FOR IMMEDIATE RELEASE
CONTACT: Jack Kohler, Vice President and CFO
(612) 544-1260
CHOICETEL COMMUNICATIONS, INC. ANNOUNCES
FOURTH QUARTER AND YEAR END FINANCIAL RESULTS
MINNEAPOLIS, MN. - ChoiceTel Communications, Inc. (NASDAQ - PHON) today
announced results for the fourth quarter and year ended December 31, 1997.
Net income after tax for the fourth quarter was $141,000, or $0.05 per
share, compared to a net loss, after a pro forma provision for income taxes, of
$417,000, or $0.23 per share for the quarter ended December 31, 1996. Revenues
for the quarter increased 106% to $2,131,000 from $1,030,000 for the fourth
quarter ended December 31, 1996. Fourth quarter 1996 results included the
effect of establishing a reserve for sales tax contingent liability of $865,000
or $O.49 per share.
The growth in revenues came from increasing the number of pay telephones in
service from an average of 1,200 during the fourth quarter of 1996 to 3,165
during the fourth quarter in 1997. Jeff Paletz, President of ChoiceTel stated
"The company acquired pay phone routes which added 1,020 phones in 5 western
states and of 585 phones in Minnesota during 1997. In addition, the company's
leasing agents added 360 phones during 1997, the most in the company's history.
The company also stated that on October 7, 1997 it began recognizing
dial-around revenue from long distance carriers at the rate of approximately
$37.00 per phone per month. Jack Kohler, CFO of ChoiceTel Communications, Inc.
stated "The Company's dial-around revenue increased when the FCC set the
dial-around rate at approximately $.28 per call beginning October 7, 1997. For
the 11 months prior to October 7, the Company recognized $6.00 per phone per
month."
Revenues for the year ended December 31, 1997 increased 101% to $7,149,000
from $3,562,000 for 1996. The net loss for the period was $134,000, or $0.06 per
share compared to net loss after a pro forma provision for income taxes of
$604,000 or $0.20 in 1996.
ChoiceTel Communications, based in Plymouth, Minnesota, is a rapidly
growing independent pay phone provider and owns and operates approximately 3,200
pay phones in 10 states.
CHOICETEL COMMUNICATIONS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN 000s EXCEPT PER SHARE)
Three Months Ended December 31,
-------------------------------
1997 1996
------- -------
Revenue $2,131 $ 1,030
Cost of Service 1,035 401
Gross Margin 1,096 629
Expenses:
SG&A 463 273
Depreciation and Amortization 247 121
Interest 100 13
Sales tax contingency 70 865
Earnings(loss) before tax 217 (642)
Income tax expense (credit) 76 (225)*
Net Income (loss) after tax $ 141 $ (417)
Net income per share
Basic $ 0.05 $ (0.23)
Fully diluted $ 0.05 $ (0.23)
Weighted average shares outstanding
Basic 2,648,339 1,767,599
Fully diluted 2,684,173 1,780,099
Year Ended December 30,
--------------------------------
1997 1996
------- -------
Revenue $7,149 $ 3,562
Cost of Service 3,826 1,987
Gross Margin 3,323 1,575
Expenses:
SG&A 1,769 830
Depreciation and Amortization 934 365
Interest 583 120
Sales Tax Contingency 243 865
Earnings (loss) before tax (206) (605)
Income tax expense (credit) (72) (212)*
Net income (loss) after tax (134) (393)
Net income per share
Basic $ (0.06) $ (0.20)
Fully diluted $ (0.06) $ (0.20)
Weighted Average shares outstanding
Basic 2,052,926 1,924,689
Fully d iluted 2,088,759 1,937,189
* = Proforma