WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Oct. 28, 1999--Vertel® (Nasdaq:VRTL - news), a leading global provider of management solutions for telecommunications networks, reported revenues of $4.7 million for the third quarter ended September 30, 1999, compared with $5.6 million for the second quarter of 1999 and $4.9 million for the third quarter of 1998.
The 1999 third quarter net loss was $3.0 million, or a loss of $0.12 per share, compared with a net loss of $1.8 million, or a loss of $0.07 per share, for the second quarter of 1999 and net income of $973,000, or $0.04 per basic and diluted share, for the third quarter of 1998.
Results for the third quarter of 1998 were favorably impacted by the company's sale of its CDPD and pACT technologies to AMP for $2.5 million, which included the licensing of related technologies. Of this amount, approximately $800,000 was included in license revenues and approximately $1.5 million, net of certain credits totaling approximately $200,000, was included in other income for the 1998 period.
For the nine months ended September 30, 1999, revenues were $14.8 million, compared with $14.8 million for the same period in 1998. Vertel's 1999 year-to-date net loss was $6.2 million, or a loss of $0.25 per share, compared with net income of $1.1 million, or $0.05 per basic and diluted share, for the first nine months of 1998.
``Total revenues were down when compared to both the second quarter of this year and the third quarter of last year, in part due to the length of the sales cycle for the introduction of our new products,'' said Bruce Brown, president and CEO of Vertel.
``We do not expect to see a significant contribution from these products until early to mid 2000. Our customer base also continues to devote time and resources to solving issues related to Y2K and several have placed freezes on the implementation of any new technologies until Y2K is safely behind them.''
Vertel announced a restructuring of its operations to help make the company more competitive, which should allow it to sustain its position in the marketplace and continue to invest in growth markets. In the fourth quarter of 1999, the company plans to reduce its workforce, move some key functions such as engineering of TMN products offshore, and consolidate its U.S. engineering function in Vertel's San Diego facility.
``As a part of the consolidation process, we began a restructuring initiative to improve efficiencies, reduce costs and devote our resources toward higher growth, next generation markets,'' said Brown. ``By moving our TMN engineering functions offshore, we can reduce costs without sacrificing talent and maintain our competitive advantage.
``Additionally, moving these functions overseas puts us closer to the higher growth TMN markets and, since we already have a well-established international presence, we expect that the transition process will take only three to six months.
``On a positive note, revenues generated by our Professional Services Unit increased from both the second quarter of this year and the third quarter of 1998. As we expected, service revenues in the third quarter benefited from our strategic alliance with Lucent. In fact, we made significant progress in the implementation of our first three projects with them,'' said Brown.
``Going forward, we'll continue to work on developing and marketing new solutions for next generation telecommunication networks,'' commented Brown. ``Specifically, we are working on extending the telecommunications management infrastructure for carrier-grade OSS, or operations support systems, with CORBA and JAVA technologies.
``We are also making progress with our mediation products and services that allow different network applications and systems to be integrated. In addition to supporting service assurance functions, we are expanding our mediation offerings to cover provisioning and billing and will begin to target carriers with these solutions as well as our current customer base of leading telecom equipment manufacturers.
``We are creating a focused team to launch an OSS Applications Service Provider (ASP) to leverage our network operations experience and mediation solutions to reduce the time to market and cost of operations for new ASP market entrants,'' said Brown. ``We are still in the early stages of these efforts.''
About Vertel Corporation
Vertel is a leading global provider of carrier-grade, broadband Internet software infrastructure and management solutions. Vertel offers a wide range of technologies and applications, supporting end-to-end network and service management with the highest quality of service for network operations. Vertel's solutions are deployed worldwide by service providers, network operators, software vendors and systems integrators.
Vertel also delivers turnkey management applications that fit individual customer requirements through its Professional Services organization. The company is based in Woodland Hills and has sales offices throughout the world. Contact Vertel on the World Wide Web at http://www.vertel.com.
``Safe Harbor'' Statement 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 June 30, 1999.
VERTEL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) Sept. 30, Dec. 31, 1999 1998 (unaudited) ASSETS Current assets: Cash and cash equivalents $4,417 $19,495 Short-term investments 5,855 978 Trade accounts receivable (net of allowances of $691 as of September 30, 1999 and $556 as of December 31, 1998) 5,974 4,477 Prepaid expenses and other current assets 627 540 Total current assets 16,873 25,490 Property and equipment, net 1,497 1,025 Investments 1,437 1,437 Goodwill 4,226 -- Other assets 290 365 $24,323 $28,317 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $757 $426 Accrued wages and related liabilities 1,613 1,351 Capital lease obligations 65 -- Accrued restructuring expenses 141 224 Accrued taxes payable 933 1,087 Other accrued liabilities 2,265 1,942 Accrued acquisition liabilities 91 -- Deferred revenue 1,648 1,115 Total liabilities 7,513 6,145 Shareholders' equity: Preferred stock, par value $.01, 2 million shares authorized; none issued and outstanding Common stock, par value $.01, 50 million shares authorized; Shares issued and outstanding: 1999, 25,484,138; 1998, 24,954,545 255 249 Additional paid-in capital 80,450 79,553 Accumulated deficit (63,727) (57,483) Accumulated comprehensive (168) (147) Total shareholders' equity 16,810 22,172 $24,323 $28,317 VERTEL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Month Nine Month Period Ended Period Ended Sept. 30, Sept. 26, Sept. 30, Sept. 26, 1999 1998 1999 1998 Net revenues: License $2,618 $3,551 $9,382 $10,199 License - related party -- -- -- 737 Service and other 2,072 1,357 5,432 3,893 Net revenues 4,690 4,908 14,814 14,829 Cost of revenues: License 353 410 1,344 940 Service and other 1,522 895 4,433 3,254 Total cost of revenues 1,875 1,305 5,777 4,194 Gross profit 2,815 3,603 9,037 10,635 Operating expenses: Research and development 2,118 1,677 5,729 4,724 Sales and marketing 2,547 1,655 6,306 4,605 General and administrative 1,078 724 3,233 2,058 Goodwill amortization 238 -- 516 -- Restructuring benefit (82) -- (82) -- Total 5,899 4,056 15,702 11,387 Operating loss (3,084) (453) (6,665) (752) Other income, net 79 1,526 471 2,189 (Loss) income before provision for income taxes (3,005) 1,073 (6,194) 1,437 Provision for income taxes 30 100 50 296 Net (loss) income (3,035) 973 (6,244) 1,141 Other comprehensive (expense) income (29) 446 (21) 425 Comprehensive (loss) income $(3,064) $1,419 $(6,265) $1,566 Basic net (loss) income per common share $(0.12) $0.04 $(0.25) $0.05 Diluted net (loss) income per common share $(0.12) $0.04 $(0.25) $0.05 Weighted average shares outstanding used in net (loss) income per common share calculations: Basic 25,452 22,898 25,337 22,790 Diluted 25,452 23,783 25,337 24,329
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