First Virtual Communications Announces Third Quarter 2001 Results.Business/Technology Editors SANTA CLARA Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. , Calif.--(BUSINESS WIRE)--Nov. 1, 2001 First Virtual Communications (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 : FVCX), a leading provider of integrated rich media communications solutions for IP and other networks, today announced financial results for the third quarter ended September 30, 2001. Revenues for the quarter were $7.8 million, compared with revenues of $8.1 million for the second quarter of 2001, and $9.1 million for the third quarter of 2000. The net loss for the current quarter on a pro-forma basis was $4.2 million, or $0.14 per share, compared with a loss of $5.0 million or $0.29 per share for the third quarter of 2000. Although the Company did not experience overall revenue growth in this quarter, it experienced significant revenue growth in several key product areas. Sales of Click to Meet(TM) and MCUs (Multipoint Control Units See MCU. ) increased by 32% and 153% respectively, and these products accounted for 44% of the overall revenue. The revenue decline was mainly due to a weakness in demand for ATM products. The Company significantly reduced its cash burn rate, on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis, for the quarter to $3.5 million. The Company achieved this reduction by focusing on reducing operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , increasing gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. and reducing Days Sales Outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). ("DSO See CSO. "). Operating expenses, on a post-merger, combined company basis, decreased significantly for the second consecutive quarter, resulting in a 35% reduction from the first quarter of 2001. Gross profit margins, on a pro forma basis, increased by 23% to 56.5% from the second quarter of 2001. DSO continued to improve, decreasing to 84 days in the third quarter from 94 days in the second quarter. As a result of the improvement in DSO, gross profit margins and the reduced operating expenses, the Company ended the quarter with a better cash balance than anticipated. "We are still working towards becoming cash neutral, as soon as possible," said Killko Caballero cab·al·le·ro n. pl. cab·al·le·ros 1. A Spanish gentleman; a cavalier. 2. A man who is skilled in riding and managing horses; a horseman. , president 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. . "In line with that goal, we are primarily focusing on improving our top line revenue, in this regard we are very encouraged by the increased interest in our products. However, we remain cautiously optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op in the short term, considering the current economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. . Furthermore, we are continuing to take aggressive action towards reducing our operating expenses, product costs and on improving our margins." The Company recorded a $5.5 million valuation adjustment to inventories, in the third quarter, to reflect lower demand expected for some of its ATM products in the future. In addition to lower demand, this inventory adjustment also reflects a change in the Company's focus towards sales of Click to Meet(TM) and the MCU (1) (MicroController Unit) A computer on a single chip. See microcontroller. (2) (Multipoint Control Unit) A device that is used to moderate a videoconference of three or more end points (users at computers or groups of users products. Excluding this non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. to costs of revenues, gross profit would have been $4.4 million, or 56.5% compared with $3.7 million or 46.0% in the second quarter of 2001. "Although the September 11 tragedy disrupted dis·rupt tr.v. dis·rupt·ed, dis·rupt·ing, dis·rupts 1. To throw into confusion or disorder: Protesters disrupted the candidate's speech. 2. our third quarter revenue growth, we are seeing strong interest in videoconferencing A real time video session between two or more users or between two or more locations. Although the first videoconferencing was done with traditional analog TV and satellites, inhouse room systems became popular in the early 1980s after Compression Labs pioneered digitized video systems and rich media communications, as a truly viable alternative to travel and as a meaningful tool for increased productivity," said Ralph Ungermann, chairman of the board. "Therefore, we remain optimistic about prospects for strong growth going forward." Conference Call Reminder Management from First Virtual Communications will discuss the company's third quarter financial results during its quarterly conference call for investors at 5:00 p.m., EST EST electroshock therapy. EST abbr. electroshock therapy today. The call will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.fvc.com. A replay of the call will be available on the company's web site for seven days following the live call. About First Virtual Communications First Virtual Communications is a world leader in providing easy-to-use, integrated rich media communications solutions to enterprises, service providers and portals. By enabling interactive voice, video and data collaboration See data conferencing. over IP-based networks, First Virtual provides cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. , integrated end-to-end solutions (jargon) end-to-end solution - (E2ES) A term that suggests that the supplier of an application program or system will provide all the hardware and/or software components and resouces to meet the customer's requirement and no other supplier need be involved. Compare: turn-key solution. for large-scale deployments to enterprise desktops. It also enables best of breed videoconferencing solutions to be extended through ISDN ISDN in full Integrated Services Digital Network Digital telecommunications network that operates over standard copper telephone wires or other media. and ATM networks. The company's flagship product A primary product of a company, which is typically why the company was founded and/or what made it well known. For example, MS-DOS, Windows and the Microsoft Office suite have been flagship products of Microsoft. CorelDRAW is a flagship product of Corel Corporation. , Click to Meet(TM), provides a complete framework for delivering a new generation of video-enabled web collaboration applications that address the 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. communications needs of companies worldwide. Click to Meet can be integrated seamlessly into popular enterprise messaging and collaboration environments such as Microsoft Exchange/Outlook and instant messaging Exchanging text messages in real time between two or more people logged into a particular instant messaging (IM) service. Instant messaging is more interactive than e-mail because messages are sent immediately, whereas e-mail messages can be queued up in a mail server for seconds or . First Virtual serves its customers through a worldwide network of resellers and partners. Additional information about First Virtual Communications can be found on the web at www.fvc.com Cautionary Statement Except for the historical information contained herein, this news release contains 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. , including, without limitation, statements containing the words, "believes," "anticipates," "expects" and words of similar import. Such forward-looking statements have known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of First Virtual Communications, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: the ability of First Virtual Communications and PictureTel to successfully carry out their collaboration, First Virtual Communications' limited operating history as a combined company with CUseeMe Networks, its variability of operating results, First Virtual Communications' broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). video services offering, market acceptance of video technology, First Virtual Communications' dependence on ATM backbone technology, potential inability to maintain business relationships with telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. carriers, distributors and suppliers, rapid technological changes, competition and consolidation in the video networking industry, the importance of attracting and retaining personnel, management of First Virtual Communications' growth, and other risk factors referenced in First Virtual Communications' public filings with the Securities and Exchange Commission, including the company's report on Form-10 K for the year ended December 31, 2000 and registration statement on Form S-4, filed with the Securities and Exchange Commission on April 25, 2001, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . All trademarks are recognized.
First Virtual Communications, Inc.
Condensed Pro forma Consolidated Statement of Operations
(in thousands)
Three months ended Nine months ended
September 30, September 30,
2001 2000 2001 2000
Revenues $ 7,767 $ 9,158 $ 20,284 $ 30,013
Cost of revenues 3,378 5,016 10,354 $ 16,376
Gross profit 4,389 4,142 9,930 13,637
Operating expenses:
Research and development 3,128 3,302 9,956 9,017
Selling, general and
administrative 5,641 6,256 17,600 17,265
Total operating
expenses 8,769 9,558 27,556 26,282
Operating loss (4,380) (5,416) (17,626) (12,645)
Other income, net 122 474 608 776
Minority interest in
consolidated
subsidiary 44 (69) 30 (112)
Net loss $ (4,214) $ (5,011) $(16,989) $(11,981)
Net loss per share:
Basic and diluted $ (0.14) $ (0.29) $ (0.75) $ (0.70)
Shares used to compute
net loss per share:
Basic and diluted 30,707 17,318 22,735 17,166
First Virtual Communications, Inc.
Pro-forma Adjustments
(in thousands)
Three months ended Nine months ended
September 30, September 30,
2001 2000 2001 2000
Net Loss as reported
on the Proforma
Consolidated Statement
of Operations $ (4,214) $ (5,011) $(16,989) $(11,981)
Amortization of
Goodwill (793) (170) (1,133) (509)
Impairment of ICAST
Goodwill - - (1,083) -
IPR&D Write-off - - (276) -
Inventory Adjustments in
Q3 2001 (5,515) - (5,515) -
Net Loss as reported on
Condensed Consolidated
Statement of Operations $(10,522) $ (5,181) $(24,995) $(12,490)
NOTE: Pro forma net loss is not a measure of operating results or cash
flows from operating activities as defined by generally accepted
accounting principles. Further, pro forma net loss is not necessarily
indicative of cash available to fund cash needs and should not be
considered as an alternative to cash flows as a measure of liquidity.
We believe the presentation of pro forma net loss provides relevant
information about our operations and is useful, along with net income,
for an understanding of our operating results.
First Virtual Communications, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data; unaudited)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2001 2000 2001 2000
Revenues $ 7,767 $ 9,158 $ 20,284 $ 30,013
Cost of revenues 8,893 5,016 15,869 $ 16,376
Gross profit (1,126) 4,142 4,415 13,637
Operating expenses:
Research and development 3,128 3,302 9,956 9,017
Selling, general and
administrative 6,434 6,426 20,092 17,774
Total operating
expenses 9,562 9,728 30,048 26,791
Operating loss (10,688) (5,586) (25,633) (13,154)
Other income, net 122 474 608 776
Minority interest in
consolidated subsidiary 44 (69) 30 (112)
Net loss $(10,522) $ (5,181) $(24,995) $(12,490)
Net loss per share:
Basic and diluted $ (0.34) $ (0.30) $ (1.10) $ (0.73)
Shares used to compute
net loss per share:
Basic and diluted 30,707 17,318 22,735 17,166
First Virtual Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands; unaudited)
(Unaudited)
September 30, December 31,
2001 2000
ASSETS
Current assets:
Cash and cash equivalents $ 7,476 $ 198
Short-term investments 4,721 23,730
Accounts receivable 7,262 9,937
Inventory 4,579 6,912
Prepaids and other current
assets 1,947 871
Total current assets 25,984 41,648
Property and equipment, net 3,356 2,815
Other assets 633 584
Intangible assets, net 16,372 1,894
$ 46,345 $ 46,941
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of
long-term debt $ 36 $ 80
Accounts payable 3,101 5,122
Accrued liabilities 7,314 3,574
Deferred revenue 2,282 1,143
Total current
liabilities 12,733 9,919
Long-term debt, net of current
portion 153 39
Minority interest in consolidated
subsidiary 244 253
Stockholders' equity:
Common stock 33 17
Additional paid-in capital 113,562 92,168
Accumulated other
comprehensive
income (loss) 280 210
Accumulated deficit (80,660) (55,665)
Total stockholders'
equity 33,215 36,730
$ 46,345 $ 46,941
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