Operations Return to Profitability in Fourth Quarter on Revenue Increase
TORONTO, March 11 /CNW/ - Kasten Chase (TSE-KCA), a leading provider of
data connectivity solutions, reported its audited financial results for the
year ended December 31, 1998.
Revenues in the fourth quarter were $8.5 million, an increase of 50% over
the third quarter, resulting in total revenues of $23.3 million for 1998. The
loss for 1998, which includes a $1.6 million writedown of inventories
associated with Dow Jones Markets whose business was sold in mid year, was
$5.3 million ($ 0.15 per share).
''We are very pleased by the progress made over the past six months,''
said Paul Hyde, president and chief executive officer. ''During 1998, we
increased our investment in product development in order to accelerate access
to potential new sources of revenue - particularly in the Web-to-Host and
Secure Remote Access markets. I believe this quarter-over-quarter revenue
growth to be an early sign of our recovery from the significant downturn in
sales to Dow Jones Markets. We are cautiously optimistic that we have begun to
offset the lost revenue, while still maintaining traditional margin levels.''
Contributing to the improved fourth quarter revenues was the deployment
of 24 secure remote access pilot systems to various US government agencies.
These systems allow authorized users, for the first time, to access classified
government information from remote locations using conventional telephone
lines. Kasten Chase is the only US government authorized supplier of this
solution.
Delivery of the New York City Transit communications based train control
trial systems was also a significant contributor to fourth quarter revenue
growth. Further product deliveries to NYCT are not anticipated until trial
completion late in the second half of 1999.
James Leech, vice chairman said, ''As a result of stringent cost
controls, we were able to reduce our general and administrative costs by over
$2 million this year. With the resurgence in revenues, Kasten Chase's
operations returned to profitability during the fourth quarter of 1998, prior
to the non-cash inventory writedown. We remain in a strong financial position
with in excess of $10 million in cash at year end.''
Earlier this month Kasten Chase expanded its product offering into the
fast growing Web-to-Host connectivity market. VersaPath is the industry's most
complete family of migration solutions, enabling organizations to deliver
business-critical mainframe data to employees, suppliers and customers over
the Internet. The new browser client and enhanced desktop product reduce
customers' network management costs and offer superior support to users
accessing mainframe applications.
''We have begun the process of rebuilding our revenue base by launching
VersaPath into the rapidly growing IP (Internet Protocol) market,'' said Hyde.
''We expect that revenues from this, and related initiatives, will remain
somewhat unpredictable as these new products make inroads into their markets.
We are encouraged by the level of interest we are attracting from potential
customers and industry analysts.'' According to a recent International Data
Corporation study, the access solutions market will grow by over US$600
million in the next three years, reaching US$1 billion by 2002.
A proven, customer-focused leader in the data communications industry,
Kasten Chase has more than 25 years experience developing mission-critical
enterprise solutions for companies around the world. With headquarters in
Toronto, Canada and offices in the United Kingdom and United States, Kasten
Chase works closely with customers and business partners in more than 30
countries. With a unique customer-centric approach, Kasten Chase solutions
support key applications such as Web-to-Host connectivity, remote access,
secure communications, and network management. For all current product and
financial information, please visit the company's web site at
www.kastenchase.com.
Forward-looking statements are subject to change based on various
important factors including, among others, competitive actions in the
marketplace, development risks involved with new products and technologies,
the size and timing of individual license transactions, and the variability of
quarterly operating results.
FINANCIAL HIGHLIGHTS
--------------------
(in thousands, except per share numbers)
For the three months For the year ended
ended December 31 December 31
1998 1997 1998 1997
---- ---- ---- ----
Revenues $ 8,534 $ 8,666 $ 23,306 $ 29,898
Operating Expenses (excluding
inventory writedown) $ 4,729 $ 4,626 $ 18,128 $ 19,418
Inventory Writedown $ 1,565 - $ 1,565 -
Net Income (Loss) $ (1,442) $ 988 $ (5,311) $ 667
Income (Loss) Per Share $ (0.04) $ 0.03 $ (0.15) $ 0.01
BALANCE SHEET
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(in thousands)
1998 1997
---- ----
Current Assets:
Cash 10,082 15,385
Other 11,682 14,086
------ ------
$ 21,764 $ 29,471
Other Assets 2,693 3,346
----- -----
$ 24,457 $ 32,817
------ ------
------ ------
Current Liabilities 2,942 4,542
Shareholders' Equity 21,515 28,275
------ ------
$ 24,457 $ 32,817
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-0- 03/11/1999
For further information: Jim Leech, Vice Chairman, Kasten Chase Applied Research,
j.leech@kastenchase.com, Ph: (905) 238-6900, ext. 3433; John Carlesso, Investor Relations,
Street Coverage Inc., carlesso@streetcoverage.com, Ph: (514) 288-1659 |
