MFNX - Metromedia Fiber Network, Inc. Reports Second Quarter 1999 Results
-- Revenues Increase 174% for 2Q99 -- Total Contracts Signed As of June 30 Exceed $650 Million -- Fiber Miles Exceed 420,000 as of June 30th
NEW YORK--(BUSINESS WIRE)--August 12, 1999-- Metromedia Fiber Network, Inc., (NASDAQ: MFNX - news), a provider of dedicated fiber optic networks within major metropolitan areas, today reported second quarter 1999 results. Revenues for the three months ended June 30, 1999 increased to $20.3 million from $7.4 million, or 174%, for the comparable period in 1998. For the six months ended June 30, 1999, revenues increased to $38.7 million from $9.1 million, an increase of 325% compared with the same period in 1998.
For the three months ended June 30, 1999, the Company reported income from operations of $2.2 million, a $1.6 million improvement over the $0.6 million income from operations for the comparable period in 1998. For the six months ended June 30, 1999, the Company reported income from operations of $5.0 million, a $10.4 million improvement over the $5.4 million loss for the comparable period in 1998. The improvement in income from operations was attributable to increased revenues as well as a reduction, as a percentage of sales, in cost of goods sold, selling, general and administrative expenses and depreciation. In addition, the 1998 amount included a $3.4 million expense associated with a settlement agreement in the three months ended March 31, 1998 due to the issuance of stock options and payment of cash.
Howard M. Finkelstein, President and Chief Operating Officer of Metromedia Fiber Network, Inc., said, ''In terms of our performance, the fundamentals of our Company are stronger than ever. In the second quarter of 1999 our network reach expanded to encompass more than 420,000 fiber miles and in excess of 1,200 route miles. In keeping with our build out schedule, we launched network operations in Washington, DC, Chicago and Dallas. As we build our networks, our customer base continues to grow as total contracts signed through June 30, 1999 exceeded the $650 million water mark.''
Mr. Finkelstein continued, ''Metromedia Fiber Network's corporate activity was broad in scope in the second quarter. Geographically, the Company is expanding its presence internationally with planned intra-city infrastructure builds in Toronto, London, Amsterdam, Stuttgart and Cologne, as well as an inter-city Pan European network. At the same time, we created a coast-to-coast domestic network virtually overnight through an agreement with Williams Communications. Strategically, we are extending our vision into the domain of Internet communications with the announced merger with AboveNet. With this merger, we look forward to marrying the virtually unlimited capacity of MFN's fiber-optic network with AboveNet's Internet infrastructure to become the dominant provider of optical network capability for next generation communications as we participate in the explosive growth of Internet activity.
''The depth of MFN's customer base has now been extended to the broadcasting arena with our agreement with CBS News, bringing, for the first time, the advantages of fiber optics to the airwaves,'' Mr. Finkelstein continued. ''In reaching a landmark agreement with Bell Atlantic, we are broadening fiber distribution to CLEC customers and enhancing our independent position in the competitive telecommunications marketplace as a compelling alternative for carrier customers. And finally, for corporate customers, our alliances with technology service companies like Cisco, Comdisco and, more recently, Nortel, serve to enhance the value of fiber-optic infrastructure for a wider customer base,'' Mr. Finkelstein concluded.
Net loss for the three months ended June 30, 1999 was $6.5 million compared with net income of $2.2 million for the comparable period in 1998. The net loss was primarily attributable to the increase in net interest expense related to the issuance and sale of the Company's 10% senior notes in November 1998.
For the three months ended June 30, 1999, cost of sales was $6.6 million compared with $3.3 million for the three months ended June 30, 1998. Cost of sales as percentages of revenue were 32% and 43%, respectively, decreasing as a result of the significant increase in the number of customers and revenues, as well as slower growth in costs associated with these revenues.
Depreciation and amortization expense was $3.9 million for the three months ended June 30, 1999 compared with $0.2 million during the comparable period in 1998, increasing as a result of increased investment in the Company's completed fiber optic network and additional property and equipment acquired.
Interest income, derived from investment of excess cash from the proceeds of the Company's $650 million note issuance in November 1998, increased to $6.1 million for the three months ended June 30, 1999 from $1.9 million for the three months ended June 30, 1998. Interest expense increased to $14.5 million from $6,000 for the respective periods, reflecting the issuance and sale of senior notes.
As the Company is in the early stage of development, the Company expects to generate significant operating and net losses as it continues to build out and market its fiber optic network. Management believes that its goals will be achieved through the Company's successful implementation and execution of its growth strategy.
Metromedia Fiber Network, Inc., headquartered in White Plains, New York, provides technologically advanced, high-bandwidth, private, fiber optic communications infrastructure within major U.S. markets, enabling sophisticated organizations to implement the latest data, video, Internet and multimedia applications at a fixed cost. The Company provides its infrastructure to communications carriers competing in the local, long distance, wireless and Internet markets, as well as corporate and government customers requiring secure communications networks. In addition to its domestic markets, the Company has filed for licensing to construct an intra-city network in Frankfurt, Germany, extending the reach of the Company's planned German national ring into the local German loop. For more information about Metromedia Fiber Network, please visit the company's Web site at www.mmfn.com.
This partial discussion of the statements of financial condition and operations of the Company should be read in conjunction with the consolidated financial statements and related notes contained in the Company's Quarterly Report on Form 10-Q for the three months ended June 30, 1999, as filed with the U.S. Securities and Exchange Commission.
This news release contains certain forward-looking statements that involve risks and uncertainties. Factors that could cause or contribute to such risks and uncertainties include, but are not limited to, general economic and business conditions, competition, changes in technology and methods of marketing, and various other factors beyond the Company's control. This also includes such factors as are described from time to time in the U.S. Securities and Exchange Commission reports filed by Metromedia Fiber Network, including the most recently filed Forms 10-K and 10-Q. |
