Press Release

Wednesday, October 27, 1999 < Prev Next >

Visio Corporation Announces Fourth Quarter and Fiscal 1999 Results

SEATTLE, Oct. 27 /PRNewswire/ — Visio Corporation (Nasdaq: VSIO), the leading developer and supplier of drawing and diagramming software for business and personal computer users, today announced results for the fourth quarter and fiscal year ended September 30, 1999.

As announced on September 15, 1999, Visio entered into a merger agreement with Microsoft Corporation. Subject to regulatory and Visio shareholder approval, the merger transaction is expected to close by January 2000.

Revenues for the quarter ended September 30, 1999 were $50.1 million, a 13 percent increase over fourth quarter fiscal 1998 revenues of $44.2 million. Net income for the fourth quarter was $9.5 million, excluding merger related expenses net of taxes, compared to net income for the fourth quarter of fiscal 1998 of $9.8 million, excluding merger related expenses net of taxes. Diluted earnings per share for the fourth quarter of fiscal 1999, excluding merger related expenses, were $0.30, compared to diluted earnings per share of $0.31, excluding merger related expenses, for the fourth quarter of fiscal 1998.

Visio believes results in the quarter were impacted primarily by the deferral of product purchases in both the volume licensing and packaged product channels in anticipation of the pending acquisition of Visio by Microsoft. The company believes that many customers who also have licensing agreements with Microsoft are choosing to delay purchases of Visio products due to the announcement of the acquisition. To a lesser extent, results were impacted by customers deferring purchases of information technology products ahead of the upgrade of Visio® 2000 Professional and Enterprise Editions, slated for release in the December quarter.

Revenues for fiscal year 1999 were $200.0 million, a 20 percent increase over fiscal year 1998 revenues of $166.0 million. Net income for the year, excluding merger related expenses net of taxes, was $39.8 million compared to net income for fiscal 1998, excluding merger and acquired technology related expenses, of $35.0 million. Diluted earnings per share for fiscal 1999, excluding merger related expenses, were $1.27 compared to diluted earnings per share, excluding merger and acquired technology related expenses, of $1.10 for fiscal 1998.

Net income for the fourth quarter of fiscal 1999, including merger related charges, was $8.4 million and diluted earnings per share were $0.27. Net income for fiscal year 1999, including merger related charges, was $38.7 million and diluted earnings per share were $1.23.

"In fiscal 1999, Visio further solidified its position as the leading provider of drawing and diagramming software," stated Jeremy Jaech, president and CEO of Visio Corp. "We grew our installed base to over 3.5 million users, expanded our corporate sales team by 51%, grew sales in volume licensing by 90%, and successfully launched Visio 2000 in the September quarter with the on-time delivery of the Standard and Technical Editions. We are on schedule for the launch of the Professional and Enterprise Editions in the December quarter and continue making progress penetrating the corporate market."

During the quarter Visio signed license agreements with a number of key customers including the United States Internal Revenue Service, the Mayo Clinic and the US Department of Defense.

"We look forward to the closing of the pending acquisition with Microsoft," continued Jaech. "It will allow Visio to continue to focus on delivering offerings that meet the needs of customers worldwide, while providing them the benefit of an expanded, global distribution and support system. This should enable us to further take advantage of the demand for our innovative software, as we transform the way knowledge workers communicate."

Due to the pending acquisition of Visio by Microsoft, the stock repurchase program was suspended during the quarter. Visio did not repurchase any of its common stock during the quarter.

About Visio Corp.

Visio Corp. is the leading supplier of enterprise-wide business diagramming and technical drawing software, with an installed base of over 3.5 million users worldwide. Founded in 1990, the Seattle-based company pioneered the drawing and diagramming software market with the release of Visio in 1992, and has since released additional Windows-based graphics applications that offer users a unique and effective way to communicate and work. Visio's powerful product line is becoming a worldwide standard for graphical solutions in business, with the support of partner programs and third-party relationships in key market segments. Visio 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) 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 timing of receipt of regulatory approvals and satisfaction of other closing conditions relating to the pending acquisition of Visio by Microsoft and potential delays in development and product release schedules. 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 and Merger Expenses

Three Months Ended

September 30,


                                  1999             1998            Change

    Revenues                $50,124   100%   $44,223    100%   $5,901    13%
    Cost of revenues          4,019     8%     3,963      9%     (56)    -1%
    Gross profit             46,105    92%    40,260     91%    5,845    15%
    Operating expenses:
    Research and development  9,138    18%     7,538     17%  (1,600)   -21%
    Sales and marketing      20,936    42%    17,375     39%  (3,561)   -20%
    General and
     administrative           4,260     8%     3,279      7%    (981)   -30%
    Acquired technology and
     merger expenses          1,495     3%     1,185      3%    (310)   -26%
    Total operating expenses 35,829    71%    29,377     66%  (6,452)   -22%

    Operating income         10,276    21%    10,883     25%    (607)    -6%

    Interest and other
     income, net              1,097     2%     1,219      3%    (122)   -10%
    Income before income
     taxes                   11,373    23%    12,102     27%    (729)    -6%
    Provision for income
     taxes                    2,957     6%     3,147      7%      190     6%

    Net income               $8,416    17%    $8,955     20%   $(539)    -6%

    Basic earnings per
     share$ 0.28             $ 0.30
    Shares used in computing
     basic earnings per
     share                   30,200           29,987

    Diluted earnings per
     share                   $ 0.27           $ 0.28
    Shares used in computing
     diluted earnings per
     share                   31,369           31,604


                                Visio Corporation
  Statements of Income

  (In thousands, except per share data)

  Including Acquired Technology and Merger Expenses

  Twelve Months Ended

  September 30,


                                      1999            1998         Change

    Revenues                   $200,012   100%  $165,995  100% $34,017   20%
    Cost of revenues             17,795     9%    15,132    9% (2,663)  -18%
    Gross profit                182,217    91%   150,863   91%  31,354   21%
    Operating expenses:
    Research and development     34,777    17%    27,257   16% (7,520)  -28%
    Sales and marketing          82,523    41%    68,596   41%  (13,927)  -20%
    General and administrative   15,500     8%    12,973    8% (2,527)  -19%
    Acquired technology and
     merger expenses              1,495     1%     9,251    6%   7,756   84%
    Total operating expenses    134,295    67%   118,077   71%  (16,218)  -14%

    Operating income             47,922    24%    32,786   20%  15,136   46%

    Interest and other income,
     net                          4,402     2%     4,894    3%   (492)  -10%
    Income before income taxes   52,324    26%    37,680   23%  14,644   39%
    Provision for income taxes   13,604     7%     9,572    6% (4,032)  -42%

    Net income                  $38,720    19%   $28,108   17% $10,612   38%

    Basic earnings per share      $1.28            $0.96
    Shares used in computing
     basic earnings per share    30,189           29,406

    Diluted earnings per share    $1.23            $0.89
    Shares used in computing
     dilutedearnings per share   31,405           31,669
  Visio Corporation

  Statements of Income

  (In thousands, except per share data)

  Excluding Acquired Technology and Merger Expenses

  Three Months Ended

  September 30,


                                   1999            1998         Change

Revenues                    $50,124    100%  $44,223  100%   $5,901  13%
Cost of revenues              4,019      8%    3,963    9%     (56)  -1%
Gross profit                 46,105     92%   40,260   91%    5,845  15%
Operating expenses:
Research and development      9,138     18%    7,538   17%  (1,600) -21%
Sales and marketing          20,936     42%   17,375   39%  (3,561) -20%
General and administrative    4,260      8%    3,279    7%    (981) -30%
Acquired technology
 and merger expenses —  —  — Total operating expenses     34,334     69%   28,192   64%  (6,142) -22%

Operating income             11,771     23%   12,068   27%    (297)  -2%

Interest and
 other income, net            1,097      2%    1,219    3%    (122) -10%
Income before income taxes   12,868     26%   13,287   30%    (419)  -3%
Provision for income taxes    3,346      7%    3,455    8%      109   3%

Net income                   $9,522     19%   $9,832   22%   $(310)  -3%

Basic earnings per share      $0.32            $0.33

Shares used in
 computing basic
 earnings per share          30,200           29,987

Diluted earnings per share    $0.30            $0.31

Shares used in
 computing diluted
 earnings per share          31,369           31,604


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

  Excluding Acquired Technology and Merger Expenses

  Twelve Months Ended

  September 30,


                                  1999            1998         Change

Revenues                   $200,012    100% $165,995  100%  $34,017  20%
Cost of revenues             17,795      9%   15,132    9%  (2,663) -18%
Gross profit                182,217     91%  150,863   91%   31,354  21%
Operating expenses:
Research and development     34,777     17%   27,257   16%  (7,520) -28%
Sales and marketing          82,523     41%   68,596   41% (13,927) -20%
General and administrative   15,500      8%   12,973    8%  (2,527) -19%
Acquired technology
 and merger expenses —  —  — Total operating expenses    132,800     66%  108,826   66% (23,974) -22%

Operating income             49,417     25%   42,037   25%    7,380  18%

Interest and
 other income, net            4,402      2%    4,894    3%    (492) -10%
Income before income taxes   53,819     27%   46,931   28%    6,888  15%
Provision for income taxes   13,993      7%   11,977    7%  (2,016) -17%

Net income                  $39,826     20%  $34,954   21%   $4,872  14%

Basic earnings per share      $1.32            $1.19

Shares used in
 computing basic
 earnings per share          30,189           29,406

Diluted earnings per share    $1.27            $1.10

Shares used
 in computing diluted
 earnings per share          31,405           31,669


                                Visio Corporation
                                  Balance Sheets
                                  (in thousands)

                                                     Sept. 30,      Sept. 30,
                                                        1999          1998
    Assets
    Current assets:
      Cash                                            $36,012       $67,088
      Short-term investments                           86,876        41,930
        Total cash and short-term investments         122,888       109,018

      Accounts receivable                              29,537        15,934
      Inventories                                         852         1,228
      Prepaid expenses                                  7,604         6,662
      Deferred income taxes                             7,362         4,709


        Total current assets                          168,243       137,551

    Equipment and leasehold improvements               20,993        10,191
    Capitalized technology                              4,677         4,609
    Other assets                                        3,703           380
    Deferred income taxes                               6,512         6,646


        Total assets                                 $204,128      $159,377

    Liabilities and shareholders' equity
    Current liabilities:
      Accounts payable                                 $6,975        $5,223
      Accrued compensation and benefits                 5,607         4,464
      Other accrued liabilities                        17,002        13,717
      Deferred revenue                                 10,940         7,830
      Income taxes payable                              2,981           936


        Total current liabilities                      43,505        32,170

    Shareholders' equity:
      Common stock                                     72,527        75,434

      Retained earnings                                88,096        51,773
        Total shareholders' equity                    160,623       127,207
         Total liabilities

          and shareholders' equity                   $204,128      $159,377

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