Financial: Timberline Software Reports Record Results - Company Financial Information

Edge: Work-Group Computing Report, Feb 1, 1999

Timberline Software Corporation (Nasdaq:TMBS), a leading developer of computer software for the construction and property management industries, Wednesday reported the highest quarterly and annual operating results in the Company's history. Revenue for the quarter ended December 31, 1998 was $13,372,000, an increase of 25% over $10,712,000 in the same quarter a year ago.

Net income for the quarter rose 35% to $2,686,000 or $.28 per diluted share compared to net income of $1,983,000 or $.21 per diluted share for the fourth quarter of 1997. For the year ended December 31, 1998, the Company's net income rose 59% to $7,194,000 or $.74 per diluted share on revenue of $44.3 million compared to net income of $4,535,000 or $.48 per diluted share on revenue of $35.2 million for the year 1997. "Strong growth in both software sales and service fee revenue enabled us to achieve record operating results," said Curtis Peltz, President. "The demand for our accounting software products was particularly strong and should continue into the coming year." Software sales for the quarter were $7,748,000 an increase of 26% over $6,162,000 in the fourth quarter of 1997. Service fees from support, consulting and training increased 23% to $5,121,000 from $4,174,000 for the same quarter a year ago. Operating expenses for the quarter increased 21% to $8,212,000 from $6,795,000 in the fourth quarter of 1997. The increase was primarily due to higher personnel costs in the customer support area and a decrease in capitalized software development costs. Founded in 1971, Timberline Software Corporation is a leading supplier of project accounting and cost estimating software for the construction and property management industries.

               TIMBERLINE SOFTWARE CORPORATION
                   STATEMENTS OF OPERATIONS
  (Unaudited - Amounts in thousands, except per share data)


                        Year Ended Dec 31,   Quarter Ended Dec 31,
                          1998      1997        1998     1997
                      ---------------------  --------------------
Net revenue:
  Computer software   $24,786    $18,928      $ 7,748    $ 6,162
  Service fees         18,197     15,354        5,121      4,174
  Other                 1,310        958          503        376
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  Total net revenue    44,293     35,240       13,372     10,712
------------------------------------------------------------------

Cost and expenses:
  Cost of revenue       3,909      3,605        1,107        933
  Customer support      8,496      6,744        2,301      1,805
  Product development   8,863      7,264        2,263      1,867
  Sales and marketing   6,916      6,351        1,993      1,773
  General and
   administrative       5,334      4,776        1,655      1,350
------------------------------------------------------------------
Total cost and
 expenses              33,518     28,740        9,319      7,728
------------------------------------------------------------------
Operating income       10,775      6,500        4,053      2,984
Other income              531        470           95        148
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Income before
  income taxes         11,306      6,970        4,148      3,132
Provision for
  income taxes          4,112      2,435        1,462      1,149
------------------------------------------------------------------
Net income            $ 7,194    $ 4,535      $ 2,686    $ 1,983
------------------------------------------------------------------
Earnings per share:
  Basic               $  0.77    $  0.49      $  0.29    $  0.21
  Diluted                0.74       0.48         0.28       0.21

Weighted-average common
 shares outstanding, used in
 computing earnings
  per share:
  Basic                 9,375      9,222        9,403      9,299
  Diluted               9,700      9,483        9,715      9,598


                   TIMBERLINE SOFTWARE CORPORATION
                       CONDENSED BALANCE SHEETS
                        (Amounts in thousands)

                                     Dec 31, 1998   Dec 31, 1997
                                    --------------  -------------
Assets
Current assets:
  Cash and temporary investments        $13,960       $10,245
  Accounts receivable                     5,086         4,303
  Other current assets                    1,474         1,268

  Total current assets                   20,520        15,816

Property and equipment                   18,381         7,485
Capitalized software costs                1,304         1,634
Purchased software                        1,249           709
Other assets                                 95           110

                                        $41,549       $25,754

Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable                      $   812       $ 1,440
  Deferred revenues                      10,352         7,503
  Other current liabilities               3,856         2,534

  Total current liabilities              15,020        11,477

Long-term debt                            5,417          --
Deferred credits                          1,076         1,011

Shareholders' equity:
  Common stock                              377           372
  Additional paid in capital              3,721         2,907
  Accumulated other comprehensive income     10            17
  Retained earnings                      15,928         9,970

  Total shareholders' equity             20,036        13,266

                                        $41,549       $25,754