This is not a typical MacDev-1 release, but some have expressed interest in
special cases like Metrowerks.
FOR IMMEDIATE RELEASE
METROWERKS THIRD QUARTER REVENUES TOTAL US$3.6 MILLION
Metrowerks Takes $4.3 Million Non-Recurring Charge
AUSTIN, Texas-May 12, 1997-Metrowerks Inc. (NASDAQ: MTWKF, TSE/ME:MWK),
today announced the results of its third fiscal quarter ending April 30,
1997, reporting revenue of $3.6 million, an increase of 52% over the third
fiscal quarter of 1996. During the quarter, the company continued its
product diversification efforts in the face of declining Mac OS-based
product sales. As a result of the declining Mac OS sales, non-recurring
and acquisition charges of $4.3 million, or $0.37 per share, related to the
company’s Mac OS-based product business were incurred. The net loss from
ongoing operations was $1.6 million, or $.14 per share. After taking into
account non-recurring charges, the company reported a net loss of $5.9
million, or $0.51 on a per share basis.
Details of Non-recurring Charges
In the third quarter, Metrowerks saw sales of Mac OS-based products, net of
all returns, drop to $813,000, representing the lowest level of quarterly
Mac OS-based product sales since the introduction of CodeWarrior in 1994.
Given this material decline in the Mac OS-based tools business, the company
has taken a $4.3 million charge against third quarter results, in order to
reflect, completely, the Company’s exposure to the Mac OS-based products.
The charge is composed of a $1.7 million write-off of capitalized software
costs, a $471,000 acquired in-process R&D and a $2.1 million provision for
Mac OS-based product returns and other related costs. “We believe that the
dramatic steps we have taken in the third quarter were needed and they will
benefit the company,” said Jean Belanger, chairman and chief executive
officer of Metrowerks. “We continue to be strongly committed to growing
our business and we are encouraged by our success to date in penetrating
new embedded systems tools markets.”
Third Quarter Highlights
In the third quarter the company made significant progress in diversifying
its business. In April 1997, the company shipped its Windows 95/NT-hosted
tools for PalmPilot, the most popular electronic ‘organizer’ in the world.
CodeWarrior for PalmPilot made a significant contribution to revenues in
the third quarter.
In April 1997, the company announced support for Windows CE with Microsoft
and NEC Electronics, which will ship in a new CodeWarrior for Windows CE
product by the fourth calendar quarter. Windows CE is a new operating
system from Microsoft aimed at the embedded systems market. Already,
Windows CE is shipping in electronic organizers/PDAs from six different
vendors. Windows CE is expected to be a very popular embedded operating
system in the future. Microsoft has announced that it intends to have
Windows CE run on PowerPC, MIPS, x86, ARM and Hitachi SH microprocessors.
The company’s heavy R&D investments in compiler technology in the past five
years is directly applicable to Windows CE as Metrowerks is the only
mainstream desktop programming tools vendor other than Microsoft to support
PowerPC, x86 and MIPS.
In February 1997, Metrowerks purchased the Latitude porting libraries which
will allow Metrowerks to port CodeWarrior to UNIX-based workstations which
are very popular hosts for embedded systems development. CodeWarrior on
UNIX will ship in the fourth calendar quarter. The Latitude porting
libraries will also be used to move existing Mac OS applications to
Rhapsody, Apple’s next generation operating system.
In the third quarter the company had total revenues of $3.6 million, an
increase of 52% over the third fiscal quarter of 1996, but $1.0 million
less than in the second quarter of fiscal 1997. The decline in revenues
from last quarter is accounted for by the substantial decrease in Mac
OS-based product revenues in the third quarter and the fact that the
company did not ship CodeWarrior for OS-9 in the third quarter. CodeWarrior
for OS-9 is undergoing final testing and is now expected to ship in June,
In the third quarter, SG&A and technical support expenses totalled $2.2
million as compared to $1.8 million for the second quarter. This increase
relates to the first full quarter of administrative and marketing costs of
the company’s new Tokyo office. In order to streamline its sales
activities, the company merged its channel sales and embedded sales groups
under the direction of Mr. David Perkins, Sr. Vice President of Metrowerks.
In the third quarter, R&D expenses totalled $1.8 million as compared to
$1.5 million in the second quarter. The increase in R&D expenses reflects
the fact that the company had no development costs in the current quarter
that met the criteria for capitalization.
The company had $6.1 million of cash on hand at April 30, 1997.
This release, other than historical financial information, may consist of
forward-looking statements that involve risks and uncertainties. These
statements may differ materially from actual future events or results. For
instance, factors which could cause results to differ from future events
include the state of the Mac OS tools market, the timing of product
deliveries, competitive pricing actions and marketing programs, among
others. Additional information on these and other factors which could
affect the Company’s financial results are included in the Company’s 1996
annual report to shareholders and most recent quarterly reports on file
with the Securities and Exchange Commission.
All figures are reported in thousands of US dollars (except per share amount):
April 30 July 31 Oct 31 Jan 31 April 30
1996 1996 1996 1997 1997
Revenue 2,372 3,504 3,766 4,684 3,615
Cost of goods sold
404 972 968 1,317 958
SG&A and technical support
1,224 1,386 1,636 1,813 2,203
Research & development
903 1,314 1,217 1,459 1,828
– – – – 4,297
Depreciation of fixed assets
105 160 209 261 319
Total operating expenses
2,636 3,832 4,030 4,850 9,605
Operating income (loss)
(264) (328) (264) (166) (5,990)
Interest 117 150 129 91 70
Net earnings (loss)
(147) (178) (135) (75) (5,920)
EPS fully diluted
(0.01) (0.02) (0.01) (0.01) (0.51)
As of April 30, 1997 there were 11,537,500 shares outstanding and there
were 1,251,183 options outstanding to acquire common shares.
CodeWarrior is an intuitive suite of software development tools that
includes an award-winning Integrated Development Environment (IDE) complete
with project manager, resource and text editors, debugger, class browser,
online documentation and tutorials. CodeWarrior’s cross-platform compilers
support C, C++, Object Pascal and Java, and allow programmers to build
applications for a number of different target platforms, all from one
Founded in 1985, Metrowerks develops, markets and supports a complete line
of programming tools used for software development for a number of
operating systems and microprocessors. Intended for use on desktop
computers or embedded systems, these operating systems include Mac OS,
Windows 95, Windows NT, PlayStation OS, BeOS and Palm OS, running on 68K,
PowerPC, MIPS and x86 microprocessors. Metrowerks’ CodeWarrior products are
used by over 70,000 registered users in 70 countries.
Metrowerks, the Metrowerks logo and CodeWarrior are registered trademarks
of Metrowerks Inc. Apple, Macintosh and Mac are registered trademarks of
Apple Computer, Inc. Microsoft, Windows and Windows NT are either
registered trademarks or trademarks of Microsoft Corporation in the United
States and/or other countries. All other company and product names may be
registered trademarks or trademarks of their respective companies/holders,
and are hereby recognized.
Chief Financial Officer