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ENGHOUSE SYSTEMS LTD - Unaudited Fourth Quarter and Year-end Results for Fiscal 1999Toronto, Ontario, Dec. 03, 1999 (Market News Publishing via COMTEX) -- Enghouse Systems Limited announced its unaudited financial results for the fourth quarter and fiscal year ended October 31, 1999.Revenue for the year ended October 31, 1999 was $19.8 million, compared to $21.1 million last year. Net income for the year was $5.0 million, or $0.56 per share, compared to $7.2 million, or $0.85 per share, in fiscal 1998. For the fourth quarter ended October 31, 1999, revenue increased 61 per cent to $5.4 million, from $3.3 million in the same quarter last year. Revenue from software licenses was $4.1 million, or 76.0 per cent of total revenue, revenue from maintenance was $1.1 million, or 20.5 per cent of total revenue, and revenue from consulting was $183,000, or 3.5 per cent of total revenue. Gross margins remained strong at 95.8 per cent of sales, reflecting the substantial product revenue mix. Net earnings were $1.4 million, or $0.16 per share, compared to $1.6 million, or $0.19 per share, in the fourth quarter of fiscal 1998. At year end, the balance sheet remained very strong. Working capital was $32.9 million, up from $29.3 million in fiscal 1998. Notably, the cash balance increased 8.5 per cent to $35.8 million from $33.0 million the year before. Cash flow from operations for the year was $5.3 million. The Company continues to have no debt. During the fourth quarter, Enghouse announced a significant $12-million agreement with IBM to supply additional GeoNet(TM) software licenses. Approximately $3.5 million of license revenue was recognized in the quarter, with the balance of the order expected to be earned early in the next fiscal year. Combined with previous purchases from IBM, this follow-on order confirms that GeoNet(TM) is the world's leading GIS core engine for the telecommunications industry. Further progress made in the quarter relating to the telecommunications sector included continued development of the TELCOWORKS(TM) and CATVWORKS(TM) applications, and the soon to be released Enghouse Web product that will Internet-enable Enghouse and customer-developed, spatial network asset management solutions. On the utility side of the business, Enghouse strengthened its POWERWORKS(TM) product portfolio with the acquisition of the Seattle-based Tellus division of ConneXt Inc. in mid September, thereby adding leading edge outage management, distribution systems design and AM/FM products. Software license revenues during the quarter include the sale of these new acquired products both to existing customers and net new customer wins. Additional achievements in the utility sector included repeat GeoNet(TM) license sales to PowerCo in New Zealand, and Gavle Energi in Sweden through Enghouse's Swedish business partner ab SOS. Enghouse also strengthened its Professional Partner network with the signing of Fitzroy Worley Ltd in New Zealand. Fitzroy Worley Ltd., a leading engineering services company, is expected to build Enghouse's market presence in the Australasia region. "Fiscal 1999 was a disappointing year in terms of revenue and earnings growth," said Michael Ford, Chief Executive Officer of Enghouse Systems Limited. "Existing and potential customers focused on maintaining overall IT stability required for Year 2000 compliance, an effect that will impact our industry into the first quarter of fiscal 2000. Additionally, consolidation activities in the telecommunications and cable television industries continued, causing potential customers to defer major software purchases as they reconfigure their organizations. However, in fiscal 1999, we focused on strengthening our competitive position in anticipation of renewed demand. This was accomplished by expanding our product offerings, implementing the WORKS(TM) branding strategy, increasing our visibility in the marketplace, building new business partnerships around the world, and adding key skills to our innovative and talented team with a modest number of employee additions. Enghouse is well positioned to grow market share and improve financial performance as industry activity revives, thereby delivering increased value to shareholders." Tony Murphy, President and Chief Operating Officer of Enghouse Systems Limited added, "Telecommunication and electric utility companies are searching for unique ways to enhance their competitive positions in a rapidly changing industry. Increasingly, spatial data management is mission critical to these orgqnmzations, as well as a central component in their overall IT strategies. Enghouse's advanced software solutions are poised to continue to play an important role in helping companies manage and maintain network assets, and meet new challenges." Year 2000 Enghouse Systems Limited has assessed all mission critical systems, and completed all remediation, internal and external testing, implementation, and company-wide testing. The Company continues to monitor and encourage the Year 2000 compliance of critical suppliers and other third parties interacting with the Company, and has a contingency plan in place in the possible event of a Year 2000 systems failure. Enghouse is committed to providing timely solutions to the Year 2000 needs of customers, and has taken all appropriate measures to ensure the Year 2000 compliance of Enghouse products and subsequent releases, services and supported applications. As no testing process is capable of testing all possible situations, each user of Enghouse products must test Year 2000 capabilities in relation to specific third party application development, and operating environments. While management will continue to monitor the Company's systems, products, suppliers, third parties, and customers to ensure as smooth a transition as possible, there can be no assurance that Year 2000 issues have been fully resolved, or that a systems failure will not have an adverse impact on Enghouse's operations, or financial results. For more information on our Year 2000 initiatives, please visit our web site at www.enghouse.com Enghouse Systems Limited is a Canadian-based software engineering company that develops GIS (Geographic Information Systems) based solutions for the telecommunications, cable TV, and utility industries. Enghouse products provide spatial asset management solutions to hundreds of customers globally by offering a collection of world-class robust applications under the trade names, TELCOWORKS(TM), POWERWORKS(TM), CATVWORKS(TM), and GASWORKS(TM). www.enghouse.com
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