Southborough, Mass. - February 14, 2002 - ViryaNet (NASDAQ: VRYA), a leading provider of wireless and Web-based software applications that automate field service delivery, today announced financial results of its fourth fiscal quarter and full year 2001.
Total revenue was $5.0M for the fourth fiscal quarter, ended December 31, 2001, a 4% decrease from $5.2M in the previous quarter, and a decrease of 39% from $8.2M in the fourth quarter of 2000.
ViryaNet reported its first-ever pro-forma net profit. For the fourth quarter of 2001, excluding $0.6M of one-time charges related to severance and other restructuring activities initiated in October, the Company reported a net profit of $0.4M, or $0.02 per basic and diluted share, compared to a net loss of $1.8M or $0.08 per basic and diluted share for the previous quarter, and a net loss of $1.6M, or $0.08
per basic and diluted share for the fourth quarter of 2000.
On a U.S. GAAP basis, the Company incurred a net loss of $0.2M, or $0.01 per basic and diluted share.
Software license revenue was $3.0M, a decrease of 12% compared to the previous quarter, and a decrease of 46% compared to the fourth quarter of 2000. Revenue from services and maintenance increased to $2.0M, a 12% increase over $1.8M in the previous quarter, and a decrease of 24% compared to the fourth quarter of 2000.
The Company reported gross margins of 64% for the quarter, compared to 56% in the previous quarter, and 69% in the fourth quarter of 2000. Gross margins from software licenses improved to 86% from 72% in the previous quarter, due to a decline in third-party license content as a result of the introduction of ViryaNet's own Service Scheduler product. Services margins continued to improve to 31%, compared to
26% in the previous quarter.
Operating expenses, including one-time charges related to severance and other restructuring activities, were $3.3M, compared to $4.7M in the previous quarter, and $7.8M in the fourth quarter of 2000.
The operating expenses of $3.3M include an increase in the provision for doubtful accounts of $0.6M. This additional provision relates to a ViryaNet customer who recently filed for Chapter 11 bankruptcy protection. The Company has approximately $1.5M of receivables related to software licenses purchased by this customer. The $0.6M provision is the amount of the receivable that is not covered under an
insurance plan that the Company secured prior to the transaction. The Company believes that it will be able to collect the balance of this receivable from the customer directly or under an insurance plan that covers this transaction.
The Company's available cash position on December 31, 2001, including the full line of credit, was $9.0M compared to $11.0M at the end of the previous quarter. During the quarter, the Company reduced its cash consumption to $2.0M from $5.7M in the third quarter of 2001.
For the fiscal year 2001, revenue was $20.0M, a decrease of 26% from $27.1M in fiscal year 2000. License revenue was $12.5M, a decrease of 27% from $17.0M in 2000. Services revenue was $7.5M, a decrease of 26% from $10.1M in 2000. The net loss for fiscal year 2001 was $14.6M or $0.67 per basic and diluted share compared to a net loss of $26.8M or $3.34 per basic and diluted share in fiscal year 2000.
"We conclude year 2001, one of the most challenging years in our industry, with a solid quarterly performance," stated Win Burke, president and CEO, ViryaNet. "We did what we said we would do at the beginning of Q2 of 2001. We have restructured the Company, stabilized it financially, and pursued the goals of a breakeven P&L in Q4, excluding one-time charges, and positive cash flow in Q1 of
2002. Today, we are delighted to announce that, with unrelenting focus and determination, ViryaNet has achieved profitability in Q4, excluding one-time charges, and has substantially reduced its cash burn."
Year 2001 in Review
Despite the challenges felt throughout the industry during the last year, ViryaNet realized significant accomplishments:
Product - the Company continued its product leadership by rolling out new releases and products, including Service Scheduler, Voice Portal, and eRepair.
Customer Implementations - ViryaNet's professional services organization successfully completed 11 new customer implementations, earning high customer satisfaction.
New Customers and Partners - During 2001, ViryaNet welcomed a number of new customers into its family, including Abentel, CAL-AIR, ionex, S.H.R. Group, and Verizon Avenue. The Company also continued to expand its market footprint with relationships with industry leaders such as Amdocs, ProLink Services, and Telvent Interactiva.
Business Outlook for 2002
Although economic indicators are uncertain regarding a market upturn during 2002, the Company currently expects revenue growth of approximately 10% during 2002, with EPS of approximately $0.08. The Company's expectations for Q1 are for revenues to be approximately $4.5M, EPS of approximately $0.01 and cash flow to be breakeven to positive.
About ViryaNet
ViryaNet is a provider of software solutions that improve the quality and efficiency of an organization's service operations. ViryaNet's flagship product - the award-winning ViryaNet Service Hub - combines the power of the Internet, the freedom of wireless technologies, and the resources of ViryaNet's deep service expertise to help companies automate workforce scheduling, dispatching, and activity
reporting; customer contract and entitlement compliance; and materials and repairs management.
Customers in the consumer goods, grocery and retail, telecommunications, manufacturing, utilities, third-party maintenance, and other industries use ViryaNet Service Hub to transition complex service business processes into a manageable, scalable Internet operation, with the goal of increasing service revenues, decreasing service costs, and maximizing customer satisfaction.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding ViryaNet's expectations, beliefs, intentions, or strategies regarding the capabilities of its
products, its relationships with its customers, its customer purchases, its future operational plans and objectives, its future business prospects, its future financial performance, and its future prospects for profitability. All forward-looking statements included in this document are based upon information available to ViryaNet Inc. as of the date hereof, and ViryaNet Inc. assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and
uncertainties, which could cause actual results to differ materially from those projected. These and other risks relating to ViryaNet's business include market acceptance of and demand for the Company's products, risks associated with a slow-down in the economy, risks associated with the financial condition of the company's customers, risks associated with the events associated with the September 11, 2001 terror attacks in the US, risks associated with competition and competitive
pricing pressures, risks associated with increases in costs and operating expenses, risks in technology development and commercialization, the risk of operating losses, risks in product development, risks associated with international sales, and other risks that are set forth in ViryaNet's Form F-1, as amended, declared effective by the SEC on September 19, 2000, and the other reports filed from time to time with the Securities and Exchange Commission. Reported results should not be
considered an indication of future performance. You should not place undue reliance on these forward-looking statements, which speak only as the date hereof. ViryaNet disclaims any obligation to publicly update or revise any such forward-looking statements to reflect any change in our expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking
statements.