussed. Factors that may cause such differences include, but are not limited to, management of growth, market acceptance of the Company's products and services, risks associated with new product versions, dependence on third party relationships and the activities of competitors. -0-
SMALLWORLDWIDE plc AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except share and per share data) Three Months Ended June 30, 1997 1996 (Unaudited) (Unaudited) (pro forma) Revenues: Licenses $ 10,440 $ 6,369 Services and maintenance 3,540 4,049 Other 229 491 Total revenues 14,209 10,909 Cost of revenues: Licenses 1,312 549 Services and maintenance 2,139 3,640 Other 113 368 Total cost of revenues 3,564 4,557 Gross profit 10,645 6,352 Operating expenses: Research and development 1,529 1,267 Acquired research and development 2,026 0 Sales and marketing 6,123 3,676 General and administrative 1,366 1,250 Total operating expenses 11,044 6,193 Income from operations (399) 159 Other income (loss), net (449) (55) Interest expense, net (302) 12 Income before income taxes (546) 92 Provision (benefit) for income taxes (172) 202 Share of income from equity affiliates 35 43 Net income ($ 339) ($ 67) Net income per share ($ 0.04) ($ 0.01) Shares used to compute net income per share 7,807,564 5,960,077 Year Ended June 30, 1997 1996 (Unaudited) (Unaudited) (pro forma) Revenues: Licenses $ 31,473 $ 19,186 Services and maintenance 16,202 12,713 Other 662 806 Total revenues 48,337 32,705 Cost of revenues: Licenses 2,355 911 Services and maintenance 11,440 10,157 Other 203 475 Total cost of revenues 13,998 11,543 Gross profit 34,339 21,162 Operating expenses: Research and development 4,923 3,951 Acquired research and development 2,026 0 Sales and marketing 19,787 11,864 General and administrative 5,214 4,343 Total operating expenses 31,950 20,158 Income from operations 2,389 1,004 Other income (loss), net (722) (79) Interest expense, net (612) 43 Income before income taxes 2,279 882 Provision (benefit) for income taxes 934 (1,130) Share of income from equity affiliates 46 125 Net income $ 1,391 $ 2,137 Net income per share $ 0.20 $ 0.37 Shares used to compute net income per share 7,091,069 5,710,695 SMALLWORLDWIDE plc AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) June 30, June 30, 1996 1997 (Audited) (Unaudited) ASSETS Current Assets Cash and equivalents $733 $6,975 Accounts receivable 9,945 15,559 Inventories 1,160 932 Amounts receivable from equity affiliates 743 146 Prepaid expenses and other assets 915 2,616 Deferred income taxes 385 1,783 Available-for-sale investments 0 4,000 Total current assets 13,881 32,011 Property and equipment, net 2,840 4,058 Deferred income taxes 1,771 0 Goodwill 925 370 Investments 214 8,567 TOTAL ASSETS $19,631 $45,006 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $3,127 $3,619 Income taxes payable 962 989 Personnel taxes 929 310 Accrued liabilities 3,466 9,353 Deferred revenue 1,875 2,003 Current portion of capital lease obligations 315 341 Total current liabilities 10,674 16,615 Accrued liabilities, less current portion 62 26 Capital lease obligations, less current portion 516 305 Deferred revenue, less current portion 482 331 Total liabilities 11,734 17,277 Redeemable Preference Shares 299 0 Shareholders' equity: Ordinary and Preference Shares 731 140 Cumulative translation adjustment (494) (512) Additional paid-in capital 5,839 25,268 Accumulated unrealized (losses) on investments 0 (80) Retained earnings 1,522 2,913 Total shareholders' equity 7,598 27,729 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $19,631 $45,006
CONTACT: Smallworldwide plc, Cambridge
Andy Stafford/Ian McShane, 44/1223-301144
Gavin Anderson & Co.
Trina Hardiman/Gerard Carney, 212/373-0229
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|Date:||Aug 20, 1997|
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