DSL.net Reports Third Quarter 2004 Results: Adjusted EBITDA Improves 56% and Free Cash Flow Improves 62% from Year Earlier.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. -- -- Company Achieves Record Levels of 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 and Free Cash-Flow -- 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. (AMEX AMEX See: American Stock Exchange : BIZ), 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 third quarter 2004 financial results. Revenue for the third quarter of 2004 was $16.8 million, as compared to revenue of $18.2 million for the third quarter of 2003. Revenue for the nine months ended Sept. 30, 2004, was $52.3 million, as compared to revenue of $53.1 million for the comparable period in 2003. The Company generated gross margin, or revenue less network expense, of $5.4 million for the third quarter of 2004, a 5% improvement over gross margin of $5.2 million for the third quarter of 2003. For the nine months ended Sept. 30, 2004, the Company generated record gross margin of $16.8 million, a 14% improvement over gross margin of $14.7 million for the first nine months of 2003. Earnings before interest, taxes, depreciation, amortization, other income (expense) and non-cash stock compensation ("Adjusted EBITDA") for the third quarter of 2004 was negative $1.2 million, a 56% improvement compared to negative $2.6 million for the third quarter of 2003. Adjusted EBITDA for the nine months ended Sept. 30, 2004, was negative $5.4 million, a 43% improvement over Adjusted EBITDA of negative $9.4 million for the comparable period in 2003. "Our third quarter results and actions demonstrate the continued progress that we are making in pursuing sales of higher margin products, such as VoIP (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. ) services, and streamlining our costs. These efforts will help establish a firm foundation for the transformation of this Company into a leading VoIP player," said Kirby Kirby is a common place name, surname, and given name. Other common uses include:
G. "Buddy" Pickle pickle, general term for fruits or vegetables preserved in vinegar or brine, usually with spices or sugar or both. Vegetables commonly pickled include the beet, cabbage, cauliflower, cucumber, olive, onion, pepper, and tomato. , chief executive officer of DSL.net. "We recently secured $5 million in financing to better position us to take advantage of emerging opportunities and we took additional steps to reduce expenses which we believe will further improve our financial results in the fourth quarter." Free cash flow (defined as Adjusted EBITDA minus capital expenditures) for the third quarter of 2004 was negative $1.2 million, a 62% improvement over free cash flow of negative $3.2 million for the third quarter of 2003. For the first nine months of 2004, free cash flow was negative $5.9 million, a 47% improvement over free cash flow of negative $11.2 million for the comparable 2003 period. Adjusted EBITDA and free cash flow amounts for the quarter and nine months ended Sept. 30, 2004, were record results for the Company for periods subsequent to its initial public offering. Net loss for the third quarter of 2004, was negative $5.9 million, representing a 35% improvement over net loss of $9.1 million for the third quarter of 2003. For the nine months ended Sept. 30, 2004, net loss was $18.8 million, a 30% improvement over net loss of $27.1 million for the comparable 2003 period. On a per share basis, the Company reported a net loss applicable to common stockholders of $0.06 per share for the third quarter of 2004, a 71% improvement compared to $0.22 per share for the comparable 2003 period. For the nine months ended Sept. 30, 2004, net loss applicable to common stockholders was $0.19 per share, a 69% improvement compared to $0.62 per share for the comparable 2003 period. At Sept. 30, 2004, the Company had total assets of $38.5 million, including $4.3 million in cash. In addition, during the fourth quarter the Company secured $5 million in additional financing, as previously disclosed. "We are pleased with our financial results for the third quarter of 2004, which continue to reflect substantial year over year improvements in Adjusted EBITDA and free cash flow," said Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. J. DeSantis DeSantis is a common surname. Well-known people with this name include:
DSL.net will host a conference call to discuss results for the third quarter, as well as future plans and expectations, tomorrow, Nov. 11, 2004, 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 800-946-0785 and entering confirmation code 8-9-8-1-5-7. For those unable to access the live conference call, an audio replay will be available until 11 p.m., Eastern Time, through the end of the month, by dialing 888-203-1112 and entering code 8-9-8-1-5-7. Investors may also access the call replay by visiting the investor relations section of the Company's Web site. (Financial tables follow this press release. These tables include a reconciliation of non-GAAP measures to the most recent comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures.) 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 ability to raise sufficient additional capital on acceptable terms, or at all, or to use the funds from its recently closed secured note and warrant financing, to finance operations The execution of the joint finance mission to provide financial advice and guidance, support of the procurement process, providing pay support, and providing disbursing support.See also financial management. or growth opportunities, including strategic transactions; (iv) 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 ; (v) DSL.net's ability to maintain compliance with the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Stock Exchange's continuing listing requirements Listing requirements Requirements, including minimum shares outstanding, market value, and income, that are laid down by an exchange for any stock to be listed for trading. , which failure could adversely impact the pricing and trading of DSL.net's common stock; (vi) regulatory, legislative and judicial developments, which could adversely affect the way DSL.net operates its business; (vii) risks associated with strategic transactions, including difficulties in identifying and completing transactions, integrating acquired businesses or assets and realizing the revenue, earnings or synergies anticipated from any transactions; (viii) competition; (ix) 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; (x) DSL.net's ability to recruit and retain qualified personnel; and (xi) 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 31, 2003, which has been filed with the Securities and Exchange Commission. DSL.net is a trademark of DSL.net, Inc. Other company names may be trademarks of their respective owners.
DSL.net, Inc.
Statements of Operations
(dollars in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2004 2003 2004 2003
------------ ----------- ------------ -----------
Revenue $16,827 $18,227 $52,333 $53,089
------------ ----------- ------------ -----------
Operating expenses:
Network
(excluding $0,
$0, $0 and $11
of stock
compensation,
respectively) 11,404 13,070 35,549 38,412
Operations
(excluding $0,
$0, $0 and $10
of stock
compensation,
respectively) 2,380 3,060 8,001 8,935
General and
administrative
(excluding $0,
$0, $0 and $69
of stock
compensation,
respectively) 3,210 2,618 9,661 8,891
Sales and
marketing
(excluding $0,
$0, $0 and $348
of stock
compensation,
respectively) 993 2,116 4,515 6,238
Stock
compensation - - - 438
Depreciation and
amortization 3,355 3,319 9,957 12,654
------------ ----------- ------------ -----------
Total operating
expenses 21,342 24,183 67,683 75,568
------------ ----------- ------------ -----------
Operating loss (4,515) (5,956) (15,350) (22,479)
Interest expense, net (1,412) (728) (3,570) (2,139)
Other income
(expense), net 8 (2,427) 114 (2,436)
------------ ----------- ------------ -----------
Net loss $(5,919) $(9,111) $(18,806) $(27,054)
============ =========== ============ ===========
Net loss applicable
to common
stockholders:
Net loss $(5,919) $(9,111) $(18,806) $(27,054)
Dividends on
Series X and Y
preferred stock (40) (1,045) (950) (3,145)
Accretion of
Series X and Y
preferred stock (4,812) (5,318) (8,852) (11,339)
Fair value of
Series Z
preferred stock (2,630) - (2,630) -
------------ ----------- ------------ -----------
Net loss
applicable to
common
stockholders $(13,401) $(15,474) $(31,238) $(41,538)
============ =========== ============ ===========
Net loss per common
share - basic and
diluted $(0.06) $(0.22) $(0.19) $(0.62)
============ =========== ============ ===========
Shares used in
computing net loss
per share, basic and
diluted 212,218,234 70,161,057 164,442,133 66,726,872
============ =========== ============ ===========
Other data:
Reconciliation of
net loss to
adjusted EBITDA &
free cash flow:
Net loss $(5,919) $(9,111) $(18,806) $(27,054)
Add back:
Interest and
other
(income)
expense, net 1,404 3,155 3,456 4,575
Depreciation
and
amortization 3,355 3,319 9,957 12,654
Stock
compensation - - - 438
------------ ----------- ------------ -----------
Adjusted EBITDA (1,160) (2,637) (5,393) (9,387)
Less capital
expenditures (62) (609) (519) (1,840)
------------ ----------- ------------ -----------
Free cash flow $(1,222) $(3,246) $(5,912) $(11,227)
============ =========== ============ ===========
DSL.net, Inc.
Condensed Balance Sheet
(dollars in thousands)
(unaudited)
September 30, December 31,
2004 2003
-------------- -------------
Cash and cash equivalents $4,320 $13,779
Accounts receivable, net of allowances 6,913 8,054
Other current assets (a) 2,028 2,210
-------------- -------------
Total current assets 13,261 24,043
Net property and equipment 15,583 24,357
Other assets 9,636 10,661
-------------- -------------
Total assets 38,480 59,061
============== =============
Current liabilities 12,939 18,318
Long-term obligations - less current
portion 9,012 5,424
Mandatorily redeemable convertible
preferred stock - 17,019
Stockholders' equity 16,529 18,300
-------------- -------------
Total liabilities and stockholders' equity $38,480 $59,061
============== =============
(a) Includes restricted cash of approximately $2 and $5 at September
30, 2004, and December 31, 2003, respectively.
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