WOODLAND HILLS, CA., July 27, 1999--Vertel® (NASDAQ: VRTL), a leading global provider of multi-management solutions for telecommunications networks, reports that revenues for its second quarter ended June 30, 1999, were $5.6 million, compared with $4.5 million in the first quarter of 1999 and $5.0 million for the second quarter 1998. Second quarter 1999 net loss was $1.8 million, or ($0.07) per share, compared with a net loss of $1.5 million, or ($0.06) per share, for the first quarter of 1999 and a net loss of $172,000, or ($0.01) per share, for the second quarter of 1998.
For the six months ended June 30, 1999, revenues were $10.1 million, compared with $9.9 million for the same period in 1998. Vertel's year-to-date net loss was $3.2 million, or ($0.13) per share, compared with net income of $168,000, or $0.01 per basic and diluted share, for the first six months of 1998.
"Sales increased by $1.1 million over the first quarter, while operating expenses, which included approximately $200,000 in goodwill amortization related to the Expersoft acquisition, increased $1.3 million, versus first-quarter levels, as we continued to reposition the company into higher growing market segments," said Bruce Brown, president and chief executive officer of Vertel."
"We are pleased with Expersoft's contribution this quarter, and continue looking for ways to expand our business through acquisition," Brown said. "During the second quarter we trained the combined sales organizations on the various product lines and increased our sales capacity through additional personnel. We are also investing in new product development both at Expersoft and at Vertel in the operations support systems (OSS) applications area."
"This quarter we advanced our corporate strategy through the introduction of our eORB product line, an intelligent agent for the new Internet-driven networks," Brown said. "We also continued our progress with the launch of our mediation framework product and services that allow the integration of different network applications and systems using standards-based technologies, such as CORBA, SNMP and TMN. Our important strategic alliance with Lucent, which we announced shortly after the close of the quarter, will profit from this technology."
"Our relationship with Lucent is an example of our strategy for building strong relationships with leading network equipment manufacturers," Brown said. Based on projections from both Vertel and Lucent, our partnership has the potential to generate up to $20 million in revenues for Vertel over three years. We expect revenues to begin to reflect the impact of this relationship in the third quarter, as we implement the first two projects."
"Our strategic focus continues to be building the telecommunications management infrastructure for carrier-grade OSS," Brown said. "This is a market estimated to be worth more than $10 billion. There are no dominant companies in our space, and 70 percent of the market remains unserved by the OSS software vendors and is instead served by the internal development organizations of the carriers and the equipment manufacturers. Our target market remains one of the truly great opportunities in the next decade."
"Safe Harbor" Statements under the Private Securities
Litigation Reform Act of 1995: Except for the historical information presented,
the matters discussed in this news release are forward looking statements
that involve risks and uncertainties, including timely and successful development
of products and technologies; successful introduction and customer acceptance
of new and enhanced products and technologies in existing and new markets;
the possible development and introduction of competitive products and new
and alternative technologies; pricing, currency and exchange risks; governmental
and regulatory developments affecting Vertel and its customers; the ability
to identify, conclude, and integrate acquisitions on a timely basis; the
ability to retain and attract key personnel; and other risks detailed from
time to time in public disclosure filings with the U.S. Securities and
Exchange Commission (SEC) by Vertel, including, but not limited to, the
Annual Report on Form 10-K for the year ended December 31, 1998 and the
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
VERTEL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) June 30, December 31, ASSETS 1999 1998 -------- -------- (unaudited) Current assets: Cash and cash equivalents $ 3,999 $19,495 Short-term investments 8,380 978 Trade accounts receivable (net of allowances of $696 as of June 30, 1999 and $556 as of December 31, 1998) 7,220 4,477 Prepaid expenses and other current assets 666 540 ------- ------- Total current assets 20,265 25,490 Property and equipment, net 1,343 1,025 Investments 1,437 1,437 Goodwill 4,464 -- Other assets 327 365 ------- ------- $27,836 $28,317 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 716 $ 426 Accrued wages and related liabilities 1,840 1,351 Capital lease obligations 138 -- Accrued restructuring expenses 223 224 Accrued taxes payable 903 1,087 Other accrued liabilities 1,904 1,942 Accrued acquisition liabilities 647 -- Deferred revenue 1,741 1,115 ------- ------- Total liabilities 8,112 6,145 ------- ------- Shareholders' equity: Preferred stock, par value $.01, 2,000,000 shares authorized; none issued and outstanding Common stock, par value $.01, 50,000,000 shares authorized; Shares issued and outstanding: 1999, 25,382,761; 1998, 24,954,545 254 249 Additional paid-in capital 80,301 79,553 Accumulated deficit (60,692) (57,483) Accumulated comprehensive deficit (139) (147) ------- ------- Total shareholders' equity 19,724 22,172 ------- ------- $27,836 $28,317 ======= ======= VERTEL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Month Six Month Period Ended Period Ended ------------------ ------------------ June 30, June 27, June 30, June 27, 1999 1998 1999 1998 -------- -------- -------- -------- Net revenues: License $ 3,602 $ 3,670 $ 6,764 $ 6,648 License - related party -- 33 -- 737 Service and other 2,000 1,300 3,360 2,536 -------- -------- -------- -------- Net revenues 5,602 5,003 10,124 9,921 -------- -------- -------- -------- Cost of revenues: License 421 330 991 530 Service and other 1,497 1,231 2,911 2,359 -------- -------- -------- -------- Total cost of revenues 1,918 1,561 3,902 2,889 -------- -------- -------- -------- Gross profit 3,684 3,442 6,222 7,032 -------- -------- -------- -------- Operating expenses: Research and development 1,975 1,612 3,611 3,047 Sales and marketing 2,202 1,463 3,759 2,950 General and administrative 1,381 677 2,433 1,334 -------- -------- -------- -------- Total 5,558 3,752 9,803 7,331 -------- -------- -------- -------- Operating loss 1,874 310 3,581 299 Other income, net 143 202 392 663 -------- -------- -------- -------- (Loss) income before provision for income taxes (1,731) (108) (3,189) 364 Provision for income taxes 20 64 20 196 -------- -------- -------- -------- Net (loss) income (1,751) (172) (3,209) 168 Other comprehensive income (expense) 38 (52) 8 (21) -------- -------- -------- -------- Comprehensive (loss) income $ (1,713) $ (224) $ (3,201) $ 147 ======== ======== ======== ======== Basic net (loss) income per common share ($ 0.07) ($ 0.01) ($ 0.13) $ 0.01 ======== ======== ======== ======== Diluted net (loss) income per common share ($ 0.07) ($ 0.01) ($ 0.13) $ 0.01 ======== ======== ======== ======== Weighted average shares outstanding used in net (loss) income per common share calculations: Basic 25,354 22,923 25,280 22,736 Diluted 25,354 22,923 25,280 24,602
For product information:
Darrin Stone
(818) 227-1451
email: darrin-stone@vertel.com
Marjorie Ornston, Media Inquiries
310/442-0599
mjo@la.frbd.com
Jill Fukuhara, Investor Inquiries
310/442-0599
jsf@la.frbd.com
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