Financial: Hyperion Software Reports Record Revenues and Earnings. Hyperion Prepares for Merger with Arbor Software, Posts 26% Operating Margin

Edge: Work-Group Computing Report, July 20, 1998

                    Hyperion Software Corporation

                     Consolidated Financial Data

                (in thousands, except per share data)

                                 Quarter Ended         Year Ended

                                    June 30,            June 30,

                               1998       1997     1998        1997

Statement of Income Data:

Software license revenues  $54,206     $41,799  $147,601   $112,115

License renewals & service

  revenues                  43,129      31,825   147,255    110,715

Total revenues              97,335      73,624   294,856    222,830

Cost of revenues            26,884      22,792    95,850     76,211

Sales & marketing expenses  27,297      22,842    91,786     72,277

Research & development

  expenses                  11,411       9,441    38,320     33,046

General & administrative

  expenses                   6,797       5,186    27,937     19,216

Asset valuation &

  restructuring costs                    4,400                4,400

Net income                  16,403       5,886(a)  27,841 11,878(a)

Diluted earnings per share     .82         .31(a)    1.41    .64(a)

R&D Spending               $11,920     $10,951   $40,993  $  37,838

                                          June 30,

                                     1998        1997

Balance Sheet Data:

Cash & cash equivalents           $119,561   $  67,059

Accounts receivable, net            78,567      64,831

Working capital                     82,005      42,236

Total assets                       291,519     218,639

Deferred revenue                    50,884      44,619

Mortgage payable                     7,314       7,823

Stockholders' equity               157,141     113,037

Hyperion Software (NASDAQ: HYSW) Wednesday reported revenues of $97.3 million and net income of $16.4 million, or $.82 per share, for its fourth quarter ended June 30, 1998. Revenues rose 32 percent from $73.6 million for the same period of the prior year. Net income rose 179 percent from $5.9 million, or $.31 per share, for the fourth quarter of fiscal 1997.

Revenues for the fiscal year ended June 30, 1998 were $294.9 million and net income was $27.8 million, or $1.41 per share. Revenues and net income increased 32 percent and 134 percent, respectively, from $222.8 million and $11.9 million, or $.64 per share, for fiscal year 1997. The company generated cash of $68.6 million from its 1998 operating activities. Also for the year, $105.6 million or 36 percent of Hyperion's revenues were generated from markets outside of the U.S.

Hyperion saw its software license sales grow 30 percent for the quarter and 32 percent for the year. Sales of the company's business analysis product (Hyperion MBA) were up 117 percent over the fourth quarter of the prior year. The corporate budgeting product line (Pillar) was up 102 percent for the same period. In addition to record revenues and earnings, Hyperion's operating margin for the quarter was a record 26 percent.

"We're very pleased with the quarter's results and, in particular, the exceptionally strong showing in our high growth products, Pillar and MBA. Combined, those product lines were up almost 110 percent over the fourth quarter of last year and account for nearly half of our license fees in this quarter," said Jim Perakis, Chairman and CEO. "Upon completion of our merger with Arbor, and when Essbase is included in the combined company's product line, high growth products will represent an even larger percentage of the product offering."

Hyperion expects to complete its merger with Arbor Software Corporation by the end of August, with Arbor and Hyperion shareholders scheduled to vote on the combination on August 20th. The merger will bring about Hyperion Solutions Corporation, a global company with more than $350 million in annual revenues based on pro forma combined results, more than 1,800 employees operating in 26 countries, leading positions in each of its core markets and a customer list that will include approximately two thirds of the Fortune 100. Hyperion Solutions will be able to provide customers worldwide with comprehensive analytic solutions. The merger is subject to customary closing conditions, including the approval of the transaction by shareholders of both companies.

Arbor Software Corporation (Nasdaq: ARSW) develops and markets enterprise OLAP software for management reporting, analysis and planning applications. With $82 million in revenues for the year ended March 31, 1998, the company's products are used by more than 1,700 corporations worldwide, spanning a broad range of industries, business applications and enterprise data warehousing architectures. Arbor's customers include BankBoston, Los Angeles Times, PepsiCo, Prudential and Sears. Arbor's products are sold direct, as well as through system integrators and resellers worldwide, including Comshare, Fujitsu, i2 Technologies, IBM, Lawson Software, Mitsubishi, PeopleSoft and Walker. Arbor's offices are located in Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, New York, Sunnyvale, Washington D.C., Frankfurt, Hamburg, London, Munich, Paris and Sydney.