SOURCE: Selectica

May 12, 2008 16:00 ET

Selectica Announces Fourth Quarter and Full Year Fiscal 2008 Financial Results

SAN JOSE, CA--(Marketwire - May 12, 2008) - Selectica, Inc. (NASDAQ: SLTC), a leading provider of enterprise contract lifecycle management and sales configuration solutions, today announced financial results for the fourth quarter and full fiscal year ended March 31, 2008.

Revenue for the fourth quarter of fiscal 2008 was $3.0 million, a 5% increase compared to $2.8 million for the same period in the previous year. Net loss for the quarter was $2.5 million, or $(0.09) per share, compared to a net loss of $4.9 million, or $(0.17) per share, in the fourth quarter of fiscal 2007. Non-GAAP net loss for the fourth quarter of fiscal 2008 was $2.4 million, or $(0.08) per diluted share, compared to non-GAAP net loss of $2.5 million, or $(0.09) per diluted share, for the same period of the prior year. Non-GAAP results exclude restructuring charges, patent litigation settlement expense, and stock option investigation expense of $168,000 for the fourth quarter of fiscal 2008 and $2.4 million for the fourth quarter of fiscal 2007.

For the full year fiscal 2008, Selectica reported revenue of $16.0 million, a 9% increase compared to $14.7 million for the full year fiscal 2007. Net loss for the full year fiscal 2008 was $23.9 million, or $(0.84), compared to a net loss of $20.9 million, or $(0.70) for the full year fiscal 2007. Non-GAAP net loss for the full year fiscal 2008 was $2.8 million, or $(0.10) per share, compared to a non-GAAP net loss of $12.3 million, or $(0.41) per share, for the full year fiscal 2007. Non-GAAP results exclude restructuring charges, patent litigation settlement expense, and stock option investigation expense of $21.1 million for the full year fiscal 2008 and $8.6 million for the full year fiscal 2007.

"Our fourth quarter results did not meet our expectations," said Robert Jurkowski, Chairman and Chief Executive Officer of Selectica. "We had transitions in the leadership within both of our business units and were unable to recognize revenue from a significant contract. However, we did form a landmark alliance with one of the largest global management consulting and technology services companies to jointly take our products to targeted global companies in the life sciences industry. Last quarter we signed a significant contract with one of the world's leading pharmaceutical companies and the revenue will be recognized over the next several quarters."

"We have refocused both our contract management and sales configuration business units, significantly reduced our operating expenses and are developing relationships with key partners to extend our market presence," continued Jurkowski. "Together with our market leading products and excellent customer base, I believe Selectica is in an excellent position to increase value for its customers and build value for its shareholders."

Financial Highlights

--  Selectica entered into a global alliance agreement with a leading
    global management consulting, technology services and outsourcing company
    to offer a joint, comprehensive contract lifecycle management (CLM)
    solution targeted for life science companies wanting to streamline the
    management of revenue cycle contracts.
--  In the fourth quarter, Selectica signed a contract with one of the
    world's largest pharmaceutical companies to provide its Contract
    Performance Management solution to address the company's needs related to
    its Managed Market Offers and Contract agreements. Selectica also signed
    its first contract with a retail banking institution.
--  Sales configuration license and services revenues represented 62% and
    contract management solutions represented 38% of total revenues in the
    fourth quarter of fiscal 2008.
--  Consolidated gross margins were 62% in the quarter compared with 44%
    in the fourth quarter of fiscal 2007.
--  Operating expenses declined 6% for the fourth quarter of fiscal 2008
    compared with the same period in the previous year.  For the fiscal year
    2008, operating expenses were 22% lower compared with the fiscal year 2007.
--  At March 31, 2008, Selectica had $35.2 million in cash, cash
    equivalents and investments.
    

Business Outlook

Selectica's fiscal 2009 guidance for the 12 month period ending March 31, 2009 is for revenue of approximately $25 million and net income of 8% to 10% of revenue. The company expects to become profitable on a quarterly basis during the second half of fiscal 2009.

Selectica will host a conference call to discuss its financial results and operational highlights today at 5:00 p.m. EDT (2:00 p.m. PDT). To access the conference call by phone, dial (800) 218-0204. The conference call will also be webcast live via the Internet, and can be accessed on the investor relations section of the Company's website (http://www.selectica.com). An archive of the webcast will be available in the same location shortly after the completion of the call.

About Selectica, Inc.

Selectica, Inc. (NASDAQ: SLTC) provides enterprise-class software solutions for sales configuration and contract lifecycle management. Selectica's contract management software solutions enable companies to manage critical business functions including contract administration, sourcing, procurement, governance, sales, revenue recognition, healthcare, and provide enterprise-wide visibility to key stakeholders such as General Counsel and executive management. Selectica's Sales Configuration Solutions simplify and automate the configuration, pricing, and quoting of complex products and services. For over 10 years, Selectica has helped its customers generate substantial savings. Selectica customers represent leaders in manufacturing, technology, finance, retail, real estate, insurance, healthcare, semiconductor and telecommunications, including: ABB, ADP, Accenture, Bell Canada, Cisco, Covad Communications, Fujitsu, General Electric, Fireman's Fund Insurance Company, Host Hotels, IBM, Juniper Networks, Reliance Industries, Rockwell Automation, Tellabs, and Walt Disney. Selectica is headquartered in San Jose, CA. For more information, visit the company's Web site at www.selectica.com.

Forward-Looking Statements

The statements contained in this release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, including statements regarding Selectica's and its customers' expectations, beliefs, hopes, intentions or strategies regarding the future and expectations regarding performance improvements or increases in sales attributable to Selectica's existing and new products. All forward-looking statements included in this release are based upon information available to Selectica as of the date hereof, and Selectica assumes no obligation to update any such forward-looking statement. Actual results could differ materially from current expectations. Factors that could cause or contribute to such differences include, but are not limited to, (i) market and customer acceptance of Selectica products including the contract management and sales configuration products, (ii) the success of the ongoing restructuring of Selectica's operations, (iii) and potential regulatory inquiries and litigation relating to the review of past stock granting practices and the related restatement of the Company's financial statements and (iv) other factors and risks discussed in Selectica's Annual Report on Form 10-K for the fiscal year ended March 31, 2007 and in other reports filed by Selectica with the Securities and Exchange Commission.


                              SELECTICA, INC.
              Condensed Consolidated Statements of Operations
                 (In thousands, except per share amounts)
                                (Unaudited)


                                 Three Months Ended   Twelve Months Ended
                                --------------------  --------------------
                                March 31,  March 31,  March 31,  March 31,
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
Revenues:
     License                    $     106  $     169  $   4,588  $   1,369
     Services                       2,880      2,680     11,415     13,352
                                ---------  ---------  ---------  ---------
        Total revenues              2,986      2,849     16,003     14,721
                                ---------  ---------  ---------  ---------

Cost of revenues:
     License                           73         50        255      1,112
     Services                       1,076      1,544      3,946      7,558
                                ---------  ---------  ---------  ---------
        Total cost of revenues      1,149      1,594      4,201      8,670
                                ---------  ---------  ---------  ---------

Gross profit                        1,837      1,255     11,802      6,051
                                ---------  ---------  ---------  ---------

Operating expenses:
     Research and development       1,303      1,426      5,041      7,358
     Sales and marketing            1,797      1,811      6,655      6,868
     General and administrative     1,440      1,590      5,426      7,761
     Litigation settlement             72          -     16,274          -
     Restructuring                     28        221      1,193      6,005
     Professional fees related
      to stock option
      investigation                    68      2,157      3,613      2,639
                                ---------  ---------  ---------  ---------
         Total operating
          expenses                  4,708      7,205     38,201     30,631
                                ---------  ---------  ---------  ---------

Operating loss                     (2,871)    (5,950)   (26,399)   (24,580)

Interest and other income, net        372      1,109      2,859      3,742
                                ---------  ---------  ---------  ---------

Loss before provision for
 income taxes                      (2,499)    (4,841)   (23,540)   (20,838)
Provision for income taxes             49         20        361        106
                                ---------  ---------  ---------  ---------
Net loss                        $  (2,548) $  (4,861) $ (23,901) $ (20,944)
                                =========  =========  =========  =========

Basic and diluted net loss per
 share                          $   (0.09) $   (0.16) $   (0.84) $   (0.70)
                                =========  =========  =========  =========

Weighted average shares
 outstanding for basic
 and diluted net loss per
 share                             28,585     29,995     28,457     29,995
                                =========  =========  =========  =========



                             SELECTICA, INC.
         Non-GAAP Condensed Consolidated Statements of Operations
  Excluding restructuring costs, option investigation fees and litigation
                          reserves and payments
                 (In thousands, except per share amounts)
                                (Unaudited)



                                 Three Months Ended   Twelve Months Ended
                                --------------------  --------------------
                                March 31,  March 31,  March 31,  March 31,
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------
Revenues:
     License                    $     106  $     169  $   4,588  $   1,369
     Services                       2,880      2,680     11,415     13,352
                                ---------  ---------  ---------  ---------
        Total revenues              2,986      2,849     16,003     14,721
                                ---------  ---------  ---------  ---------

Cost of revenues:
     License                           73         50        255      1,112
     Services                       1,076      1,544      3,946      7,558
                                ---------  ---------  ---------  ---------
        Total cost of revenues      1,149      1,594      4,201      8,670
                                ---------  ---------  ---------  ---------

Gross profit                        1,837      1,255     11,802      6,051
                                ---------  ---------  ---------  ---------

Operating expenses:
     Research and development       1,303      1,426      5,041      7,358
     Sales and marketing            1,797      1,811      6,655      6,868
     General and administrative     1,440      1,590      5,426      7,761
                                ---------  ---------  ---------  ---------
        Total operating
         expenses                   4,540      4,827     17,122     21,987
                                ---------  ---------  ---------  ---------

Operating loss                     (2,703)    (3,572)    (5,320)   (15,936)

Interest and other income, net        372      1,109      2,859      3,742
                                ---------  ---------  ---------  ---------

Loss before provision for
 income taxes                      (2,330)    (2,463)    (2,461)   (12,194)
Provision for income taxes             49         20        361        106
                                ---------  ---------  ---------  ---------
Non-GAAP net loss               $  (2,380) $  (2,483) $  (2,821) $ (12,300)
                                =========  =========  =========  =========

Basic and diluted non-GAAP net
 loss per share                 $   (0.08) $   (0.08) $   (0.10) $   (0.41)
                                =========  =========  =========  =========

Weighted average shares
 outstanding for basic
 and diluted non-GAAP net
 loss per share                    28,585     29,995     28,457     29,995
                                =========  =========  =========  =========

Use of Non-GAAP Financial Information

To supplement our consolidated financial statements presented on a GAAP
basis, Selectica uses non-GAAP measures of operating results, net loss and
loss per share, which are adjusted to exclude certain costs, expenses, and
losses we believe appropriate to enhance an overall understanding of our
past financial performance and also our prospects for the future. The
presentation of this additional information is not meant to be considered
in isolation or as a substitute for net loss or net loss per share prepared
in accordance with generally accepted accounting principles in the United
States.



                              SELECTICA, INC.
                Reconciliation of GAAP to Non-GAAP Net Loss
                 (In thousands, except per share amounts)
                                (Unaudited)



                                 Three Months Ended   Twelve Months Ended
                                --------------------  --------------------
                                March 31,  March 31,  March 31,  March 31,
                                  2008       2007       2008       2007
                                ---------  ---------  ---------  ---------

GAAP net loss                   $  (2,548) $  (4,861) $ (23,901) $ (20,944)

Non-GAAP adjustments:
     Litigation settlement             72          -     16,274          -
     Restructuring                     28        221      1,193      6,005
     Professional fees related
      to stock option
      investigation                    68      2,157      3,613      2,639
                                ---------  ---------  ---------  ---------
Non-GAAP net loss               $  (2,380) $  (2,483) $  (2,821) $ (12,300)
                                =========  =========  =========  =========

Basic and diluted non-GAAP net
 loss per share                 $   (0.08) $   (0.08) $   (0.10) $   (0.41)
                                =========  =========  =========  =========

Weighted average shares
 outstanding for basic
 and diluted non-GAAP net
 loss per share                    28,585     29,995     28,457     29,995
                                =========  =========  =========  =========



                              SELECTICA, INC.
                  Condensed Consolidated Balance Sheets
                              (In thousands)
                                (Unaudited)

                                                     March 31,   March 31,
                                                       2008        2007
                                                    ----------- -----------
ASSETS
Current assets
   Cash and cash equivalents                        $    22,137 $    30,165
   Short-term investments                                13,076      27,285
   Accounts receivable                                    1,330       1,778
   Prepaid expenses and other current assets                919         567
                                                    ----------- -----------
      Total current assets                               37,462      59,795

Property and equipment, net                               2,185       1,992
Intangible assets                                           102         309
Other assets                                                491         531
Long-term investments                                         -       1,009
                                                    ----------- -----------
      Total assets                                  $    40,240 $    63,636
                                                    =========== ===========



LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Current portion of note payable to Versata       $       786 $         -
   Accounts payable                                         518       3,014
   Current portion of accrual for restructuring
    liability                                             1,937       3,043
   Accrued payroll and related liabilities                  740         920
   Other accrued liabilities                                735       1,324
   Deferred revenue                                       1,984       2,251
                                                    ----------- -----------
      Total current liabilities                           6,700      10,552
                                                    ----------- -----------
   Accrual for restructuring liability, net of
    current portion                                         924       2,653
   Note payable to Versata                                5,113           -
   Other long-term liabilities                              245         518
                                                    ----------- -----------
      Total liabilities                                  12,982      13,723
                                                    ----------- -----------

Stockholders' equity                                     27,258      49,913
                                                    ----------- -----------
      Total liabilities and stockholders' equity    $    40,240 $    63,636
                                                    =========== ===========



                             SELECTICA, INC.
              Condensed Consolidated Statements of Cash Flows
                              (In thousands)
                                (Unaudited)

                                                      Twelve Months Ended
                                                    ----------------------
                                                    March 31,   March 31,
                                                       2008        2007
                                                    ----------  ----------

Cash flows from operating activities:
Net loss                                            $  (23,901) $  (20,944)
Adjustments:
   Depreciation                                            449         654
   Amortization                                            207         207
   Noncash charge for litigation settlement              6,118           -
   Loss on disposal of property and equipment              (20)      1,091
   Stock based compensation                              1,470       1,265
   Changes in assets and liabilities:
        Accounts receivables                               448       1,465
        Prepaid expenses and other current assets         (352)      1,692
        Other assets                                        40         (20)
        Accounts payable                                (2,496)      1,363
        Accrual for restructuring liability             (2,835)      5,843
        Accrued payroll and related liabilities           (180)       (511)
        Other accrued liabilities and long-term
         liabilities                                      (842)     (1,862)
        Deferred revenue                                  (267)        199
                                                    ----------  ----------
Net cash used in operating activities                  (22,161)     (9,558)
                                                    ----------  ----------

Cash flows from investing activities:
   Purchase of capital assets                             (558)     (1,371)
   Proceeds from sale of fixed assets                       22          40
   Proceeds and investment in restricted
    investments                                            150           -
   Purchase of short-term investments                  (55,272)    (42,674)
   Proceeds from maturities of short-term
    investments                                         69,663      76,854
   Proceeds from maturities of long-term
    investments                                          1,009       1,921
                                                    ----------  ----------
Net cash provided by investing activities               15,014      34,770
                                                    ----------  ----------

Cash flows from financing activities:
   Principal payments on note payable to Versata          (239)          -
   Purchase of treasury stock                             (246)     (7,851)
   Proceeds from issuance of common stock                    -         176
                                                    ----------  ----------
Net cash used in financing activities                     (485)     (7,675)
                                                    ----------  ----------
Effect of exchange rate changes on cash                   (396)          -
Net increase (decrease) in cash and cash
 equivalents                                            (8,028)     17,537
Cash and cash equivalents, beginning of period          30,165      12,628
                                                    ----------  ----------
Cash and cash equivalents, end of period            $   22,137  $   30,165
                                                    ==========  ==========

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