MOUNTAIN VIEW, Calif. -- Ditech Communications Corporation (Nasdaq: DITC) today reported results for its first quarter of fiscal year 2002. Revenues for the fiscal first quarter ended July 31, 2001 were $15.3 million, down 65 percent from revenues of $43.5 million in the same quarter last year. Ditech's pro forma net loss for the first quarter of fiscal 2002 was $3.0 million, down from pro forma net income of $14.2 million in the same quarter last year. Pro forma earnings (loss) per share for the first quarter of fiscal 2002 was ($0.10) compared to $0.47 for the same quarter last year. Ditech's pro forma financial results do not include the impact of charges related to mergers and acquisitions activity, including purchased research and development, amortization of goodwill, retention bonuses, and other costs. Ditech's actual net loss for the first quarter of fiscal 2002 was $10.9 million compared to net income of $11.7 million in the same quarter last year. Actual earnings (loss) per share for the first quarter of fiscal 2002 were ($0.37) per share compared to $0.39 for the same quarter last year. Gross margins were 55 percent for the first quarter of fiscal 2002 compared to 70 percent for the same quarter last year, with the decrease primarily related to absorption of overhead costs on a smaller revenue base, a product mix favoring the optical subsystems business, and the current competitive environment. "While the current business climate continues to be challenging, there are several reasons for confidence moving forward," said Tim Montgomery, Ditech's chairman, president and CEO. "First, our optical subsystems business is performing well, and we believe we're on target to grow our optical revenues by approximately 50 percent this year. Our optical subsystems sales, combined with the volume sales of our fourth and fifth generation echo cancellation products, enabled us to meet the revenue expectations we set at the last conference call. Second, by acquiring the intellectual property and engineering talent of Ilotron, a well-respected optical communications startup based in the United Kingdom, we've effectively accelerated the transmission developments for our Titanium product. The technology and expertise acquired from Ilotron will help us deliver a Titanium product that we believe can provide best-of-class transmission capability along with the best-of-class optical switching system we are developing. Lastly, we increased cash on our balance sheet, improved receivables, and met our commitments. With a solid quick ratio and almost no debt, we are well positioned to move forward." Ditech Communications Corp.