[Metromedia Fiber Network Reports 2232% Revenue Growth in Q1 1998]
NEW YORK--(BUSINESS WIRE)--May 15, 1998--Metromedia Fiber
Network, Inc. (MFNX:Nasdaq) today reported the following results:
($ Thousands) Quarters Ended March 31,
1998 1997 Change
$ 1,726 $ 74 2232%
Revenues
As of March 31, As of December 31,
1998 1997 Change
Deferred Revenue $ 22,248 $ 10,311 116%
Howard M. Finkelstein, Metromedia Fiber Network's President, said
"Our results tell us that Metromedia Fiber Network's offering of
virtually unlimited bandwidth and a fixed cost is being met with great
enthusiasm from the carrier, corporate, and government communities.
During the first quarter of 1998, we were pleased to enter into a
number of agreements with a variety of organizations that will employ
our services to significantly increase their abilities to grow. Our
rapid growth to-date gives us great confidence that our strategy is
working, and that we can look forward to strong continued growth as we
continue to build and market our network."
Metromedia Fiber Network Highlights for the Period January 1,
1998 Through March 31, 1998
- Signed $6.8 million sale agreement with Cable & Wireless
- Signed $92 million agreement with NextLink
- Signed five year contract with Bankers Trust
- Acquired rights to fiber optic infrastructure in downtown Chicago
and surrounding metropolitan area
- Announced major fiber exchange agreement with IXC Communications,
enabling the Company to link Chicago to New York
- Named Jerry Benedetto, formerly of Metromedia International
Telecommunications, Inc., as CFO
- Named transatlantic joint venture with Racal "International
Optical Network, L.L.C.," known as "ION" and named Vincent
Galluccio, SVP and Director of Metromedia Fiber Network, as ION's
President
Review of Results of Operations
($ in 000's, except per share amounts)
Revenues
Revenues for the first quarter of 1998 were $1,726 or 2,232%
greater than revenues of $74 for the first quarter of 1997. The
increase in revenue for the three months ended March 31, 1998 versus
the three months ended March 31, 1997 reflect higher revenues
associated with commencement of service to customers, as well as an
increase in the total number of customers served and revenue
recognized related to sales of indefeasible rights of use to the
Company's network.
Cost of Sales
Cost of sales were $1,234 in the first quarter of 1998, a 126%
increase over cost of sales of $547 for the first quarter of 1997.
Cost of sales increased for the three months ended March 31, 1998 as
compared to the same period in 1997 due to costs associated with the
commencement of service to customers, as well as higher fixed costs
associated with the build-out of the Company's network. Costs of sales
as percentages of revenue for the first quarters of 1998 and 1997 were
71% and 639%, respectively, declining as a result of the significant
increase in the number of customers and revenues.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to $2,733
during the first quarter of 1998, from $889 during the first quarter
of 1997, an increase of $1,844, or 207%. The increase in selling,
general and administrative expenses for the three months ended March
31, 1998 versus the three months ended March 31, 1997 resulted
primarily from increased overhead to accommodate the Company's
expansion and increased legal expenses as a result of the increased
business activities of the Company.
Settlement Agreement
The amounts recorded for a settlement agreement were $3,400 for
the three months ended March 31, 1998 with no expense for the three
months ended March 31, 1997. The amount recorded in 1998 reflects an
expense associated with the issuance of stock options and payment of
cash related to the settlement agreement.
Interest Income
Interest income was $1,701 during the three months ended March
31, 1998 as compared to $3 during the comparable 1997 period. Interest
income during 1998 was derived from investment of the Company's excess
cash as a result of the initial public offering in October 1997. In
1997, the Company had no significant excess cash to invest and,
accordingly, earned nominal interest income.
Net Loss
A net loss of $4,247 was recorded for the three months ended
March 31, 1998, versus a net loss of $5,441 for the comparable period
of 1997. For the three months ended March 31, 1998 and 1997, the net
losses per share were $0.18 and $0.55, respectively. The decrease in
net losses was primarily attributable to the growth of revenues and
the improvements in gross margins as noted above, as well as the
increase in net interest income versus net interest expense related to
the investment by Metromedia Company and the funds raised through the
Company's initial public offering.
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 network. Management believes
that its goals will be achieved through the Company's successful
implementation and execution of its growth strategy.
Metromedia Fiber Network provides technologically advanced,
high-bandwidth, private, fiber optic communications infrastructure
within major U.S. markets. 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 for the
transmission of large amounts of voice, data, and video. Headquartered
in the New York area, Metromedia Fiber Network currently operates a
fiber optic metropolitan area network in New York and is developing
local fiber optic infrastructure along strategic routes in Chicago,
Philadelphia, Boston, and Washington, D.C. and an inter-city link
between New York and Washington, D.C. The Company has agreements in
place that enable connectivity between New York and Chicago, and has
established a joint venture with Racal Telecom of the United Kingdom
which should offer transatlantic service in 1998. 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 Form 10-K for the fiscal year ended December 31,1997, 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 described from time to time in the U.S. Securities and Exchange
Commission reports filed by Metromedia Fiber Network, including the
most recently filed Form 10-K.
Metromedia Fiber Network, Inc. & Subsidiaries
Consolidated Statements of Operations (Unaudited)
(In 000's, except per share amounts)
Three Months Ended
March 31,
1998 1997
Revenue $ 1,726 $ 74
Expenses:
Cost of sales 1,234 547
Selling, general and administrative 2,733 889
Consulting and employment incentives 91 3,441
Settlement agreement 3,400 -
Depreciation and amortization 209 172
Loss from operations (5,941) (4,975)
Interest income 1,701 3
Interest expense
(including financing costs) (7) (469)
Net loss $ (4,247) $ (5,441)
Net loss per share $ (0.18) $ (0.55)
Weighted average number of shares
outstanding 23,089 9,830
Metromedia Fiber Network, Inc. & Subsidiaries
Consolidated Balance Sheets
(In 000's, except share amounts)
March 31, December 31,
1998 1997
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 132,413 $ 138,846
Prepaid expenses 661 485
Accounts receivable 1,724 837
Other current assets 426 389
Total current assets 135,224 140,557
Fiber optic transmission network
and related equipment, net 71,683 24,934
Non-current prepaid expenses - -
Property and equipment, net 1,312 759
Restricted cash - -
Franchise costs, net - -
Investment in/advance to joint venture 446 56
Other assets 1,261 1,072
Total assets $ 209,926 $ 167,378
Liabilities and stockholders' equity
Current liabilities:
Accounts payable 1,085 3,072
Accrued expenses 18,055 3,181
Current portion of deferred revenue 1,087 1,184
Current portion of capital lease
obligations 1,151 -
Current portion of settlement agreement - -
Due to related parties - -
Total current liabilities 21,378 7,437
Settlement agreement, net of current
portion - -
Capital lease obligations, net of
current portion 17,915 -
Deferred revenue 22,248 10,311
Other - 90
Commitments and contingencies
Stockholders' equity:
Class A common stock, $.01 par value;
authorized 180,000,000 shares;
18,896,898 and 18,724,142 shares
issued and outstanding, respectively 189 187
Class B common stock, $.01 par value,
authorized 20,000,000 shares; 4,221,159 and
4,221,159 shares issued and outstanding,
respectively 42 42
Additional paid-in capital 195,624 192,534
Accumulated deficit (47,470) (43,223)
Total stockholders' equity 148,385 149,540
Total liabilities and stockholders'
equity $ 209,926 $ 167,378
CONTACT: Media Relations Investor Relations
Judy Sweeney/David King Eric Leeds
G. S. Schwartz & Co. G. A. Kraut Company Inc.
212-725-4500 212-696-5600
dking@schwartz.com |
