Segue (NASDAQ:SEGU)
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Segue Software, Inc. (NASDAQ-CM: SEGU), a leader in
Software Quality Optimization(TM) (SQO(TM)), today announced financial
results for the fourth quarter and fiscal year 2005 ended December 31,
2005. In a separate release, Segue announced that it has signed a
definitive agreement to be acquired by Borland Software Corporation
(NASDAQ NM: BORL).
Net revenues for the fourth quarter totaled $10.1 million, an
increase of 19% over $8.5 million reported in the fourth quarter of
2004. Software license revenues increased 24% over the same period to
$4.7 million. Net income applicable to common shareholders was $1.1
million, or $0.09 per diluted share, as compared to $459,000, or $0.04
per diluted share for the quarter ended December 31, 2004.
For fiscal year 2005 the Company recorded net revenues of $36.4
million, up 10% from 2004, and software license revenues of $15.9
million, up 9% from 2004. Net income applicable to common shareholders
was $2.9 million, or $0.25 per diluted share, as compared to $1.7
million, or $0.15 per diluted share, for 2004.
Segue closed fiscal year 2005 with a strong cash position of $14.5
million, up from $11.0 million at the beginning of the year, deferred
revenues of $12.1 million, up from $10.5 million a year ago, and no
long-term debt.
Borland Conference Call Information
As a result of the acquisition, Segue has cancelled its earnings
conference call and webcast scheduled for today, Wednesday, February
8, 2006 at 8:30 a.m. EST. Borland will hold a conference call and
webcast to discuss recent announcements today, Wednesday, February 8,
2006 at 2:00 pm EST. To access the live webcast of this conference
call, please visit the Investor Relations section of Borland's website
at least 30 minutes prior to the scheduled time to download any
necessary audio or plug-in software. A replay will be available
approximately two hours after the conference call ends and will be
available until February 23, 2006, at 12:00 a.m. PST. Please dial
1.800.405.2236 or +1.303.590.3000, passcode 11050769 to access the
replay. The archived webcast will also be available on Borland's
website.
About Segue Software
Segue Software, Inc. (NASDAQ-CM: SEGU) is a global expert in
delivering solutions to define, measure, manage and improve software
quality throughout the entire software application lifecycle. Segue's
Software Quality Optimization(TM) (SQO(TM)) solutions help companies
reduce business risk, ensure the deployment of high quality software
and increase return on investment. Leading businesses around the
world, including many of the Fortune 500, rely on Segue's innovative
Silk family of products to protect their business service levels,
competitive edge and brand reputation. Headquartered in Lexington,
Mass., with offices across North America, Europe and Asia, Segue can
be reached at +1-781-402-1000 or www.segue.com.
This press release may contain forward-looking statements,.
Forward-looking statements are statements that contain predictions or
projections of future events or performance, and often contain words
such as "anticipates", "can", "estimates", "believe", "expects",
"projects", "will", "might", or other words indicating a statement
about the future. The Company notes that any such forward-looking
statements are subject to change and are not guarantees of future
performance, and that actual results may differ materially from any
such predictions or projections, based on various important factors
and including, without limitation, the Company's and Borland's ability
to consummate the transaction; the conditions to the completion of the
transaction may not be satisfied, or the regulatory approvals required
for the transaction may not be obtained on the terms expected or on
the anticipated schedule; and the parties' ability to meet
expectations regarding the timing, completion and accounting of the
merger; the possibility that the parties may be unable to achieve
expected synergies and operating efficiencies in the merger within the
expected time-frames or at all and to successfully integrate the
Company's operations into those of Borland's; such integration may be
more difficult, time-consuming or costly than expected; revenues
following the transaction may be lower than expected; operating costs,
customer loss and business disruption (including, without limitation,
difficulties in maintaining relationships with employees, customers,
clients or suppliers) may be greater than expected following the
transaction; the retention of certain key employees at the Company,
the ability of the Company to continue to achieve positive cash flow
and sustain profitability in this difficult economic and business
climate; the ability of the Company to close large enterprise orders;
the Company's transition to a new management team; the timing and
success of introductions of our new products; market acceptance of
recently-introduced products (including SilkCentral Test Manager 8.0)
and updated releases; the effectiveness of our additional distributors
and resellers; growth in license revenue; new products and
announcements from other companies; the Company's continued access to
capital; and changes in technology and industry standards. Additional
information on the factors that could affect the Company's business
and financial results is included in the Company's periodic reports
filed with the Securities and Exchange Commission.
Segue and the Segue logo are registered trademarks and Software
Quality Optimization and SQO are trademarks of Segue Software, Inc.
All other marks are the property of their respective owners.
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Segue Software, Inc.
Consolidated Condensed Balance Sheets
(In thousands, except per share data)
(Unaudited)
December 31, December 31,
2005 2004
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 14,495 $ 11,028
Accounts receivable, net of allowances
of $317 and $281, respectively 8,775 6,421
Other current assets 863 1,013
------------- -------------
Total current assets 24,133 18,462
Property and equipment, net 753 749
Goodwill, net 1,506 1,506
Other assets 44 604
------------- -------------
Total assets $ 26,436 $ 21,321
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 637 $ 564
Accrued compensation and benefits 1,794 1,602
Accrued lease obligations on excess
space 669 1,059
Accrued expenses 817 1,134
Deferred revenue 12,055 10,524
------------- -------------
Total current liabilities 15,972 14,883
Stockholders' equity:
Preferred stock, par value $.01 per
share; 9,000 shares authorized; 0 and
921 shares of Series B and 0 and 570
shares of Series C preferred stock
issued and outstanding, respectively - 4,726
Common stock, par value $.01 per share;
30,000 shares authorized; 12,113 and
10,195 shares issued, respectively 120 102
Additional paid-in capital 63,643 57,959
Cumulative translation adjustment 221 429
Unearned stock-based compensation (24) (47)
Accumulated deficit (52,896) (56,131)
------------- -------------
11,064 7,038
Less treasury stock, at cost, 145 shares (600) (600)
------------- -------------
Total stockholders' equity 10,464 6,438
------------ -------------
Total liabilities and
stockholders' equity $ 26,436 $ 21,321
============= =============
Segue Software, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except per share data)
Unaudited
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
--------- --------- --------- ---------
Revenue:
Software $ 4,650 $ 3,706 $ 15,894 $ 14,644
Services 5,475 4,857 20,858 18,516
--------- --------- --------- ---------
Gross revenue 10,125 8,563 36,752 33,160
Less vendor consideration to
a customer (66) (50) (314) (154)
--------- --------- --------- ---------
Net revenue 10,059 8,513 36,438 33,006
Cost of revenue:
Cost of software 122 93 419 352
Cost of services 1,186 1,124 4,744 4,947
--------- --------- --------- ---------
Total cost of revenue 1,308 1,217 5,163 5,299
Gross margin 8,751 7,296 31,275 27,707
Operating expenses:
Sales and marketing 4,699 3,580 15,881 14,019
Research and development 1,922 1,775 7,365 6,610
General and administrative 1,345 1,307 5,112 4,711
--------- --------- --------- ---------
Total operating expenses 7,966 6,662 28,358 25,340
--------- --------- --------- ---------
Income from operations 785 634 2,917 2,367
Other income, net 15 - 15 15
Interest income, net 105 33 295 93
--------- --------- --------- ---------
Income before provision for
income taxes 905 667 3,227 2,475
Provision (benefit) for income
taxes 46 (28) (8) 35
--------- --------- --------- ---------
Net income 859 695 3,235 2,440
Preferred stock dividend-in-
kind 194 (236) (364) (763)
--------- --------- --------- ---------
Net income applicable to
common shares $ 1,053 $ 459 $ 2,871 $ 1,677
========= ========= ========= =========
Net income per common share -
Basic $ 0.10 $ 0.05 $ 0.28 $ 0.17
Net income per common share -
Diluted $ 0.09 $ 0.04 $ 0.25 $ 0.15
Weighted average common shares
outstanding - Basic 10,627 10,028 10,300 9,932
Weighted average common shares
outstanding - Diluted* 11,714 10,967 11,445 10,834
* The assumed conversion of preferred shares into common shares is not
included because their inclusion would be anti-dilutive.
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