Island Pacific Announces FY 2005 First Quarter Earnings
Irvine, California, USA - August 12, 2004 -Island Pacific, Inc. (AMEX: IPI) announced today first quarter financial results for the period ended June 30, 2004. The company reported revenues of $5.3 million, a 4% decrease versus $5.5 million for the year-earlier period. Island Pacific reported a negative Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $2.3 million, versus $0.9 million in the same quarter in the prior year. The company reported a net loss available to common stockholders of $4.1 million, or a basic and diluted EPS of ($0.08), versus $13,000, or basic and diluted EPS of $0.0 for the prior year`s first quarter.
The company reported gross profit of $3.4 million, versus a gross profit of $3.8 million in the same quarter in the prior year. As a percentage of revenues, gross profit decreased to 65% from 70%, primarily to an increased mix of lower margin professional services and hardware revenues and a decrease in higher margin software license revenues. Loss from operations was $3.6 million versus income from operations of $11,000 in the same quarter in prior year.
First quarter revenues represented an 11% increase versus the $4.7 million revenues reported in the fourth quarter ended March 31, 2004, while EBITDA improved by $0.3 million versus the negative $2.5 million reported in the fourth quarter. In addition, EPS improved $0.02 from ($0.10) in the fourth quarter.
Ran Furman, Chief Financial Officer, stated "We currently anticipate that second quarter revenues will improve compared to the second quarter in the prior year and will also improve sequentially over the June 30, 2004 quarter."
President and chief operating officer Mike Tomczak stated, "The primary focus for the management team is to return the company to profitability. Since taking charge of the company in June of this year, significant steps have been taken to achieve this goal. We have already lowered annual expenses by more than $3.0 million, including staff reductions. We will be reviewing other opportunities to further lower our expenses."
"Our focus in reducing costs was to not affect the quality or efficiency in supporting our customers. We also believe these actions will not effect the momentum we have gained in our sales organization. We will be concentrating our resources on our three great product brands: IPMS (enterprise merchandising), Synaro (multi channel applications) and Retail Pro (store operations). There will be a reorganization charge on the income statement in our second quarter as a result of these actions."
Mr. Tomczak continued, "The previous management team had invested resources in areas that are not consistent with our new focus. We will be concentrating our efforts in our core business where we have the products, knowledge, experience and an enviable global installed base of users."
"We have defined a business plan that focuses on improving the quality of revenues for the company which we believe will result in a return to profitability. We have streamlined and redefined the manner in which we market and sell our products. Island Pacific`s sales model has traditionally been direct where we had developed, marketed, sold, installed and supported our proprietary applications."
"Following the acquisition of RTI, we now have a global, broad-based channel of distribution through loyal, professional and knowledgeable retail specialists. We believe this sales channel is the highest-quality and most broadly-based Business Partner network in our industry, 64 partners supporting retailers in 70 countries in 15 languages. We will now be marketing our brands through this channel, which over time will have the effect of reducing the margin on each sale but will result in significantly more licenses being sold. In addition, this channel has over 9,000 retailers as customers who will now be exposed to the entire Island Pacific family of products."
Mr. Tomczak stated, "I am even more convinced now, after having been at the helm for 60 days, than I was at the outset, that Island Pacific has the products, talent and outstanding customer base to be successful. I am pleased to have the opportunity to be the leader and a major shareholder of this company. We have the core assets necessary to build a solid, profitable business."
"I am also pleased we have added Julia Eakes and Steven Spector as outside members to our Board of Directors. Their experience in the industry, business and with public companies, as well as their track record of professional leadership, will help us achieve our goal of building a successful business."
"We have a clearly defined strategy to reduce overhead, increase sales through our reseller network and offer our full suite of products to specialty retailers including our installed base. My current guidance for the year, which will be updated quarterly, is a return to a positive cash flow and a return to profitability for the second half of FY 2005."
The company will hold a conference call at 4:30 p.m. EDT. Interested participants should call (800) 218.9073. There will be a playback available, beginning two hours after the call. To listen to the playback, please call (800) 405.2236. Please use pass code 11005616#.
Web users may log in to www.actioncast.acttel.com and use event ID 24187.
About Island Pacific
Island Pacific is a global leader in retail merchandising, store operations, CRM, and multi-channel software solutions. For more than 25 years, Island Pacific has developed a reputation for delivering high-quality, high-reliability software to the retail industry. Recently, the company has transformed itself into the low-cost, high-value provider of retail enterprise solutions by developing breakthrough technologies, and by partnering with leading consulting organizations to provide next-generation services. In addition, Island Pacific leverages its years of experience with emerging and established retailers to craft creative solutions tailored for each customer`s needs.
As a result, Island Pacific is the definitive resource for scalable, flexible and affordable solutions for retailers around the world. Incorporating the recently acquired Retail Technologies International (RTI) and Page Digital, Island Pacific serves over 9,000 retail clients in more than 70 countries. Represented in more than 55,000 stores worldwide and available in 14 languages, the company`s technology manages billions of transactions annually under the brand names of IPMS, IP synaro, OnePointe and Retail Pro, and is the thought leader in multi-channel retailing.
Founded in 1978, the company is headquartered in Irvine, California, and has offices in the United States and the United Kingdom, and is represented by business partners in over 30 countries. For more information, please visit www.islandpacific.com and www.retailpro.com.
Certain statements contained in this news release regarding matters that are not historical facts are forward-looking statements. These statements relate to future events or the Company`s future performance. These statements are only predictions. Because such forward-looking statements include risks and uncertainties, actual results may differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the risk factors listed in the Company`s Form 10-K for the fiscal year ended March 31, 2004 and other risk factors identified from time to time in the Company`s filings with the Securities and Exchange Commission. IPI undertakes no obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events.
Media Relations Contact:
Danny Zeibert
Island Pacific, Inc.
+1.916.605.7200
Email: media@islandpacific.com
Investor Relations Contact:
Tricia Skoda
Island Pacific, Inc.
+1.949.399.3816
Email: ir@islandpacific.com
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