Carrier1 Reports 2nd Quarter Results And Retirement Of CEO; Chairman Victor Pelson Says Search for New CEO Nearly Complete.Business Editors ZURICH, Switzerland--(BUSINESS WIRE)--Aug. 14, 2001 2nd Quarter Highlights: -- 88% revenue growth over prior year to $108 million -- Streamlining voice business by reducing exposure to non-core customer and product groups -- AOL extended UK VISP contract to 2004 and placed additional orders for capacity All financial numbers are in US dollars Carrier1 (Neuer Market: CJN CJN Canadian Jewish News ; 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 : CONE) today announced its financial results for the second quarter ended June 30, 2001. The Company also announced the retirement of its President and Chief Executive Officer, Stig Johansson. A search for a new 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. is nearing completion, and the Company expects to announce the new CEO within 30 days. Victor Pelson, who became non-executive Chairman of Carrier1 in mid-May of this year, said that in the interim, executive duties would be assumed by senior officers of the Company, who will report to him. Mr. Pelson is a former senior AT&T executive. When he left AT&T in 1996 at the time of the Lucent Technologies and NCR (NCR Corporation, Dayton, OH, www.ncr.com) A technology company specializing in financial terminal transactions, retail systems and data warehousing. Until the late 1990s, NCR was heavily invested in the hardware side of the industry, known worldwide as a major manufacturer of computers spin-offs, he was a member of the AT&T Board of Directors and the executive responsible for AT&T's operations in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and around the world. Commenting on Mr. Johansson's retirement, Pelson said, "Stig was instrumental in the rapid development of Carrier1 to become a leading European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. provider of high-quality, 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. communications services. The Board appreciates his service in these early days of the Company's growth and we wish him the best in the future." Carrier1 reported second quarter revenues of $108.0 million, an 88% increase over the second quarter of 2000 and a 21% sequential increase from the first quarter of this year. 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 (earnings before interest, taxes, depreciation, amortization, foreign currency exchange gains or losses, other income or expense and extraordinary items), was a loss of $13.1 million for the quarter, excluding bad debt expenses of $16.8 million, for a total EBITDA loss of $29.9 million. As of June 30, 2001, unrestricted and restricted cash, cash equivalents and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has totalled $161.5 million. The Company also expects to receive net value-added tax value-added tax (VAT), levy imposed on business at all levels of the manufacture and production of a good or service and based on the increase in price, or value, provided by each level. (VAT VAT See: Value-added tax VAT See value-added tax (VAT). ) refunds of approximately $40 million from various governmental institutions before year-end. Capital expenditures in the second quarter were $43.8 million, compared to $109.2 million in the first quarter of 2001. "Clearly, Carrier1 is not immune to the difficult economic conditions affecting the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry and many of our customers. However, we were encouraged by the 88% revenue growth over the prior year's second quarter, including a more than three-fold increase in data revenue," said Alex Schmid, Chief Financial Officer. "We were also pleased that AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. extended its UK VISP VISP Virtual Internet Service Provider VISP Vitamin Intervention for Stroke Prevention Trial VISP Video Imagery Standards Profile VISP Visual Information Systems Program contract to 2004 and placed additional orders for capacity with the Company, which we believe underscores the strength of our services and capabilities." "One of the key drivers for our business going forward is to continue our thorough analysis of what products and customer groups can deliver improved performance to Carrier1. This requires tough actions such as ceasing commercial relationships with certain customer groups to address possible credit risk or scalability issues, particularly in the voice area," said Schmid. "In addition to the actions we are taking in our voice business, we are also reducing capital expenditure levels and SG&A costs, while continuing to execute critical strategic initiatives to position the Company for long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth, including the completion of several key metropolitan last mile networks." First Half and Second Quarter Financial Results Revenue Total revenue for the second quarter of 2001 amounted to $108.0 million, a 21% increase compared with the $89.6 million reported in the first quarter of 2001, and an 88% increase over the $57.5 million reported in the second quarter of 2000. For the first six months of 2001, Carrier1's revenue totaled $197.6 million, an 82% increase from total revenue of $108.8 million reported in the same period of last year. The sequential and year-over-year revenue improvements were driven by increased demand for our data and voice services and an expanded network 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. across Europe. Data revenue for the second quarter of 2001 reached $39.0 million, or 36% of total revenue, a 26% increase compared with the $31.0 million reported in the first quarter of 2001. This included $10.4 million of one-time data revenue during the second quarter. Data revenue increased more than three-fold year-over-year, from $9.6 million in the second quarter of 2000. For the first six months of 2001, data revenue amounted to $70.0 million, compared to $13.2 million in the same period last year, a more than four-fold improvement. The increase in data revenue is mainly due to increased demand for Carrier1's 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 services, including IP transit and Virtual ISP An ISP that uses the facilities and services (servers, switches, backbone, etc.) of a large ISP, but retains its own branding for marketing and billing purposes. Virtual ISPs are often formed to target a specific group, whether by location, profession, language or other subject of common (VISP) services. AOL has used Carrier1's VISP services in the UK and in Germany since the last quarter of 2000. AOL recently extended its sizeable UK VISP contract until 2004 and placed additional capacity orders with the Company. The Company is planning to launch its IP 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. (Internet Virtual Private Network) service during the third quarter of 2001. Voice revenue accounted for $69.0 million, or 64% of total revenue. This represents an 18% growth over the $58.6 million reported in the first quarter of 2001, and a 44% increase over the $47.9 million reported in the second quarter of 2000. For the first six months of 2001, voice revenue was $127.6 million, a 33% growth compared to voice revenue of $95.6 million in the first half of 2000. Gross margin For the quarter ended June 30, 2001, gross margin (revenue minus cost of services) was ($0.8) million compared to $4.9 million in the first quarter of 2001 and ($0.9) million reported in the second quarter of 2000. For the first six months of 2001, gross margin was $4.1 million, compared to ($4.2) million in the same period of 2000. Commenting on the gross margin for the second quarter, Schmid said: "The voice market suffered from extreme instability during the second quarter. Unusually high traffic due to the reduced number of carriers and volatility among suppliers we use to terminate traffic significantly increased our termination costs and negatively impacted our gross margin. We expect, as we optimise optimise - To perform optimisation. our supplier base and the overall market stabilizes, that gross margins should return to historical levels. We are quite pleased with the gross margin returns on our recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. data business and we hope to continue to improve those margins as our managed modem business achieves some maturity and further data products are rolled out on top of our infrastructure platform." Selling, general and administrative expenses (SG&A), before bad debt expense of $16.8 million, were $12.3 million or 11% of revenue in the second quarter of 2001. This compares with $12.3 million or 14% of revenue, before bad debt expense of $7.0 million, in the first quarter of 2001 and $8.3 million or 14% of revenue, before bad debt expense of $0.9 million, in the second quarter of 2000. For the first six months of 2001, SG&A before bad debt of $23.8 million was $24.6 million or 12% of revenue, compared to $15.6 million before bad debt of $1.2 million, or 14% of revenue for the same period last year. EBITDA In the second quarter of 2001, EBITDA loss, excluding bad debt expense of $16.8 million, was $13.1 million or (12%) of revenue. This compares to a loss of $7.4 million, excluding bad debt of $7.0 million, or (8)% of revenue in the first quarter of 2001 and to a loss of $9.2 million or (16)% of revenue, excluding bad debt expense of $0.9 million, in the second quarter of 2000. In the first half of 2001, the EBITDA loss, excluding bad debt expenses of $23.8 million, was $20.5 million. This compares to an EBITDA loss of $19.8 million, before bad debt expense of $1.2 million, for the same period last year. Bad debt expenses for the second quarter, specifically relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the voice business, were higher than previously anticipated due to the increased number of bankruptcies in the industry and Carrier1's further efforts to trim its customer base. During the quarter, the Company also reduced the number of voice customers connected to its pan-European network to reduce potential credit risks. Earnings Net loss was $59.4 million in the second quarter of 2001 which included $13.3 million of net interest expense and currency exchange loss. This compares to a net loss of $45.2 million in the first quarter of 2001, of which $17.3 million was net interest expense and currency exchange loss. Net loss totalled $12.8 million in the second quarter of 2000, which included net other income of $4.6 million. For the first six months of 2001, net loss was $104.6 million, compared with $60.8 million for the first six months of 2000. Capital expenditures and cash position Capital expenditures for the quarter amounted to $43.8 million compared to $109.2 million in the first quarter of 2001 and $44.4 million in the second quarter of 2000. For the first half of 2001, capital expenditures amounted to $153.0 million. The majority of these capital expenditures were associated with finalizing Carrier1's long-haul networks as well as taking certain metropolitan networks into operation. As of June 30, 2001, total restricted and unrestricted cash and marketable securities amounted to $161.5 million. In addition, the Company expects to receive value-added tax (VAT) refunds of approximately $40 million from various governmental institutions before year-end. Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. was $230.2 million as of June 30, 2001. Carrier1 expects to reduce its cash burn rate in the second half of 2001 and beyond, through EBITDA and working capital improvements as well as reduced capital expenditures. Due to low visibility caused by current market conditions, as well as the new CEO's anticipated strategic review of the Company's finances and operations, Carrier1 expects to provide revised financial guidance later this year. Infrastructure and Network Development Carrier1 is complementing its 14,000 route km of long-haul network, connecting more than 35 cities, with dense metropolitan networks in some of Europe's most important business centers, supporting the delivery of advanced services that meet customer needs. By the end of 2001, Carrier1 expects to have network infrastructure available in Amsterdam, Frankfurt, Geneva Geneva, canton and city, Switzerland Geneva (jənē`və), Fr. Genève, canton (1990 pop. 373,019), 109 sq mi (282 sq km), SW Switzerland, surrounding the southwest tip of the Lake of Geneva. , Hanover, Milan, and Paris. While substantial elements of the metro rings in Berlin, Dusseldorf, Hamburg Hamburg, city, Germany Hamburg (häm`b  rkh), officially Freie und Hansestadt Hamburg (Free and Hanseatic City of Hamburg), city (1994 pop. ,
London, Munich, Rotterdam and The Hague have been built, Carrier1 is
slowing down the finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. of these networks in line with the overall
slowdown For articles with similar titles, see Slow Down (disambiguation).A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in the capital expenditure plans of other major operators and also to take advantage of asset swaps Asset Swap Similar in structure to a plain vanilla swap, the key difference is the underlying of the swap contract. Rather than regular fixed and floating loan interest rates being swapped, fixed and floating investments are being exchanged. and purchasing opportunities to further reduce the cost of constructing these networks. Furthermore, Carrier1 will slow down the finalization of its Southern Ring (sections of the long distance network connecting Frankfurt, Geneva, Milan, Paris and Zurich) due to market conditions and the availability of capacity from other operators at favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. conditions. CONFERENCE CALL A conference call with support of slides will follow this press release on August 14, 2001 at 3:00 pm Central Europe Central Europe is the region lying between the variously and vaguely defined areas of Eastern and Western Europe. In addition, Northern, Southern and Southeastern Europe may variously delimit or overlap into Central Europe. time (9:00 am US Eastern Time) and will be simultaneously webcast on www.carrier1.com. This webcast will be made available for 90 days on Carrier1's website.
Figures prepared Three Months Three Months Six Months Six Months
in accordance Ended Ended Ended Ended
with U.S. GAAP June 30 June 30 June 30 June 30
($ 000, except 2001 2000 2001 2000
per share data)
Revenue 108,033 57,531 197,610 108,798
Operating Expenses:
Cost of services 108,850 58,467 193,541 113,003
Selling, general
and administrative
Expenses (1) 29,080 9,165 48,404 16,803
Depreciation and
amortization 16,166 7,228 29,624 13,379
Total operating
expenses 154,096 74,860 271,569 143,185
Loss from Operations (46,063) (17,329) (73,959) (34,387)
Other Income (Expense):
Interest expense (7,987) (5,712) (16,075) (15,836)
Interest income 2,889 6,406 6,732 9,090
Other income
(expense) (7) (3) (4) (6)
Currency exchange
loss, net (8,186) 3,862 (21,292) (15,825)
Total other income
(expense) (13,291) 4,553 (30,639) (22,577)
Loss before Income
Tax Benefit (59,354) (12,776) (104,598) (56,964)
and Extraordinary
item
Extraordinary item 0 0 0 (3,789)
Income tax benefit 0 0 0 0
Net Loss (59,354) (12,776) (104,598) (60,753)
Earnings (Loss) per Share
Loss from operations
in $ (1.07) (0.42) (1.73) (0.88)
Net loss in $ (1.38) (0.31) (2.44) (1.56)
Weighted average
shares 42,865,000 41,663,000 42,858,000 39,047,000
Other Financial Data
EBITDA (2) (29,897) (10,101) (44,335) (21,008)
June 30 Dec. 31
2001 2000
Selected Balance Sheet Data
Unrestricted cash 48,245 162,162
Restricted cash 13,370 24,429
Marketable securities 84,955 198,186
Restricted investments 14,885 29,951
Working capital 170,619 392,610
Property and equipment, net 480,265 423,194
Investments 35,063 31,008
Total Assets 907,610 1,054,261
Long-term deferred revenue 92,796 103,496
Long-term debt 230,214 238,641
Equity 382,271 525,104
1 - Includes bad debt expenses of $16,768 and $910 for the three months ended June 30, 2001 and 2000, respectively, and $23,771 and $1,181 for the six months ended June 30, 2001 and 2000, respectively. 2 - EBITDA is not a U.S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measure. EBITDA is defined as earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
About Carrier1 Carrier1 International S.A. is one of Europe's top providers of end-to-end Internet, 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). , voice, data-centre and dialup access communications
Access Communications Co-operative Ltd. to large users of telecommunications services In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. with a network that spans 14,000 contracted route kilometers in 13 countries, and links more than 35 European cities. Carrier1 provides its clients with carrier-grade transport and network solutions as well as end-user-ready, value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. that customers then brand and market to their respective users. References to our web site are not intended to create an active link. Forward Looking Statement: The information contained in this press release contains "forward-looking" statements within the meaning of the U.S. federal securities laws. These statements can be identified by the use of forward-looking terminology such as "believes", "expects", "plans", "estimates", "may", "will", "should" or "anticipates" or the negative thereof or other variations 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 or comparable terminology, or by discussions of strategy that involve risks, uncertainties and assumptions. These statements include those regarding (i) the search for a new CEO; (ii) the expected VAT refunds including the amounts and the timing of the refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies ; (iii) the continued revenue growth including data services revenue; (iv) the performance of services under and the revenue stream from the Company's UK VISP contract with AOL and the additional orders for capacity; (v) the Company's action plan in respect of its voice business including the analysis and implementation, (vi) the planned reduction in capital expenditures and SG&A costs and the implementation of certain initiatives, including the completion of certain metro networks Metro Networks is a broadcasting outsourcing company based in Houston, Texas. It is a subsidiary of Westwood One, which is managed by CBS Radio. The company operates a number of local and regional news and traffic facilities that provide regular reports to affiliates, together with , and the intended impact thereof on the Company's long term growth; (vii) the continued increase in demand for our data and voice services; (viii) the timing and implementation of the launch of the Company's IP VPN service; (ix) our expectation as to future gross margins and the underlying reasons for this; (x) the reduction of the Company's cash burn rate in the second half of 2001 and the reasons underlying such reduction; (xi) the timing, cost, and implementation of the Company's infrastructure and network deployment, including in respect of its metropolitan networks, (xii) the Company's plans to reduce the cost of such deployment by swapping or purchasing and slowing down the implementation of certain networks. These statements are based on the current expectations of the management of Carrier1 and performance is subject to risks, uncertainties and other factors that could cause actual results to differ materially from these statements. Such risks include but are not limited to, the deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of the market economy, including in Europe and the technology and telecommunications segments, the deterioration of the financial strength of our customer base, adverse regulatory, technological, judicial or competitive developments; decline in Carrier'1 services or products; inability to timely develop and introduce new technologies, products and services; pressure on pricing resulting from competition; unforeseen construction delays and failure to receive on a timely basis necessary permits or other governmental approvals, failure to obtain any necessary financing if management's business plan assumptions are not met, performance failure by third parties with whom Carrier1 has contracted including for the supply or maintenance of infrastructure components and by joint venture partners; the risk of termination of certain joint ventures through which Carrier1 operates; the amount of indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. incurred by Carrier1 and its obligations thereunder. For a more detailed discussion of these risks, uncertainties and other factors affecting the Company, please refer to the Company's prospectus and periodic reports filed with the U.S. Securities and Exchange Commission on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , 10-Q and 8-K, including its 10-K for the year ended 31 December 2000 and its 10-Qs for the quarter ended 31 March 2001 and 30 June 2001. Corresponding filings are available |
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