Exhibit 99.1
Press Contact: | | For Immediate Release |
Janine Fogal | | |
650-623-1469 | | |
| | |
Investor Contact: | | |
Bill Tamblyn | | |
650-623-1309 | | |
Ditech Communications Announces Second Quarter Fiscal 2004 Financial Results
Revenues Up 35 Percent over Prior Quarter
Mountain View, California, November 20, 2003 - Ditech Communications Corporation (Nasdaq: DITC) reported results for its second quarter of fiscal 2004 ended October 31, 2003. Revenues for the second quarter of fiscal 2004 were $14.5 million, an increase of 35% from revenues of $10.7 million in the prior quarter and up 74% from revenues of $8.3 million in the same quarter in the prior fiscal year.
“Our return to profitability this quarter, amidst this magnitude of revenue growth, is both gratifying and very exciting for all of us,” said Tim Montgomery, president and CEO of Ditech Communications. “I believe our results, business fundamentals and strong balance sheet are evidence that we have achieved the proper balance between aggressive product and business development and conservative financial management.”
Ditech Communications (Ditech) will discuss its second quarter financial results at today’s conference call (see details later in this release).
Q2 Fiscal 2004 Results
• Income from continuing operations for the second quarter of fiscal 2004 of $2.9 million, compared to a loss from continuing operations of ($1.7) million in the same quarter in the prior fiscal year.
• Income per share from continuing operations for the second quarter of fiscal 2004 of $0.09, compared to a loss per share from continuing operations of ($0.06) in the same quarter in the prior fiscal year.
• Net income for the second quarter of fiscal 2004 of $2.9 million compared to a net loss of ($19.6) million in the same quarter in the prior fiscal year.
• Net income per share of $0.09, compared to a net loss per share of ($0.65) in the same quarter in the prior fiscal year.
Q3 Fiscal 2004 Outlook
Ditech expects revenues in the third quarter of fiscal 2004 to break the $20 million mark. The key drivers for this revenue are consistent with the second quarter results, including key account deployments and year-end budget spending by Ditech’s customers. Ditech expects gross profit, as a percentage of revenue, to be within 2% of second quarter levels. Ditech expects operating expenses to be up slightly from second quarter results as a consequence of increased revenue.
Conference Call
Ditech will host an investor webcast and conference call at 4:20 p.m. EDT today to review its second quarter performance and its outlook for the coming quarter. Any member of the public can listen to the conference call by calling the following number: (706) 634-5581. The conference call will also be broadcast live over the Internet and can be accessed by going to either the “Press Room” or “Investors” section of the Ditech web site home page: http://www.ditechcom.com. A replay of the Q2 FY04 conference call will be available via Ditech’s web site or by calling the Encore replay number at (706) 645-9291. The conference call ID is: 3588600. The replay of this call will be available two hours after the call is completed and will be available until December 4, 2003 and the webcast will be available on Ditech’s website until at least Ditech’s next earnings announcement.
Basis of Presentation
In July 2003, Ditech executed a sale of a substantial portion of the assets used in its optical business. As a result, the optical business is accounted for as a discontinued operation in all financial information presented.
Ditech Communications Corporation
Ditech Communications Corporation is a global telecommunications equipment supplier for voice networks. Ditech’s voice products are high-capacity echo canceller and voice enhancement products that utilize advanced software and digital signal processor (DSP) technology. This combination of software and hardware allows Ditech to deliver Voice Quality Assurance (VQA), a robust and cost-effective solution for voice enhancement (including noise reduction) and echo cancellation. Ditech (DITC) is listed on the Nasdaq National Market and is headquartered in Mountain View, California (web site: http://www.ditechcom.com).
Forward-Looking Statements
The statements in this press release regarding Ditech’s expected financial results for the third quarter of fiscal 2004 are forward-looking statements. Actual results could differ materially as a result of numerous risks and uncertainties, including the risk that: shipment of products Ditech expects to ship before the end of the quarter may be delayed or cancelled due to unexpected factors and events affecting Ditech’s customers; Ditech may experience weakening in demand for its voice and echo cancellation products; component supply problems may occur as a result of factors beyond its control; infrastructure demand could continue to weaken or remain flat due to the weakness in the economy or for other unanticipated reasons; Ditech’s competitors may develop products that compete favorably with Ditech’s new products; Ditech has a limited number of customers, the loss of any one which could cause its revenues to decrease materially; as well as those detailed in the section entitled “Future Growth and Operating Results Subject to Risk” in Ditech’s Form 10-Q for the quarter ended July 31, 2003 (filed September 15, 2003 with the Securities and Exchange Commission).
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Ditech Communications Corporation
Consolidated Statements of Operations
For the Three and Six Month Periods Ended October 31, 2003 and 2002
(in thousands, except per share amounts)
(unaudited)
| | Three Months Ended October 31, | | Six Months Ended October 31, | |
| | 2003 | | 2002 | | 2003 | | 2002 | |
| | | | | | | | | |
Revenue | | $ | 14,487 | | $ | 8,314 | | $ | 25,204 | | $ | 15,895 | |
| | | | | | | | | |
Cost of goods sold | | 4,937 | | 3,424 | | 8,691 | | 6,715 | |
| | | | | | | | | |
Gross profit | | 9,550 | | 4,890 | | 16,513 | | 9,180 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Sales and marketing | | 3,028 | | 3,233 | | 6,008 | | 6,377 | |
Research and development | | 2,603 | | 2,525 | | 5,168 | | 5,054 | |
General and administrative | | 1,285 | | 1,377 | | 2,576 | | 2,757 | |
Restructuring Costs | | — | | — | | 1,016 | | — | |
| | | | | | | | | |
Total operating expenses | | 6,916 | | 7,135 | | 14,768 | | 14,188 | |
| | | | | | | | | |
Income (loss) from operations | | 2,634 | | (2,245 | ) | 1,745 | | (5,008 | ) |
| | | | | | | | | |
Other income, net | | 275 | | 496 | | 659 | | 971 | |
| | | | | | | | | |
Income (loss) before benefit from income taxes | | 2,909 | | (1,749 | ) | 2,404 | | (4,037 | ) |
| | | | | | | | | |
Benefit from income taxes | | (17 | ) | — | | (6 | ) | — | |
| | | | | | | | | |
Income (loss) from continuing operations | | 2,926 | | (1,749 | ) | 2,410 | | (4,037 | ) |
| | | | | | | | | |
Discontinued operations: | | | | | | | | | |
Loss from discontinued operations | | (33 | ) | (17,844 | ) | (2,550 | ) | (26,791 | ) |
Loss on disposition of discontinued operations | | — | | — | | (6,892 | ) | — | |
Loss from discontinued operations | | (33 | ) | (17,844 | ) | (9,442 | ) | (26,791 | ) |
| | | | | | | | | |
Income (loss) before cumulative effect of accounting change | | 2,893 | | (19,593 | ) | (7,032 | ) | (30,828 | ) |
Cumulative effect of accounting change | | — | | — | | — | | (36,837 | ) |
| | | | | | | | | |
Net income (loss) | | $ | 2,893 | | $ | (19,593 | ) | $ | (7,032 | ) | $ | (67,665 | ) |
| | | | | | | | | |
Basic income (loss) per share: | | | | | | | | | |
From continuing operations | | $ | 0.09 | | $ | (0.06 | ) | $ | 0.07 | | $ | (0.14 | ) |
From discontinued operations | | — | | $ | (0.59 | ) | $ | (0.08 | ) | $ | (0.88 | ) |
From disposition of discontinued operations | | — | | — | | $ | (0.22 | ) | — | |
From cumulative effect of accounting change | | — | | — | | — | | $ | (1.21 | ) |
Basic net income (loss) per share | | $ | 0.09 | | $ | (0.65 | ) | $ | (0.23 | ) | $ | (2.23 | ) |
| | | | | | | | | |
Diluted income (loss) per share: | | | | | | | | | |
From continuing operations | | $ | 0.09 | | $ | (0.06 | ) | $ | 0.08 | | $ | (0.14 | ) |
From discontinued operations | | — | | $ | (0.59 | ) | $ | (0.08 | ) | $ | (0.88 | ) |
From disposition of discontinued operations | | — | | — | | $ | (0.22 | ) | — | |
From cumulative effect of accounting change | | — | | — | | — | | $ | (1.21 | ) |
Diluted net income (loss) per share | | $ | 0.09 | | $ | (0.65 | ) | $ | (0.22 | ) | $ | (2.23 | ) |
| | | | | | | | | |
Weighted shares used in per share calculation: | | | | | | | | | |
Basic | | 31,297 | | 30,360 | | 30,995 | | 30,291 | |
Diluted | | 32,558 | | 30,360 | | 32,021 | | 30,291 | |
Ditech Communications Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
| | October 31,
2003 | | April 30,
2003 | |
| | | | | |
Assets | | | | | |
Cash and cash equivalents | | $ | 107,990 | | $ | 94,495 | |
Accounts receivable, net | | 1,287 | | 6,249 | |
Inventories | | 7,765 | | 8,467 | |
Other current assets | | 6,936 | | 4,510 | |
| | | | | |
Total current assets | | 123,978 | | 113,721 | |
| | | | | |
Property and equipment, net | | 3,172 | | 8,893 | |
Other assets | | 2,263 | | 3,827 | |
| | | | | |
Total Assets | | $ | 129,413 | | $ | 126,441 | |
| | | | | |
Liabilities and Stockholders’ Equity | | | | | |
Accounts payable | | $ | 2,177 | | $ | 2,323 | |
Accrued expenses | | 7,462 | | 6,026 | |
Deferred revenue | | 2,630 | | 121 | |
Income taxes payable | | 1,832 | | 1,833 | |
| | | | | |
Total current liabilities | | 14,101 | | 10,303 | |
| | | | | |
Common stock | | 276,324 | | 270,038 | |
Accumulated deficit | | (161,012 | ) | (153,980 | ) |
Foreign currency translation adjustment | | — | | 80 | |
| | | | | |
Total stockholders’ equity | | 115,312 | | 116,138 | |
| | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 129,413 | | $ | 126,441 | |
