PeopleSoft Announces Record Quarterly Revenue; License Revenue Up 70 Percent, Net Income up 229 Percent

Business Wire, April 25, 2001

Business Editors/High-Tech Writers

PLEASANTON, Calif.--(BUSINESS WIRE)--April 25, 2001

PeopleSoft Inc. (Nasdaq:PSFT) today announced record financial results for the first quarter ended March 31, 2001. Total revenue increased 34 percent over the first quarter of last year to $503 million. It was the highest revenue in company history and the fourth consecutive record quarter for the pure internet applications leader.

Continued market demand for PeopleSoft's collaborative enterprise applications drove first quarter license revenue up 70 percent over the first quarter of last year to $153 million. Service revenues rose 22 percent over the same quarter of last year to $319 million as customer adoption of PeopleSoft 8 drove increased demand for the Company's consulting business.

Net income from recurring operations increased sharply, rising 229 percent to $36 million, or $0.11 per share, up from $11 million, or $0.04 per share, in the same quarter of 2000. Results for the first quarter of 2000 do not include a non-recurring after-tax gain from the sale of equity securities of $5.8 million. Including this gain, net income for the first quarter of 2000 was $17 million, or $0.06 per share.

The company's cash and investments were $1.155 billion at March 31, 2001, an increase of $59 million from December 31, 2000.

Management Commentary

"PeopleSoft is reporting strong financial results during a very difficult macro economic period," said President and CEO Craig Conway. "This success is based on continued market acceptance of PeopleSoft 8 and the strength of our services business, together with strong execution and precision management," Conway said.

"Our pure internet applications have given PeopleSoft an unprecedented leadership opportunity," Conway said. "No other applications vendor can match our internet architecture. It is the basis for companies to create a collaborative network between customers, suppliers and employees, which dramatically lowers costs and increases productivity," Conway added.

"Enhancing productivity and lowering costs are at the center of technology buying decisions, especially in tough economic times. PeopleSoft's eBusiness solutions are uniquely positioned to help companies drive top line growth and bottom line profit. No company can ignore this today," Conway added.

Customer Wins

PeopleSoft won significant deals against its competitors in the first quarter in all product lines and across all geographies. Enterprises buying PeopleSoft eBusiness applications included: AT&T Broadband, Avery Dennison, Avon Products, BEA Systems, Boeing, CIBC, Darden Restaurants, Dynegy, Jostens, Lowe's Companies, Lucent Technologies, Nationwide Building Society plc, Pfizer, Pharmacia, Safeway plc, Sumitomo Forestry, University of Texas Medical Branch at Galveston, Verizon Wireless and Weyerhaeuser Company.

About PeopleSoft

PeopleSoft is a world leader in providing eBusiness applications that enable people -- customers, employees, and suppliers -- to power the internet. PeopleSoft's pure internet Customer Relationship Management, Supply Chain Management, and Enterprise Management solutions provide the industry's most open and flexible e-commerce platform. PeopleSoft employs more than 8,000 people worldwide, including 2,400 eBusiness consultants. More than 4,700 organizations in 107 countries run on PeopleSoft eBusiness applications. Visit us at www.peoplesoft.com.

PeopleSoft and the PeopleSoft logo are registered trademarks. All other company and product names may be trademarks of their respective owners.

Statements made in this press release that state the Company's or management's intentions, beliefs, expectations, or predictions for the future are forward-looking statements. Readers are cautioned that these statements are only predictions and may differ materially from actual future events or results. The specific forward-looking statements relate to such matters as the Company's plans for the development and marketing of certain products and services and the competitive position and market acceptance of existing products and services, as well as those under development. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the Company's actual results to differ materially from those projected in such forward-looking statements. These risks, assumptions and uncertainties include: the ability to complete and deliver products and services within currently estimated time frames and budgets; the ability to achieve revenues from products and services that are under development; competitive and pricing pressures; and other risks referenced from time to time in the Company's filings with the Securities and Exchange Commission. Please refer to the Company's annual report to shareholders (Form 10-K) and subsequent filings on Form 10-Q for more information on the risk factors that could cause actual results to differ.

             CONDENSED CONSOLIDATED FINANCIAL INFORMATION
                 (In thousands, except per share data)
                              (Unaudited)

                                             THREE MONTHS ENDED
                                                 MARCH 31,
                                            2001            2000
Revenues:
  License fees                          $ 153,278       $  90,235
  Services                                319,089         262,052
  Development and other services           30,721          23,132
     Total revenues                       503,088         375,419

Costs and expenses:
  Cost of license fees                     16,268          10,433
  Cost of services                        173,692         143,287
  Cost of development services             27,894          21,097
  Sales and marketing expense             126,184          86,530
  Product development expense              79,040          79,899
  General and administrative expense       33,879          25,634
     Total costs and expenses             456,957         366,880

Operating income                           46,131           8,539

Other income, net                           8,920          17,677

Income before provision for income
taxes                                      55,051          26,216

Provision for income taxes                 18,993           9,431

Net income                              $  36,058       $  16,785

Basic income per share                  $    0.12       $    0.06
Shares used in basic per share
computation                               290,187         273,661

Diluted income per share                $    0.11       $    0.06
Shares used in diluted per share
 computation                              315,011         291,953

                                        MARCH 31,      DECEMBER 31,
                                           2001             2000
                        ASSETS

Current assets:
 Cash and cash equivalents              $ 337,078        $ 646,605
 Short-term investments                   718,842          354,074
 Accounts receivable, net                 429,651          449,036
 Investments in corporate
  equity securities                         7,969            8,241
 Income taxes receivable                   20,083           31,652
 Deferred tax assets                       63,913           59,214
 Other current assets                      73,938           67,109
    Total current assets                1,651,474        1,615,931

Property and equipment, at cost           459,945          443,629
    Less accumulated depreciation
     and amortization                    (248,281)        (234,443)
                                          211,664          209,186

Investments                                99,223           95,650
Non-current deferred tax assets            19,043           19,121
Capitalized software, less
 accumulated amortization                   6,528            7,369
Other assets                               35,600           37,893
                                      $ 2,023,532      $ 1,985,150

         LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable and accrued
  liabilities                           $ 197,865        $ 176,906
 Accrued compensation and
  related expenses                        135,465          158,623
 Income taxes payable                       6,709            5,059
 Deferred revenues                        415,198          429,554
    Total current liabilities             755,237          770,142

Long-term deferred revenues               103,005          100,858
Long-term debt                             57,000           68,000
Other liabilities                          21,203           21,795

Stockholders' equity:
 Common stock                               2,912            2,880
 Additional paid-in capital               857,334          813,551
 Treasury stock                           (15,000)         (15,000)
 Retained earnings                        261,718          225,660
 Accumulated other comprehensive loss     (19,877)          (2,736)
                                        1,087,087        1,024,355
                                     $  2,023,532      $ 1,985,150

Worldwide employee count                    8,255            8,019