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Omega Announces Earnings for 1998



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Topic: (NASDAQ:OMGA) , (NASDAQ:DBCC) Data Broadcasting, (NASDAQ:DTLN) Data
Transmission Network, (AMEX:PQT) PC Quote Inc,
Headline: Omega Research Announces Revenues and  Earnings for 1998; Reports
16th
Consecutive Profitable Quarter and Finishes Transitional Year With
$2,000,000 of
Net Income

======================================================================
    MIAMI--(BUSINESS WIRE)--Feb. 16, 1999--Omega Research, Inc.
(NASDAQ:OMGA) today reported revenues and earnings for the 1998 fourth
quarter and the year ended December 31, 1998.
    Net revenues for the fourth quarter of 1998 were $7.0 million,
compared to $6.4 million in net revenues for the same period in the
prior year. Net income for the fourth quarter of 1998 was $120,000
compared to $465,000 for the fourth quarter of 1997. Net earnings per
share (on a fully diluted basis) for the 1998 fourth quarter were
$0.01 compared to $0.02 for the prior year's fourth quarter.
    Net revenues in 1998 were $28.2 million compared to net revenues
of $29.2 million in the prior year. Net income was $2.0 million in
1998 compared to proforma net income of $5.5 million in 1997. Net
earnings per share (on a fully diluted basis) were $0.09 in 1998
compared to proforma net earnings per share (on a fully diluted basis)
of $0.26 in the prior year. Net income and net earnings per share for
1997 have been adjusted on a proforma basis to reflect proforma income
taxes as if the Company had been a C corporation subject to federal
and state corporate income taxes during all of 1997 and a
non-recurring deferred income tax credit recorded in the third quarter
of 1997.
    During the third quarter of 1997, the Company recognized a
non-recurring deferred income tax credit (the "FAS 109 Credit") of
approximately $3.0 million which was partially offset by a $1.8
million provision for income taxes payable. Since 1988, and until
September 1997, the Company elected for its earnings to be taxed
directly to the Company's shareholders as an S corporation under the
Internal Revenue Code of 1986, as amended. On September 30, 1997, the
Company terminated its S corporation election, and, as a result,
recognized the FAS 109 Credit to record net deferred tax assets
arising from book and tax basis differences that arose primarily as a
result of accounts receivable reserves. The $1.8 million income tax
provision relates to federal and state income taxes owed by the
Company as a result of S corporation taxable earnings which were
recognized by the Company, for tax purposes, during 1997 and 1998.
    Commenting on the Company's 1998 performance, Salomon Sredni,
Omega Research's Vice President of Operations and Chief Financial
Officer, commented, "1998 was a transitional year for the Company, but
one which we believe positions us well for future success in the
individual, institutional and international markets. I am pleased that
even though 1998 was a transitional year, we generated $2.0 million
in net income. During 1998, we also invested in new systems for our
administrative infrastructure and believe that we will begin to reap
the benefits of this investment in 1999."
    Ralph Cruz, Omega Research's Co-Chairman and Co-CEO, added, "I am
pleased that Omega Research ProSuite(tm) 2000i, TradeStation(R) 2000i
and OptionStation(R) 2000i have been released to manufacturing and I
am eagerly awaiting the first delivery from production expected later
this week. We believe that there exists significant pent-up demand for
these products and look forward to the impact that this upgrade cycle
should have on our financial results during 1999."
    Omega Research's next generation of products is expected, upon
release, to be compatible with the following real-time Internet and
broadcast data services: Data Broadcasting Corporation's
(NASDAQ:DBCC) Signal Online (Internet), StockEdge Online (Internet),
InSite (Internet), DBC Signal (Broadcast) and BMI (Broadcast); Data
Transmission Network Corporation's (NASDAQ:DTLN) DTN Real Time and
DTNstant (Broadcast); and PC Quote, Inc.'s (AMEX:PQT) Hyperfeed(tm)
(Internet and Broadcast). An agreement is also in place to add, later
this year, as a compatible real-time data service, Standard & Poor's
ComStock's Xpressfeed(tm).
    Founded in 1982, and headquartered in Miami, Florida, Omega
Research is a leading provider of real-time investment analysis
software for the Windows operating system. With the 1991 release of
its flagship product, TradeStation, the Company pioneered the concept
of utilizing the power of the personal computer to enable investors to
historically test the profitability of their own investment strategies
and then computer-automate those strategies to generate real-time buy
and sell signals. Omega Research's other principal products are
OptionStation and SuperCharts(R).

    This press release contains statements that are forward looking
and are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. When used in this press
release, the words "believes," "estimates," "plans," "expects,"
"intends," "anticipates," "may," "should," "prospect," "looking
forward" and similar expressions as they relate to Omega Research or
its management are intended to identify forward-looking statements.
The statements in this press release regarding expected future Company
success in the individual, institutional and international markets,
pent-up demand, benefits from administrative infrastructure
investment, and future financial results are based on current
expectations and beliefs concerning future events that are subject to
risks and uncertainties. Actual results may differ materially from the
results suggested herein and from the results historically
experienced. Factors that may cause or contribute to such differences
and impact future events include, but are not limited to, Omega
Research meeting its timetable for the anticipated upgrade releases of
its premium products, customer acceptance of such upgraded products,
technical difficulties or errors in the upgraded products, unfavorable
critical reviews of such upgraded products, Omega Research's ability
to market effectively such upgraded products, the introduction of
competitive products in the market or increased customer acceptance of
recently-introduced competitive products, failure of the Company to
achieve anticipated sales volumes relating to its principal products
in future periods, whether there in fact exists significant pent-up
demand for the product upgrades (as management's belief in this regard
is based solely upon the size of a waiting list for the upgrades and
certain anecdotal evidence), the ability of Omega Research and various
domestic and international data vendors to develop and maintain the
requisite technical compatibility between Omega Research's software
and the respective data services in a timely fashion, if at all (and
the quality and customer acceptance of such combined offerings), the
current and future viability of the Internet as an effective delivery
method for streaming real-time financial market data and various other
issues and risks related to expected Internet technology and
development, unanticipated higher variable expenses (such as bad
debt), increases in product returns, decisions by Omega Research to
enter into new markets or expand into related businesses (and the
various possible effects and consequences thereof), the Company's
ability to effectively manage growth (if, as and when it occurs),
volatility or other adverse conditions in the securities markets, the
ability of Omega Research to achieve operating efficiencies through
its new systems, and Omega Research's ability to attract and retain
high-quality product development and marketing personnel, as well as
those discussed in Omega Research's press releases and its filings
with the Securities and Exchange Commission including, but not limited
to, Omega Research's December 31, 1997 Annual Report on Form 10-K.
*T

                         OMEGA RESEARCH, INC.
                         STATEMENTS OF INCOME


                      Three Months Ended            Year Ended
                          December 31,              December 31,
                       1998        1997          1998         1997
NET REVENUES:

 Licensing fees    $ 5,663,655  $5,254,663   $22,005,324  $24,364,990
 Other revenues      1,400,986   1,100,054     6,211,181    4,861,284

   Total net
    revenues         7,064,641   6,354,717    28,216,505   29,226,274

OPERATING EXPENSES:
 Cost of licensing
  fees                 515,428     446,059     1,798,078    1,848,993
 Product development   912,909     540,076     3,318,310    1,890,392
 Sales and
  marketing          3,590,801   3,291,973    14,381,923   11,272,290
 General and
  administrative     1,937,613   1,507,283     6,134,608    5,420,760

   Total operating
    expenses         6,956,751   5,785,391    25,632,919   20,432,435

   Income from
    operations         107,890     569,326     2,583,586    8,793,839

OTHER INCOME, net       74,087     128,629       423,961      146,474

  Income before
   income taxes        181,977     697,955     3,007,547    8,940,313

PROVISION (BENEFIT)
 FOR INCOME TAXES       61,500     233,000     1,052,000    ( 934,000)

 Income before
  proforma income
  Adjustments          120,477     464,955     1,955,547    9,874,313

PROFORMA INCOME TAX
  ADJUSTMENTS:
  Proforma income
   taxes (A)                 -           -             -    3,255,731
  Non-recurring
   tax credit                -           -             -    1,167,000

  Proforma net
   income         $    120,477 $   464,955   $ 1,955,547  $ 5,451,582

PROFORMA NET
 EARNINGS PER
 SHARE (fully
 diluted)         $       0.01 $      0.02   $      0.09  $      0.26

WEIGHTED AVERAGE
 COMMON SHARES
 OUTSTANDING
(fully diluted)     22,511,301  22,877,670    22,757,913   20,884,675

(A)  The Company was treated as an S corporation for federal and
     state income tax purposes prior to September 30, 1997.
     Proforma income taxes have been provided as if the Company
     had been a C corporation during all of 1997.


                         OMEGA RESEARCH, INC.
                            BALANCE SHEETS

                                            December 31,
                                      1998                 1997
                                ------------------  -----------------
ASSETS:
CURRENT ASSETS:
 Cash and cash equivalents      $   7,436,980        $   12,323,515
 Marketable securities              5,736,958             1,014,590
 Accounts receivable, net           9,246,474             9,438,218
 Inventories                          131,659               146,821
 Other current assets                 692,273               520,537
 Deferred income taxes              4,541,000             2,963,000
   Total current assets            27,785,344            26,406,681

PROPERTY AND EQUIPMENT, net         1,670,925               971,511
OTHER ASSETS                          185,854                91,626
   Total assets                   $29,642,123           $27,469,818

LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
 Accounts payable                 $ 1,082,521           $ 1,119,202
 Accrued expenses                   1,067,499               608,947
 Income taxes payable                       -               509,000
   Total current liabilities        2,150,020             2,237,149

SHAREHOLDERS' EQUITY:
 Common stock                         222,700               222,461
 Additional paid-in capital        23,913,877            23,745,251
 Retained earnings                  3,355,526             1,264,957

   Total shareholders' equity      27,492,103            25,232,669

   Total liabilities and
    shareholders' equity          $29,642,123           $27,469,818
*T


     CONTACT:  Omega Research Inc., Miami
               Salomon Sredni, Vice President of Operations
               and Chief Financial Officer
               305/485-7000

               Visit the Omega Research web site at
               www.omegaresearch.com

     KEYWORD:  FLORIDA
     INDUSTRY KEYWORD:  COMED COMPUTERS/ELECTRONICS EARNINGS