EQUALNET HOLDING CORP. REPORTS 2ND QUARTER RESULTS.HOUSTON--(BUSINESS WIRE)--February 6, 1996--EqualNet Holding Corp. (Nasdaq:ENET ENET Ethernet ENET Enterprise Network ) today announced results for its second fiscal quarter which ended December 31, 1995. The results include a one-time, non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $3.7 million ($2.3 million, or $0.38 per share, after tax effect) to write down the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of acquired customer bases as a result of higher than expected attrition Attrition The reduction in staff and employees in a company through normal means, such as retirement and resignation. This is natural in any business and industry. Notes: associated with the underlying accounts. Including this charge, the Company recorded a net loss for the quarter of $2,002,000, or $0.33 per share, on revenues of $19.0 million. For the comparable period of the prior fiscal year, EqualNet reported net income of $262,000, or $0.06 per share, on revenues of $13.6 million. While order activity remained strong during the second fiscal quarter, a number of factors caused by the rapid growth of the Company resulted in lower than anticipated revenues for the period. Specifically, with rapid increases in new customers, provisioning time -- the time it takes the Company's primary underlying long-distance carrier to activate new customers -- rose sharply, from approximately 20 days to 45 days or more. Additionally, NetBase , the Company's customer management system, was not equipped to handle the rapid growth, leading to delays in providing the Company's customers with timely bills. EqualNet stated that these conditions caused customer attrition Customer attrition, also known as customer churn, customer turnover, or customer defection, is a business term used to describe loss of clients or customers. rates to increase from an average of approximately 3.5% typical of the industry and the Company, to as much as 6% or more. Thus, although the new customer base was increasing sharply, actual revenues were declining due to unforeseen customer shrinkage Shrinkage The amount by which inventory on hand is shorter than the amount of inventory recorded. Notes: The missing inventory could be due to theft, damage, or book keeping errors. . The Company added that, since it relies on call record information from long-distance carriers to account for actual revenues, the increased attrition problem was not detected until recently. "We are taking a number of actions to address the problem of provisioning delays and the resulting higher than expected attrition," said EqualNet Chairman and Chief Executive Officer Zane D. Russell. "We have worked with our primary underlying carrier to improve the provisioning time, which has recently decreased from over 45 days to less than 20 days. Also, we have implemented a full review of our internal systems to improve accuracy and customer service, and to provide management with greater reporting visibility. We have implemented a special customer service team to recapture recapture n. in income tax, the requirement that the taxpayer pay the amount of tax savings from past years due to accelerated depreciation or deferred capital gains upon sale of property. (See: income tax) RECAPTURE, war. some of the accounts lost due to slow provisioning and customer service issues. It is also important to note that we have entered into a joint venture with GlobalOne, which should enable us to offer customers long- distance service with even more attractive cost savings and faster provisioning. We look forward to improving customer usage and reducing attrition through these measures." Mr. Russell added that, as previously announced, the Company had reorganized re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. its senior management in a smaller and more flexible structure following the resignation of its President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . EqualNet also named a new Vice President of Operations, curtailed staff in certain areas, and devoted more personnel resources to functions such as customer service. EqualNet is a nationwide long-distance company offering discounted major carrier transmission services to small and medium-sized businesses, which are made possible by the Company's large volume commitments to its underlying carriers. EqualNet's core strategy focuses on managing profitable growth while remaining adaptable in the highly competitive long-distance industry. CONTACT: EqualNet Holding Corp. Michael Hlinak, 713/556-4600 or Morgen-Walke Associates Investor Relations--Howard Zar/Shannon Moody Press--Lee Foley fo·ley n. 1. A technical process by which sounds are created or altered for use in a film, video, or other electronically produced work. 2. A person who creates or alters sounds using this process. , 212/850-5600 |
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