QRS Reports Fourth Quarter and Full Year 2003 Results
The Company Launches QRS IMPACT(TM) for Product Information Management
RICHMOND, Calif., Feb. 12 -- QRS Corporation (NASDAQ:QRSI) announced today the results of its fourth quarter and fiscal year ended December 31, 2003.
The Company reported revenue of $30.7 million for the fourth quarter 2003, compared to $31.3 million for the third quarter 2003. Full year revenue was $123.3 million for 2003, compared to $136.0 million for 2002.
The Company reported a fourth quarter net loss of $5.9 million, or 37 cents per share, which included $8.2 million of licensed technology, restructuring and impairment charges. This result compares to a net loss of $3.5 million, or 22 cents per share, for the third quarter 2003, which included $5.3 million of restructuring charges. For the full year, the Company reported a net loss of $6.7 million, or 42 cents per share, which included $13.5 million of licensed technology, restructuring and impairment charges. This result compares to a net loss of $4.1 million, or 26 cents per share, for 2002.
Excluding licensed technology, restructuring and impairment charges, non-GAAP fourth quarter net income was $2.4 million, or 14 cents per diluted share, compared to non-GAAP third quarter 2003 net income of $1.8 million, or 11 cents per diluted share. Full year non-GAAP net income was $6.9 million, or 42 cents per diluted share, compared to a net loss of $4.1 million, or 26 cents per share, for 2002.
"QRS non-GAAP operating results for 2003 were in line with our expectations and we continued to reduce our cost structure while investing for growth," said Liz Fetter, President and CEO of QRS. "The Company is committed to bringing new collaborative commerce solutions like QRS IMPACT(TM) to market as we transition to new long-term growth drivers for the Company."
The Company reported a fourth quarter gross margin of 50%, which compares to 50% in the third quarter 2003. Full year gross margin increased from 47% in 2002 to 50% in 2003.
Fourth quarter total operating expenses were $21.3 million, compared to $19.2 million for the third quarter 2003. Full year operating expenses were $68.3 million, compared to $69.0 million for 2002. Excluding licensed technology, restructuring and impairment charges, non-GAAP fourth quarter operating expenses were $13.1 million, compared to non-GAAP third quarter 2003 operating expenses of $13.9 million. Non-GAAP full year operating expenses were $54.8 million, compared to non-GAAP operating expenses of $69.0 million for 2002.
Included in the $8.2 million fourth quarter charges were $1.8 million of licensed technology related to a source code license agreement, and roughly $150 thousand of trailing restructuring expenses associated with the third quarter consolidation of the development team. During the fourth quarter, the Company concluded that the estimated future cash flows from its QRS Sourcing(TM) product were not sufficient to support the remaining carrying value of the intangible and other assets associated with its 2000 acquisition of Rockport Trade Systems, Inc. and its 2002 purchase of IBM CrossWorlds licenses. As a result, the Company wrote off the remaining $6.3 million of associated intangible and other assets. The Company remains committed to supporting its existing QRS Sourcing customers.
The cash and marketable securities balance at the end of the quarter was $38.1 million, up from $37.0 million at the end of the third quarter 2003.
The Company recently finalized an agreement related to its unoccupied building in Richmond, California, resulting in a $6.4 million decrease in future cash obligations. As a result, the Company believes the restructuring charges previously taken will cover all remaining obligations related to this facility.
Recent QRS accomplishments include:
-- Deepening Relationships in General Merchandise and Apparel (GMA). In
the fourth quarter, QRS signed contracts for its collaborative commerce
solutions with many leading general merchandise and apparel (GMA)
companies including Burberry`s Wholesale; Charles David; Ferragamo USA;
Goody`s; Holt Renfrew; Jockey; Sears, Roebuck and Co.; and Stride Rite.
-- Expanding to New Retail Segments. QRS continued to win business with
companies in retail segments adjacent to North American GMA. The
Company`s target retail segments outside of GMA include the consumer
packaged goods, hardlines, do-it-yourself, sporting goods, consumer
electronics and health and beauty segments. In the fourth quarter, QRS
signed contracts with leading companies in these segments, including:
Raley`s; Gund; Henredon Furniture; Waterford Wedgwood; Tabletops
Unlimited; Montblanc; Pentel; Prince Sports; Rollerblade; Samsung
America; Intercosmetics; and Shiseido Canada.
-- Enhancing the Product Portfolio. In January 2004, QRS introduced QRS
IMPACT for product information management. The combination of QRS
IMPACT and QRS Catalogue(TM) makes QRS the only company to offer an
end-to-end item data synchronization solution built for the complex
needs of the North American retail industry. While continuing to
strengthen its core product offerings, the Company is preparing to
launch new solutions built on its Intelligent Transaction Management
(ITM) platform.
The Company currently expects first quarter 2004 revenue to be in the $29 million to $31 million range. Incremental sales and marketing expenses associated with the first quarter launch of the new QRS IMPACT product and potentially lower revenues may lead to an operating loss in the first quarter 2004.
Conference Call Information
In conjunction with the earnings release, the Company will hold a conference call at 2:00 p.m. PT (5:00 p.m. ET) on February 12, 2004. The conference call can be accessed via telephone at 877-580-9103 (toll-free) and 610-794-9303 (international) with passcode QRS and leader name Liz Fetter. The call will be webcast and can be accessed at www.qrs.com. Telephone replay will be available beginning February 12, 2004, after 4:00 p.m. PT (7:00 p.m. ET) at 800-678-8936 (toll-free) and 402-998-1600 (international). The replay of the webcast will also be available at www.qrs.com.
About QRS
QRS is a technology company that serves the global retail trading community. We offer collaborative commerce solutions that drive a new standard for global brand execution. At QRS, we manage the flow of critical commerce information and leverage our retail technology expertise to address fundamental industry challenges such as global data synchronization, mandate compliance, transaction outsourcing and global trade management. QRS solutions help over 10,000* customers expand into new markets and channels, improve operational efficiency and differentiate their brand. Learn more about QRS at www.qrs.com.
*Based on total, unique QRS corporate customers that purchased or licensed QRS products and services between January and December 2003.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements regarding future events and the future financial performance of QRS Corporation that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Readers are referred to the documents filed by QRS Corporation with the SEC, specifically the most recent reports on Form 10-K, 8-K, and 10-Q, each as it may be amended from time to time, which identify important factors that could cause actual results to differ from those contained in the forward-looking statements, including risks associated with general economic conditions; specific conditions in the retail industry; competition; changes in senior management; rapid technological change in our industry; dependence upon key customers and their trading partners; ability to introduce and market acceptance of new products and services; the ability to successfully integrate and manage acquired businesses and technologies; customers` willingness to purchase products or services offered through or in conjunction with third parties; and dependence upon IBM for e-commerce services, among others. QRS disclaims any obligation to update the forward-looking information contained in this news release.
NOTE: QRS is a registered trademark and QRS IMPACT and QRS Catalogue are trademarks of QRS Corporation. All other trademarks belong to their respective owners.
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