ATLANTA, Aug. 16 /PRNewswire/ -- Preferred Networks, Inc.
(OTC Bulletin Board: PFNT) (PNI), a leading outsourcing services provider to
the wireless industry, today reported an increase in revenues and improvement
in EBITDA of 3.0% and 41.7%, respectively, for the second quarter of 1999
compared to the first quarter of 1999. ("EBITDA" is earnings before interest,
taxes, depreciation and amortization.)
Total revenues for the second quarter of 1999 increased 8.9% to
$9.9 million from $9.1 million for the second quarter of 1998. Total revenues
for the six months ended June 30, 1999 increased 6.4% to $19.6 million from
$18.4 million for the six months ended June 30, 1998. EBITDA improved by
40.7% to negative $731,000 for the second quarter of 1999 compared to negative
$1.2 million for the second quarter of 1998. EBITDA improved by 23.6% to
negative $2.0 million for the six months ended June 30, 1999 compared to
negative $2.6 million for the six months ended June 30, 1998. The net loss
from continuing operations before cumulative effect of change in accounting
principle for the second quarter of 1999 was $2.3 million, or $0.20 per share,
compared to a loss of $3.0 million, or $0.24 per share, for the prior year
period. The net loss from continuing operations before cumulative effect of
change in accounting principle for the six months ended June 30, 1999 was
$5.4 million, or $0.44 per share, compared to a loss of $6.3 million, or
$0.47 per share, for the prior year period.
Commenting on the results, Chairman and Chief Executive Officer, Mark H.
Dunaway said, "We are pleased with our continued growth in total revenues and
further progress toward profitability. We had a number of positive
developments during the quarter. We completed the sale of our technical
services wholly owned subsidiary, Preferred Technical Services, Inc. (PTS),
allowing us to focus more on our core business activities. Concurrent with
the sale of PTS, we also restructured our three primary credit facilities and
reduced the overall debt burden on the Company."
At June 30, 1999, PNI's Access Services Division was operating in
28 markets and had 538,470 units in service, a 7.4% increase from
501,516 units in service at June 30, 1998.
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 PNI Access Services Division(SM), a provider of wholesale
paging network services and one of the largest carrier's carriers in the U.S.,
and through its wholly-owned subsidiary 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 1998 Annual Report on Form 10-K
and the Company's Form 10-Qs, and actual results could differ materially from
those anticipated in the forwarding-looking statements. In particular,
statements relating to the competitive position and performance of
Platform1(TM) and iTerminal(TM) and their expected performance in the market
place are forward-looking statements that are subject to risks and
uncertainties. The Company operates in a highly competitive marketplace and
new product developments by competitors can occur at any time, thereby
diminishing the attractiveness of the Company's products. Also, there can be
no assurance that the marketplace will find the price and functionality of the
Company's products attractive, which also can adversely affect product sales.
PREFERRED NETWORKS, INC.
Financial Highlights
(in thousands, except per share data)
Three months ended June 30,
1999 1998
Revenues
Network services $3,365 33.9% $ 3,295 36.2%
Product sales 1,937 19.5 3,621 39.7
Other services 4,630 46.6 2,201 24.1
Total revenues 9,932 100.0 9,117 100.0
Costs of Revenues
Network services 2,019 20.4 2,186 24.0
Product sales 1,719 17.3 3,105 34.1
Other services 3,738 37.6 1,678 18.3
Total costs of
revenues 7,476 75.3 6,969 76.4
Gross margin 2,456 24.7 2,148 23.6
Selling, general and
administrative 3,187 32.1 3,381 37.1
Depreciation and
amortization 1,311 13.2 1,583 17.4
Operating loss (2,042) (20.6) (2,816) (30.9)
Interest expense (494) (5.0) (293) (3.2)
Interest income 19 0.2 126 1.4
Gain/(loss) on asset
disposal (75) (0.8) --- ---
Income from continuing
operations before
income taxes and
cumulative effect of
change in accounting
principle (2,592) (26.1) (2,983) (32.7)
Income tax benefit 280 2.8 --- ---
Net loss from continuing
operations before
cumulative effect of
change in accounting
principle(1) (2,312) (23.3) (2,983) (32.7)
Discontinued operations(2):
Net income (loss) from
discontinued operations,
net of income tax (134) (1.3) 7 0.1
Gain on sale of PTS,
net of income tax 645 6.5 --- ---
Net income from
discontinued operations 511 5.1 7 0.1
Cumulative effect of
change in accounting
principle(1) --- --- --- ---
Net loss $(1,800) (18.1) $(2,976) (32.6)
Net Loss attributable
to Common Stock $(2,671) (26.9) $(3,810) (41.8)
EBITDA $(731) (7.4) $(1,233) (13.5)
Net income (loss) per
share of Common Stock from:
Continuing operations
before change in
accounting
principle(1) $(0.20) $(0.24)
Discontinued
operations, net
of income tax(2) $0.03 $0.00
Cumulative effect
of change in
accounting
principle(1) $--- $---
Net loss per share
of Common Stock $(0.16) $(0.23)
Weighted average number
of common shares used
in calculating net
loss per share of
Common Stock 16,305 16,242
Pro forma net loss
assuming change in
accounting principle
is applied
retroactively(1) $(1,800) (18.1)% $(2,957) (32.4)%
Pro forma net loss
attributable to Common
Stock assuming change
in accounting principle
is applied
retroactively(1) $(2,671) (26.9)% $(3,791) (41.6)%
Pro forma net
loss per share $(0.16) $(0.23)
Six months ended June 30,
1999 1998
Revenues
Network services $6,672 34.1% $ 6,558 35.7%
Product sales 5,783 29.5 7,515 40.8
Other services 7,124 36.4 4,319 23.5
Total revenues 19,579 100.0 18,392 100.0
Costs of Revenues
Network services 4,144 21.2 4,341 23.6
Product sales 4,925 25.2 6,337 34.5
Other services 5,946 30.3 3,385 18.4
Total costs of
revenues 15,015 76.7 14,063 76.5
Gross margin 4,564 23.3 4,329 23.5
Selling, general and
administrative 6,548 33.4 6,924 37.7
Depreciation and
amortization 2,707 13.8 3,295 17.9
Operating loss (4,691) (23.9) (5,890) (32.1)
Interest expense (983) (5.0) (620) (3.4)
Interest income 56 0.3 200 1.0
Gain/(loss) on asset
disposal (75) (0.4) --- ---
Income from continuing
operations before
income taxes and
cumulative effect of
change in accounting
principle (5,693) (29.1) (6,310) (34.3)
Income tax benefit 280 1.4 --- ---
Net loss from continuing
operations before
cumulative effect of
change in accounting
principle(1) (5,413) (27.6) (6,310) (34.3)
Discontinued operations(2):
Net income (loss) from
discontinued operations,
net of income tax (73) (0.4) 12 0.1
Gain on sale of PTS,
net of income tax 645 3.3 --- ---
Net income from
discontinued operations 572 2.9 12 0.1
Cumulative effect of
change in accounting
principle(1) (1,832) (9.4) --- ---
Net loss $(6,673) (34.1) $(6,298) (34.2)
Net Loss attributable
to Common Stock $(8,374) (42.8) $(7,664) (41.7)
EBITDA $(1,984) (10.1) $(2,595) (14.1)
Net income (loss) per
share of Common Stock from:
Continuing operations
before change in
accounting
principle(1) $(0.44) $(0.47)
Discontinued
operations, net
of income tax(2) $0.04 $0.00
Cumulative effect
of change in
accounting
principle(1) $(0.11) $---
Net loss per share
of Common Stock $(0.51) $(0.47)
Weighted average number
of common shares used
in calculating net
loss per share of
Common Stock 16,288 16,211
Pro forma net loss
assuming change in
accounting principle
is applied
retroactively(1) $(4,840) (24.7)% $(6,182) (33.6)%
Pro forma net loss
attributable to Common
Stock assuming change
in accounting principle
is applied
retroactively(1) $(6,541) (33.4)% $(7,548) (41.0)%
Pro forma net
loss per share $(0.40) $(0.47)
PREFERRED NETWORKS, INC.
Financial Highlights (con't)
(1) In April 1998, the Accounting Standards Executive Committee issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5"). SOP 98-5 requires entities to charge to
expense start-up costs, including organizational costs, as incurred.
In addition, SOP 98-5 requires a write-off of any previously
capitalized start-up or organization costs, and must be reported as
the cumulative effect of a change in accounting principle. SOP 98-5
became effective January 1, 1999. The Company adopted SOP 98-5 on
January 1, 1999 and has written off the unamortized balance of its
market entry costs of $1.8 million and no longer capitalizes such
costs. Pro forma amounts reflect adjustments to cease
capitalization and amortization as if SOP 98-5 had been adopted prior
to 1998.
(2) On May 31, 1999, the Company completed the sale of substantially all
of the assets of its wholly-owned subsidiary, Preferred Technical
Services ("PTS"). This subsidiary has been presented as a
discontinued operation in the accompanying financial statements.
PREFERRED NETWORKS, INC.
Balance Sheet data
(dollars in thousands)
June 30, 1999 December 31, 1998
(Unaudited)
Cash and cash equivalents $4,126 $6,474
Total current assets 12,084 14,659
Property and equipment, net 18,688 21,556
Total assets 51,506 60,033
Total debt 16,025 19,814
Redeemable preferred stock 25,659 23,968
Stockholders' equity 2,225 10,556
Total liabilities and stockholders' equity 51,506 60,033
SOURCE Preferred Networks, Inc.
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Related links:
http://www.pni.net
Company News On-Call:
http://www.prnewswire.com/comp/109794.html or fax,
800-758-5804, ext. 109794
CONTACT:
Kathryn Loev Putnam, Senior Vice President
and Chief Financial Officer of Preferred Networks, Inc.,
770-582-3507
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