Natural MicroSystems Announces First Quarter Financial Results.Business/Technology Editors FRAMINGHAM, Mass.--(BUSINESS WIRE)--April 11, 2001 Natural MicroSystems Corporation (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 :NMSS NMSS National Multiple Sclerosis Society NMSS Nuclear Material Safety and Safeguards NMSS New Model Special Schools NMSS Network Management Support Services ), the technology leader enabling a new era of communications, today announced results for the first quarter ended March 31, 2001. Revenues (in thousands) for the first quarter of 2001 were $26,617 compared to $27,722 for the corresponding quarter in 2000, a decrease of 4%. 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 net loss (in thousands), which excludes the effects of acquisition-related and purchased intangibles amortization charges and other non-recurring items, for the quarter, was $3,815 versus net income of $285 reported for the first quarter of 2000. Pro forma loss per diluted share for the quarter was $0.10 compared to income of $0.01 for the comparable period in 2000, based on 36.4 million and 30.7 million weighted average diluted shares outstanding, respectively. "For NMS See NetWare Management System. , as for the rest of the communications industry communications industry, broadly defined, the business of conveying information. Although communication by means of symbols and gestures dates to the beginning of human history, the term generally refers to mass communications. , this was a challenging and tough-to-call quarter. While it's difficult to predict how long this broad-based economic slowdown will continue, we are confident that the converged network The integration of the telephone system with IP-based data networks. See softswitch. (networking) converged network - A single network that can carry voice, video and data. buildout--for voice, video, and data--represents a huge opportunity ahead for NMS," said Bob Schechter, Natural MicroSystems' 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. . "Our acquisition of Mobilee, announced earlier today, demonstrates our commitment to extending the NMS value proposition in Voice Web solutions by providing a scaleable, feature rich platform that will help our customers achieve rapid success in this exciting market. "We have established a leadership position in the emerging communications market sweet spots, including the voice Web, IP media servers for next generation networks, packet voice and broadband access See broadband and wireless broadband. services like voice over 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 and voice over wireless local loop," Schechter continued. "We continue to deliver the breakthrough technologies essential to current and next-generation networks and to build the responsive operational infrastructure that our customers require and can trust. And, our strong balance sheet, with best-in-class DSOs--and over $300 million in cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has on hand--provide the financial foundation for continued leadership." New Technologies Bring New Customers During the first quarter, NMS continued its record of delivering products and services that help customers achieve time-to-market, cost and performance objectives, reinforcing its position as the industry's trusted technology leader. The Company unveiled its revolutionary PowerAccess(TM) architecture, capable of supporting over ten thousand ports in a single CompactPCI chassis--and reducing the cost to produce broadband access switches and gateways to an unprecedented $30 per port. At the same time, the Company announced the availability of the first hardware and software products based on this advanced ASIC (Application Specific Integrated Circuit) Pronounced "a-sick." A chip that is custom designed for a specific application rather than a general-purpose chip such as a microprocessor. design. PowerAccess enables developers to build solutions competitive with the vastly more expensive Class 5 telecommunications switches. Early customers for the PowerAccess products included Floware Wireless Systems, a leading provider of super fast broadband wireless See wireless broadband. communications systems to carriers and service providers. The market for systems like Floware's is expected to reach $16.3B in 2004, 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. Cahners Instat. NMS also launched a new version of PolicyPoint, its award-winning product expressly designed and priced for network service providers looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. immediate IP services revenue. PolicyPoint extends tiered classes of IP voice, video and data service and application-specific QoS to business customer premises. In testing by the independent Tolly Group, PolicyPoint demonstrated a new industry level of customer premise equipment (CPE (Customer Premises Equipment) Communications equipment that resides on the customer's premises. CPE - Customer Premises Equipment ). The award-winning Convergence Generation(TM) (CG) series of packet telephony Synonymous with IP telephony and voice over IP (VoIP), in which a digital voice stream is broken up into small chunks (packets) and transmitted over a packet-switched network. See IP telephony and packet switching. platforms earned approval certification from the Japan Approvals for Telecommunications Equipment (JATE JATE Jack and Kate (TV show Lost) JATE Joint Air Transport Establishment (UK) JATE Japan Approvals Institute for Telecommunications Terminal Equipment ) organization. This latest addition to an ever-increasing long list of international approvals, including China, reaffirms NMS' commitment to ensuring that its solutions are available for simplified worldwide deployment. The Company's Engineering Consulting Services group teamed with Surf Communication Solutions Surf Communication Solutions develops a suite of hardware and software products that drives a wide variety of applications whose common goal is high-capacity distribution of voice and video. to add v.34 modem support to the CG6000 platform, further enhancing that product for customers delivering next-generation communication solutions to burgeoning markets in China, Japan, Korea, and other Asian countries. This is additional demonstration of NMS' ability to help its global customers get to market faster and at lower costs. Customers Deliver Innovative, High Value Solutions NMS' Engineering Consulting Services group used NMS hardware and software to provide the essential technology for Motorola's Harmony(TM) wireless communications wireless communications System 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. system, which delivers cost-effective, scalable two-way radio A voice network that provides an always-on connection enabling the user to just "push the button and talk." Also called "dispatch radio," two-way radio has traditionally been used by police, fire, taxi and other mobile fleets. and wireless phone service for smaller networks of up to 12,000 users. The Harmony system is designed for faster implementation than traditional wireless alternatives and extends integrated digital communications Transmitting text, voice and video in binary form. See communications. to mobile workgroups and other users who have previously been beyond the reach of these services. Underscoring the power, scalability and reliability of NMS technology, Radcom, a leading supplier of test and quality management solutions for service providers, developers and enterprises, has integrated NMS' DSP (1) (Digital Signal Processor) A special-purpose CPU used for digital signal processing applications (see definition #2 below). It provides ultra-fast instruction sequences, such as shift and add, and multiply and add, which are commonly used in math-intensive technology into systems that measure voice and signaling quality at both the end and the edge of the public network. Leadership in Speech-driven Applications During the quarter, NMS and SpeechWorks International, a market leader in the telephony-based speech technology industry, announced the integration of the award-winning HearSay hearsay: see evidence. (TM) and the SpeechWorks(R)6.5 speech recognition engine at the application programming interface (API) level. The integrated platform dramatically streamlines the development and deployment of applications and services like voice portals, call center services, automated attendants, interactive voice response (IVR (Interactive Voice Response) An automated telephone information system that speaks to the caller with a combination of fixed voice menus and data extracted from databases in real time. ), directory assistance, unified messaging Having access to e-mail, voice mail and faxes via a common computer application or by telephone. For example, unified messaging may send faxes and digitized voice mail to a mail server that turns them into e-mail attachments. and telematic servers. Consolidating its leading position, NMS announced that its award-winning platforms for IP voice and speech-enabled services are being deployed in Tellme's carrier-grade voice application network. Tellme Networks Tellme Networks is a company founded in 1999 by Mike McCue, based out of Mountain View, California that specializes in telephone-based applications. Tellme Networks was acquired by Microsoft on March 14, 2007 for "close to $800M".[1] The deal closed in late April. (TM) specializes in helping businesses build and run applications on its carrier-grade VoiceXML network and is installing the NMS platform within its application servers during the continuing buildout The construction and implementation of a system. For example, "network buildout" implies constructing the network and going online. of the Tellme Voice Application Network. Conita Technologies also selected NMS' voice processing The computerized handling of voice, which includes voice store and forward, voice response, voice recognition and text to speech technologies. platform for its Personal Virtual Assistant (PVA PVA polyvinyl alcohol. ) service for enterprise communications. The Conita PVA enables mobile professionals to access and use corporate office applications and databases and the Internet from any phone using simple conversational language. Further affirmation of NMS leadership in IP media server technology and markets came with announcement that Webley Systems had standardized on PacketMedia(TM) for its voice-activated communications services for individuals, businesses, and service providers. PacketMedia is playing an essential role in Webley's migration of voice-activated services from a public-switched telephone network (PSTN (Public Switched Telephone Network) The worldwide voice telephone network. Once only an analog system, the heart of most telephone networks today is all digital. In the U.S. ) to a more flexible, cost-effective IP foundation. Similarly, Singapore-based UGotACall, a next-generation communications provider, is using PacketMedia for its Virtual Intelligent Agent service, which allows subscribers to manage voicemail and fax communications and make and receive phone calls without toll charges. This solution is now being deployed by Singapore's largest ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. , StarHub Internet. Expanded Distribution Capabilities NMS also announced an agreement with S.A.S. Group in Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. to expand its distribution channels in Asia. In addition to marketing NMS products to communication solution developers and service providers in Hong Kong and Taiwan, S.A.S Group, which has more than twenty years TWENTY YEARS. The lapse of twenty years raises a presumption of certain facts, and after such a time, the party against whom the presumption has been raised, will be required to prove a negative to establish his rights. 2. experience in the telecommunications components distribution business, will also provide technical support and offer custom integration services. Additionally, Channel Access, NMS' channel partner in the US, recently expanded its facilities and operations to meet increased demand for NMS products. About Natural MicroSystems At NMS, we strive to lead in the design, development and distribution of hardware and software for the communications industry's most advanced solutions. NMS technology turns the promise of tomorrow's high-value applications and services into today's revenue opportunities--by converging voice, video and data, connecting the Web to the phone, and spanning current and next-generation networks. Using NMS products and services, the world's leading networking and telecommunications suppliers get their solutions to market faster, and at lower costs. NMS supplies the essential technologies for voice Web services (1) Loosely, any online service delivered over the Web. Such usage appears in articles from non-technical sources, but not in IT-oriented publications, because definition #2 below describes the correct use of the term. and voice portals; eCRM applications; IP media servers for next-generation enhanced services; packet voice and broadband access services, including voice over IP (VoIP), voice over DSL (VoDSL) and voice over wireless local loop (VoWLL); and for guaranteed IP voice, video and data traffic performance. NMS...enabling a new era of communications. Visit www.nmss.com for more information. Statements in this document expressing the beliefs and expectations of management regarding future performance are "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. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to risks and uncertainties including, but not limited to, a continued slowdown in communications spending, quarterly fluctuations in financial results, the availability of products from vendors and other risks. These and other risks are detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2000. Natural MicroSystems, PowerBlade, Convergence Generation, PacketMedia and HearSay are trademarks of Natural MicroSystems Corporation. All other product or corporate references are trademarks or registered trademarks of their respective companies.
NATURAL MICROSYSTEMS CORPORATION
Pro Forma Consolidated Statements of Operations
(In $000's except share and per share data)
(Unaudited)
For the Three Months Ended
March 31,
2001 2000
Revenues $ 26,617 $ 27,722
Cost of revenues (a) 10,999 10,499
Gross profit 15,618 17,223
Operating expenses:
Selling, general and
administrative (b) 14,651 10,795
Research and development 8,678 6,984
Total operating expenses 23,329 17,779
Operating loss (7,711) (556)
Other income, net (c) 1,842 994
Income (loss) before income taxes (5,869) 438
Income tax expense (benefit) (d) (2,054) 153
Net income (loss) $ (3,815) $ 285
Basic net income (loss)
per common share $ (0.10) $ 0.01
Weighted average basic
shares outstanding 36,426,749 27,862,558
Diluted net income (loss)
per common share $ (0.10) $ 0.01
Weighted average diluted
shares outstanding 36,426,749 30,669,432
(a) Excludes $456 of amortization of purchased intangibles for the
quarter ended March 31, 2001; $89 of amortization of purchased
intangibles for the quarter ended March 31, 2000.
(b) Excludes $6,770 of amortization of purchased intangibles primarily
related to the IML acquisition, $4,572 reversal of an accrual
related to additional consideration that will not be paid to the
former shareholders of IML, $4,285 of non-cash compensation
expense related to the IML acquisition, $286 of amortization of
debt issuance costs and $142 of legal expenses assumed as the
result of the QWES.com acquisition for the quarter ended March 31,
2001; $217 of amortization of purchased intangibles for the
quarter ended March 31, 2000.
(c) Excludes $2,938 of foreign currency translation loss generated by
the remeasurement of intercompany debt that was established in
accordance with the IML transaction and $5,106 of impairment loss
for the write down to fair market value of a minority investment
for the quarter ended March 31, 2001; $982 of gain realized on
minority investments for the quarter ended March 31, 2000;
(d) Assumes a corporate tax rate of 35% for all periods presented.
NATURAL MICROSYSTEMS CORPORATION
Consolidated Statements of Operations
(In $000's except share and per share data)
(Unaudited)
For the Three Months Ended
March 31,
2001 2000
Revenues $ 26,617 $ 27,722
Cost of revenues 11,454 10,589
Gross profit 15,163 17,133
Operating expenses:
Selling, general and
administrative 21,562 11,011
Research and development 8,678 6,984
Total operating expenses 30,240 17,995
Operating loss (15,077) (862)
Other income, net (6,202) 1,976
Income (loss) before income taxes (21,279) 1,114
Income tax expense 225 78
Net income (loss) $ (21,504) $ 1,036
Basic net income (loss)
per common share $ (0.59) $ 0.04
Weighted average basic
shares outstanding 36,426,749 27,862,558
Diluted net income (loss)
per common share $ (0.59) $ 0.03
Weighted average diluted
shares outstanding 36,426,749 30,669,432
NATURAL MICROSYSTEMS CORPORATION
Condensed Consolidated Balance Sheet
(In $000)
March 31, Dec. 31,
2001 2000
ASSETS (Unaudited)
Current assets:
Cash, cash equivalents
and marketable securities $306,880 $309,154
Accounts receivable, net of
allowance for uncollectable
accounts of $1,251 and $1,260,
respectively 14,569 18,840
Inventories 8,569 7,781
Prepaid expenses and other
current assets 7,443 7,467
Total current assets 337,461 343,242
Property and equipment, net 22,030 19,768
Other long-term assets 9,510 16,340
Goodwill and other intangibles, net 108,031 119,428
Total assets $477,032 $498,778
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 27,719 $ 31,794
Long-term obligations,
less current portion 175,000 175,000
Stockholders' equity 274,313 291,984
Total liabilities and
stockholders' equity $477,032 $498,778
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