EXHIBIT A
CONTACT:
Nick Bray AT THE FINANCIAL RELATIONS BOARD:
Chief Financial Officer For Analyst Info: Julie Creed (312) 640-6724
Gentia Software For General Info: Kelly Lofts (212) 661-8030
+44 181 971 4000 For Media Info: Claudine Cornelis (212) 661-8030
GENTIA RETURNS TO PROFITABILITY DURING THIRD QUARTER 1999
LONDON, OCTOBER 21, 1999 -- Gentia Software (Nasdaq: GNTI), a leading provider
of intelligent analytical applications for enterprise-wide deployment, today
reported results for the third quarter ended September 30, 1999. Gentia reported
net income of $0.1 million, or $0.01 per share, for the third quarter of 1999.
This compares with a net loss of $6.3 million, or ($0.62) per share, for the
second quarter of 1999 and a net loss of $1.6 million, or ($0.15) per share, in
the same quarter in 1998. Revenues for the third quarter of 1999 totalled $6.1
million, compared with $6.0 million for the second quarter of 1999 and $8.0
million for the same quarter a year ago.
"We have reduced costs from a level of $9.2 million in quarter two to $6.0
million this quarter," commented Nick Bray, Chief Financial Officer. "In
addition the company has returned solid total revenues of $6.1 million this
quarter notwithstanding this transition. Although overall revenues increased
only marginally over the prior quarter, we experienced 17% growth in new license
fees during quarter three, from $2.4million to $2.8 million. We also showed an
increase in the proportion of new license fees from application sales.
Application license revenue now accounts for the majority of all new license
sales and we believe application license fees are well positioned for further
growth."
"The top priority of the new management team has been to stabilize Gentia and
position it for long-term growth," commented Steve Fluin, Chief Executive
Officer. "We are extremely pleased to have reached this goal and report a modest
profit for the quarter. More importantly, with our expenses now in line, our
operation is geared for revenue growth as we move forward. This quarter marks a
milestone in our company's transition and growth. We have simultaneously
completed a global, functional reorganization that provides us with the
operational capability for sustained revenue growth and introduced an
intelligent application strategy that builds on our current product portfolio,
providing our clients with applications that show multi-million dollar return on
investment. Gentia's applications now provide future looking business
information, based on our analytic capability, that executives require to
successfully maximize their business performance."
Fluin Continued, "We are resolute that the route to revenue growth is through
our channel strategy. We are very encouraged by the relationships we recently
established. Our channel strategy is to partner with domain experts to develop
and market best of breed intelligent applications that help our clients to
improve business performance. This year we have worked with Arthur Andersen to
produce a market leading profitability analysis application and added several
notable partners including IBM for our balanced scorecard product. These
relationships increase our competitive position and also increase the percentage
of target opportunities we achieve in our global markets."
The Company has been notified that it no longer meets the listing requirements
for the Nasdaq National Market System. The Company is exploring options that
will enable it to maintain its National Market listing in addition to other
listing alternatives such as the Nasdaq Small Cap.
MOST RECENT DEVELOPMENTS
- -- Closed major deals during the quarter with Cockerill Sambre, Motorola,
Zurcher Kantonalbank, Telenor and Co-op.
- -- Partnered with IBM to offer the Balanced Scorecard application to IBM's
customers as an integrated tool in IBM's business intelligence solution.
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- -- Achieved immediate success following the launch of Gentia TrafficOptimizer
in partnership with Bell Atlantic and Hewlett-Packard. The application
enables telecom network operators to optimize their existing network
architecture. Bell Atlantic recently announced savings in excess of $4
million on network investment following the implementation of the
application in January of 1999.
- -- Partnered with FlexiInternational to create a balanced scorecard
application for the financial services industry and integrate the tool into
Flexi's Scorecard suite of financial management applications.
- -- Upgraded our customer support to take advantage of web technologies, be
more effective for users and introduced a new team of proactive Customer
Relationship Managers, globally.
- -- Increased our global sales campaign efforts including establishing an Asian
Regional Headquarters in Singapore and appointment of a new distributor in
Australia.
ABOUT THE COMPANY
Gentia Software (Nasdaq: GNTI) is a leading supplier of intelligent analytical
applications that sustain and improve business performance. Its integrated
portfolio of software applications, incorporating the expertise of world-class
consulting partners, supports strategy management, performance measurement and
operational analysis. For more information, visit www.gentia.com or call:
1-888-4GENTIA (United States), +44 (0) 208 971 4000 (Europe).
THIS NEWS RELEASE CONTAINS STATEMENTS OF A FORWARD-LOOKING NATURE RELATING TO
THE FINANCIAL PERFORMANCE OF GENTIA SOFTWARE. SUCH STATEMENTS ARE BASED UPON THE
INFORMATION AVAILABLE TO MANAGEMENT AT THIS TIME, AND THEY NECESSARILY INVOLVE
RISK BECAUSE ACTUAL RESULTS COULD DIFFER MATERIALLY FROM CURRENT EXPECTATIONS.
AMONG THE MANY FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER FROM THOSE SET
FORTH IN THE COMPANY'S FORWARD-LOOKING STATEMENTS ARE CHANGES IN GENERAL
ECONOMIC CONDITIONS, ACTIONS TAKEN BY CUSTOMERS OR COMPETITORS, AND THE RECEIPT
OF MORE OR FEWER ORDERS THAN EXPECTED.
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GENTIA SOFTWARE PLC
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Nine Months Ended
------------------------------------------------------------
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
------------------------------------------------------------
US$ US$ US$ US$
Revenues:
License ..................................................... $ 2,760 $ 4,419 $ 7,420 $ 12,076
Services and other .......................................... 3,367 3,588 10,610 9,587
-------- -------- -------- --------
6,127 8,007 18,030 21,663
Cost of revenues:
License .................................................... 575 452 1,575 999
Services and other ......................................... 1,523 2,140 6,441 5,967
-------- -------- -------- --------
2,098 2,592 8,016 6,966
Gross profit .................................................... 4,029 5,415 10,014 14,697
Operating expenses:
Sales and marketing ........................................ 2,134 4,351 10,570 12,641
Research and development ................................... 948 1,512 4,082 5,185
General and administrative ................................. 632 1,106 2,646 3,209
Restructuring costs ......................................... -- -- 1,876 --
Goodwill amortization ...................................... 260 153 844 383
-------- -------- -------- --------
Total operating expenses ................... 3,974 7,122 20,018 21,418
Income / (loss) from operations ................................. 55 (1,707) (10,004) (6,721)
Other income .................................................... -- 144 69 605
-------- -------- -------- --------
Income / (loss) before provision for income taxes ............... 55 (1,563) (9,935) (6,116)
Provision for income taxes ...................................... -- -- -- --
-------- -------- -------- --------
Net income / (loss) ............................................. $ 55 $ (1,563) $ (9,935) $ (6,116)
======== ======== ======== ========
Basic income / (loss) per share ................................. $ 0.01 $ (0.15) $ (0.97) $ (0.62)
Diluted income / (loss) per share ............................... $ 0.01 $ (0.15) $ (0.94) $ (0.62)
Shares used to compute basic EPS ................................ 10,232 10,116 10,232 9,874
Shares used to compute diluted EPS .............................. 10,560 10,116 10,560 9,874
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GENTIA SOFTWARE PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1999 1998
------------- ------------
(Unaudited) (Audited)
US$ US$
ASSETS
Current assets:
Cash and cash equivalents .......................... $ 760 $ 5,314
Accounts receivable, net of allowances of $4,329
( Dec 31, 1998 - $3,801) ........................ 6,575 10,565
Prepaid expenses and other current assets .......... 1,087 1,363
Tax recoverable .................................... -- 212
-------- --------
Total current assets .......................................... $ 8,422 $ 17,454
Property and equipment, net ............................... 1,542 2,192
Intangible assets:
Purchase software, net of amortization of $478
( Dec 31, 1998 - $25) ............... 2,131 2,585
Goodwill on acquisition, net of amortization of $2,156
(Dec 31, 1998 - $1,764) ..................... 3,961 4,317
-------- --------
Total assets .................................................. $ 16,056 $ 26,548
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of lease obligations ............... $ 57 $ 78
Accounts payable ................................... 2,902 2,203
Accrued liabilities ................................ 3,337 3,778
Deferred revenues .................................. 3,678 4,754
Other accounts payable ............................. 1,232 1,766
Short Term Loans ............................. 1,060 --
-------- --------
Total current liabilities ................................ $ 12,266 $ 12,579
Non current liabilities:
Deferred taxation .................................. -- --
Long-term portion of lease obligations ............. 121 59
-------- --------
Total Liabilities ............................................. $ 12,387 $ 12,638
Shareholders' equity:
Ordinary shares .................................... 2,454 2,445
Additional paid-in capital ......................... 28,885 28,881
Retained (deficit) ................................. (26,772) (16,837)
Cumulative translation adjustment .................. (898) (579)
-------- --------
Total shareholders' equity .................................... $ 3,669 $ 13,910
-------- --------
Total liabilities and shareholders' equity .................... $ 16,056 $ 26,548
======== ========
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