FOR IMMEDIATE RELEASE
Financial Information Press Contact:
Vincent C. Klinges
Chief Financial Officer
American Software, Inc.
(404) 264-5477
American Software Reports Preliminary Third Quarter of Fiscal Year 2008 Results
Company Reports 28th Consecutive Quarter of Profitability and Positive Operating
Cash Flow
ATLANTA, March 4 American Software, Inc. (Nasdaq: AMSWA) today reported
financial results for the third quarter of fiscal year 2008, achieving 28
consecutive quarters of profitability. Key third quarter financial highlights
include:
- Total revenues for the quarter ended January 31, 2008 were $22.1 million,
an increase of 3% over the third quarter of fiscal 2007;
- Software license fees for the quarter ended January 31, 2008 were $4.3
million, a decrease of 24% over the third quarter of fiscal 2007;
- Services and other revenues for the third quarter ended January 31, 2008
were $10.6 million; an increase of 24% over the third quarter of fiscal
2007;
- Maintenance revenues for the quarter ended January 31, 2008 were $7.1
million, a decrease of 1% over the third quarter of fiscal 2007; and
- Operating earnings for the quarter ended January 31, 2008 were
approximately $1.6 million which includes, a decrease of 47% compared to
operating earnings for the third quarter of fiscal 2007; operating
earnings for the third quarter ended January 31, 2008 included a non-
cash write-down of capitalized software development costs of $1.2
million.
GAAP net earnings were approximately $1.1 million or $0.04 per fully diluted
share for the third quarter of fiscal 2008 compared to $2.5 million or $0.10 per
fully diluted share for the same period last year. Adjusted net earnings, which
excludes stock option compensation expense, acquisition-related amortization of
intangibles, and write-down of capitalized software costs, for the quarter ended
January 31, 2008 were $2.2 million or $0.08 per fully diluted share compared to
$2.7 million or $0.10 per fully diluted share for the same period last year.
Total revenues for the nine months ended January 31, 2008 were $67.4
million or a 9% increase compared to $61.9 million for the comparable period
last year. Software license fees for the nine-month period were $14.3 million or
a 1% decrease compared to $14.4 million during the same period last year.
Services and other revenues were $32.0 million or an 18% increase compared
to $27.1 million in the same period last year. Maintenance revenues were $21.1
million or a 4% increase compared to $20.3 million in the same period last year.
For the nine months ended January 31, 2008, the Company reported operating
earnings of approximately $6.9 million, a 7% increase compared to operating
earnings of $6.4 million for the same period last year; operating earnings for
the nine months ended January 31, 2008 included a non cash write-down of
capitalized software development costs of $1.2 million.
GAAP net earnings were approximately $5.6 million or $0.21 per fully
diluted share for the nine months ended January 31, 2008 compared to $5.6
million or $0.22 per fully diluted share for the same period last year. Adjusted
net earnings year to date as of January 31, 2008, which excludes stock option
compensation expense, acquisition-related amortization of intangibles, and
write-down of capitalized software costs, were $6.9 million or $0.26 earnings
per fully diluted share compared to $6.1 million or $0.24 earnings per fully
diluted share for the same period last year.
The Company is including adjusted net earnings and adjusted net earnings
per share in the summary financial information provided with this press release
as supplemental information relating to its operating results. This financial
information is not in accordance with, or an alternative for, GAAP and may be
different from non-GAAP net earnings and non-GAAP per share measures used by
other companies. The Company believes that this presentation of adjusted net
earnings and adjusted net earnings per share provides useful information to
investors regarding certain additional financial and business trends relating to
its financial condition and results of operations.
The overall financial condition of the Company remains strong, with cash
and investments of approximately $74.9 million and no debt as of January 31,
2008. This is an increase in cash and investments of approximately $5.0 million
compared to January 31, 2007. "License fee revenue was impacted by several
significant software license contracts that were deferred to later quarters. At
this time, it is not clear whether this was due to deteriorating economic
conditions or to random occurrences. It should be noted that the $1.2 million
write-down of capitalized software was a non-cash event," stated James C.
Edenfield, president and CEO of American Software. "In spite of these temporary
setbacks, we achieved our 28th consecutive quarter of profitability and positive
operating cash flow and remain optimistic about the Company's future."
Additional highlights for the third quarter of fiscal year 2008 include:
Customers:
- Notable new and existing customers placing orders with the Company in
the third quarter include: Arch Chemicals, Bob's Furniture, Caremark
International, Ellery Homestyles, GST Autoleather, Hartmarx Corp.,
Huhtamaki LTD, Johnson Diversey Japan, Precision Dormer, PPG Industries
Europe, OOBE, Puma, R.G. Barry, Unilever UK Ltd., and Yurman Design.
- During the quarter, software license agreements were signed with
customers located in 14 countries including: Australia, Canada, China,
Ireland, Italy, Japan, Norway, Pakistan, Singapore, South Africa, Sweden,
Switzerland, the United Kingdom, and the United States.
- New Generation Computing (NGC(R)), a wholly-owned subsidiary of the
Company, announced that R.G. Barry Corporation has selected NGC's e-SPS
as its strategic software platform to manage overseas suppliers and
trading partners. R.G. Barry, "the Dearfoams(R) company," is one of the
world's leading developers and marketers of accessory footwear.
- NGC announced that three of its customers - Maggy London, Michael Stars
and Russell Athletic - have been named winners of Apparel Magazine's 2007
All-Star awards. Each year, Apparel Magazine honors ten outstanding
apparel businesses based on their innovation, excellence in management,
track record of growth, and corporate goodwill that reflects positively
on the industry. The All-Star winners were selected by the editorial
staff based on nominations from industry executives, and each will be
profiled in the December issue of the magazine.
- Logility, the Company's majority-owned subsidiary, announced that Verizon
Wireless, the leader in delivering wireless communication innovations to
the mass market, has selected Logility Voyager Solutions(TM) to
strengthen its supply chain by improving inventory, demand and sales and
operations planning.
- Logility announced Intertape Polymer Group's success implementing
Logility Voyager Solutions which has helped Intertape Polymer Group
quickly gain visibility and flexibility in its supply chain. As a result
of the implementation, Intertape Polymer Group has increased demand
visibility, created a more proactive supply chain and refined its
inventory and replenishment planning processes.
- Logility customer A.O. Smith Water Products was featured in
AberdeenGroup's "Demand Management in Discrete Industries" benchmark
report for its success in building a lean manufacturing initiative that
focuses on better demand management which has led to reduced inventory,
more proactive response to demand fluctuations, improved customer service
and increased collaboration through a streamlined sales and operations
planning process.
- Logility announced Connections 2008: Saddle Up for Supply Chain Success
to be held May 14-16 in San Antonio, TX. The conference will give
customers and attendees the opportunity to network and share ideas with
fellow supply chain professionals, and gain the latest insight from
industry experts and peers on how to leverage best practices for global
supply chain success.
Products and Technology:
- NGC celebrated its 25th anniversary as a technology leader for the
Fashion, Apparel, Footwear and Retail industries. Founded in 1982, NGC
has grown to become one of the apparel industry's most highly regarded
software companies, with a track record of innovation, a customer base
that includes many of the industry's best-known brands and retailers, and
offices around the world. NGC is responsible for a number of "firsts"
that have enabled apparel brands and retailers to transform their supply
chain operations by gaining real-time visibility, improving speed to
market and enhancing product quality.
- In January, NGC announced its certification as a Microsoft(R) Gold
Partner, representing the highest level of competency and expertise with
Microsoft technologies. NGC's status as a Gold Certified Partner
reaffirms NGC's longstanding relationship with Microsoft and will allow
NGC to enjoy the closest possible working relationship with Microsoft.
NGC met various requirements for multiple Microsoft competencies and
specializations through independent testing of the company's RedHorse(R)
2007 SQL Series ERP software, as well as technology certifications held
by NGC employees and positive customer references.
- Demand Management, Inc., a wholly-owned subsidiary of Logility, announced
integration of the Demand Solutions(R) planning suite with Microsoft
Dynamics(TM) GP and Microsoft Dynamics NAV. The integration is in
response to significant overlap among Demand Solutions and Microsoft
Dynamics GP and Microsoft Dynamics' NAV customer profiles. Demand
Management, Inc. also announced plans to adopt Microsoft's next
generation technology platform, including Microsoft SQL Server 2008,
Microsoft Vista Ribbon Technology and .NET 3.0/3.5, for all future Demand
Solutions product offerings. Demand Management and Microsoft share
existing and potential customers in small and midsize enterprises.
- Food Logistics magazine named both Logility and Demand Management, to the
FL100, an annual listing of the Top 100 technology suppliers to the food
industry, for the fourth consecutive year. The FL100 consists of
technology and solution providers that are helping food, beverage and
consumer packaged goods companies to transform their supply chains and
gain a competitive supply chain advantage. The FL100 is printed as the
cover story for the November/December 2007 issue of Food Logistics and is
featured on the www.foodlogistics.com website.
- Logility received multiple Reader's Choice Awards for the eighth
consecutive year by Consumer Goods Technology magazine. Logility was
ranked as a top three solution provider for supply chain planning and
supply chain execution and also ranked number two for customer experience
in both categories by Consumer Goods Technology readers.
About American Software, Inc.
Headquartered in Atlanta, American Software develops, markets and supports
one of the industry's most comprehensive offerings of integrated business
applications, including supply chain management, Internet commerce, financial,
warehouse management and manufacturing packages. e-Intelliprise(TM) is an
ERP/supply chain management suite, which leverages Internet connectivity and
includes multiple manufacturing methodologies. American Software owns 87% of
Logility, Inc. (NASDAQ: LGTY), a leading provider of collaborative supply chain
solutions that help small, medium, large and Fortune 1000 companies realize
substantial bottom-line results in record time. Logility is proud to serve such
customers as Avery Dennison Corporation, Brown Shoe Company, BP (British
Petroleum), Hyundai Motor America, Leviton Manufacturing Company, McCain Foods,
Pernod-Ricard, Sigma Aldrich and Under Armour Performance Apparel. New
Generation Computing Inc. (NGC), a wholly owned subsidiary of American Software,
is a global software company that has 25 years of experience developing and
marketing business applications for apparel manufacturers, brand managers,
retailers and importers. Headquartered in Miami, NGC's worldwide customers
include Dick's Sporting Goods, Wilsons Leather, Kellwood, Hugo Boss, Russell
Corp., Ralph Lauren Childrenswear, Haggar Clothing Company, Maidenform, William
Carter and VF Corporation. For more information on the Company, contact:
American Software, 470 East Paces Ferry Rd., Atlanta, GA 30305; (800) 726-2946
or (404) 261-4381. FAX:
(404) 264-5206. INTERNET: www.amsoftware.com or e-mail: ask@amsoftware.com.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to
substantial risks and uncertainties. There are a number of factors that could
cause actual results to differ materially from those anticipated by statements
made herein. These factors include, but are not limited to, changes in general
economic conditions, technology and the market for the Company's products and
services, including economic conditions within the e-commerce markets; the
timely availability and market acceptance of these products and services; the
Company's ability to satisfy in a timely manner all SEC required filings and the
requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and
regulations adopted under that Section; the challenges and risks associated with
integration of acquired product lines and companies; the effect of competitive
products and pricing; the uncertainty of the viability and effectiveness of
strategic alliances; and the irregular pattern of the Company's revenues. For
further information about risks the Company could experience as well as other
information, please refer to the Company's Form 10-K for the year ended April
30, 2007 and other reports and documents subsequently filed with the Securities
and Exchange Commission. For more information, contact: Vincent C. Klinges,
Chief Financial Officer, American Software, Inc., (404) 264-5477 or fax: (404)
237-8868.
e-Intelliprise is a trademark of American Software, Logility is a registered
trademark and Logility Voyager Solutions is a trademark of Logility, Demand
Solutions is a registered trademark of Demand Management, and REDHORSE is a
trademark of New Generation Computing. Other products mentioned in this document
are registered, trademarked or service marked by their respective owners.
AMERICAN SOFTWARE, INC.
Consolidated Statements of Operations Information
(In thousands, except per share data)
(Unaudited)
Third Quarter Ended Nine Months Ended
------------------------------ ----------------------------
January 31, January 31,
Pct Pct
2008 2007 Chg. 2008 2007 Chg.
-------- -------- ---- ------ -------- ----
Revenues:
License $ 4,335 $ 5,726 (24%) $14,26 $ 14,432 (1%)
Services & other 10,611 8,577 24% 32,032 27,120 18%
Maintenance 7,127 7,175 (1%) 21,121 20,332 4%
-------- -------- ---- ------ -------- ---
Total Revenues 22,073 21,478 3% 67,414 61,884 9%
-------- -------- ---- ------ -------- ---
Cost of Revenues:
License 1,386 1,415 (2%) 4,621 4,474 3%
Services & other 7,246 6,022 20% 22,520 18,965 19%
Maintenance 1,940 1,823 6% 5,581 5,391 4%
Write-down of capitalized
software development
costs 1,196 -- nm 1,196 -- nm
-------- -------- ---- ------ -------- ---
Total Cost of Revenues 11,768 9,260 27% 33,918 28,830 18%
-------- -------- ---- ------ -------- ---
Gross Margin 10,305 12,218 (16%) 33,496 33,054 1%
-------- -------- ---- ------ -------- ---
Operating expenses:
Research and development 2,237 2,408 (7%) 7,131 7,036 1%
Less: capitalized
development (480) (495) (3%) (1,635) (1,678) (3%)
Sales and marketing 4,085 3,560 15% 11,298 10,600 7%
General and administrative 2,813 3,694 (24%) 9,574 10,430 (8%)
Acquisition related
amortization of
intangibles 88 88 0% 263 263 0%
-------- -------- ---- ------ -------- ---
Total Operating Expenses 8,743 9,255 (6%) 26,631 26,651 0%
-------- -------- ---- ------ -------- ---
Operating Earnings 1,562 2,963 (47%) 6,865 6,403 7%
-------- -------- ---- ------ -------- ---
Interest Income & Other,
Net 143 1,423 (90%) 2,722 3,494 (22%)
-------- -------- ---- ------ -------- ---
Earnings Before Income Taxes
and Minority Interest 1,705 4,386 (61%) 9,587 9,897 (3%)
Income Tax Expense 461 1,635 (72%) 3,397 3,813 (11%)
Minority Interest Expense 107 248 (57%) 557 513 9%
-------- -------- ---- ------ -------- ---
Net Earnings $ 1,137 $ 2,503 (55%) $ 5,633 $ 5,571 1%
-------- -------- ---- ------ -------- ---
Earnings per common share: (1)
Basic $ 0.04 $ 0.10 (60%) $ 0.22 $ 0.23 (4%)
======== ======== ==== ====== ======== ===
Diluted $ 0.04 $ 0.10 (60%) $ 0.21 $ 0.22 (5%)
======== ======== ==== ====== ======== ===
Weighted average number of common shares outstanding:
Basic 25,562 24,676 25,406 24,573
Diluted 26,449 25,859 27,125 25,693
Reconciliation of Adjusted
Net Earnings:
Net Earnings $ 1,137 $ 2,503 $ 5,633 $ 5,571
Acquisition related
amortization of
intangibles (2) 64 55 170 162
Stock-based compensation (2) 158 121 372 390
Write-down of capitalized
software development
costs (2) 873 -- 773 --
-------- -------- ---- ------ -------- ---
Adjusted Net Earnings $ 2,232 $ 2,679 (17%) $ 6,948 $ 6,123 13%
======== ======== ==== ====== ======== ===
Adjusted Net Earnings per
Diluted Share $ 0.08 $ 0.10 (20%) $ 0.26 $ 0.24 8%
======== ======== ==== ====== ======== ===
(1) - Basic per share amounts are the same for Class A and Class B shares.
Diluted per share amounts for Class A shares are shown above. Diluted per share
for Class B shares under the two-class method are $0.04 and $0.10 for the three
months ended January 31, 2008 and 2007 and $0.22 and $0.23 for the nine months
ended January 31, 2008 and 2007.
(2) - Tax affected nm- not meaningful
AMERICAN SOFTWARE, INC.
Consolidated Balance Sheet Information
(In thousands)
(Unaudited)
January 31, April 30,
2008 2007
-------- --------
Cash and Short-term investments $ 74,896 $ 72,769
Accounts Receivable:
Billed 12,559 12,489
Unbilled 4,815 3,860
-------- --------
Total Accounts Receivable, net 17,374 16,349
Prepaids & Other 3,251 2,560
-------- --------
Current Assets 95,521 91,678
PP&E, net 7,032 7,080
Capitalized Software, net 4,652 6,137
Goodwill 11,503 11,210
Other Intangibles 1,157 1,472
Non-current Assets 249 239
-------- --------
Total Assets $120,114 $117,816
======== ========
Accounts Payable $ 1,358 $ 1,138
Other Current Liabilities 5,042 8,853
Dividend Payable 2,301 1,984
Deferred Tax Liability 697 911
Deferred Revenues 15,432 15,441
-------- --------
Current Liabilities 24,830 28,327
Deferred Tax Liability 1,224 1,697
Minority Interest 5,888 5,061
Shareholders' Equity 88,172 82,731
-------- --------
Total Liabilities &
Shareholders' Equity $120,114 $117,816
======== ========