Viatel Posts Record 4th-Quarter and 1997 Revenue, Billable Minutes Company Announces Acquisition of Flat Rate Communications
PR Newswire - March 04, 1998 23:33
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NEW YORK, March 4 /PRNewswire/ -- Viatel, Inc. (Nasdaq: VYTL), a provider
of international and national long-distance telecommunications services, today
announced record revenue for the fourth quarter and year ended December 31,
1997.
Viatel also today announced that it recently acquired Flat Rate
Communications, Inc., a privately held long-distance telecommunications
reseller based in California. Flat Rate posted 1997 revenue of $28.7 million
with net income of $0.3 million. On a pro forma basis, Viatel's combined 1997
revenue would have been $101.8 million.
Viatel's 1997 revenue rose 45% to $73.0 million from $50.4 million in
1996. Billable minutes of use increased 126% over the prior period to
140.9 million, with billable minutes in European operations increasing 162%.
Customers billed increased 18% to 21,515 from 18,172 at the end of 1996.
Fourth-quarter revenue rose 39% to $20.9 million from $15.0 million for the
fourth quarter of 1996. Billable minutes in the fourth quarter more than
doubled to 41.5 million, from 20.5 million in the comparable period a year
ago.
In late September 1997, Michael J. Mahoney assumed leadership of the
Company as Chief Executive Officer. Since then, Viatel has taken numerous
steps to capitalize on the evolving deregulation of certain Western European
telecommunications markets. In addition, during 1997 Viatel tripled the reach
of its network in Western Europe, restructured its sales organization and
substantially increased its transatlantic fiber capacity.
Subject to financing and certain other contingencies, Viatel recently
announced its intention to build the "Circe Cable System," a Pan-European
fiber-optic network to better control costs and quality while providing new
services to its customers. Mahoney said that "Circe will create opportunities
for Viatel to expand the reseller aspect of our business and enhance network
utilization."
Mahoney said, "Viatel is moving aggressively to capitalize on the
opportunity that is now beginning to unfold in Europe by further developing
our distribution and sales channels for the small and medium-sized business
market in Europe as well as providing services to resellers and other long-
distance service providers."
Mahoney continued, "While deregulation of the telecommunications industry
in Europe officially began on January 1 in most markets, true competition is
evolving country by country. We believe that our infrastructure and marketing
initiatives, coupled with our operating experience in Europe, should position
Viatel to capture market share while driving down our costs." The Company now
operates one of the largest alternative-long distance networks in Western
Europe, with points of presence in 30 cities and sales organizations in
approximately 100 locations.
"The Company posted strong growth in revenue and billable minutes in 1997,
despite aggressive pricing by incumbent telecommunications operators in
certain Western European countries, the short-term impact on customer growth
of establishing minimum fees in certain markets and the negative impact of
currency translations," said Allan L. Shaw, Viatel's Chief Financial Officer.
"Revenue suffered slightly due to instability in the Asian financial markets."
Viatel reported an EBITDA loss for the year of $26.6 million, compared
with an EBITDA loss of $24.6 million in 1996, primarily reflecting the
Company's ongoing investment in its network and operating infrastructure. The
net loss for the full year was $43.0 million, or $1.90 a share, compared with
$38.4 million, or $2.47 a share, in 1996. The EBITDA loss for the fourth
quarter was $6.7 million, compared with an EBITDA loss of $5.2 million in the
year-earlier period. The net loss for the fourth quarter of 1997 was
$12.2 million, or $0.54 a share, compared with a net loss of $8.4 million, or
$0.40 a share, a year earlier.
"Viatel's EBITDA loss was also adversely affected by static leased
facilities costs as the Company continued to invest in its network and
operating infrastructure," Shaw said. "We are aggressively pursuing a
strategy of replacing leased lines with company-owned facilities, which will
allow Viatel to reduce its cost structure while maintaining end-to-end quality
and control."
Shaw also noted that the Company "continued to manage costs aggressively,
reducing SG&A expenses for the year to 49% of revenue (38% on a pro forma
basis), compared with 65% a year ago, and to 43% of revenue in the fourth
quarter of 1997." He also said that property and equipment nearly tripled to
$54 million from $21 million a year earlier.
The Company's European operations accounted for 45% of revenue for the
year, rising 65% to $32.6 million from the prior year, and rising to 56% of
revenue in the fourth quarter. Minutes of use for 1997 in the European
markets rose 162% to 64.6 million, while the number of customers rose 31% to
12,407. In the fourth quarter, revenue from European operations rose 91% to
$11.6 million from a year earlier. Minutes of use in the fourth quarter in
the Company's European markets rose 114% to 17.3 million from the prior year
period.
Viatel's Latin American operations, which accounted for approximately 22%
of total telecommunications revenue in 1997, increased 13% to $16.0 million
compared with $14.2 million for the prior year. Minutes of use in the Latin
American markets rose 33% to 12.4 million from 9.3 million for 1996, and the
number of Latin American customers billed was 3,388 at the end of the year.
Viatel's Pacific Rim operations, which accounted for approximately 11.2% of
total yearly revenue, increased 32% to $8.2 million compared with $6.2 million
a year earlier.
Viatel, which has its headquarters in New York, NY, is a rapidly growing
provider of telecommunications services. The Company offers a broad array of
competitively priced, value-added international and domestic long-distance
services primarily to small and medium-sized businesses. Viatel provides
long-distance service to more than 230 countries and territories worldwide
through its international network. The Company is listed on the Nasdaq stock
market under the symbol "VYTL." For more information, visit Viatel's website
at www.viatel.com.
Except for the historical information contained herein, the matters
discussed in this release are forward-looking statements that involve risks
and uncertainties, including the continued deregulation of the European Union
member states in which the Company does business, and its ability to continue
to convert from leased to owned facilities and other risks detailed from time
to time in the Company's reports filed with the Securities and Exchange
Commission, including those contained in the Company's Annual Report on Form
10-K. As a result, actual results, events or conditions, financial or
otherwise, could differ materially from those statements. Viatel undertakes
no duty to update such forward-looking statements.
VIATEL, INC.
Unaudited Summary Consolidated Financial and Other Data
(In 000s, except other operating and per share data)(a)
Three Months Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Statement of Operations Data:
Telecommunications
revenue $ 20,868 $ 15,029 $ 73,018 $ 50,419
Operating expenses:
Cost of
telecommunications
services 18,557 12,341 63,504 42,130
Selling, general
and administrative
expense 9,006 7,839 36,076 32,857
Depreciation and
amortization 2,934 1,413 7,717 4,802
Total operating
expenses 30,498 21,593 107,297 79,789
Operating loss (9,630) (6,564) (34,279) (29,370)
Interest expense, net (2,591) (1,841) (8,764) (8,996)
Share in loss of
affiliate -- (3) -- (10)
Net loss $(12,220) $(8,408) $(43,044) $(38,375)
Net loss per share $ (0.54) $ (0.40) $ (1.90) $ (2.47)
Weighted average
shares outstanding 22,635 20,896 22,620 15,514
Other Financial Data:
EBITDA (b) $ (6,695) $(5,154) $(26,562) $(24,578)
Other Operating Data:
Billable minutes
(000's) 41,547 20,458 140,918 62,249
Average revenue
per billable
minute $ 0.50 $ 0.73 $ 0.51 $ 0.80
Average cost
per billable
minute $ 0.45 $ 0.60 $ 0.44 $ 0.67
Switches (c) 14 13 14 13
European cities (c) 30 9 30 9
Customers (c) 21,515 18,172 21,515 18,172
Balance Sheet Data
(000's):
Cash, cash
equivalents and
marketable
securities $47,142 $92,982 $ 47,142 $92,982
Working Capital 7,666 79,665 7,666 79,665
Property and
equipment, net 54,094 21,074 54,094 21,074
Total assets 126,809 134,664 126,809 134,664
Long-term debt,
excluding current
installment 99,609 77,904 99,609 77,904
Stockholders'
(deficit) equity (8,564) 38,483 (8,564) 38,483
(a) Amounts may not total due to rounding.
(b) As used herein, "EBITDA" consists of earnings before interest income,
interest expense, income taxes and depreciation and amortization.
EBITDA is a measure commonly used in the telecommunications industry
to analyze companies on the basis of operating performance. EBITDA
is not a measure of financial performance under generally accepted
accounting principles, is not necessarily comparable to similarly
titled measures of other companies, and should not be considered as
an alternative to net income as a measure of performance nor as an
alternative to cash flow as a measure of liquidity.
(c) Information presented as of the end of the period indicated.
VIATEL, INC.
Pro Forma Financial Data
(In 000s)
The following pro forma condensed statement of operations for the year
ended December 31, 1997 combines the historical statements of operations
of Viatel, Inc. and Flat Rate Communications, Inc. (Flat Rate) for the
year ended December 31, 1997 as if the acquisition of Flat Rate had
occurred on January 1, 1997. The pro forma condensed statement of
operations is not necessarily indicative of what the actual financial
results would have been for the period had the transaction occurred as the
date indicated and does not purport to indicate the financial results of
the future periods.
Pro Forma Pro Forma
Viatel Flat Rate Adjustments Combined
Condensed
Statement
of Operations:
Telecommunications
Revenue $ 73,018 $ 28,735 $ -- $101,753
Operating Expenses:
Costs of
Telecommunications
Services 63,504 25,283 -- 88,787
Selling,
general and
administrative 36,076 2,992 -- 39,068
Depreciation and
amortization 7,717 16 1,760 (a) 9,493
Total operating
expenses 107,297 28,291 1,760 137,348
Operating (loss)
income $ (34,279) $ 444 $ (1,760) $ (35,595)
Interest income 3,686 49 (250) (b) 3,485
Interest expense (12,450) (208) -- (12,658)
Net (loss)
income before
taxes (43,044) 285 (2,010) (44,769)
Provision for
taxes -- 16 (16) (c) --
Net (loss)
income $ (43,044) $ 269 $ (1,994) $ (44,769)
Other Financial Data:
EBITDA (d) $ (26,562) $ 460 $ -- $ (26,102)
(a) Represents the amortization of excess purchase price over fair value
of net assets acquired.
(b) Represents the reduction of interest income resulting from cash
portion of purchase price.
(c) Represents an adjustment to tax expense based on loss before income
taxes.
(d) As used herein, "EBITDA" consists of earnings before income interest,
interest expense, income taxes and depreciation and amortization.
EBITDA is a measure commonly used in the telecommunications industry
to analyze companies on the basis of operating performance. EBITDA
is not a measure of financial performance under generally accepted
accounting principles, is not necessarily comparable to similarly
titled measures of other companies, and should not be considered as
an alternative to net income as a measure of performance nor as an
alternative to cash flow as a measure of liquidity.
SOURCE Viatel, Inc.
/CONTACT: Allan L. Shaw, Chief Financial Officer of Viatel, 212-350-9200
or allan_shaw@viatel.com; or Jeffrey Goldberger or Christine Davies, both of
Stern & Co., 212-888-0044 or info@sternco.com, for Viatel/
/Web site: viatel.com |
