FileNET Reports Results for First Quarter Ended March 31, 2001

Apr 12, 2001, 01:00 ET from FileNET Corporation

    COSTA MESA, Calif., April 12 /PRNewswire/ -- FileNET Corporation
 (Nasdaq:   FILE), a leading provider of eProcess and Web Content Management
 software and applications, today announced financial results for its first
 quarter ended March 31, 2001.  The Company reported revenues of $84.0 million,
 compared to revenues of $92.8 million reported in the same quarter of 2000.
 Net loss was $5.6 million, compared to net income of $6.5 million reported for
 the same period last year.  Loss per basic and diluted share for the first
 quarter of 2001 was $0.16, compared to earnings per basic and diluted share of
 $0.19 and $0.18, respectively, in the first quarter of 2000.  Loss per diluted
 share, excluding amortization of goodwill and other intangibles, was
 $0.14, compared to earnings of $0.18 per share in the first quarter of 2000.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/20000207/FILENETLOGO )
     FileNET's financial position remains strong with cash and investments
 totaling $155.7 million, total stockholders' equity of $219.4 million, and no
 long-term debt.
     "The first quarter of 2001 proved to be a difficult quarter for the
 enterprise software industry at large, and FileNET was not immune," said Lee
 Roberts, Chairman and CEO of FileNET.  "However, we remain confident about the
 long-term prospects for our company.  FileNET has a broad and diverse product
 line with many new products planned for launch this year.  In addition, we
 have a large customer base including many of the Global 2000.  The market
 views FileNET as a leader in the emerging Business Process Management software
 market, which is increasingly seen as a critical catalyst and requirement to
 the development of applications that leverage new Web-based technologies.
     "We believe our company is financially strong and well equipped to manage
 through an economic downturn and we are taking prudent cost reduction actions
 to quickly restore the company to profitability.  We continue to manage the
 company strategically with a focus on increasing shareholder equity."
 
     About FileNET
     FileNET Corporation (Nasdaq:   FILE) provides The Substance Behind
 eBusiness(TM) by delivering eProcess management software solutions.  FileNET
 enables organizations around the globe to increase productivity, customer
 satisfaction and revenue by linking customers, business partners, suppliers,
 and employees through efficient and flexible eBusiness processes.
 Headquartered in Costa Mesa, Calif., the company markets its innovative
 solutions in more than 90 countries through its own global sales, professional
 services and support organizations, as well as via its ValueNET(R) Partner
 network of resellers, system integrators and application developers.  To put
 more substance into your eBusiness, visit FileNET's Web site at
 www.filenet.com or call 1 800 FileNET.
     FileNET and ValueNET are registered trademarks and Panagon is a trademark
 of FileNET Corporation.  All other named products mentioned in this release
 may have been identified by trademarks or registered trademarks of their
 respective holders.
 
     Safe Harbor Statement under the Private Securities Litigation Reform Act
 of 1995:
     This release contains forward-looking statements that are based on our
 current expectations, estimates and projections about our industry,
 management's beliefs and certain assumptions made by us.  Words such as
 "anticipates," "expects," "intends," "plans," "believes," "seeks,"
 "estimates," "may," "will" and variations of these words or similar
 expressions are intended to identify forward-looking statements.  In addition,
 any statements that refer to expectations, projections or other
 characterizations of future events or circumstances, including any underlying
 assumptions, are forward-looking statements.  These statements are not
 guarantees of future performance and are subject to certain risks,
 uncertainties and assumptions that are difficult to predict.  Therefore, our
 actual results could differ materially and adversely from those expressed in
 any forward-looking statements as a result of various factors.
     Important factors that may cause such a difference for FileNET include,
 but are not limited to, the volume of our sales and pricing concessions on
 volume sales; our ability to specify, develop or acquire, complete, introduce,
 market, distribute and gain market acceptance for new products and
 technologies in a timely manner; the mix of products and services sold by the
 company; the timing, rescheduling or cancellation of significant customer
 orders; the loss of a key customer; our ability to control expenses;
 announcements of technological innovations, new products or product
 enhancements by the company or its competitors; the emerging nature of the
 eProcess and Web Content Management market; key management changes; changes in
 joint marketing and development programs; developments relating to patents or
 other intellectual property rights or disputes; changing relationships with
 customers, distributors, suppliers and strategic partners; potential
 contractual or employment issues; and general conditions in the worldwide
 economy and the software/technology sector and other factors. Our Annual
 Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q,
 recent Current Reports on Forms 8-K and other Securities and Exchange
 Commission filings discuss some of the important risk factors that may affect
 our business, results of operations and financial condition.  We undertake no
 obligation to revise or update publicly any forward-looking statements for any
 reason.
 
 
                                FILENET CORPORATION
 
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                       (In thousands, except per share data)
 
                                                      Quarter Ended March 31,
                                                        2001          2000
                                                     (Unaudited)   (Unaudited)
     Revenue:
       Software                                       $32,729        $48,112
       Service                                         45,885         39,482
       Hardware                                         5,356          5,208
       Total revenue                                   83,970         92,802
 
     Costs
       Cost of software revenue                         2,041          4,289
       Cost of service revenue                         28,495         23,105
       Cost of hardware revenue                         3,488          2,891
     Total cost of revenue                             34,024         30,285
 
       Gross profit                                    49,946         62,517
 
     Operating expenses:
       Research and development                        16,088         14,138
       Selling, general and administrative             42,382         40,946
       Amortization of goodwill and other intangibles     777             --
       Total operating expenses                        59,247         55,084
 
     Operating income (loss)                           (9,301)         7,433
 
     Other income, net                                  1,670          1,192
 
     Income (loss) before income taxes                 (7,631)         8,625
 
     Provision (benefit) for income taxes              (2,060)         2,156
 
     Net income (loss)                                $(5,571)       $ 6,469
 
     Earnings (loss) per share:
       Basic                                          $ (0.16)         $0.19
       Diluted                                        $ (0.16)         $0.18
 
     Weighted average shares outstanding:
       Basic                                           34,998         33,344
       Diluted                                         34,998         36,858
 
     Earnings (loss) per share before
      amortization of goodwill and other intangibles:
       Basic                                           $(0.14)         $0.19
       Diluted                                         $(0.14)         $0.18
 
 
                                FILENET CORPORATION
 
                            CONSOLIDATED BALANCE SHEETS
                                   (In thousands)
 
                                                      March 31,   December 31,
                                                        2001          2000
                                                     (Unaudited)
     ASSETS
     Current assets:
       Cash and cash equivalents                    $ 109,252      $ 101,497
       Short-term investments                          46,445         36,960
       Accounts receivable, net                        67,136         90,166
       Inventories, net                                 2,858          3,393
       Prepaid and other expenses                      12,307          9,682
       Deferred income taxes                            5,720          5,660
       Total current assets                           243,718        247,358
 
     Property, net                                     51,346         49,757
     Long-term investments                                 --            999
     Goodwill and other intangibles, net               12,438         13,457
     Deferred income taxes                             10,267         10,278
     Other assets                                       1,648          1,721
 
        Total assets                                $ 319,417      $ 323,570
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
       Accounts payable                                 9,657         16,638
       Accrued liabilities                             84,186         75,237
       Total current liabilities                       93,843         91,875
 
     Unearned maintenance revenue                       6,138          6,738
 
     Stockholders' equity                             219,436        224,957
 
        Total liabilities and stockholders' equity  $ 319,417      $ 323,570
 
 
     For further information, please contact Sam Auriemma, CFO, 714-327-3799,
 sauriemma@filenet.com, or Peter Hargittay, Investor Relations Manager,
 714-327-3405, phargittay@filenet.com, or Tom Hennessey, Corporate Relations
 Manager, 714-327-5050, thennessey@filenet.com, all of FileNET Corporation.
 
 

SOURCE FileNET Corporation
    COSTA MESA, Calif., April 12 /PRNewswire/ -- FileNET Corporation
 (Nasdaq:   FILE), a leading provider of eProcess and Web Content Management
 software and applications, today announced financial results for its first
 quarter ended March 31, 2001.  The Company reported revenues of $84.0 million,
 compared to revenues of $92.8 million reported in the same quarter of 2000.
 Net loss was $5.6 million, compared to net income of $6.5 million reported for
 the same period last year.  Loss per basic and diluted share for the first
 quarter of 2001 was $0.16, compared to earnings per basic and diluted share of
 $0.19 and $0.18, respectively, in the first quarter of 2000.  Loss per diluted
 share, excluding amortization of goodwill and other intangibles, was
 $0.14, compared to earnings of $0.18 per share in the first quarter of 2000.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/20000207/FILENETLOGO )
     FileNET's financial position remains strong with cash and investments
 totaling $155.7 million, total stockholders' equity of $219.4 million, and no
 long-term debt.
     "The first quarter of 2001 proved to be a difficult quarter for the
 enterprise software industry at large, and FileNET was not immune," said Lee
 Roberts, Chairman and CEO of FileNET.  "However, we remain confident about the
 long-term prospects for our company.  FileNET has a broad and diverse product
 line with many new products planned for launch this year.  In addition, we
 have a large customer base including many of the Global 2000.  The market
 views FileNET as a leader in the emerging Business Process Management software
 market, which is increasingly seen as a critical catalyst and requirement to
 the development of applications that leverage new Web-based technologies.
     "We believe our company is financially strong and well equipped to manage
 through an economic downturn and we are taking prudent cost reduction actions
 to quickly restore the company to profitability.  We continue to manage the
 company strategically with a focus on increasing shareholder equity."
 
     About FileNET
     FileNET Corporation (Nasdaq:   FILE) provides The Substance Behind
 eBusiness(TM) by delivering eProcess management software solutions.  FileNET
 enables organizations around the globe to increase productivity, customer
 satisfaction and revenue by linking customers, business partners, suppliers,
 and employees through efficient and flexible eBusiness processes.
 Headquartered in Costa Mesa, Calif., the company markets its innovative
 solutions in more than 90 countries through its own global sales, professional
 services and support organizations, as well as via its ValueNET(R) Partner
 network of resellers, system integrators and application developers.  To put
 more substance into your eBusiness, visit FileNET's Web site at
 www.filenet.com or call 1 800 FileNET.
     FileNET and ValueNET are registered trademarks and Panagon is a trademark
 of FileNET Corporation.  All other named products mentioned in this release
 may have been identified by trademarks or registered trademarks of their
 respective holders.
 
     Safe Harbor Statement under the Private Securities Litigation Reform Act
 of 1995:
     This release contains forward-looking statements that are based on our
 current expectations, estimates and projections about our industry,
 management's beliefs and certain assumptions made by us.  Words such as
 "anticipates," "expects," "intends," "plans," "believes," "seeks,"
 "estimates," "may," "will" and variations of these words or similar
 expressions are intended to identify forward-looking statements.  In addition,
 any statements that refer to expectations, projections or other
 characterizations of future events or circumstances, including any underlying
 assumptions, are forward-looking statements.  These statements are not
 guarantees of future performance and are subject to certain risks,
 uncertainties and assumptions that are difficult to predict.  Therefore, our
 actual results could differ materially and adversely from those expressed in
 any forward-looking statements as a result of various factors.
     Important factors that may cause such a difference for FileNET include,
 but are not limited to, the volume of our sales and pricing concessions on
 volume sales; our ability to specify, develop or acquire, complete, introduce,
 market, distribute and gain market acceptance for new products and
 technologies in a timely manner; the mix of products and services sold by the
 company; the timing, rescheduling or cancellation of significant customer
 orders; the loss of a key customer; our ability to control expenses;
 announcements of technological innovations, new products or product
 enhancements by the company or its competitors; the emerging nature of the
 eProcess and Web Content Management market; key management changes; changes in
 joint marketing and development programs; developments relating to patents or
 other intellectual property rights or disputes; changing relationships with
 customers, distributors, suppliers and strategic partners; potential
 contractual or employment issues; and general conditions in the worldwide
 economy and the software/technology sector and other factors. Our Annual
 Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q,
 recent Current Reports on Forms 8-K and other Securities and Exchange
 Commission filings discuss some of the important risk factors that may affect
 our business, results of operations and financial condition.  We undertake no
 obligation to revise or update publicly any forward-looking statements for any
 reason.
 
 
                                FILENET CORPORATION
 
                       CONSOLIDATED STATEMENTS OF OPERATIONS
                       (In thousands, except per share data)
 
                                                      Quarter Ended March 31,
                                                        2001          2000
                                                     (Unaudited)   (Unaudited)
     Revenue:
       Software                                       $32,729        $48,112
       Service                                         45,885         39,482
       Hardware                                         5,356          5,208
       Total revenue                                   83,970         92,802
 
     Costs
       Cost of software revenue                         2,041          4,289
       Cost of service revenue                         28,495         23,105
       Cost of hardware revenue                         3,488          2,891
     Total cost of revenue                             34,024         30,285
 
       Gross profit                                    49,946         62,517
 
     Operating expenses:
       Research and development                        16,088         14,138
       Selling, general and administrative             42,382         40,946
       Amortization of goodwill and other intangibles     777             --
       Total operating expenses                        59,247         55,084
 
     Operating income (loss)                           (9,301)         7,433
 
     Other income, net                                  1,670          1,192
 
     Income (loss) before income taxes                 (7,631)         8,625
 
     Provision (benefit) for income taxes              (2,060)         2,156
 
     Net income (loss)                                $(5,571)       $ 6,469
 
     Earnings (loss) per share:
       Basic                                          $ (0.16)         $0.19
       Diluted                                        $ (0.16)         $0.18
 
     Weighted average shares outstanding:
       Basic                                           34,998         33,344
       Diluted                                         34,998         36,858
 
     Earnings (loss) per share before
      amortization of goodwill and other intangibles:
       Basic                                           $(0.14)         $0.19
       Diluted                                         $(0.14)         $0.18
 
 
                                FILENET CORPORATION
 
                            CONSOLIDATED BALANCE SHEETS
                                   (In thousands)
 
                                                      March 31,   December 31,
                                                        2001          2000
                                                     (Unaudited)
     ASSETS
     Current assets:
       Cash and cash equivalents                    $ 109,252      $ 101,497
       Short-term investments                          46,445         36,960
       Accounts receivable, net                        67,136         90,166
       Inventories, net                                 2,858          3,393
       Prepaid and other expenses                      12,307          9,682
       Deferred income taxes                            5,720          5,660
       Total current assets                           243,718        247,358
 
     Property, net                                     51,346         49,757
     Long-term investments                                 --            999
     Goodwill and other intangibles, net               12,438         13,457
     Deferred income taxes                             10,267         10,278
     Other assets                                       1,648          1,721
 
        Total assets                                $ 319,417      $ 323,570
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
       Accounts payable                                 9,657         16,638
       Accrued liabilities                             84,186         75,237
       Total current liabilities                       93,843         91,875
 
     Unearned maintenance revenue                       6,138          6,738
 
     Stockholders' equity                             219,436        224,957
 
        Total liabilities and stockholders' equity  $ 319,417      $ 323,570
 
 
     For further information, please contact Sam Auriemma, CFO, 714-327-3799,
 sauriemma@filenet.com, or Peter Hargittay, Investor Relations Manager,
 714-327-3405, phargittay@filenet.com, or Tom Hennessey, Corporate Relations
 Manager, 714-327-5050, thennessey@filenet.com, all of FileNET Corporation.
 
 SOURCE  FileNET Corporation