Printer Friendly


 AUSTIN, Texas, Aug. 13 /PRNewswire/ -- The Continuum Company, Inc. (NYSE: CNU) announced that it has now acquired Paxus Corporation Limited of Sydney, Australia.
 Over 98 percent of Paxus common stock has been tendered which will result in the issuance of approximately 3,800,000 shares of Continuum's common stock. The remaining shares of Paxus stock will be acquired through a routine legal procedure in Australia.
 Paxus is an international consulting and computer services firm based in Sydney, Australia, supplying computer software and services to a variety of customers, including insurance and financial services companies throughout Europe and the Pacific. As measured by revenues and staff, Paxus is approximately the same size as Continuum.
 Continuum has now installed its management to combine the operations of Paxus with Continuum and staff reductions have now been made. At March 31, 1993, Continuum and Paxus combined had approximately 2,100 employees. Staff has been reduced to approximately 1,900 employees. The reductions were approximately evenly divided among Continuum's three major regions, Europe, North America and the Pacific.
 Continuum is now executing plans associated with space consolidations in Melbourne, Sydney, London and Austin. All moves either have or will be completed within 60 days.
 Continuum is currently consolidating the Paxus data center in Sydney, Australia into Continuum's Sydney facility. The consolidation will be completed within the next 90 days.
 Continuum intends to use its cash balances to significantly reduce the bank debt of Paxus which currently approximates $17,000,000. The debt reduction will occur within the next 30 days.
 The Paxus corporate office has been closed with its activities now being conducted out of Austin, Texas. Neil R. Cullimore, formerly Paxus' chief executive officer, has joined Continuum's executive staff and relocated to Austin, Texas.
 W. Michael Long, Continuum chief executive officer, commented, "Our management teams around the world have done an excellent job executing the business plan for combining the operations of Continuum and Paxus. With the acquisition of Paxus, Continuum confirms our world leadership in serving the needs of life insurance, property and casualty insurance, reinsurance and related financial services companies for computer software and services. This increases our already substantial presence in Europe and gives us an important position of strength in Australia, New Zealand, Japan and Asia. We are now the market leader in both life and property and casualty insurance in Europe and the Pacific as well as North American life insurance.
 "Our immediate revenue opportunities include cross selling of Paxus and Continuum products and services to our larger combined customer base. Also, completing the acquisition improves existing sales campaigns by eliminating uncertainty over Paxus' ownership structure and direction. We also expect to offer new combinations of Continuum and Paxus products and services to new markets. A larger customer base, greater market access and global data centers substantially improve our outsourcing opportunities around the world.
 The acquisition of Paxus will be accounted for as a pooling of interests. Accordingly, second quarter and six month results will include the operations of Paxus as if the acquisition had occurred at the beginning of the periods reported.
 Costs associated with the restructuring, including severance payments and lease commitments on excess space, will be reflected in the second quarter results.
 Paxus, before its acquisition by Continuum, expected to be profitable during fiscal 1994. With the cost reductions achieved and presently planned, it is expected that the acquisition of Paxus will have a positive impact on Continuum's earnings before restructuring costs.
 Continuum also announced earnings for the quarter ended June 30, 1993. The quarterly results do not reflect Paxus which was acquired after June 30, 1993.
 For the first fiscal quarter ended June 30, 1993, net income was $708,000 or $.07 per share on revenues of $29,827,000. For the same period last year, net income was $1,591,000 or $.15 per share on revenues of $29,846,000.
 License revenues for the quarter totaled $2,118,000 which included the sale of Continuum's COLOSSUS(TM) software system to a unit of Lincoln National Corporation.
 Long noted, "We are pleased with our COLOSSUS sale in the first quarter and expect additional COLOSSUS sales this fiscal year. We also believe that our overall pace of product sales will increase as the year progresses.
 "We have transitioned a difficult period where services revenue from the Advanced Development Program and our Australian research and development ventures have now been replaced. Though our total services revenue only increased by 6 percent from the same quarter last year, our non-ADP and Australian R&D service revenue increased $6,700,000 or 34 percent. However, our margins are still too low. We expect that product rollouts underway and recent expense reductions will enable service revenues and margins to improve, especially in the third and fourth quarters."
 Supplemental Information
 Service Revenue Profitability
 Quarter ended (000 omitted):
 June 30 Mar 31 June 30
 1993 1993 1992

 Service revenue $27,528 $27,708 $26,004
 Service expenses 21,838 22,017 20,125
 Service gross profit $ 5,690 $ 5,691 $ 5,879
 Service gross profit 21 pct. 21 pct. 23 pct.
 Compared to a year earlier, service revenue increased 6 percent and service expenses increased 9 percent, resulting in a service gross profit decrease of approximately $200,000. Expenses have increased as development resources transitioned to consulting assignments. Expense reductions have now been achieved and margins are expected to improve.
 Service revenue, expense and gross profit for the first quarter were approximately the same as the fourth quarter of fiscal 1993.
 Customer Geography
 U.S. customers accounted for 33 percent of first quarter service revenue and European customers accounted for 43 percent. U.S. customers accounted for 35 percent of total revenues and European customers accounted for 42 percent. Australian and Japanese customers accounted for the remainder.
 Service Revenue by Product
 Approximately 67 percent of first quarter service revenue was related to Continuum's life insurance software products. The remaining revenue was primarily related to COGEN(TM) and COLOSSUS, systems for property and casualty insurance companies.
 Advanced Development Program Revenue
 ADP revenue for the first quarter of fiscal 1994 was approximately $3,800,000 less than the same quarter last year and approximately $1,700,000 less than the fourth quarter of fiscal 1993. Additional ADP revenue is expected to be immaterial.
 Marketing and Administrative Expenses
 Marketing and administrative expenses for the first fiscal quarter were $6,251,000 or 21 percent of total revenue, compared to a year ago when they were $7,020,000 or 24 percent of revenue.
 Cash and short term investments totaled approximately $41,000,000 compared to approximately $32,000,000 one year ago.
 Continuum employment worldwide was 1,065, a decrease of 44 during the latter part of the first fiscal quarter.
 The Continuum Company, Inc. is an international consulting and computer services firm based in Austin, Texas, serving the needs of life insurance, property and casualty insurance and other financial services companies for computer software and services.
 Condensed Consolidated Statements Of Income
 Three Months Ended June 30 1993 1992
 Software systems licensing $ 2,118,000 $ 3,543,000
 Service revenues 27,528,000 26,004,000
 Interest income 181,000 299,000
 29,827,000 29,846,000
 Service expenses 21,838,000 20,125,000
 Marketing and administration 6,251,000 7,020,000
 Interest expense 648,000 --
 28,737,000 27,145,000
 Income before provision for
 income taxes 1,090,000 2,701,000
 Provision for income taxes 382,000 1,110,000
 Net income $ 708,000 $ 1,591,000
 Earnings per common share $ 0.07 $ 0.15
 Average common shares
 outstanding 10,886,000 10,780,000
 -0- 8/13/93
 /CONTACT: John L. Westermann III of The Continuum Company, Inc., 512-345-5700/

CO: The Continuum Company, Inc. ST: Texas IN: INS SU: ERN

LD -- NY099 -- 2780 08/13/93 20:28 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Aug 13, 1993

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters