ACE*COMM Reports Financial Results For the Third Quarter of Fiscal Year 2001

Apr 25, 2001, 01:00 ET from ACE*COMM Corporation

    GAITHERSBURG, Md., April 25 /PRNewswire/ -- ACE*COMM Corporation
 (Nasdaq:   ACEC) today announced results for its third quarter of fiscal 2001,
 ended March 31, 2001.  Revenues were $5.5 million for the third quarter,
 compared to $8.1 million in the comparable quarter of fiscal 2000,
 representing a decrease of 32%.  The net loss and loss per fully diluted share
 for the quarter were $1.8 million and $.20, respectively, compared to net
 income and income per fully diluted share of $0.7 million and $.07 for the
 third quarter of fiscal 2000. These results may not fully reflect the
 potential impact of a significant customer's election to seek reorganization
 under Chapter 11 of the Bankruptcy Code (see below).
     For the first nine months of fiscal 2001, the Company recorded revenue of
 $19.8 million, a decrease of 18% compared to the $24.2 million recorded for
 the first nine months of fiscal 2000. The net loss and loss per fully diluted
 share were $4.4 million and $.48, respectively, compared to net income and
 income per fully diluted share of $1.9 million and $.20 for the comparable
 first nine months of fiscal 2000.
     The Company's performance improved from the second quarter of fiscal 2001
 in terms of revenue, profitability, and cash at quarter end.  Revenue grew 4%
 from $5.3 million to $5.5 million.  Profitability improved from a net loss of
 $2.8 million to a net loss of $1.8 million, and cash at quarter end improved
 from $4.4 million to $4.9 million.
     "We are encouraged by the improvement in our results this quarter," said
 George T. Jimenez, Chairman and CEO of ACE*COMM.  "During the quarter we
 announced significant contracts with Adelphia Business Solutions and a new
 global services customer.  In addition, we announced a new partner
 relationship with Portal Software, an industry leading internet billing
 provider.  With continued support from our customers, we are optimistic that
 we will continue to realize further improvement in future periods."
 
     Market Conditions
     A primary market for the Company's products has been the Next-Generation
 Network operator segment of the telecommunications market in the United
 States.  Companies in this market are experiencing difficulty accessing
 capital markets, which has resulted in a decrease in the cash and liquidity
 needed to sustain their growth.  They have consequently focused their efforts
 over the past six months on preserving cash to fund daily operations.  The
 Company believes its lower revenue, compared to the previous year, is a direct
 result of this curtailment in capital spending.
 
     Customer Files Chapter 11
     On April 18, 2001, one of the Company's significant customers, Winstar
 Communications, elected to reorganize under Chapter 11 of the U.S. Bankruptcy
 Code.  As of March 31, 2001, the Company had $1.4 million in accounts
 receivable from Winstar, which represented 18% of gross accounts receivable.
 The Company has been monitoring the proceedings daily. Based upon the facts
 available to it at the time of this press release, the Company believes that
 it has made adequate provision for a portion of the receivable that might be
 unrecoverable.  However, due to uncertainties inherent in Chapter 11
 proceedings, it is possible that an additional allowance might need to be
 established for this receivable for the third quarter or in future periods.
 Any such additional allowance would adversely affect the Company's results for
 the quarter.
 
     Financial Stability & Outlook
     "In the fall of last year, the Company began a program to preserve cash
 and to maintain financial stability.  As a result of aggressive cost reduction
 and cash collection programs, the Company has been able to increase cash to
 $4.9 million with no increase in operating debt," explained James K. Eckler,
 Executive Vice President Finance and Administration.
 
     "The Company continues to be cautiously optimistic about a return of the
 U.S. telecommunications market to levels previously experienced.  The
 Company's current strategy of focusing on international markets, services and
 enterprise markets is progressing, and we are hopeful that we will realize the
 benefits of those efforts in the near future," continued Mr. Eckler.
 "Analysts indicate that consumer demand for telecom and Internet services is
 not declining.  When the recovery in the financial market occurs, which would
 enable growth in the telecom sector, ACE*COMM believes it will ultimately
 benefit from the suppressed demand for the kinds of data collection, data
 warehousing, and strategic measurement products that we provide."
     Except for historical information, the matters discussed in this news
 release include forward-looking statements that are subject to certain risks
 and uncertainties that could cause the actual results to differ materially
 from those projected, including, but not limited to:  the failure of
 anticipated orders to materialize, delays or cancellations of orders due to
 various factors, including business and economic conditions in the U.S. and
 foreign countries; industry-wide slowdowns, any limitations on customers'
 financial resources, the continued convergence of voice and data networks, the
 continuing success of the Company's strategic alliances for product
 development and marketing, customer purchasing and budgetary patterns or lack
 thereof; pricing pressures and the impact of competitive products; the timely
 development and acceptance of new products;  the Company's ability to
 adequately support growth of its operations, and other risks detailed from
 time to time in the Company's Report on Form 10-Q and other reports filed with
 the Securities Exchange Commission.
 
     About ACE*COMM:
     ACE*COMM (Nasdaq:   ACEC) delivers product based solutions for
 Telecommunications and Internet service providers worldwide. The Company
 develops technology and provides related services for voice, conventional data
 networks and Internet protocol (IP) based networks. ACE*COMM specializes in
 products and services that enable the capture, management, enhancement and
 distribution of network data used to support the business operations of
 service providers. These Operations Support System (OSS) solutions are
 provided by the Company to a broad range of customers, delivering both public
 and private communications services, and include wireless carriers, incumbent
 and competitive local exchange carriers, national and international long
 distance carriers, internet services providers and enterprises. ACE*COMM is a
 registered ISO 9001 quality standard company.
 
     For more information on the company refer to http://www.acecomm.com
 
     ACE*COMM and the ACE*COMM logo are registered trademarks, and Convergent
 Mediation is a trademark of ACE*COMM Corporation.
 
                              ACE*COMM CORPORATION
                                 BALANCE SHEETS
                                 (in thousands)
 
 
                                                    March 31,       June 30,
                                                      2001           2000
 
           Assets                                  (Unaudited)
 
     Current assets:
       Cash and cash equivalents                      $ 4,880        $ 4,386
       Accounts receivable, net                         6,795         11,818
       Inventories, net                                 1,706          1,869
       Prepaid expenses and other current assets          630            531
         Total current assets                          14,011         18,604
     Property and equipment, net                        2,764          3,190
     Capitalized software development costs, net          286            738
     Other assets                                         118            253
         Total assets                                 $17,179        $22,785
 
           Liabilities and Stockholders' Equity
 
     Current liabilities:
       Borrowings                                        $307           $280
       Accounts payable                                   601          1,538
       Accrued expenses                                   794            565
       Accrued compensation                             1,586          2,267
       Deferred revenue                                   831            770
         Total current liabilities                      4,119          5,420
     Noncurrent borrowings                                291            446
         Total liabilities                              4,410          5,866
 
 
     Stockholders' equity:
       Common stock                                        92             92
       Additional paid-in capital                      21,383         21,136
       Accumulated deficit                             (8,706)        (4,309)
         Total stockholders' equity                    12,769         16,919
 
         Total liabilities and stockholders' equity   $17,179        $22,785
 
 
                              ACE*COMM CORPORATION
                            STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
 
                                  For the three              For the nine
                                  months ended               months ended
                                    March 31,                 March 31,
                               2001          2000         2001         2000
                           (Unaudited)    (Unaudited) (Unaudited)  (Unaudited)
 
     Revenue                 $5,519        $8,073      $19,799       $24,228
     Cost of revenue
      (exclusive of
      depreciation expense
      included in selling,
      general, and
      administrative expense
      shown separately below) 2,863         2,857       10,541         9,990
 
         Gross profit         2,656         5,216        9,258        14,238
 
     Selling, general and
      administrative expense  3,671         3,786       11,784        10,725
     Research and development
      expense                   521           811        1,311         1,786
     Provision for doubtful
      accounts                  278           (67)         570          (235)
 
         (Loss) income
          from operations    (1,814)          686       (4,407)        1,962
 
     Interest income            (48)          (45)        (178)          (89)
     Interest expense            35            36          162            60
     Other expense                6             -            6             -
 
         (Loss) income
          before income
          taxes              (1,807)          695       (4,397)        1,991
 
     Income tax (benefit)
      provision                   -           (10)           -            71
 
         Net (loss)
          income           $( 1,807)         $705      $(4,397)       $1,920
 
 
     Basic net (loss)
      income per share       $(0.20)        $0.08       $(0.48)        $0.21
 
     Diluted net (loss)
      income per share       $(0.20)        $0.07       $(0.48)        $0.20
 
     Shares used in computing
      net (loss) income per share:
 
         Basic                9,244         9,125        9,219         9,001
         Diluted              9,244        10,087        9,219         9,612
 
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SOURCE ACE*COMM Corporation
    GAITHERSBURG, Md., April 25 /PRNewswire/ -- ACE*COMM Corporation
 (Nasdaq:   ACEC) today announced results for its third quarter of fiscal 2001,
 ended March 31, 2001.  Revenues were $5.5 million for the third quarter,
 compared to $8.1 million in the comparable quarter of fiscal 2000,
 representing a decrease of 32%.  The net loss and loss per fully diluted share
 for the quarter were $1.8 million and $.20, respectively, compared to net
 income and income per fully diluted share of $0.7 million and $.07 for the
 third quarter of fiscal 2000. These results may not fully reflect the
 potential impact of a significant customer's election to seek reorganization
 under Chapter 11 of the Bankruptcy Code (see below).
     For the first nine months of fiscal 2001, the Company recorded revenue of
 $19.8 million, a decrease of 18% compared to the $24.2 million recorded for
 the first nine months of fiscal 2000. The net loss and loss per fully diluted
 share were $4.4 million and $.48, respectively, compared to net income and
 income per fully diluted share of $1.9 million and $.20 for the comparable
 first nine months of fiscal 2000.
     The Company's performance improved from the second quarter of fiscal 2001
 in terms of revenue, profitability, and cash at quarter end.  Revenue grew 4%
 from $5.3 million to $5.5 million.  Profitability improved from a net loss of
 $2.8 million to a net loss of $1.8 million, and cash at quarter end improved
 from $4.4 million to $4.9 million.
     "We are encouraged by the improvement in our results this quarter," said
 George T. Jimenez, Chairman and CEO of ACE*COMM.  "During the quarter we
 announced significant contracts with Adelphia Business Solutions and a new
 global services customer.  In addition, we announced a new partner
 relationship with Portal Software, an industry leading internet billing
 provider.  With continued support from our customers, we are optimistic that
 we will continue to realize further improvement in future periods."
 
     Market Conditions
     A primary market for the Company's products has been the Next-Generation
 Network operator segment of the telecommunications market in the United
 States.  Companies in this market are experiencing difficulty accessing
 capital markets, which has resulted in a decrease in the cash and liquidity
 needed to sustain their growth.  They have consequently focused their efforts
 over the past six months on preserving cash to fund daily operations.  The
 Company believes its lower revenue, compared to the previous year, is a direct
 result of this curtailment in capital spending.
 
     Customer Files Chapter 11
     On April 18, 2001, one of the Company's significant customers, Winstar
 Communications, elected to reorganize under Chapter 11 of the U.S. Bankruptcy
 Code.  As of March 31, 2001, the Company had $1.4 million in accounts
 receivable from Winstar, which represented 18% of gross accounts receivable.
 The Company has been monitoring the proceedings daily. Based upon the facts
 available to it at the time of this press release, the Company believes that
 it has made adequate provision for a portion of the receivable that might be
 unrecoverable.  However, due to uncertainties inherent in Chapter 11
 proceedings, it is possible that an additional allowance might need to be
 established for this receivable for the third quarter or in future periods.
 Any such additional allowance would adversely affect the Company's results for
 the quarter.
 
     Financial Stability & Outlook
     "In the fall of last year, the Company began a program to preserve cash
 and to maintain financial stability.  As a result of aggressive cost reduction
 and cash collection programs, the Company has been able to increase cash to
 $4.9 million with no increase in operating debt," explained James K. Eckler,
 Executive Vice President Finance and Administration.
 
     "The Company continues to be cautiously optimistic about a return of the
 U.S. telecommunications market to levels previously experienced.  The
 Company's current strategy of focusing on international markets, services and
 enterprise markets is progressing, and we are hopeful that we will realize the
 benefits of those efforts in the near future," continued Mr. Eckler.
 "Analysts indicate that consumer demand for telecom and Internet services is
 not declining.  When the recovery in the financial market occurs, which would
 enable growth in the telecom sector, ACE*COMM believes it will ultimately
 benefit from the suppressed demand for the kinds of data collection, data
 warehousing, and strategic measurement products that we provide."
     Except for historical information, the matters discussed in this news
 release include forward-looking statements that are subject to certain risks
 and uncertainties that could cause the actual results to differ materially
 from those projected, including, but not limited to:  the failure of
 anticipated orders to materialize, delays or cancellations of orders due to
 various factors, including business and economic conditions in the U.S. and
 foreign countries; industry-wide slowdowns, any limitations on customers'
 financial resources, the continued convergence of voice and data networks, the
 continuing success of the Company's strategic alliances for product
 development and marketing, customer purchasing and budgetary patterns or lack
 thereof; pricing pressures and the impact of competitive products; the timely
 development and acceptance of new products;  the Company's ability to
 adequately support growth of its operations, and other risks detailed from
 time to time in the Company's Report on Form 10-Q and other reports filed with
 the Securities Exchange Commission.
 
     About ACE*COMM:
     ACE*COMM (Nasdaq:   ACEC) delivers product based solutions for
 Telecommunications and Internet service providers worldwide. The Company
 develops technology and provides related services for voice, conventional data
 networks and Internet protocol (IP) based networks. ACE*COMM specializes in
 products and services that enable the capture, management, enhancement and
 distribution of network data used to support the business operations of
 service providers. These Operations Support System (OSS) solutions are
 provided by the Company to a broad range of customers, delivering both public
 and private communications services, and include wireless carriers, incumbent
 and competitive local exchange carriers, national and international long
 distance carriers, internet services providers and enterprises. ACE*COMM is a
 registered ISO 9001 quality standard company.
 
     For more information on the company refer to http://www.acecomm.com
 
     ACE*COMM and the ACE*COMM logo are registered trademarks, and Convergent
 Mediation is a trademark of ACE*COMM Corporation.
 
                              ACE*COMM CORPORATION
                                 BALANCE SHEETS
                                 (in thousands)
 
 
                                                    March 31,       June 30,
                                                      2001           2000
 
           Assets                                  (Unaudited)
 
     Current assets:
       Cash and cash equivalents                      $ 4,880        $ 4,386
       Accounts receivable, net                         6,795         11,818
       Inventories, net                                 1,706          1,869
       Prepaid expenses and other current assets          630            531
         Total current assets                          14,011         18,604
     Property and equipment, net                        2,764          3,190
     Capitalized software development costs, net          286            738
     Other assets                                         118            253
         Total assets                                 $17,179        $22,785
 
           Liabilities and Stockholders' Equity
 
     Current liabilities:
       Borrowings                                        $307           $280
       Accounts payable                                   601          1,538
       Accrued expenses                                   794            565
       Accrued compensation                             1,586          2,267
       Deferred revenue                                   831            770
         Total current liabilities                      4,119          5,420
     Noncurrent borrowings                                291            446
         Total liabilities                              4,410          5,866
 
 
     Stockholders' equity:
       Common stock                                        92             92
       Additional paid-in capital                      21,383         21,136
       Accumulated deficit                             (8,706)        (4,309)
         Total stockholders' equity                    12,769         16,919
 
         Total liabilities and stockholders' equity   $17,179        $22,785
 
 
                              ACE*COMM CORPORATION
                            STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
 
                                  For the three              For the nine
                                  months ended               months ended
                                    March 31,                 March 31,
                               2001          2000         2001         2000
                           (Unaudited)    (Unaudited) (Unaudited)  (Unaudited)
 
     Revenue                 $5,519        $8,073      $19,799       $24,228
     Cost of revenue
      (exclusive of
      depreciation expense
      included in selling,
      general, and
      administrative expense
      shown separately below) 2,863         2,857       10,541         9,990
 
         Gross profit         2,656         5,216        9,258        14,238
 
     Selling, general and
      administrative expense  3,671         3,786       11,784        10,725
     Research and development
      expense                   521           811        1,311         1,786
     Provision for doubtful
      accounts                  278           (67)         570          (235)
 
         (Loss) income
          from operations    (1,814)          686       (4,407)        1,962
 
     Interest income            (48)          (45)        (178)          (89)
     Interest expense            35            36          162            60
     Other expense                6             -            6             -
 
         (Loss) income
          before income
          taxes              (1,807)          695       (4,397)        1,991
 
     Income tax (benefit)
      provision                   -           (10)           -            71
 
         Net (loss)
          income           $( 1,807)         $705      $(4,397)       $1,920
 
 
     Basic net (loss)
      income per share       $(0.20)        $0.08       $(0.48)        $0.21
 
     Diluted net (loss)
      income per share       $(0.20)        $0.07       $(0.48)        $0.20
 
     Shares used in computing
      net (loss) income per share:
 
         Basic                9,244         9,125        9,219         9,001
         Diluted              9,244        10,087        9,219         9,612
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X27035241
 
 SOURCE  ACE*COMM Corporation