Broadwing Corporation Reports Financial Results for the Second Quarter 2005.COLUMBIA Columbia, cities, United States Columbia (kəlŭm`bēə). 1 City (1990 pop. 75,883), Howard co., central Md., between Washington, D.C., and Baltimore. , Md. -- Broadwing Corporation Broadwing Corporation is a data, voice, and media solutions company based in Austin, Texas, USA. Enabled by its 20,000-mile All-Optical-Network and 20 nation-wide HDTV transmitting and delivering centers, Broadwing Communications provides communications solutions and (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BWNG) --Company Reports Consolidated Revenue of $222.2 Million --Data/Internet and Broadband Services See broadband and broadband service provider. Revenue Grows 5% Sequentially, 21% Year over Year --Company Posts Improvements in Consolidated Gross Profit and Gross Margin Broadwing Corporation (NASDAQ:BWNG), a leading provider of optical network communications services and solutions, today announced its second quarter 2005 financial and operational results. Total company revenue for the second quarter ended June June: see month. 30, 2005 was $222.2 million, an increase of $80.1 million or 56% from $142.1 million in the second quarter 2004. Revenue in the second quarter 2005 was generated almost entirely from sales of communications services, which contributed $221.2 million to total company revenue in the quarter, an increase of 56% from the second quarter 2004. The year-over-year increase in communications services revenue was primarily the result of revenue contributions from Focal Communications Corporation, acquired in September September: see month. 2004, and organic growth in legacy Broadwing Broadwing can mean:-
The consolidated net loss for the second quarter was $38.3 million, or a loss of $0.52 per share, as compared to a reported net loss of $38.1 million, or a loss of $0.78 per share for the second quarter 2004. Net loss year-over-year was impacted primarily by increased depreciation expense related to assets acquired in the Focal acquisition, offset by higher gross margin and lower interest expense. The Company reduced its consolidated net loss by 12% from the first quarter 2005 due in part to reduced interest expense in the quarter. "Our second quarter results again showed top and bottom line improvement," said Dr. David R. Huber Huber may refer to:
Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. by more than 200 basis points compared to the second quarter 2004. We are pleased with our financial performance, but believe the competitive environment will remain challenging for the remainder of 2005." Quarterly Results Communications services revenue of $221.2 million in the second quarter represented a 2% increase from the prior quarter. Revenue from sales of data/Internet and broadband services was $115.2 million, an increase of 5% from prior quarter and 21% from the second quarter 2004. Long-distance long-dis·tance adj. 1. Covering a long distance: a long-distance runner; operating under long-distance supervision. 2. and local voice services revenue was $106.0 million, a decrease of 1% sequentially and an increase of 130% from the second quarter 2004. "Our business recorded another quarter of revenue growth, with the core product lines of the legacy Broadwing Communications business -- data/Internet and broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). transport (private line) -- performing particularly well," said Lynn Anderson Lynn Anderson (b. Lynn Rene Anderson September 26, 1947) is an American country music singer. She was a consistent hit maker and one of country music's leading ladies throughout the 1970s. , Chief Financial Officer. "Revenue growth from voice services was impacted by continued pricing pressure in the retail market and lower wholesale voice traffic volumes toward the end of the quarter tied to long-distance rate increases we implemented to protect our margins." The year-over-year increase in voice revenue was due primarily to the inclusion of acquired Focal revenue, which mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. the impact of lower average rates per minute. Broadwing's equipment division reported approximately $993,000 of revenue for the quarter from sales of communications equipment and equipment services, compared with $1.3 million in the first quarter of 2005. In April 2005, the Company began exploring strategic alternatives for the equipment division's primary product line, the Optical Convergence Switch (OCS OCS - Object Compatibility Standard ), in order to more closely focus its resources on its core communications services business. During the second quarter, Broadwing committed to a plan to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: the OCS product line while honoring current commitments. Current OCS backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. totals $0.3 million, which will be delivered before OCS operations are discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: . The remaining equipment division operations, which serve a strategic role in the expansion and maintenance of the Broadwing network, will be incorporated into the communications services business. Therefore, beginning in the third quarter of 2005, Broadwing will have only one reportable segment. Financial Position Cash, cash equivalents and investments were $196.3 million at June 30, 2005, a $40.9 million decrease from the prior quarter. Cash used in the quarter included the first of three equal annual payments of $11.0 million to Ciena Corporation Ciena Corporation NASDAQ: CIEN develops and markets communications network platforms and software, and offers professional services. The Company's broadband access, data and optical networking platforms, software tools, and global network services support worldwide telecom in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the terms of the companies' litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement announced April 1, 2005. The settlement provides that Broadwing's payments totaling $33.0 million spread out over three years in equal installments, may be used as credits toward the purchase of Ciena equipment and services at market prices over the next three and one-half years. The Company has historically purchased equipment from Ciena to help maintain, build and enhance the Broadwing network. In the quarter, approximately $2.5 million of the $11.0 million payment to Ciena was used for equipment purchases and service agreements, with the balance remaining as credits for future expenditures to benefit the Broadwing network. Capital expenditures totaled $20.1 million in the quarter, inclusive of inclusive of prep. Taking into consideration or account; including. the $2.5 million of Ciena purchases. During the quarter, Broadwing also elected to pay in cash the $33.7 million of interest and principal due to holders of its Senior Convertible Notes on May 19, 2005. Additionally, on July July: see month. 18, 2005, Broadwing provided notice to the note holders that the Company was electing to pay in cash $33.4 million of interest and installment of principal due on the notes on August 19, 2005. The August payment will be reflected in third quarter 2005 financial statements. Recent Announcements and Quarter Highlights Broadwing's business activities during the quarter focused on increasing revenue opportunities via new product introductions and an expanded market footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. . The Company announced key business initiatives aimed at improving flexibility and choice for its communications services customers: --The commercial availability of its suite of Converged Services. Broadwing's Layer 2- and Layer 3-supported Converged Services are delivered over an MPLS-based core network that is access-agnostic to enable "plug and play" convenience for any type of customer application, IP or non-IP. Additionally, Broadwing and OnFiber Communications announced a joint initiative that pairs Broadwing's nationwide Converged Services offering with OnFiber's complementary, high capacity, Ethernet Ethernet Telecommunications networking protocol introduced by Xerox Corp. in 1979. It was developed as an inexpensive way of sending information quickly between office machines connected together in a single room or building, but it rapidly became a standard computer local access network footprint to deliver an end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. , site-to-site Ethernet Wide Area Network (WAN) solution to enterprise customers. --The general availability of its Voice over Internet Protocol See Internet and TCP/IP. (networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. (VoIP) Integrated Access Service, a nationwide, IP-based service that interfaces directly with a customer's existing PBX (Private Branch eXchange) An inhouse telephone switching system that interconnects telephone extensions to each other as well as to the outside telephone network (PSTN). . The solution makes it affordable for multi-location enterprises to extend voice networking, with features like extension dialing to their branch offices. --The Media Services Network has been expanded to 20 U.S. cities utilizing NetInsight's Nimbra platform. In addition, Broadwing teamed with Intelsat Intelsat: see Communications Satellite Corporation; communications satellite. (INTELSAT, Washington, DC, www.intelsat.com) A leading supplier of commercial satellite services, including HDTV, broadband and IPTV delivery. and HTN HTN Hypertension HTN High Blood Pressure HTN Hierarchical Task Network HTN Hughes Television Network HTN Hospitality Training Network (Sydney, Australia) HTN Histotechnology (program of study) Communications to deliver a new set of media services to broadcasters. HTN is leveraging this enhanced network offering to distribute Major League Baseball "MLB" and "Major Leagues" redirect here. For other uses, see MLB (disambiguation) and Major Leagues (disambiguation). Major League Baseball (MLB) is the highest level of play in North American professional baseball. from U.S. sports venues to broadcast studios throughout North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . Broadwing has been designated a "Premium Provider" by current customer Duke Realty realty n. a short form of "real estate." (See: real estate) REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. for its nationwide tenant program. As a Premium Provider, Broadwing may now market its services directly to Duke's business tenants. Broadwing also announced that Petry Media, a leading seller in the $8 billion spot television marketplace, has contracted for IP-based 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 managed firewall services to interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. all 22 of its locations. Webcast Information In conjunction with this announcement, Broadwing will host a conference call to review its second quarter 2005 results and other developments, today, July 29 at 10:30 AM ET. The live broadcast of the conference will be available via Broadwing's website, www.broadwing.com. An archived audio of the conference call will be available for future reference through the Broadwing website at www.broadwing.com. About Broadwing Corporation Broadwing Corporation, through its consolidated subsidiary Broadwing Communications, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , delivers innovative data, voice, and media solutions to enterprises, service providers, and government entities. Enabled by its one-of-a-kind, all-optical network A communications network that works completely in the optical domain. It uses optical switches connected by optical fibers. See optical switch and optical computer. and award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" products and services, Broadwing Communications provides communications solutions with unparalleled customer focus and speed. Broadwing Corporation, via its Corvis Equipment Corporation subsidiary, also provides government agencies and service providers with advanced, scalable optical networking Communications between computers, telephones and other electronic devices using light. An optical network is far more reliable and has far greater potential transmission capacity than networking in the electrical domain. See optical fiber. equipment designed to reduce the overall cost associated with building and operating optical networks. For more information, visit www.broadwing.com. Broadwing and its logo are trademarks 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. service marks of Broadwing Communications, LLC, and/or Broadwing Corporation. All trademarks and service marks not belonging to Broadwing are the property of their respective owners. Investor Note Regarding 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. Statements in this press release regarding Broadwing Corporation and/or Broadwing Communications, LLC (collectively "Broadwing"), that are not statements of historical fact may include forward-looking statements, and statements regarding Broadwing's beliefs, plans, expectations or intentions regarding the future are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. and Section 21E of the Securities Exchange Act of 1934, as amended. All such forward-looking statements are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Broadwing's actual results could differ materially from these statements.
BROADWING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Unaudited
Quarter Ended
-------------------
June 30, June 30,
2005 2004
--------- ---------
Revenue:
Communications services $221,231 $141,405
Communications equipment 993 725
--------- ---------
Total revenue 222,224 142,130
Operating expenses:
Cost of revenue:
Communications services 146,958 97,147
Communications equipment 377 242
--------- ---------
Total cost of revenue 147,335 97,389
Research and development 2,928 3,852
Selling, general and administrative 75,899 61,241
Depreciation 28,241 5,974
Amortization 1,404 1,040
Equity-based expense 974 2,667
Restructuring and other charges 1,027 194
--------- ---------
Total operating expenses 257,808 172,357
Operating loss (35,584) (30,227)
Interest expense, net of capitalized amounts (4,812) (10,670)
Other income and expense, net 2,048 2,818
--------- ---------
Net loss $(38,348) $(38,079)
========= =========
Net loss per share $(0.52) $(0.78)
========= =========
Weighted average shares outstanding 73,593 48,632
========= =========
BROADWING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Unaudited
Quarter Ended
-------------------
June 30, March 31,
2005 2005
--------- ---------
Revenue:
Communications services $221,231 $216,986
Communications equipment 993 1,269
--------- ---------
Total revenue 222,224 218,255
Operating expenses:
Cost of revenue:
Communications services 146,958 146,744
Communications equipment 377 879
--------- ---------
Total cost of revenue 147,335 147,623
Research and development 2,928 2,565
Selling, general and administrative 75,899 73,795
Litigation settlement -- 2,000
Depreciation 28,241 26,471
Amortization 1,404 1,418
Equity-based expense 974 950
Restructuring and other charges 1,027 (313)
--------- ---------
Total operating expenses 257,808 254,509
Operating loss (35,584) (36,254)
Interest expense, net of capitalized amounts (4,812) (9,163)
Other income and expense, net 2,048 1,952
--------- ---------
Net loss $(38,348) $(43,465)
========= =========
Net loss per share $(0.52) $(0.62)
========= =========
Weighted average shares outstanding 73,593 70,398
========= =========
BROADWING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30, 2005 December 31, 2004
(Unaudited)
------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $76,909 $124,540
Short-term investments 115,369 100,139
Trade accounts receivable, net 87,647 94,731
Inventories, net 83 1,270
Other current assets 25,053 22,757
------------- -----------------
Total current assets 305,061 343,437
Restricted cash, non-current 14,553 13,911
Long-term investments 4,048 49,676
Property and equipment, net 267,193 286,038
Intangible assets, net 27,629 30,152
Goodwill 47,041 48,696
Other non-current assets, net 17,360 9,080
------------- -----------------
Total assets $682,885 $780,990
============= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, net of discounts, and
capital lease obligations, current
portion $91,598 $117,324
Accounts payable 19,807 12,452
Accrued expenses and other
liabilities 91,256 95,028
Deferred revenue, current portion 11,363 11,752
Accrued restructuring and other
charges 5,614 8,620
------------- -----------------
Total current liabilities 219,638 245,176
Notes payable, net of discounts, and
capital lease obligations, net of
current portion 19,961 52,218
Deferred revenue, net of current
portion 14,284 13,608
Other long-term liabilities 15,515 14,949
------------- -----------------
Total liabilities 269,398 325,951
Stockholders' equity:
Common stock(a) 744 679
Additional paid-in capital 3,177,964 3,137,928
Treasury stock, 1,228,180 shares at
an average cost of $7.70 per share (9,512) (9,512)
Accumulated other comprehensive
income (loss):
Unrealized investment gains
(losses) (557) (717)
Accumulated deficit (2,755,152) (2,673,339)
------------- -----------------
Total stockholders' equity 413,487 455,039
------------- -----------------
Total liabilities and
stockholders' equity $682,885 $780,990
============= =================
(a) $0.01 per share par value; 1,900,000,000 authorized shares;
68,424,060 shares issued and 67,195,880 shares outstanding as of
12/31/04; 74,936,321 shares issued and 73,708,141 shares
outstanding as of 6/30/05.
OTHER FINANCIAL INFORMATION
(In thousands)
Three Months Ended
June 30, June 30,
2005 2004
------------ -----------
Capital expenditures $20,079 $31,484
Capital expenditures of $20,079 as of June 30, 2005 included $2.5
million in cash that was applied as credits toward purchases of Ciena
equipment in the second quarter.
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