Caminus Corp. expects to boost its revenues by 40% next year and gain a significantly larger presence in the energy software business with the purchase of Altra Energy Technologies’ software operations. Caminus bought Altra’s software business with 1.975 million shares of common stock (currently valued at about $32 million) and $30 million in cash.

Although Caminus reported it will not meet prior third quarter earnings projections because of the impact of the Sept. 11 terrorist attacks, it said a significant number of transactions that were delayed because of the impact of the attacks will be completed in the fourth quarter, adding to its earnings. The addition of Altra also is expected to be accretive in the fourth quarter.

Altra, a private company located in Houston, has its roots and retains its dominant position in providing software systems primarily focused on managing the transactions and physical movement of natural gas. With more than 100 customers, now including some power and multi-fuel customers, Altra has the largest installed base of systems in the gas market, thereby significantly enhancing Caminus’ already strong position in the energy software marketplace.

“By combining Caminus’ historical strength in financial and risk management of power transactions with Altra’s expertise in managing physical logistics and transactions in gas markets, we’re creating an extremely strong suite of integrated applications for the growing number of energy market participants active in both gas and electricity,” said Caminus CEO David Stoner. “Further, we gain a large customer base to upgrade to a new generation of systems. We will have the opportunity to sell our power and risk systems to Altra customers and to sell Altra’s new generation of systems to Caminus’ customers. We gain the strongest staff of gas sector subject matter experts in the industry, and we have the opportunity to deepen the joint relationships we already enjoy with key energy players like Conoco, PG&E and Dynegy.”

Stoner noted during a conference call that the real gem that it’s been after is Altra’s new software platform, which is expected to become available next summer. “This new system was a major factor in our decision to acquire Altra,” he said. “It is truly the enterprise platform of the future for the energy business. We especially like its ability to equally enable data exchange and integration with other systems. What’s exciting is the work we started in our next generation platform is complementary with Altra’s new platform.”

He said the combined company would have about 300 customers. The combined staff of the two companies would be reduced by 50 employees to about 500. The transaction is expected to close in the fourth quarter, upon receipt of applicable regulatory approvals. CIBC World Markets Corp. acted as exclusive financial advisor to Altra.

Caminus also reported that it has adjusted its financial guidance for the third and fourth quarters of 2001. The company now expects total revenues for the third quarter to be $15 million, compared with consensus analysts’ estimates of $17.8 million. Pro forma net income per diluted share for the third quarter is now expected to be approximately $0.04, versus consensus analyst estimates of $0.13. For the fourth quarter, pro forma net income per diluted share is expected to increase to $0.27 per share from $0.23 per share.

The adjustment in third quarter guidance is a direct result of the events of September, the company said. Prior to Sept. 11 Caminus was on track to achieve guidance given to investors, as it has done for all previous quarters in its history. The company books a large portion of its license revenue in the last month of each quarter. This pattern is particularly true in the third quarter because of the need to wait until the end of the European vacation season and the North American summer power demand peaks to gain sufficient institutional attention of customers to close large sales. This year business activity ceased just as the peak closing period got underway. Certain well-qualified, anticipated license sales did not close in September. None were lost to a competitor. All these prospects have confirmed an intention to buy and all are expected to close in the months ahead, Caminus said.

The company’s strategic and implementation consulting revenues are based on time billing. Again, the events of September had an adverse effect. The effective cessation of business activity and business travel for more than a week resulted in a non-recoverable loss of some time-based billings. The delay in closing certain license sales will reduce the level of fourth quarter implementation consulting revenues that are driven by, but lag, prior period license sales.

Because Caminus expects to close the license transactions that slipped from the third quarter, it is increasing its pro forma EPS guidance for the fourth quarter of 2001 to $0.27 per share from $0.23 per share. The revision excludes any consideration of the Altra transaction.

The company expects Altra to add about 40% to Caminus’ current stand-alone guidance for 2002 revenues. The transaction is expected to be accretive to Caminus pro forma earnings, beginning in the fourth quarter of 2001, and the combined operation is expected to produce growth rates and margins consistent with prior guidance.

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