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CONSILIUM ANNOUNCES SECOND QUARTER RESULTS, RESTATES REVENUES BASED ON SOP

 CONSILIUM ANNOUNCES SECOND QUARTER RESULTS,
 RESTATES REVENUES BASED ON SOP
 MOUNTAIN VIEW, Calif., June 11 /PRNewswire/ -- Consilium, Inc. (NASDAQ: CSIM), the leading supplier of manufacturing execution systems software and services, today reported revenues for its second quarter ended April 30, 1992. The company also reported that it has restated results for the past three years, based on a change in revenue recognition policy for sales made through foreign resellers.
 Revenues for the second quarter of fiscal 1992 were $7.0 million, down 2 percent from revenues of $7.2 million (as restated) for the second quarter of 1991. The company had a net loss of $687,000, or $.10 per share, compared to net income of $27,000 (as restated) for the same period a year ago. Revenues for the six months ended April 30, 1992 were $13.2 million, up 8 percent from revenues of $12.2 million for the same period last year. For the first six months of 1992 the company had a net loss of $1.5 million, or $.21 per share, compared to a net loss of $.15 per share for the first six months of 1991 (as restated).
 In December 1991, the American Institute of Certified Public Accountants (AICPA) issued Statement of Position SOP 91-1 on software revenue recognition (the SOP). The Company and its independent accountants, Coopers & Lybrand, believed the company to be in compliance with the SOP after the company voluntarily changed its recognition policy for maintenance revenues, before the SOP went into effect. However, after consideration of interpretations now being made under the SOP relating to transactions with resellers, and upon further experience with its foreign resellers, the company and its independent accountants, Coopers & Lybrand, have concluded that it is appropriate to change its policy for recognition of revenue from foreign distributors and systems integrators.
 The new accounting method provides that revenue from foreign distributor and systems integrator sales be recognized either upon confirmation that the software has been sold to the end-user or upon installation of the software at the end user's facility, provided collection is probable. The company's historical revenue recognition practice was based upon execution of a license agreement, the receipt of a purchase order, and delivery of the software to the reseller. Foreign sales made through indirect reseller channels account for approximately 15 percent of the company's total product revenue.
 The effect of the change in accounting, which does not impact the company's cash position, is to restate financial results for the years ended Oct. 31, 1991, 1990 and 1989 and for the quarter ended Jan. 31, 1992, and to reduce accounts receivable by $4.8 million. Restated financials for the periods affected are set forth in the financial tables.
 "This new accounting policy will benefit the company significantly in the future, as it should reduce the aging of our receivables and shorten the time between recognition and collection of revenues from foreign resellers," said Mark Finkel, Consilium's chief financial officer. "This change is especially timely based on the recent creation of a separate Channels division and our expectation that we will be signing an increased number of distributors and systems integrators worldwide. Software companies will continue to struggle in applying the SOP to the unique circumstances of our industry."
 Sales activity in the second quarter showed encouraging trends for the company, according to Thomas Tomasetti, president and chief executive officer of Consilium. "It appears that things are beginning to improve. Specifically, we are seeing an increase in purchasing activity among our installed base, and our forecast indicates incremental growth worldwide," said Tomasetti. "In addition, FlowStream activity is surpassing expectations."
 During the quarter, the company signed a large contract with a major U.S. pharmaceuticals company for FlowStream software and co-development services. FlowStream was also sold to a major Japanese chemicals firm.
 The company's flagship product, WorkStream, was sold to a new Navy spare parts facility and to several existing customers, including Garrett Fluid Systems Division and Bendix Oceanics Division of Allied Signal Aerospace and Read-Rite Corporation in the U.S., and European manufacturers MEMC Electronic Materials, SGS Thomson Microelectronics, Zentrum Microelectronics and a Belgian electronics firm.
 "For the remainder of the fiscal year, we will continue our investment in research and development with the goal of offering manufacturers two leading products for Open Systems environments. We intend to maintain our position as the leader in the manufacturing execution systems market, expected to grow significantly once the impact of the recession lessens."
 Consilium, Inc. is the leading supplier of manufacturing execution systems software and services. With its WorkStream and FlowStream product lines, Consilium offers a suite of comprehensive integrated plant floor management solutions that direct the execution of the manufacturing process and allow manufacturers to achieve world class manufacturing. The company is headquartered in Mountain View.
 (1) WorkStream is a registered trademark and FlowStream is a trademark of Consilium, Inc.
 CONSILIUM, INC.
 Consolidated Statements of Operations
 (In thousands, except per share data; unaudited;
 as restated for change in revenue recognition)
 Periods ended Three months Six months
 April 30 1992 1991 1992 1991
 Revenues:
 Product $ 3,252 $ 3,658 $ 5,896 $5,524
 Maintenance 2,337 2,364 4,579 4,619
 Services 1,416 1,138 2,737 2,013
 Total revenues 7,005 7,160 13,212 12,156
 Cost of Revenue
 Product 418 618 820 1,050
 Services 1,311 1,046 2,475 1,986
 Total cost of revenue 1,729 1,664 3,295 3,036
 Gross Margin 5,276 5,496 9,917 9,120
 Expenses:
 Selling and marketing 3,477 3,173 6,693 6,146
 Research and developmt 2,486 1,702 4,524 3,584
 General and administ. 507 810 1,275 1,410
 Total operating expens.6,470 5,685 12,492 11,140
 (Loss) from operations(1,194) (189) (2,575) (2,020)
 Interest income, net 154 229 337 529
 Income (loss) bef.
 income taxes (1,040) 40 (2,238) (1,491)
 Provision (benefit)
 for income taxes (353) 13 (760) (478)
 Net income (loss) $(687) $27 $ (1,478) $(1,013)
 Earnings per share $ (0.10) .00 $(0.21) $ (.15)
 Shares used in per share
 calculations: 6,901 6,992 6,887 6,853
 CONSILIUM, INC.
 Condensed Consolidated Balance Sheets
 (In thousands; as restated for change in revenue recognition)
 (unaudited)
 April 30 1992 Oct. 31, 1991
 Assets:
 Current Assets:
 Cash and cash equivalents $3,782 $2,431
 Short term investments 11,746 12,679
 Accounts receivable, net 8,975 9,883
 Other current assets 3,533 3,159
 Total current assets 28,036 28,152
 Property & equipment (net) 3,328 3,755
 Software production costs (net) 4,984 4,489
 Other assets 934 839
 Total assets $ 37,282 $ 37,235
 Liabilities and Stockholders' Equity
 Current liabilities:
 Accounts payable $2,032 $1,782
 Other current liabilities
 and accrued expenses 1,649 1,733
 Deferred revenue 4,223 3,938
 Total current liabilities 7,904 7,453
 Deferred income taxes 1,614 1,614
 Accrued lease obligation 281 328
 Deferred revenue 877 223
 Total liabilities 10,676 9,618
 Stockholders' Equity:
 Total stockholders' equity 26,606 27,617
 Total Liabilities and
 Stockholders' Equity $ 37,282 37,235
 CONSILIUM, INC.
 Adjustments to Financial Results
 for Compliance with SOP
 (in thousands, except per share figures)
 1989 1990 1991 1992
 Revenues:
 As reported before
 consideration
 of SOP 91-1 $ 23,118 $ 32,427 $ 31,455 $ 6,370
 Effect of maintenance
 provision (999) (1,199)
 Effect of change in revenue from
 foreign distributors/
 integrators (545) (2,377) (4,101) (163)
 As restated for
 compliance with
 SOP 91-1 $ 21,574 $ 28,851 $ 27,354 6,207
 Net Income (Loss):
 As reported before
 consideration
 of SOP 91-1 $ 3,528 $5,644 $1,469 ($718)
 Effect of maintenance
 provision (659) (839)
 Effect of change in revenue from
 foreign distributors/
 integrators (359) (1,590) (2.533) (73)
 As restated
 for compliance with
 SOP 91-1 $2,509 3,215 ($ 1,064) 791
 Earnings (Loss) per Share:
 As reported
 before consideration
 of SOP 91-1 $0.59 $0.82 $0.21 (0.10)
 Effect of maintenance
 provision (0.11) (0.12)
 Effect of change
 in revenue from
 foreign distributors/
 integrators (0.06) (0.23) (0.37) (.02)
 As restated for compliance with
 SOP 91-1 $0.42 $0.47 ($ 0.16) .12
 Reflects adjustment to maintenance revenues made in April 1992 when
 revenue recognition for maintenance was changed.
 -0- 6/11/92
 /CONTACT: Mark Finkel, chief financial officer, or Darby Dye, investor relations, of Consilium, 415-691-6100, or Joanne Marlin of Thomas Associates, Inc., 415-325-6236, for Consilium/
 (CSIM) CO: Consilium Inc. ST: California IN: CPR SU: ERN


AH -- NY004 -- 9050 06/11/92 02:24 EDT
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Date:Jun 11, 1992
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