Retek Reports Fourth Quarter Results; Continues to Build On Strong Customer Partnerships
MINNEAPOLIS--Jan. 28, 2003--Retek Inc (Nasdaq:RETK) today reported fourth quarter revenue of $37.1 million, compared with $51.3 million in the fourth quarter of 2001 and $40.5 million in the third quarter of 2002. Software license revenue was $20.4 million in the fourth quarter of 2002 compared with $38.7 million in the year earlier quarter and $24.8 million in the third quarter of 2002. The value of software license contracts signed in the quarter was $11 million. Services revenue was $16.7 million compared with $12.5 million in the year earlier quarter and $15.7 million in the third quarter of 2002.
On a GAAP basis, the Company reported a net loss of $0.61 per share compared with a profit of $0.01 per share in the year earlier quarter. The fourth quarter 2002 results included restructuring charges of $19.6 million. On an operational basis, excluding non-cash expenses for stock-based compensation, amortization of intangibles, and all restructuring and other charges, the net loss was $0.06 per share in the fourth quarter of 2002 compared with net income of $0.06 per share in the fourth quarter a year earlier and a loss of $0.07 per share in the third quarter of 2002.
For all of 2002, the Company reported total revenue of $191.8 million compared with $179.4 million in 2001. On a GAAP basis, the Company reported a net loss of $2.35 per share compared with a net loss of $0.29 per share in 2001. On an operational basis, the Company reported a net profit of $0.05 per share compared with a profit of $0.08 per share in 2001.
The Company added five new customers in the fourth quarter including Moran Foods, a $4 billion retail grocery division of SuperValu, Inc.; Home Hardware, a $2 billion hardware and building supply retail cooperative in Canada; Wegmans Food Markets, Inc., a $3 billion privately-held U.S. grocer; and LPP SA, a rapidly growing fashion retailer based in Poland. In addition, contracts for additional products were signed with existing customers such as The Gymboree Corporation, Woolworths Limited and Gap Inc.
Gross margin was 49.2% for the fourth quarter, with improved software license margins offset by weaker margins on services, which were impacted by lower utilization levels due to seasonal factors. Total operating expenses declined to $23.9 million compared with $26.7 million in the third quarter of 2002 as a result of lower total headcount and operational efficiencies. Headcount declined to 735 at the end of the fourth quarter from 848 at the end of the third quarter.
Cash and investments at the end of the fourth quarter were $85.5 million compared with $88.0 million at the end of the third quarter. Deferred revenue rose to $49.2 million from $48.4 million at the end of the third quarter and DSO increased to 105 days at the end of the quarter compared to 94 days at the end of the third quarter. The increase in DSO was the result of lower overall revenues and the revenue mix, and is expected to stabilize near these levels and decline as 2003 progresses.
Commenting on the results, Steve Ladwig, President and CEO of Retek said, "Our performance in the fourth quarter reflects a continuation of the difficult environment we saw through much of 2002. Retailers remain very cautious about new capital spending commitments and the larger uncertainties around the economy and geopolitical events continue to delay decisions. It is unclear when the fundamentals of the market will improve so we have taken steps to reduce our expenses. As the market leader with a broad and integrated product line, we will continue to invest in new product development, both in-house and in partnership with our customers.
We did have some important competitive wins in the fourth quarter and added some terrific new names to our customer base. Our competitive position remains strong and we believe we will win a good share of the investment retailers make in critical infrastructure in 2003."
The Company expects first quarter 2003 revenue generally comparable to that reported in the fourth quarter including software license revenue of $20 to $21 million. On that projected revenue level, the Company expects an operational loss of $0.04 to $0.05 per share.
About Retek
Retek Inc. (Nasdaq:RETK) is the leading provider of mission-critical software and services to the retail industry. Retek 10 integrates collaborative software with patented predictive technologies, consulting services, and the best practices of customers and partners to help retailers create, manage and fulfill consumer demand. Leading global retailers including A&P, Tesco, Best Buy, Family Dollar Stores, Gap, Sainsbury`s, Eckerd Corp. and Kohl`s Department Stores use Retek solutions. On the net: Retek at http://www.retek.com.
Retek is a trademark of Retek Inc. Other names may be trademarks of their respective owners. Forward-looking statements contained in this press release are made under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such factors are described from time to time in the company`s Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission.
CONTACT:
Media Relations Contact:
David Naumann, 612/587-2522
david.naumann@retek.com
Investor Relations Contact:
Bob Kleiber, 612/587-2398
robert.kleiber@retek.com
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