Spatial Technology Reports Record Fourth Quarter and 1998 Revenue
27 January 1999
Spatial Technology Reports Record Fourth Quarter and 1998 Revenue
BOULDER, Colo.--Jan. 27, 1999--Company Reports Year-End and Fourth Quarter Income Per Share
of 6 Cents and 4 Cents, Respectively, Before Merger Costs
Spatial Technology Inc. (AMEX-STY), the leading developer of open, component 3D modeling technology, today reported record results for its fiscal year and fourth quarter ended December 31, 1998.
For the year, revenue advanced 32% to a record $14,350,000 compared with $10,884,000 in 1997. Fourth quarter revenue was $4,183,000, a single-quarter record and a 27% increase compared with revenue of $3,306,000 in last year's fourth quarter. The fourth quarter increase was attributable to a 38% improvement in the Company's recurring revenue stream (royalty and maintenance fees) as well as a 14% increase in license fees. Recurring revenue accounted for 57% of total revenue in the fourth quarter.
Spatial reported year-end income of $520,000, or 6 cents per share, and fourth quarter income of $378,000, or 4 cents per share. Year-end net income, which includes one-time merger costs of $319,000 related to Spatial's fourth quarter acquisition of InterData Access, Inc. (IDA), was $201,000, or 2 cents per share. This represents a positive swing of more than $2 million when compared to last year's net loss of $1,820,000, or 21 cents per share. Fourth quarter net income, including merger costs, was $59,000, or 1 cent per share, versus a net loss of $430,000, or 5 cents per share, in the fourth quarter last year.
It is important to note that all financial results presented have been retroactively re-stated to reflect the December 1998 acquisition of IDA, which was accounted for as a pooling of interests.
Bruce Morgan, Spatial's president and CEO, said, "Fiscal 1998 represented a dramatic turnaround for Spatial Technology, and we are very pleased with the significant improvement in our financial results. Even more encouraging, however, was the swift pace at which we advanced our product lines and the response to those advancements by new and existing customers."
During the year, Spatial released five new upgrades to its flagship product, the ACIS(R) 3D Toolkit. Each release featured major improvements in modeling functionality, speed and performance. Morgan said the response to these advancements was evident by the rapid expansion of Spatial's customer base. During the year, Spatial signed a record 74 new accounts that included a broad range of both domestic and international customers. The Company completed 1998 with approximately 480 customers -- more than five times that of Spatial's nearest competitor. Spatial also successfully introduced important new products in 1998, including the highly acclaimed Deformable Modeler, the Model Healing Husk, and the IGES Data Translator.
Subsequent to Spatial's fiscal year end, the Company released ACIS 5.0, which features a wide range of interoperability capabilities such as tolerant modeling, advanced blending functionality and enhanced healing technology. This much anticipated ACIS release incorporates more than 400 customer-requested enhancements.
"Our recent release of ACIS 5.0 was designed to address one of the leading dilemmas faced by the worldwide computer-aided design community -- the lack of 3D model interoperability," Morgan said. "We are very excited by the initial customer response this product has received, and we believe it will play an important role in the long-term growth of Spatial Technology." Continued on Page 2
Spatial's year-end acquisition of IDA represented a major step forward in executing the Company's plan to complete and deploy a comprehensive line of 3D CAD model interoperability products and solutions. IDA is a leading provider of product data viewing, data translation and digital mock-up software and consulting services to Fortune 500 companies worldwide. The privately held business was acquired in a stock transaction valued at approximately $4 million.
In accordance with Securities and Exchange Commission rules on pooling of interest mergers, Spatial has announced financial results for a 30-day period commencing December 24, 1998 and ending January 22, 1999. The Company reported net income for this 30-day period of $184,000, or 2 cents per share, on revenue of $1,757,000. It should be noted that the latter portion of Spatial's fourth fiscal quarter is historically one of very strong license revenue. Therefore, these results should not be extrapolated over a quarterly or annual period.
"We have entered fiscal 1999 with considerable financial and operational momentum," Morgan said. "Clearly, we are very excited about our prospects for the remainder of the year."
INCOME STATEMENT RECAP (a)
Year Ended Three Months Ended
December 31, December 31,
1998 1997 1998 1997
---- ---- ---- ----
Revenue:
License fee $6,253,000 $4,854,000 $1,798,000 $1,578,000
Royalties 3,922,000 2,866,000 1,069,000 821,000
Maintenance and
other 4,175,000 3,164,000 1,316,000 907,000
----------- ----------- ----------- -----------
Total revenue 14,350,000 10,884,000 4,183,000 3,306,000
Cost of sales 764,000 825,000 291,000 200,000
----------- ----------- ----------- -----------
Gross profit 13,586,000 10,059,000 3,892,000 3,106,000
----------- ----------- ----------- -----------
Operating expenses
excluding Non-recurring
charges 12,988,000 11,489,000 3,515,000 2,944,000
Non-recurring
charges (b) 319,000 621,000 319,000 621,000
----------- ----------- ----------- -----------
Total operating
expense 13,307,000 12,110,000 3,834,000 3,565,000
----------- ----------- ----------- -----------
Earnings (loss) from
operations 279,000 (2,051,000) 58,000 (459,000)
Other, net (78,000) 231,000 1,000 29,000
----------- ----------- ----------- -----------
Net earnings (loss) $201,000 $(1,820,000) $59,000 $(430,000)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings (loss)
per share $.02 $(.21) $.01 $(.05)
Weighted average shares
Basic 9,199,000 8,849,000 9,238,000 8,891,000
Diluted 9,307,000 8,849,000 9,439,000 8,891,000
BALANCE SHEET DATA (a)
December 31, December 31,
1998 1997
---- ----
Working capital $5,349,000 $5,703,000
Total assets $11,589,000 $10,751,000
Stockholders' equity $7,802,000 $7,269,000
(a) All periods presented have been retroactively restated to reflect
the December 23, 1998 acquisition of IDA, which was accounted for
as a pooling of interests.
(b) Non-recurring charges include merger costs associated with the
IDA acquisition in 1998, and acquired in-process research and
development charges in 1997.
About Spatial Technology
Spatial Technology Inc. is the world leader in the development of open, component 3D modeling technology. Spatial's ACIS 3D Toolkit is universally recognized as the de facto 3D modeling standard for the MCAD, CAM, CAE, and AEC industries. ACIS is the undisputed market leader, with over 480 licensees and more than 1.3 million end users of the over 175 ACIS-enabled applications in the market.
The ability of the 175+ ACIS-enabled applications to share SAT models is referred to as the ACIS Geometry Bus, which provides true model interoperability in a multi-vendor environment. Industry-leading ACIS-enabled applications include AutoCAD and Mechanical Desktop by Autodesk, Inc. , Bravo by Applicon, Inc., CADKEY by Baystate Technologies, Inc., Grade/CUBE II by Hitachi Zosen Information Systems, GSCAD by Intergraph Corporation , IronCAD by Visionary Design Systems, Inc., MegaCAD by Megatech Software GmbH, TurboCAD Solid Modeler by IMSI , and Vellum Solids by Ashlar Inc.
Headquartered in Boulder, Colorado, Spatial has subsidiaries in Europe and Asia. Shares of Spatial Technology stock are traded on AMEX under the symbol "STY." For more information, call 303-544-2900, or visit Spatial's web site at http://www.spatial.com.
Statements made in this news release that are not historical facts may be forward looking statements. Actual results may differ materially from those projected in any forward-looking statement. There are a number of important factors that could cause actual results to differ materially from those anticipated by any forward-looking information. A description of risks and uncertainties attendant to Spatial Technology Inc. and its industry, and other factors which could affect the Company's financial results, are included in the Company's Securities and Exchange Commission filings, including but not limited to the Company's annual report on Form 10-KSB for the year ended December 31, 1998.
Spatial Technology Inc., ACIS 3D Toolkit and SAT are trademarks. ACIS is a registered trademark of Spatial Technology Inc. All other products are trademarks of their respective owners.