4/11/2003 - NMS Communications (NASDAQ: NMSS), the leading supplier of technology for tomorrow's networks, announced results for the first quarter ended March 31, 2003.
Revenues (in thousands) for the first quarter of 2003 were $20,812 compared to $28,217 for the corresponding quarter in 2002, a decrease of 26.2 percent. Pro forma net loss (in thousands) was $6,359 versus a net loss of $6,282 reported for the first quarter of 2002. Pro forma loss per diluted share for the quarter was $0.18 compared to a loss of $0.17 for the comparable period in 2002, based on 36.2 million and 36.1 million weighted average diluted shares outstanding, respectively.
All pro forma numbers provided above exclude the effects of amortization charges related to acquisitions and purchased intangibles, restructuring charges, impairment charges and other non-recurring items, each of which are explained in more detail in the footnotes to the accompanying pro forma statement of operations. NMS Communications excludes these one-time effects, which are not representative of results from ongoing operations, and assumes a tax rate of 35 percent, to provide our shareholders supplemental information on performance and a consistent basis for financial comparisons. Results including these charges in accordance with generally accepted accounting principles ("GAAP") are stated later in this release and are also set forth in the accompanying statement of operations. NMS Communications uses this non-GAAP financial measure for investor communications only.
During the quarter, the company purchased $1.8 million face value of convertible debt for a purchase price of $1.1 million, bringing the total face value of convertible debt repurchased by the company to $107.7 million, with a cumulative purchase price of $66.1 million. As of March 31, 2003, the remaining convertible debt outstanding was $67.3 million.
Including the effects of amortization charges related to acquisitions and purchased intangibles, restructuring charges, impairment charges and other non-recurring items, each of which are explained in more detail in the accompanying pro forma statement of operations, net loss (in thousands) for the first quarter of 2003 was $11,584 versus a net loss of $13,526 reported for the first quarter of 2002 and loss per diluted share for the quarter was $0.32 compared to a loss of $0.37 for the comparable period in 2002, based on 36.2 million and 36.1 million weighted average diluted shares outstanding, respectively. The most significant reconciling items between GAAP net loss and pro forma net loss for the first quarter of 2003 relate to $1.2 million of amortization of purchased intangible assets and an assumed tax rate of 35 percent, off-set by a gain of $0.7 million realized on the repurchase of the convertible debt.
"Results in the first quarter continued to be affected by softness in capital spending by enterprise as well as telecommunications companies. Our focus remains on improving the profitability of our existing Platforms and VQS businesses within the current business environment and making measured progress toward first revenues of our new HearSay and wireless access gateway products. We will make further cost reductions in the next week, and we reaffirm our commitment to reach break-even operations by the end of the year" said Bob Schechter, NMS Communications' chairman and CEO.
"During the first quarter, we also announced the addition of the NMS Network Analysis System, a network testing and monitoring tool, to our voice quality products, opening the door for operators to take action to improve mobile phone call quality," Schechter said. "Independent research has shown that subscribers consider sound quality, especially in noisy environments, an important feature that is not yet adequately addressed---and one that affects wireless subscriber satisfaction, ARPU and churn. We expect increased awareness of the impact of voice quality on these mobile operator business metrics. In fact, this quarter, China Unicom began installing NMS' voice quality products with Studio Sound to improve the call experience for its Shanxi Unicom subsidiary's 1.4 million subscribers," Schechter added.
"We announced important new design wins with existing platform customers. For example, this quarter Avaya selected NMS voice processing technology for its recently announced Avaya Interactive Response System, the company's newest voice applications platform for self-service, using spoken instructions, touchtone or rotary-dialed input from any telephone. Similarly, long-time NMS customer Fujitsu will be the first to bring the value of NMS' new SS7 monitoring application to operators. And General Dynamics chose NMS to develop custom gateway technology for the British government's military tactical communications system," concluded Schechter.
For the second quarter ending June 30, 2003, NMS Communications expects revenues to be flat with the first quarter results. Gross margins are expected to perform in the range of 50% to 52 %. The company anticipates a pro forma net loss for the second quarter of 2003 in the range of $0.14 to $0.16 per share. The Company's goal is to breakeven from operations by the end of 2003.
The above targets represent the Company's current revenue and earnings goals as of the date of this release.
NMS Communications (Nasdaq: NMSS) helps its customers increase revenues and returns on investments by rapidly deploying new carrier-grade communications products and services. Every telecom operator and communications equipment provider on the Global Fortune 50 list relies on NMS Communications for technology-leading products and services, including system building blocks, systems, consulting, and support. Visit www.nmscommunications.com for more information.
NMS Communications, NMS HearSay, and PowerAccess are trademarks of NMS Communications Corporation. Studio Sound is a registered trademark of NMS Communications Corporation.
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