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Wednesday
October 24, 12:01 pm Eastern Time
Company Press Release
North
American DataCom Announces Revised Business Plan
IUKA,
Miss.--(BUSINESS WIRE)--Oct. 24, 2001--North American DataCom,
Inc. (OTC BB: NADA) announced today that it had approved a
revised Business Plan. The revised plan is focusing on immediate
revenue growth and immediate reduction of investment and expenses
associated with delayed broadband infrastructure development.
"Our
goal continues to be development of a state-of-the-art broadband
network in the underserved southeast,'' stated Robert R. Crawford,
chief executive officer of North American DataCom. "We
are now faced with the realities of the current capital marketplace
that have limited our access to funds for the investment.
The Company has therefore redirected its focus to shorter-term
goals. As discussed in previous releases, the Company's initial
marketing efforts are to start application services, such
as Global PTX, and to expand data storage (EDS) services and
broadband services throughout the rural South. These three
markets provide tremendous opportunities for immediate revenue
growth. Our current broadband facilities of approximately
500 megabytes per second can support our application services
until our network is in place.''
"This
Plan that had been formulated last year with Cap Gemini Ernst
and Young, calls for the construction of a 3,000-mile fiber
optic network throughout the Southeast United States. The
Company has divided the proposed fiber optic network construction
into six discreet segments. The Company now plans to complete
the first segment (roughly 550 route miles, extending from
Atlanta to Memphis) by late 2002. The original 5-year Plan
identified a $700 million capital investment for seven EDS
centers, plus the 3,000-route-mile broadband network. The
current market pricing has reduced the estimated capital investment
to under $400 million. Revenues at the end of 5 years were
projected to be over $500 million.
To
accomplish our objectives in the current economic environment,
we are developing our EDS capabilities and our application
services,'' said Mr. Crawford. ``Segment 1, running from Memphis
to our facility in Iuka, Mississippi, and on to Atlanta, is
tactically and strategically the most important phase. We
estimate completion of this by the end of next year, subject
to the viability of the capital markets.'' The Company sees
a large opportunity for its broadband services in this region.
This region serves 15 of the 62 smaller population centers
and 3 of the major 7 population centers along the planned
network route. NAD plans to initially operate 2 of its 5 satellite
data storage centers that are directly connected to its broadband
network. The Company has opened approximately 5,000 square
feet in its Major Data Center. The Major Center will eventually
comprise 60,000 of the planned 125,000 square feet available
in the Company's facility in Iuka, Mississippi.
The
capital budget to develop and operate the interim bandwidth
network, the interim EDS business and the Global PTX business
is estimated at approximately $20 million over the next 12
months. The Company's Revised Business Plan continues to project
operating cash flow to be breakeven by the end of this fiscal
year, June 30, 2002. The revenues and net income in the next
fiscal year are estimated at approximately $60 million and
$10 million, respectively. "We remain determined to develop
the network and services in the rural South, an underserved
area,'' continued Mr. Crawford. "Further, we believe
this Plan positions us to benefit from expanding traffic growth.
We expect the capital market to react favorably to our Plan,
and plan to utilize the equity line of credit announced earlier
this year.''
Under
the revised Plan, North American DataCom still expects to
have a positive cash flow by June 2002, and profits in August
2002. The Company's first quarter results, scheduled for release
next week, are expected to show raising revenues and reduced
expenses.
Safe
Harbor Statement
Statements
in this release express management's beliefs and expectations
regarding future performance. These statements are forward-looking
and involve risk and uncertainties. These risks include, but
not limited to, the ability to negotiate venture agreements,
properly identify acquisition partners, manage and integrate
acquired businesses, react to quarterly fluctuation in results,
raise working capital and secure other financing, respond
to competition and other rapidly expanding technology, deal
with market and stock price fluctuation, and other risks.
These risks are and will be detailed, from time to time, in
North American DataCom, Inc. Securities and Exchange Commission
filings. Actual results may differ materially from management's
expectations.
North
American DataCom's principal executive offices are located
at 751 County Road 989, Building 1000, Iuka, MS 38852. For
further information, contact Investor Relations, 662-424-5030,
or by e-mail at investorrelations@nadata.com.
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