FTGX cash flow positive.. (COMTEX) B: FiberNet Reports Fourth Quarter and Full Year 2004 Results - F urth Quarter of 2004 Revenues Increase 15.5% Over Com B: FiberNet Reports Fourth Quarter and Full Year 2004 Results - Fourth Quarter o 2004 Revenues Increase 15.5% Over Comparable Period in 2003 - ( PRNewswire-Firs Call )
NEW YORK, March 30, 2005 /PRNewswire-FirstCall via COMTEX/ -- FiberNet Telecom Group, Inc. (Nasdaq: FTGX), a leading provider of metropolitan data services, today announced its results for the fourth quarter and fiscal year ended December 31, 2004. FiberNet has now produced increases in revenues in the last nine consecutive quarters. The Company also generated $3.3 million in positive cash flow from operations for fiscal 2004.
Revenues for the fourth quarter of 2004 increased to $8.2 million, up 0.6% from $8.1 million for the third quarter of 2004 and up 15.5% from $7.1 million for the fourth quarter of 2003. FiberNet also experienced revenue growth in its core product offerings of transport and colocation services. For the fourth quarter of 2004, revenues from transport and colocation services (excluding revenues from access management services) grew by 0.9% over the third quarter of 2004 and by 16.8% over the fourth quarter of the prior year.
Transport services remain the most significant component of FiberNet's revenues, accounting for 72.4% of the total revenues generated in the fourth quarter of 2004. On-net transport revenues were 58.0%, and off-net transport revenues were 14.4%. Colocation services and access management services represented 20.2% and 7.4% of revenues, respectively. FiberNet's number of customers also increased to 213 as of December 31, 2004, up from 152 at the end of the fourth quarter of 2003 and 198 at the end of the third quarter of this year.
For the full year 2004, revenues were $34.6 million, up 30.0% from $26.6 million in 2003. An arbitration settlement received in the beginning of 2004 accounted for $2.7 million, or 7.9%, of the total revenue for the year. Excluding this settlement, core revenues from transport and colocation services grew by 9.8% over 2003. For the full year 2004, on-net transport, off-net transport, colocation and access management services represented 56.2%, 10.6%, 26.3% and 6.9% of total revenues, respectively.
Jon A. DeLuca, President and Chief Executive Officer, stated, "We finished 2004 on a strong note. Last year proved to be an exciting time for FiberNet. We completed the acquisition of Gateway Colocation, greatly expanding our data center and colocation presence in the New York metropolitan market, and this transaction has proven to be a valuable addition to our portfolio of network assets. We also launched our new optical Ethernet and IP MPLS metro network, enabling us to provide emerging data services to our customers."
"Most notably, we announced that FiberNet entered into an agreement to acquire Con Edison Communications. We are on track to obtain the regulatory approvals that are necessary to consummate the acquisition, and we have been extensively engaged in integration planning to ensure the continuity of the high levels of service that both companies provide their customers and to realize the synergies and cost savings that made this opportunity so attractive to us. As we approach the closing of the transaction, we continue to believe that the combination of FiberNet and Con Edison Communications will be a powerful data service provider in our sector, with great strengths in both the enterprise and service provider marketplaces."
"Our successful commitment to customer service can be attributed to the flexibility, innovation and reliability we deliver in meeting our customers' needs in the complex metro networking environment," Mr. DeLuca added. "We added 15 new customers in the fourth quarter to total 213 at the end of 2004, up from 152 at the beginning of the year. We continue to be successful in developing the international segment of our customer base. In the past few months, we announced several significant developments on this front. BT Infonet selected us to provide 2.5 gigabit optical wavelength services to support its network expansion. BT Americas expanded its agreement for additional colocation, transport, and interconnection services at the 60 Hudson Street Meet-Me-Room, and Swisscom selected our Dynamic Gateway service for the optical conversion and distribution of its international traffic in New York City."
EBITDA (as defined) for the fourth quarter of 2004 was $0.3 million, down from $0.6 million reported in third quarter of 2004. EBITDA (as defined) for the fourth quarter of 2003 was $8,000.
For the full year 2004, EBITDA (as defined) was $5.4 million, or $2.4 million excluding the arbitration settlement recorded in the first quarter of 2004. EBITDA (as defined) for 2003 was $2.1 million. Excluding the settlement, the annual increase in EBITDA (as defined) was 14.7%.
The Company presents the financial metric EBITDA (as defined) because it is utilized in the determination of the majority of the financial covenants in its credit agreement, and the metric is calculated in accordance with its credit agreement. As of December 31, 2004, FiberNet was in full compliance with all of the financial covenants in its credit agreement.
FiberNet generated positive cash flow from operations of $3.3 million for the full year 2004. Capital expenditures for the year were $3.5 million.
The net loss applicable to common stockholders for the fourth quarter of 2004 was $(2.5) million, or $(0.05) per share, compared to $(2.3) million, or $(0.04) per share, for the third quarter of 2004. The net loss applicable to common stockholders for the fourth quarter of 2003 was $(12.5) million, or $(0.31) per share. For the full year 2004, FiberNet's net loss applicable to common stockholders was $(18.4) million, or $(0.37) per share, compared to $(27.8) million in 2003, or $(0.75) per share.
Cost of services for the fourth quarter of 2004 was $3.8 million, compared to $3.7 million for the third quarter of 2004 and $2.6 million for the fourth quarter of 2003. Cost of services for the full year 2004 was $13.8 million, compared to $8.8 million in 2003. These increases were due, in part, to increased off-net connectivity costs from the Company's Network Solutions initiative. The cost of services related to the Company's acquisition of Gateway Colocation was also consolidated beginning in the first quarter of 2004 and accounted for $1.5 million in 2004.
Selling, general and administrative expenses for the fourth quarter of 2004 were $4.1 million, compared to $3.9 million in the third quarter of 2004, and $5.0 million in the fourth quarter of 2003. Selling, general and administrative expenses for the full year 2004 were $16.0 million, compared to $16.4 million in 2003.
Capital expenditures for the fourth quarter of 2004 were $1.3 million, compared to $1.0 million in the third quarter and $0.6 million in the fourth quarter of last year. For the full year 2004, capital expenditures were $3.5 million, compared to $2.4 million recorded in 2003. During the fourth quarter FiberNet started construction on the second phase of the 60 Hudson Street Meet-Me-Room which accounted for $0.5 million, and the majority of the Company's remaining capital expenditures were for the implementation of customer orders. Capital expenditures for general network improvements accounted for 29.5% of the total in 2004.
As of December 31, 2004, FiberNet had total assets of $87.7 million and total stockholders' equity of $59.2 million. As of March 26, 2005, the Company had approximately 51.0 million shares of common stock outstanding, or 60.5 million shares of common stock outstanding on a fully-diluted basis, assuming the exercise of all outstanding options and warrants. Of the approximately 9.5 million outstanding options and warrants, 7.0 million are out-of-the-money as of March 26, 2005.
FiberNet Teleconference:
FiberNet will hold a teleconference today, Wednesday, March 30, 2005, at 11:00 a.m. EST. To participate in the teleconference please call: 800-299-0148 and enter pass code 94480410, and from outside the U.S. call 617-801-9711 and enter the pass code.
A replay of the teleconference will be available beginning March 30, 2005 at 1:00 p.m. EST through April 13, 2005. To listen to the replay by phone, call 888-286-8010 and enter pass code 45905315, and from outside the U.S. call 617-801-6888 and enter the pass code.
About FiberNet:
FiberNet Telecom Group, Inc. deploys, owns and operates fiber-optic networks in the two gateway markets of New York/New Jersey and Los Angeles, designed to provide comprehensive broadband connectivity to other telecommunications service providers and enterprise customers for data, voice and video transmissions. FiberNet's networks provide an advanced, high bandwidth, fiber-optic solution to support the demand for network capacity and to facilitate the interconnection of multiple carriers' and customers' networks. For additional information about FiberNet, visit the Company's website at http://www.ftgx.com.
Financial Information and Forward Looking Statements:
This partial discussion of the statements of financial condition and operations of the Company should be read in conjunction with the consolidated financial statements and related notes contained in the Company's annual report on Form 10-K for the year ended December 31, 2004 to be filed with the Securities and Exchange Commission.
Investors are cautioned that EBITDA (as defined) is not a financial measure under generally accepted accounting principles. EBITDA (as defined) is defined as net loss before income taxes, net interest expense, depreciation and amortization, stock related expense and other non-cash or non-recurring charges. The Company does not, nor does it suggest investors should, consider such a non-GAAP financial measure in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. EBITDA (as defined) should not be construed as an alternative to operating income or cash flows from operating activities, both of which are determined in accordance with GAAP, or as a measure of liquidity. Because it is not calculated under GAAP, FiberNet's EBITDA (as defined) may not be comparable to similarly titled measures used by other companies. EBITDA (as defined) is commonly used in the communications industry and by financial analysts, and others who follow the industry, as a measure of operating performance. The Company believes that it is appropriate to present this financial measure because certain of the financial covenants in the Company's credit agreement are based upon it.
Various remarks about the Company's future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Such remarks are valid only as of today, and the Company disclaims any obligation to update this information. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Company's most recent Annual Report on Form 10-K, to be filed with the Securities and Exchange Commission.
Reconciliation of Non-GAAP Financial Metric:
Consolidated Financial Data (in thousands) (unaudited) Three months Ended ------------------------------------------- December 31, December 31, September 30, 2004 2003 2004 ------------- ------------- ------------- Calculation of EBITDA (as defined):
Net loss $ (2,492) $ (12,497) $ (2,293)
Plus: Operating expenses: Stock related expense for selling, general, and administrative matters 129 133 130 Impairment of property, plant and equipment (1) -- 1,544 129 Depreciation and amortization 2,213 2,238 2,192 Impairment of goodwill -- 7,509 -- Legal settlement expenses (included in selling, general, and administrative expenses) -- 495 -- Interest expense, net 454 586 444
-------- -------- --------
EBITDA (as defined) $ 304 $ 8 $ 602
Consolidated Financial Data (in thousands)
Year ended December 31, ------------------------ 2004 2003 ------------ ---------- Calculation of EBITDA (as defined):
Net loss $(18,394) $ (27,775)
Plus: Operating expenses: Stock related expense for selling, general, and administrative matters 518 222 Impairment of property, plant and equipment (1) 9,603 1,544 Impairment of goodwill 2,309 7,509 Depreciation and amortization 9,013 8,840 Loss on early extinguishment of debt -- 8,951 Lease cancellation expense (included in selling, general, and administrative expenses) 405 -- Legal settlement expenses (included in selling, general, and administrative expenses) -- 495 Interest expense, net 1,902 2,296 --------- ---------
EBITDA (as defined) $ 5,356 $ 2,082
(1) Excludes recoveries from previously impaired property, plant and equipment.
FIBERNET TELECOM GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
Year Ended Three Months Ended December 31, December 31, (Audited) (Unaudited) 2004 2003 2004 2003
Revenues $34,579 $26,604 $8,200 $7,097 Operating expenses: Cost of services (exclusive of items shown separately below) 13,776 8,806 3,776 2,597 Selling, general and administrative expense excluding stock related expense 15,986 16,409 4,119 4,995 Stock related expense for selling, general, and administrative matters 518 222 129 133 Impairment of property, plant and equipment 9,468 1,346 - 1,536 Impairment of goodwill 2,309 7,509 - 7,509 Depreciation and amortization 9,013 8,840 2,213 2,238 Total operating expenses 51,070 43,132 10,237 19,008 Loss from operations (16,491) (16,528) (2,037) (11,911) Loss on early extinguishment of debt - (8.951) - - Interest expense, net 60 46 23 24 Interest expense, net (1,963) (2,342) (478) (610) Net loss $(18,394) $(27,775) $(2,492) $(12,497) Net loss per share - basic and diluted $(0.37) $(0.75) $(0.05) $(0.31) Weighted average common shares outstanding - basic and diluted 50,179 37,192 50,997 40,680
FIBERNET TELECOM GROUP, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts)
December 31, December 31, 2004 2003 ASSETS Current Assets: Cash and cash equivalents $2,909 $3,488 Restricted cash 1,881 2,337 Accounts receivable, net of allowance of $749 and $721 at December 31, 2004 and 2003, respectively 4,275 3,785 Prepaid expenses and other 676 754 Total current assets 9,741 10,364 Property, plant and equipment, net 74,123 86,958 Other Assets: Deferred charges, net of accumulated amortization of $1,860 and $1,402 at December 31, 2004 and 2003, respectively 2,292 2,035 Other assets 1,569 261 Total other assets 3,861 2,296 TOTAL ASSETS $87,725 $99,618 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $4,409 $3,598 Accrued expenses 3,805 5,138 Deferred revenues-current portion 3,427 4,584 Notes payable-current portion 6,182 1,795 Total current liabilities 17,823 15,115 Long-Term Liabilities: Notes payable, less original issue discount of $1,598 and $2,308 at December 31, 2004 and 2003, respectively 7,405 18,330 Deferred revenue, long term 3,261 1,439 Total Long Term Liabilities 10,666 19,769 Total liabilities 28,489 34,884 Commitments and contingent liabilities (Note 8) Stockholders' Equity: Common stock, $.001 par value, 2,000,000,000 shares authorized and 50,989,572 and 40,540,334 shares issued and outstanding at December 31, 2004 and 2003, respectively 51 41 Additional paid-in-capital and other 444,429 429,991 Deferred compensation (4,443) (4,797) Deferred rent (warrants) (1,906) - Accumulated deficit (378,895) (360,501) Total stockholders' equity 59,236 64,734 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $87,725 $99,618
FIBERNET TELECOM GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Year Ended December 31, 2004 2003 2002 Cash flows from operating activities: Net loss $(18,394) $(27,775) $(37,448) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 9,013 8,840 10,346 Preferred stock dividends - - 44 Stock related expense for selling, general and administrative matters 518 222 225 Impairment of property, plant and equipment 9,468 1,346 13,175 Impairment of goodwill 2,309 7,509 - Loss on early extinguishments of debt - 8,951 7,859 Non-cash interest expense capitalized on notes payable - 663 5,421 Other non-cash expenses 1,098 977 1,418 Change in assets and liabilities: Increase in accounts receivable (589) (1,020) (556) Decrease (increase) in prepaid expenses 78 217 (270) (Increase) decrease in other assets (939) (4) 37 Increase (decrease) in accounts payable 1,071 (353) (2,882) (Decrease) increase in accrued expenses (1,010) 1,067 (416) Increase (decrease) in and deferred revenue 665 1,410 (1,459) Cash provided by (used in) operating activities 3,288 2,050 (4,506)
Cash flows from investing activities: Acquisition of Gateway Colocation (382) - - Recovery on sale of impaired assets 135 198 - Decrease (increase) in restricted cash 456 (2,337) - Capital expenditures (3,524) (2,388) (2,453) Cash used in investing activities (3,315) (4,527) (2,453)
Cash flows from financing activities: Payment of financing costs of debt financings (807) (428) (70) Repayment of notes payable (7,225) - - Proceeds from debt financing - - 2,307 Payment of financing costs of equity financings (520) (810) (378) Proceeds from subordinated note payable - - 2,000 Proceeds from issuance of equity securities 8,000 3,500 3,800 Repayment of capital lease obligation - (85) (250) Cash (used in) provided from financing activities (552) 2,177 7,409
Net (decrease) increase in cash and cash equivalents (579) (300) 450 Cash and cash equivalents at beginning of year 3,488 3,788 3,338 Cash and cash equivalents at end of year $2,909 $3,488 $3,788 Supplemental disclosures of cash flow information: Interest paid $863 $563 $35 Non-cash financing activities: Conversion of accrued interest into common stock - - 2,000 Conversion of accrued interest into notes payable - - 3,522 Conversion of notes payable into common stock - 13,382 66,000 Conversion of subordinated note payable into common stock - - 2,080 Conversion of note payable- affiliate into common stock - - 450 Conversion of series H preferred stock into common stock - - 17,127 Conversion of series J preferred stock into common stock - - 1,363
SOURCE FiberNet Telecom Group, Inc.
CONTACT: Jon A. DeLuca, President, Chief Executive Officer of FiberNet Telecom Group, Inc., +1-212-405-6200, investor.relations@ftgx.com
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