ONTARIO, CALIF. (May 18) BUSINESS WIRE -May 18, 1999--
Exclusive of One-Time Non-Cash Charges,
Loss From Operations Improved 58%
MicroTel International Inc. (the "Company") (OTC BB: MCTL) today
announced that for the three months ended March 31, 1999 it recorded a
net loss of $975,000 or $0.07 per share, as compared with a net loss of
$948,000 or $0.08 per share for the first quarter of 1998, however
excluding approximately $830,000 in one-time non-cash charges, the loss
from operations improved over the first quarter of 1998 by 58%. For the
first quarter of 1999, the Company's gross profit as a percent of net
sales increased to 35% from 23% in the first quarter of 1998 as a
result of increased higher margin sales, the disposal and
discontinuance of lower margin product lines and the reduction during
1998 of manufacturing overhead costs. Cash used in operations for the
first quarter of 1999 fell to only $151,000 from $1,331,000 in the
first quarter of 1998.
In pursuing its strategy of disposing of non-core, lower margin
product lines and seeking to acquire new telecommunications end-user
products, during the first quarter of 1999, the Company sold
substantially all the assets of its HyComp, Inc. subsidiary and
acquired a 41% ownership interest in Digital Transmission Systems,
Inc., a provider of wireless voice and data transmission products which
compliments the Company's existing base wireline transmission product
line. The sale of HyComp completes the Company's exit from the
commercial circuits business.
Carmine T. Oliva, MicroTel's Chairman and CEO commented, "Despite our
anticipated loss in the first quarter of 1999, which was exaggerated by
discretionary one-time non cash charges of $830,000, we are pleased
that our efforts during 1998 to eliminate lower margin product lines
and reduce manufacturing overhead costs have resulted in substantially
improved gross profit margins and a 58% decrease in loss from
operations compared with the same quarter of 1998. We expect the
remainder of 1999 to be similarly improved over 1998 leading to
full-year profitability."
MicroTel International, Inc. is a holding company for its three wholly
owned subsidiaries - CXR Telcom Corporation in Fremont, CA; CXR, S.A.
in Paris, France and XIT Corporation in Ontario, CA. and its 41% owned
affiliate company Digital Transmission Systems, Inc. located near
Atlanta, Georgia. CXR Telcom Corporation, CXR, S.A. and Digital
Transmission Systems, Inc. design, manufacture and market electronic
telecommunication test instruments, wireless and wireline voice, data
and video transmission and networking equipment. XIT Corporation
designs, manufactures and markets information technology products,
including input and display components, subsystem assemblies and power
supplies. The Company operates out of facilities in the U.S., France,
England and Japan.
The statements in this press release relating to matters that are not
historical are forward-looking statements which involve risks and
uncertainties including, without limitation, economic and competitive
conditions in the markets served by the Company affecting the demand
for the Company's products, product pricing, market acceptance, access
to distribution channels and other risks detailed from time to time in
the Company's Securities and Exchange Commission filings. These risks
could cause actual results to differ materially from those anticipated
or described herein.
MicroTel International, Inc.
Consolidated Statements of Operations
Three months ended
March 31,
1999 1998
---------- ----------
(in thousands, except per
share amounts)
Net sales $ 7,510 $ 9,742
Cost of sales 4,904 7,506
---------- ----------
Gross profit 2,606 2,236
35% 23%
Operating expenses:
Selling, general and
administrative 3,716 3,119
Engineering and product
development 558 571
---------- ----------
Loss from operations (1,668) (1,454)
Other expense (income)
Interest expense 119 167
Gain on sale of subsidiary (331) (670)
Equity in earnings of
unconsolidated affiliates (540) 10
Other 51 (28)
---------- ----------
Loss before income taxes (967) (933)
Income taxes 8 15
---------- ----------
Net loss $ (975) $ (948)
========== ==========
Basic and diluted loss per share $ (.07) $ (0.08)
========== ==========
Weighted average shares outstanding 14,766 11,929
========== ==========
Consolidated Balance Sheet Information
(dollars in thousands)
3/31/99 12/31/98
------- --------
Total current assets $ 14,933 $ 15,552
Total current liabilities 11,692 11,765
Long-term debt, less
current portion 1,300 1,430
Stockholders' equity 6,713 5,482
Total assets $ 21,577 21,242
-0- flb/ny*
CONTACT: MicroTel International Inc.
James P. Butler, CFO
909/456-4321
Web site: microtelinternational.com
or
H.L. Lanzet
Herbert Lanzet/DeeDee Lanzet
212/687-0061
909/456-4321
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