Timberline Software Reports Record Second Quarter Results - 2nd qtr 1999 - Company Financial Information

Edge: Work-Group Computing Report, July 19, 1999

Timberline Software Corporation (Nasdaq:TMBS), a leading developer of computer software for the construction and property management industries, Wednesday reported the highest second quarter revenue and profits in the Company's history.

Revenue for the quarter ended June 30, 1999 was $13,271,000, an increase of 27% over $10,460,000 for the same quarter a year ago. Net income for the quarter rose 39% to $2,255,000 or $.23 per diluted share compared to net income of $1,623,000 or $.17 per diluted share for the second quarter of 1998.

For the six months ended June 30, 1999, the Company's net income rose 61% to $4,485,000 or $.46 per diluted share on revenue of $26.6 million compared to net income of $2,782,000 or $.29 per diluted share on revenue of $19.8 million for the like period a year ago.

"Record operating results for the second quarter were primarily the result of strong growth in both software sales and service fee revenue," said Curtis Peltz, President. "Continued strength in the construction industry and our increased market dominance enabled us to achieve these results."

Overall software sales grew 28% to $7,226,000 in the second quarter of 1999 from $5,624,000 in 1998. Service fees from support, consulting and training, which account for 44% of total revenue, also continued their strong growth, rising 29% to $5,786,000 in 1999 from $4,483,000 for the same quarter a year ago.

Operating expenses for the quarter increased 18% to $8,404,000 in 1999 from $7,106,000 in 1998. The rise was primarily due to increased personnel costs in the product development, customer support, and sales areas.

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)


                            Six Months Ended       Quarter Ended
                                June 30,              June 30,
                            1999       1998       1999      1998
                         --------------------   ------------------
Net revenue:
 Computer software        $14,698    $10,678    $ 7,226   $ 5,624
 Service fees              11,286      8,612      5,786     4,483
 Other                        628        553        259       353
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 Net revenue               26,612     19,843     13,271    10,460
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Cost and expenses:
 Cost of revenue            2,439      1,838      1,311       972
 Customer support           4,959      4,018      2,507     2,088
 Product development        5,010    4,234      2,546     2,193
 Sales and marketing        4,425      3,168      2,019     1,598
 General and administrative 2,659      2,494      1,332     1,227
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 Total cost and expenses   19,492     15,752      9,715     8,078
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Operating income            7,120    4,091      3,556     2,382

Other income                  233        327        142       196
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Income before income taxes  7,353      4,418      3,698     2,578
Provision for income taxes  2,868      1,636      1,443       955
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Net income                $ 4,485    $ 2,782    $ 2,255   $ 1,623
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Earnings per share:
 Basic                    $  0.47    $  0.30  $  0.24   $  0.17
 Diluted                     0.46       0.29       0.23      0.17

Weighted-average common shares
 outstanding, used in computing
  earnings per share:
 Basic                      9,464      9,350    9,484     9,370
 Diluted                    9,791      9,689      9,833     9,716

TIMBERLINE SOFTWARE CORPORATION
CONDENSED BALANCE SHEETS
(Amounts in thousands)
                                    (Unaudited)
                                    June 30, 1999     Dec. 31, 1998
                                   --------------     -------------
Assets
Current assets:
 Cash and temporary investments       $13,400           $13,960
 Accounts receivable                    4,510             5,086
 Other current assets                   1,903               1,474
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 Total current assets                  19,813              20,520

Property and equipment                 18,248              18,381
Capitalized software costs              2,224               1,304
Purchased software                      1,549               1,249
Other assets                               80                95
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Total assets                          $41,914             $41,549
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Liabilities and Shareholders' Equity
Current liabilities:
 Accounts payable                     $   940           $   812
 Deferred revenues                     12,237              10,352
 Other current liabilities              3,271               3,856
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 Total current liabilities             16,448              15,020
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Long-term debt                             --               5,417
Deferred credits                          986               1,076

Shareholders' equity:
 Common stock                             380               377
 Additional paid in capital             4,468               3,721
 Accumulated other
  comprehensive income                    (24)                 10
 Retained earnings                     19,656              15,928
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 Total shareholders' equity            24,480            20,036
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Total liabilities and
 shareholders' equity                 $41,914             $41,549