ATLANTA, Feb. 26 /PRNewswire/ -- Preferred Networks, Inc. (Nasdaq: PFNT)
(PNI), a leading outsourcing services provider to the wireless industry, today
reported record revenues for the fourth quarter and for the year ended
December 31, 1997. The fourth quarter reflected an improvement in EBITDA
(earnings before interest, taxes, depreciation and amortization), with a
reduction in loss from both the third quarter of 1997 and the fourth quarter
of 1996.
Total revenues for the fourth quarter increased 80% to $9.7 million from
$5.4 million for the fourth quarter of 1996. EBITDA improved to negative
$2.4 million for the fourth quarter of 1997 compared to negative
$3.8 million for the fourth quarter of l996. EBITDA as a percentage of
revenues for the fourth quarter of 1997 improved to negative 25%, compared to
negative 71% for the fourth quarter of 1996. Fourth quarter 1997 EBITDA also
represented an improvement of $550,000 compared to the third quarter of 1997.
The net loss for the fourth quarter of 1997 was $4.4 million, or $0.30 per
share, compared with a loss of $4.7 million, or $0.32 per share, for the prior
year period.
For the twelve months ended December 31, 1997, total revenues increased
170% to $36.0 million from $13.4 million for 1996. For the twelve months
ended December 31, 1997, EBITDA was negative $11.3 million compared to
negative $8.6 million for 1996, representing an improvement as a percentage of
revenues to negative 32% for 1997, compared to negative 64% for 1996. The net
loss for 1997 was $19.2 million, or $1.26 per share, compared with a loss of
$10.2 million, or $0.91 per share, for the prior year.
Commenting on the results, Chairman and Chief Executive Officer, Mark H.
Dunaway said, "1997 was a pivotal year in the development of PNI. This was
the first full year in which we offered all three of our outsourcing service
solutions: network, product and technical services. PNI now provides
outsourcing services to twelve of the twenty largest paging companies, and we
currently provide all three of our services to the top five."
"This was also a year of change for our customers, with the industry
focused more on profitable growth than on subscriber increases at any cost.
Our strategy of providing outsourcing solutions to companies rather than
competing with them for subscribers allows our customers to focus more of
their capital resources on sales and marketing of value-added, branded
services, while incurring associated costs on a variable basis. This has been
an exciting year for the industry and PNI has never been better positioned to
serve the wireless marketplace."
Dunaway added, "1997 was also a milestone in our financial performance,
with the fourth quarter improvement in EBITDA reflecting the financial returns
we are beginning to achieve. In mid-1997, PNI announced a focus on developing
relationships with large companies and emphasis on profitability. As a
result, we began to execute multi-market and multi-service contracts with
national companies in late 1997. At the same time, we discontinued heavy
discounting of pagers to network customers, which negatively impacted our
reseller customer growth during the quarter, but resulted in a fourth quarter
consolidated profit from product sales for the first time since 1993. We
expect that PNI's positioning with large customers that began in the fourth
quarter of 1997 will result in future increases in more profitable revenue."
At December 31, 1997, PNI's network services business was operating in
27 markets with six Technical Control Centers, up from 21 markets at
December 31, 1996. At December 31, 1997, PNI's network services business had
454,795 units in service, a 25% increase in units from 362,481 units in
service at December 31, 1996.
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 September 30, 1997 Quarterly
Report on Form 1O-Q 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 December 31,
1997 1996
Revenues
Network Services $ 3,372 34.9% $ 1,823 34.1%
Product Sales 4,080 42.3% 2,493 46.6%
Other services 2,201 22.8% 1,035 19.3%
Total Revenues 9,653 100.0% 5,351 100.0%
Costs of Revenues
Network Services 2,182 22.6% 1,723 32.2%
Product Sales 3,713 38.5% 4,009 74.9%
Other Services 2,343 24.3% 543 10.1%
Total Cost of
Revenues 8,238 85.3% 6,275 117.2%
Gross Margin 1,415 14.7% (924) (17.2%)
Selling, General and
Administrative
Expenses 3,849 39.9% 2,876 53.7%
Depreciation and
Amortization 1,697 17.6% 1,081 20.2%
Other Expenses (A) -- -- -- --
Operating Loss (4,131) (42.8%) (4,881) (91.2%)
Interest Expense 348 3.6% 48 0.9%
Interest Income 101 1.0% 215 4.0%
Net Loss ($4,378) (45.4%) ($4,714) (88.1%)
EBITDA ($2,434) (25.2%) ($3,800) (71.0%)
Net Loss per share
of Common Stock ($O.30) ($0.32)
Weighted Average Number
of Common Shares Used
in Calculating Net
Loss per Share of
Common Stock 16,140,552 14,818,496
Twelve months ended December 31,
1997 1996
Revenues
Network Services $12,456 34.6% $ 6,121 45.8%
Product Sales 13,603 37.8% 5,818 43.6%
Other Services 9,922 27.6% 1,411 10.6%
Total Revenues 35,981 100.0% 13,350 100.0%
Costs of Revenues
Network Services 8,316 23.1% 4,621 34.6%
Product Sales 13,553 37.7% 8,329 62.4%
Other Services 9,140 25.4% 662 5.0%
Total Cost of
Revenues 31,009 86.2% l3,612 102.0%
Gross Margin 4,972 13.8% (262) (2.0%)
Selling, General and
Administrative
Expenses 16,030 44.6% 8,338 86.4%
Depreciation and
Amortization 6,993 19.4% 2,479 25.7%
Other Expenses (A) 278 -- -- --
Operating Loss (18,329) (50.9%) (11,079) (83.0%)
Interest Expense 1,277 3.6% 242 1.8%
Interest Income 455 1.3% 1,122 8.4%
Net Loss ($19,151) (53.2%) ($10,199) (76.4%)
EBITDA ($11,336) (31.5%) ($8,600) (64.4%)
Net Loss per share
of Common Stock ($1.26) ($O.91)
Weighted Average Number
of Common Shares used
in Calculating Net
Loss per share
of Common Stock 16,059,637 12,814,579
(A) Other expenses include $278,000 in charges that reflect certain
non-recurring severance expenses associated with cost reduction
measures primarily in the area of SG&A.
PREFERRED NETWORKS, INC.
Balance Sheet
(Unaudited)
(dollars in thousands)
Balance Sheet Data: December 31, 1997 December 31, 1996
Cash and Cash Equivalents $ 7,563 $21,645
Total Current Assets 14,748 30,725
Property and Equipment, Net 25,569 21,559
Total Assets 66,233 66,125
Total Debt 19,782 17,025
Stockholders' Equity 27,773 40,583
Total Liabilities and
Stockholders' Equity $66,233 $66,125
SOURCE Preferred Networks, Inc.
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Related links:
http://www.pni.net
CONTACT:
Kathryn Loev Putnam of Preferred Networks,
770-582-3507
CNOC: http://www.prnewswire.com or fax, 800-758-5804, ext.
109794
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