Segue Software, Inc. (NASDAQ-CM: SEGU), a leader in Software
Quality Optimization(TM) (SQO(TM)), today announced financial
results for the fourth quarter and fiscal year 2005 ended December
31, 2005. In a separate release, Segue announced that it has signed
a definitive agreement to be acquired by Borland Software
Corporation (NASDAQ NM: BORL). Net revenues for the fourth quarter
totaled $10.1 million, an increase of 19% over $8.5 million
reported in the fourth quarter of 2004. Software license revenues
increased 24% over the same period to $4.7 million. Net income
applicable to common shareholders was $1.1 million, or $0.09 per
diluted share, as compared to $459,000, or $0.04 per diluted share
for the quarter ended December 31, 2004. For fiscal year 2005 the
Company recorded net revenues of $36.4 million, up 10% from 2004,
and software license revenues of $15.9 million, up 9% from 2004.
Net income applicable to common shareholders was $2.9 million, or
$0.25 per diluted share, as compared to $1.7 million, or $0.15 per
diluted share, for 2004. Segue closed fiscal year 2005 with a
strong cash position of $14.5 million, up from $11.0 million at the
beginning of the year, deferred revenues of $12.1 million, up from
$10.5 million a year ago, and no long-term debt. Borland Conference
Call Information As a result of the acquisition, Segue has
cancelled its earnings conference call and webcast scheduled for
today, Wednesday, February 8, 2006 at 8:30 a.m. EST. Borland will
hold a conference call and webcast to discuss recent announcements
today, Wednesday, February 8, 2006 at 2:00 pm EST. To access the
live webcast of this conference call, please visit the Investor
Relations section of Borland's website at least 30 minutes prior to
the scheduled time to download any necessary audio or plug-in
software. A replay will be available approximately two hours after
the conference call ends and will be available until February 23,
2006, at 12:00 a.m. PST. Please dial 1.800.405.2236 or
+1.303.590.3000, passcode 11050769 to access the replay. The
archived webcast will also be available on Borland's website. About
Segue Software Segue Software, Inc. (NASDAQ-CM: SEGU) is a global
expert in delivering solutions to define, measure, manage and
improve software quality throughout the entire software application
lifecycle. Segue's Software Quality Optimization(TM) (SQO(TM))
solutions help companies reduce business risk, ensure the
deployment of high quality software and increase return on
investment. Leading businesses around the world, including many of
the Fortune 500, rely on Segue's innovative Silk family of products
to protect their business service levels, competitive edge and
brand reputation. Headquartered in Lexington, Mass., with offices
across North America, Europe and Asia, Segue can be reached at
+1-781-402-1000 or www.segue.com. This press release may contain
forward-looking statements,. Forward-looking statements are
statements that contain predictions or projections of future events
or performance, and often contain words such as "anticipates",
"can", "estimates", "believe", "expects", "projects", "will",
"might", or other words indicating a statement about the future.
The Company notes that any such forward-looking statements are
subject to change and are not guarantees of future performance, and
that actual results may differ materially from any such predictions
or projections, based on various important factors and including,
without limitation, the Company's and Borland's ability to
consummate the transaction; the conditions to the completion of the
transaction may not be satisfied, or the regulatory approvals
required for the transaction may not be obtained on the terms
expected or on the anticipated schedule; and the parties' ability
to meet expectations regarding the timing, completion and
accounting of the merger; the possibility that the parties may be
unable to achieve expected synergies and operating efficiencies in
the merger within the expected time-frames or at all and to
successfully integrate the Company's operations into those of
Borland's; such integration may be more difficult, time-consuming
or costly than expected; revenues following the transaction may be
lower than expected; operating costs, customer loss and business
disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers, clients or
suppliers) may be greater than expected following the transaction;
the retention of certain key employees at the Company, the ability
of the Company to continue to achieve positive cash flow and
sustain profitability in this difficult economic and business
climate; the ability of the Company to close large enterprise
orders; the Company's transition to a new management team; the
timing and success of introductions of our new products; market
acceptance of recently-introduced products (including SilkCentral
Test Manager 8.0) and updated releases; the effectiveness of our
additional distributors and resellers; growth in license revenue;
new products and announcements from other companies; the Company's
continued access to capital; and changes in technology and industry
standards. Additional information on the factors that could affect
the Company's business and financial results is included in the
Company's periodic reports filed with the Securities and Exchange
Commission. Segue and the Segue logo are registered trademarks and
Software Quality Optimization and SQO are trademarks of Segue
Software, Inc. All other marks are the property of their respective
owners. -0- *T Segue Software, Inc. Consolidated Condensed Balance
Sheets (In thousands, except per share data) (Unaudited) December
31, December 31, 2005 2004 ------------- ------------- ASSETS
Current assets: Cash and cash equivalents $ 14,495 $ 11,028
Accounts receivable, net of allowances of $317 and $281,
respectively 8,775 6,421 Other current assets 863 1,013
------------- ------------- Total current assets 24,133 18,462
Property and equipment, net 753 749 Goodwill, net 1,506 1,506 Other
assets 44 604 ------------- ------------- Total assets $ 26,436 $
21,321 ============= ============= LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 637 $ 564 Accrued
compensation and benefits 1,794 1,602 Accrued lease obligations on
excess space 669 1,059 Accrued expenses 817 1,134 Deferred revenue
12,055 10,524 ------------- ------------- Total current liabilities
15,972 14,883 Stockholders' equity: Preferred stock, par value $.01
per share; 9,000 shares authorized; 0 and 921 shares of Series B
and 0 and 570 shares of Series C preferred stock issued and
outstanding, respectively - 4,726 Common stock, par value $.01 per
share; 30,000 shares authorized; 12,113 and 10,195 shares issued,
respectively 120 102 Additional paid-in capital 63,643 57,959
Cumulative translation adjustment 221 429 Unearned stock-based
compensation (24) (47) Accumulated deficit (52,896) (56,131)
------------- ------------- 11,064 7,038 Less treasury stock, at
cost, 145 shares (600) (600) ------------- ------------- Total
stockholders' equity 10,464 6,438 ------------ ------------- Total
liabilities and stockholders' equity $ 26,436 $ 21,321
============= ============= Segue Software, Inc. Consolidated
Condensed Statements of Operations (In thousands, except per share
data) Unaudited Three Months Ended Twelve Months Ended December 31,
December 31, 2005 2004 2005 2004 --------- --------- ---------
--------- Revenue: Software $ 4,650 $ 3,706 $ 15,894 $ 14,644
Services 5,475 4,857 20,858 18,516 --------- --------- ---------
--------- Gross revenue 10,125 8,563 36,752 33,160 Less vendor
consideration to a customer (66) (50) (314) (154) ---------
--------- --------- --------- Net revenue 10,059 8,513 36,438
33,006 Cost of revenue: Cost of software 122 93 419 352 Cost of
services 1,186 1,124 4,744 4,947 --------- --------- ---------
--------- Total cost of revenue 1,308 1,217 5,163 5,299 Gross
margin 8,751 7,296 31,275 27,707 Operating expenses: Sales and
marketing 4,699 3,580 15,881 14,019 Research and development 1,922
1,775 7,365 6,610 General and administrative 1,345 1,307 5,112
4,711 --------- --------- --------- --------- Total operating
expenses 7,966 6,662 28,358 25,340 --------- --------- ---------
--------- Income from operations 785 634 2,917 2,367 Other income,
net 15 - 15 15 Interest income, net 105 33 295 93 ---------
--------- --------- --------- Income before provision for income
taxes 905 667 3,227 2,475 Provision (benefit) for income taxes 46
(28) (8) 35 --------- --------- --------- --------- Net income 859
695 3,235 2,440 Preferred stock dividend-in- kind 194 (236) (364)
(763) --------- --------- --------- --------- Net income applicable
to common shares $ 1,053 $ 459 $ 2,871 $ 1,677 ========= =========
========= ========= Net income per common share - Basic $ 0.10 $
0.05 $ 0.28 $ 0.17 Net income per common share - Diluted $ 0.09 $
0.04 $ 0.25 $ 0.15 Weighted average common shares outstanding -
Basic 10,627 10,028 10,300 9,932 Weighted average common shares
outstanding - Diluted* 11,714 10,967 11,445 10,834 * The assumed
conversion of preferred shares into common shares is not included
because their inclusion would be anti-dilutive. *T
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