KING OF PRUSSIA, Pa., Oct. 18, 2001 (PRIMEZONE) -- Neoware Systems (Nasdaq:NWRE), the leading supplier of award-winning software and solutions for the emerging Appliance Computing market, today reported financial results for its fiscal quarter ended September 30, 2001.
Driven by growing demand for thin client appliance solutions by business customers, revenues for the quarter ended September 30, 2001 grew to $5,264,729, an increase of 31% from $4,033,337 for the prior year quarter. Net income for the quarter ended September 30, 2001 was $259,672, or $0.02 per fully diluted share, compared to a net loss of $187,544, or $(0.02) per share in the prior year period.
"We are pleased to report continued, significant revenue growth and profitable operations, especially at a time when many other technology companies are reporting disappointing results," stated Michael Kantrowitz, Neoware's President and CEO. "Like others in our industry, Neoware's sales were negatively impacted in the last few weeks of the quarter. However, even with these effects, our revenues are up 31% from the prior year, and we are solidly profitable with net income of $260,000."
Commenting on the Company's financial condition and its competitive position, Mr. Kantrowitz noted, "We continue to prove that Neoware's unique business model gives us a sustainable competitive advantage, and that our message of cost savings resonates with enterprise customers. With strong, profitable operations, significant cash reserves, and no debt, Neoware has the financial resources to grow our business in this economic climate, both organically and through acquisition."
Financial Highlights
-- Revenues for the first quarter increased 31% over the prior year
quarter to $5,264,729.
-- Gross margin increased to 42% for the first quarter, up from 29%
in the prior year quarter.
-- Net income for the first quarter of $259,672 was $0.03 per basic
share, $0.02 per fully diluted share and 5% of revenue.
-- Inventory on hand decreased to $415,146, or 12 days at quarter end
from $932,162 or 30 days in the prior year quarter, reflecting the
operating benefits of the Company's business model.
-- Sales and marketing expenses increased by 69% from the prior year
quarter, reflecting the Company's investments to develop a
worldwide operation and the additional personnel hired in
connection with the acquisition of the Capio product line. Neoware
now operates from 12 locations throughout the United States and
Europe, and this expansion is substantially complete.
-- Research and development expenses doubled from the prior year
quarter, reflecting the Company's commitment to establish and
maintain technical leadership in its markets.
-- G&A expenses were flat from the prior year quarter, reflecting the
Company's focus on cost containment, and decreased to 10% of
revenues from 13% in the prior year.
-- Cash equivalents and marketable securities increased during the
quarter to approximately $12.5 million with no debt.
Customer Wins
-- During the quarter the Company sold its products across a broad
range of industry segments, including retail, healthcare,
manufacturing, transportation, government and education.
-- Neoware added 87 new customers during the quarter, continuing its
new customer acquisition even during the slow summer months.
Integration of the Capio Product Line
-- During the quarter Neoware completed the integration of the Capio
product
line and sales organization into its overall operations. All Capio
products are now available worldwide from a Neoware-authorized
sales channel.
-- Neoware's innovative Windows CE software is now available for the
Capio product line, and Capio thin clients can now be managed
using Neoware's ezRemote Manager software, providing enterprise-
class remote administration to Capio customers.
"In summary, Neoware's people continue to produce strong results by effectively communicating the benefits of our award-winning products and our unique operating model," Mr. Kantrowitz noted. "We intend to leverage our global reach, strong balance sheet, excellent products and our proven business model to continue to deliver significant benefits to our shareholders, employees and customers. We continue to see positive signs in our market, and feel confident that we will deliver on our guidance of significant revenue growth and profitability for the year."
About Neoware
Neoware provides software and solutions to enable Appliance Computing, a new Internet-based computing architecture targeted at business customers that is designed to be simpler and easier than traditional PC-based computing. Neoware's software and management tools power and manage a new generation of smart computing appliances that utilize the benefits of open, industry-standard technologies to create new alternatives to personal computers used in business and a wide variety of proprietary business devices. Neoware's products are designed to run local applications for specific vertical markets, plus allow access across a network to multi-user Windows servers, Linux servers, mainframes, minicomputers, and the Internet. Computing appliances that run and are managed by Neoware's software offer the cost benefits of industry-standard hardware and software, easier installation, and have lower up-front and administrative costs than proprietary or PC-based alternatives. More information about Neoware can be found on the Web at www.neoware.com or via email at invest@neoware.com. Neoware is based in King of Prussia, Pa.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our position as the leading supplier of software and solutions for the Appliance Computing market, the growth of our business, revenues and profitability, the competitive advantage of our business model, our proprietary software and our technology, the increase in sales of our products in today's business climate due to cost savings associated with our products, the growth of the Appliance Computing market, the increasing demand for our products, continued benefits of our business model to our stockholders, employees and customers due to our proven business model and our competitive advantage. These forward-looking statements involve risks and uncertainties. Factors that could cause actual results to differ materially from those predicted in any such forward-looking statement include Neoware's ability to lower its costs, Neoware's timely development and customers' acceptance of Neoware's Appliance Computing products, pricing pressures, rapid technological changes in the industry, growth of the Appliance Computing market, increased competition, our ability to attract and retain qualified personnel, adverse changes in customer order patterns, adverse changes in general economic conditions in the U. S. and internationally, risks associated with foreign operations and political and economic uncertainties associated with current world events. These and other risks are detailed from time to time in Neoware's periodic reports filed with the Securities and Exchange Commission, including, but not limited to, its report on Form 10-K for its fiscal year ended June 30, 2001.
Neoware is a registered trademark of Neoware Systems, Inc. All other names, products and services are trademarks or registered trademarks of their respective holders.
NEOWARE SYSTEMS, INC
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
September 30, June 30,
2001 2001
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $12,165,500 $11,712,535
Marketable securities 343,333 366,667
Accounts receivable, net 3,335,059 3,502,013
Inventories 415,146 458,736
Prepaid expenses and other 257,582 369,529
Notes receivable 26,072 26,072
----------- -----------
Total current assets 16,542,692 16,435,552
Property and equipment, net 202,280 199,397
Notes receivable 21,549 52,193
Capitalized and purchased
software, net 69,880 77,247
Intangible assets, net 2,021,874 2,024,453
----------- -----------
$18,858,275 $18,788,842
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $1,104,530 $ 935,943
Accrued expenses 1,124,963 1,473,718
Deferred revenue 293,972 289,278
---------- ----------
Total current liabilities 2,523,465 2,698,939
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock -- --
Common stock 10,286 10,280
Additional paid-in capital 24,530,673 24,524,567
Treasury stock (100,000) (100,000)
Accumulated other
comprehensive income
45,790 66,667
Retained earnings (deficit) (8,151,939) (8,411,611)
------------ ------------
Total stockholders' equity 16,334,810 16,089,903
------------ ------------
$ 18,858,275 $ 18,788,842
============ ============
NEOWARE SYSTEMS, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Three Months Ended
September 30, September 30,
2001 2000
------------ ------------
Net revenues $ 5,264,729 $ 4,033,337
Cost of revenues 3,060,589 2,861,755
------------ ------------
Gross profit 2,204,140 1,171,582
------------ ------------
Sales and marketing 1,210,108 714,276
Research and development 330,866 164,827
General and administrative 515,447 519,711
Acquisition costs -- 161,038
------------ ------------
Operating expenses 2,056,421 1,559,852
------------ ------------
Operating income (loss) 147,719 (388,270)
Interest income, net 111,953 200,726
------------ ------------
Net income (loss) $ 259,672 $ (187,544)
============ ============
Basic income (loss) per share $ 0.03 $ (0.02)
============ ============
Diluted income (loss) per share $ 0.02 $ (0.02)
============ ============
Weighted average number of
shares used in basic
earnings per share computation 10,179,851 10,275,163
============ ============
Weighted average number of
shares used in diluted
earnings per share computation 10,596,720 10,275,163
============ ============