Cellular Technical Services Reports 2002 Second-Quarter Results.Business Editors SEATTLE--(BUSINESS WIRE)--July 25, 2002 Cellular Technical Services Company, Inc. (Nasdaq:CTSC CTSC Cathepsin CTSC Clinical and Translational Science Center (University of California at Davis) CTSC Chenega Technology Services Corporation CTSC Canadian Technical Security Conference (Burlington, ON, Canada) ) ("CTS (1) (Clear To Send) The RS-232 signal sent from the receiving station to the transmitting station that indicates it is ready to accept data. Contrast with RTS. (2) (Common Type System) The data typing used in . "), a provider of products and services for the prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. and wireless communications wireless communicationsSystem using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. industries, today reported its second quarter financial results for 2002.
Summary of Financial Highlights
(Dollar amounts in 000s, except per share data)
Three Months Ended 6/30 Six Months Ended 6/30
----------------------- ---------------------
2002 2001 2002 2001
------- ------- ------- -------
Revenue $3,331 $5,568 $ 5,689 $11,129
Net Income (Loss) $ (998) $ 504 $(1,981) $ 454
Net Income (Loss) Per
Share Basic and Diluted $(0.44) $ 0.22 $ (0.86) $ 0.20
Revenue decreased 40% to $3.3 million in the three months ended June June: see month. 30, 2002, compared to the prior year quarter, and 49% to $5.7 million from $11.1 million for the six months ended June 30, 2002, compared to the prior year period. 2001 was the final year of revenue for CTS' Blackbird blackbird, common name in North America of a perching bird allied to the bobolink, the meadow lark, the oriole, and the grackle and belonging to the family Icteridae. The European blackbird, Turdus merula, is a thrush. Platform product suite, which accounted for $1.4 million in revenue in the second quarter of 2001 and $2.8 million in revenue for the six months ended June 30, 2001, compared to zero in both 2002 periods. As previously reported, our Blackbird business ended in December 2001 and we forecast no additional revenue from that segment in future periods. CTS reported a quarterly net loss of $998,000 compared to net income of $504,000 in the prior year period. The change is due to several factors: i) gross margin decreased by $843,000 as the Blackbird business provided $1,014,000 in the prior year offset by improved 2002 Isis Isis, in Egyptian religion Isis (ī`sĭs), nature goddess whose worship, originating in ancient Egypt, gradually extended throughout the lands of the Mediterranean world during the Hellenistic period and became one of the chief gross margins of $171,000; ii) operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. reductions of $366,000; iii) reduced other income of $919,000 due to an arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the settlement received in the 2001 period; and iv) a combination of reduced interest income and increased taxes of $92,000. The Company's Isis Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , Inc. subsidiary ("Isis") provided $3.3 million in revenue during the second quarter of 2002 compared to $4.2 million in the 2001 period, and $5.7 million in revenue for the six months ended June 30, 2002 compared to $8.3 million in the 2001 period. Today, with long-distance prices down substantially, customers need to purchase fewer cards to get the same amount of calling time, impacting both Isis' top and bottom lines. We believe, however, that we have now passed the low point and our metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. such as quarterly sales, expenses as a percent of revenue and bad debts are showing positive trends, customer returns have declined as we have upgraded product quality, and customer creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. is improving with better screening and collection efforts. If these trends continue, Isis should be operationally profitable in the next few months. Stephen Katz
Stephen Katz (1946 in New York City – 18 October, 2005 in Plano, Texas) was an American teacher and screenwriter. , CTS chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , noted, "As announced in early June, CTS common stock is now trading on the Nasdaq SmallCap Market, moving from the Nasdaq National Market due to their market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. requirements. The stock continues to trade at a substantial discount to cash and stated book values, a situation similar to many other technology companies. At the current stock price level, certain executives and directors are considering accepting common stock in lieu of Instead of; in place of; in substitution of. It does not mean in addition to. cash compensation and/or purchasing shares on the open market. As of June 30, 2002, we had $4.5 million in cash, $4.8 million of working capital and no bank debt. For the remainder of 2002, we are planning that our cash burn rate will average less than $250,000 per month in support of our Neumobility development efforts. We have continued our strict headcount and expense controls while devoting our entire R&D resources to developing our Neumobility(TM) location based services ("LBS (Location-Based Services) See mobile positioning. ") platform, gateway and suite of applications. Additionally, we believe that prospects and developments are positive at TruePosition, Inc., an LBS company in which we have a substantial investment, especially given recent issues with competing technologies and TruePosition's strong intellectual property portfolio. "Our discussions with customers and possible industry partners with respect to our Neumobility suite of products and applications continue to be encouraging, and we are hopeful that sales activity or initial deployments will occur in late 2002. Some carriers have requested LBS proposals and others have announced specific deployment plans that have added to our belief that we are on the right track. We are pleased with the current progress and direction of the Neumobility division." The Company will hold a conference call at 9:00 a.m. Eastern time, Aug. 1, 2002, to discuss its second-quarter 2002 results. Please call 888/270-8045 to join the call. Replays will be available starting two hours after the call for one week at 800/642-1687, code 5052506. Over the past 13 years, CTS has used its experience with real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. wireless call processing In telecommunication, the term call processing has the following meanings:
Special Note Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 that involve risks and uncertainties that could cause actual results for CTS or its affiliates to differ materially from those expressed or implied in the applicable statements. These risks and uncertainties include but are not limited to: vulnerability to rapid industry change and technological obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. ; limited customer base and reliance on a relatively small number of customers and customer contracts; dependence on a limited number of existing products and services; uncertainty of continued demand for and market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" of its existing products and services under existing and future contracts; uncertainty in its ability to timely develop, introduce and gain acceptance of new products and services; uncertainty of the demand for and market penetration of new products and services; the possible impact of competitive products and pricing; the risk that its current and future products may contain errors or be affected by technical problems that would be difficult and costly to detect and correct; reliance on a limited number of outside vendors for key components and processes; potential difficulties in managing changing business conditions; dependence on key personnel; the availability of financing; and other risks described in CTS' filings with the Securities and Exchange Commission.
CELLULAR TECHNICAL SERVICES COMPANY, INC.
SELECTED CONSOLIDATED BALANCE SHEET DATA
(in 000's)
June 30, Dec. 31,
2002 2001
-------- --------
Cash $4,462 $6,353
Accounts Receivable, net 633 529
Inventories, net 321 531
Total Assets 7,935 9,990
Working Capital 4,771 6,523
Stockholders' Equity 6,898 8,879
CELLULAR TECHNICAL SERVICES COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in 000's, except per share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
------------------------------------
2002 2001 2002 2001
-------- -------- --------- --------
REVENUE
Phonecards $ 3,331 $ 4,187 $ 5,689 $ 8,343
Services and Systems -- 1,381 -- 2,786
-------- -------- --------- --------
Total Revenue 3,331 5,568 5,689 11,129
COSTS AND EXPENSES
Cost of phonecards 3,346 4,373 5,617 8,340
Cost of services and systems -- 367 -- 754
Sales and marketing 246 365 537 771
General and administrative 343 515 650 957
Research and development 411 486 815 977
-------- -------- --------- --------
Total Costs and Expenses 4,346 6,106 7,619 11,799
-------- -------- --------- --------
LOSS FROM OPERATIONS (1,015) (538) (1,930) (670)
OTHER INCOME, net 2 921 5 945
INTEREST INCOME, net 22 121 51 181
-------- -------- --------- --------
INCOME (LOSS) BEFORE INCOME TAXES
AND CHANGE IN ACCOUNTING
PRINCIPLE (991) 504 (1,874) 456
INCOME TAX PROVISION 7 -- 7 2
-------- -------- --------- --------
INCOME (LOSS) BEFORE THE EFFECT
OF A CHANGE IN ACCOUNTING
PRINCIPLE (998) 504 (1,881) 454
CUMULATIVE EFFECT OF A CHANGE IN
ACCOUNTING PRINCIPLE -- -- (100) --
-------- -------- --------- --------
NET INCOME (LOSS) $ (998) $ 504 $ (1,981) $ 454
======== ======== ========= ========
BASIC AND DILUTED SHARE DATA:
Income (loss) before the effect
of a change in accounting
principle $ (0.44) $ 0.22 $ (0.82) $ 0.20
Cumulative effect of a change
in accounting principle -- -- (0.04) --
======== ======== ========= ========
Net income (loss) $ (0.44) $ 0.22 $ (0.86) $ 0.20
======== ======== ========= ========
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 2,292 2,292 2,292 2,292
Diluted 2,292 2,297 2,292 2,302
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