Metrowerks Third Quarter Revenues Total US$ 3.6 Million
AUSTIN, Texas — May 12, 1997 — Metrowerks Takes $ 4.3 Million Non-Recurring Charge
Metrowerks Inc. (NASDAQ: MTWKF, TSE/ME:MWK), Tuesday announced the results of its third fiscal quarter ending April 30, 1997, reporting revenue of $ 3.6 million, an increase of 52% over the third fiscal quarter of 1996.
During the quarter, the company continued its product diversification efforts in the face of declining Mac OS-based product sales. As a result of the declining Mac(R) OS sales, non-recurring and acquisition charges of $ 4.3 million, or $ 0.37 per share, related to the company's Mac OS-based product business were incurred.
The net loss from ongoing operations was $ 1.6 million, or $ .14 per share. After taking into account non-recurring charges, the company reported a net loss of $ 5.9 million, or $ 0.51 on a per share basis.
Details of Non-recurring Charges
In the third quarter, Metrowerks saw sales of Mac OS-based products, net of all returns, drop to $ 813,000, representing the lowest level of quarterly Mac OS-based product sales since the introduction of CodeWarrior(R) in 1994.
Given this material decline in the Mac OS-based tools business, the company has taken a $ 4.3 million charge against third quarter results, in order to reflect, completely, the Company's exposure to the Mac OS-based products.
The charge is composed of a $ 1.7 million write-off of capitalized software costs, a $ 471,000 acquired in-process R&D and a $ 2.1 million provision for Mac OS-based product returns and other related costs.
"We believe that the dramatic steps we have taken in the third quarter were needed and they will benefit the company," said Jean Belanger, chairman and chief executive officer of Metrowerks. "We continue to be strongly committed to growing our business and we are encouraged by our success to date in penetrating new embedded systems tools markets."
Third Quarter Highlights
In the third quarter the company made significant progress in diversifying its business. In April 1997, the company shipped its Windows(R) 95/NT-hosted tools for PalmPilot(TM), the most popular electronic 'organizer' in the world. CodeWarrior for PalmPilot made a significant contribution to revenues in the third quarter.
In April 1997, the company announced support for Windows CE with Microsoft(R) and NEC(R) Electronics, which will ship in a new CodeWarrior for Windows CE product by the fourth calendar quarter. Windows CE is a new operating system from Microsoft aimed at the embedded systems market.
Already, Windows CE is shipping in electronic organizers/PDAs from six different vendors. Windows CE is expected to be a very popular embedded operating system in the future. Microsoft has announced that it intends to have Windows CE run on PowerPC, MIPS, x86, ARM and Hitachi SH microprocessors.
The company's heavy R&D investments in compiler technology in the past five years is directly applicable to Windows CE as Metrowerks is the only mainstream desktop programming tools vendor other than Microsoft to support PowerPC(TM), x86 and MIPS.
In February 1997, Metrowerks purchased the Latitude porting libraries which will allow Metrowerks to port CodeWarrior to UNIX-based workstations which are very popular hosts for embedded systems development. CodeWarrior on UNIX will ship in the fourth calendar quarter. The Latitude porting libraries will also be used to move existing Mac OS applications to Rhapsody, Apple's next generation operating system.
Operational Review
In the third quarter the company had total revenues of $ 3.6 million, an increase of 52% over the third fiscal quarter of 1996, but $ 1.0 million less than in the second quarter of fiscal 1997.
The decline in revenues from last quarter is accounted for by the substantial decrease in Mac OS-based product revenues in the third quarter and the fact that the company did not ship CodeWarrior for OS-9(R) in the third quarter. CodeWarrior for OS-9 is undergoing final testing and is now expected to ship in June, 1997.
In the third quarter, SG&A and technical support expenses totalled $ 2.2 million as compared to $ 1.8 million for the second quarter. This increase relates to the first full quarter of administrative and marketing costs of the company's new Tokyo office.
In order to streamline its sales activities, the company merged its channel sales and embedded sales groups under the direction of David Perkins, senior vice president of Metrowerks.
In the third quarter, R&D expenses totalled $ 1.8 million as compared to $ 1.5 million in the second quarter. The increase in R&D expenses reflects the fact that the company had no development costs in the current quarter that met the criteria for capitalization.
The company had $ 6.1 million of cash on hand at April 30, 1997.
This release, other than historical financial information, may consist of forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results.
For instance, factors which could cause results to differ from future events include the state of the Mac OS tools market, the timing of product deliveries, competitive pricing actions and marketing programs, among others.
Additional information on these and other factors which could affect the Company's financial results are included in the Company's 1996 annual report to shareholders and most recent quarterly reports on file with the Securities and Exchange Commission.
Earnings Table
All figures are reported in thousands of US dollars (except per share amount):
Metrowerks Inc.
Consolidated Statements of Operations
April 30 July 31 Oct 31 Jan 31 April 30
1996 1996 1996 1997 1997
Revenue 2,372 3,504 3,766 4,684 3,615
Cost of goods sold 404 972 968 1,317 958
SG&A and technical support 1,224 1,386 1,636 1,813 2,203
Research & development 903 1,314 1,217 1,459 1,828
Non-recurring Charge – – – – 4,297
Depreciation of fixed assets 105 160 209 261 319
Total operating expenses 2,636 3,832 4,030 4,850 9,605
Operating income (loss) (264) (328) (264) (166) (5,990)
Interest 117 150 129 91 70
Net earnings (loss) (147) (178) (135) (75) (5,920)
EPS fully diluted (0.01) (0.02) (0.01) (0.01) (0.51)
As of April 30, 1997 there were 11,537,500 shares outstanding and there were 1,251,183 options outstanding to acquire common shares.
About CodeWarrior
CodeWarrior is an intuitive suite of software development tools that includes an award-winning Integrated Development Environment (IDE) complete with project manager, resource and text editors, debugger, class browser, online documentation and tutorials.
CodeWarrior's cross-platform compilers support C, C++, Object Pascal and Java(TM), and allow programmers to build applications for a number of different target platforms, all from one development environment.
About Metrowerks
Founded in 1985, Metrowerks develops, markets and supports a complete line of programming tools used for software development for a number of operating systems and microprocessors.
Intended for use on desktop computers or embedded systems, these operating systems include Mac OS, Windows 95, Windows NT(TM), PlayStation(TM) OS, BeOS(TM) and Palm OS(TM), running on 68K, PowerPC, MIPS and x86 microprocessors. Metrowerks' CodeWarrior products are used by over 70,000 registered users in 70 countries.
EDITORS NOTE: Metrowerks, the Metrowerks logo and CodeWarrior are registered trademarks of Metrowerks Inc. Apple, Macintosh and Mac are registered trademarks of Apple Computer, Inc. Microsoft, Windows and Windows NT are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. All other company and product names may be registered trademarks or trademarks of their respective companies/holders, and are hereby recognized.
CONTACT:
Metrowerks Inc., Austin
Media: Cynthia Fray, 512/873-4758
[email protected]
Financial: Jim Welch, 512/873-4777
[email protected]