DSET Reports Record Sales and Earnings for the Fourth Quarter and the Year; Company Ends 1999 with 23 CLEC and 3 ILEC Customers for Gateway Products.Business Editors BRIDGEWATER Bridgewater, town (1990 pop. 21,249), Plymouth co., E Mass.; inc. 1656. Manufacturing includes shoes and metal products. Its iron foundry industry dates from colonial times. Bridgewater State College and a state prison are there. , NJ--(BUSINESS WIRE)--February 8, 2000 (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : DSET DSET Desert Sunshine Exposure Testing Inc. ) - DSET Corporation, a leading supplier of business-to-business  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. solutions for the telecom industry, today reported record net income and revenues for the fourth quarter ended December December: see month. 31, 1999. This was the company's twenty-seventh consecutive profitable quarter. Net income and revenues for the year ended December 31 were also at record levels. Net income for the quarter amounted to $3.2 million, or $0.27 per share, assuming dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. , as compared with $1.9 million, or $0.17 per share, assuming dilution, for the quarter ended December 31, 1998. The weighted average number of fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common shares outstanding in each period was 11.8 million and 11.4 million, respectively. Total revenues for the quarter amounted to $15.1 million, as compared with $9.2 million for the same period in 1998, a 64.3% increase. Of this amount, $8.3 million or 54.7% came from sales to competitive local exchange carriers (CLECs) and incumbent local exchange carriers ILEC, short for incumbent local exchange carrier, is a local telephone company in the United States that was in existence at the time of the break up of AT&T into the Regional Bell Operating Companies (RBOCs) also known as the "Baby Bells". (ILECs), with the balance coming from sales to network equipment vendors. Geographically, revenue from North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. comprised 96.0% of total revenue. During the quarter, license revenues accounted for $8.1 million compared to $6.4 million for the same period a year ago, a 26.7% increase. Service revenues accounted for $7.0 million compared to $2.8 million in 1998, a 150.8% increase. The significant increase in service revenues was mainly due to including sales of certain DSET products for CLECs that have yet to be released for final production. Revenues from these products, which include DSET's ezSubscribe and ezTroubleAdmin solutions, amounted to $4.1 million in the fourth quarter of 1999. These products should be released in the first half of 2000 and will be sold as licensed products to other CLECs. Gross margin for the quarter was 82.0% versus 84.1% in the prior year. Gross margin for license revenues increased to 92.1% in the fourth quarter from 90.2% for the comparable 1998 period. The gross margin for service revenues increased to 70.3% in the fourth quarter of 1999 from 70.0% in the same quarter of 1998. Net income for the twelve months ended December 31, 1999 was $6.5 million or $0.59 per share, assuming dilution, as compared to $4.8 million or $0.43 per share, assuming dilution, last year. Revenues for the twelve-month period increased 52.4% to $44.6 million as compared to $29.3 million in the prior year. License revenues were $24.1 million, or an increase of 47.4% for the twelve-month period, and service revenues were $20.5 million, or an increase of 58.6% as compared to the prior year. &uot;Our results for the quarter, as well as for the year, clearly demonstrate the success of DSET's strategy for transitioning from a company that specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. in software-development tools to one that has become a leading provider of e-commerce solutions for the telecom industry,&uot; said Bill McHale McHale is a firm manufacturing a range of farm machinery. McHale is located in the West of Ireland in the town of Ballinrobe, which is approximately 40km North of Galway City. , president and chief executive officer of DSET. &uot;In the quarter, we won sales from five CLECs and an ILEC (Incumbent Local Exchange Carrier) A traditional local telephone company such as one of the Regional Bell companies (RBOCs). Contrast with CLEC. See ELEC and TELRIC. that amounted to more than eight million dollars. This increased the number of our customers to twenty-three CLECs and three ILECs, with total 1999 sales to such providers reaching almost twenty million dollars. This amounted to 44 percent of 1999 revenues, which exceeded our own expectations of 35 to 40 percent. &uot;At the end of 1998, we had just four CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) customers and no ILEC customers. Compared to 1998, sales of our gateway products increased over 650 percent by the close of 1999. That's exceptional performance by any measure, and we feel that DSET has staked out a leading position that will enable us to generate continued growth in 2000 and beyond.&uot; McHale highlighted various factors contributing to the results reported by the company. He said, &uot;In 1999, the service providers that purchased our gateways were able to get them up and running as an integral part of their business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets by interconnecting with trading partners in virtually every part of the U.S. We delivered trading-partner interfaces for Ameritech AMERITECH American Information Technologies , the Bell Atlantic North Region, the Bell Atlantic South Region, BellSouth
GTE Génie Thermique et Énergie (French) GTE Gas Turbine Engine GTE Global Tropospheric Experiment GTE Geothermal Energy GTE Gas Turbine Efficiency plc (Sweden & USA) , Pacific Bell, and Southwestern Bell
Southwestern Bell Telephone, L.P. . Other trading-partner interfaces are under development and we anticipate their availability in the near future. &uot;The interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. capability that we have worked to provide reflects what may be our most important goal, giving our customers maximum flexibility with regard to where and how they operate. The majority of our CLEC customers have taken advantage of the close integration between DSET's gateways and MetaSolv's order-management software to quickly implement flow-through operating capabilities Noun 1. operating capability - the capability of a technological system to perform as intended performance capability capability, capableness - the quality of being capable -- physically or intellectually or legally; "he worked to the limits of his . &uot;However, our gateways can also be efficiently integrated with other order-management systems if a customer chooses. An example of this is our recent success at Gabriel Communications, where we will integrate our gateways with an order-management system from Eftia OSS Oss (ôs), city (1994 pop. 62,141), North Brabant prov., S Netherlands; chartered 1399. It is a significant industrial center. Manufactures include meat products, chemicals, pharmaceuticals, electrical equipment, and metalware. Solutions Inc. In addition, as part of our program to partner with companies that complement DSET's offerings, we're we're Contraction of we are. we're we are working with Vitria Technology to enable interconnection between DSET gateways and an even greater range of operations support systems Operations Support Systems (also called Operational Support Systems or OSS) are computer systems used by telecommunications service providers. The term OSS most frequently describes "network systems" dealing with the telecom network itself, supporting processes such .&uot; According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. McHale, the company's expanding partnering program will yield other benefits for both DSET and its customers. As an example, he cited the agreement finalized See finalization. in the fourth quarter between DSET and systems integrator An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. BusinessEdge Solutions. He explained that partnering with systems integrators trained in the installation and testing of DSET products will accelerate the deployment of those products for the company's customers. In addition to the very positive results for DSET's gateway products, the company has experienced continuing success with its number-portability solutions. McHale stated, &uot;Revenue generated from DSET's Local Service Management System, which is essential number-portability software for switch manufacturers, was a strong complement to our gateway sales in 1999. In the fourth quarter, we added a third major network equipment manufacturer to the two that had already been reselling our LSMS LSMS Living Standards Measurement Survey LSMS Louisiana State Medical Society LSMS Local Service Management System LSMS Locally-Self-consistent Multiple-Scattering LSMS Line-Strip Multibeam System LSMS Lnp Service Management System as part of their hardware solutions.&uot; &uot;DSET's success for 1999 was rooted largely in sales to facilities-based CLECs, carriers that have their own switches. Estimates put the number of CLECs in this category at around two hundred. But there's a much larger group of CLECs referred to as `resellers.' While these carriers purchase telecom services from trading partners and resell re·sell tr.v. re·sold , re·sell·ing, re·sells 1. To sell again. 2. To sell (a product or service) to the public or to an end user, especially as an authorized dealer. them at competitive prices, the services are provided exclusively via their trading partners' switches and phone lines. It's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have estimated that there are well over a thousand companies in this group, which we are now targeting by enhancing our gateway products with the capabilities such companies need.&uot; McHale stated that a new version of the DSET ezLocal ordering gateway shipped towards the end of the quarter can be used by resellers to process phone-service orders for customers. He pointed out that the gateway's new support for an operating mode known as UNE-P UNE-P Unbundled Network Element - Platform allows a CLEC to lease any combination of network elements from a trading partner to provide local phone service at an increased margin for the CLEC. &uot;Facilities-based CLECs across the country have already deployed previous versions of our ezLocal gateway,&uot; McHale said. &uot;Now, with ezLocal 2.6, we're making that product even more appealing to facilities-based carriers, in addition to addressing the needs of companies in the much larger resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. segment of the market. The new UNE-P capability that we've built into ezLocal will enable facilities-based CLECs to turn on revenue streams in areas where they have yet to complete connections to their switches.&uot; Asserting as·sert tr.v. as·sert·ed, as·sert·ing, as·serts 1. To state or express positively; affirm: asserted his innocence. 2. To defend or maintain (one's rights, for example). that the introduction of ezLocal 2.6 is just the beginning of DSET's response to increasingly diverse modes of CLEC operation, McHale stated that all of the company's pre-order, ordering, and post-order solutions will evolve as the industry demands. &uot;Some CLECs are deploying systems to provide internal support for all of their operations, while others plan to make use of service bureaus or application service providers to facilitate business processes,&uot; he said. &uot;But no matter how a CLEC chooses to operate, DSET products will have the flexibility to interface effectively with any operations environment and add substantial value to that environment.&uot; &uot;Over the next few months, we expect to announce solutions to support the marketing and ordering of DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary service that can be used by providers concentrating exclusively on data services and Internet access See how to access the Internet. , as well as by CLECs expanding into this market. The first of our DSL products will enable a provider to identity which homes and businesses in a given area can actually receive DSL service and at what speeds. This is vital information for focused, profitable marketing. Our DSL solutions are premier examples of how we are expanding the number of products available to our customers.&uot; Commenting on expectations for DSET's products and performance in 2000, McHale said, &uot;We are confident that the very positive trends that emerged during 1999 will continue as we enter the new year. Based on our results to date, we strongly believe that gateway sales to CLECs, ILECs, and DLECs can double in 2000, building to as much as 70 percent of our total business.&uot; About DSET: DSET Corporation is a leading provider of business-to-business e-commerce solutions for the global telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. marketplace. The DSET suite of electronic-bonding gateways is designed to interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. the operations support systems (OSSs) of service providers that must exchange information and share network capabilities as trading partners to provision and maintain a growing range of services for customers in the competitive telecom market. DSET's local number portability "LNP" redirects here. For the airport in Virginia with that IATA code, see Lonesome Pine Airport. For the compound InP, see Indium phosphide. Local number portability, (LNP) for fixed lines, and full mobile number portability solutions play a key role in enabling business and residential customers to change service providers without changing their local phone numbers. 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 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. . DSET expressly disclaims any obligation to update any forward-looking statements. DSET and the DSET logo are registered trademarks of DSET Corporation.
DSET Corporation
Consolidated Statements of Income
(In $000 except per share data)
Quarter Ended Twelve Months Ended
December 31, December 31,
1999 1998(a) 1999 1998(a)
---------------- --------------------
Unaudited Unaudited Unaudited Audited
Revenues:
License revenues......$ 8,126 $ 6,414 $ 24,084 $ 16,338
Service revenues...... 7,000 2,792 20,545 12,952
--------- ---------- ----------- ---------
Total revenues..... 15,126 9,206 44,629 29,290
--------- ---------- ----------- ---------
Cost of revenues:
License revenues...... 640 628 1,823 1,775
Service revenues...... 2,080 838 7,063 3,692
--------- ----------- ---------- ---------
Total cost of
revenues.......... 2,720 1,466 8,886 5,467
--------- ----------- ---------- ---------
Gross profit........ 12,406 7,740 35,743 23,823
--------- ----------- ---------- ---------
Operating expenses:
Sales and marketing... 3,809 2,800 12,537 9,193
Research and product
development......... 3,280 1,640 11,046 6,237
General and
administrative...... 1,033 931 4,221 2,708
--------- ----------- ---------- ---------
Total operating
expenses......... 8,122 5,371 27,804 18,138
--------- ----------- ---------- ---------
Operating income.... 4,284 2,369 7,939 5,685
Amortization............. (96) (10) (199) (38)
Interest expense and other
income (expense) (82) (74) (179) (120)
Interest income.......... 531 550 2,206 1,828
---------- ----------- ---------- --------
Income before taxes...... 4,637 2,835 9,767 7,355
Provision for income
taxes.................. 1,481 927 3,250 2,561
========== =========== ---------- --------
Net income...............$ 3,156 $ 1,908 $ 6,517 $ 4,794
========== =========== ========== ========
Net income per common
share..................$ .29 $ .20 $ .63 $ .53
========== =========== =========== =======
Weighted average number of common shares
outstanding........... 10,747 9,777 10,425 9,012
========== =========== =========== =======
Net income per common share
assuming dilution.....$ .27 $ .17 $ .59 $ .43
========== =========== ========== ======
Weighted average number of common shares and
common equivalent shares
outstanding........... 11,804 11,435 11,067 11,043
========== =========== =========== =======
(a) Certain amounts have been reclassified for comparative
purposes.
DSET Corporation
Consolidated Balance Sheets
(In $000 except per share data)
December 31,1999 December 31, 1998
Assets (Unaudited) (Audited)
Current assets:
Cash and cash equivalents.......$ 1,243 $ 1,159
Marketable securities........... 39,453 43,864
Accounts receivable, net........ 20,132 9,108
Deferred income taxes........... 633 258
Prepaid expenses and other
current assets................ 1,392 194
------------- -----------------
Total current assets.......... 62,853 54,583
Acquired technology, net........... 3,682 --
Capitalized software development
costs, net....................... 565 --
Fixed assets, net.................. 3,428 1,592
Goodwill, net...................... 1,919 130
Intangibles and other assets, net.. 885 549
Total assets..................$ 73,332 $ 56,854
============= =================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
expenses......................$ 6,145 $ 3,561
Income taxes payable............ 395 146
Deferred revenues............... 1,720 1,727
Note payable.................... 1,000 112
Current portion of capital lease
obligation.................... 130 --
Total current liabilities..... 9,390 5,546
Capital lease obligation........... 562 --
Long term note payable............. 1,310 --
Deferred income taxes.............. 711 119
--------------- -----------------
Total liabilities............. 11,973 5,665
--------------- -----------------
Commitments
Shareholders' equity:
Common stock..................... 45,575 41,912
Deferred stock compensation...... (197) (494)
Retained earnings................ 16,248 9,731
Unrealized appreciation/(depreciation)
on investments................ (267) 40
--------------- -----------------
Total shareholders' equity.... 61,359 51,189
=============== =================
Total liabilities and shareholders'
equity.......................$ 73,332 $ 56,854
=============== =================
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