News | February 13, 2004

Epicor Reports Fourth Quarter And Fiscal Year 2003 Earnings

Source: Epicor Software Corporation

Epicor Software Corporation (Nasdaq: EPIC - News), a leading provider of integrated enterprise software solutions for the midmarket, today reported its financial results for the fourth quarter and year ended December 31, 2003. Total revenues for the fourth quarter were $44.1 million, compared with $36.7 million in the prior year's quarter, up 20%. For the year ended December 31, 2003, revenues totaled $155.4 million compared with revenues of $143.5 million in the prior year, up over 8%.

License revenues were $12.0 million for the fourth quarter compared to $9.8 million in the fourth quarter of 2002 up almost 23%. License revenues for the year were $38.7 million compared with license revenues of $34.2 million for the year 2002, an increase of 13%. Service revenues for the fourth quarter of 2003 were $31.4 million compared with $26.4 million in the fourth quarter of 2002, up 19%. Service revenues for the year were $114.5 million compared with $106.7 million in 2002, up over 7%.

For the fourth quarter, the company reported GAAP net income of $3.5 million or $0.07 per diluted share compared with a net loss of $2.1 million or $0.05 per diluted share in the prior year's period. For the fourth quarter of 2003, adjusted earnings were $6.6 million or $0.13 per diluted share compared with adjusted earnings of $3.7 million or $0.08 per diluted share in the same period last year. Adjusted earnings exclude amortization of capitalized software development costs and acquired intangible assets, stock-based compensation expense and restructuring charges.

For the year 2003, the company reported GAAP net income of $9.3 million or $0.18 per diluted share compared with a net loss of $7.3 million or $0.17 per diluted share reported in the year 2002. For the year, adjusted earnings, as described above, were $20.5 million or $0.41 per diluted share, compared to adjusted earnings of $4.5 million or $0.10 per diluted share for the year 2002.

The company's balance sheet at December 31, 2003 showed cash and cash equivalents of $38.9 million. At year-end, net accounts receivable was $27.1 million and deferred revenues were $37.3 million. Day sales outstanding was 55, up from 51 in the third quarter 2003.

"We executed and delivered profitable growth and significant cash flow in 2003," said chairman, CEO and president, George Klaus. "With increased revenue growth, profitability and cash-generating operations, a number of new products in the marketplace and the planned acquisition of Scala Business Solutions, Epicor is poised to become the largest exclusive midmarket provider with global distribution for diversified solutions in services, distribution and manufacturing sectors." Klaus continued, "I am very excited about our long term growth and profit opportunities."

The company also provided its guidance for the first quarter 2004, with total revenues expected to be in the range of $40 to $41 million. GAAP earnings per diluted share for the first quarter 2004 is expected to be $0.07 with adjusted earnings, as described above, per share of $0.10. The company has also provided an updated outlook for the fiscal year 2004. The company on a standalone basis, provided guidance for $172 to $175 million in revenues, GAAP earnings per diluted share of $0.40 and adjusted earnings, as described above, of $0.52 per diluted share, using a weighted average share count of 52 million shares. Based on the revised timeframe for the offer period to acquire the shares of Scala Business Solutions announced last week on January 23, the company expects annual revenues in 2004 for the combined entity to be approximately $230 million. The companies expect to drive operating efficiencies from the merger predominantly through reducing redundant G&A and facilities and by streamlining the R&D and technical support organizations. Based on the current expected timeframe to close the transaction, operating activities for the combined entity are expected to result in GAAP earnings per diluted share for the year 2004 of approximately $0.40, or neutral to earnings per diluted share, and an accretion of $0.12 cents for Epicor's adjusted earnings per diluted share for fiscal year 2004, or $0.64 (adjusted) per diluted share, in each case using a weighted average share count of 56 million shares.

Fourth Quarter and Fiscal Year Highlights

  • Delivered profitable revenue growth across regions and products
  • Generated approx. $17 million in cash from operations in fiscal year 2003
  • Added over 400 new customers in the year to Epicor's base through organic growth and over 400 through acquisition for a total of over 800 customers
  • Delivered the market's first vertical specific enterprise suite of applications on Web services platform, Epicor for Service Enterprises
  • Entered early access stage and beta schedule of new manufacturing product on Web services platform, Epicor for Manufacturing
  • Successfully executed the integration of ROI Systems acquisition closed in July 2003
  • Announced Planned Acquisition of Scala Business Solutions which would create:
    • The largest exclusive midmarket provider with global distribution of diversified solutions in services, distribution and manufacturing sectors
    • A substantial installed base of over 20,000 customers
    • The most comprehensive midmarket vertical solutions with complimentary functionality
    • The largest Microsoft ISV partner
    • An expanded global presence with scale and distribution capabilities
    • Significant opportunity for operational synergies to increase cash flow and provide Epicor and Scala shareholders increased value through EPS accretion

About Epicor Software Corporation
For 20 years, Epicor has been a recognized leader dedicated to providing integrated enterprise software to midmarket companies around the world. With over 15,000 customers, Epicor has delivered end-to-end, industry-specific solutions that enable companies to immediately improve business operations and build competitive advantage. Epicor's comprehensive suite of integrated software solutions for Customer Relationship Management, Financials, Manufacturing, Supply Chain Management, Professional Services Management and Collaborative Commerce provide the scalability and flexibility to support long-term growth. Epicor's solutions are complemented by a full range of services, providing single point of accountability to promote rapid return on investment and low total cost of ownership. Epicor's worldwide headquarters is located in Irvine, California with offices and affiliates around the world. For more information, visit the company's Web site at www.epicor.com.