Letter to Shareholders
To Our Shareholders:
Revenue reached new highs and earnings rebounded sharply during the fiscal year ended December 31, 1972.
For the full year, revenue increased to $2,960,148 up 22 percent from 1971's $2,419,034 result. Net income totalled $186.232 or 22 cents per share - up over 80% from the $99,262 or 12 cents per share, recorded in the previous year.
The financial results came in the midst of a broad expansion program. We took advantage of the resurgence of the software business to establish several new marketing efforts, create a number of new services and build a base of hardware rentals. This will provide the leverage to convert individual performance into a continuously improving trend in both revenue and earnings. We have already seen evidence of this trend in the early months of fiscal 1973.
Software Activities
The basic business of Keane Associates is to know more about the operation and use of computers than the clients we seek to serve. While this premise extends through all our activities, it is particularly evident in the manner in which we develop and implement software technology and applications systems for clients.
In this context, 1972 was our most successful year. The company received more than 12 development contracts in excess of $100,000 each, a significant increase in long-term large-dollar contracts over the previous year. More than 70 per cent of our 1972 software work came from existing clients.
"The company's improved 1972 results came in the midst of a broad expansion program. We took advantage of the resurgence of the software business to establish several new marketing efforts, create a number of new services and build a base of hardware rentals. This will provide the leverage to convert individual performance into improved revenue and earnings."
These facts suggest not only an improvement of the total market for outside software services, but the presence of a revenue platform that is consistent and increasing.
Perhaps our most notable single contract in 1972 came from the Custom Contract Services division of International Business Machines Corporation. In an unprecedented award, the company received a $375,000 contract to assist IBM with development of an on line teleprocessing system for a large Midwestem account. Our portion of the work involves the development, implementation and test of advanced and complex software systems.
During the year, we were also selected by the Friden division of The Singer Co. to be the implementing resource for STARS, a series of proprietary com puter programs operating with Singer's line of System Ten computers
Hardware Activities
Since announcement in February 1972 of a small desk top computer, called - System/4, the company has made steady progress as a supplier of hard ware products for data entry and communications functions With over 50 computers installed to date, the company has recently expanded its System/4 product line New line print ens teleprinters tape drives and communications products were added during the year.
In August, we announced a modified version of the System/4, called Mini Key to serve the keypunch replacement market. A four-station Mini-Kay system with substantially better performance than keypunches, leases for $640 monthly.
We expect to continue gradual expansion of our product line in the current year, and to broaden our base of rental revenue.
National Marketing
In mid-year, we established a joint venture, called Delphi/Keane, to market and install software systems in the healthcare and social services fields Participating with the company is Delphi Associates of Wakefield, Massachusetts a specialist in healthcare systems
The first contract received by the joint venture was a $200,000 award from the State of New Hampshire for implementation of a Medicaid information system-the second of its type in the nation. The bulk of the contract revenues will be realized by Keane Associates Additional marketing efforts are currently in progress, and are expected to provide the joint venture a strong position in the rapidly growing health care and social service markets.
Processing Centers
As a result of a one-year test program using a facility in Providence, the company initiated at the start of 1973 a new range of computer services that in clude sales of computer time, program test time, teleprocessing services, packaged product services and other computer processing.
The services will be provided from two computer centers-serving Providence and Boston markets-each of which is equipped with powerful System/370 Model 145 computers.
The company's introduction of computer services comes at an advantageous time. Computer usage is maturing. As it does, users start to question their traditional practices, to seek new types of specialized assistance, and to insist that their information product adhere to the same criteria of quality, timeliness, utility and return-on-investment as other business functions. Although subtle and demanding, this emerging attitude opens important new growth opportunities for Keane Associates.
In summary, our 1972 efforts were directed at positioning the company in the three fastest growing sectors of the computer field The software market. after a pause, is rapidly expanding again Computer processing services are continuing an accelerated growth rate. And data entry and communications products are pacing the growth of the hardware sector.
We expect our improving position in each sector to be reflected in better quarter-by-quarter performance in both revenue and earnings during the current year.
John F. Keane, President
March 15, 1973
Annual Report
Notes
In the annual report - there's mention of the System/4, This was from the Cogar Corporation of New York. https://georgecogar.com/2016/05/23/cogar-system-4