Exhibit 99.1
![[exh991001.jpg]](https://capedge.com/proxy/8-K/0000892712-08-000836/exh991001.jpg)
PressRelease |
FOR IMMEDIATE RELEASE
ARI REPORTS RECORD REVENUES AND INCREASED NET INCOME FOR FISCAL 2008
Growth Driven by Marketing Services
Milwaukee, Wis., October 29, 2008 – ARI Network Services, Inc. (OTCBB:ARIS), a leading provider of technology-enabled business solutions that connect equipment dealers, distributors and manufacturers, today reported results for the fourth fiscal quarter and fiscal year ended July 31, 2008.
Full Year Fiscal 2008 Highlights
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Revenues increased approximately 9.6% to a record $16.9 million for fiscal 2008, from revenues of $15.4 million for fiscal 2007.
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Operating income was $821,000 for fiscal 2008, a 398% increase from operating income of $165,000 for the prior year.
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Net income was $1.4 million or $0.20 per diluted share for fiscal 2008, compared to net income of $101,000 or $0.02 per diluted share for fiscal 2007.
Fourth Quarter Fiscal 2008 Highlights
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Revenues increased approximately 4.9% to $4.3 million for the fourth quarter of fiscal 2008, compared to revenues of $4.1 million in the fourth quarter of fiscal 2007.
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Operating loss was $236,000 in the fourth quarter of fiscal 2008, compared to an operating loss of $154,000 for the same period in the prior year.
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Net income was $378,000 or $0.05 per diluted share, compared to a net loss of $167,000 or $0.02 per diluted share for the fourth quarter of fiscal 2007.
Operations Review
“We made great strides in returning the company to our prior level of operating profitability, achieving record revenues and a significant improvement in earnings in fiscal 2008,” said Roy W. Olivier, president and CEO of ARI.
“The improved performance for the year was driven primarily by the continued organic growth of our marketing services business as well as the results of our mid-year fiscal 2007 acquisition of OC-Net for the full year of fiscal 2008. The recognition of a gain on deferred tax assets also contributed to the improvement in net income. The increase in profitability reflected our continued emphasis on controlling expenses, as well as the fact that in fiscal 2007 we had one-time expenses related to a potential acquisition which didn’t close and release of a new electronic parts catalog product,” added Olivier.
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11425 WEST LAKE PARK SUITE 900 MILWAUKEE, WI 53224-3025 414.973.4300 FAX 414.973-4357
_______________________________________________________________________________________www.arinet.com |
“The continued strong growth of our marketing services business is due to the success of WebsiteSmart Pro™ and professional services associated with Internet marketing. Our award-winning WebsiteSmart Pro™ provides a complete website solution for dealers who want to seamlessly integrate electronic parts catalog content while leveraging the Internet to increase sales and improve service to their customers. In addition, the core electronic parts catalog business remains strong, with North American subscription renewal rates reaching nearly 90%,” concluded Olivier.
“In fiscal 2008, we generated strong cash flow from operations and maintained a healthy balance sheet. We also improved our operational structure by consolidating our U.S. offices from four into two, which resulted in a one-time restructuring charge of $529,000 in the fourth quarter. While this consolidation impacted our fiscal 2008 results, over the long term, we expect to benefit from the reduced operating costs and increased efficiency the consolidation provides,” said Ken Folberg, chief financial officer.
“While the current general economic environment is showing signs of significant weakness, ARI’s strong software subscription revenue base provides a stable foundation of cash flow from operations which puts the Company in a favorable financial position to pursue our growth and efficiency initiatives in fiscal 2009,” added Folberg.
About ARI
ARI is a leading provider of electronic parts catalogs and marketing services to dealers, distributors and manufacturers in the manufactured equipment markets. ARI currently serves approximately 85 manufacturers and 180 distributors worldwide. Additionally, ARI provides electronic parts catalogs, dealer websites and/or professional marketing services to more than 24,000 dealers in about a dozen segments of the worldwide equipment market including outdoor power, power sports, motorcycles, appliances, agricultural equipment, marine, recreation vehicles, floor maintenance, auto and truck after-market parts and construction. For more information on ARI, please visit our website: www.arinet.com.
Fourth Quarter Earnings Conference Call
ARI’s Fourth Quarter Conference Call is scheduled for October 29, 2008 at 3:30 p.m. Central Time/4:30 p.m. Eastern Time. If you would like to participate, please pre-register at https://www.myrcplus.com/rsvp-index.asp?BWebID=&CID=4962790. At that time you will be provided with the numbers to use to join the conference call. A replay of ARI’s conference call, as well as notes and financial information presented in the call, will also be available on ARI’s website, www.arinet.com, after 7:00 p.m. Central Time on October 30, 2008. Click on the “Investor Relations” tab to access the information.
Statements in this news release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. The forward-looking statements can generally be identified by words such as "believes," "anticipates," "expects" or words of similar meaning. Forward-looking statements also include statements relating to the Company's future performance, such as future prospects, revenues, profits and cash flows. The forward-looking statements are subject to risks and uncertainties, which may cause actual results to be materially different from any future performance suggested in the forward-looking statements. Such risks and uncertainties include those factors described under "Forward Looking Statements Disclosure" in Exhibit 99.1 of the Company’s annual report on Form 10-K for fiscal year ended July 31, 2008 filed with the Securities and Exchange Commission. Re aders are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements. For more information, please refer to the Company’s filings with the Securities and Exchange Commission.
Contact:
Nancy Krajcir-Bennett
ARI Network Services, Inc.
Tel: (414) 973-4380
Fax: (414) 973-4357
Email: krajcir@arinet.com
ARI Network Services, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)
| | | July 31 | | July 31 |
| ASSETS | | 2008 | | 2007 |
Current assets: | | | | |
| Cash and cash equivalents | | $ 1,086 | | $ 1,050 |
| Trade receivables, less allowance for doubtful accounts of $178 and | | | | |
| | $148 at July 31, 2008 and 2007, respectively | | 1,304 | | 1,302 |
| Work in process | | 264 | | 223 |
| Prepaid expenses and other | | 392 | | 291 |
| Deferred income taxes | | 330 | | 555 |
| | Total current assets | | 3,376 | | 3,421 |
Equipment and leasehold improvements: | | | | |
| Computer equipment | | 5,647 | | 5,324 |
| Leasehold improvements | | 198 | | 128 |
| Furniture and equipment | | 2,842 | | 2,749 |
| | | | 8,687 | | 8,201 |
| Less accumulated depreciation and amortization | | 7,523 | | 6,991 |
| | Net equipment and leasehold improvements | | 1,164 | | 1,210 |
| | | | | | |
Deferred income taxes | | 2,412 | | 1,539 |
Goodwill | | 2,196 | | 1,269 |
Intangibles | | 1,396 | | 882 |
Other long term assets | | 53 | | - |
| | | | | |
Capitalized software product costs | | 13,209 | | 12,455 |
| Less accumulated amortization | | 11,613 | | 10,849 |
Net capitalized software product costs | | 1,596 | | 1,606 |
| | | | | |
Total assets | $ 12,193 | | $ 9,927 |
| | | | | |
| | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | |
Current liabilities: | | | | |
| Current borrowings on line of credit | | $ 700 | | $ - |
| Current portion of notes payable | | 676 | | 1,023 |
| Accounts payable | | 408 | | 703 |
| Deferred revenue | | 5,071 | | 5,619 |
| Accrued payroll and related liabilities | | 922 | | 962 |
| Accrued sales, use and income taxes | | 80 | | 28 |
| Accrued vendor specific liabilities | | 284 | | 175 |
| Other accrued liabilities | | 615 | | 124 |
| Current portion of capital lease obligations | | 95 | | 8 |
Total current liabilities | | 8,851 | | 8,642 |
| | | | | |
Non-current liabilities: | | | | |
| Notes payable (net of discount) | | 116 | | 479 |
| Long term portion of accrued compensation | | 97 | | 55 |
| Other long-term liabilities | | - | | 28 |
| Capital lease obligations | | 233 | | 5 |
Total long term liabilities | | 446 | | 567 |
| | | | | |
Shareholders' equity: | | | | |
| Cumulative preferred stock, par value $.001 per share, | | | | |
| | 1,000,000 shares authorized; 0 shares issued and outstanding | | | | |
| | at July 31, 2008 and 2007, respectively | | - | | - |
| Junior preferred stock, par value $.001 per share, | | | | |
| | 100,000 shares authorized; 0 shares issued and outstanding | | | | |
| | at July 31, 2008 and 2007, respectively | | - | | - |
| Common stock, par value $.001 per share, 25,000,000 shares | | | | |
| | authorized; 6,971,927 and 6,623,605 shares issued and outstanding | | | | |
| | at July 31, 2008 and 2007, respectively | | 7 | | 7 |
| Common stock warrants and options | | 501 | | 195 |
| Additional paid-in capital | | 95,148 | | 94,627 |
| Accumulated deficit | | (92,708) | | (94,091) |
| Other accumulated comprehensive income | | (52) | | (20) |
Total shareholders' equity | | 2,896 | | 718 |
| | | | | |
Total liabilities and shareholders' equity | $ 12,193 | | $ 9,927 |
| | | | | |
ARI Network Services, Inc.
Statements of Operations
(In thousands, except per share data)
| | | | |
| | Three months ended | | Twelve months ended |
| | July 31 | | July 31 |
| | 2008 | | 2007 | | 2008 | | 2007 |
Net revenues: | | | | | | | |
| Subscriptions, support and other services fees | $ 3,046 | | $ 2,957 | | $ 11,909 | | $ 11,290 |
| Software licenses and renewals | 517 | | 522 | | 2,115 | | 2,187 |
| Professional services | 750 | | 661 | | 2,893 | | 1,958 |
| | 4,313 | | 4,140 | | 16,917 | | 15,435 |
Cost of products and services sold: | | | | | | | |
| Subscriptions, support and other services fees | 194 | | 300 | | 1,010 | | 1,188 |
| Software licenses and renewals | 219 | | 301 | | 814 | | 956 |
| Professional services | 257 | | 157 | | 1,047 | | 575 |
| | 670 | | 758 | | 2,871 | | 2,719 |
Gross Margin | 3,643 | | 3,382 | | 14,046 | | 12,716 |
Operating expenses: | | | | | | | |
| Depreciation and amortization (exclusive of | | | | | | | |
| | amortization of software products included in | | | | | | | |
| | cost of products and services sold) | 166 | | 212 | | 727 | | 631 |
| Customer operations and support | 182 | | 289 | | 970 | | 1,131 |
| Selling, general and administrative | 2,187 | | 2,534 | | 9,163 | | 9,110 |
| Software development and technical support | 815 | | 501 | | 1,836 | | 1,679 |
| Restructuring charge | 529 | | - | | 529 | | - |
Net operating expenses | 3,879 | | 3,536 | | 13,225 | | 12,551 |
Operating income (loss) | (236) | | (154) | | 821 | | 165 |
Other income (expense) | | | | | | | |
| Interest expense | (24) | | (43) | | (99) | | (153) |
| Other, net | 56 | | 17 | | 71 | | 93 |
Total other income (expense) | 32 | | (26) | | (28) | | (60) |
Income (loss) before provision for income taxes | (204) | | (180) | | 793 | | 105 |
| Income tax benefit (provision) | 582 | | 13 | | 590 | | (4) |
Net income (loss) | $ 378 | | $ (167) | | $ 1,383 | | $ 101 |
| | | | | | | | |
Average common shares outstanding: | | | | | | | |
| Basic | 6,764 | | 6,532 | | 6,678 | | 6,378 |
| Diluted | 6,989 | | 6,704 | | 6,903 | | 6,550 |
Basic and diluted net income (loss) per share: | | | | | | | |
| Basic | $0.06 | | ($0.03) | | $0.21 | | $0.02 |
| Diluted | $0.05 | | ($0.02) | | $0.20 | | $0.02 |
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