Retek Reports Third Quarter Results
Contact:
Retek Inc., Minneapolis
Media Relations Contact:
Susan Duschane, 612/587-2239
susan.duschane@retek.com
or
Investor Relations Contact:
Bob Kleiber, 612/587-2398
robert.kleiber@retek.com
Initiates Restructuring to Align Operating Expenses With Expected Revenues
10/16/2002
Minneapolis - October 16, 2002 - Retek Inc (NASDAQ: RETK) today announced third quarter revenue of $40.5 million, compared with $47.5 million in the third quarter a year earlier and $60.8 million in the second quarter of 2002. The Company reported a loss of $1.63 per share which includes a $75 million charge, or $1.42 per share, to establish valuation allowances against deferred tax assets, compared with a loss of $0.14 per share in the year earlier quarter and a profit of $0.04 in the second quarter of 2002.
On an operational basis, excluding non-cash charges for amortization of intangibles, stock-based compensation and the valuation allowances, the Company reported a loss of $0.07 per share in the third quarter of 2002 compared with a profit of $0.03 per share in the year earlier third quarter and a profit of $0.10 per share in the second quarter of 2002.
Software license revenue in the third quarter was $24.8 million compared with $35.1 million in the year earlier quarter and $45.7 million in the second quarter of 2002. Services revenue was $15.7 million in the third quarter compared with $12.4 million in the year earlier quarter and $15.0 million in the second quarter of 2002.
The Company added five new customers in the third quarter, including AVA, a $5 billion German multi-format retailer; TravelCenters of America, the largest full-service travel center network in the U.S.; and Woolworth`s, a $1 billion South African department store retailer.
Cash and investments at the end of the third quarter was $88 million. Deferred revenue was $48.4 million compared with $61.9 million at the end of the second quarter. Days sales outstanding (DSO) was 94 days, up from 64 days at the end of the second quarter due to the lower total revenue and the relatively larger percentage of services revenues which typically have a longer collection cycle.
The Company has implemented a restructuring intended to bring expenses in line with expected revenues. Headcount is being reduced by approximately 15% or about 130 people and discretionary spending is being reduced. The workforce reductions are being implemented immediately.
For the fourth quarter, the Company is estimating revenue of $35-37 million with software license revenue of about $20 million and an operational loss of $0.04 to $0.06 per share. The Company expects to return to operational profitability in the first half of 2003.
Commenting on the results, Steve Ladwig, president and Chief Executive Officer of Retek said, "We are disappointed with our financial results for the third quarter. The selling environment is very difficult as retailers are extremely cautious about making capital investments given the uncertainty in their businesses. Since we do not expect a significant upturn in activity in the near term, we are taking strong steps to bring our costs in line with expected revenue levels. We have reduced headcount and are focusing on reducing discretionary spending. Our goal is to return to profitability and generate positive operating cash flow in the first half of 2003.
Retek remains a strong company with outstanding products, customers, and people. By aligning our expenses with expected revenues, the Company can weather these difficult market conditions while continuing to invest in its products and technology."
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.
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