ATLANTA, Nov. 13 /PRNewswire/ -- Preferred Networks, Inc. (PNI)
(Nasdaq: PFNT), a leading outsourcing services provider to the wireless
industry, today reported third quarter 1998 financial results.
Total revenues increased by 6.2% to $9.2 million for the third quarter of
1998 compared to $8.6 million for the third quarter of 1997. EBITDA (earnings
before interest, taxes, depreciation and amortization, a standard measure of
operating cashflow in the wireless industry) improved by 18.2% to negative
$2.4 million for the third quarter of 1998 compared to negative $3.0 million
for the third quarter of 1997. Net loss for the third quarter of 1998 was
$4.3 million or $0.32 per share compared to a loss of $5.0 million or $0.34
per share for the third quarter of 1997.
Total revenues for the nine months ended September 30, 1998 increased by
8.9% to $28.7 million compared to $26.3 million for the nine months ended
September 30, 1997. EBITDA improved by 44.7% to negative $4.9 million for the
nine months ended September 30, 1998 compared to negative $8.9 million for the
nine months ended September 30, 1997. Net loss for the nine months ended
September 30, 1998 was $10.6 million or $0.79 per share compared to a loss of
$14.8 million or $0.96 per share for the nine months ended September 30, 1997.
Commenting on the results, Chairman and Chief Executive Officer, Mark H.
Dunaway said, "This quarter marks a number of positive developments in our
company, including new customer contracts by PNI's Access Services Division
and PNI's subsidiary, Preferred Technical Services ("PTS") and the
strengthening of our senior management team at our subsidiary, EPS Wireless
("EPS"). We also announced this week our first Internet services product,
ZOOMpage(SM), which enables email-to-pager notification and text messaging
through the Internet. We believe ZOOMpage(SM) will help our customers to
bridge from the Internet to wireless services and enable enhanced services
revenue streams to be generated for both PNI and our customers."
Dunaway added, "This has also been a quarter of continued consolidation
and transition for many of our customers, with particular emphasis on
centralization of inventory management. This resulted in a reduction during
the quarter in pagers repaired by EPS and resulted in a decline in pager
repair revenue. However, we are assisting our customers with this transition
and believe that we are well positioned to benefit from the increased services
we believe our customers will require to support these initiatives."
Dunaway concluded, "While I am obviously disappointed that the third
quarter did not show the financial improvement that we have consistently
reported in recent periods, the trends in the industry that are leading
companies to rationalize expenses and outsource cost centers present favorable
opportunities for each of our businesses. We are excited about the planning
that is occurring between PNI and many of our customers as they look to us for
solutions."
At September 30, 1998, PNI's Access Services Division was operating in
27 markets and had 503,841 units in service, a 10.1% increase from 457,627
units in service at September 30, 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 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 subsidiaries: PTS, a provider of paging network
equipment installation, maintenance and engineering services; and EPS, 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 Form 10-Q for the periods ending March 31 and June 30, 1998, 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
September 30,
1998 1997
Revenues
Network Services 3,328 36.3% 3,268 37.9%
Product Sales 3,691 40.3% 3,117 36.1%
Other services 2,138 23.4% 2,238 26.0%
Total revenues 9,157 100.0% 8,623 100.0%
Costs of revenues
Network Services 2,161 23.6% 2,030 23.5%
Product Sales 3,627 39.7% 3,201 37.1%
Other services 1,881 20.5% 2,413 28.0%
Total cost of
revenues 7,669 83.8% 7,644 88.6%
Gross margin 1,488 16.2% 979 11.4%
Selling, general
and administrative
expenses 3,759 41.0% 3,961 46.0%
Depreciation
and amortization 1,583 17.2% 1,846 21.4%
Other expenses 170 1.9% -- --
Operating loss (4,024) (43.9%) (4,828) (56%)
Interest expense (349) (3.8%) (323) (3.7%)
Interest income 90 1.0% 136 1.6%
Net loss (4,283) (46.7%) (5,015) (58.1%)
EBITDA (2,441) (26.7%) (2,982) (34.6%)
Net loss per share
of common stock $(0.32) $(0.34)
Weighted average
number of common
shares used in
calculating net
loss per share
of common stock 16,265,377 16,194,512
PREFERRED NETWORKS, INC.
Financial Highlights
(Unaudited)
(dollars in thousands, except per share data)
Nine months ended
September 30,
1998 1997
Revenues
Network Services 9,886 34.5% 9,085 34.5%
Product Sales 11,207 39.1% 9,523 36.2%
Other services 7,592 26.4% 7,721 29.3%
Total revenues 28,685 100.0% 26,329 100.0%
Costs of revenues
Network Services 6,502 22.7% 6,134 23.3%
Product Sales 9,965 34.7% 9,840 37.4%
Other services 6,099 21.3% 6,798 25.8%
Total cost of
revenues 22,566 78.7% 22,772 86.5%
Gross margin 6,119 21.3% 3,557 13.5%
Selling, general 10,875 37.9% 12,181 46.2%
and administrative
expenses 4,974 17.3% 5,296 20.1%
Depreciation
and amortization 170 0.6% 278 1.1%
Other expenses
Operating loss (9,900) (34.5%) (14,198) (53.9%)
Interest expense (971) (3.4%) (929) (3.5%)
Interest income 290 1.0% 354 1.3%
Net loss (10,581) (36.9%) (14,773) (56.1%)
EBITDA (4,926) (17.2%) (8,902) (33.8%)
Net loss per share
of common stock $(0.79) $(0.96)
Weighted average
number of common shares
used in calculating
net loss per share
of common stock 16,228,877 16,067,527
PREFERRED NETWORKS, INC.
Balance Sheet Data
(Unaudited)
(dollars in thousands)
September 30 December 31
1998 1997
Cash and cash equivalents $ 7,254 $ 7,563
Total Current Assets 15,249 14,748
Property and equipment, net 23,054 25,569
Total Assets 62,677 66,233
Total debt 19,124 19,782
Redeemable Preferred Stock 23,137 13,956
Stockholders Equity 15,975 27,773
Total liabilities and
stockholders equity 62,677 66,233
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, 770-582-3507
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