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NEWS RELEASE
CENTRINITY REPORTS THIRD QUARTER FINANCIAL RESULTS FOR FISCAL 2002
Lower net loss, cash better than expected and continued expense management positions Company for Fiscal 03
TORONTO, CANADA - August 21, 2002 - Centrinity Inc. (TSX: CTI), the developer of the FirstClass® Communications Platform, today announced its financial results for the three and nine-month periods ended June 30, 2002. Revenue for the third quarter was $4.1 million, which was approximately the same as the third quarter last year. Revenue for the nine-month period ended June 30, 2002 was $13.3 million as compared to $12.6 million, for the same period in the prior year, an increase of 4%. All figures are unaudited and are in Canadian dollars.
Revenue from enterprise customers was $4.0 million for the quarter and $12.4 million for the nine-month period ended June 30, 2002, representing growth of 12% and 11% as compared to the same periods in Fiscal 2001. The Company's focus on its FirstClass Communications Platform for enterprise customers, particularly education and government, continues to provide growth in line with the Company's plans.
Revenue from service providers was $0.2 million for the quarter, as compared to $0.6 million for the same quarter last year and as compared to revenues of $0.7 million in the second quarter. The decline in revenue reflects the continued slowdown in the telecom sector and the delays in securing new service provider contracts.
Total expenses, including amortization of intangible assets and excluding interest income, foreign exchange gains or losses and future income taxes, decreased by $13.6 million or 68% percent for the quarter and 55% for the nine months ended June 30, 2002 as compared to the same periods of the previous year. The majority of the decrease in expenses came from reductions in staff and sales and marketing support activities and the reduction of amortization of intangibles.
The net loss for the quarter was $3.3 million or $0.14 per share, and was significantly lower than the comparable quarter in Fiscal 2001 when the net loss was $17.2 million or $0.72 per share. The net loss was $2.9 million or $0.12 per share in the second quarter of Fiscal 2002.
The Company's cash balance was $14.4 million at June 30, 2002 as compared to $16.0 million at March 31, 2002 and $20.2 million at September 30, 2001. The net cash outflow for the quarter was $1.5 million or approximately $0.5 million per month as compared to a net cash outflow of approximately $0.7 million per month during the first six months of this Fiscal year. Cash used in operations decreased by $7.3 million for the quarter and $15.9 million for the nine-months ended June 30, 2002 as compared to the same periods in Fiscal 2001, due to the effect of expense management initiatives taken.
"While revenue for the quarter was less than planned the Company is encouraged by the growth in revenue from enterprise customers for the first nine months of Fiscal 2002," said Jane Mowat, executive vice president and chief financial officer, Centrinity Inc. "Our service provider revenue has not grown as planned due to market conditions affecting this sector and accordingly, the Company now expects lower revenue from service provider customers for Fiscal 2002 as compared to the last Fiscal year. We are pleased with the 81 percent reduction in our net loss, year over year, and steps are being taken to ensure costs are aligned with a realistic view of near-term revenues. The Company expects to take a charge of approximately $1.5 million in the fourth quarter to reflect the one time cost of expense reduction
activities, which includes a workforce reduction of approximately 20%. With the cash that these additional actions will use, the Company expects to end the fiscal year with at least $11.0 million of cash, and it will be positioned to be cash flow positive in 2003."
The Company has now successfully subleased over 80% of the space it vacated in Fiscal 2001, which will result in a net cash inflow on existing lease commitments of approximately $1.0 million in Fiscal 2003.
"The reduction in our net loss and cash burn rate, and continued expense management has and should continue to improve the Company's ability to withstand the impact of reduced spending and longer than anticipated sales cycles for service providers particularly in North America," added Ms. Mowat.
Highlights:
During the third quarter, Centrinity completed the first phase of implementation at the Isle of Man's Department of Education and replaced its existing MicrosoftTM ExchangeTM system. "We believe that FirstClass is a compelling alternative for organizations becoming frustrated with the increasing licensing fees of their existing software systems," said John Myers, executive vice president and chief operating officer, Centrinity Inc. "Centrinity successfully used its FirstClass Migrator® tool during the first phase of implementation at the Isle of Man's Department of Education to move educators from their existing email system to FirstClass."
Subsequent to the third quarter, Centrinity also released the latest version of its FirstClass Communications Platform. FirstClass 7.0 provides a number of enhancements to core Calendaring facilities and the Standard Web and Mobile Web Interfaces. Additionally, the new version offers enhanced security features. FirstClass 7.0 also introduced the FirstClass® Migrator® and Connector® tools for ExchangeTM and OutlookTM, which provides a strong integration and migration path for existing ExchangeTM and OutlookTM users.
"We believe that the new capabilities, like the ExchangeTM Connector and Migrator tool found in FirstClass 7.0 will be instrumental in our drive to increase our market share," added John Myers.
On July 25, 2002 Centrinity announced that it had signed agreements with TDS Telecommunications Company (TDS Telecom), a wholly owned subsidiary of Telephone and Data Systems, Inc. (AMEX: TDS), whereby TDS Telecom will deploy a suite of messaging services based on Centrinity's FirstClass Communications Platform.
About FirstClass Communications Platform
FirstClass is a software-messaging platform that combines Centrinity's award-winning Collaborative Groupware and Unified Communications technologies into one Common Communications Platform. At the foundation of the FirstClass Communications Platform is Centrinity's Collaborative Groupware, which provides users with the ability to effectively communicate and share valuable resources through email, conferencing, directories, calendaring and online chats.
Centrinity's FirstClass Unified Communications technology, seamlessly converges email, voice mail and fax messages into one unified mailbox thereby enabling users to access all of their data and messages via the device of their choice including cell phone, telephone, computer and handheld devices - anytime, anywhere.
About Centrinity Inc.
Centrinity is a leading provider of cost-effective, highly scalable, feature-rich messaging and collaboration solutions to service providers, enterprises, governments, and learning organizations. Our award-winning software solutions are designed to enhance productivity and efficiency by simplifying and facilitating communications and information sharing for both individuals and groups of people working together. Centrinity is listed under the symbol 'CTI' on the Toronto Stock Exchange. Website: www.centrinity.com.
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For more information please contact:
Margaret Williamson
Centrinity Inc.
Manager, Corporate Communications
Tel: 905.762.6234
This news release may include statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Statements that are not statements of historical fact and statements that the Company or its management "expects", "believes", "may", "will", "project" or "anticipate" or similar statements should be construed as forward looking in nature. You are cautioned not to place undue reliance on forward looking statements. The Company has no obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances that occur after the date hereof or to reflect the occurrence of unanticipated events except as may be required under applicable securities laws. The Company further
cautions that actual performance will be affected by a number of factors, many of which are beyond its control. Future events and results may vary substantially from what the Company currently foresees.
FirstClass is a registered trademark of a Centrinity Inc. subsidiary used under license. Centrinity and the Centrinity logo are trademarks of Centrinity Inc. All other trademarks are the property of their respective owners.
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