iBasis Reports Record Revenue, Margin and Traffic Volume for Second Quarter 2005; Company Achieves Positive Cash Flow and Strengthens Balance Sheet.BURLINGTON Burlington, town, Canada Burlington, town (1991 pop. 129,575), SE Ont., Canada, on Lake Ontario. First settled (1798) by Mohawk Loyalist Joseph Brandt, Burlington's economy was built on the shipment of wheat, lumber, and quarried rock by waterway. , Mass. -- iBasis, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). : IBAS), a leader in international long distance, VoIP, and prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. calling cards, today
announced results for the second quarter ended June June: see month. 30, 2005.Revenue for the second quarter of 2005 was $94.6 million, compared to $61.2 million for the second quarter of 2004. Net loss for the second quarter of 2005 was $0.8 million, or $(0.01) per share, compared to net loss for the second quarter of 2004 of $5.9 million, or $(0.13) per share. The net loss for the second quarter 2005 included debt conversion premiums and foreign exchange losses totaling $1.0 million. The net loss for the second quarter 2004 included $2.5 million in refinancing-related charges and foreign exchange losses. Highlights of the second quarter include: --Achieved positive cash flow of $1 million; --Converted $12.3 million of bond debt to equity in June, and subsequently converted an additional $19.9 million of bond debt to equity in July July: see month. ; --Achieved eighth consecutive quarter of revenue growth; --Increased overall revenue 55% over Q2 2004 and 7% over Q1 2005; and --Increased gross margin in Retail business to 20% of Retail revenue. "In large part we maintained the gains from our tremendous first quarter and posted another quarter with positive cash flow," said Ofer Ofer (Hebrew: עופר) is a moshav located south of Haifa, Israel in the Carmel Mountains and is a part of the Hof HaCarmel Regional Council. Gneezy, 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 iBasis. "Revenue and gross margin dollars advanced from the first quarter, offset by higher operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . "In our Trading business, we achieved good revenue growth but experienced margin pressure from a decline in traffic originating in China. We continued to build on our leadership position in the market, adding 39 new customers during the quarter. We also continued to expand our presence in the fast-growing adj. 1. tending to spread quickly; - used mostly of plants. Adj. 1. fast-growing - tending to spread quickly; "an aggressive tumor" strong-growing, aggressive consumer VoIP segment where we now have 16 voice-over-broadband providers as wholesale trading customers, including market leaders Skype An Internet phone service from Skype Limited, Luxembourg (www.skype.com). Being softphone based, calls from Skype subscribers originate from their PCs. All PC-to-PC calls between Skype subscribers are free, while "SkypeOut" lets users dial a regular telephone for a low per-minute charge. and Yahoo BB. "In our Retail business, we improved gross margin by 28% over Q1 in dollar terms, reaching 20% of retail revenue, up from 15% in Q1. Towards the end of Q2 and into Q3 we introduced a number of new cards with more aggressive pricing. We expect that as these newer cards gain traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. in the market we will resume revenue growth while possibly giving back some percentage points of margin. "We are particularly excited that through our efforts during and subsequent to the quarter we have achieved a monumental mon·u·men·tal adj. 1. Of, resembling, or serving as a monument. 2. Impressively large, sturdy, and enduring. 3. milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. in eliminating our secured bond debt entirely and reducing our overall long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $34 million, which is less than our cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments at the end of Q2. We will also save $2.5 million in future annual interest payments. Primarily as a result of the bond conversions during the second quarter, we reduced the deficit in stockholder's equity Stockholder's equity The residual claims that stockholders have against a firm's assets, calculated by subtracting all current liabilities and debt liabilities from total assets. to $11 million. The subsequent debt conversions in Q3 added approximately $19 million to stockholder's equity." Quarterly Results of Trading and Retail Businesses ($ in millions) Trading Retail Total ---------------------------------------------------------------------- Revenue $77.7 $16.9 $94.6 ---------------------------------------------------------------------- Gross Margin (A) $ 9.3 $ 3.4 $12.7 ---------------------------------------------------------------------- Gross Margin % 11.9% 20.4% 13.4% (A) Net revenue less Data Communications and Telecommunications costs. Key Indicators Minutes of use on The iBasis Network(TM) in the second quarter 2005 were 1.79 billion minutes, a 61% increase over the 1.11 billion minutes carried in the second quarter 2004, and a 2% increase over the 1.76 billion minutes in the first quarter 2005. Average revenue per minute increased to 5.3 cents per minute in the second quarter 2005, up from 5.0 cents per minutes in the first quarter 2005. Average revenue per minute is based on our reported net revenue divided by the minutes of traffic for the applicable period. iBasis ended the second quarter of 2005 with $42.6 million in cash and short-term investments compared to $41.6 million at the end of the first quarter 2005. The total increase in cash and short-term investments during the quarter of $1.0 million included cash provided by operations of $2.7 million, less cash for capital expenditures of $1.1 million and less cash used for financing activities of $0.6 million. Cash used in financing activities primarily consisted of $0.5 million for debt conversion premium payments. Operational Milestones Overseas-originated calls accounted for 48% of revenue in the second quarter of 2005, compared to 47% in the first quarter 2005. iBasis ended the second quarter with 348 wholesale trading customers, up from 309 at the end of Q1 2005. New customers announced during the quarter included African carriers Globacom Globacom is a telecommunication company that was launched particially by the cell phone corporation, Alcatel; in Nigeria by 2003. Not only it offers GSM SIM cards such as the "Classic Package" or the "Premium Package", it is also the second national landline carrier after the and Econet 1. Econet - One of the IGC networks. EcoNet serves individuals and organisations working for environmental preservation and sustainability. Important issues covered include: global warming, energy policy, rainforest preservation, legislative activities, water quality, toxics , Pakistani carrier Callmate Telips, and Australian Australian pertaining to or originating in Australia. Australian bat lyssavirus disease see Australian bat lyssavirus disease. Australian cattle dog a medium-sized, compact working dog used for control of cattle. carrier Telecorp. During the quarter the Company announced the expansion of its DirectVoIP(TM) 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). regionalized global architecture, adding to its facility in London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. to meet growing demand for VoIP services in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). .
This expansion offers VoIP service providers in Europe fast and secure
IP interconnections to the iBasis global VoIP network through the London
facility to enable high quality international voice services for
consumer and corporate customers.Also, during the quarter iBasis announced that for the fourth year in a row it has been ranked by carriers as the world's best international wholesale carrier in the 2005 Global Wholesale Carrier Report Card, the industry reference survey published annually by independent telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. research and advisory firm ATLANTIC-ACM. Debt Refinancing Refinancing An extension and/or increase in amount of existing debt. During the second quarter the Company reduced its long term debt by converting $12.3 million in bond debt to approximately 6.6 million shares of iBasis common stock, at the $1.85 per share conversion price, through negotiated agreements with noteholders and through voluntary conversions. The negotiated conversions consisted of $9.1 million of the Company's 8% Secured Convertible Notes due 2007 and $2 million of its 6 3/4% Convertible Subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. Notes due 2009. In addition, approximately $1.2 million of 6 3/4% Convertible Subordinated Notes were converted to equity at the $1.85 per share conversion price, in separate voluntary transactions. The Company paid premiums to encourage early conversion in the amount of $661,000 in stock and cash, which were charged to results of operations in Q2 2005. In July, the Company announced the conversion of the remaining $19.9 million of its 8% Secured Convertible Notes due 2007 to approximately 10.8 million shares of iBasis common stock, at the $1.85 per share conversion price, through negotiated agreements with noteholders. To encourage early conversion the Company paid approximately $1.2 million in cash premiums, which will be charged to operations in Q3 2005. Year to date, iBasis has converted $32.4 million of bond debt, reducing its long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. bond debt to approximately $33 million. The overall reduction in the Company's debt adds approximately $30 million to stockholder's equity and results in total annual savings of approximately $2.5 million on future interest payments. Future annual interest payments now stand at approximately $2.2 million. Guidance The following statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and actual results may differ materially due to factors noted below, among others. The information provided in this financial outlook is as of July 27, 2005, and supersedes all previous guidance. The Company believes that in 2005 it will: --achieve 40 to 50% year-over-year revenue growth; --achieve positive net income for the year; and --be cash flow positive for 2005. Planned cash expenditures for 2005 include $7 to $8 million in capital asset investments. About iBasis Founded in 1996, iBasis (OTCBB: IBAS) is a leading wholesale carrier of international long distance telephone calls and a provider of retail prepaid calling services, including the Pingo(TM) web-based offering (www.pingo.com) and disposable disposable Nursing adjective Referring to that which is discarded or disposed of noun An item used in health care-related Pt contact which is discarded after use–eg masks, gloves, gowns, needles, paper products, syringes, wipes. See Biohazardous waste. calling cards, which are sold through major distributors and available at retail stores throughout the U.S. iBasis customers include many of the largest telecommunications carriers in the world, including AT&T, Cable & Wireless, China Mobile, China Unicom China Unicom, full name China United Telecommunications Corporation, 中国联通, HKSE: 0762 NYSE: CHU, is a telecommunication operator in the People's Republic of China. 52. , MCI (1) (Media Control Interface) A high-level programming interface from Microsoft and IBM for controlling multimedia devices. It provides commands and functions to open, play and close the device. (2) (Microwave Communications Inc. , Sprint, Skype, and Telefonica. iBasis carried approximately 5 billion minutes of international voice over IP (VoIP) traffic in 2004, and is one of the ten largest carriers of international voice traffic in the world(1). For four consecutive years service providers named iBasis the best international wholesale carrier in ATLANTIC-ACM's annual International Wholesale Carrier Report Card(2). iBasis was also ranked among the fastest-growing technology companies in New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. in the 2002, 2003, and 2004 Technology Fast 50 programs sponsored by Deloitte & Touche. The Company can be reached at its worldwide headquarters in Burlington, Massachusetts Burlington is a town in Middlesex County, Massachusetts, United States. The population was 22,876 at the 2000 census. History Burlington was first settled in 1641 and was officially incorporated on February 28, 1799. , USA at 781-505-7500 or on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.ibasis.com. iBasis is a registered mark, The iBasis Network and Pingo are trademarks of iBasis, Inc. All other trademarks are the property of their respective owners. Except for historical information, all of the expectations, projections and assumptions contained in the foregoing press release, including those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the company's current expectations regarding revenue growth, sources of revenue, margin improvement, and future capital expenditures, constitute 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. 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 and involve risks and uncertainties. Important factors that could cause actual results to differ materially from such forward-looking statements include, but are not limited to, (i) the extent of adoption of the company's services and the timing and amount of revenue and margin generated by these services; (ii) fluctuations in the market for and pricing of these services; and (iii) the other considerations described as "Risk Factors" in iBasis' most recent Forms 10-K and 10-Q, and the company's other SEC filings. We have no current intention to update any forward-looking statements. Use of Non-GAAP Financial Data The Company provides certain financial data in addition to providing financial results in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . This data is not in accordance with, or an alternative to GAAP, and may be different from Non-GAAP financial data used by other companies. This Non-GAAP financial data includes average revenue per minute, which the Company believes provides useful information, to both its management and investors, about the Company's current performance. (1)Telegeography 2005 data compared with iBasis 2004 traffic volume. (2)ATLANTIC-ACM International Wholesale Carrier Report Card - 2002, 2003, 2004, & 2005.
iBasis, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, Dec. 31,
2005 2004
--------- ---------
(Unaudited)
Assets
Cash, cash equivalents and short-term
investments $ 42,617 $ 38,825
Accounts receivable, net 39,673 34,133
Prepaid expenses and other current assets 2,825 2,420
Property and equipment, net 11,852 11,861
Deferred debt financing costs, net 155 177
Other assets 374 360
--------- ---------
Total assets $ 97,496 $ 87,776
========= =========
Liabilities and Stockholders' Deficit
Accounts payable $ 26,399 $ 24,340
Accrued expenses 18,419 12,186
Deferred revenue 7,441 6,303
Current portion of long term debt 20,873 1,775
Long term debt, net of current portion 34,163 65,933
Other long term liabilities 1,079 1,132
--------- ---------
Total liabilities 108,374 111,669
Stockholders' deficit (10,878) (23,893)
--------- ---------
Total liabilities and stockholders' deficit $ 97,496 $ 87,776
========= =========
iBasis, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended
June 30,
--------------------
2005 2004
--------- ---------
(Unaudited)
Net revenue $ 94,581 $ 61,175
Cost and operating expenses:
Data communications and telecommunications
(excluding depreciation and amortization) 81,874 52,066
Research and development 3,126 3,542
Selling and marketing 2,866 2,131
General and administrative 3,746 3,161
Depreciation and amortization 1,726 2,787
--------- ---------
Total costs and operating expenses 93,338 63,687
--------- ---------
Income (loss) from operations 1,243 (2,512)
Interest expense, net (862) (795)
Other expenses, net (140) (66)
Foreign exchange loss (347) (105)
Debt conversion premium (661) ---
Refinancing-related charges:
Transaction costs --- (1,954)
Additional interest expense, net --- (481)
--------- ---------
Net loss $ (767) $ (5,913)
========= =========
Net loss per share:
Basic $ (0.01) $ (0.13)
Diluted $ (0.01) $ (0.13)
Weighted average common shares outstanding:
Basic 65,994 46,287
Diluted 65,994 46,287
iBasis, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Six Months Ended
June 30,
--------------------
2005 2004
--------- ---------
(Unaudited)
Net revenue $183,253 $118,183
Cost and operating expenses:
Data communications and telecommunications
(excluding depreciation and amortization) 158,175 100,656
Research and development 6,258 7,080
Selling and marketing 5,593 4,132
General and administrative 7,059 6,299
Depreciation and amortization 3,446 6,311
--------- ---------
Total costs and operating expenses 180,531 124,478
--------- ---------
Income (loss) from operations 2,722 (6,295)
Interest expense, net (1,898) (1,520)
Other expenses, net (160) (85)
Foreign exchange gain (loss) (580) 80
Loss on non-marketable long-term security --- (5,000)
Debt conversion premium (661) ---
Refinancing-related charges:
Transaction costs --- (1,954)
Additional interest, net --- (481)
--------- ---------
Net loss $ (577) $(15,255)
========= =========
Net loss per share:
Basic $ (0.01) $ (0.33)
Diluted $ (0.01) $ (0.33)
Weighted average common shares outstanding:
Basic 65,488 45,674
Diluted 65,488 45,674
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