DSL.net Second Quarter 2002 Revenues up 12% and Adjusted EBITDA and Free Cash Flow Improve 92% Year over Year.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)--Aug. 8, 2002 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, direct provider of high-speed Internet See broadband. access solutions for small and medium-sized businesses, today reported second quarter 2002 financial results. Revenue for the second quarter of 2002 was $11.6 million, representing a 12% increase over second quarter 2001 revenue of $10.3 million and a sequential increase of 2% compared to first quarter 2002 revenue of $11.4 million. Revenue for the six months ended June 30, 2002 was $23.0 million, a 20% increase over revenue of $19.2 million reported for the same period in 2001. The Company ended the second quarter with more than 21,500 installed DSL lines. Earnings before interest, taxes, depreciation, amortization 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 second quarter of 2002 was negative $3.8 million, a 92% improvement compared to Adjusted EBITDA of negative $48.0 million for the second quarter of 2001, and a 2% improvement compared to Adjusted EBITDA of negative $3.9 million for the first quarter 2002. Adjusted EBITDA for the six months ended June 30, 2002 was negative $7.8 million, an 88% improvement over negative $66.6 million of Adjusted EBITDA reported for the same period in 2001. Free cash flow (defined as Adjusted EBITDA minus capital expenditures) for the second quarter 2002 was negative $4.1 million, a 92% improvement compared to free cash flow of negative $50.0 million for the second quarter 2001, and a 9% improvement compared to free cash flow of negative $4.5 million for the first quarter of 2002. Free cash flow for the six months ended June 30, 2002 was negative $8.6 million, an 88% improvement over $70.0 million of negative free cash flow for the first six months of 2001. David F. Struwas, chairman and chief executive officer of DSL.net, stated, "Our year over year improvements in both Adjusted EBITDA and free cash flow demonstrate the progress we've made as a company. I'm pleased that again this past quarter, we did what we said we would do - we achieved or exceeded each of the targets that we set." Robert J. DeSantis, chief financial officer of DSL.net, added, "The significant year over year improvements in Adjusted EBITDA and free cash flow are primarily attributable to the cost reduction benefits that have been realized this year as a result of the Company's restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). actions taken last year. Excluding the restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. incurred by the Company in 2001, Adjusted EBITDA for the second quarter of 2002 improved 75% over the same period in 2001 and free cash flow for the second quarter of 2002 improved 76% over the comparable prior year period." Excluding non-cash stock compensation, depreciation and amortization charges: the Company posted a net loss of $3.8 million for the second quarter 2002, which represents a 92% improvement compared to a net loss of $47.9 million for the second quarter of 2001, and a 4% improvement compared to a net loss of $4.0 million for the first quarter 2002. For the six months ended June 30, 2002, net loss excluding non-cash stock compensation, depreciation and amortization charges was $7.8 million, representing an 88% improvement compared to a net loss of $66.0 million for the first half of 2001. Including non-cash stock compensation, depreciation and amortization charges: the Company reported a net loss of $9.4 million for the second quarter of 2002, which represents a 83% improvement compared to a net loss of $56.2 million for the second quarter of 2001, and a 1% improvement compared to a net loss of $9.5 million for the first quarter of 2002. Net loss including non-cash stock compensation, depreciation and amortization charges for the six months ended June 30, 2002 was $18.8 million, or 77% better than net loss of $82.8 million for the same period last year. On a per share basis, the Company reported a net loss applicable to common stockholders of $0.20 for the second quarter of 2002, compared to $0.88 for the second quarter of 2001, and $0.18 for the first quarter of 2002. The sequential quarterly increase in net loss per common share resulted from accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the and accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. dividends related to the Company's recently issued preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , which equated to $0.05 and $0.03 per share for the second quarter and first quarter of 2002, respectively. For the six months ended June 30, 2002, net loss per share applicable to common stockholders was $0.38, compared to $1.30 for the same period of the prior year, representing a 71% improvement. Keith Markley, president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , said, "We continued to add revenue and reduce spending this past quarter. Our operational efficiency continued to improve, and we began to see the benefits of adding an affordable T1 offering to our suite of services, giving us reach to a significant number of previously unserviceable customers." Commenting on the Company's financial performance, DeSantis stated, "For the second quarter this year, we delivered revenue and an Adjusted EBITDA loss ahead of our previously articulated baseline benchmarks, while we preserved cash balances to pursue growth opportunities. We remain committed to generating improved revenues and operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. through both opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. acquisitions and the ramp-up of our internal sales and marketing activities." DSL.net will host a conference call to discuss results for the quarter, as well as future plans and expectations, today at 11:00 AM, 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 may also be accessed, live via telephone, by dialing 800-289-0498, confirmation code 401908. For those unable to access the live conference call, an audio replay will be available until 11:00 PM, Eastern Time, on August 12, 2002, by dialing 888-203-1112 and entering access code 401908. Investors may also access the call replay by visiting the Investor Relations section of the Company's web site. About DSL.net Based in New Haven, Connecticut, DSL.net, Inc. combines its own DSL facilities, nationwide network infrastructure, and Tier I 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 access 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 businesses throughout 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. . A certified See certification. CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) in all 50 states, plus Washington D.C. and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , DSL.net sells to businesses, primarily through its own direct sales channel. DSL.net augments its direct sales strategy through select system integrators See systems integrator. , application service providers and marketing partners. In addition to a number of high-performance, high-speed Internet connectivity solutions specifically designed for business, DSL.net product offerings include 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 email, on-line 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. . For more information on DSL.net, 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, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, among others, statements regarding DSL.net's forecasts of financial and operating plans and results. These statements and other 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 execute its business plan in a timely manner to generate the forecasted financial and operating results and liquidity; (iv) risks associated with DSL.net's reliance on two long distance carriers, including WorldCom, Inc., to transmit data across its network; (v) 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; (vi) competition; (vii) 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; (viii) the challenges relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the timely installation of service for customers, including DSL.net's dependence on traditional telephone companies to provide acceptable telephone lines in a timely manner; (ix) DSL.net's dependence on wholesale providers to provide it with local DSL and T1 facilities in areas where it has not deployed its own DSL equipment; (x) the difficulty of predicting the new and rapidly evolving high-speed data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. industry; (xi) regulatory, legislative, and judicial developments, which could adversely affect the way DSL.net operates its business; and (xii) DSL.net's ability to recruit and retain qualified personnel and manage the growth of its operations. 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, 2001, which has been filed with the Securities and Exchange Commission. DSL.net is a trademark of DSL.net, Inc. Tables to Follow
DSL.net, Inc.
Statements of Operations
(unaudited)
(in thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-----------------------------------------
2001 2002 2001 2002
-----------------------------------------
Revenue $10,348 $11,596 $19,170 $22,977
Operating expenses:
Network (excluding $8, $8,
$15 and $15 of stock
compensation,
respectively) 11,872 8,625 23,719 17,337
Operations (excluding $59,
$14, $119 and $29 of stock
compensation, respectively) 32,078 1,856 37,193 3,847
General and administrative
(excluding $136, $57, $228
and $168 of stock
compensation,
respectively) 10,367 3,373 15,830 6,776
Sales and marketing
(excluding $219, $217,
$435, and $430 of
stock compensation,
respectively) 4,074 1,577 9,039 2,774
Stock compensation 422 296 797 642
Depreciation and amortization 7,805 5,274 16,016 10,388
------ ------ ------- --------
Total operating expenses 66,618 21,001 102,594 41,764
------ ------ ------- -------
Operating loss (56,270) (9,405) (83,424) (18,787)
-------- ------- -------- -------
Interest income (expense),
net 101 8 630 (236)
Other (expense) income, net - 3 (2) 175
-------- -------- --------- -------
Net loss $(56,169) $(9,394) $(82,796)$(18,848)
======== ========= ========= =======
Net loss applicable to common
stockholders:
Net loss $(56,169) $(9,394) $(82,796) $(18,848)
Dividends on preferred
stock (879) (1,473)
Accretion of preferred stock,
net of issuance costs - (2,461) - (4,057)
Loss applicable to common
stockholders $(56,169) $(12,734) $(82,796) $(24,378)
======== ======== ======= ======
Net loss per common share
- basic and diluted $(0.88) $(0.20) $(1.30) $(0.38)
====== ====== ====== ======
Shares used in computing
net loss per share 63,735,232 64,868,362 63,561,430 64,806,104
========== ========== ========== ==========
Other data:
Adjusted EBITDA(a) $(48,043) $(3,835) $(66,611) $(7,757)
========= =========== ========= ==========
(a) Adjusted EBITDA is defined as earnings (losses) before
interest, taxes, depreciation, amortization and non cash stock
compensation.
Selected Balance Sheet Data
(unaudited)
(dollars in thousands)
December 31, June 30,
2001 2002
----------------------------------
Cash, cash equivalents(b) $19,631 $20,797
Net property and equipment 36,861 29,910
Total assets 81,024 73,592
Current liabilities 25,269 18,878
Long-term obligations - less
current portion 4,560 3,185
Stockholders' equity $50,725 $45,529
(b) Includes restricted cash of approximately $350 and $300 at
December 31, 2001 and June 30, 2002, respectively.
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