RWAV Rogue Wave Software (MM)

Rogue Wave Software Reports Financial Results for Fiscal Fourth Quarter and 2003 Fiscal Year Revenue and EPS Exceed Expectations for Quarter and Year End BOULDER, Colo., Oct. 28 /PRNewswire-FirstCall/ -- Rogue Wave Software, Inc. , a global software application infrastructure and consulting services company, today reported the following results for its fiscal fourth quarter and year ended September 30, 2003. -- Fourth quarter revenue was $7.6 million, representing a decline of 18% from the $9.3 million achieved in the fourth quarter of fiscal 2002. For fiscal year 2003, revenue totaled $32.9 million, representing a decline of 24% from the $43.3 million achieved in fiscal year 2002. Previous guidance for fiscal 2003 ranged from $29.5 million to $32.0 million. -- Net income for the quarter was $2.7 million or $0.26 per basic and $0.25 per diluted share. This compares with a net loss of ($4.8 million) or ($0.45) per basic and diluted share in the fourth quarter of fiscal 2002. Net income for fiscal 2003 was $1.5 million or $0.15 per basic and diluted share. A net loss of ($7.3 million) or ($0.68) per basic and diluted share was reported in fiscal 2002. Fourth quarter and fiscal year 2003 EPS guidance ranged from ($0.15) to $0.13 and ($0.26) to $0.02, respectively. -- Cash and short-term investments increased to $32.7 million at September 30, 2003 from $28.8 million at June 30, 2003. This compares to a cash position of $28.3 million at September 30, 2002. "We are pleased to report that we have achieved a third quarter of consecutive profitability. We are especially proud of our performance in Q4. We defined a very challenging business plan earlier this year and we successfully executed it. The results are rewarding to all of us at Rogue Wave, and they are serving as a new source of motivation that is driving the successful execution of our newly defined and equally challenging plan for 2004," stated Kathleen Brush, CEO of Rogue Wave Software. Brush continued, "Fiscal 2003 was a turning point for Rogue Wave Software. Our financial results are solid evidence that our refocusing efforts and commitment to sound business practices are working. It gives us great satisfaction to tell our stockholders that we have surpassed our revenue and earnings guidance for the year. We are also encouraged that the revenue of our core SourcePro product, which had witnessed several quarters of revenue decline, has had two quarters of stabilization. This combined with cost restructuring in the Stingray product line, gives us two profitable products to support a healthy bottom line and to fund our new product initiatives. "We also take some comfort in the continued momentum for LEIF, in the two forms of an increasing number of customers and a growing pipeline." Brush concluded, "While we are encouraged with the signs of stabilization in SourcePro revenue, and the initial traction of LEIF, we know that 2004 will be another challenging year for Rogue Wave. The success of our new product strategy, which includes LEIF and other still to be introduced products, relies upon the technology adoption curve for Web services. Because of this we must remain cautious in our 2004 outlook." Revenue for fiscal 2004 is expected to range from $28.0 million to $30.0 million. EPS for the year is expected to be between $0.30 - $0.35 per share. Rogue Wave Software's earnings call will be available live via its Web site at http://www.roguewave.com/ or by calling 800-299-8538 for domestic, and 617-786-2902 for international, beginning at 4:30 p.m. EST today. The participant pass code is 88181040. There will also be an on-demand webcast replay of the conference call beginning two hours after the conclusion. The replay will be available at http://www.roguewave.com/ through November 11, 2003, or by dialing 888-286-8010 for domestic, and 617-801-6888 for international. The participant pass code is 18421669. About Rogue Wave Software, Inc. Rogue Wave Software, Inc. (NASDAQ:RWAV) is leading global software and consulting services company. Its large-scale, platform-independent business frameworks, components and services provide the fastest way to deliver durable mission-critical applications. Today more than 300,000 developers at the world's leading companies use Rogue Wave products to develop comprehensive, enterprise-level general business and e-business applications. With headquarters in Boulder, Colo., Rogue Wave has offices located throughout the United States, Europe and Asia and can be found on the Internet at http://www.roguewave.com/ . Rogue Wave is a registered trademark of Rogue Wave Software, Inc. All other trademarks are the property of their respective owners. This release may contain projections or other forward-looking statements regarding future events or the future financial performance of the company that involve risks and uncertainties. These statements include, but are not limited to, estimates of fiscal 2004 revenue and net income and other expressions of management's belief or expectations. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Readers are referred to the documents filed by Rogue Wave with the SEC, specifically the most recent reports on Form 10-K and 10-Q which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including risks associated with acquisition strategy, dependence on new product offerings, competition, patents, intellectual property and licensing, future growth, rapid technological and market change, manufacturing and sourcing risks, Internet infrastructure and regulation, international operations, volatility of stock price, financial risk management, and potential volatility in operating results, among others. Rogue Wave undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release. ROGUE WAVE SOFTWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, unaudited) September 30, September 30, ASSETS 2003 2002 Current assets: Cash and short-term investments $32,728 $28,256 Accounts receivable, net 6,161 8,144 Prepaid and other current assets 444 2,057 Total current assets 39,333 38,457 Equipment, net 968 2,933 Other assets, net 396 1,552 Total assets $40,697 $42,942 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $80 $137 Accrued expenses 3,087 4,961 Deferred revenue 6,679 9,102 Total current liabilities 9,846 14,200 Stockholders' equity: Common stock 10 10 Additional paid-in capital 39,706 39,944 Accumulated deficit (9,776) (11,325) Other comprehensive income (loss) 911 113 Total stockholders' equity 30,851 28,742 Total liabilities and stockholders' equity $40,697 $42,942 ROGUE WAVE SOFTWARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data, unaudited) Three months ended Twelve months ended September 30, September 30, 2003 2002 2003 2002 Revenue: License revenue $4,505 $4,691 $19,040 $22,877 Service and maintenance revenue 3,100 4,577 13,867 20,422 Total revenue 7,605 9,268 32,907 43,299 Cost of revenue: Cost of license revenue 205 321 645 942 Cost of service and maintenance revenue 378 1,102 2,698 6,213 Total cost of revenue 583 1,423 3,343 7,155 Gross profit 7,022 7,845 29,564 36,144 Operating expenses: Product development 1,173 2,829 6,233 12,355 Sales and marketing 2,128 5,708 13,559 22,739 General and administrative 801 1,019 3,829 5,377 Restructuring, severance and goodwill amortization - - 4,123 1,315 Total operating expenses 4,102 9,556 27,744 41,786 Income (loss) from operations 2,920 (1,711) 1,820 (5,642) Other income(expense), net (192) 44 (75) 412 Income (loss) before income taxes 2,728 (1,667) 1,745 (5,230) Income tax expense (benefit) 75 3,166 196 2,065 Net income (loss) $2,653 $(4,833) $1,549 $(7,295) Basic income (loss) per share $0.26 $(0.45) $0.15 $(0.68) Shares used in basic per share calculation 10,180 10,663 10,113 10,742 Diluted income (loss) per share $0.25 $(0.45) $0.15 $(0.68) Shares used in diluted per share calculation 10,447 10,663 10,172 10,742 DATASOURCE: Rogue Wave Software, Inc. CONTACT: Sherry Beck of Rogue Wave Software, Inc., +1-303-545-3264, Web site: http://www.roguewave.com/

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