Indus (NASDAQ:IINT)
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Indus International Inc. (NASDAQ: IINT), a leading
Service Delivery Management (SDM) solution provider, today announced
its results of operations for the first quarter ended June 30, 2006.
GAAP net loss for the quarter was $1.7 million, or $0.03 per fully
diluted share, compared to net income of $1.6 million, or $0.03 per
fully diluted share, in the same quarter last year and $2.1 million,
or $0.03 per fully diluted share, in the prior quarter. Non-GAAP
adjusted net loss, which excludes restructuring expenses and benefits
and certain stock compensation expense, was $1.2 million, or $0.02 per
fully diluted share, for the first quarter of fiscal 2007 compared to
adjusted net income of $1.7 million, or $0.03 per fully diluted share,
in the same quarter last year and adjusted net income of $1.9 million,
or $0.03 per fully diluted share, in the prior quarter. A
reconciliation of adjusted net income (loss) is included as a
supplemental attachment to this press release.
First Quarter Financial Results and Other Achievements for the
Quarter:
-- Total revenue for the first quarter of fiscal 2007 was $27.8
million, compared to $33.6 million in the same quarter last
year and $31.9 million in the prior quarter.
-- Revenue from software license fees totaled $2.6 million,
compared to $6.6 million in the same period a year ago and
$5.1 million in the prior quarter.
-- Cash, cash equivalents and restricted cash decreased $4.1
million to $38.8 million at June 30, 2006, from $42.9 million
at March 31, 2006.
-- The Company secured new customers in the quarter including
EDS, Eastern Municipal Water District and Defensie Telematica
Organisatie ("DTO"), the internal IT organization supporting
the Dutch Army.
-- The Company continued to expand solutions with existing
customers, including GE Plastics, BC Hydro, Charlotte County,
New York City Department of Education and Portland General
Electric.
Executive Commentary
"While we are disappointed in the timing of software license sales
to certain large organizations, we continue to see positive momentum
with our Service Delivery Management strategy in both the utility and
non-utility markets," said Indus President and CEO Greg Dukat. "We
continue to believe our comprehensive offering supporting the
management of customers, assets and field service in an integrated
manner brings strategic value to our customers and prospects and
represents a sound strategy for Indus."
Business Outlook
Indus previously provided diluted earnings per share guidance for
fiscal year 2007. The fiscal year 2007 GAAP diluted earnings per share
includes the impact of adopting SFAS 123(R) and certain restructuring
benefits and expenses. As described below, the non-GAAP adjusted
diluted earning per share excludes restructuring expenses and benefits
and certain stock compensation expense. A full reconciliation of GAAP
to non-GAAP diluted earnings per share is included in the supplemental
attachments to this release. For the fiscal year ending on March 31,
2007, the company currently projects GAAP net income to fall within a
range of $0.12 to $0.18 per fully diluted share, and non-GAAP adjusted
net income to fall within a range of $0.17 and $0.23 per fully diluted
share. These projections assume the company will not be subject to
income taxes and that there are no significant changes to the current
general economic environment and the capital spending environments
within our markets over the course of the year.
Adoption of New Accounting Pronouncement:
Indus adopted Statement of Financial Accounting Standards No.
123(R) ("SFAS 123(R)"), Share-Based Payment, in the first quarter of
fiscal year 2007, using the modified prospective transition method,
which does not require restatement of prior periods presented. The
adoption of SFAS 123(R) increased our GAAP diluted loss per share for
the first quarter of fiscal year 2007 by $0.01. The Company estimates
the accounting required by SFAS 123(R) will reduce fiscal year 2007
GAAP diluted earnings per share by approximately $0.05. This estimate
is dependent upon a number of variables such as the number of options
awarded, cancelled or exercised and fluctuations in the Company's
share price during the year.
GAAP Versus Non-GAAP Presentation
The information presented in this press release includes financial
measures using accounting principles generally accepted in the U.S.
("GAAP") and using adjustments to GAAP. In particular, we have shown
certain GAAP measures adjusted to eliminate restructuring and
settlement benefits and expenses incurred under restructuring plans
over the last few years by the Company to bring its operating expenses
more in line with its operations, as well as stock compensation
expenses incurred during the period related to our adoption of SFAS
123(R). We have presented such non-GAAP financial measures because our
management believes that they provide meaningful information regarding
those aspects of the Company's current operating performance that it
can manage. Consequently, management uses these measures in our
internal reporting, planning and compensation systems and to view
trends and changes in operating performance excluding the effects of
certain items that do not correlate to operating expenses of the
Company's continuing operations. As a result, our public disclosure of
these measures enables investors to evaluate our operating performance
in a manner consistent with that used by management. We also believe
that these measures are helpful for a period-to-period comparison of
our results and are frequently used by securities analysts, investors
and other interested parties to compare the performance of companies
in our industry. These non-GAAP measures should not be used as a
substitute for measures calculated in accordance with GAAP and may not
be directly comparable to similarly titled measures of other
companies. This release should be read in conjunction with our Form
8-K earnings release filing for this quarter ended June 30, 2006. A
full reconciliation of our GAAP financial measures to non-GAAP
adjustments is included in the supplemental attachment to this
release.
Investor Call
As previously announced, Indus will conduct an investor conference
call to discuss the Company's results and other matters related to the
Company at 11:00 a.m. EDT today. Investors may access the conference
call over the Internet via the Company's Website (investor.indus.com),
or via telephone by dialing 877-412-8086 (International callers dial
973-582-2842). Those listening via the Internet should go to the site
15 minutes early to register, download and install any necessary audio
software.
For those who cannot listen to the live broadcast, a replay will
be available through August 15, 2006, by dialing 877-519-4471
(international callers dial 973-341-3080) and entering conference ID #
7638963; or by going to the Company's Website (Investor.Indus.com).
Like most companies, Indus will be taking live questions from
securities analysts and institutional portfolio managers, but the
complete call is open to all interested parties on a listen-only
basis. Furthermore, individual investors may submit questions at any
time prior to and during the call by sending an email to
investorqa@indus.com.
About Indus International
Indus is a leading Service Delivery Management (SDM) solution
provider, helping clients in a broad array of industries optimize the
management of their customers, workforce, spare parts inventory, tools
and documentation in order to maximize performance and customer
satisfaction while achieving significant cost savings. Indus customer,
asset and workforce management software products, professional
services and hosted service offerings improve our clients'
profitability by reducing costs, increasing capacity and
competitiveness, improving service to their customers, facilitating
billing for services and ensuring regulatory compliance. Indus
solutions have been purchased by more than 400 companies in more than
40 countries, representing diverse industries -- including
manufacturing, utilities, telecommunications, government, education,
transportation, facilities and property management, high tech,
consumer packaged goods and more. For more information, visit our
Website at http://www.indus.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
This press release contains statements, estimates or projections
that are not historical in nature and that may constitute
"forward-looking statements" as defined under U.S. federal securities
laws. These statements include, but are not limited to, estimates of
GAAP earnings per share and non-GAAP adjusted earnings per share for
the fiscal year ending March 31, 2007, as well as statements regarding
the Company's Service Delivery Management strategy. These statements,
which speak only as of the date given, are subject to certain risks
and uncertainties that could cause actual results to differ materially
from our Company's historical experience and our expectations or
projections. These risks include, but are not limited to, projected
growth in the emerging service delivery management market, market
acceptance of our service delivery management strategy, current market
conditions for our products and services, our ability to close
licensing transactions for which we have been selected or we are
negotiating arrangements, our ability to achieve growth in our asset
management, customer management and service suite offerings, market
acceptance and the success of our new products and enhancements and
upgrades to our existing products, the success of our product
development strategy, our competitive position, the ability to
establish and retain partnership arrangements, our ability to develop
our indirect sales channels, changes in our executive management team,
uncertainty relating to and the management of personnel changes, the
ability to realize the anticipated benefits of our restructurings,
timely development and introduction of new products, releases and
product enhancements, current economic conditions, heightened security
and war or terrorist acts in countries of the world that affect our
business, and other risks identified from time-to-time in the
Company's SEC filings. Investors are advised to consult the Company's
filings with the SEC, including its fiscal 2006 Annual Report on Form
10-K filed with the SEC, for a further discussion of these and other
risks.
Indus is a registered trademark of Indus International Inc. Other
company and product names may be trademarks of the respective
companies with which they are associated.
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INDUS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
June 30, 2006 March 31, 2006
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 33,200 $ 37,165
Restricted cash 2,670 2,793
Billed accounts receivable, net 17,245 14,020
Unbilled accounts receivable 5,840 6,257
Other current assets 3,813 3,683
-------------- --------------
Total current assets 62,768 63,918
Property and equipment, net 26,075 26,990
Capitalized software, net 3,447 3,760
Goodwill 7,442 7,442
Acquired intangible assets, net 8,708 9,066
Restricted cash, noncurrent 2,976 2,976
Other assets 707 681
-------------- --------------
Total assets $ 112,123 $ 114,833
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 767 $ 767
Accounts payable 4,570 3,836
Accrued liabilities 13,384 14,050
Deferred revenue 28,829 30,234
-------------- --------------
Total current liabilities 47,550 48,887
Income taxes payable 2,683 2,553
Mortgage and other liabilities 12,392 13,312
Stockholders' equity:
Common stock 59 59
Additional paid-in capital 163,671 163,218
Treasury stock, at cost - -
Deferred compensation - (480)
Accumulated deficit (114,870) (113,142)
Accumulated other comprehensive income 638 426
-------------- --------------
Total stockholders' equity 49,498 50,081
-------------- --------------
Total liabilities and
stockholders' equity $ 112,123 $ 114,833
============== ==============
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INDUS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share data)
Three Months Ended
June 30,
-----------------------------
2006 2005
-------------- --------------
Revenue:
Software license fees $ 2,646 $ 6,603
Services:
Support, outsourcing and hosting 14,787 14,285
Consulting, training and other 10,336 12,733
-------------- --------------
Total revenue 27,769 33,621
-------------- --------------
Cost of revenue:
Software license fees 444 680
Services:
Support, outsourcing and hosting 3,514 3,452
Consulting, training and other 8,707 9,291
-------------- --------------
Total cost of revenue 12,665 13,423
-------------- --------------
Gross margin 15,104 20,198
-------------- --------------
Operating expenses:
Research and development 6,557 7,836
Sales and marketing 6,863 6,942
General and administrative 3,716 3,804
Restructuring expenses 16 43
-------------- --------------
Total operating expenses 17,152 18,625
-------------- --------------
Operating (loss) income (2,048) 1,573
Other income, net 278 56
-------------- --------------
Pre-tax (loss) income (1,770) 1,629
(Benefit) provision for income taxes (42) 16
-------------- --------------
Net (loss) income $ (1,728) $ 1,613
============== ==============
Net Loss) income per share:
Basic $ (0.03) $ 0.03
============== ==============
Diluted $ (0.03) $ 0.03
============== ==============
Shares used in computing per share data:
Basic 58,600 57,624
Diluted 58,600 58,816
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INDUS INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In Thousands, except per share data)
Three Months Ended
June 30,
---------------------------------
2006 2006
GAAP Adjustments Non-GAAP
-------- ----------- --------
Revenue:
Software license fees $ 2,646 - $ 2,646
Services:
Support, outsourcing and hosting 14,787 - 14,787
Consulting, training and other 10,336 - 10,336
-------- ----------- --------
Total revenue 27,769 - 27,769
-------- ----------- --------
Cost of revenue:
Software license fees 444 - 444
Services:
Support, outsourcing and hosting 3,514 (26) (a) 3,488
Consulting, training and other 8,707 (63) (a) 8,644
-------- ----------- --------
Total cost of revenue 12,665 (89) 12,576
-------- ----------- --------
Gross margin 15,104 89 15,193
-------- ----------- --------
Operating expenses:
Research and development 6,557 (103) (a) 6,454
Sales and marketing 6,863 (151) (a) 6,712
General and administrative 3,716 (188) (a) 3,528
Restructuring expenses 16 (16) (b) -
-------- ----------- --------
Total operating expenses 17,152 (458) 16,694
-------- ----------- --------
Operating (loss) income (2,048) 547 (1,501)
Other income, net 278 - 278
-------- ----------- --------
Pre-tax (loss) income (1,770) 547 (1,223)
(Benefit) provision for income taxes (42) - (42)
-------- ----------- --------
Net (loss) income $(1,728) $ 547 $(1,181)
======== =========== ========
Net Loss) income per share:
Basic $ (0.03) $ 0.01 $ (0.02)
======== =========== ========
Diluted $ (0.03) $ 0.01 $ (0.02)
======== =========== ========
Shares used in computing per share data:
Basic 58,600 58,600 58,600
Diluted 58,600 58,600 58,600
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INDUS INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In Thousands, except per share data)
Three Months Ended
June 30,
---------------------------------
2005 2005
GAAP Adjustments Non-GAAP
-------- ----------- --------
Revenue:
Software license fees $ 6,603 - $ 6,603
Services:
Support, outsourcing and hosting 14,285 - 14,285
Consulting, training and other 12,733 - 12,733
-------- ----------- --------
Total revenue 33,621 - 33,621
-------- ----------- --------
Cost of revenue:
Software license fees 680 - 680
Services:
Support, outsourcing and hosting 3,452 - 3,452
Consulting, training and other 9,291 - 9,291
-------- ----------- --------
Total cost of revenue 13,423 - 13,423
-------- ----------- --------
Gross margin 20,198 - 20,198
-------- ----------- --------
Operating expenses:
Research and development 7,836 - 7,836
Sales and marketing 6,942 - 6,942
General and administrative 3,804 - 3,804
Restructuring expenses 43 (43) (b) -
-------- ----------- --------
Total operating expenses 18,625 (43) 18,582
-------- ----------- --------
Operating (loss) income 1,573 43 1,616
Other income, net 56 - 56
-------- ----------- --------
Pre-tax (loss) income 1,629 43 1,672
(Benefit) provision for income taxes 16 - 16
-------- ----------- --------
Net (loss) income $ 1,613 $ 43 $ 1,656
======== =========== ========
Net (loss) income per share:
Basic $ 0.03 $ 0.00 $ 0.03
======== =========== ========
Diluted $ 0.03 $ 0.00 $ 0.03
======== =========== ========
Shares used in computing per share data:
Basic 57,624 57,624 57,624
Diluted 58,816 58,816 58,816
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INDUS INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(a) The Company adopted SFAS 123(R) on April 1, 2006, using the
modified prospective transition method. SFAS 123(R) requires us to
recognize compensation costs for all share-based payments.
Previously we did not record compensation expense for share-based
payments, except for performance-based options and restricted
stock awards which were accounted for in accordance with APB
Opinion #25. The adjustments in the three month period ended June
30, 2006, to cost of services, research and development, sales and
marketing and general and administrative expense represent stock
compensation expense recorded during the period for time vested
stock option grants and the employee stock purchase plan pursuant
to SFAS 123(R). These adjustments do not include compensation
expense recorded for restricted stock and performance-based
options, which accounted for $70,000 in the first quarter of
fiscal year 2007. The first quarter of fiscal 2006 did not include
any expense for restricted stock or performance based options.
Stock compensation expense increased by $0.5 million as a result
of our adoption of SFAS 123(R).
Actual stock option expense recorded for the first quarter of
fiscal 2007 as well as proforma expense for the first quarter of
fiscal 2006, as if the Company had previously adopted the new
statement on April 1, 2005 is presented below.
Three Months Ended
June 30,
2006 2005
-------------- --------------
Stock option and employee stock purchase
plan expense 531,000 868,000
Restricted stock and performance based
option expense 70,000 -
-------------- --------------
Total stock option expense 601,000 868,000
============== ==============
-------------- --------------
Diluted EPS impact $ 0.01 $ 0.01
============== ==============
(b) Adjustments eliminate expense for previous restructuring
initiatives related to excess lease costs for our vacated office
space. We have presented such non-GAAP disclosures because we
believe they allow management to view trends and changes in
operating performance excluding the effects of certain items, they
are helpful for a period-to-period comparison of our results and
they are frequently used by securities analysts, investors and
other interested parties, in addition to and not in lieu of GAAP
results, to compare the performance of companies.
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