ATLANTA, Aug. 14 /PRNewswire/ -- Preferred Networks, Inc. (Nasdaq: PFNT)
(PNI), an outsourcing services provider to the wireless industry, today
announced results for the three months and six months ended June 30, 1997.
Total revenues for the second quarter increased 284% to a record
$9.6 million from $2.5 million for the second quarter of 1996. EBITDA
(earnings before interest, taxes, depreciation and amortization), a standard
measure of operating cashflow in the wireless industry, was negative
$2.9 million compared with negative $1.4 million for the prior-year period.
The net loss for the second quarter of 1997 was $5.0 million, or $0.32 per
share, compared with a loss of $1.5 million, or $0.10 per share for the prior-
year period.
Operating expenses for the second quarter of 1997 included $278,000 in
charges that reflect certain non-recurring severance expenses associated with
cost reduction measures primarily in the area of S,G&A. Excluding these
expenses, EBITDA for the second quarter of 1997 would have been negative
$2.7 million, an improvement over negative $3.0 million for the first quarter
of 1997.
Total revenues for the six months ended June 30, 1997 increased 264% to
$17.7 million from $4.9 million for the six months ended June 30, 1996.
EBITDA was negative $5.9 million compared with negative $2.6 million for the
prior-year period. The net loss for the six months ended June 30, 1997 was
$9.8 million, or $0.62 per share, compared with a loss of $3.0 million, or
$0.28 per share for the prior-year period.
Commenting on the results compared to the first quarter of 1997, Chairman
and Chief Executive Officer Mark Dunaway said, "The second quarter showed a
combined 18% revenue growth from our three service areas and improved gross
margin. Our expanded outsourcing services platform has also enabled us to
achieve revenue growth momentum and reductions in expenses as a percentage of
revenues. The result is a combined quarter-to-quarter 34% increase in gross
margin and an EBITDA dollar improvement, with excellent prospects for the
remainder of 1997."
At June 30, 1997, PNI's network services business was operating in
23 markets with six Technical Control Centers and was constructing networks in
28 markets. At June 30, 1997, PNI's network services business had 424,991
units in service, a 97% increase in units from 215,706 units in service at the
end of the second quarter in 1996. During the second quarter, the company
also closed the pending $15 million private placement of preferred stock and
warrants.
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; 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 1996 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 Six Months ended
June 30 June 30
1997 1996 1997 1996
Revenues
Network services $3,251 33.9% $1,445 57.9% $5,817 32.9% $2,744 56.4%
Product sales 3,473 36.2 1,049 42.1 6,406 36.2 2,086 42.9
Other services 2,865 29.9 -- -- 5,482 30.9 33 0.7
Total revenues 9,589 100.0 2,494 100.0 17,705 100.0 4,863 100.0
Costs of Revenues
Network services 2,195 22.9 946 37.9 4,103 23.2 1,688 34.7
Product sales 3,559 37.1 1,308 52.5 6,639 37.5 2,669 54.9
Other services 2,359 24.6 -- -- 4,385 24.7 -- --
Total cost
of revenues 8,113 84.6 2,254 90.4 15,127 85.4 4,357 89.6
Gross Margin 1,476 15.4 240 9.6 2,578 14.6 506 10.4
Selling, general
and administrative
expenses 4,127 43.0 1,680 67.3 8,219 46.4 3,140 64.5
Depreciation and
amortization 1,804 18.8 399 16.0 3,450 19.5 763 15.7
Other expenses(1) 278 2.9 -- -- 278 1.6 -- --
Operating
loss (4,733)(49.3) (1,839)(73.7) (9,369)(52.9) (3,397) (69.8)
Interest expense (380) (4.0) (13) (0.5) (606) (3.4) (155) (3.2)
Interest income 79 0.8 374 15.0 217 1.2 573 11.8
Net loss $(5,034)(52.5) $(1,478)(59.2)$(9,758)(55.1)$(2,979) (61.2)
EBITDA $(2,929)(30.6) $(1,440)(57.7)$(5,919)(33.4)$(2,634) (54.1)
Net loss per
share of
Common Stock $(.32) $(.10) $(.62) $(.28)
Weighted average
number of common
shares used in
calculating net
loss per share of
Common Stock 16,148,065 14,417,732 16,004,034 12,679,831
(1) Other expenses includes $278,000 in charges that reflect certain non-
recurring severance expenses associated with cost reduction measures
primarily in the area of S,G&A.
PREFERRED NETWORKS, INC.
BALANCE SHEET
(Unaudited)
(balance sheet dollars in thousands)
June 30, December 31,
1997 1996
Balance Sheet Data:
Cash and cash equivalents $ 12,919 $ 21,645
Current assets 22,955 30,725
Property and equipment, net 26,955 21,560
Total assets 76,367 66,125
Long-term debt 16,667 16,030
Stockholders' equity 38,087 40,583
Total liabilities and
stockholders' equity 76,367 66,125
SOURCE Preferred Networks, Inc.
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CONTACT:
Kathryn Loev Putnam of Preferred Networks,
770-582-3507
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