FileNet Reports Earnings, Revenue Increased in 1990

Though its growth slowed with the economy in the second half of 1990, FileNet Corp. reported Tuesday that its earnings increased 25.6% to $3.8 million for the year ended Dec. 31, up from $3 million in 1989.

Revenue for the year rose 24% to $102.9 million from $83.1 million a year earlier, the company said.

The Costa Mesa-based company makes computer systems that use optical disk storage technology to convert paper records into electronic data.

Although earnings rose for all of 1990, FileNet’s earnings dropped sharply in the fourth quarter, falling to $840,000, down 70% from $2.8 million a year earlier. Revenue for the quarter increased 11.5% to $29.6 million from $26.5 million a year earlier.

“The last half of the year did not live up to our expectations,” said Ted Smith, president and chief executive. “However, as we reported in January, we were satisfied with the overall financial results in light of the current economic environment.”

James W. Reynolds, an analyst for Crowell, Weedon & Co., a Los Angeles securities firm, said FileNet’s earnings for the latest quarter were slightly below his expectations because of higher operating expenses during the period.

The company reported higher expenses in the quarter partly because of costs resulting from the opening of a sales and support office in the United Kingdom, a shareholder lawsuit and layoffs.

During the third and fourth quarters, FileNet trimmed its work force by about 4% to about 750 employees. In October, a shareholder sued the company alleging that the company misled investors by portraying its financial prospects as better than they actually were. FileNet has denied the allegations in the suit, which is pending.

During the current quarter, FileNet began shipping its PC WorkFlo Business System, a software system that allows customers to convert their personal computer networks into document processing systems with the same text storage and retrieval functions as FileNet’s workstations.

“They have a healthy new product in the WorkFlo packages that runs on a PC,” Reynolds said. “It’s one of the most exciting things happening in the image-processing industry now and it can help establish the company as a leader.”

The company said it shipped document-processing systems to 60 new customers during the year.