Tangram Announces Third Quarter 2003 Results

Tangram Announces Third Quarter 2003 Results 


CARY, N.C., Oct. 29  /PRNewswire-FirstCall/ -- Tangram Enterprise Solutions,
Inc.  (BULLETIN BOARD: TESI) , the global leader for automated IT asset
management, today announced operating results for the third quarter, ending
September 30, 2003.

"Our net cash position for the quarter and for the last nine months has shown
strong and steady improvement, but more importantly, we have some nice
profitability figures for the third quarter," said Norm Phelps, President and
CEO of Tangram. "We are very pleased that the cost containment initiatives we
put in place last year are showing significant results this year, particularly
in reduced operating expenses and improved profitability."

For the quarter ended September 30, 2003, the company reported total revenues of
$2.73 million, compared with $3.03 million in the comparable period in 2002,
which is down ten (10) percent from 2002 however an improvement of five (5)
percent over the second quarter of 2003. The quarter ended with cash and cash
equivalents at $1.41 million on September 30, 2003, a three hundred thirty-seven
(337) percent increase from the beginning of the year. Total operating expenses
declined over twenty-eight (28) percent to $1.50 million from $2.09 million in
the same quarter of 2002.  Net income for the third quarter of 2003 was
$134,000, up from net income of $19,000, for the third quarter of 2002.

"For the last several quarters we have focused our energies on improving our
business in spite of the downturn in technology spending.  While the technology
market is still soft we are pleased with the increases in our service revenues
over the previous three quarters and particularly pleased with the enthusiasm in
the market for our unified Insight solution," said Ron Nabors, Tangram's Senior
Vice President and Chief Marketing Officer.  "We continue to invest in new
products that will bring high value to our customers and further differentiate
Tangram from our competitors."

For the nine months ended September 30, 2003, the company reported total
revenues of $7.61 million, compared with $8.75 million in the comparable period
in 2002.  Net income for the nine-month period ending on September 30, 2003 was
$32,000 versus a Net loss of $1.53 million for the same nine-month period in
2002.  Operating expenses for the nine months period ending September 30, 2003
were $4.69 million, down from $7.30 million in the nine-month period ended
September 30, 2002.  Net cash provided by operating activities improved to $2.51
million for the nine months ended September 30, 2003, compared to $764,000 in
the nine-month period ended September 30, 2002.

This press release contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 (statements that are not historical facts and relate to
future performance) that involve risks and uncertainties.  These forward-looking
statements are not guarantees of the future performance of Tangram and actual
results may vary materially from the results and expectations discussed in this
press release or in any other forward-looking statements made by or on behalf of
the company.  Such forward-looking statements, including statements about the
timing or occurrence of the rebound in spending in the IT asset management
market space, expense control, product revenue opportunities, and growth and
profitability expectations, are based upon information available to management
as of today's date.  There can be no assurance that Tangram will be able to
succeed or capitalize upon the opportunities in the asset management market. 
Tangram's quarterly and annual revenues and operating results are subject to a
number of factors that make estimating its future operating results extremely
uncertain and difficult to predict, particularly in the current downturn in
technology spending.  These factors include: uncertain economic and stock market
conditions that could affect the company's business; unanticipated discovery of
bugs or other technical problems that could impact market acceptance of
Enterprise Insight(R) or Asset Insight(R); competitive forces in the asset
management markets in which Tangram participates; Tangram's reliance on key
personnel to guide its efforts; and other risks identified and described in more
detail in Tangram's SEC filings, including its Form 10-K for the year ended
December 31, 2002 and subsequent filings with the SEC.  While Tangram may elect
to update forward-looking statements at some point in the future, the company
specifically disclaims any obligation to do so, even if estimates change.

About Tangram

Tangram Enterprise Solutions, Inc., is the leading provider of cohesive,
automated IT asset management software and services for large and midsize
organizations across all industries, in both domestic and international markets.
 Tangram's core business strategy and operating philosophy center on delivering
world-class customer care, creating a more personal and productive IT asset
management experience through a phased solution implementation, providing
tailored solutions that support evolving customer needs, and maintaining a
leading-edge technical position.  Today, Tangram's solutions manage more than
two million workstations, servers, and other related assets. Tangram is a
majority owned subsidiary of Safeguard Scientifics, Inc.
(http://www.safeguard.com/) (NYSE:SFE), an operating company creating long-term
value by taking controlling interest in and developing its companies through
superior operations and management.  Safeguard operates businesses that provide
business decision and life science software-based product and service solutions.
  To learn more about Tangram, visit http://www.tangram.com/ or call
1-800-4TANGRAM.

                         Statements of Operations
                               (unaudited)
                 (in thousands, except per share amounts)

                            Three Months Ended          Nine Months Ended
                               September 30                September 30
                             2003        2002          2003          2002

  Revenues
   Licenses and product    $  892        $1,408       $2,327        $3,534
   Services                 1,840         1,626        5,281         5,219
   Total revenues           2,732         3,034        7,608         8,753

  Cost of revenues
   Cost of licenses
    and product                (3)           10           26            41
   Cost of services           369           369          951         1,192
   Amortization of
    software cost             700           513        1,814         1,609
   Total cost of revenues   1,066           892        2,791         2,842
   Gross profit             1,666         2,142        4,817         5,911

  Operating expenses
   Sales and marketing        818         1,195        2,562         3,971
   General and
    administrative            357           522        1,213         1,536
   Research and development   308           277          802         1,217
   Depreciation and
    amortization               16            82          110           252
   Restructuring charge        --            16           --           325
   Total operating
    expenses                1,499         2,092        4,687         7,301

   Income (loss) from
    operations                167            50          130        (1,390)
   Other expense, net         (33)          (31)         (98)         (138)

   Income (loss) before
    income taxes              134            19           32        (1,528)
   Provision for income
    taxes                      --            --           --            --

   Net income (loss)        $ 134        $   19       $   32      $(1,528)

  Per share calculation
   Net income (loss)        $ 134        $   19       $   32      $(1,528)
   Less-preferred
    stock dividend            (72)          (66)        (212)        (197)

   Net loss available to
    common shareholder      $  62        $  (47)      $ (180)     $(1,725)

   Loss per common share
    Basic and diluted       $ 0.00       $(0.00)      $(0.01)     $ (0.09)

   Weighted average number
    of common shares
    outstanding Basic and
    diluted**              19,802        19,802       19,802       19,717

  ** Weighted average number of common shares outstanding on a diluted basis
     for the three and nine-month periods ended September 30, 2003 and 2002
     does not include common stock equivalents because the effect of
     inclusion of the exercise of stock options would be to reduce the loss
     per common share.


                    Condensed Statements of Cash Flows
                              (in thousands)

                                            Nine Months Ended September 30
                                                  2003           2002
                                              (unaudited)     (unaudited)
  Operating Activities
   Net income (loss)                            $    32       $  (1,528)
   Adjustments to reconcile net loss
    to net cash provided by operating
    activities:                                   1,997           1,913
   Cash provided by changes in
    working capital items:                          479             379
   Net cash provided by operating activities      2,508             764
   Net cash used in investing activities           (866)         (1,317)
   Net cash (used in) provided
    by financing activities                        (650)            501

  Net increase (decrease) in
   cash and cash equivalents                    $   992       $     (52)


                         Condensed Balance Sheets
                              (in thousands)

                                   September 30, 2003     December 31, 2002
                                       (unaudited)             (audited)
  Assets:
   Current assets:
   Cash and cash equivalents           $  1,410              $    418
   Accounts receivable, net               1,232                 2,671
   Other                                    290                   296
   Total current assets                   2,932                 3,385

   Property and equipment, net              106                   100
   Intangible assets and other, net       5,386                 6,449

   Total assets                        $  8,424              $  9,934

  Liability and Shareholders' Equity:
   Current portion of
    long-term debt-shareholder         $  1,823                  $467
   Accounts payable and
    accrued expenses                        802                 1,060
   Deferred revenue                       2,622                 3,281
   Total current liabilities              5,247                 4,808

   Long-term debt-shareholders                0                 1,954
   Other long-term liabilities              727                   542

   Total shareholders' equity             2,450                 2,630

   Total liabilities and
    stockholders' equity               $  8,424              $  9,934




All product names are the registered trademarks of their respective owners. 

DATASOURCE: Tangram Enterprise Solutions, Inc.



CONTACT: John N. Nelli, Chief Financial Officer of Tangram Enterprise

Solutions, [phone], ; Brian Strombotne,

[phone], , or John D. Wagner, [phone],

, both of Wagner Public Relations, for Tangram Enterprise

Solutions



Web site:  http://www.tangram.com/

http://www.safeguard.com/ 

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