Press Release

Wednesday, July 21, 1999 < Prev Next >

Visio Corporation Reports Third Quarter 1999 Results

Company Continues to Penetrate Corporate Market

SEATTLE, July 21 /PRNewswire/ — Visio Corporation (Nasdaq: VSIO) today announced results for the third quarter of fiscal 1999. Total revenue and earnings per share slightly exceeded the preliminary results reported on July 8, 1999.

Revenue for the quarter ended June 30, 1999 was $50.3 million, an increase of 14 percent over third quarter fiscal 1998 revenue of $44.2 million. Net income for the third quarter of fiscal 1999 was $9.6 million, an increase of 5 percent over third quarter fiscal 1998 net income of $9.2 million, excluding a charge for acquired technology, net of taxes. Diluted earnings per share for the third quarter of fiscal 1999 were $0.31, compared to diluted earnings per share for the third quarter of fiscal 1998 of $0.29, excluding a charge for acquired technology, net of taxes, in the fiscal 1998 quarter.

For the nine months ended June 30, 1999, revenue was $149.9 million, an increase of 23 percent from revenue of $121.8 million for the comparable period in fiscal 1998. Net income for the nine month period was $30.3 million, or $0.96 per diluted share, an increase of 21 percent compared to net income of $25.1 million, or $0.79 per diluted share, excluding charges for acquired technology, net of taxes, for the same period in fiscal 1998. "In the third quarter, the Company continued to focus on penetrating the corporate market," stated Jeremy Jaech, President and CEO of Visio Corporation. "We experienced solid growth in securing volume licensing agreements and have strengthened our domestic and international sales force." Revenue growth in the June quarter was driven by strength in the corporate volume licensing business, which increased 72 percent over the comparable quarter in fiscal 1998, and by continued growth in sales from the IT design and documentation group, which increased 32 percent over the June quarter in fiscal 1998. In the June 1999 quarter, volume licensing revenue was $19.3 million and represented 38 percent of total revenue, compared to 25 percent of total revenue for the same period in fiscal 1998. IT design and documentation revenue was $28.9 million and represented 57 percent of total revenue, compared to 50 percent for the same period in fiscal 1998. International revenue for the third quarter of fiscal 1999 represented 38% of total revenue, or $18.9 million. Revenue from Europe and the Rest of the World (ROW) regions, including Japan, comprised 25% and 13% of total revenue by geography, respectively. Despite general weakness in both Japan and Europe, ROW was in line and Europe increased 22% from the same period in fiscal 1998.

"We are excited about the upcoming launch of Visio® 2000 in the September quarter," Jaech continued. "We intend to broadly distribute Visio 2000 by making the product available for purchase through our corporate sales force, online via the Visio Upgrade Center, as well as through the traditional distribution channel."

Mr. Jaech concluded, "Visio 2000 will be an integral component of our mutli-pronged growth strategy. We are providing customers with innovative, powerful and easy to use enhancements to the present Visio product line."

During the quarter, the Company repurchased 313,500 shares of its common stock for approximately $8.9 million under the Company's stock repurchase program. Announced during the March 1999 quarter, the repurchase program allows for a total of up to 2 million shares to be repurchased over a two-year period. Since the inception of the program, the Company has repurchased 696,500 shares.

A discussion of June 1999 quarter results by Visio executives will be available from 2:00 p.m. Pacific Time on Wednesday, July 21, 1999 until 6:00 p.m. Pacific Time on Friday, July 23, 1999. To listen via the Internet, point browsers to http://www.videonewswire.com/VISIO/072199/.

About Visio Corp.

Founded in 1990, Visio Corp. is the leading supplier of enterprise wide business diagramming and technical drawing software. The Seattle-based company pioneered the Microsoft Windows-based drawing and diagramming software market when it launched Visio 1.0 in 1992. Since then, it has released additional visual tools that offer users unique and effective ways to think, communicate and work. With a worldwide installed base of more than 3 million users, Visio's powerful product line is the standard for businesses that need drawing and diagramming software to communicate visually. Visio offers customers the support of partner programs and third-party relationships in key market segments. Its products are available in as many as 12 language versions and are sold in more than 45 countries.

This press release (including the quoted language above) regarding quarterly financial results contains forward-looking statements. There are certain important factors that could cause actual results to differ materially from those anticipated by some of the statements made above. Among these are fluctuations in quarterly performance, transition in the Company's distribution channels, timing and customer acceptance of new products, product lifecycles, potential changes in licensing and marketing methods, the Company's ability to manage growth and integrate acquired technology, dependence on other products including Microsoft Windows, competition in the business drawing and diagramming software market, Year 2000 issues, and changes in general economic conditions. Additional information concerning these and other risks is described in the section entitled "Certain Risk Factors That May Impact Future Results of Operations" contained in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 1998, and, from time to time, in other reports filed by the company with the Securities and Exchange Commission.

Additional information about Visio Corporation is available on the Internet at http://www.visio.com.

NOTE: Visio is a registered trademark of Visio Corporation in the United States and/or other countries. All other trademarks, trade names or company names referenced herein are used for identification only and are the property of their respective owners.

Visio Corporation

Statements of Income

(In thousands, except per share data)

Including Acquired Technology

Three Months Ended

Jun 30,


                                              1999                1998

    Revenues                          $50,346       100%  $44,186       100%
    Cost of revenues                    4,432         9     4,140         9
    Gross profit                       45,914        91    40,046        91
    Operating expenses:
      Research and development          8,961        18     6,951        16
      Sales and marketing              20,584        41    18,624        42
      General and administrative        4,322         8     3,436         8
      Acquired technology —  — 976         2
    Total operating expenses           33,867        67    29,987        68
    Operating income                   12,047        24    10,059        23
    Interest and other income, net        961         2     1,203         2
    Income before income taxes         13,008        26    11,262        25
    Provision for income taxes          3,383         7     2,813         6
    Net income                         $9,625        19%   $8,449        19%
      Basic earnings per share          $0.32               $0.28
      Shares used in computing basic
       earnings per share              30,075              29,740
      Diluted earnings per share        $0.31               $0.26
      Shares used in computing diluted
       earnings per share              31,236              32,018


                              Visio Corporation
                             Statements of Income
  (In thousands, except per share data)

  Including Acquired Technology

  Six Months Ended

  Jun 30,


                                              1999                1998

    Revenues                         $149,888       100% $121,772       100%
    Cost of revenues                   13,776         9    11,169         9
    Gross profit                      136,112        91   110,603        91
    Operating expenses:
      Research and developmen          25,639        17    19,719        16
      Sales and marketing              61,588        41    51,221        42
      General and administrative1       1,239         8     9,694         8
      Acquired technology —  — 8,066         7
    Total operating expenses           98,466        66    88,700        73
    Operating income                   37,646        25    21,903        18
    Interest and other income, net      3,306         2     3,675         3
    Income before income taxes         40,952        27    25,578        21
    Provision for income taxes         10,648         7     6,425         5
    Net income                        $30,304        20%  $19,153        16%
      Basic earnings per share          $1.00               $0.66
      Shares used in computing basic
       earnings per share              30,185              29,196
      Diluted earnings per share        $0.96               $0.60
      Shares used in computing diluted
       earnings per share              31,416              31,691


                              Visio Corporation
                             Statements of Income
  (In thousands, except per share data)

  Excluding Acquired Technology

  Three Months Ended

  Jun 30,


                                              1999                 1998

    Revenues                          $50,346       100%  $44,186       100%
    Cost of revenues                    4,432         9     4,140         9
    Gross profit                       45,914        91    40,046        91
    Operating expenses:
      Research and development          8,961        18     6,951        16
      Sales and marketing              20,584        41    18,624        42
      General and administrative        4,322         8     3,436         8
    Total operating expenses           33,867        67    29,011        66
    Operating income                   12,047        24    11,035        25
    Interest and other income, net        961         2     1,203         3
    Income before income taxes         13,008        26    12,238        28
    Provision for income taxes          3,383         7     3,067         7
    Net income                         $9,625        19%   $9,171        21%
      Basic earnings per share          $0.32               $0.31
      Shares used in computing basic
       earnings per share              30,075              29,740
      Diluted earnings per share        $0.31               $0.29
      Shares used in computing
       diluted earnings per share      31,236              32,018


                              Visio Corporation
                             Statements of Income
  (In thousands, except per share data)

  Excluding Acquired Technology

  Six Months Ended

  Jun 30,


                                              1999                1998

    Revenues                         $149,888       100% $121,772       100%
    Cost of revenues                   13,776         9    11,169         9
    Gross profit                      136,112        91   110,603        91
    Operating expenses:
      Research and development         25,639        17    19,719        16
      Sales and marketing              61,588        41    51,221        42
      General and administrative       11,239         8     9,694         8
    Total operating expenses           98,466        66    80,634        66
    Operating income                   37,646        25    29,969        25
    Interest and other income, net      3,306         2     3,675         3
    Income before income taxes         40,952        27    33,644        28
    Provision for income taxes         10,648         7     8,522         7
    Net income                        $30,304        20%  $25,122        21%
      Basic earnings per share          $1.00               $0.86
      Shares used in computing basic
       earnings per share              30,185              29,196
      Diluted earnings per share        $0.96               $0.79
      Shares used in computing diluted
       earnings per share              31,416              31,691


                              Visio Corporation
                                Balance Sheets
                                (in thousands)

                                               Jun. 30,          Sept. 30,
                                                   1999               1998
    Assets
    Current assets:
     Cash                                       $39,861            $67,088
     Short-term investments                      72,243             41,934
     Accounts receivable                         27,226             15,934
     Inventories                                    894              1,228
     Prepaid expenses                             6,955              6,662
     Deferred income taxes                        6,504              4,709
       Total current assets                     153,683            137,551
    Equipment and leasehold
      improvements                               18,197             10,191
    Capitalized technology                        3,959              4,609
    Other assets                                  3,661                380
    Deferred income taxes                         6,981              6,646
        Total assets                           $186,481           $159,377

    Liabilities and shareholders' equity
    Current liabilities:
     Accounts payable                            $6,651             $5,223
     Accrued compensation and benefits            6,407              4,464
     Deferred revenue                            10,305              7,830
     Other accrued liabilities                   16,334             13,717
     Income taxes payable                         2,355                936

       Total current liabilities                 42,052             32,170

    Long-term notes payable —  — Shareholders' equity:
     Common stock                                65,786             75,434
     Retained earnings                           78,643             51,773
       Total shareholders' equity               144,429            127,207

    Total liabilities and
      shareholders' equity                     $186,481           $159,377

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