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American Software Second Quarter Earnings Exceed Analysts Expectations

ATLANTA, Nov. 25 /PRNewswire/ -- American Software (Nasdaq: AMSWA) earned $.02 per share for the second quarter of fiscal 1997 which exceeded research analysts expectations. The higher than expected earnings were primarily a result of software license fees which increased for the third consecutive quarter.

All three categories of revenue improved in the second quarter versus the first quarter of fiscal 1997. Total revenues were $19,949,000 up 10% from $18,126,000 in the first quarter this year. License fee revenues increased to $6,928,000 up 27% versus first quarter this year. Maintenance revenues improved 5% to $5,444,000 in the second quarter versus $5,208,000 in the first quarter. The second quarter maintenance revenues were the first sequential quarterly improvement since the first quarter of fiscal 1996. Maintenance revenues benefited from new customers rolling onto maintenance as well as an increase in renewals for existing customers interested in the Company's year 2000 enabled software. Services revenues increased to $7,577,000 in the second quarter from $7,444,000 in the first quarter.

Cash and investments were $21.9 million at the end of the second quarter of fiscal 1997. The Company's financial strength is further highlighted by a current ratio of 1.8 to 1 and no long term debt.

For the first time, American Software received significant revenues from the Company's K2 development effort. License fees were recognized for the Flow manufacturing product which is the first generally available system in the new K2 product line. The Company also received license fees for the newly available client server WarehouseP&RO product. The approaching year 2000 also offers the Company a significant opportunity to help customers prepare their computing systems for the next millennium. The Company is marketing the latest year 2000 enabled solutions including maintenance renewals, services customizations and in some instances software relicensing.

"The sales pipeline for American Software products continues to grow stronger, reaffirming the specialized salesforce strategy architected in first quarter this fiscal year and confirming customer interest and acceptance for our newly available client server solutions," explained Mike Edenfield, executive vice president and chief operating officer. "We are pleased that companies like Stanley Works, Sony, Bell Sports, Precision Twist Drill, Indiana Gas, C&J Clark and Newell are continuing to invest in our latest software solutions," continued Edenfield.

The Company continues to make progress establishing a separate company for the Supply Chain Planning business unit. Industry analysts estimate that the Supply Chain marketplace could exceed as much as $8 billion by the year 2000. The Supply Chain Planning business unit is uniquely poised to be a leader in this application area and the formation of a separate company will provide singular focus to succeed in this fast growth industry. Relationships with Peoplesoft, Deloitte & Touche and Churchill Systems were all announced during this quarter. These strategic partnerships will allow the Supply Chain Planning business unit to increase the acceptance for Supply Chain Planning products. In addition, the Company's completed the first installation of Resource Chain Voyager(TM), our Internet enabled supply chain management solution, which the Company believes will provide corporations with significant supply chain benefits. This is the Industry's first generally available solution for collaborative forecasting and replenishment.

It should be noted that this discussion contains forward-looking statements which are subject to substantial risks and uncertainties. There are a number of factors which could cause actual results to differ materially from those anticipated by statements made herein. Such factors include, but are not limited to, changes in general economic conditions, the growth rate of the market for the Company's products and services, the timely availability and market acceptance of these products and services, the effect of competitive products and pricing, and the irregular pattern of revenues, as well as a number of other risk factors which could affect the future performance of the Company.

American Software develops, markets and supports the industry's most comprehensive offering of integrated supply chain management and financial control systems. As a leading provider of multiplatform enterprise software solutions, the Atlanta based firm offers state-of-the-art business solutions across a wide range of industries internationally from manufacturing and distribution to utilities and health care as well as providing outsourcing services to a wide range of businesses. Its product line encompasses integrated business applications including logistics/planning, order management, manufacturing and financial control. The Company's common shares are listed on the Nasdaq stock market-national market under the symbol AMSWA.
 AMERICAN SOFTWARE, INC. Consolidated Statement of Operations for the Quarter Ended Oct. 31, 1996
 (In Thousands, Except Earnings (Loss) Per Share)
 For the Second
 Qtr. Ended
 Oct. 31,
 1996 1995


Revenues:
 License fees $ 6,928 $ 7,335
 Services 7,577 8,210
 Maintenance 5,444 5,863
 Total revenues $19,949 $21,408


Costs:
 License fees $ 2,412 $ 3,041
 Services 6,601 6,356
 Maintenance 2,087 1,946
 Total cost of revenues 11,100 11,343
 Research & development 3,014 3,984
 Less: Capitalized software (2,260) (2,790)
 Mkt & sales 4,894 5,301
 G&A 3,185 3,525
 Total costs $19,933 $21,363
 Operating earnings (loss) $ 16 $ 45
 Other income $ 510 $ 617


Earnings (loss) before
 income taxes $ 526 $ 662
 Income tax expense $ 82 $ 252
 Net earnings (loss) $ 444 $ 410
 Earnings (loss) per share $ 0.02 $ 0.02


Weighted average shares
 outstanding 23,449 23,725
 For the Six Months
 Ended
 Oct. 31,
 1996 1995


Revenues:
 License fees $12,402 $14,785
 Services 15,021 15,819
 Maintenance 10,652 11,762
 Total revenues $38,075 $42,366


Costs:
 License fees $ 4,692 $ 6,523
 Services 13,229 12,266
 Maintenance 3,902 3,925
 Total cost of revenues 21,823 22,714
 Research & development 6,601 7,530
 Less: Capitalized software (5,328) (5,445)
 Mkt & sales 10,050 10,523
 G&A 6,235 6,974
 Total costs $39,381 $42,296
 Operating earnings (loss) $(1,306) $ 70
 Other income $ 629 $ 1,206


Earnings (loss) before
 income taxes $ (677) $ 1,276
 Income tax expense $ 82 $ 498
 Net earnings (loss) $ (759) $ 778
 Earnings (loss) per share $ (0.03) $ 0.03


Weighted average shares
 outstanding 22,313 23,744


SOURCE American Software, Inc.
 -0- 11/25/96


/CONTACT: Peter W. Pamplin, Controller, American Software, 404-264-5482/

(AMSWA)

CO: American Software, Inc. ST: Georgia IN: CPR SU: ERN

BR -- ATM002 -- 3425 11/25/96 07:18 EST http://www.prnewswire.com
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Date:Nov 25, 1996
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