ATLANTA, May 6 /PRNewswire/ -- Preferred Networks, Inc. (Nasdaq: PFNT)
(PNI), a leading outsourcing services provider to the wireless industry, today
reported first quarter 1998 financial results marked by a significant
improvement in EBITDA (earnings before interest, taxes, depreciation and
amortization), a standard measure of operating cash flow in the wireless
industry, reflecting a $1.1 million improvement over the fourth quarter of
1997 and the second consecutive quarterly reduction in losses.
Total revenues increased by 19.1% to $9.7 million for the first quarter of
1998 compared to $8.1 million for the first quarter of 1997. EBITDA improved
by 56.2% to negative $1.3 million for the first quarter of 1998 compared to
negative $3.O million for the first quarter of 1997. EBITDA as a percentage
of revenues for the first quarter of 1998 was negative 13.6% compared to
negative 36.8% for the first quarter of 1997, also an improvement from
negative 25.2% for the fourth quarter of 1997. Net loss for the first quarter
of 1998 was $3.3 million or $0.24 per share compared to a loss of $4.7 million
or $0.30 per share for the first quarter of 1997.
Commenting on the results, Chairman and Chief Executive Officer, Mark H.
Dunaway said, "We are extremely pleased with the continued financial
improvement in our operating results. As expected, our positioning with large
customers that began in the fourth quarter of 1997 and our focus on more
profitable revenue has resulted in a significant improvement in our bottom
line. In particular, we realized significant contribution from product and
technical services and a return to growth in units in service with an emphasis
on colocate/interconnect customers."
Dunaway added, "We believe successful marketers of subscriber products and
services compete on the basis of branding and customer service rather than on
the basis of the technical functions that support those services, such as
networks and other back-office support. Our outsourcing strategy enables
companies to eliminate certain cost centers by purchasing products and
services directly from PNI to support their subscriber revenue streams.
Furthermore, the cost efficiencies PNI is able to achieve by providing these
services to companies rather than to subscribers facilitates a profitable
long-term relationship for PNI and our customers."
Other notable events during the quarter include the completion of the
$8 million equity funding announced in March and also the expansion of PNI's
bank credit facility to increase its availability for working capital
purposes. The credit facility maturity date was also extended from
August 1998 to July 2000.
At March 31, 1998, PNI's network services business was operating in
27 markets with six Technical Control Centers, up from 23 markets and
six Technical Control Centers at March 31, 1997. At March 31, 1998, PNI's
network services business had 476,476 units in service, a 21% increase in
units from 393,167 units in service at March 31, 1997.
Preferred Networks, Inc., headquartered in metropolitan Atlanta, provides
outsourcing solutions to the wireless industry which allow companies to offer
branded wireless services directly to subscribers, while relying on PNI to
provide high-quality network, technical, and product services. PNI offers its
services through its wholesale paging networks as one of the largest carrier's
carriers in the U.S., and through its wholly owned subsidiaries: Preferred
Technical Services, Inc., a provider of paging network equipment installation,
maintenance and engineering services; and EPS Wireless, Inc., a national
provider of paging and cellular product repair services, sales of new, used
and refurbished paging and cellular products and inventory management
services. PNI's address on the World Wide Web is: http://www.pni.net.
Safe Harbor Statement Under the Private Securities Litigation Reform Act
of 1995:
The statements contained in this release which are not historical facts,
such as those concerning future financial performance and growth, are forward-
looking statements that are subject to risks and uncertainties, including
those identified in the Company's 1997 Annual Report on Form 10-K, and actual
results could differ materially from those anticipated in the forward-looking
statements.
PREFERRED NETWORKS, INC.
Financial Highlights
(Unaudited)
(dollars in thousands, except per share data)
Three months ended Three months ended
March 31, 1998 March 31, 1997
Revenues
Network services $3,263 33.8% $2,566 31.6%
Product sales 3,895 40.3% 2,933 36.1%
Other services 2,507 25.9% 2,617 32.3%
Total revenues 9,665 100.0% 8,116 100.0%
Costs of revenues
Network services 2,154 22.3% 1,908 23.5%
Product sales 3,232 33.5% 3,080 37.9%
Other services 1,965 20.3% 2,026 25.0%
Total cost of revenues 7,351 76.1% 7,014 86.4%
Gross margin 2,314 23.9% 1,102 13.6%
Selling, general and
administrative expenses 3,623 37.5% 4,092 50.4%
Depreciation and
amortization 1,760 18.2% 1,646 20.3%
Operating loss (3,069) (31.8%) (4,636) (57.1%)
Interest expense (327) (3.4%) (227) (2.8%)
Interest income 74 0.8% 138 1.7%
Net loss $(3,322) (34.4%) $(4,725) (58.2%)
EBITDA $(1,309) (13.6%) $(2,990) (36.8%)
Net Loss per share
of common stock $ (0.24) $ (0.30)
Weighted average number
of common shares used
in calculating net loss
per share of common
stock 16,179,250 15,860,004
PREFERRED NETWORKS, INC.
Balance Sheet Data
(Unaudited)
(dollars in thousands)
March 31, 1998 December 31, 1997
Cash and cash equivalents $12,635 $ 7,563
Total current assets 19,037 14,748
Property and equipment, net 24,920 25,569
Total assets 69,360 66,233
Total debt 19,814 19,782
Redeemable preferred stock 21,453 13,956
Stockholders' equity 24,754 27,773
Total liabilities and
stockholders' equity 69,360 66,233
SOURCE Preferred Networks, Inc.
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Related links:
http://www.pni.net
Company News On-Call: http://www.prnewswire.com or
fax, 800-758-5804, ext. 109794
CONTACT:
Kathryn Loev Putnam of Preferred Networks,
770-582-3507
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