Exhibit 99.1
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FOR IMMEDIATE RELEASE Contact:Becky Haight
Investor Relations
Pathnet
877 227-5600
investor@pathnet.net
Kye Presley-Dowd
Media Relations
Pathnet
202 295-3286
kpresleydowd@pathnet.net
PATHNET REPORTS FIRST QUARTER RESULTS
WASHINGTON, DC, MAY 14, 1999-- Pathnet, Inc., a privately-held carrier's carrier
of digital telecommunications capacity to under-served and second- and
third-tier markets, today announced revenue of $826,000 for the quarter ended
March 31, 1999, an eight-fold increase from revenue of $100,000 reported in the
first quarter of 1998. The majority of the company's revenue for the quarter was
derived from telecommunication services, with the remainder coming from
construction management services for strategic partners. Earnings before
interest, taxes, depreciation and amortization (EBITDA) for the quarter was a
loss of $4.6 million, up as expected, from a loss of $2.7 million in the
year-ago quarter.
"We are very pleased with Pathnet's progress in the quarter," said president and
chief executive officer Richard A. Jalkut. " We've already made some significant
advances since broadening our network strategy to include fiber. We recently
announced a strategic agreement with Worldwide Fiber USA to co-develop an 1,100
mile fiber-optic network between Chicago and Denver. This high-profile route
will connect important under-served markets like Des Moines, Lincoln and Omaha
that we feel have been overlooked by other carriers. We expect to sign
additional partnering agreements in the months ahead as we continue to focus on
network construction and accelerating revenue growth," he added.
In recent executive announcements, Pathnet named James M. Craig as executive
vice president and chief financial officer, and Robert A. Rouse as executive
vice president and president of network services. Craig joined Pathnet from
Omnipoint while Rouse joined the company from Intermedia.
Pathnet has evolved to its current position as a leading wholesale provider of
high quality, low-cost digital telecommunications capacity by partnering with
utility, pipeline and railroad companies to upgrade and aggregate existing
wireless infrastructure to a state-of-the-art SONET network. In February, the
company announced an expansion of its business strategy to include construction
and deployment of digital networks utilizing both fiber-optic and wireless
technologies. Going forward, Pathnet plans to construct and deploy fiber
facilities on selected routes and integrate those routes with its existing and
future wireless facilities.
As of March 31, 1999, the company had over $209 million in cash and marketable
securities available for its use. That amount does not include approximately
$62.7 million remaining in pledged securities set aside to service interest
payments to bondholders through April 2000. Pathnet continues to use its capital
to construct and deploy network resulting in an increase in gross plant and
equipment for the first quarter of $21.6 million, bringing total plant and
equipment acquired to $70.4 million.
First Quarter Highlights and Recent Developments
* Signed strategic agreement with Worldwide Fiber USA to jointly develop
an 1,100 mile fiber-optic network from Chicago to Denver.
* Named James M. Craig to position of Chief Financial Officer.
* Named Robert A. Rouse to position of President, Network Services.
* Increased total network route miles completed to 2,100.
Pathnet is a carriers' carrier providing high capacity, fiber and wireless
bandwidth to under-served and second- and third-tier U.S. markets. It provides
service to inter-exchange carriers, local exchange carriers, Internet service
providers, Regional Bell Operating Companies, cellular operators and resellers.
Pathnet's strategy is to build low-cost telecommunications networks through
partnering arrangements. As of March 31, 1999, Pathnet had 2,100 route miles of
completed network, 4,600 route miles of network under construction and 7,800
route miles of network under commitment. The company's headquarters are located
in Washington, D.C., at 1015 31st Street, NW, Washington, D.C., 20007. For
additional information about Pathnet, visit the company Web site at
www.pathnet.net.
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THIS PRESS RELEASE CONTAINS SOME MATTERS THAT ARE FORWARD-LOOKING STATEMENTS.
THE READER IS CAUTIONED THAT THESE FORWARD-LOOKING STATEMENTS, SUCH AS PLANS TO
SIGN ADDITIONAL AGREEMENTS WITH PRIVATE NETWORK OPERATORS; OFFER SERVICES TO
TELECOM SERVICE PROVIDERS; ENTER INTO PARTNERING ARRANGEMENTS; BUILD A DIGITAL
NETWORK; AND STATEMENTS REGARDING THE DEVELOPMENT OF PATHNET'S BUSINESS, AND
OTHER STATEMENTS CONTAINED HEREIN REGARDING MATTERS THAT ARE NOT HISTORICAL
FACTS, ARE ONLY PREDICTIONS. NO ASSURANCE CAN BE GIVEN THAT THE FUTURE RESULTS
WILL BE ACHIEVED; ACTUAL EVENTS MAY DIFFER MATERIALLY AS A RESULT OF RISKS
FACING PATHNET. FOR A DISCUSSION OF FACTORS THAT COULD AFFECT THE
FORWARD-LOOKING STATEMENTS, SEE PATHNET'S PUBLIC FILINGS ON FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION.
PATHNET, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(In thousands except per share data)
For the period
August 25, 1995
For the three months ended (date of inception)
March 31, March 31,
1999 1998 1999
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Revenue $ 826 $ 100 $ 2,573
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Expenses:
Cost of revenue 2,651 715 10,199
Selling, general and administrative 2,795 2,111 18,421
Depreciation 538 37 1,326
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Total expenses 5,984 2,863 29,946
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Net operating loss (5,158) (2,763) (27,373)
Interest expense (10,271) - (43,258)
Interest income 3,815 81 17,930
Initial public offering costs - - (1,355)
Other income, net 88 (3) 86
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Net loss $ (11,526) $ (2,685) $ (53,970)
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Basic and diluted loss per
Common share $ (3.97) $ (0.93) $ (18.61)
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Weighted average number of
Common shares outstanding 2,903 2,901 2,901
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Other Data:
EBITDA (1) $ (4,620) $ (2,726) $ (26,047)
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(1) EBITDA comprises earnings before interest, taxes, depreciation and
amortization
PATHNET, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
(In thousands, except route miles)
March 31, December 31,
1999 1998
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(Unaudited)
ASSETS
Cash and cash equivalents $ 98,333 $ 57,322
Interest receivable 2,511 3,849
Marketable securities available for sale, at market 61,094 97,896
Other current assets 4,375 3,412
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Total current assets 166,313 162,479
Property and equipment, net 69,038 47,971
Deferred financing costs, net 10,224 10,508
Restricted cash 10,846 10,731
Marketable securities available for sale, at market 50,075 71,900
Pledged marketable securities held to maturity 62,656 61,825
Other Assets 109 -
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Total assets $ 369,261 $ 365,414
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LIABILITIES, MANDATORILY REDEEMABLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable $ 14,284 $ 10,708
Accrued interest 19,651 8,932
Other current liabilities 1,511 640
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Total current liabilities 35,446 20,280
Bonds payable, net of unamortized bond discount of $3,685 346,315 346,212
Other non-current liabilities 103
Total mandatorily redeemable preferred stock 35,970 35,970
Total stockholders' equity (deficit) (48,573) (37,048)
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Total liabilities, mandatorily redeemable preferred stock and
stockholders' equity (deficit) $ 369,261 $ 365,414
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Selected statistical data:
Route miles under construction 4,600
Route miles complete 2,100