Covad Communications Announces Record Second Quarter Results; Subscriber Lines Increase By 48% to 138,000.Business Editors/High-Tech Writers SANTA CLARA Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. , Calif.--(BUSINESS WIRE)--July 26, 2000 Today Covad Communications Group, Inc. (Nasdaq:COVD COVD College of Optometrists in Vision Development COVD Covad Communications Group (stock symbol) ) announced financial results for the second quarter ended June 30, 2000. Revenues for the quarter ended June 30, 2000, were $58.2 million, representing a 39% increase over the revenues of $41.8 million for the quarter ended March 31, 2000. The net loss for the second quarter of 2000 increased to $131.5 million, from a loss of $107.2 million in the first quarter of 2000. 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 for the second quarter was negative $87.9 million versus negative $75.0 million for the quarter ended March 31, 2000. "The combination of the most robust and efficient network, that has an unrivaled footprint, along with an expanding set of value-added services, positions us well for the road ahead," said Robert Knowling, chairman, 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. of Covad. "Our customers can purchase full network service capabilities from us, with our unmatched suite of services that include, broadband high-speed access, various IP services, a national backbone and a turn-key back office, all from the largest national broadband service provider An ISP, telephone company, cable company or other carrier that offers high-speed communications to homes and businesses, typically for Internet access. Cable modems, DSL and T1 lines are the common technologies. See broadband, cable modem, DSL and T1. utilizing DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary technology." During the second quarter, subscriber lines increased 48% to 138,000 lines, from 93,000 lines at March 31, 2000. Homes and businesses passed increased to 42 million from 35 million at March 31, 2000, giving Covad one of the largest national broadband access See broadband and wireless broadband. networks in the US. Service ready central offices increased during the second quarter to over 1,700 from 1,350 at March 31, 2000.
Highlights during the quarter included:
- Entering into a relationship with Blockbuster and Enron to
launch "Entertainment On-Demand" service
- Deploying automated loop ordering process with GTE, US West,
Ameritech and Southwestern Bell
- Acquiring Bluestar Communications in the southeast US to
accelerate network deployment and add direct sales channel
capabilities to small businesses in Tier 2 and Tier 3 cities
- Completing line sharing agreements with all the major local
exchange carriers
- Demonstrating the Covad Broadband Platform featuring streaming
media "From the Edge", including Demonstrating a live band
auditioning to music studio executives over the Covad
Broadband Platform in New York City
- Winning a $27.2 million arbitration award against Pacific Bell
- Signing an internet access contract with Avon
- Demonstrating Voice over DSL with ICG and Jetstream at
DSLcon'00
About Covad Covad is the leading national broadband services provider of high-speed Internet See broadband. and network access utilizing Digital Subscriber Line See DSL. (communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and (DSL) technology. It offers DSL, IP and dial-up services An information service on demand. The term was popular when analog modems were the only way to connect to a remote system. See dial-up. through Internet Service Providers Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. , telecommunications carriers, enterprises, affinity groups, PC OEMs and ASPs to small and medium-sized businesses and home users. Covad services are currently available across 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. in 92 of the top Metropolitan Statistical Areas (MSAs). By the end of 2000, Covad services are expected to be available in 165 MSAs (which includes MSAs that will be added as a result of the acquisition of BlueStar Communications). At that time Covad's network is targeted to reach more than 45 percent of all US homes and 50 percent of all US businesses. Corporate headquarters is located at 4250 Burton Drive, Santa Clara, CA 95050. Telephone: 1-888-GO-COVAD. Web Site: www.covad.com. 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. Statement under 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: The statements contained in this release which are not historical facts may be deemed to contain forward-looking statements, including but not limited to statements regarding the intention to deploy our network in new and existing MSAs, the timing and breadth of coverage in each MSA (Metropolitan Service Area) An urban area with at least 50,000 people plus surrounding counties. There are 306 MSAs and 428 RSAs (rural service areas) in the U.S. MSAs and RSAs are used to allocate cellular licenses. , our ability to deliver audio, video and other high-bandwidth applications and our ability to build a network that can bypass Internet congestion The condition of a network when there is not enough bandwidth to support the current traffic load. congestion - When the offered load of a data communication path exceeds the capacity. . Actual results may differ materially from those anticipated in any forward-looking statements as a result of certain risks and uncertainties, including, without limitation, the company's dependence on incumbent local exchange carriers ILEC, short for incumbent local exchange carrier, is a local telephone company in the United States that was in existence at the time of the break up of AT&T into the Regional Bell Operating Companies (RBOCs) also known as the "Baby Bells". for collocation, unbundled network elements Unbundled Network Elements (UNE) are a requirement mandated by the United States Telecommunications Act of 1996. They are the parts of the telecommunications network that the incumbent local exchange carriers (ILECs) are required to offer on an unbundled basis. , transport and other facilities, development of necessary technologies and operations, ability to manage growth of our operations, and the need to raise additional capital. For other risks and uncertainties applicable to our business refer to the Company's Securities and Exchange Commission filings.
COVAD COMMUNICATIONS GROUP, INC.
Financial Highlights
(Dollars in thousands, except share and per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
----------------------------------------------
Revenues $ 58,160 $ 10,833 $ 99,967 $ 16,429
Operating Expenses:
Network and
products costs 43,614 10,565 74,963 15,525
S,G & A expenses 102,462 24,976 187,907 43,089
Depreciation and
amortization 44,388 8,671 65,170 13,318
Amortization of
deferred compensation 725 1,234 1,911 2,887
----------- ---------- ----------- -----------
Total operating
expenses 191,189 45,446 329,951 74,819
----------- ---------- ----------- -----------
Income (loss) from
operations (133,029) (34,613) (229,984) (58,390)
Other income 13,788 - 14,787 -
Write-off of in-process
technology acquired - - (3,726) -
Net interest income
(expense) (12,237) (7,239) (19,780) (12,366)
Net income (loss) $ (131,478)$ (41,852)$ (238,703)$ (70,756)
=========== ========== =========== ===========
Basic and diluted
net income (loss)
per common share $ (0.86)$ (0.61)$ (1.59)$ (1.18)
Weighted average shares
used in computing net
loss per share 153,403,027 68,157,273 150,060,418 60,930,856
Other Data:
EBITDA (1) $ (87,916)$ (24,708)$ (162,903)$ (42,185)
As of As of
June 30, December 31,
2000 1999
------------------------------
Selected Balance Sheet Data:
Cash, cash equivalents
and short-term investments $ 763,154 $ 767,357
Net property and equipment 466,137 237,542
Total assets 1,783,880 1,147,606
Current liabilities and other
long-term liabilities 177,716 82,534
Long-term obligations 811,845 374,781
Total stockholder's equity 794,319 690,291
(1) EBITDA consists of income (losses) excluding interest,
taxes, depreciation, amortization, non-cash stock-based compensation
and other non-operating income or expenses.
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