[LOGO OF LHS NEWS] LHS Group Inc.
6 Concourse Parkway
Suite 2700
Atlanta, Georgia 30328
USA
Media Contacts: For Release 4:15 p.m. EST
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Klaus Kleber (770) 280-3461 (USA)
kkleber@us.lhsgroup.com
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Andrea Willige +49 (0) 6103-482-778 (Europe)
awillige@de.lhsgroup.com
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Investor Relations Contacts:
Rainer Westermann (770) 280-6360 (USA)
rwestermann@us.lhsgroup.com
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Nicolas Stackelberg +49 (0) 6103-482-456 (Europe)
nstackelberg@de.lhsgroup.com
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LHS GROUP ANNOUNCES RECORD QUARTERLY, ANNUAL RESULTS
ATLANTA, February 22, 1999 LHS Group Inc. (NASDAQ: LHSG; Neuer Markt: LHI)
today reported record earnings and revenue results for the fourth quarter and
year ended December 31, 1998.
Revenue for the quarter ended December 31, 1998, increased 50 percent to $48.3
million, compared with $32.3 million for the fourth quarter last year. Earnings
before interest and taxes increased 95 percent to $11.9 million. This compares
with $6.1 million for the fourth quarter last year. Net earnings for the
quarter were up 86 percent to $8.0 million or $0.15 per diluted share, compared
with $4.3 million or $0.08 per diluted share for the same quarter last year.
For the year ended December 31, 1998, LHS Group Inc. reported a 55 percent
increase in revenues from $105.4 million in 1997 to $163.2 million in 1998.
Excluding a one-time charge of $8.2 million recorded in the second quarter in
connection with the acquisition of InfoCellular, Inc., earnings before interest
and taxes for the 12-month period was up 131 percent to $38.0 million from $16.4
million in 1997. Net earnings excluding the one-time charge increased 128
percent from $11.2 million or $0.23 per diluted share in 1997 to $25.5 million
or $0.47 per diluted share in 1998.
[LOGO OF LHS NEWS]
"LHS' CONTINUED EARNINGS AND REVENUE GROWTH ARE A DIRECT RESULT OF THE
TREMENDOUS EFFORTS OF OUR DEDICATED EMPLOYEES, AS WELL AS AN AGGRESSIVE
MARKETING STRATEGY AND THE INCREASINGLY LARGE ROLE OUR GLOBAL PARTNERS PLAY IN
IT," COMMENTED CHAIRMAN AND CHIEF EXECUTIVE OFFICER HARTMUT LADEMACHER. "OUR
PRODUCT DEVELOPMENT STRATEGY, CENTERED AROUND A NEW, COMPLETELY OBJECT-ORIENTED
NEXT GENERATION SOFTWARE, WILL ASSURE LHS' CONTINUED LEADERSHIP ROLE IN THE
YEARS TO COME. WE WILL CONTINUE TO BE THE LEADING GLOBAL PROVIDER OF CUSTOMER
CARE AND BILLING SOLUTIONS IN THE NEXT MILLENNIUM."
About LHS
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LHS is a leading global provider of convergent client/server customer care,
billing and customer acquisition software and services for the
telecommunications industry. Its over 140 systems are installed in more than 60
countries, operating in 13 languages. In addition to its Atlanta headquarters,
LHS has major offices in Frankfurt, Germany; Kuala Lumpur, Malaysia; Boston and
Miami, USA; and Zurich, Switzerland. LHS is listed with NASDAQ (LHSG) and on the
Frankfurt Neuer Markt Exchange (LHI). For more information, visit LHS' web site
at www.lhsgroup.com.
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LHS GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
Fourth Quarter Ended December 31,
(Unaudited) (Unaudited)
---------------- ----------------
1998 1997
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Revenues
License revenues $19,045 $12,688
Service revenues 29,289 19,640
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Total revenues 48,334 32,328
Cost of services 16,691 14,784
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Gross profit 31,643 17,544
Operating expenses
Sales and marketing 3,533 2,071
Research and development 11,465 6,052
General and administrative 4,785 3,339
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19,783 11,462
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Earnings before interest and taxes 11,860 6,082
Interest expense (income), net (1,401) (1,050)
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Earnings before income taxes 13,261 7,132
Income taxes 5,304 2,851
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Net earnings $ 7,957 $ 4,281
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Earnings Per Share
Basic $ 0.15 $ 0.09
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Diluted $ 0.15 $ 0.08
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LHS GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
Twelve Months Ended December 31,
(Unaudited)
-------------- --------------
1998 1997
-------------- --------------
Revenues
License revenues $ 66,780 $ 38,439
Service revenues 96,402 66,972
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Total revenues 163,182 105,411
Cost of services 59,953 47,325
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Gross profit 103,229 58,086
Operating expenses
Sales and marketing 11,700 8,454
Research and development 36,530 19,682
General and administrative 16,976 13,510
Cost of purchased in-process computer
software technology 8,200
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73,406 41,646
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Earnings before interest and taxes 29,823 16,440
Interest expense (income), net (4,557) (2,238)
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Earnings before income taxes 34,380 18,678
Income taxes 17,031 7,470
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Net earnings $ 17,349 $ 11,208
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Earnings Per Share
Basic $ 0.33 $ 0.24
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Diluted $ 0.32 $ 0.23
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LHS GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
December 31, December 31,
1998 1997
(Unaudited)
----------------------- ---------------------
ASSETS
Cash and cash equivalents $ 42,084 $ 27,867
Short Term Investments 63,440 45,907
Trade accounts receivable, net 42,539 25,135
Unbilled receivables 18,321 11,910
Prepaid expenses 2,754 2,330
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Total current assets 169,138 113,149
Property, plant & equipment, net 15,589 8,870
Deferred income taxes 914 1,083
Other 2,904 4,121
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Total Assets $188,545 $127,223
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LIABILITIES
Accounts payable and accrued expenses 36,353 29,390
Deferred revenues 6,095 4,553
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Total current liabilities 42,448 33,943
Other long-term obligations 239 731
----------------- -----------------
Total Liabilities 42,687 34,674
STOCKHOLDERS' EQUITY 145,858 92,549
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Total Liabilities and Stockholders' Equity $188,545 $127,223
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LHS GROUP INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In Thousands)
Twelve Months Ended December 31,
(Unaudited)
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1998 1997
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OPERATING ACTIVITIES
Net earnings $ 17,349 $ 11,208
Adjustments:
Depreciation and amortization 4,265 2,072
Write-off of purchased in process computer software 8,200 -
Change in operating assets and liabilities, net of effect
of business acquisition (2,230) (1,035)
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Net cash provided by operating activities 27,584 12,245
INVESTING ACTIVITIES
Additions of leasehold improvements and equipment (9,452) (5,064)
Purchase of short-term debt instruments (13,879) (49,560)
Acquisition of business, net of cash acquired (2,955) -
Other (444) (240)
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Net cash used in investing activities (26,730) (54,864)
FINANCING ACTIVITIES
Net proceeds from issuance of capital stock 13,975 72,487
Repayment of bank borrowings - (1,661)
Repayment to former shareholder - (4,000)
Other (612) (629)
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Net cash provided by financing activities 13,363 66,197
Increase in cash and cash equivalents 14,217 23,578
Cash and cash equivalents at beginning of period 27,867 4,289
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Cash and cash equivalents at end of period $ 42,084 $ 27,867
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