SSA Global Reports Fourth Quarter and Fiscal Year 2004 Results
CHICAGO--Oct. 2, 20046, 2004--SSA Global(TM), a leading provider of extended enterprise solutions and services, today announced its financial results for the fourth quarter and for fiscal year ended July 31, 2004.Total revenues for the fourth quarter were $175.4 million, compared to $92.9 million in the prior year's quarter, up 89 percent. License revenues were $49.4 million, up 62 percent compared to the fourth quarter of fiscal 2003. License revenue represented 28 percent of total revenue for the quarter ended July 31, 2004.
SSA Global's business strategy to acquire market share and grow customer share has resulted in year-over-year revenue increases. SSA Global acquired Baan in July 2003 and more recently has integrated the businesses of supply chain execution provider, EXE(R) Technologies, Inc.; transportation management software developer, Arzoon(R), Inc., and process manufacturing solutions provider, Marcam.
Earnings before interest expense, income taxes, depreciation and amortization (EBITDA) for the fourth fiscal quarter ended July 31, 2004 was $28.4 million compared to $16.2 million in the fourth quarter of fiscal 2003. EBITDA was $30.5 million for the quarter ended July 31, 2004 when excluding acquisition integration and other one-time costs of $2.1million. Net income for the fourth quarter was $4.2 million compared to $29.2 million last year. Net income in the fourth quarter of fiscal 2003 included a tax benefit of $19.4 million related to the reinstatement of deferred tax assets.
During the fourth quarter, North America delivered 43 percent of total revenue with Europe, Middle East and Africa (EMEA) at 38 percent. The emerging growth markets in Latin America and Asia-Pacific/Japan provided the remaining 19 percent of total revenue. In the fourth quarter of fiscal 2004, 662 software license contracts were signed, including 71 new SSA Global customers who purchased extended enterprise resource planning (ERP) solutions.
Total revenues for the fiscal year ending July 31, 2004, were $637.8 million, an increase of 115 percent from $296.6 million for the same period last year. License revenues were $158.8 million, up 69 percent compared to the prior year. Software license revenue represented 25 percent of total revenue. Revenues include contributions from recently integrated acquisitions.
EBITDA for the fiscal year 2004 was $105.7 million compared to $63.7 million last year. EBITDA was $122.5 million for the twelve months ended July 31, 2004 excluding acquisition integration and other one-time costs of $16.8 million. Net income for the twelve months ended July 31, 2004 was $20.0 million compared to $52.3 million in the prior year period. Fiscal 2003 net income included a tax benefit of $10.6 million related to the reinstatement of deferred tax assets. Excluding acquisition integration and other one-time costs, fiscal 2004 net income would have been $30.4 million.
"These results reflect our customers' continued acceptance of SSA Global's business strategy, solution strategy and the tremendous efforts of outstanding SSA Global professionals," said Mike Greenough, chairman, president and CEO of SSA Global. "As a team, we will continue to focus on positive results and satisfaction of our growing customer base."
About SSA Global
SSA Global(TM) is a leading provider of extended ERP solutions for manufacturing, distribution, retail, services and public organizations worldwide. In addition to core ERP applications, SSA Global offers a full range of integrated extension solutions including corporate performance management, customer relationship management, product lifecycle management, supply chain management and supplier relationship management. Headquartered in Chicago, SSA Global has 63 locations worldwide and its product offerings are used by approximately 13,000 active customers in over 90 countries. For additional information, visit the SSA Global web site at www.ssaglobal.com.
SSA Global(TM) is the new corporate brand for product lines and subsidiaries of SSA Global Technologies, Inc.
SSA Global, SSA Global Technologies and SSA GT are trademarks of SSA Global Technologies, Inc. Other products mentioned in this document are registered, trademarked or service marked by their respective owners.
Presentation of Non-GAAP Financial Measures
The non-GAAP financial measure presented in the text of this press release, EBITDA, is intended to provide a useful supplement to cash flow from operations in understanding cash flows generated from operations that are available for debt service (interest and principal payments) and further investment in research and development and acquisitions. We believe EBITDA provides meaningful additional information that enables management to monitor our ability to generate cash and provides investors an understanding of cash flow performance over comparative periods. We also believe EBITDA reflects the underlying economics of our business and aligns with the operating cash flow performance of our company as measured under GAAP. However, EBITDA is not a measure of cash flow performance under GAAP and should not be considered in isolation or as a substitute for cash flows from operations, or other cash flow statement data prepared in accordance with GAAP, as a measure of liquidity or as indicative of whether cash flows will be sufficient to fund our future cash requirements. Moreover, EBITDA is not a standardized measure and may be calculated in a number of ways. Accordingly, the EBITDA information provided in this press release might not be comparable to other similarly titled measures provided by other companies.
Forward-Looking Statements
These materials may contain "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Any statements that are not statements of historical fact (including without limitation statements to the effect that SSA Global or its management "believes," "expects," "anticipates," "plans," "looks forward" and similar expressions) should be considered forward-looking statements. Any "forward-looking statements" in these materials are subject to certain risks and uncertainties that could cause actual results to differ materially from those stated. Many important factors could cause SSA Global's actual results to differ materially from those expressed in the forward-looking statements made by or on behalf of SSA Global, including, without limitation, the size and timing of license transactions, the effect of economic conditions on the spending patterns of SSA Global's customers, the impact of competitive products and services, the effect of fluctuations in the economy and local currency, the ability of SSA Global to accurately forecast revenue, the ability to maintain adequate cash flow, the ability to maintain a satisfactory credit facility, the relationship between SSA Global and its affiliates and suppliers, the ability to manage costs and expenses, the availability of qualified resources, the ability to develop and enhance products, and other unknown risks including those as may be detailed in other SSA Global filings, reports and releases. SSA Global undertakes no obligation to revise or publicly update these forward-looking statements, whether as a result of new information or otherwise.
SSA Global Technologies, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months and twelve months ended July 31, 2004 and 2003
(in millions)
Three months Twelve months
ended ended
July 31, July 31,
------------- --------------
2004 2003 2004 2003
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Revenues:
License fees $49.4 $30.5 $158.8 $94.0
Support 82.9 45.9 322.5 143.8
Services and other 43.1 16.5 156.5 58.8
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Total revenues 175.4 92.9 637.8 296.6
Cost of revenues:
Cost of license fees 12.3 6.6 35.4 15.1
Cost of support, services and other 50.5 20.5 175.8 69.5
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Total cost of revenues 62.8 27.1 211.2 84.6
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Gross margin 112.6 65.8 426.6 212.0
Operating expenses:
Sales and marketing 44.4 23.4 157.0 69.5
Research and development 24.7 12.4 95.2 41.9
General and administrative 25.1 14.7 97.0 40.8
Amortization of other intangible assets 6.1 2.4 23.4 6.0
Restructuring charge 1.7 1.3 3.1 2.8
------ ------ ------- ------
Total operating expenses 102.0 54.2 375.7 161.0
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Operating income 10.6 11.6 50.9 51.0
Other income (expense):
Interest expense - related parties (3.7) (1.9) (13.7) (9.4)
Interest income (expense) - other (0.2) 0.2 0.1 (0.9)
Other income (expense) 2.4 (0.1) 0.6 1.0
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Total other income (expense) (1.5) (1.8) (13.0) (9.3)
------ ------ ------- ------
Income before provision (benefit) for
income taxes 9.1 9.8 37.9 41.7
Provision (benefit) for income taxes 4.9 (19.4) 17.9 (10.6)
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Net income $4.2 $29.2 $20.0 $52.3
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SSA Global Technologies, Inc. and Subsidiaries
Reconciliation of Net Income to EBITDA (in millions)
Three months Twelve months
ended ended
July 31, July 31,
------------- --------------
2004 2003 2004 2003
------ ------ ------- ------
Net income $4.2 $29.2 $20.0 $52.3
Interest expense 3.9 1.7 13.6 10.3
Provision (benefit) for income taxes 4.9 (19.4) 17.9 (10.6)
Non-cash stock option amortization 2.3 - 9.4 -
Depreciation 2.0 0.9 7.0 2.4
Amortization of intangibles (1) 6.1 2.4 23.4 6.0
Amortization of acquired and developed
software 3.9 1.4 13.3 3.3
In-process research and development 1.1 - 1.1 -
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EBITDA $28.4 $16.2 $105.7 $63.7
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(1) Customer lists and patents related to acquisitions.
Reconciliation of EBITDA to Cash Provided by Operations (in millions)
Three months Twelve months
ended ended
July 31, July 31,
------------- --------------
2004 2003 2004 2003
------ ------ ------- ------
EBITDA $28.4 $16.2 $105.7 $63.7
Interest paid (2.4) (1.1) (7.6) (10.7)
Income taxes paid (0.6) (0.8) (2.1) (1.3)
All other, including working capital
changes (12.8) 5.9 (44.8) (2.2)
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Cash provided from operations $12.6 $20.2 $51.2 $49.5
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