Exhibit 99.1
[LOGO] CARREKER NEWS RELEASE
FOR IMMEDIATE RELEASE
CARREKER CORPORATION REPORTS THIRD QUARTER FISCAL 2004 RESULTS
DALLAS (December 7, 2004) -- Carreker Corporation (Nasdaq: CANI), a
leading provider of payments technology and consulting solutions for the
financial services industry, today reports its third quarter results. For the
quarter-ended October 31, 2004, the Company reports revenues of $30.6 million,
net income of $513,000 and diluted earnings per share of $0.02.
Notable items during the quarter include:
o Q3 revenue was approximately $1 million higher than Q2 04.
o The Company experienced increases in all revenue categories, except
consulting revenue, in comparison to Q2 04.
o SG&A expenses decreased by approximately $650,000 from Q2 04.
o Contracted sales in Q3 decreased significantly from Q2 04.
o KeyCorp and Wells Fargo accepted and deployed Carreker software for
image exchange and image quality.
o Coley Clark, retired EDS Executive, and Gregory B. Tomlinson,
retired "Big Four" Audit Partner, joined Carreker Board of
Directors.
"For the second half of 2004 and the first half of 2005, we will have more
products released or scheduled for release than at any other comparable time in
the Company's history. Complex buying decisions and continued high levels of
competition are causing some delays though we are encouraged by the growth in
our qualified sales opportunities," said J. D. (Denny) Carreker, Chairman and
Chief Executive Officer of Carreker Corporation.
Third quarter 2004 revenue was $30.6 million as compared to the second quarter
2004 revenue of $29.6 million and revenue of $31.4 million in the third quarter
2003. In the third quarter 2004,
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the Company experienced increases over second quarter 2004 in all revenue
categories, except consulting, with revenue from software license, maintenance
and implementation fees each increasing by approximately $1 million. Software
license, maintenance, and implementation fees all decreased in third quarter
2004 relative to third quarter 2003 but were partially offset by increased
consulting revenue.
Third quarter 2004 operating income of $366,000 decreased in comparison to the
$631,000 reported for the second quarter 2004 and the $1.4 million operating
income in the third quarter 2003. The decrease in third quarter 2004 relative to
second quarter 2004 was due, in part, to increases in cost of revenue and R&D
expenses in third quarter 2004. The increases in these expenses more than offset
the favorable impact of higher revenue and decreased SG&A expenses in third
quarter 2004. Contributing to the decrease in operating income from third
quarter 2003 to third quarter 2004 were higher third quarter 2003 revenues,
increased research and development expense in third quarter 2004, and a $540,000
benefit in third quarter 2003 recorded in other operating costs related to the
reversal of certain merger costs where actual costs were lower than the
estimated amounts.
Net income for the third quarter 2004 was $513,000, or $0.02 earnings per
diluted share, as compared to second quarter 2004 net income of $199,000, or
$.01 per diluted share, and third quarter 2003 net income of $1.3 million, or
$0.05 per diluted share.
Guidance
Although the Company had anticipated that the strong contracted sales in the GPT
business segment in the second quarter would continue in the third quarter, that
trend did not materialize as delays in decision making by clients contributed to
softness in contracted sales in third quarter. The fourth quarter 2004 outlook
remains very sensitive to the volume and timing of sales, product delivery,
client implementation schedules and client-dependent timing on a small number of
engagements in our Revenue Enhancement business segment. We expect revenues for
the fourth quarter to be flat to slightly down and operating profit to be
approximately break-even or slightly negative. During the third quarter, the
Company qualified an increased number of Check 21 and other potential sales
opportunities and anticipates that contract sales will improve in the fourth
quarter and beyond as an expanded array of new products becomes available.
Accordingly, the Company believes this will result in revenue growth in 2005.
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Conference Call
Management has scheduled a conference call tomorrow, Wednesday, December 8,
2004, at 11:00 a.m. Eastern Time. The conference call is intended to provide a
forum for a discussion of the Company's third quarter fiscal 2004 financial
results, business conditions, industry trends and other points of interest to
investors. To join the conference call, domestic participants dial 800-901-5241,
international participants dial 617-786-2963. All participants enter the
passcode 39632178. A replay of the call will be available on Wednesday, December
8 from 1:00 p.m. Eastern Time through Wednesday, December 15 at 11:45 p.m.
Eastern Time. To access the replay, domestic participants dial 888-286-8010,
international participants dial 617-801-6888. All replay participants enter the
passcode 59294914. A live webcast of the conference call, as well as the archive
webcast, will be available through the investor relations (IR) section of the
Company's website at http://ir.carreker.com.
About Carreker Corporation
Carreker Corporation improves earnings for financial institutions around the
world. The Company's integrated consulting and software solutions are designed
to increase clients' revenues and reduce their expenses, while improving
security and increasing the value of their customer relationships. Carreker
provides products and services to more than 250 clients in the United States,
Canada, the United Kingdom, Ireland, continental Europe, Australia, New Zealand,
South Africa, South America, Mexico, and the Caribbean. Clients include the full
range of community, regional and large banks, among them more than 75 of the
largest 100 banks in the United States. Headquartered in Dallas, Texas since
1978, Carreker Corporation has offices in London and Sydney. For more
information, visit www.carreker.com.
Forward Looking Statements - Except for historical information, the statements
in this release, including statements regarding future financial performance,
constitute forward-looking statements within the meaning of the federal
securities laws. These statements are subject to numerous risks and
uncertainties that could cause actual results to differ materially, including
but not limited to the volatility in the Company's common stock price, as well
as the risks and uncertainties arising out of economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, services, products, sales, potential sales and prices. For further
information concerning certain of these risks and uncertainties, see under the
caption "Business-Forward Looking Statements and Risk Factors" in the Company's
most recent Form 10-K for the year ended January 31, 2004 and "Management's
Discussion and Analysis" in subsequent quarterly reports on Form 10-Q. We assume
no obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as may be required
by law.
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Lisa Peterson, Executive Vice President
and CFO
(972) 371-1454 PH (972) 458-2567 FX
Email: lpeterson@carreker.com
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CARREKER CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share amounts)
ASSETS
October 31, January 31,
2004 2004
--------- ---------
Current assets
Cash and cash equivalents ........................... $ 26,787 $ 28,605
Accounts receivable, net of allowance of $667
and $1,512 at October 31, 2004 and
January 31, 2004, respectively ................. 11,950 21,751
Prepaid expenses and other current assets ........... 2,913 3,331
--------- ---------
Total current assets .................................. 41,650 53,687
Property and equipment, net of accumulated
depreciation of $19,480 and $17,140 at
October 31, 2004 and January 31, 2004,
respectively ........................................ 6,918 6,690
Capitalized software costs, net of accumulated
amortization of $12,197 and $11,050 at
October 31, 2004 and January 31, 2004, respectively . 3,083 2,028
Acquired developed technology, net of accumulated
amortization of $14,618 and $11,153
at October 31, 2004 and January 31, 2004,
respectively ........................................ 11,082 14,547
Goodwill, net of accumulated amortization of $3,405 at
October 31, 2004 and January 31, 2004 ............... 20,765 21,193
Customer relationships, net of accumulated
amortization of $4,783 and $3,733 at October 31, 2004
and January 31, 2004, respectively .................. 3,617 4,667
Deferred loan costs, net of accumulated
amortization of $1,232 and $1,028 at October 31, 2004
and January 31, 2004, respectively .................. 476 680
Other assets .......................................... 1,036 1,087
--------- ---------
Total assets .......................................... $ 88,627 $ 104,579
========= =========
Current liabilities
Accounts payable .................................... $ 1,151 $ 913
Accrued compensation and benefits ................... 7,159 9,219
Other accrued expenses .............................. 3,274 4,520
Income tax payable .................................. 222 181
Deferred revenue .................................... 17,566 25,231
Accrued merger and restructuring costs .............. 594 1,898
--------- ---------
Total current liabilities ............................. 29,966 41,962
Long-term debt ........................................ -- 6,250
Other long-term liabilities ........................... 481 49
--------- ---------
Total liabilities ..................................... 30,447 48,261
Commitments and Contingencies
Stockholders' equity
Preferred stock, $.01 par value:
2,000 shares authorized; no shares
issued or outstanding ........................... -- --
Common stock, $.01 par value:
100,000 shares authorized; 24,848 and
24,357 shares issued at October 31, 2004 and
January 31, 2004, respectively .................. 249 244
Additional paid-in capital .......................... 110,714 108,757
Accumulated deficit ................................. (52,780) (52,680)
Less treasury stock, at cost: 1 common share
at October 31, 2004 and January 31, 2004 ....... (3) (3)
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Total stockholders' equity ............................ 58,180 56,318
--------- ---------
Total liabilities and stockholders' equity ............ $ 88,627 $ 104,579
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CARREKER CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
October 31, October 31,
---------------------- ----------------------
2004 2003 2004 2003
-------- -------- -------- --------
Revenues:
Consulting fees .................................................... $ 7,930 $ 6,396 $ 27,501 $ 21,349
Software license fees .............................................. 5,701 7,026 16,134 21,955
Software maintenance fees .......................................... 11,491 11,770 32,807 34,764
Software implementation fees ....................................... 4,622 4,983 11,143 14,385
Outsourcing service fees ........................................... 50 -- 60 --
Out-of-pocket expense reimbursements 813 1,228 2,365 3,367
-------- -------- -------- --------
Total revenues ................................................... 30,607 31,403 90,010 95,820
Cost of revenues:
Consulting fees .................................................... 4,555 4,936 14,166 15,193
Software license fees .............................................. 2,503 2,037 5,771 5,662
Software maintenance fees .......................................... 3,765 3,600 10,949 9,910
Software implementation fees ....................................... 4,002 4,485 11,181 14,398
Outsourcing service fees ........................................... 222 -- 236 --
Out-of-pocket expenses 738 1,122 2,333 3,413
-------- -------- -------- --------
Total cost of revenues ........................................... 15,785 16,180 44,636 48,576
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Gross profit ......................................................... 14,822 15,223 45,374 47,244
Operating costs and expenses:
Selling, general and administrative ................................ 11,320 11,797 35,483 36,267
Research and development ........................................... 2,520 1,876 6,102 5,522
Amortization of customer relationships ............................. 350 350 1,050 1,050
Restructuring and other charges .................................... 266 (229) 2,978 1,233
-------- -------- -------- --------
Total operating costs and expenses ............................... 14,456 13,794 45,613 44,072
-------- -------- -------- --------
Income (loss) from operations ........................................ 366 1,429 (239) 3,172
Other income (expense):
Interest income .................................................... 92 69 207 223
Interest expense ................................................... (106) (234) (336) (991)
Other income ....................................................... 275 219 732 269
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Total other income (expense) ..................................... 261 54 603 (499)
-------- -------- -------- --------
Income before provision for income taxes ............................. 627 1,483 364 2,673
Provision for income taxes ........................................... 114 146 464 372
-------- -------- -------- --------
Net income (loss) .................................................... $ 513 $ 1,337 $ (100) $ 2,301
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Basic earnings (loss) per share ...................................... $ 0.02 $ 0.06 $ 0.00 $ 0.10
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Diluted earnings (loss) per share .................................... $ 0.02 $ 0.05 $ 0.00 $ 0.10
======== ======== ======== ========
Shares used in computing basic earnings (loss) per share ............. 24,821 23,812 24,623 23,635
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Shares used in computing diluted earnings (loss) per share ........... 25,589 24,645 24,623 23,820
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