DSL.net Reports Fourth-Quarter, Full-Year 2003 Results: 2003 Revenue Increases 57%; Gross Margin Increases 65% and Adjusted EBITDA Improves 10% from Full-Year 2002.Business Editors NEW HAVEN New Haven, city (1990 pop. 130,474), New Haven co., S Conn., a port of entry where the Quinnipiac and other small rivers enter Long Island Sound; inc. 1784. Firearms and ammunition, clocks and watches, tools, rubber and paper products, and textiles are among the many , Conn.--(BUSINESS WIRE)--March 11, 2004 4Q 2003 Revenue and Gross Margin Both Hit Record Levels 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 .net, Inc. (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 : DSLN), a leading nationwide provider of 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). communications services to businesses, today reported fourth quarter and full-year 2003 financial results. Revenue for the fourth quarter of 2003 was a record $18.2 million, representing a 62% increase from fourth quarter of 2002 revenue of $11.3 million. Revenue for the full-year 2003, was a record $71.3 million, a 57% increase over revenue of $45.5 million for the full-year 2002. The Company generated record gross margin, or revenue less network expenses, of $5.2 million for the fourth quarter of 2003, representing a 75% improvement over gross margin of $3.0 million for the fourth quarter of 2002. For the full-year 2003, the Company generated record gross margin of $19.9 million, a 65% improvement over gross margin of $12.1 million for 2002. Earnings before interest, taxes, depreciation, amortization, other income (expense) and non-cash stock compensation ("Adjusted 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 fourth quarter of 2003 was negative $3.4 million, a 3% improvement over negative $3.5 million for the fourth quarter of 2002. Adjusted EBITDA for the full-year 2003, was negative $12.8 million, a 10% improvement over negative $14.3 million Adjusted EBITDA for the full-year 2002. "DSL.net achieved several milestones during 2003," said David F. Struwas, chairman and chief executive officer of DSL.net. "We closed on two key acquisitions, secured $30 million in new financing and positioned DSL.net to become a leading player in the 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) space by adding local and long-distance long-dis·tance adj. 1. Covering a long distance: a long-distance runner; operating under long-distance supervision. 2. telephone services in select markets to our already proven data offerings." Net loss for the quarter ended Dec. 31, 2003, was $7.9 million, representing a 10% improvement over a net loss of $8.8 million for the fourth quarter of 2002. For the full-year 2003, net loss was $35.0 million, a 3% improvement over net loss of $36.1 million for the 2002 period. On a per share basis, the Company reported a net loss applicable to common stockholders of $0.10 per share for the fourth quarter of 2003, a 50% improvement compared to $0.20 per share for the fourth quarter of 2002. For the full-year 2003, net loss applicable to common stockholders was $0.64 per share, a 16% improvement compared to $0.77 per share for the comparable 2002 period. At Dec. 31, 2003, the Company had total assets of $59.1 million, including $13.8 million in cash. DSL.net will host a conference call to discuss results for the fourth quarter, as well as future plans and expectations, today at 11 a.m. Eastern Time. Interested parties may listen to the live audio Webcast of the call by visiting the investor relations Investor relations The process by which the corporation communicates with its investors. section of DSL.net's Web site, www.dsl.net. The call also may be accessed live via telephone by dialing 800-478-6251, confirmation code 407684. For those unable to access the live conference call, an audio replay will be available beginning at 2 p.m. Eastern time today and through the end of March by dialing 888-203-1112 and entering code 407684. Investors may also access the call replay by visiting the investor relations section of the Company's Web site. About DSL.net DSL.net, Inc. is a leading nationwide provider of broadband communications services to businesses. The Company combines its own facilities, nationwide network infrastructure and 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. ) capabilities to provide high-speed Internet See broadband. access, private network solutions and 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. directly to small- and medium-sized Me´di`um-sized` a. 1. Having a medium size; as, a medium-sized man s>. Adj. 1. medium-sized - intermediate in size medium-size, moderate-size, moderate-sized businesses or larger enterprises looking to connect multiple locations. DSL.net product offerings include T-1, DS-3 and business-class DSL services, virtual private networks (VPNs), frame relay A high-speed packet switching protocol used in wide area networks (WANs). Providing a granular service of up to DS3 speed (45 Mbps), it has become popular for LAN to LAN connections across remote distances, and services are offered by most major carriers. , 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. , DNS (Domain Name System) A system for converting host names and domain names into IP addresses on the Internet or on local networks that use the TCP/IP protocol. For example, when a Web site address is given to the DNS either by typing a URL in a browser or behind the management, enhanced e-mail, online data backup and recovery services, firewalls and nationwide 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. , as well as integrated voice and data offerings in select markets. For more information, visit www.dsl.net, e-mail info@dsl.net, or call 1-877-DSL-NET1 (1-877-375-6381). This press release contains 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. 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. These forward-looking statements are subject to a variety of risks and uncertainties, many of which are beyond DSL.net's control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things, (i) fluctuations in DSL.net's quarterly operating results, which could adversely affect the price of its common stock; (ii) DSL.net's unproven unproven Dubious, nonscientific, not proven, quack, questionable, unscientific adjective Relating to that which has not been validated by reproducible experiments or other scientific methods for determining effect or efficacy business model, which may not be successful; (iii) DSL.net's failure to generate sufficient revenue, contain certain discretionary spending, achieve certain other business plan objectives, or obtain additional debt or equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. could have a material adverse effect on DSL.net's results of operations or financial position, or cause it to restructure its operations to further reduce operating costs operating costs npl → gastos mpl operacionales ; (iv) risks associated with the possible removal of DSL.net's common stock from the Nasdaq SmallCap Market, which removal could adversely impact the pricing and trading of DSL.net's common stock; (v) regulatory, legislative and judicial developments, which could adversely affect the way DSL.net operates its business; (vi) risks associated with acquisitions, including difficulties in identifying and completing acquisitions, integrating acquired businesses or assets and realizing the revenue, earnings or synergies anticipated from any acquisitions; (vii) competition; (viii) the marketplace's receptiveness re·cep·tive adj. 1. Capable of or qualified for receiving. 2. Ready or willing to receive favorably: receptive to their proposals. 3. to DSL.net's offering of integrated voice and data services; and (ix) DSL.net's dependence on third-party providers to supply it with local DSL and T-1 facilities in areas where it has not deployed its own equipment. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . DSL.net undertakes no obligation, and disclaims any obligation, to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or or otherwise. For additional information regarding these and other risks faced by DSL.net, see the disclosure contained under "Risk Factors'' in DSL.net's Annual Report 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. for the year ended December December: see month. 31, 2002, which has been filed with the Securities and Exchange Commission. DSL.net is a trademark of DSL.net, Inc.
DSL.net, Inc.
Statements of Operations
(dollars in thousands, except per share data)
(unaudited)
-------------
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2003 2002 2003
Revenue $11,291 $18,244 $45,530 $71,333
---------- -------- -------- --------
Operating expenses:
Network (excluding $8, $0,
$30 and $10 of stock
compensation, respectively) 8,313 13,039 33,470 51,452
Operations (excluding $11,
$0, $52 and $11 of stock
compensation, respectively) 1,878 2,938 7,949 11,873
General and administrative
(excluding $57, $0, $283 and
$69 of stock compensation,
respectively) 2,322 3,310 11,403 12,200
Sales and marketing
(excluding $215, $0, $863
and $348 of stock
compensation, respectively) 2,325 2,403 6,969 8,642
Stock compensation 291 - 1,228 438
Depreciation and
amortization 4,806 3,706 20,332 16,359
---------- -------- -------- --------
Total operating
expenses 19,935 25,396 81,351 100,964
---------- -------- -------- --------
Operating loss (8,644) (7,152) (35,821) (29,631)
Interest (expense)
income, net (152) (797) (458) (2,936)
Other income (expense), net 9 6 185 (2,430)
---------- -------- -------- --------
Net loss $(8,787) $(7,943) $(36,094) $(34,997)
========== ========= ========= =========
Net loss applicable to
common stockholders:
Net loss $(8,787) $(7,943) $(36,094) $(34,997)
Dividends on preferred
stock (1,050) (553) (3,573) (3,698)
Accretion of preferred stock,
net of issuance costs (3,011) (1,033) (10,078) (8,833)
---------- -------- --------- --------
Loss applicable to
common stockholders $(12,848) $(9,529) $(49,745) $(47,528)
========== ========= ========= =========
Net loss per common
share - basic and diluted $(0.20) $(0.10) $(0.77) $(0.64)
========== ========= ========= =========
Shares used in computing
net loss per share 64,929,899 96,080,175 64,857,869 74,125,513
========== ========== ========== ===========
Other data:
Reconciliation of net loss
to adjusted EBITDA & free
cash flow:
Net loss $(8,787) $(7,943) $(36,094) $(34,997)
Add back:
Interest and other
expense, net 143 791 273 5,366
Depreciation and
amortization 4,806 3,706 20,332 16,359
Stock compensation 291 - 1,228 438
--------- ------- ------- --------
Adjusted EBITDA (3,547) (3,446) (14,261) (12,834)
Less capital
expenditures (319) (564) (1,647) (2,405)
---------- --------- --------- --------
Free cash flow $(3,866) $(4,010) $(15,908) $(15,239)
========== ========= ========= =========
DSL.net, Inc.
Condensed Balance Sheets
(dollars in thousands)
December 31, December 31,
2002 2003
---------------- -------------
Cash and cash equivalents $11,319 $13,784
Accounts receivable, net of allowances 4,358 8,054
Other current assets 2,048 2,205
--------- ---------
Total current assets 17,725 24,043
Net property and equipment 23,066 24,357
Other assets 12,705 10,661
--------- ---------
Total assets 53,496 59,061
========= =========
Current liabilities 16,734 18,318
Long-term obligations - less current portion 1,889 5,424
Mandatorily redeemable convertible
preferred stock 14,122 16,553
Stockholders' equity 20,751 18,766
--------- ---------
Total liabilities, preferred stock and
stockholders equity $53,496 $59,061
========= =========
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