CONVERA
The True Meaning of Search
Contact:
Matt Jones
Convera
703.761.3700
mjones@convera.com
CONVERA REPORTS THIRD QUARTER FINANCIAL RESULTS
Vienna, Va.--December 6, 2006--Convera Corporation (NASDAQ:CNVR), a leading
provider of search technologies for professional workers, today announced
financial results for the three-month and nine-month periods ended October 31,
2006.
Revenue for the third quarter of fiscal 2007 totaled $6.0 million, a 33%
increase when compared to the year-ago quarter principally due to an increase in
RetrievalWare(R) license sales. Two transactions each represented more than 10%
of total revenues for the third quarter of fiscal 2007.
The net loss for the three-month period ended October 31, 2006 was $16.6
million, or $0.32 per share, compared to a net loss of $2.5 million, or $0.05
per share, for the comparable year-ago period. The net loss was impacted by a
non-cash charge totaling $9.1 million to record, at their net realizable value,
the capitalized software development costs and record impairment to the
equipment relating to the Company's new TrueKnowledge for Web(TM) product. In
connection with the preparation of its financial statements for the quarter, the
Company determined it was necessary to record this non-cash charge under the
applicable accounting guidance. The amount of the non-cash charge may be subject
to revision as the Company finalizes its financial statements in connection with
the filing of its Form 10-Q for the quarter ended October 31, 2006. The non-cash
charge has no effect on the Company's development, sales and marketing plans for
its TrueKnowledge for Web solution. The net loss for the quarter was also
influenced by $1.4 million of stock option expenses related to the Company's
adoption of FAS 123R.
Cash and investments as of October 31, 2006 totaled $55.5 million. The Company
carries no debt.
"Convera made significant strides this quarter in executing its business
strategy," said Patrick C. Condo, Convera's president and chief executive
officer. "We won new contracts for our RetrievalWare enterprise search
technology and expanded our reach in the publishing industry with our
TrueKnowledge for Web hosted search solution. Our technology innovations are
taking quick root across all the markets we serve. Convera is well positioned to
help our clients meet their business needs as the search landscape is rapidly
changing."
The attached financial information compares the results of operations for the
three and nine-month periods ended October 31, 2006 to the same periods in 2005
and the balance sheet as of October 31, 2006 to the balance sheet as of January
31, 2006.
ABOUT CONVERA(R)
Convera(R) is a leading provider of search technologies for professional
workers. Convera has developed a unified product platform that makes sense of
vast amounts of information--wherever it resides--across multiple data formats,
languages and meanings. Based on proprietary technologies that extract relevant
results from public and private data, Convera enables professionals to quickly
retrieve exactly the information essential for action. The Convera search
platform, TrueKnowledge Platform(TM), is delivered as a hosted service, software
or a bundled hardware and software package. Thousands of government and business
professionals in 40 countries rely on Convera search solutions to power a broad
range of mission critical applications. For more information, contact Convera at
800-755-7005, via e-mail at info@convera.com or on the Web at www.convera.com
This release, including any statements from Convera personnel, contains
statements about Convera's future expectations, performance, plans, and
prospects, as well as assumptions about future events. The reader is cautioned
not to put undue reliance on these forward-looking statements, as these
statements are subject to numerous factors and uncertainties, including without
limitation, business and economic conditions and trends; the ability to continue
funding operating losses; fluctuations in operating results including impacts
from reduced corporate IT spending and lengthier sales cycles; continued success
in technological advances and development including the TrueKnowledge Platform
(TM); possible disruption in commercial activities caused by terrorist activity
and armed conflict, such as changes in logistics and security arrangements;
reduced customer demand relative to expectations; competitive factors; and other
risk factors listed from time to time in the company's reports to the Securities
and Exchange Commission. Actual results may differ materially from our
expectations as the result of these and other important factors relating to
Convera's business and product development efforts, which are further described
in Convera's filings with the SEC. These filings can be obtained from the SEC's
website located at www.sec.gov. Any forward-looking statements are based on
information available to Convera on the date of this release, and Convera
assumes no obligation to update such statements. "The Convera design logo and
the following are trademarks of Convera in the United States and other
countries: Convera(R), the Convera design logo, Screening Room(R),
RetrievalWare(R), Excalibur(TM), Govmine(TM), baseRelevance(TM), TrueKnowledge
Platform(TM), TrueB2B(TM), TrueKnowledge for Enterprise(TM), TrueKnowledge for
Discovery(TM), TrueKnowledge for Web(TM), and Knewworld(TM).
The condensed, consolidated statements of operations for the Company appear
below and are presented in accordance with accounting principles generally
accepted in the United States. All amounts, except per share amounts, are
expressed in thousands of US dollars.
Three Months Ended Nine Months Ended
October 31, October 31,
2006 2005 2006 2005
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(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
License $ 3,490 $ 1,914 $ 6,861 $ 9,331
Services 541 516 1,493 1,947
Maintenance 1,984 2,082 5,641 6,117
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Total Revenue 6,015 4,512 13,995 17,395
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Expenses:
Cost of revenues:
License 433 365 1,335 962
Services 2,701 887 7,239 2,529
Maintenance 306 254 883 763
Sales and marketing 2,872 1,851 8,827 6,406
Research and product development 3,497 1,248 11,438 4,322
General and administrative 3,358 2,640 11,497 7,796
Restructuring charge - (1) - (57)
Amortization of capitalized software
development costs 1,016 - 3,045 -
Impairment of capitalized software
development costs and fixed assets 9,111 - 9,111 -
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Total Expense 23,294 7,244 53,375 22,721
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Operating loss (17,279) (2,732) (39,380) (5,326)
Interest income (expense), net 643 241 1,665 341
Net loss $ (16,636) $ (2,491) $ (37,715) $ (4,985)
================================================================
Earnings per share - basic & diluted $ (0.32) $ (0.05) $ (0.72) $ (0.12)
================================================================
Weighted average number of common
shares outstanding - basic and diluted 52,727 46,170 52,023 41,812
The condensed, consolidated balance sheets for the Company appear below and are
presented in accordance with accounting principles generally accepted in the
United States. All amounts are expressed in thousands of U.S. dollars.
October 31, 2006 January 31, 2006
----------------------------------------------
(unaudited)
Current Assets:
Cash and cash equivalents $ 55,440 $ 37,741
Short term investments 71 71
Accounts receivable, net 3,735 4,364
Prepaid expenses and other 2,057 2,396
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Total current assets 61,303 44,572
Equipment and leasehold improvements, net 1,278 9,152
Other assets 393 819
Capitalized software development
costs, net - 7,102
Goodwill and other intangible assets 2,370 2,572
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Total assets $ 65,344 $ 64,217
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Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 1,547 $ 1,367
Accrued expenses 2,677 2,680
Deferred revenues 4,248 3,931
Current maturities of long-term debt - 1,283
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Total current liabilities 8,472 9,261
Other long-term liability - 3,717
Deferred revenues - long term 228 398
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Total liabilities 8,700 13,376
Shareholders' Equity 56,644 50,841
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Total liabilities and shareholders'
equity $ 65,344 $ 64,217
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