To all PR
ALPHANET TELECOM INC. ANNOUNCES ITS RESULTS FOR THE SEVEN MONTH FISCAL PERIOD ENDED DECEMBER 31, 1997
TORONTO, Feb. 18 /CNW/ - AlphaNet Telecom Inc. (''AlphaNet'') today reported its financial results for the seven months ended December 31, 1997.
As previously announced, effective December 31, 1997, AlphaNet changed its year end from May 31 to December 31, therefore the following also provides a report on the four month quarter of September 1 to December 31, 1997 which coincides with AlphaNet's new year end. For comparative purposes, the previous year's information has also been restated to correspond to the four month period.
Financial Highlights
Telecommunications Business Unit
AlphaNet's Telecommunications business unit began commercial service in November 1997, and therefore for the quarter ended December 31, 1997 reported a nominal revenue of US$0.1 million representing 0.6 million minutes of billed traffic. As at December 31, 1997, the Telecommunications business unit had a total of twenty-six signed client contracts, representing an annualized traffic potential of approximately 200 million minutes, with domestic telecommunications operators located in eight countries. Eleven clients were
interconnected to the network by December 31, 1997. During the recent period, management has also been addressing certain network operational issues that surfaced as the Telecommunications business unit continued to increase its commercial traffic and, further developed systems enhancements to meet the demanding standards of the international carriers market. Over the upcoming months, the Telecommunications business unit will gradually interconnect the
balance of its clients to the network. Interconnection will take place as local lines between client facilities and the business unit's network are obtained, and as further network transmission facilities required to scale up the network become available.
Network costs for the quarter amounted to US$2.1 million compared to US$0.2 million for the same period last year. Consistent with the previous quarter, the Telecommunications business unit continued to expand its network transmission facilities first, to accommodate ''Beta'' testing activities and secondly, to facilitate initial commercial service. As at December 31, 1997, the Telecommunications business unit had deployed its commercial network platform, with direct end-to-end call origination and termination capabilities, in twelve countries which represent significant coverage of the
world's international voice traffic.
Operating expenses, including all costs incurred for technology
development, totaled US$3.5 million for the quarter ended December 31, 1997, a US$1.7 million increase over the same period last year which was attributable to higher employee related costs resulting from an increase in regional sales teams and network operations personnel to handle the demands of commercial service. The Telecommunications business unit reported a loss from operations of US$5.4 million or US$0.54 per common share for the quarter ended December 31, 1997 compared to US$1.9 million or US$0.19 per common share for the same
period last year.
With the launch of commercial service in November 1997, the
Telecommunications business unit reported a nominal revenue for the seven months ended December 31, 1997. Network costs increased US$2.0 million over the year ended May 31, 1997 to US$2.7 million, while operating expenses, including all costs incurred for technology development, increased US$0.1 million over the year ended May 31, 1997 to US$5.6 million. As a result, this business unit reported a loss from operations of US$8.2 million or US$0.81 per common share compared to US$6.1 million and US$0.60 per common share for the year ended May 31, 1997.
Hospitality Business Unit
The Hospitality business unit reported revenue of US$2.5 million for the quarter ended December 31, 1997, a US$0.1 million increase over the same period last year which was attributable to revenue from facsimile services.
During the quarter, hospitality operations added a net of 2,284 rooms,
including installations of its InnFax Business Center (''IBC-5000'') which was introduced in March 1997, to its North American installed base. As at December 31, 1997, installations of the IBC-5000 had increased by almost threefold over May 31, 1997, to represent 9 percent of the North American installed customer base. Including international licensee rooms, the worldwide installed InnFax
base was 51,731 rooms as at December 31, 1997 compared to 38,866 as at
December 31, 1996.
Hospitality direct costs for the quarter were US$0.6 million, consistent with last year. For the quarter, operating expenses were US$2.5 million compared to US$2.4 million for last year, reflecting an increase in depreciation and amortization which was driven by growth in the North American installed base. The loss from operations for this business unit was US$0.5 million or US$0.06 per common share for the quarter compared to US$0.6 million or US$0.06 per common share for same period last year. For the quarter, the Hospitality business unit generated US$1.0 million in cash from operating activities, a US$0.7 million increase over the prior year attributable to reduced facsimile inventory levels due to the timing of InnFax installations.
Due to the shorter fiscal period, revenue for the seven months ended December 31, 1997 of US$4.5 million decreased by US$3.1 million compared to the year ended May 31, 1997. Direct costs also decreased by US$0.9 million to US$0.9 million for the seven months ended December 31, 1997. Operating expenses totaled US$4.3 million for the seven months ended December 31, 1997 compared to US$7.2 million for the year ended May 31, 1997. For the seven months ended December 31, 1997, the Hospitality business unit reported a loss from operations of US$0.7 million or US$0.07 per common share compared to
US$1.5 million or US$0.14 per common share for the year ended May 31, 1997.
Consolidated
On a consolidated basis, revenue for the quarter was US$2.6 million compared to US$2.4 million for last year and, due to the recent launch of commercial service for the Telecommunications business unit, was primarily generated by the Hospitality business unit. The consolidated net loss for the quarter was US$6.6 million or US$0.65 per common share compared to US$2.8 million or US$0.27 per common share for same period last year.
For the seven months ended December 31, 1997, consolidated revenue was US$4.6 million compared to US$7.6 million for the year ended May 31, 1997, and, as mentioned above, was primarily generated by the Hospitality business unit. Consolidated operating revenue declined US$4.1 million compared to the year ended May 31, 1997 to US$1.0 million for the seven months ended December 31, 1997, due to telecommunications network costs incurred for start-up activities and the shorter fiscal period. For the seven months ended December
31, 1997, operating expenses were US$10.8 million, a decrease of US$3.4 million over the year ended May 31, 1997. After adjusting for a one-time expense incurred last year for the closure of certain offices of the Corporation, the decrease was attributable to the shorter fiscal period. As a result, the net loss for t he seven month period was US$9.5 million or US$0.93 per com mon share versus US$8.4 million or US$0.83 per common share for the year ended May 31, 1997. The consolidated cash flow used in operations was US$5.6 million for the seven months ended December 31, 1997 compared to US$1.2
million used for the year ended May 31, 1997.
As at December 31, 1997, AlphaNet was in a healthy financial position with US$26.6 million in cash and short-term investments. The
Telecommunications business unit will use these funds to finance its operating requirements and the further deployment of its network platform. Management anticipates that the Hospitality business unit will continue to generate increasingly positive cash flows from operating activities.
Other Corporate Developments In November 1997, the Hospitality business unit introduced its new unattended in-hotel business center called The Office. The Office is credit card activated and will be available in central locations of a hotel twenty-four hours daily. This product is a synergistic addition to InnFax services which will allow the hospitality operations to penetrate the high growth North American mid-market hotel segment, as well as enhance its positioning in the upscale hotel market segment.
AlphaNet is a communications provider specializing in the development of digital technologies and services for the telecommunications and hospitality industries. Its Telecommunications business unit is a cutting-edge carriers' carrier offering low cost, high quality international long distance services.
Its Hospitality business unit is a provider of innovative communication services for the hospitality industry. Based in Toronto, AlphaNet maintains an office in New York and is listed on the Toronto Stock Exchange under the symbol FAX. Additional information can be found at AlphaNet's Web site at
http.//www.alphanet.net.
<<
ALPHANET TELECOM INC.
Summary Consolidated Financial Information
Periods Ended December 31 and May 31
(in millions of U.S. dollars except per share amounts)
Four months Four months Seven months Year
ended ended ended ended
December 31, December 31, December 31, May 31,
1997 1996 1997 1997
-------------------------------------------------------------------------
Revenue US$ 2.6 US$ 2.4 US$ 4.6 US$ 7.6
-------------------------------------------------------------------------
Operating revenue US$ - US$ 1.7 US$ 1.0 US$ 5.1
-------------------------------------------------------------------------
Expenses US$ 6.8 US$ 4.4 US$ 10.8 US$ 14.2
-------------------------------------------------------------------------
Net loss for the period
US$ 6.6 US$ 2.8 US$ 9.5 US$ 8.4
-------------------------------------------------------------------------
Loss per common shareUS$ 0.65 US$ 0.27 US$ 0.93 US$ 0.83
-------------------------------------------------------------------------
Other Financial Information
-------------------------------------------------------------------------
Cash used in operating
activities US$ 2.0 US$ 0.6 US$ 5.6 US$ 1.2
-------------------------------------------------------------------------
Cash and short-term
investments US$ 26.6 US$ 19.0 US$ 26.6 US$ 12.0
-------------------------------------------------------------------------
>>
%SEDAR: 00003200E
-0- 02/18/98
For further information: Catherine Barker, Vice-President, Finance and
Administration and Chief Financial Officer, Tel: (416) 413-4481, Fax: (416)
413-4424, e-mail: catherine.barker@alphanet.net |
