IINT Indus

Indus International Inc. (NASDAQ: IINT), a leading Service Delivery Management (SDM) solution provider, today announced its results of operations for its third quarter ended December 31, 2005. The Company reported its fifth consecutive quarter of profitability with total revenues for the third quarter of $34.7 million, an increase of 3 percent when compared to $33.7 million in the same quarter last year. Software license revenues totaled $8.1 million, an increase of 15 percent compared to the $7.0 million in software license revenues during the same period a year ago. Net income for the third quarter of fiscal 2006 increased 14 percent to $2.9 million, or $0.05 per fully diluted share, from $2.6 million, or $0.04 per fully diluted share in the same quarter last year. The cash balance as of December 31, 2005, was $39.3 million, an increase of $0.8 million from September 30, 2005. Adjusted net income for the third quarter of fiscal 2006, which excludes restructuring and settlement expenses, was $3.0 million, or $0.05 per fully diluted share, compared to $1.6 million, or $0.03 per fully diluted share, in the third quarter of last year. A reconciliation of adjusted net income is included with the financial statements that are part of this press release. Key Quarterly Financial and Business Highlights: -- Adjusted net income increased 89 percent, or $1.4 million, to $3.0 million for the quarter ended December 31, 2005, from $1.6 million in the third quarter of last year. -- Adjusted EPS increased to $0.05 per diluted share for the quarter ended December 31, 2005, from $0.03 per diluted share. -- Cash increased $0.8 million from September 30, 2005, to $39.3 million, and increased $5.4 million in the nine months ended December 31, 2005. -- The Company signed a multimillion-dollar contract with an existing customer which standardized its nuclear fleet on Indus, replacing competing products in several plants. -- A significant contract was signed with a new utility customer in the Central European region, which the Company has identified as a key growth area. -- The Company continued to expand solutions with existing customers, including Georgia Pacific, NexInnovations, PAKS, Platte River, Progress Energy and Southern Company, among others. -- The Company achieved 31-percent growth in license revenue over the previous quarter and 15-percent growth over the same quarter last year. -- Gross margin increased to 62 percent of revenues in the third quarter of fiscal 2006, compared to 59 percent of revenues for the previous quarter and the same quarter last year. -- The Company achieved 7-percent growth in year-over-year recurring revenue, demonstrating steady customer loyalty. Executive Commentary "I am proud of what Indus has accomplished as we continue to execute in a focused manner on the strategy we set three years ago," said Indus President and CEO Greg Dukat. "This strategy is bearing fruit as evidenced by growing market share within our traditional markets as well as new market segments. Our successful execution and growing opportunities in these areas validates that we are providing the right solutions to the right markets at the right time and are well-positioned for sustained leadership in our target markets." Indus Chief Financial Officer Pat Henn added, "I'm extremely pleased with our performance this quarter in growing license revenues and recurring revenues, while improving our margins in professional services, which helped lead to continued growth in our cash balance. We remain focused on improving profitability and cash flows from operations, and this quarter is another example of success." Business Outlook For our fiscal year ending on March 31, 2006, we currently project adjusted net income, which excludes restructuring charges and benefits, to fall within a range of $0.12 and $0.18 per fully diluted share. A reconciliation of adjusted net income (loss) is included as part of this press release. These projections assume no significant changes to the current general economic environment and the capital spending environments within our markets over the course of the year. 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. EST today. Investors may access the conference call over the Internet via the Company's Website (investor.indus.com), or via telephone by dialing 800-938-0653 (International callers dial 973-321-1100). 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 February 10, 2006, by dialing 877-519-4471 (international callers dial 973-341-3080) and entering conference ID #6893575; 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, estimated operating results for the year ending March 31, 2006, and sustaining leadership in our target markets. 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 achieve growth in our asset management and customer management 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 2005 Annual Report on Form 10-K and the Form 10-Q for the quarter ended December 31, 2005, anticipated to be filed with the SEC on or before February 9, 2006, for a further discussion of these and other risks. 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 expenses as well as subsequent revisions of the estimates used in the determination of such charges which relate to excess lease costs for vacated space and severance costs in the periods shown and discussed herein. We have presented such non-GAAP financial measures because we believe that 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 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. 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. -0- *T INDUS INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) December 31, March 31, 2005 2005 ------------ ----------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 33,205 $ 27,779 Restricted cash 769 194 Billed accounts receivable, net 25,258 17,225 Unbilled accounts receivable 4,329 12,240 Other current assets 3,197 3,672 --------- --------- Total current assets 66,758 61,110 Property and equipment, net 27,698 30,755 Capitalized software, net 4,074 5,014 Goodwill 7,442 7,442 Acquired intangible assets, net 9,428 10,536 Restricted cash, noncurrent 5,293 5,821 Other assets 229 427 --------- --------- Total assets $ 120,922 $ 121,105 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 767 $ 767 Accounts payable 4,432 4,208 Accrued liabilities 19,506 19,213 Deferred revenue 32,171 33,239 --------- --------- Total current liabilities 56,876 57,427 Income taxes payable 2,813 3,137 Mortgage and other liabilities 14,245 20,128 Stockholders' equity: Common stock 59 58 Additional paid-in capital 162,488 165,280 Treasury stock, at cost - (4,681) Deferred compensation (513) - Accumulated deficit (115,204) (121,322) Accumulated other comprehensive income 158 1,078 --------- --------- Total stockholders' equity 46,988 40,413 --------- --------- Total liabilities and stockholders' equity $ 120,922 $ 121,105 ========= ========= *T -0- *T INDUS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended December 31, December 31, ------------------- ------------------ 2005 2004 2005 2004 ------- ------- -------- -------- (As (As restated) restated) (1) (1) Revenue: Software license fees $ 8,075 $ 7,041 $ 20,867 $ 23,016 Services: Support, outsourcing and hosting 15,189 14,153 44,253 44,267 Consulting, training and other 11,480 12,477 36,103 37,506 ------- ------- -------- -------- Total revenue 34,744 33,671 101,223 104,789 ------- ------- -------- -------- Cost of revenue: Software license fees 496 598 1,474 3,248 Services: Support, outsourcing and hosting 3,578 3,875 10,613 13,297 Consulting, training and other 9,047 9,449 27,966 29,402 ------- ------- -------- -------- Total cost of revenue 13,121 13,922 40,053 45,947 ------- ------- -------- -------- Gross margin 21,623 19,749 61,170 58,842 ------- ------- -------- -------- Operating expenses: Research and development 7,403 7,179 22,616 23,246 Sales and marketing 7,533 7,483 20,948 22,429 General and administrative 4,066 3,717 11,814 11,063 Restructuring and settlement expenses 45 (991) 129 10,548 ------- ------- -------- -------- Total operating expenses 19,047 17,388 55,507 67,286 ------- ------- -------- -------- Operating income (loss) 2,576 2,361 5,663 (8,444) Other income (expense), net 247 60 383 (53) ------- ------- -------- -------- Pre-tax income (loss) 2,823 2,421 6,046 (8,497) Provision (benefit) for income taxes (101) (141) (72) 80 ------------------------------------- Net income (loss) $ 2,924 $ 2,562 $ 6,118 $ (8,577) ======= ======= ======== ======== Net income (loss) per share: Basic $ 0.05 $ 0.04 $ 0.11 $ (0.15) ======= ======= ======== ======== Diluted $ 0.05 $ 0.04 $ 0.10 $ (0.15) ======= ======= ======== ======== Shares used in computing per share data: Basic 58,025 57,285 57,800 57,195 Diluted 60,519 57,897 59,658 57,195 (1) As reported on May 10, 2005, the Company restated previously issued financial statements dating back to the fiscal year ended December 31, 2000 to reflect a correction in its accounting practices for leases and leasehold improvements. INDUS INTERNATIONAL, INC. RECONCILIATION OF ADJUSTED NET INCOME (LOSS) (In Thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended December 31, December 31, -------------------- ------------------- 2005 2004 2005 2004 -------- ------- ------- ------- (As (As restated) restated) (1) (1) Reconciliation of adjusted net income (loss) (a): Net income (loss) $ 2,924 $ 2,562 $ 6,118 $(8,577) Restructuring and settlement expenses 45 (991) 129 10,548 Income tax effect - - - - -------- ------- ------- ------- Adjusted net income(a) $ 2,969 $ 1,571 $ 6,247 $ 1,971 ======== ======= ======= ======= Adjusted net income per diluted share(a) $ 0.05 $ 0.03 $ 0.10 $ 0.03 ======== ======= ======= ======= (1) As reported on May 10, 2005, the Company restated previously issued financial statements dating back to the fiscal year ended December 31, 2000 to reflect a correction in its accounting practices for leases and leasehold improvements. (a) The information presented above 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 expenses, as well as subsequent revisions of the estimates used in the determination of such expenses, relating to excess lease costs for vacated office space, severance costs and contract settlement costs. We have presented such non-GAAP financial measures because we believe that 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 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. *T