HitCom Reports 1997 Operating Profit
Company Releases Results for the Nine Months Ended Dec. 31, 1997
ST. LOUIS--(BUSINESS WIRE)--March 11, 1998--HitCom Corp. (Nasdaq/OTC:HICO - news), a facilities-based telecommunications company with headquarters in St. Louis, Wednesday reported financial results for the nine-month period ended Dec. 31, 1997.
The company posted an operating profit of $48,952 on revenues of $2,732,377. However, due to $118,413 of non-operating other expenses, including minority interest, the company also announced a loss of 1 cent per share.
At the same time, HitCom released pro forma results for the 12 months ended Dec. 31, 1997, including the acquisition of HitCom's new subsidiary, Channel Telecom Inc., which is expected to close this spring.
The pro forma results would have boosted HitCom's revenue to $4,513,246 and operating profit to $181,871. Furthermore, the company would have reported basic and fully-diluted Earnings Per Share (EPS) of 1 cent.
According to David Parks, HitCom's chief financial officer, the company is completing a year-long re-engineering process that included the acquisition of One Plus Marketing Inc. effective April 1, 1997; the pending acquisition of Channel Telecom Inc. effective January 1, 1998; and the implementation of numerous other measures that have improved the company's position and financial flexibility.
''During 1997 HitCom incurred substantial expenses related to preparing the company to undertake its aggressive growth plan as well as developing HitCom into an enhanced communication services and technologies provider,'' said Parks.
''The company has a stronger internal management team now and we should see a substantial reduction in overall expenses as well as other operating efficiencies that will further benefit the company's operating and net income in 1998.''
Additionally, Parks explained the reason for the nine-month results. ''The acquisition of One Plus was treated as a 'reverse merger' under generally accepted accounting principles. As such, One Plus is considered the 'accounting acquirer' and the results of operations are presented from the date of the acquisition prospectively.
''For pro forma purposes, the results of One Plus are also presented for the three-month period ended March 31, 1997.''
One Plus Marketing
HitCom's 80 percent-owned subsidiary, One Plus Marketing, was the significant contributor to HitCom's 1997 revenues. One Plus markets HitCom's interactive voice response (IVR) products and services, including 800Link, a national voice-mail system currently used by more than 15,000 subscribers.
One Plus' 1997 revenues increased 81 percent from approximately $1.9 million in 1996. This record year is consistent with One Plus' performance over the past few years.
''One Plus' sales do not show any signs of slowing in the near future,'' said Dawn Echols, a spokesperson for One Plus Marketing. ''As a matter of fact, with the new switching platform HitCom plans to introduce this year and our recent expansion into Canada, we're looking forward to another banner year.''
According to Parks, HitCom is currently reviewing its options to purchase the remaining minority interest in One Plus this year.
Channel Telecom
HitCom signed a definitive agreement on Feb. 18, 1998, to acquire all of the outstanding shares of Channel Telecom for approximately 3.8 million shares of HitCom's common stock and $175,000 in cash. The transaction is scheduled to close in April 1998, with an effective date of Jan. 1, 1998.
Channel is currently the fourth-largest facility-based provider of prepaid phone cards in Canada. Channel's success is attributed, in part, to a broad-based retail distribution network that includes 2,500 outlets.
Channel also recently announced that it was the official network provider for a series of prepaid phone cards featuring the world famous Rolling Stones. The worldwide exclusive agreement to market the prepaid cards was obtained by Babylon 1 PhoneCards, a partnership that includes Channel Telecom.
Channel's sales were also up significantly from 1996. Channel reported revenues of $945,079 in 1997, representing a 56 percent increase over the previous year.
Rajan Arora, Channel Telecom's president, said: ''This is a great time for Channel, One Plus and HitCom. Our companies have generated a positive momentum and when combined will generate an exciting new energy and direction. We have a lot of hard work ahead of us, but we are building a solid team and infrastructure that is capable of allowing us to reach our goals.''
WorldCom Affiliation
In October of 1997, HitCom announced an affiliation with WorldCom Inc. (Nasdaq:WCOM - news) that is expected to result in a savings on HitCom's long distance call transport costs beginning in late 1997. HitCom's management believes that the company's gross profit percentage for IVR services should increase between 1-2 percent in 1998 as a result of its affiliation with WorldCom.
Comments From HitCom's Chairman
According to Scott Beil, HitCom's chairman: ''1997 was both a tough and exciting year for HitCom. We had to make several hard decisions regarding our future. I feel good about what we have accomplished so far and even better about our capacity for the years ahead.
''In 1997, we shifted the company's focus to enhanced communications services and technology, redirected the efforts of our entire organization, retained Fidelity Capital to assist us with the development of our strategic plan, augmented our management team and set our sights higher than ever before -- all while increasing our sales by 81 percent.
''In 1998,'' Beil continued, ''HitCom is committed to an aggressive growth plan designed to significantly increase revenues while maximizing earnings and shareholder value. The company's short-term goal is to continue at an annual revenue growth rate of at least 100 percent with a mid-range goal of reaching $50 million by 2000.
''HitCom plans to accomplish these goals through an aggressive acquisition strategy as well as through internal growth including the expansion of existing market shares and new product development and introduction.''
About HitCom
HitCom, with headquarters in St. Louis, is a facilities-based telecommunications company that provides enhanced communication services and technologies to businesses and consumers in the United States and Canada.
Specifically, HitCom focuses on designing, developing and marketing interactive voice response/voice processing services, prepaid/postpaid phone cards and phone card platform services, Internet connectivity services, IP telephony services and other emerging communications services.
HitCom markets its products and services through its subsidiaries One Plus Marketing and its current acquisition, Channel Telecom.
HitCom is traded on the Nasdaq Stock Exchange OTC Bulletin Board under the symbol HICO. The company expects to file Form 10-SB with the Securities and Exchange Commission and become a reporting company in the spring of 1998. HitCom can be found on the worldwide web at www.hitcom.com.
Statements contained in this news release regarding expected financial results and other planned events are forward-looking statements subject to uncertainties and risks, including, but not limited to, the demand for HitCom's products and services, and the ability of the company to successfully implement its strategies, each of which may be impacted, among other things, by economic, competitive or regulatory conditions.
HITCOM CORP.
FINANCIAL RESULTS
Consolidated Statement of Operations for the Nine-Month
Period Ended Dec. 31, 1997
Net Revenues $ 2,732,377
Cost and expenses:
Cost of sales 1,440,524
Selling, general and administrative 1,242,901
Total costs and expenses 2,683,425
Operating income 48,952
Other expense -- net 55,041
Loss before income tax benefit
and minority interest (6,089)
Tax benefit (885)
Loss before minority interest (5,204)
Minority interest 64,257
Net loss (69,461)
Basic loss per share (1 cent)
Weighted average number of
shares outstanding 7,921,458
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Contact:
HitCom Corp., St. Louis
Anthony W. Hitt, 314/231-1000 ext. 801
ahitt@hitcom.com (e-mail) |
