WinStar Communications Reports 64% Revenue Increase For Fiscal 1995; Has Multiple Wireless Fiber Orders From Long Distance Carriers, Competitive Access Providers, Mobile Communications Companies, and End Users

Business Wire, May 25, 1995

NEW YORK--(BUSINESS WIRE)--May 25, 1995--WinStar Communications Inc. (NASDAQ:WCII), today reported a 64% increase in revenues for the fiscal year ended Feb. 28, 1995.

Revenues were $25,564,760, up 64% from the prior year's revenues of $15,625,019. During fiscal 1995, the WinStar Telecom Group (WTG) reported revenues of $14,909,225, as compared to $8,505,282 in fiscal 1994, an increase of 75%. This growth in WTG was generated entirely by WinStar Gateway Network (WGN), the company's long distance subsidiary. The consumer products division, WinStar Global Products (WGP), also experienced substantial sales growth, from $7,119,737 in fiscal 1994 to $10,182,143 in fiscal 1995, an increase of 43%. The company's new content and information services segment, WinStar New Media, generated $473,392 in revenues in fiscal 1995, its first year of operation.

Operating losses for the year ended Feb. 28, 1995 widened to $5,611,436 from $2,067,521 in the prior year. As a result of growth in WGN and WGP, coupled with the initiation of the company's wireless operation and development of WinStar's management team, selling general and administrative expenses were $12,688,859, or 50% of net sales, up from $6,887,913, or 44% of net sales, in the prior year.

In fiscal 1994, the company recorded a non-cash expense of $5,316,667 related to certain stock options issued in connection with the company's initial public offering in 1991, and an expense of $292,376 related to discontinued business lines. The company also recorded an extraordinary gain of $194,154 resulting from the settlement of debt at a discount. The net loss was $7,230,195 for fiscal 1995 as compared to a net loss of $8,195,468 for fiscal 1994 due to the factors noted above. The net loss per share was $0.42 in fiscal 1995, versus a net loss of $1.06 per share in the prior year. The weighted average number of shares outstanding grew from 7,718,988 in fiscal 1994 to 17,122,318 in fiscal 1995.

In the fourth quarter of fiscal 1995, revenues grew 16% to $5,695,408 versus $4,930,295 in the prior year. The net loss declined from $6,854,613 to $4,104,679. The fourth quarter of fiscal 1995 included $607,609 in restructuring expenses related to WinStar Gateway Network, as described above, and $859,000 in additional non-recurring adjustments. WinStar projected that the first quarter of fiscal 1996, ending May 31, 1995, would show higher revenues and significantly lower losses than the fourth quarter of fiscal 1995.

WinStar expects to have outstanding approximately 22 million shares after closing the Avant-Garde transaction, discussed below, with fully diluted shares of approximately 33 million. These numbers are higher than at the close of the February quarter, due mainly to the closing of $13,500,000 in private placement financing and the pending buy-out of the remaining 51% of Avant-Garde. The company's shareholders' equity will approximate $29 million.

Fiscal 1995 was a ground breaking year in which WinStar made significant progress towards its long-term goal of building a telecommunications services business. The company's efforts and resources were devoted toward assimilating and developing the acquisitions made during the last two years as well as molding a new corporate structure to oversee the implementation of its long-term strategic plan.

Initially through the acquisition of WGN in fiscal 1994, the company formed a telecommunications business segment which accounted for 58% of consolidated revenues in the past fiscal year. In February 1994 and April 1994, the WTG expanded into wireless communications through the purchase of a 49% interest in Avant-Garde Telecommunications Inc. (AGT). At WGN, the company expanded the revenue base and restructured operations by bringing in new management, revamping billing and information systems, and revising cost and commission structures, thus positioning WGN for improved profitability in the future. WGN recently entered into a new carrier contract which will commence in fiscal 1996 and which should reduce its transmission costs and improve its margins.

At WinStar Wireless, Inc. (WWI), the company has created its core management team, financed the initial stages of construction of its wireless communications capacity utilizing AGT's licenses, executed vendor equipment supply contracts, developed network and operating systems, placed into service over 120 radio links, and initiated marketing and sales efforts which resulted in the successful installation of Wireless Fiber(SM) customer orders. As anticipated and subsequent to year end, WinStar entered into a merger agreement to acquire the remaining 51% of AGT in exchange for shares of the company's common stock subject to approval by the Federal Communications Commission.

The company is in some stage of progress with a number of potential customers and strategic partners for the expansion of WinStar's wireless business. WinStar has received orders for its Wireless Fiber(SM) links from a number of customers, who break down into the following categories: two long distance carriers, including MCI Metro, five Competitive Access Providers, two large mobile communications companies, and five end users. Some of these customers have placed multiple orders.