[Metromedia Fiber Network Achieves Net Profits in Second Quarter 1998]
NEW YORK--(BUSINESS WIRE)--Aug. 12, 1998--Metromedia Fiber
Network, Inc. (MFNX:Nasdaq) today reported the following results:
($ Thousands) Three Months ended June 30, Six months ended June 30,
1998 1997 1998 1997
Revenues $7,407 $468 $9,133 $542
As of June 30, As of December 31,
1998 1997
Deferred revenue $28,297 $11,495
Howard M. Finkelstein, Metromedia Fiber Network's President, said,
"Our strong results this quarter reinforce our confidence in the
direction of our business plan. During the past quarter, we continued
to achieve important benchmarks in both the development of our
infrastructure and the market acceptance of our innovative product
offering. We are encouraged by the significant progress we have made
and view this landmark quarter as a platform for continued profitable
growth."
Metromedia Fiber Network Highlights for the Period April 1, 1998
Through June 30, 1998
-- Signed $7.8 million 10-year contract to provide a leading
investment banking firm with a dark fiber optic telecommunications
network in the New York metropolitan area.
-- Signed $36 million 15-year agreement with Intermedia to lease fiber
optic rings in the New York, Philadelphia, Washington, D.C. and
Chicago metropolitan areas.
-- ION(TM) joint venture with Racal Telecom was awarded a $25 million
25-year contract to provide inland capacity services in the U.K.
and U.S.
-- Announced significant expansion of fiber optic infrastructure in
the New York, Philadelphia, Washington, D. C. and Chicago
metropolitan areas.
-- On July 23, 1998 the Company announced a two-for-one stock split of
the Company's Class A and Class B Common Stock in the form of a
100% stock dividend, to be issued to shareholders of record as of
the close of business August 7, 1998.
Review of Results of Operations(a)
(a)All share and per share amounts presented in this release give
retroactive effect to the stock dividend.
Revenues
Revenues for the second quarter of 1998 rose to $7.4 million from
$0.5 million for the second quarter of 1997, reflecting 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 $3.3 million in the second quarter of 1998,
compared to $0.5 million for the second quarter of 1997. This increase
reflects 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 second quarters of 1998 and 1997 were 45% and 114%, 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 rose to $3.2 million
during the second quarter of 1998, from $1.3 million during the second
quarter of 1997. The increase resulted primarily from higher overhead
to accommodate the Company's expansion and increased legal expenses as
a result of the increased business activities of the Company.
Interest Income
Interest income, net, was $1.9 million during the three months
ended June 30, 1998 compared to interest expense, net, of $8,000
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 Income
Net income of $2.2 million was recorded for the three months ended
June 30, 1998, versus a net loss of $11.6 million for the comparable
period of 1997. For the three months ended June 30, 1998, the basic
net income per share was $0.05 and diluted net income per share was
$0.04, compared to a net loss per share of $0.60 in the second quarter
of 1997. The significant improvement during the second quarter of 1998
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
may, from time to time, 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/government
customers requiring secure communications networks for the
transmission of large amounts of voice, data and video. 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 San Francisco, Chicago, Philadelphia,
Washington D.C. and Boston and inter-city links connecting these local
markets. The Company has established a joint venture, known as
ION(TM), with Racal Telecom of the United Kingdom that will begin
providing broadband capacity between the United States and the United
Kingdom later this year.
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.
For more information about Metromedia Fiber Network, please visit
the company's Web site at mmfn.com.
Metromedia Fiber Network, Inc. & Subsidiaries
Consolidated Statements of Operations (Unaudited)
(in 000's, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenue $ 7,407 $ 468 $ 9,133 $ 542
Expenses:
Cost of sales 3,319 535 4,553 1,082
Selling, general and
administrative 3,183 1,297 5,914 2,186
Consulting and
employment incentives 103 9,979 195 13,420
Settlement agreement -- -- 3,400 --
Depreciation and amortization 230 201 440 373
Income (loss) from operations 572 (11,544) (5,369) (16,519)
Interest income 1,875 202 3,576 204
Interest expense (6) (210) (12) (679)
Income (loss) from
joint venture (251) -- (251) --
Income (loss) before
income taxes 2,190 (11,552) (2,056) (16,994)
Income taxes -- -- -- --
Net income (loss) $ 2,190 (11,552) $ (2,056) (16,994)
Net income (loss)
per share, basic $ 0.05 $ (0.60) $ (0.04) $ (0.87)
Net income (loss)
per share, diluted $ 0.04 N/A N/A N/A
Weighted average number of
shares outstanding, basic 46,628 19,130 46,404 19,424
Weighted average number of
shares outstanding, diluted 54,304 N/A N/A N/A
Metromedia Fiber Network, Inc. & Subsidiaries
Consolidated Balance Sheets
(in 000's, except share amounts)
June 30, December 31,
1998 1997
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 120,645 $ 138,846
Prepaid expenses 369 485
Accounts receivable 7,513 837
Other current assets 438 389
Total current assets 128,965 140,557
Fiber optic transmission network and related
equipment, net 93,305 24,934
Property and equipment, net 1,459 759
Investment in/advance to joint venture 2,550 56
Other assets 1,269 1,072
Total assets $ 227,548 $ 167,378
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 2,179 $ 3,072
Accrued expenses 26,239 3,181
Current portion of deferred revenue 2,882 1,184
Current portion of capital lease obligations 55 --
Total current liabilities 31,355 7,437
Capital lease obligations, net of
current portion 19,346 --
Deferred revenue 25,415 10,311
Other -- 90
Commitments and contingencies (see notes)
Stockholders' equity:
Class A common stock, $.01 par value; 180,000,000
shares authorized; 38,392,700 and 37,448,284 shares
issued and outstanding, respectively 384 374
Class B common stock, $.01 par value; 20,000,000
shares authorized; 8,442,318 and 8,442,318 shares
issued and outstanding, respectively 84 84
Additional paid-in capital 196,243 192,305
Accumulated deficit (45,279) (43,223)
Total stockholders' equity 151,432 149,540
Total liabilities and stockholders' equity $ 227,548 $ 167,378
CONTACT: Media Relations
Gibbs & Soell, New York
Luke Lambert, 212/697-2600
or
Investor Relations
G. A. Kraut Company Inc., New York
Jeffrey Luth, 212/696-5600 |
