St. Louis, Missouri, November 11, 1999 -- Data Research Associates, Inc. (DRA) (NASDAQ: DRAI) announced today that revenues for the fourth quarter of fiscal 1999, ended September 30, were $9.0 million, compared with $8.4 million in the same period last year. For all of fiscal 1999, revenues were $30.0 million, compared with $32.5 million for fiscal 1998.
Earnings for its fiscal fourth quarter were $1.3 million, or 25 cents per share basic and diluted, compared with $1.7 million, or 31 cents per share basic and 30 cents per share diluted, for the same period in fiscal 1998. For all of fiscal 1999, earnings were $2.3 million, or 45 cents per share basic and diluted, compared with $3.7 million, or 68 cents per share basic and 67 cents per share diluted, in fiscal 1998.
In conjunction with the earnings announcement, the company announced that its Board of Directors had maintained its regular, annual cash dividend at 12 cents per share. The dividend has a record date of January 7, 2000 and a payment date of January 25, 2000.
DRA president and CEO Michael J. Mellinger announced that the first general release of Taos, DRA's next-generation library automation system, had occurred in the fourth quarter. "Several Taos sites are now live, and several more are in the final preparatory stages for going live," said Mellinger. "The first Taos sites represent the complete spectrum of our target marketplace, including public libraries, academic libraries, school libraries, special libraries and library consortia. In addition, these libraries include both Unix-based hardware platforms and Windows NT-based hardware platforms.
"We have also begun the first conversions of libraries from among our existing customer base, and we are using this experience to finalize standard programs that will allow us to increase the pace and volume of these conversions."
Mellinger added that the Taos general release had helped the company to report year-over-year increases for the fourth quarter in all three components of its revenue. DRA is an automation systems integrator that derives its revenues from three sources: computer hardware sales, software licenses and sales of services. For the fourth quarter of fiscal 1999, hardware revenues rose to $1.5 million, compared with $1.3 million in the fourth quarter of fiscal 1998; software revenues rose to $2.4 million, compared with $2.2 million; and service revenues rose to $5.0 million, compared with $4.9 million.
Mellinger noted that earnings in the fourth quarter had decreased even while revenues increased primarily because of decreases in gross margins on both software and services during the fourth quarter of fiscal 1999. Gross margin on software decreased to 81% in the fourth quarter of fiscal 1999, compared with 85% in the fourth quarter of fiscal 1998, and gross margin on services decreased to 77% in the fourth quarter of fiscal 1999, compared with 82% in the fourth quarter of fiscal 1998.
The decrease in gross margin on software was attributed primarily to the commencement of amortization of Taos development costs, which are reflected as costs of goods sold for the software component of revenue. The decrease in gross margin on services was attributed primarily to higher telecommunications costs related to the company's proprietary Internet backbone.
For fiscal year 1999, service revenues grew to $19.2 million from $19.1 million in fiscal 1998. Software revenues decreased to $7.4 million in fiscal 1999 from $8.0 million in fiscal 1998. Hardware revenues decreased to $3.4 million in fiscal 1999 from $5.4 million in fiscal 1998.
Among expenses for the fiscal year, salaries and employee benefits rose 5%, to $10.4 million in fiscal 1999, compared with $9.9 million in fiscal 1998, due primarily to annual salary increases. General and administrative expenses decreased 11%, to $6.0 million in fiscal 1999, compared with $6.8 million in fiscal 1998. This decrease resulted primarily from non-recurring expenses in fiscal 1998 related to discontinued use of a set of development tools, for which there were no similar expenses in fiscal 1999. Depreciation and amortization rose 14%, to $2.0 million in fiscal 1999, compared with $1.7 million in fiscal 1998, primarily due to capital expenditures related to upgrades to the company's technological infrastructure.
The company ended the fiscal year with $17.0 million in cash, compared with $17.2 million in cash and short-term investments at the end of fiscal 1998. During the course of fiscal 1999, the company used $4.8 million in cash to repurchase shares of its common stock. Immediately subsequent to the end of the fiscal year, the company's board augmented the ongoing stock repurchase program with authorization to repurchase additional stock in an aggregate amount of up to $2 million.
"We are enthusiastic at having a growing number of live Taos sites, which demonstrates the viability of our revolutionary new technology for library automation," said Mellinger in summarizing the company's recent results.
"Our determination to build a system based on object-oriented technologies is already giving us a head start on incorporating important new developments. For example, we have already incorporated a resource-sharing product based on the emerging standard known as XML, which integrates seamlessly with our object-oriented database, rather than the heavy normalization that is required for use of XML with a relational database. In addition, as the only library automation vendor that participates in the World Wide Web Consortium, W3C, we are actively participating in the shaping of the XML standard.
"We believe that the visibility provided by the increasing number of live Taos sites, coupled with the growing general acceptance of many of the technologies we're pioneering in the library automation marketplace, will accelerate the attractiveness of the Taos product in all of our target market segments."
Data Research Associates, headquartered in St. Louis, is a leading systems integrator for libraries and other information providers, offering its own proprietary information services software; third-party software and hardware; Internet, World Wide Web and other networking services; and other related support services.
This news release contains forward-looking statements, including statements as to anticipated or expected results, beliefs, opinions and future financial performance. These forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties that could cause DRA's actual results to differ materially. Specific risk factors for the statements contained herein include, but are not limited to, the company's ability to continue to enhance the Taos product; continued customer acceptance of that product; and timing of negotiations for sites who have selected Taos but have not yet signed a contract. Some of these risk factors, as well as additional risk factors, are discussed in detail in DRA's Annual Report and in Exhibit 99-1 of its Form 10-K for fiscal year 1998. DRA does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Three Months Ended Sept. 30|
|Hardware||$ 1,536||$ 1,339|
|Services and other||5,042||4,942|
|Net income||$ 1,261||$ 1,651|
|Earnings per share (basic)||$ .25||$ .31|
|Earnings per share (diluted)||$ .25||$.30|
|Weighted average shares (basic)||5,018||5,376|
|Adjusted weighted-average shares and assumed conversions (diluted)||5,020||5,415|
Fiscal Year Ended Sept. 30|
|Services and other||19,223||19,095|
|Net income||$ 2,333||$ 3,700|
|Earnings per share (basic)||$ .45||$ .68|
|Earnings per share (diluted)||$ .45||$ .67|
|Weighted average shares (basic)||5,211||5,471|
|Adjusted weighted-average shares and assumed conversions (diluted)||5,220||5,504|