St. Louis, Missouri, January 15, 1998 -- Data Research Associates, Inc. (DRA) (NASDAQ: DRAI) announced today that revenues for its first quarter of fiscal 1998, ended December 31, 1997, were $7.5 million, compared with $7.1 million for the first quarter of fiscal 1997. Earnings for the first quarter of fiscal 1998 were $492,000, or nine cents per share, compared with $541,000, or ten cents per share, for the same period in fiscal 1997.
"We are very pleased with the increase in revenue in this quarter, especially since this increase was driven by higher sales of software and services," said DRA President and CEO Michael J. Mellinger. "These sales gains reflect continued marketplace acceptance of our DRA Classic system."
Revenues and earnings from sales of the company's library automation systems in the first quarter were aided by a $1.2 million sale of the DRA Classic system to the Las Vegas-Clark County Library District in Nevada.
Mellinger noted that the decrease in earnings was primarily due to a decrease in margins from the service component of the company's revenues, and to a lesser extent to increases in the company's amortization expenses.
"Over the course of the past year, DRA has greatly enhanced our proprietary network, DRA Net, upgrading a majority of our backbone to Asynchronous Transfer Mode, or ATM. While the total DRA Net package has remained profitable during this upgrade, its margins have decreased due to the increased telecommunications costs associated with the enhanced backbone, and thus our overall service margins have gone down. We expect to increase networking margins in the future through a combination of more aggressive sales efforts and modified pricing strategies."
During the quarter, the company also announced a $500,000 sale of its new Taos system, currently in development, to the library of the University of California-Santa Barbara.
"Taos development continues to move at a rapid pace," said Mellinger. "We have successfully implemented the Unicode standard for simultaneous use of multiple alphabets and character sets, and we signed long-term agreements with the provider of our object broker, IONA Technologies (NASDAQ: IONAY) and the provider of our object-oriented database, Object Design, Inc. (NASDAQ: ODIS). In addition, expert staff from Object Design has come to St. Louis to assist us in optimizing the Taos server."
The first Taos module, DRA Web2, a Web-browser public access catalog for Taos servers, DRA Classic servers and the company's Inlex and MultiLIS servers, was initially released in September 1997 with an upgrade issued in December. An additional upgrade, including support of Unicode, is scheduled for the first few months of calendar 1998. In part because of amortization expenses associated with the viability of this module, the company's depreciation and amortization expense for the first quarter of fiscal 1998 were $381,000, a 30 percent increase over depreciation and amortization expenses of $294,000 for the same period in fiscal 1997.
"At present, we hope to start shipping Taos systems for revenue in the fourth quarter of this fiscal year. In the interim quarters, our current view of the marketplace would indicate that we should be able to continue to sell and install new DRA Classic systems, including some Classic systems that include Taos client modules. We would also expect to continue to realize add-on sales to our existing customer base."
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 complete and ship the Taos product; customer acceptance of that product; and the success of the company's revised sales and marketing strategies for networking services. 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 1997. 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.
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