BroadVision, Inc. Announces 57% Sequential License Growth and Non-GAAP Profit in Fourth Quarter of 2004

BroadVision, Inc. Announces 57% Sequential License Growth and Non-GAAP Profit in Fourth Quarter of 2004 Company Also Reports Strengthened Balance Sheet REDWOOD CITY, Calif., Jan. 26 /PRNewswire-FirstCall/ -- BroadVision, Inc. (NASDAQ:BVSN), a global provider of self-service web applications, today reported financial results for its fourth quarter ended December 31, 2004. Revenue for the quarter was $19.8 million, compared with revenue of $17.2 million for the third quarter ended September 30, 2004 and $23.3 million for the fourth quarter of 2003. License revenue for the quarter totaled $7.3 million versus $4.7 million in the third quarter of 2004 and $10.4 million in the comparable quarter of 2003. In the fourth quarter, BroadVision posted a net loss on a generally accepted accounting principles (GAAP) basis of $386,000, or $0.01 per share, as compared with GAAP net income of $23.4 million, or $0.69 per diluted share, for the third quarter of 2004, and a GAAP net loss of $18.9 million, or $0.57 per share, in the fourth quarter of 2003. The GAAP loss in the most recent quarter included a restructuring charge of $660,000 attributable largely to the revaluing of excess lease accruals to actual or anticipated settlement amounts. Similarly, the GAAP net income for the third quarter of 2004 included a $25.5 million restructuring credit related primarily to the reduction of excess lease accruals to actual or anticipated settlement amounts. Pro forma net income for the fourth quarter of 2004 was $274,000, or $0.01 per diluted share, compared with a pro forma net loss of $2.1 million, or $0.06 per share, in the third quarter of 2004 and pro forma net income of $3.0 million, or $0.09 per diluted share, in the fourth quarter of 2003. The preceding pro forma results exclude a $660,000 restructuring charge in the fourth quarter of 2004, a $25.5 million restructuring credit in the third quarter of 2004 and a $22.0 million restructuring charge in the fourth quarter of 2003. A reconciliation of pro forma results to GAAP results is provided in the financial information attached to this press release. The Company believes its pro forma results provide useful information because they reflect the Company's financial performance excluding certain charges, credits, gains and losses that the Company believes are not indicative of its ongoing operations. "We are pleased to report fourth quarter revenue that was at the top end of our range of guidance and a return to pro forma profitability," said Dr. Pehong Chen, BroadVision president and CEO. "We increased license revenue by 57% sequentially as a number of new and repeat customers committed to BroadVision technology. Also in recent weeks, we exited nearly all of our excess real estate lease obligations and completed a $16 million convertible debt financing. These transactions enable us now to focus on execution against our 2005 growth and profit goals." During the fourth quarter of 2004, BroadVision closed new and repeat business in all key vertical markets with customers such as ENI, Exempla Healthcare, HP Shopping, Iberia Airlines, Japan Airlines, Saudi Aramco, Telecom Italia, and the United States Air Force. The Company also acquired 7 new BroadVision Process(TM) license customers. This solution enables organizations to transform people-intensive processes into high-touch, self- service applications that can be deployed into existing websites. Conference Call BroadVision will hold a conference call to discuss this press release and related matters at 5:00 pm Eastern Time, January 26, 2005. The call, hosted by Dr. Pehong Chen, can be accessed live by dialing 866-761-0749; pass code 21414601 or live and thereafter by visiting the investor relations section of the Company's website at www.broadvision.com/ir. Information Concerning Forward-Looking Statements Information in this release that involves expectations, beliefs, hopes, plans, intentions or strategies regarding the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which forward-looking statements involve risk and uncertainties. All forward-looking statements included in this release, including, but not limited to, our ability to finalize revenue transactions in future quarters and our ability to generate growth, earnings and positive cash flows in 2005, are based upon information available to BroadVision as of the date of this release, and BroadVision assumes no obligation to update or correct any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from BroadVision's current expectations. Factors which could cause or contribute to such differences include, but are not limited to: lack of market acceptance of BroadVision's existing and new products or services; BroadVision's inability to continue to develop competitive new products and services on a timely basis; introduction of new products or services by competitors; general economic conditions and BroadVision's inability to attract and retain qualified employees. These and other factors and risks associated with BroadVision's business are discussed in its most recent annual report on Form 10-K and in BroadVision's quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission. About BroadVision BroadVision is a global provider of personalized self-service web applications. Our integrated suite of process, commerce, portal, and content solutions helps customers rapidly increase revenues and reduce costs. Over 1,000 organizations -- including Circuit City, Vodafone, Cardinal Health, Hewlett-Packard, Toyota, Japan Airlines and the U.S. Air Force -- serving nearly 60 million registered users, rely on BroadVision's open solutions to power and personalize their mission-critical web initiatives For more information about BroadVision, Inc., call 650-542-5100, email info@broadvision.com or visit www.broadvision.com. NOTE: BroadVision and BroadVision Process are trademarks or registered trademarks of BroadVision, Inc. in the United States and other countries. BROADVISION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) December 31, 2004 2003 ASSETS (Unaudited) Current assets: Cash and cash equivalents $41,851 $78,776 Accounts receivable, less allowance for doubtful accounts and reserves of $1,409 and $3,022 as of December 31, 2004 and 2003, respectively 14,370 15,380 Restricted cash and investments, current portion 21,933 -- Prepaids and other 2,232 5,346 Total current assets 80,386 99,502 Property and equipment, net 3,566 15,400 Restricted cash and investments, net of current portion 2,323 19,827 Equity investments 574 1,565 Goodwill 53,421 53,421 Other intangibles, net 3,013 3,013 Other assets 1,370 2,354 Total assets $144, 653 $195,082 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank borrowings and current portion of long-term debt $28,104 $27,977 Accounts payable 7,470 9,186 Accrued expenses 40,650 34,761 Warrant liability 4,898 -- Unearned revenue 3,966 7,596 Deferred maintenance 15,972 19,234 Total current liabilities 101,060 98,754 Long-term debt, net of current portion 7,872 969 Other noncurrent liabilities 5,311 87,409 Total liabilities 114,243 187,132 Commitments and contingencies Stockholders' equity 30,410 7,950 Total liabilities and stockholders' equity $144,653 $195,082 BROADVISION, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) Three Months Ended Twelve Months Ended Dec. 31, Sep. 30, Dec. 31, December 31, 2004 2004 2003 2004 2003 Revenues: Software licenses $7,292 $4,654 $10,355 $26,883 $30,230 Services 12,471 12,570 12,897 51,121 57,851 Total revenues 19,763 17,224 23,252 78,004 88,081 Cost of revenues: Cost of software licenses 156 256 1,012 1,303 2,561 Cost of services 6,008 6,391 6,058 24,978 25,708 Total cost of revenues 6,164 6,647 7,070 26,281 28,269 Gross profit 13,599 10,577 16,182 51,723 59,812 Operating expenses: Research and development 4,027 4,600 4,386 18,024 21,067 Sales and marketing 6,975 6,020 6,809 27,340 26,394 General and administrative 2,386 2,335 2,203 9,538 9,790 Litigation settlement costs -- -- -- -- 4,250 Goodwill and intangible amortization -- -- -- -- 886 Restructuring (credit) charge 660 (25,454) 21,995 (23,545) 35,356 Total operating (credit) expenses 14,048 (12,499) 35,393 31,357 97,743 Operating income (loss) (449) 23,076 (19,211) 20,366 (37,931) Interest and other income (expense), net (387) 315 446 (40) 2,899 Income (loss) before (provision)/ benefit for income taxes (836) 23,391 (18,765) 20,326 (35,032) (Provision)/benefit for income taxes 450 (11) (184) 309 (439) Net income (loss) $(386) $23,380 $(18,949) $20,635 $(35,471) Basic income (loss) per share $(0.01) $0.70 $(0.57) $0.62 $(1.08) Diluted income (loss) per share $(0.01) $0.69 $(0.57) $0.60 $(1.08) Shares used in computing basic income (loss) per share 33,768 33,599 33,080 33,539 32,800 Shares used in computing diluted income (loss) per share 33,768 34,052 33,080 34,321 32,800 PRO FORMA FINANCIAL INFORMATION(1): Net income (loss) $274 $(2,074) $3,046 $(2,910) $1,070 Basic income (loss) per share $0.01 $(0.06) $0.09 $(0.09) $0.03 Diluted income (loss) per share $0.01 $(0.06) $0.09 $(0.09) $0.03 (1) Pro forma net loss and the related per share amounts exclude restructuring charges, impairment of equity investments and impairment of assets. Pro forma net loss and pro forma cost of revenues and operating expenses reconcile to the comparable amounts under generally accepted accounting principles as follows (unaudited, in thousands): Three Months Ended Twelve Months Ended Dec. 31, Sep. 30, Dec. 31, December 31, 2004 2004 2003 2004 2003 Net income (loss), generally accepted accounting principles $(386) $23,380 $(18,949) $20,635 $(35,471) Pro forma adjustments: Restructuring charges (credits) 660 (25,454) 21,995 (23,545) 35,356 Amortization of acquired technology -- -- -- -- 887 Impairment of equity investments -- -- -- -- 298 Pro forma net income (loss) $274 $(2,074) $3,046 $(2,910) $1,070 Cost of revenues and operating expenses, generally accepted accounting principles $20,211 $(5,852) $42,463 $57,638 $126,012 Pro forma adjustments: Restructuring (charges) credits (660) 25,454 (21,995) 23,545 (35,356) Amortization of acquired technology -- -- -- -- (887) Pro forma cost of revenues and operating expenses $19,551 $19,602 $20,468 $81,183 $89,769 Source: BroadVision, Inc. CONTACT: Bill Herrick, Investor Relations of BroadVision, Inc., +1-650-542-3865, or ir1@broadvision.com Web site: http://www.broadvision.com/ ------- Profile: International Entertainment