Spatial Inc. Reports Final Results for Second Quarter
27 July 1999
Spatial Inc. Reports Final Results for Second Quarter; Previously Reported Order Delays Impact Financial Performance
BOULDER, Colo.--July 27, 1999--Spatial Inc. (AMEX: STY), the world's leading developer of open, component 3D modeling technology and interoperability solutions, today announced final results for its second quarter ended June 30, 1999. As the Company previously announced, its second quarter results were impacted by delays in the receipt of several large orders. Management continues to believe the impact of these delayed orders will be limited to the second quarter, and the Company expects to meet its financial targets for the fiscal year.Second quarter revenue was $3,603,000 compared with $3,663,000 in the comparable quarter a year ago. Royalty revenue advanced to $1,082,000 versus $932,000 last year, and service revenue increased to $1,235,000 from $972,000. Total recurring revenue, which is comprised of royalty revenue and maintenance fees, increased 22% from the prior-year period. New license revenue for the second quarter was $1,286,000 compared with $1,759,000 a year ago.
The Company reported a second quarter loss of $105,000, or 1 cent per share, excluding a charge of $500,000 related to acquired in-process research and development associated with the Company's second quarter acquisition of Sven Technologies, Inc. With the one-time charge, net loss for the quarter was $605,000, or 7 cents per share, versus net income of $244,000, or 3 cents per share, last year.
Bruce Morgan, president and CEO, said, "While we were satisfied with the performance of our recurring revenue stream and the continued strong demand for our core ACIS(R) modeling components, we were unable to finalize several large new license transactions for our Deformable Modeler and viewing products prior to the end of the quarter. In our traditional business model, large orders make up a significant portion of our revenue stream. The missed deals are still in negotiation, and we anticipate their closure in the third and fourth quarters."
Morgan said he believes the Company's rapidly evolving family of Web-based model interoperability products and services will substantially change the Company's business model, and will ameliorate the impact large orders have on the Company's quarterly financial performance.
Spatial's June acquisition of Sven Technologies, Inc., was highly strategic, providing the company with state-of-the-art visualization acceleration tools and patented texture-mapping technology. The Company anticipates generating revenue in the third and fourth quarters from component products based on these technologies that it will release to its large customer base. More importantly, these technologies will be part of the strategic backbone of the Company's Web-based interoperability products.
"We believe our emerging proficiency as an Internet-based application service provider will serve to broaden the overall profile of Spatial," Morgan said. "The Company's Web-based products are rapidly evolving and initial customer response is enthusiastic."
In July, Spatial announced that it had surpassed the 500 customer milestone for its ACIS Geometric Modeler. Spatial also announced the shipment of ACIS 5.2, featuring multi-surface deformation and advanced blending capabilities.
For the six-month period, revenue increased to $7,654,000 compared with $6,555,000 for the comparable period last year. The Company reported a loss of $45,000, or less than one cent per share, excluding a $500,000 charge for acquired in-process research and development. With the one-time charge, net loss for the period was $545,000, or 6 cents per share, versus net income of $52,000, or one cent per share, last year.
INCOME STATEMENT RECAP
Six Months Ended Three Months Ended
June 30, June 30,
1999 1998 1999 1998
Revenue: ---- ---- ---- ----
License fee $2,956,000 $2,695,000 $1,286,000 $1,759,000
Royalties 2,359,000 1,934,000 1,082,000 932,000
Services 2,339,000 1,926,000 1,235,000 972,000
---------- ---------- ---------- ----------
Total revenue 7,654,000 6,555,000 3,603,000 3,663,000
Cost of sales 535,000 307,000 311,000 151,000
---------- ---------- ---------- ----------
Gross profit 7,119,000 6,248,000 3,292,000 3,512,000
Operating expense excluding
non-recurring
charges 7,071,000 6,097,000 3,397,000 3,212,000
Acquired
in-process R&D 500,000 - 500,000 -
---------- ---------- ---------- ----------
Total operating
expense 7,571,000 6,097,000 3,897,000 3,212,000
Earnings (loss)
from operations (452,000) 151,000 (605,000) 300,000
Other, net (93,000) (99,000) - 56,000
---------- ---------- ---------- ----------
Net earnings (loss) $(545,000) $52,000 $(605,000) $244,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings (loss) per share
Basic and diluted $(0.06) $0.01 $(0.07) $0.03
Weighted average
shares outstanding
Basic 9,284,000 9,173,000 9,294,000 9,183,000
Diluted 9,284,000 9,274,000 9,294,000 9,277,000
BALANCE SHEET DATA
June 30, December 31,
1999 1998
---- ----
Working capital $4,580,000 $5,349,000
Total assets $11,749,000 $11,589,000
Stockholders' equity $7,681,000 $7,802,000
About Spatial Inc.
A leading innovator of 3D modeling technology, Spatial provides advanced component and interoperability products for creating, viewing, exchanging, and sharing high-fidelity 3D digital geometry.
The ACIS(R) 3D Toolkit(TM), Spatial's flagship product, is the de facto standard 3D modeling kernel for the MCAD, CAM, CAE, and AEC industries. With over 500 ACIS licensees and 1.4+ million end users of more than 200 ACIS-enabled applications, ACIS is indisputably the world's most widely used 3D modeling kernel. ACIS-enabled applications include ABAQUS/CAE by Hibbitt, Karlsson & Sorensen, Inc., AutoCAD and Mechanical Desktop by Autodesk, Inc., CADKEY by Baystate Technologies, Inc., GAMBIT by Fluent Inc., Grade/CUBE II and Space-E by Hitachi Zosen Information Systems, GSCAD by Intergraph Corporation, IronCAD by Visionary Design Systems, Inc., Maxwell 3D Field Simulation by Ansoft Corporation, MegaCAD by Megatech Software GmbH, TurboCAD Solid Modeler and Professional by IMSI, Vellum Solids by Ashlar Inc., and Working Model 3D by MacNeal-Schwendler Corporation. Spatial offers a diversity of production-proven 3D modeling component products, like Spatial Deformable Modeler(TM), a 3D surface modeling tool for high level artistic design and industrial styling. Spatial's Interoperability Products enable developers and end users to optimize engineering processes by providing efficient methods of communicating 3D models and product data across multiple CAD/CAM/CAE systems throughout the design-to-manufacturing process. Interoperability Products include comprehensive visualization solutions, like IntraVISION(TM); data translators for IGES, STEP, and VDA-FS; 3D model healing technology; and PDM integration modules. Headquartered in Boulder, Colorado, Spatial has offices in Europe and Asia. Spatial stock is publicly traded on the NASDAQ-AMEX exchange under the symbol "STY." For more information, visit Spatial's web site at or call (303) 544-2900.
Statements made in this news release that are not historical facts may be forward looking statements. Specifically, we indicate above that we anticipate several large customer licensing opportunities have been delayed and we believe these licenses will sign in the third and fourth quarter of 1999. Further, we believe we will satisfy our own internal operating goals for the year. Because these statements are forward looking and subject to a number of risks, the Company may not complete the large licensing transactions, or end the year with satisfactory operating results, which may have a negative impact on the prevailing price of our common stock. Actual results may differ materially from those projected in any forward-looking statement. There are a number of additional important factors that could cause actual results to differ materially from those anticipated by any forward-looking information. A description of these additional 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.