21st Century Telecom Announces Significant Growth in Network Construction and Business Development During 1999.Business Editors, Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. Writers CHICAGO--(BUSINESS WIRE)--March 15, 2000 Revenues Increased Eleven-fold, Customer Connections Up 369 Percent, and Miles of Fiber Optic optic /op·tic/ (op´tik) ocular (1). op·tic or op·ti·cal adj. 1. Of or relating to the eye or vision. 2. Backbone backbone: see spinal column. The part of a network that handles the major traffic. It employs the highest-speed transmission paths in the network and may also run the longest distances. Up 225 Percent From Previous Year 21st Century Telecom Group, Inc. ("21st Century Telecom" or the "Company") today announced that net operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. for the year ended Dec. 31, 1999 totaled $11,320,000, an increase of eleven times the $947,000 posted the previous calendar year. The Company also announced a 396 percent increase in buildings connected over last year for the same period, a 369 percent increase in customer connections, and a 184 percent increase in homes passed. 21st Century Telecom also reported that its fiber optic backbone increased by 225 percent to nearly 270 miles of plant completed by Dec. 31, 1999. Fourth quarter revenues were $4,376,000, up 39 percent from $3,150,000 for the third quarter. Active customer connections at Dec. 31, 1999 were 49,037, increasing by 30 percent from Sept. 30, 1999. At Dec. 31, 1999, 21st Century Telecom's fiber optic network had expanded to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 236,200 homes passed, an increase of 16 percent over the third quarter. Over the same period, marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. homes increased by 27 percent to 100,800 versus 79,100 at Sept. 30, 1999. "We have had tremendous growth in revenues, in construction of our fiber optic backbone, and in customer connections over the course of the past year," said Bob Currey, 21st Century Telecom president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "With our February February: see month. 1999 acquisition of EnterAct, the addition of local and long distance telephone services to our product offerings, the strong team we have in place and the new agreement with RCN RCN n abbr (= Royal Canadian Navy) → kanadische Marine Corp., we are poised to offer the residents of Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. more choices in telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. ." Fourth quarter EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become loss was $10,809,000, up 34 percent from the $8,059,000 loss posted for third quarter, reflecting the full quarter effect of the ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale in sales, provisioning and customer service resources begun in the third quarter and approximately $915,000 of costs related to the merger with RCN. For the year, the EBITDA loss totaled $31,411,000. RCN CORP. ACQUISITION On Dec. 13, 1999 it was announced that RCN Corporation RCN Corporation, (NASDAQ: RCNI), founded in 1993 and based in Herndon, Virginia, is the first American facilities-based competitive provider of bundled telephone, cable television and high speed Internet service delivered over its own fiber-optic local network to consumers in (Nasdaq: RCNC RCNC Royal Corps of Naval Constructors (naval architects, mechanical, electrical engineers for UK Royal Navy) RCNC Royal Corps of Naval Constructors ) had signed a definitive agreement to acquire 21st Century Telecom Group in a transaction valued at approximately $500 million, payable in RCN stock and assumed debt. The acquisition will enable RCN to expand its operations into Chicago's high-density high-den·si·ty adj. Having a high concentration: high-density urban areas. residential market with over 8.6 million people and 3.1 million homes. "This is a great opportunity for 21st Century because RCN's corporate objectives and operating philosophy are similar to ours," added Currey. "We remain committed to providing our 49,000 customer connections with high quality services at competitive prices. With the additional resources of RCN, we look forward to offering new and innovative products to our growing customer base." The merger of 21st Century into RCN is targeted to close during the second quarter 2000, after the necessary regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. reviews are completed and approvals, where required, are received. Proxy materials Proxy Materials Documents regulated by the Securities & Exchange Commission in which a public company outlines its methods and procedures. These documents are used to inform shareholders and solicit votes for corporate decisions, such as the election of directors and other will be circulated to shareholders and a tender offer will be submitted to 21st Century Senior Discount Note and Subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. Exchange Debenture debenture (dəbĕn`chər), document acknowledging indebtedness. In Great Britain a debenture is practically the same as a bond, and debenture stock is similar to preferred stock. holders. These mailings should begin later in the first or early second quarter 2000. COMPANY DECLARES AN EXCHANGE OF PREFERRED STOCK Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. 21st Century Telecom announced it exchanged on Feb. 15, 2000 all issued and outstanding shares of its 13 3/4 percent Senior Cumulative Exchangeable Preferred Stock for 13 3/4 percent Subordinated Exchange Debentures Due 2010 in an aggregate principal amount equal to the sum of the Liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy Preference of the Shares, plus all accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. and unpaid dividends Unpaid dividend A dividend declared by the directors of a corporation that has not yet been paid. unpaid dividend 1. A declared dividend that has not yet been paid. 2. See passed dividend. thereon there·on adv. 1. On or upon this, that, or it. 2. Archaic Following that immediately; thereupon. Adv. 1. thereon - on that; "text and commentary thereon" on it, on that to the date of the Exchange. The timing coincided with the next scheduled Dividend Payment Date. ABOUT 21st CENTURY TELECOM 21st Century Telecom is the only single-source, facilities-based provider of bundled bun·dle n. 1. A group of objects held together, as by tying or wrapping. 2. Something wrapped or tied up for carrying; a package. 3. Biology A cluster or strand of closely bound muscle or nerve fibers. telecommunications services in Chicago. The Company's unique bundling bundling, courtship custom, thought to have originated in Holland and the British Isles. It was extended to America, particularly to New England, and most widely practiced in the years prior to the Revolution of 1776. strategy via its state-of-the-art fiber optic network delivers cable TV with 190 digital-quality channels; ultra ultra Member of the extreme right (ultraroyalist) wing of the royalist movement in the French Bourbon Restoration (1815–30). The ultras included large landowners, clericalists, and the former émigré nobility. high-speed Internet See broadband. access via cable modem cable modem Modem used to convert analog data signals to digital form and vise versa, for transmission or receipt over cable television lines, especially for connecting to the Internet. ; and reliable telephone service at attractive discounted rates - all on one bill. 21st Century Telecom's 15-year cable franchise encompasses Area One, which stretches along the Chicago lakefront from Evanston Evanston, residential city (1990 pop. 73,233), Cook co., NE Ill., on Lake Michigan; settled 1826, inc. 1892. A largely residential suburb north of Chicago, Evanston has businesses and manufactures goods such as books and published documents, paper, paint, chemicals, , Ill. to the Hyde Park Hyde Park, park, London, England Hyde Park, 615 acres (249 hectares) in Westminster borough, London, England. Once the manor of Hyde, a part of the old Westminster Abbey property, it became a deer park under Henry VIII. area. The Company also has franchise agreements with Skokie Skokie (skō`kē), village (1990 pop. 59,432), Cook co., NE Ill., an industrial suburb adjacent to Chicago; inc. 1888. Its varied products include communications, computer, and electrical equipment; rubber, iron, and steel products; and tools. and Northbrook Northbrook, village (1990 pop. 32,308), Cook co., NE Ill., a suburb of Chicago; settled 1836. It was incorporated as Shermerville in 1901 and was reincorporated as Northbrook in 1923. , Ill. 21st Century Telecom's Business Services Group, formed with the acquisition of EnterAct, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a privately held Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the company based in Chicago, offers a full complement of solutions, including dial-up access hot Dial-up access is a form of Internet access via telephone line. The client uses a modem connected to a computer and a telephone line to dial into an Internet service provider's (ISP) node to establish a modem-to-modem link, which is then routed to the Internet. , web hosting Making a Web site available on the Internet. Many ISPs host a few personal Web pages for an individual at no additional cost above the monthly service fee, but the address is subordinate to the ISP; for example, www.friendlyisp.com/pat_smith. , Internet consulting, co-location Placing equipment owned by a customer or competitor in an organization's own facility. Telephone companies often allow co-location in order to provide the best interconnection between devices. , and VPN (Virtual Private Network) A private network that is configured within a public network (a carrier's network or the Internet) in order to take advantage of the economies of scale and management facilities of large networks. and LAN/WAN LAN/WAN Local Area Network/Wide Area Network networking. Except for historical and factual information contained herein, all other information set forth in this news release represents forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including all statements about 21st Century Telecom's plans, beliefs, estimates, and expectations. These statements are based on current estimates and projections that involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Investors are encouraged to consider these risks and uncertainties, which are discussed in documents filed by 21st Century Telecom with the U.S. Securities and Exchange Commission. 21st Century Telecom undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. See four attachments for detailed financial data. 21st Century Telecom is a trademark and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. registered trademark. 21st Century Telecom Group, Inc., 350 N. Orleans Or·lé·ans A city of north-central France on the Loire River south-southwest of Paris. Founded by Celts and conquered by Julius Caesar in 52 b.c. , Suite 600, Chicago, Ill., 60654. Phone: 312-955-2100. Fax: 312-955-2111. http://www.21stCentury.com/.
ATTACHMENT ONE
21st CENTURY TELECOM GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
PRELIMINARY
ASSETS December 31, 1999 September 30, 1999
----------------- ------------------
Cash and cash equivalents $ 10,332,386 $ 25,094,932
Investments 17,655,227 48,941,472
Other current assets 21,295,139 17,591,275
Property plant and equipment, net 165,591,901 131,390,918
Restricted cash collateral reserve 4,089,496 4,021,496
Other assets 19,542,259 20,387,164
----------------- ------------------
Total assets $ 238,506,408 $ 247,427,257
================= ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 26,328,004 $ 21,173,828
Senior Discount Notes -
net of discount 250,537,733 243,202,406
Exchangeable Preferred Stock 61,666,268 59,297,753
Other noncurrent liabilities 4,472,842 4,242,411
Shareholders' equity (104,498,439) (80,489,141)
----------------- ------------------
Total liabilities and
shareholders' equity $ 238,506,408 $ 247,427,257
================= ==================
ASSETS December 31, 1998 September 30, 1998
----------------- ------------------
Cash and cash equivalents $ 72,901,622 $ 93,036,071
Investments 98,464,936 99,561,203
Other current assets 11,141,535 3,930,720
Property plant and equipment, net 58,308,719 46,879,517
Restricted cash collateral reserve 1,796,880 1,796,880
Other assets 11,730,281 12,032,914
----------------- ------------------
Total assets $ 254,343,973 $ 257,237,305
================= ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 13,180,224 $ 10,416,825
Senior Discount Notes -
net of discount 222,453,777 215,940,951
Exchangeable Preferred Stock 52,617,006 50,524,033
Other noncurrent liabilities - -
Shareholders' equity (33,907,034) (19,644,504)
----------------- ------------------
Total liabilities and
shareholders' equity $ 254,343,973 $ 257,237,305
================= ==================
ATTACHMENT TWO
21st CENTURY TELECOM GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Twelve Months For the Nine
Ended December 31, Months Ended
----------------------------- -----------------
1999 1998 December 31, 1998
------------- ------------ -----------------
(Unaudited)
Operating revenues $ 11,320,134 $ 946,834 $ 873,898
------------- ------------ -----------------
Operating expenses
Network operations $ 11,849,414 $ 3,248,787 $ 2,678,047
Sales and marketing 9,923,165 4,482,723 3,533,731
General and
administrative 20,959,037 15,843,669 12,812,019
------------- ------------ -----------------
Total operating
expenses $ 42,731,616 $ 23,575,179 $ 19,023,797
------------- ------------ -----------------
EBITDA $ (31,411,482) $ (22,628,345) $ (18,149,899)
Depreciation and
amortization 11,972,805 4,645,199 3,876,779
Interest (income)
expense, net 20,042,421 11,281,181 9,562,264
Other (income)
expense, net 53,241 3,059 -
Amortization of
issuance costs 1,591,667 1,416,588 1,199,770
------------- ------------ -----------------
Net loss $ (65,071,616) $ (39,974,372) $ (32,788,712)
Preferred stock
requirements 13,063,465 10,875,242 8,928,707
------------- ------------ -----------------
Net loss attributable
to common shares $ (78,135,081) $ (50,849,614) $ (41,717,419)
============= ============ =================
Weighted average common
shares outstanding 4,126,826.1 3,430,867.6 3,493,836.5
Basic and diluted
loss per share $ (18.93) $ (14.82) $ (11.94)
============= ============ =================
Note: The Company declared a 3 for 1 stock split effective
September 30, 1999.
Note: The Company rescinded the declared 3 for 1 stock split of
September 30, 1999.
Note: On December 12, the Company entered into a definitive merger
with RCN Corporation.
ATTACHMENT THREE
21st CENTURY TELECOM GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
PRELIMINARY
For the Three Months Ended
--------------------------------------
December 31, 1999 September 30, 1999
----------------- ------------------
Operating revenues $ 4,376,256 $ 3,150,238
Operating expenses
Network operations $ 4,120,562 $ 3,312,900
Sales and marketing 3,678,352 2,741,891
General and administrative 7,386,392 5,154,591
----------------- ------------------
Total operating expenses $ 15,185,306 $ 11,209,382
EBITDA $(10,809,050) $ (8,059,144)
Depreciation and amortization 4,585,760 3,147,628
Interest (income) expense, net 5,977,886 4,808,106
Other (income) expense, net - 53,242
Amortization of issuance costs 396,389 395,432
----------------- ------------------
Net loss $(21,769,085) $(16,463,552)
Preferred stock requirements 3,401,893 3,319,135
----------------- ------------------
Net loss attributable to
common shares $(25,170,978) $(19,782,687)
================= ==================
Weighted average common
shares outstanding 4,257,377.1 4,227,924.1
Basic and diluted loss per share $ (5.91) $ (4.68)
================= ==================
Capital spending -
full accrual basis $ 38,498,884 $ 30,277,735
For the Three Months Ended
--------------------------------------
June 30, 1999 March 31, 1999
----------------- ------------------
Operating revenues $ 2,668,239 $ 1,125,401
Operating expenses
Network operations $ 2,769,533 $ 1,646,419
Sales and marketing 2,309,668 1,193,254
General and administrative 4,750,534 3,667,519
----------------- ------------------
Total operating expenses $ 9,829,735 $ 6,507,192
EBITDA $ (7,161,496) $ (5,381,791)
Depreciation and amortization 2,539,650 1,699,765
Interest (income) expense, net 4,802,629 4,453,801
Other (income) expense, net - -
Amortization of issuance costs 394,479 405,368
----------------- ------------------
Net loss $(14,898,254) $(11,940,724)
Preferred stock requirements 3,213,137 3,129,300
----------------- ------------------
Net loss attributable to
common shares $(18,111,391) $(15,070,024)
================= ==================
Weighted average common
shares outstanding 4,219,671.2 3,784,703.8
Basic and diluted loss per share $ (4.29) $ (3.98)
================= ==================
Capital spending -
full accrual basis $ 33,778,998 $ 14,930,086
Note: Certain operating expenses in the quarter ending March, 1999
have been reclassified to conform to current period presentation.
Note: The Company declared a 3 for 1 stock split effective
September 30, 1999.
Note: The Company rescinded the declared 3 for 1 stock split of
September 30, 1999.
Note: On December 12, the Company entered into a definitive merger
with RCN Corporation.
ATTACHMENT FOUR
21st CENTURY TELECOM GROUP, INC.
Selected Statistical and Operational Data
PRELIMINARY
December 31, September 30, June 30,
1999 1999 1999
------------ ------------- ------------
Network Construction
--------------------
Gross PP&E (000's) $ 181,352 $ 142,853 $ 112,575
============ ============= ============
Plant Miles Constructed 267 177 117
Plant Miles Activated 238 127 104
Total Homes Passed 236,201 204,479 158,591
Total Marketable Homes 100,802 79,108 57,656
Total Buildings Committed 1,048 762 633
Bulk 129 106 92
ROE 919 656 541
Buildings Connected
to DRS Network 730 584 396
Bulk 114 95 74
ROE 616 489 322
Residential & Small Business
----------------------------
Active Customer Connections(a) 45,838 35,107 27,578
Connection Orders in Backlog 5,157 6,104 4,240
------------ ------------- ------------
Total Connections Sold 50,995 41,211 31,818
============ ============= ============
Business Service Group Connections(a)
-------------------------------------
Web/Colocated Hosting Clients 1,720 1,505 1,273
ISDN & Dedicated Access 1,479 1,178 914
------------ ------------- ------------
Total Business Service
Group Connections 3,199 2,683 2,187
------------ ------------- ------------
TOTAL ACTIVE CONNECTIONS 49,037 37,790 29,765
============ ============= ============
(Excludes Backlog)
Employees(b)
------------
Total Employees 588 490 373
Sales & Marketing Employees 104 106 69
March 31, December 31,
1999 1998
------------- ------------
Network Construction
--------------------
Gross PP&E (000's) $ 78,796 $ 63,123
============= ============
Plant Miles Constructed 94 82
Plant Miles Activated 88 56
Total Homes Passed 119,520 82,968
Total Marketable Homes 35,603 22,665
Total Buildings Committed 450 406
Bulk 69 65
ROE 381 341
Buildings Connected
to DRS Network 214 147
Bulk 56 40
ROE 158 107
Residential & Small Business
----------------------------
Active Customer Connections(a) 21,633 10,455
Connection Orders in Backlog 3,377 3,690
------------- ------------
Total Connections Sold 25,010 14,145
============= ============
Business Service Group Connections(a)
-------------------------------------
Web/Colocated Hosting Clients 1,017 -
ISDN & Dedicated Access 775 -
------------- ------------
Total Business Service
Group Connections 1,792 -
------------- ------------
TOTAL ACTIVE CONNECTIONS 23,425 10,455
============= ============
(Excludes Backlog)
Employees(b)
------------
Total Employees 291 195
Sales & Marketing Employees 56 36
(a) On February 26, 1999, the Company acquired EnterAct Corp., a
Chicago-based provider of Internet access and commercial data
services. EnterAct has become the Company's Business Services Group
and its subscribers are included in this summary as of the date of
acquisition. Estimated subscribers at acquisition include 7,570
dial-up internet (both residential and small business), 964 web
colocated hosting and 719 ISDN and dedicated access.
(b) Total employees at March 31, 1999 includes 64 from the
Business Services Group, 13 of which are Sales & Marketing.
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