DSET Reports Financial Results
for Third Quarter
Bridgewater, NJ - November 1, 2001 - (Nasdaq: DSET) - DSET
Corporation today reported financial results for the third
quarter ended September 30, 2001.
For the third quarter of 2001, revenues amounted to $2.0 million.
Gross margins on these revenues were 40%.
The loss for the quarter before restructuring and other charges
was $3.0 million, resulting in a loss of $1.03 per share on
a basic and diluted basis. The company recorded restructuring
and other charges of $4.6 million, or $1.58 per share. These
restructuring and other charges resulted primarily from asset-impairment
charges for surplus fixed assets, idle facilities, and certain
intangible assets related to various gateway products. The
company will record approximately $700,000 of restructuring
charges in the fourth quarter due to a reduction in headcount
at the beginning of October 2001.
Revenues for the nine months ended September 30, 2001 were
$8.0 million. The loss for the same period before restructuring
and other charges was $16.9 million, resulting in a loss of
$5.81 per share on a basic and diluted basis. Additional losses
of $14.8 million, or $5.09 per share, were recognized in the
first nine months of 2001 for restructuring and other charges
primarily related to the shutdown of the company's Canadian
operations, consolidation of its U.S. operations, and asset-impairment
charges for surplus fixed assets, idle facilities, and certain
tangible and intangible assets related to various gateway
products.
The weighted average number of basic and diluted common shares
outstanding for the three and nine months ended September
30, 2001 was 2.9 million. After giving retroactive application
to the company's one-for-four reverse stock split in August
2001, all share and per-share amounts have been restated for
this reverse stock split.
Financial Position
"We ended the third quarter of 2001 with $18.4 million in
cash, cash equivalents and marketable securities, and an additional
$1.2 million in net receivables," said Bruce Crowell, DSET's
chief financial officer.
"We have continued to progress towards making our line of
electronic-bonding gateways a profitable contributor to the
company, taking into account the deterioration of the competitive
telecommunications market. We have reduced expenses related
to our gateway products to a level that should result in a
positive cash flow based on the recurring stream of maintenance
revenue from our current base of 30 customers. As we noted
in recent weeks, we are still providing full support for our
gateways, which we believe are the most widely used and tested
in the market, and we anticipate adding new customers under
the terms of our recently announced Gateway Rental Plan.
"With our latest cost-reduction initiatives, we believe that
we have reduced our quarterly operating expenses to below
$3.0 million. As noted above, gross margins for the quarter
were 40%, which is a 100% improvement over the prior quarter,
and should improve further as the full effect of our restructuring
takes hold.
Status of Merger with ISPsoft, Inc.
"The merger between DSET and ISPsoft, which we announced in
late June, continues to move ahead. We now expect it to be
completed in December 2001. We still believe that we will
have enough cash and resources after completion of the merger
to operate the combined businesses through the third quarter
of 2002, even assuming only current levels of maintenance
revenue. However, we also believe that we can grow revenues
from our gateway product line and begin to make sales in the
IP provisioning market."
Outlook for Our Gateway and IP Provisioning
Business
"We remain firmly committed to the gateway business, which
should be a cash generator as we go forward," said Bill McHale,
DSET's president, chief executive officer, and chairman of
the board. "And we are pleased with the response to our Gateway
Rental Plan. Prospective customers can now gain the benefits
of electronic-bonding gateways without a long-term financial
commitment and for essentially no cash up front.
"We are clearly focused on two product lines and have an aggressive
strategy for offering all of our products to any service provider
in the world at very attractive rates. First, as a value-added
reseller of ISPsoft products, we are entering what many analysts
say is a very substantial global market. The first phase of
this market is for IP-based Virtual Private Networks, or VPNs.
Telecom providers can use our products to quickly define new
IP-based services and rapidly activate those services in a
multi-vendor environment at a fraction of the cost of other
provisioning methods. Secondly, we continue to offer our electronic
bonding-gateways in creative ways to help competitive service
providers reduce the time required to provision new voice
and data services for their customers.
"It has been a very difficult year for the telecom industry
and DSET. However, our restructuring efforts are beginning
to pay off and we are starting to feel more confident. We
believe that DSET will once again be growing in 2002."
About DSET
DSET Corporation is a supplier of electronic-bonding gateways
and software solutions that automate the provisioning of Internet
Protocol (IP)-based services. DSET gateways enable communications
providers to implement electronic Trading Partner Networks
(TPNs). A TPN plays a critical role in lowering the cost of
acquiring customers, reducing the amount of time required
to provision new phone services for customers, and minimizing
the time required to resolve service outages to ensure higher
customer satisfaction and less customer churn. DSET IP provisioning
solutions facilitate the creation of virtual private networks
(VPNs) and other services at a fraction of the cost and time
of conventional provisioning methods. DSET is headquartered
in Bridgewater, New Jersey, and the company's Web site can
be viewed at www.dset.com.
Statements regarding financial matters contained in this press
release, other than historical facts, are forward-looking.
Since all statements about DSET's plans, estimates, and expectations
are based on current projections that involve risks and uncertainties,
and are subject to change at any time, the company's actual
results may differ materially from expected results. Investors
should consider these risks and uncertainties, which are discussed
in documents filed by DSET with the Securities and Exchange
Commission. These documents identify important factors that
could cause the actual results to differ materially from those
contained in the projections or forward-looking statements.
DSET expressly disclaims any obligation to update any forward-looking
statements.
x x x
DSET Contacts:
Financial: Bruce Crowell, Chief Financial Officer,
908-526-7500 Ext. 1775, e-mail bcrowell@dset.com
Media Relations: Dean Maskevich, Marketing Communications,
908-526-7500 Ext. 1366, e-mail: dmaskevi@dset.com
Investor Relations: John P. Murphy, Westfield Investor Relations,
908-233-1558, e-mail: westfieldir@worldnet.att.net
DSET and the DSET logo are registered trademarks of DSET Corporation.
All other trademarks are the property of their respective
owners.
|
