Year 2000 Wire/Viasoft Announces Fiscal 1999 First Quarter Results.

PHOENIX--(BUSINESS WIRE)--Oct. 15, 1998--Viasoft, Inc. (Nasdaq NM:VIAS) today announced fiscal 1999 first quarter results.

The Company reported first quarter revenues of $25.3 million, compared with $26.1 million in the first quarter of fiscal 1998. This represents a decrease from the previous year of 3%. Excluding the acquisition and restructuring-related charges discussed below, the net loss for the quarter was $695,000, or $0.04 per share, compared with diluted net income per share of $0.21 in the first quarter of fiscal 1998. The weighted average number of common shares outstanding were 18,955,000 and 18,722,000 for the quarters ended September 30, 1998 and 1997, respectively.

As previously reported, the Company will take an in-process research and development charge of approximately $5.0 million, or $0.17 per share, in the quarter ended September 30, 1998, in connection with the acquisition of exclusive worldwide marketing and development rights to SHL TRANSFORM, a knowledge-driven process management and productivity software toolset.

The Company has implemented a cost reduction and restructuring plan that includes a reduction in workforce of more than 10%, office consolidations and the write-down of certain intangibles. The Company will recognize a charge of approximately $4.8 million, or $0.16 per share, in the quarter ended September 30, 1998.

Including the SHL transaction and the restructuring charge, the loss per share for the quarter was $0.37, compared with diluted net income per share of $0.21 in the first quarter of fiscal 1998.

Steven D. Whiteman, Chairman and Chief Executive Officer, commented: "As we indicated earlier this month, weaker demand and increased competition worldwide for Viasoft's Y2K software tools had a negative impact on first quarter results. With the restructuring plan recently implemented, we believe we have taken the appropriate steps to realign expenses with revenues and to position the Company to invest in our core solutions of enterprise-wide application maintenance and modernization."

Whiteman added: "We continued to see growth in both application modernization and Y2K service opportunities as our Professional Services business grew more than 50% over the prior quarter. As we move forward, Professional Services will be a key component in our application maintenance and modernization strategy."

The Company previously announced that the Board of Directors had authorized a stock repurchase program under which the Company may acquire up to 1,500,000 shares of Viasoft common stock from time to time on the open market. Under this program, the Company has purchased a total of 1,056,500 shares as of September 30, 1998.

Viasoft is a leading provider of business solutions, consisting of integrated technology and specialized professional services, designed to enable customers worldwide to cost-effectively manage and modernize their information technology assets. Viasoft's flagship products are the Existing Systems Workbench(R), a comprehensive, integrated toolset that enables the management and modernization of existing systems; Rochade(tm), an enterprise repository environment; and the OnMark 2000(tm) suite of tools for the desktop and client/server year 2000 challenge.

Headquartered in Phoenix, Ariz., Viasoft provides sales and services through regional offices in the United States, Canada, Australia, Europe and a growing network of resellers and international distributors. For more information on Viasoft's products and services, please visit the Company's World Wide Web site at www.viasoft.com.

Conference Call

The Company will host a conference call today at 4:45 P.M. EDT to discuss its quarterly results. Investors may listen to the call over the Internet through Vcall at http://www.vcall.com. To listen to the live call, please go to the Vcall Web site at least 15 minutes early to register, download and install any necessary audio software.

The statements made in this press release that are not historical facts contain forward-looking information that involves risks and uncertainties. Important factors that may cause actual results to differ include, but are not limited to, market demand and acceptance, the impact of competitive products and services, risks associated with results and timing of technology development and commercialization, the Company's ability to manage growth and acquisitions of technology or businesses, the effect of economic and business conditions including risks inherent in international operations and the ability to attract and retain technical personnel, risks associated with, as well as the Company's ability to manage, a consulting services business and other risks detailed from time to time in the Company's Securities and Exchange Commission filings. -0-

                    VIASOFT, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except per share data)
                              (unaudited)

                                          Three Months Ended
                                             September 30,
                                        1998             1997
Revenue:
 Software license fees                $ 9,735          $13,518
 Maintenance fees                       8,293            6,884
 Professional services fees             7,288            5,619
 Other                                      7               41
  Total revenues                       25,323           26,062

Operating expenses:
 Cost of software license and
  maintenance fees                      4,552            1,777
 Cost of professional services fees     6,086            4,765
 Sales and marketing                   12,188            9,321
 Write-off of purchased in-process
  research and development              5,013               --
 Research and development               5,375            2,818
 General and administrative             4,551            2,038
  Total operating expenses             37,765           20,719

Income (loss) from operations         (12,442)           5,343

Other income (expense):
 Interest income                        1,369              521
 Interest expense                          --               --
 Other income (expense), net              207             (122)
  Total other income (expense)          1,576              399

Income (loss) before income taxes     (10,866)           5,742
 Income tax (benefit) provision        (3,799)           1,977
Net income (loss)                    $ (7,067)         $ 3,765

Basic earnings (loss) per
 common share                        $  (0.37)         $  0.21

Weighted average number of
 common shares outstanding             18,955           17,925

Diluted earnings (loss) per
 common and common share equivalent  $  (0.37)         $  0.20

Weighted average number of
 common and common share equivalents
 outstanding                           18,955           18,722


                    VIASOFT, INC. AND SUBSIDIARIES
                      CONSOLIDATED BALANCE SHEETS
                   (in thousands, except share data)

                                            September 30,    June 30,
                                                1998           1998
ASSETS                                       (unaudited)
Current assets:
 Cash and cash equivalents                   $  36,073      $  37,809
 Investments, at amortized cost                 51,937         63,294
 Accounts receivable (less allowance for
  doubtful accounts of $789 and $815,
  respectively)                                 23,655         33,227
 Prepaid expenses and other                      5,171          7,774
  Total current assets                         116,836        142,104

Furniture and equipment, net                     7,768          7,609

Other assets:
 Investments, at amortized cost                    507          2,502
 Intangible assets, net                          8,111          6,751
 Other                                           5,696          3,411
  Total other assets                            14,314         12,664
  Total assets                                $138,918       $162,377

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                             $  2,309       $  1,733
 Accrued compensation                            2,855          4,390
 Accrued income taxes payable                      440          5,113
 Other accrued expenses                         16,356         13,768
 Deferred revenue                               15,885         20,843
  Total current liabilities                     37,845         45,847
Deferred revenue, recognized after one year        493            542
Other long term liabilities                        127            130
Commitments and contingencies
Stockholders' equity:
 Preferred stock, $.001 par value, 2,000,000
  shares authorized, no shares issued or
  outstanding                                       --             --
 Common stock, $.001 par value, 24,000,000
  shares authorized, 19,456,133 shares
  issued at both September 30, and June 30,
  1998, respectively                                19             19
 Capital in excess of par value                124,821        125,626
 Common stock subscriptions receivable             (31)           (31)
 Accumulated deficit                           (14,062)        (6,995)
 Cumulative translation adjustment                (279)          (580)
 Treasury stock, at cost, 993,212 shares       (10,015)        (2,181)
  Total stockholders' equity                   100,453        115,858
  Total liabilities and stockholders' equity  $138,918       $162,377