A Review of
e by Epicor
By J. Carlton Collins, CPA

The Company Behind the Product

When it comes to evaluating accounting software, too many evaluators dive right into the product without giving a second thought to the company behind the product. It is not prudent to disregard the stability and future of the accounting software publisher. Customers who have traveled this path before know that when you select an accounting software package, the resulting relationship is akin to a marriage. Once the product is installed, the customer becomes dependent upon the accounting publisher to supply updates for payroll taxes, sales taxes, and depreciation rates. The customer must also rely on the publisher to fix bugs, provide support, and continually enhance the product to run on the latest platforms and technologies. Like it or not, the continued success of the accounting software publisher has a direct bearing on the customer's continued success with the accounting software product. The bottom line is that some accounting software publishers have figured out the magical formula for producing top quality products, successfully distributing those products directly or through a profitable dealer channel, and supporting those products in an timely matter - all while remaining profitable and achieving a high level of customer satisfaction. Those companies that fall into this category should rate higher in your evaluation and selection process. With this in mind, presented below is an brief overview of  Epicor Software Corporation - the company.

1.  

Company Name

Epicor Software Corporation

2.  

Address, Phone, Web Address. 

197 Technology Drive,
Irvine, CA 92618
949-585-4000
http://www.epicor.com  

3.  

Ownership

4.  

Latest Product Versions

5.  

List of all Accounting Software Products Sold by Epicor Software Corporation:.

6.  

Epicor Software Corporation’s Key Management:

President and CEO

President and CEO

VP of Finance and CFO

VP, Mid Range Engineering

VP of Human Resources

VP, MAS 500 Sales

VP, General Manager, Best Software Canada

VP of Marketing

VP of Channel Sales

VP of Customer Support 

US VP, GM,  Enterprise Systems

VP, GM, Platinum for Windows by Best

7.  

   Brief History of e by Epicor  

8.               

Total number of customers (companies) using the e by Epicor

9.               

Total number of users (individuals) using e by Epicor

Financial Highlights and Other Company Highlights:  

Un-audited results for the year ended 30 September 2001 for Sage Group PLC:

• Sage pre-tax profit up 12% to £121.3 million for year ended 30 September 2001

• Turnover increased by 17% to £484.1m (2000: £412.2m)

• Pre-tax profit increased 12% to £121.3m (2000: £108.7m)

• Earnings per share up 11% to 6.59p (2000: 5.92p)

• Dividends for the year raised 10% to 0.425p (2000: 0.386p)

• Operating cash flow up 14% to £119.6m (2000: £105.0m)

• Acquisition of Interact Commerce Corporation (Interact) for £189m, May 2001

• 248,000 new customers added (excluding Interact), bringing the total to 2.8m (2000: 2.5m)

• Support contracts increased 15% to 897,000 (2000: 779,000)

Selected Financial Data:

* Foreign currency results for the year ended 30 September 2000 have been retranslated at current year exchange rates to facilitate comparison of results, in the table above and in the operational review above.

Selected Quotes from Michael Jackson, Chairman:

“Our businesses have continued to win significant numbers of new customers  -  nearly a quarter of a million - this year. Throughout the Group we continue to find new ways of selling more products and services to existing customers. Our strategy of marketing an ever-expanding product and service offering to an ever-increasing customer base remains our clear focus. As in the past, we will continue to grow our business both organically and through acquisition. Notwithstanding the current economic climate, we believe that the strength of our brands, the breadth of our product offering, the resilience of our channel and the sheer scale of our customer base provide us with a platform for sustained long-term growth.  Therefore we look forward to 2002 with confidence”.

"In the US, Sage has a product offering that covers the market from entry-level to mid-market. Acquisitions are being used to build the business management software solutions offering and  expand the customer base."

"Market conditions have been challenging and were exacerbated by disruption following September’s terrorist attacks. The market for new license sales was especially tough, but despite this our US businesses maintained their market share and the installed base business performed strongly so that revenues (excluding Interact) grew 7% over the prior year."

"At the entry-level Peachtree attracted 71,000 new customers and successfully pursued a strategy of migrating customers onto new versions, additional modules, and higher-value support contracts, which has resulted in its operating margin increasing to 23% (2000: 14%). The ability to mine the Peachtree customer base for sales leads to mid-market products provides us with a unique opportunity in the US market. The first signs of the success of this are evident in that 26% of new license unit sales of the mid-market offering, MAS90 were generated from the Peachtree customer base."

"Best Software offers business management software solutions outside the accounting core. It has focused its business objectives on its market-leading FAS (Fixed Asset) and Abra (Human Resources) applications and has de-emphasized its non-core products. The resulting efficiencies have improved operating margins to 21% (2000: 14%). Best is now well-placed to address the substantial opportunity to cross-sell its products to the large installed base in the US."

"Acquisitions in the US have added complementary customer bases in strategically important industry-specific markets. Haitek, acquired in March, added a manufacturing module which enhances the mid-market Enterprise Suite offering. MIP, acquired in September with 5,000 customers, established a presence in, and an opportunity to consolidate, the fast-growing non-profit sector. In addition, the acquisition of Platinum For Windows in June added 6,000 mid-market accounting customers."

"Our US businesses are focused not only on driving growth through new customer acquisition but also on maximizing the significant installed base opportunity in the US market. We will continue to benefit from the competitive advantage we have in covering all segments of the SME market."

"The acquisition of Interact in May 2001 for £189m marked a significant step in our strategy to offer SMEs a comprehensive suite of business management software solutions, by establishing for the first time an offering in the CRM market.  The two Interact products, ACT! and SalesLogix, address different needs in the marketplace.  ACT! is a product used by 3 million salespeople worldwide which helps the user manage individual contacts very efficiently.  SalesLogix is a comprehensive CRM suite enabling an entire organization to automate sales, marketing and customer service activities.  Both products are being actively marketed to SMEs in all our markets."

"In the contact management field ACT! is a bestseller with few competitors.  SalesLogix, a more expensive solution, operates in a more competitive market and has suffered this year from a difficult trading environment in the mid-market.  In addition, SalesLogix experienced some sales deferrals in September.  Following a detailed review of the product positioning for SalesLogix, we have refocused the product offering to be more compelling to the SME market as a whole rather than just the upper end of the mid-market.  The product repositioning, a simplified pricing structure and the launch of a number of innovative channel marketing campaigns are expected to stimulate revenue growth."

"ACT! and SalesLogix have an estimated user base of more than 3 million.  Historically, however, Interact has done very little to sell additional products and services to this substantial installed base.  We are developing a range of installed base marketing campaigns to the Interact customer base, focusing in the first instance on support contracts as well as industry-specific versions of ACT! and SalesLogix.  We expect this installed base activity to lead to a significant increase in revenues for Interact."

"Our research confirms that there is strong demand from existing Sage customers for CRM solutions that are tightly integrated to our core accounting products.  Over the last few months, we have invested considerable time and effort in building an efficient software integration tool that will allow rich integration between ACT! and Sage accounting software products.  The ACT! integration tool is now complete which means that Sage operating companies are able to launch new integrated versions of ACT!  In the UK, for example, the launch of Sage Contact Manager powered by ACT! is planned for March 2002."

"The integration tool that will allow seamless integration between SalesLogix and our accounting products will be completed during calendar 2002.  In the meantime our channel partners have access to a number of development toolkits which facilitate  integration between SalesLogix and our accounting products.  Links, for example, between SalesLogix and our mainstream accounting products in the US, MAS90 and Sage Enterprise, already exist and are being actively marketed to our customer base."

"Drawing on our experience of integrating acquisitions and improving their operating performance, we are confident of maximizing the strategic CRM opportunity represented by Interact, not only as a stand-alone business, but also as a provider of important additional products to sell to our installed bases around the world."

Source of Financial Information: RNS
http://www.londonstockexchange.com/rns/announcement.asp?AnnID=342693 

Continuing operations

2001

2000

(unaudited)

Acquisitions

(unaudited)

Total

(unaudited)

Total

(audited)

£’000

£’000

£’000

£’000

Turnover

460,582

23,555

484,137

412,153

Cost of sales

(49,694)

(1,037)

(50,731)

(43,066)

Gross profit

410,888

22,518

433,406

369,087

Selling and administrative expenses

(282,658)

(22,367)

(305,025)

(257,205)

Operating profit

128,230

151

128,381

111,882

Interest receivable

3,192

3,139

Interest payable and similar charges

(10,256)

(6,273)

Profit on ordinary activities before taxation

121,317

108,748

Taxation on profit on ordinary activities

(37,609)

(34,799)

Profit on ordinary activities after taxation

83,708

73,949

Equity minority interest

32

71

Profit for the financial year

83,740

74,020

Equity dividends

(5,515)

(4,898)

Amount transferred to reserves

78,225

69,122

Earnings per share (pence) - basic

6.59p

5.92p

Dividend per share (pence)

0.425p

0.386p

2001

(unaudited)

£’000

2000

(audited)

£’000

Fixed assets

Intangible assets

836,329

540,422

Tangible assets

51,208

46,504

887,537

586,926

Current assets

Stocks

2,308

2,489

Debtors

95,248

85,369

Cash at bank and in hand

42,764

66,417

140,320

154,275

Creditors: amounts falling due within one year

(138,479)

(110,178)

Net current assets

1,841

44,097

Total assets less current liabilities

889,378

631,023

Creditors: amounts falling due after more than one year

(237,585)

(78,472)

Deferred income

(112,809)

(98,066)

Equity minority interest

(62)

(94)

538,922

454,391

Capital and reserves

Called up equity share capital

12,725

12,680

Share premium account

437,671

432,690

Merger reserve

61,111

61,111

Profit and loss account

27,415

(52,090)

Equity shareholders’ funds

538,922

454,391

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