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CENTRINITY ANNOUNCES Q4 AND FISCAL YEAR ENDED SEPTEMBER 30, 2001 RESULTS
COMPANY REPORTS INCREASE IN REVENUE FOR FOURTH QUARTER AND FISCAL YEAR END
RICHMOND HILL, ON, CANADA - November 16, 2001 - Centrinity Inc. (TSE: CTI), which develops and markets the FirstClass Communications Platform, today announced that revenue for the year ended September 30, 2001 was $17.2 million, an increase of $5.6 million (48%) over fiscal 2000. The increase in revenue is attributable to increased sales of both Unified Communications and Collaborative Groupware.
Expenses for the year ended September 30, 2001 increased by $33.6 million (148%) over the previous fiscal year. Approximately $24.7 million of the increase is attributable to expanded sales, marketing, research and development activities and infrastructure; and the build-out of the service provider hosting environment to support the expansion of the Company's Unified Communications offering. The Company began the fiscal year with 178 employees and increased that number to 307 by the end of April 2001 in anticipation of additional financing to support a large-scale roll out of its Unified Communications offering on a hosted basis. Rightsizing commenced in the third quarter and continued in the fourth quarter once the Company decided to abandon financing efforts and in response to the longer than expected sales cycles. There were 201
employees at September 30, 2001. Approximately $8.9 million of the increase in expenses related to items not representative of ongoing operations incurred primarily to reduce staff and provide for surplus office space. The net effect of the change in amortization expense, after offsetting income taxes, interest income and foreign exchange gains, was a decrease of $2.7 million (48%) compared to 2000. The net loss for the year was $43.3 million, an increase of $25.9 million or 149% over the prior year. The net loss per share was ($1.81) as compared to ($0.96) for one year prior.
Revenue for the quarter ended September 30, 2001 increased by $0.3 million (8%) over the quarter ended June 30, 2001, and was 28% higher than the same quarter last year. The Company continued to experience extended buying cycles for public and private entities and service providers alike, which slowed revenue growth. Expenses for the quarter ended September 30, 2001 decreased by $2.8 million (15%) compared to the previous quarter. Expenses, excluding non-representative items, decreased by $3.5 million reflecting right-sizing actions taken in the third and fourth quarter. Items that are not representative of ongoing operations attributable to surplus office space and staff reductions equalled $4.8 million compared to $4.1 million in the third quarter. The Company decreased its workforce by 73 employees during the fourth quarter. The net
effect of the change in amortization expense, after offsetting income taxes, interest income and foreign exchange, was a decrease of $3.3 million compared to the third quarter. The net loss for the quarter decreased by $6.4 million (37%) compared to the third quarter. The net loss per share for the fourth quarter was ($0.45) as compared to ($0.72) for the third quarter for fiscal year 2001.
The Company's cash balance was $20.2 million at September 30, 2001. The cash burn in the fourth quarter decreased to $2.4 million per month compared to $3.0 million per month in the third quarter, reflecting the expense-management actions that began late in the third quarter. The Company's cash burn will decrease further in the first quarter of fiscal 2002 as the impact of expense reduction initiatives is fully realized. Management expects that the Company's expenses will decrease approximately 40%, and with the planned revenue growth for fiscal 2002, the Company should have sufficient cash to execute its plan. The Company is prepared to make changes as and when required if it does not meet its revenue and product milestones in the coming fiscal year.
“Centrinity was able to achieve a number of significant milestones with its Unified Communications technology in fiscal year 2001 with Sprint Canada, BellZinc.ca and TELUS. At the same time, our Collaborative Groupware technology continued to be a leading source of revenue for the Company," said Myles McGovern, president and CEO, Centrinity Inc. "Despite the effects of the economic slowdown, we have delivered solid revenue growth as expected.”
"Fiscal 2001 was a historical year for the world and one that brought significant changes and challenges,” Mr. McGovern said. “Especially given the economic context, we are proud of the milestones that Centrinity achieved and we are continually pursuing new business opportunities to help drive adoption and increase market share of our FirstClass Communications Platform. Simply put, our vision has not changed but our tactical plan to get there has. We firmly believe that fiscal care combined with our strong sales initiative will ensure our success as a Company in fiscal 2002, a year that looks to show increasing vitality in the economy.”
Centrinity will continue to grow Enterprise revenues through the sale of Collaborative Groupware and Unified Communications to its traditional target market of government and education exploiting Centrinity's key differentiators - low total cost of ownership, feature-rich integration, choice of server platforms and range of client access points. Centrinity will seek new opportunities, and drive the existing Groupware customer base to Unified Communications. Centrinity will continue to expand in the Service Provider space through both the implementation of unified communications and the replacement of aging voice mail systems. These systems need to be replaced with next-generation messaging platforms that can provide a wider array of revenue-generating services from basic voice mail and web mail to advanced unified messaging
and unified communications.
The Centrinity team has focused its efforts on continuing to align costs to revenue, leverage existing relationships with customers and seek new business opportunities.
Fourth Quarter & Fiscal Year End 2001 Highlights
-Centrinity teams with BellZinc.ca to deliver its branded Unified Messaging Service to its small and medium-sized enterprise customers across Canada.
-Centrinity partners with TELUS to launch its Unified Communications products and services to its small and medium-sized enterprise customers nationwide.
-Centrinity collaborates with Sprint Canada to launch Unified Communications offering to customers across Canada.
-Centrinity appoints former IBM senior executive Jane Mowat as executive vice president and CFO.
-Centrinity announces partnership with SAIC.
-Centrinity announces beta testing of UNIX version of FirstClass.
-Centrinity supports Intel carrier-class technology platform.
-Centrinity ships latest version of FirstClass.
Conference Call Reminder
Centrinity will host a conference call Friday November 16, 2001, at 11:00 a.m. (EST) to further discuss the fourth quarter and end of year financial results for 2001.
Participants can access the conference call on the Internet at www.centrinity.com.
For those unable to participate in the conference call at the scheduled time, the conference call will be available for replay via telephone or the Centrinity web site. The replay will be available by telephone approximately one hour after the end of the call until November 23, 2001 at midnight. The telephone replay can be accessed by dialing 416.695.5800 and entering reservation number 955036. The Internet replay can be accessed at www.centrinity.com.
About Centrinity Inc.
Centrinity is a leading provider of Unified Communications and Collaborative Groupware software solutions to service providers, enterprises and learning organizations. Our award-winning software solutions are designed to enhance productivity and efficiency by simplifying and facilitating the management of communications and information among individuals and groups. Centrinity is listed under the symbol “CTI” on the Toronto Stock Exchange. Website: www.centrinity.com.
For more information please contact:
Margaret Williamson
Manager, Corporate Communications
Tel: 905.762.6234
Email: margaret_williamson@centrinity.com
All figures are in Canadian dollars unless otherwise stated.
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. The Company 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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