Pivotal Announces Full Year and Fourth Quarter Results

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Vancouver, Canada, July 26, 2001 — Pivotal Corporation (Nasdaq NM: PVTL; TSE: PVT) today announced financial results for its fourth quarter and fiscal year ended June 30, 2001.

Pivotal's total revenues in the fourth quarter of fiscal 2001 increased 21.6 percent to $22.1 million compared to $18.2 million in the fourth quarter of fiscal 2000. Revenues from licenses were $12.0 million in the fourth quarter of fiscal 2001 compared to $13.1 million in the fourth quarter of fiscal 2000. Revenues from services and maintenance were $10.1 million in the fourth quarter of fiscal 2001, compared to $5.0 million in the same quarter last fiscal year.

Pro forma net loss for the fourth quarter of 2001 was $6.5 million or $0.27 per share. This compares with pro forma net earnings of $0.6 million or $0.03 per share in the fourth quarter of fiscal 2000.

Net loss for the fourth quarter of fiscal 2001, was $16.7 million or $0.70 per share, compared with a net loss of $7.7 million or $0.37 per share in the fourth quarter of fiscal 2000.

Total revenues for the year ended June 30, 2001 increased 80 percent to $95.3 million compared to $52.9 million for the year ended June 30, 2000. Pro forma net loss for the year ended June 30, 2001 was $5.8 million or $0.25 per share, compared to pro forma net earnings of $0.2 million or $0.01 per share for the year ended June 30, 2000. Software license revenue for fiscal 2001 grew 56.5 percent over the prior fiscal year, while service revenue grew 136.5 percent over the same period.

Pro forma figures for 2001 exclude amortization of intangibles, impairment of long-lived assets, an increased provision for doubtful accounts receivable and deferred stock compensation charges. Pro forma figures for 2000 exclude amortization of intangibles, acquired in process research and development and other charges, and deferred stock compensation charges.

Fourth Quarter Highlights

“Pivotal made significant advancements this quarter in the strategy to expand its market opportunity,” said Norm Francis, president & CEO. “We signed agreements with Alcatel, Cap Gemini Ernst & Young, Interpath Communications and Microsoft EMEA. We shipped three new products and we added experienced executives to our senior management team.”


Global Alliance Momentum

In the quarter Pivotal continued its global expansion by signing strategic alliance agreements:
  • Signed an alliance agreement with Cap Gemini Ernst & Young to jointly target the rapidly growing demand chain management market
  • Signed an agreement with Interpath Communications to be Pivotal’s preferred ASP partner
  • Expanded the company’s alliance with Microsoft with the signing of an agreement to jointly target the financial services market in Europe, Middle-East and Africa (EMEA)
  • Signed an alliance agreement with Alcatel e-Business Distribution GmbH to jointly sell the Pivotal Demand Chain Network solution suite to companies in Germany

    Products Shipped

    Pivotal shipped three new products in the quarter to extend the Pivotal Demand Chain Network solution suite:
  • Pivotal Instant Action -- an XML-based solution that routes critical business information and time-sensitive tasks according to business rules
  • Pivotal Digital Intelligence – a solution that extends beyond traditional analytics by providing companies with insight into customer and partner behaviors
  • Pivotal Value.Net – a solution specialized for the retail banking industry

    Management Expansion

    Pivotal augmented its senior management team this quarter with the signing of senior executives with enterprise and industry expertise.

  • John O’Hara was appointed to the role as executive vice president of EMEA. O’Hara has more then 20 years of senior management experience in the technology industry and most recently held an executive role at IBM
  • Garry Reichert was appointed as senior vice president of strategic alliances and global accounts. Reichert brings more than 20 years technology experience and most recently managed global and strategic accounts at Aspect Communications
  • Vanessa de Vere was appointed as vice president of marketing for EMEA. De Vere brings extensive senior management marketing expertise with specialization in the European markets

    Customers

    New customers signed in the quarter included: Alcatel e-Business Distribution GmbH, Dresdner RCM Global Investors (UK) Ltd., ElectronicPartner, Electrolux, Gulf & Fraser Credit Union, Industries New Zealand, James Hardie Building Products, Mettler-Toledo and Thomson Legal.

    Existing Pivotal customers that made additional purchases included: Bang & Olufsen Deutschland GmbH, Crystal Decisions, Farm Credit Services of America, Kikkoman Corporation, KPMG Consulting, Macro 4 and Novartis.


    Industry Recognition

    During the fourth quarter 2001, Aberdeen Group, a leading industry analyst firm, named Pivotal to the prestigious ‘Aberdeen List of Top Ten Significant CRM Applications for 2000.’ Pivotal received this honor for delivering fast business results for Intrawest Corporation – a leading resort developer and operator that implemented the Pivotal Demand Chain Network solution suite.

    Conference Call Details


    Date: Thursday July 26, 2001
    Start Time: 5:30 p.m. EDT (2:30 p.m. PDT)
    Dial-In Phone Number: 1-415-537-1886
    Conference Call Name: Fiscal 2001 4th Quarter Earnings Call
    Live Audio Streaming: www.pivotal.com


    If you are unable to participate, a replay will be available from 7:30 p.m. EDT July 26th through 7:30 p.m. EDT July 28th, 2001. For callers within the U.S. or Canada, the replay number is 1-800-633-8284. For callers outside the U.S. or Canada, the replay number is 858-587-5842. The replay pass code for all callers is 19202565. In addition, the replay will be available via our website at www.pivotal.com for 90 days.

    PIVOTAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Expressed in United States dollars; all amounts in thousands except per share data)
    Three months ended Years ended
    June 30, June 30,
    2001 2000 2001 2000
    (Unaudited) (Unaudited)
    Revenues:
    Licences $12,028 $13,136 $58,510 $37,384
    Services and maintenance 10,079 5,049 36,780 15,555
    Total revenues 22,107 18,185 95,290 52,939
    Cost of revenues:
    Licenses 946 812 3,800 2,141
    Services and maintenance 5,971 2,671 20,166 8,147
    Total cost of revenues 6,917 3,483 23,966 10,288
    Gross profit 15,190 14,702 71,324 42,651
    Operating expenses :
    Sales and marketing 14,129 10,319 51,230 31,165
    Research and development 5,228 2,803 18,750 8,906
    General and administrative 6,904 1,318 13,567 4,190
    In process research and development and other charges
    -
    6,979
    -
    6,979
    Total operating expenses 26,261 21,419 83,547 51,240
    Loss before amortization, other income and taxes (11,071) (6,717) (12,223) (8,589)
    Amortization of goodwill (6,594) (1,280) (23,062) (1,409)
    Loss from operations (17,665) (7,997) (35,285) (9,998)
    1,352 478 3,333 2,193
    Loss before income taxes (16,313) (7,519) (31,952) (7,805)
    Income taxes 344 217 503 557
    Net loss $(16,657) $ (7,736) $(32,455) $(8,362)
    Loss per share:
    Basic and diluted $ (0.70) $ (0.37) $ (1.40) $ (0.45)
    Weighted average number of shares used to calculate earnings (loss) per share:
    Basic and diluted 23,848 20,686 23,173 18,643

    Pro forma financial information:
    Net earnings (loss) $ (6,520) {1} $ 571 {2} $ (5,765) {1} $ 249 {2}
    Earnings (loss) per share:
    Basic and diluted $ (0.27) $ 0.03 $ (0.25) $ 0.01
    Weighted average number of shares used to calculate earnings (loss) per share:
    Basic 23,848 20,686 23,173 18,643
    Diluted
    -
    22,013
    -
    21,339

    These pro forma balances exclude:
    {1}amortization of intangibles, impairment of long-lived assets, an increased provision for doubtful accounts receivable, and deferred stock compensation charges, which in aggregate total $10,137 and $26,690 for both the quarter and the year ended June 30, 2001, respectively.
    {2}amortization of intangibles, acquired in process research and development and other charges, and deferred stock compensation charges, which in aggregate total $8,307 and $8,611 for both the quarter and the year ended June 30, 2000, respectively.

    CONDENSED CONSOLIDATED BALANCE SHEETS (Expressed in United States dollars; all amounts in thousands)

    June 30, 2001 June 30, 2000
    ASSETS
    Current assets
    Cash and cash equivalents $ 13,247 $ 4,734
    Short term investments 55,468 30,788
    Accounts receivable 26,610 16,764
    Prepaid expenses and other current assets 2,691 1,859
    Total current assets 98,016 54,145
    Property and equipment, net 9,183 7,231
    Goodwill, intangibles and other assets, net 61,244 60,569
    Total assets $ 168,443 $ 121,945
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    $ 25,324 $ 16,877
    Current portion of long term debt 516 -
    Deferred revenue 13,810 8,971
    Total current liabilities 39,650 25,848
    Long term debt 592 -
    Shareholders' equity 128,201 96,097
    Total liabilities and shareholders' equity $ 168,443 $ 121,945

  • Pivotal Corporation enables large and medium-sized businesses worldwide to make, serve, and manage customers with superior speed and efficiency by providing XML-based demand chain networks that deliver personalized customer experiences across every touch point in real-time. These networks unify Internet commerce, CRM, eSelling, and wireless technologies to manage collaborative relationships between customers, business partners, and employees; guide intelligent commerce transactions across multiple channels; seamlessly integrate the demand chain with the supply chain; and fully exploit Microsoft platform standards.

    Pivotal solutions are sold in 35 countries and are available in English, French, German, Spanish, Portuguese, Swedish, Japanese and Chinese. Pivotal's worldwide customer base includes more than 1,000 organizations in traditional, commercial and public market sectors and the new digital economy, including KPMG, Intrawest Corporation, Emerson Electric, US Filter, Ericsson, Nissan Motor Corp., HarperCollins Publishers, Qiagen Inc., Deutsche Bank, Trader.com, Southern Company, Lucent Technologies, Inc., NEC, Deloitte & Touche, Principal Financial Group and Red Cross Australia. Pivotal is a public company traded on the NASDAQ under the symbol “PVTL” and the Toronto Stock Exchange under the symbol “PVT.” More information can be found on the corporate Web site at http://www.pivotal.com. This release contains certain forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors that may cause actual results of events to differ materially from those anticipated in our forward-looking statements. Factors that could cause actual results to differ materially include: rapid technological and/or market changes in the industry; the ability to maintain and grow successful third party and customer relationships, to improve current products and develop new products, to adequately protect the company's proprietary rights, and other factors as described in the company's SEC filings. Although we believe that the expectations reflected in our forward-looking statements are reasonable, individual results may vary, and we cannot guarantee future results, levels of activity, performance or achievements or other future events. Moreover, neither we nor anyone else assumes responsibility for the accuracy or completeness of forward-looking statements. Jacqueline Voci
    Tel: 425.897.6992
    Fax: 425.897.8401
    Email: jvoci@pivotal.com