Covad Provides Additional Information To NASDAQ; Covad Provides Information On MDF, Credits, Restructuring Charges, SAB 101.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)--Feb. 20, 2001 Covad Communications (Nasdaq:COVD COVD College of Optometrists in Vision Development COVD Covad Communications Group (stock symbol) ), the leading national broadband services provider 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 (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 ) technology, today announced it has provided the following additional information to NASDAQ officials. Covad has begun a review of the internal procedures and controls it uses to implement its service contracts and bill its customers. To ensure that the company is correctly recognizing revenue, Covad is reviewing its Internet Service Provider 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. (ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. ) contracts, billings, marketing development funds and credits for current and prior periods. Additionally, the company continues to identify restructuring and asset impairment charges associated with its previously announced cost cutting measures. Finally, the company is preparing its 2000 financial statements in accordance with SAB-101, the previously announced accounting rule that all industry companies are required to adopt. These efforts are expected to take at least several weeks to complete and, until they are complete, the company cannot provide any guidance on the expected impact to its financial statements. The company provided the following information to NASDAQ today: -- Credits recorded against revenue from customers in year 2000 are currently estimated to be $15 million. The company is reviewing the quarter to quarter timing of these credits and the magnitude and timing of any additional credits yet to be recorded. -- Marketing development funds provided to customers to help their marketing efforts and recorded as expenses in 2000 are currently estimated to be $38 million. The company is reviewing the magnitude and quarter to quarter timing and classification of these payments as expenses or revenue offsets and any additional commitments made but yet to be recorded. -- Restructuring charges and tangible asset impairment charges for 2000 and 2001 relating to the company's previously announced cost cutting measures are still being determined, but are currently estimated to be in the range of $50-$100 million. The company is still determining the timing and magnitude of these restructuring charges and asset impairments. -- The impact of the application of SAB-101 on the company's results in 2000 will be to reduce calendar year 2000 revenue by approximately $52 million and increase EBIDTA losses by approximately $17 million, but further analysis is required to confirm these estimates. The company's review of its customer contracts, billings and credits could also affect these estimates. -- Covad has recorded goodwill and other intangible assets of approximately $120 million associated with the purchase of BlueStar Communications. The company is currently evaluating whether any portion of goodwill or intangible assets are impaired. The magnitude of any write down has not yet been determined. The company emphasizes that these are the areas under review and the amounts are not necessarily indicative of the impact to the company's financial statements. About Covad Communications Covad is the leading 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. of high-speed Internet See broadband. and network access utilizing Digital Subscriber Line (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, 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 109 of the top metropolitan statistical areas (MSAs). Covad's network currently covers more than 40 million homes and business and reaches approximately 40 to 45 percent of all US homes and businesses. Corporate headquarters is located at 4250 Burton Drive, Santa Clara, CA 95054. 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 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. Reform Act of 1995 The statements contained in this press release that are not historical facts are "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 statements concerning expected accounting treatment of the items discussed above. Actual events or results may differ materially as a result of numerous factors, including the company's ability to estimate size of and the effect of the accounting issues discussed above, the results of the company's review of its internal procedures and controls, the company's ability to successfully market its services to current and new customers, the consolidation of sales to a fewer number of wholesale customers, the company's ability to generate customer demand, to achieve acceptable pricing, to respond to increasing competition, to manage growth, to receive timely payment from our Internet service providers and other customers, to access regions and negotiate suitable interconnection agreements, all in a timely manner, at reasonable costs and on satisfactory terms and conditions, as well as regulatory, legislative, and judicial developments. All forward-looking statements are expressly qualified in their entirety by the "Risk Factors" and other cautionary statements included in the company's SEC filings. |
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