Anyone have the CC report? <A>Intermedia Communications Reports Record
Revenue Growth; Access Lines Installed Increase by 30,000 in Fourth
Quarter
TAMPA, Fla.--Intermedia Communications Inc. (NASDAQ/NM: ICIX) today
announced record growth for its fourth quarter and full year 1997. The
Company reported a record high of $247.9 million in revenues, an
increase of 140% over 1996 revenues of $103.4 million. Posting its
fourth double-digit growth quarter in 1997, Intermedia's revenue for
the quarter ended December 31 was $82.6 million, a 16% sequential
increase from the previous quarter and 111% over the previous year's
fourth quarter revenues of $39.1 million.
EBITDA (earnings before interest, taxes, depreciation and
amortization) was in line with expectations at $(9.9) million for the
fourth quarter, despite increased expenses to build infrastructure for
a larger base of business operations and more aggressive cross-selling
of services upon the completion of the three pending acquisitions.
EBITDA was $(49.8) million for the year and is consistent with the
Company's plan to achieve positive EBITDA in the second quarter of
1998.
The Company initiated acquisitions in the fourth quarter of 1997 of
Shared Technologies Fairchild, LDS and National Telecommunications,
all of which the Company projects will be completed in the first half
of 1998. Assuming these acquisitions are completed, annualized revenue
would be in excess of $675 million (based on fourth quarter 1997
results).
"These are exciting results given our efforts to grow the Company
organically as well as through acquisitions. We now have a full
service portfolio, including the DIGEX Internet Connectivity and Web
Site Management services, a large and stable customer base, a large
and growing number of connected buildings, and more than a year's
solid experience in provisioning local services," said David C.
Ruberg, Chairman, Chief Executive Officer and President. "In 1998, we
plan to reap the benefits of the economies of scale that we have
achieved and further leverage the expertise and leadership that we
have accumulated in the data arena."
"Along with the excellent revenue growth during the quarter, our
careful attention to managing costs and the realization of acquisition
synergies resulted in a 12% sequential gross margin improvement to 29%
for the fourth quarter," said Robert M. Manning, Senior Vice President
and Chief Financial Officer. "This improvement was augmented by our
disciplined sales approach into targeted high margin zones."
Local Services
As the fastest growing category in the service portfolio, local
services revenue grew 40% to $16.5 million in the fourth quarter from
$11.8 million in the third quarter. The number of access line
equivalents in service increased to 81,349 during the fourth quarter,
an increase of 30,609, or 60%, over the 50,740 reported at the end of
the third quarter. Of access line equivalents installed during the
quarter, 84% were on-switch, compared to the former level of 50%.
These on-switch access lines deliver higher margin than those that are
resold. More than 60% of the 81,349 access lines in service are now
on-switch. Access line equivalents averaged 5,007 per Intermedia local
switch, indicating strong loading of the Company's switched network
and effective capital deployment. Additionally, during the fourth
quarter, Intermedia expanded the sales of its full suite of integrated
services (local, long distance, data/Internet) into a total of 20
markets.
Enhanced Data Services
This category, which is now reported with all of DIGEX revenue
included, grew by 161% in the fourth quarter over the same period last
year, and by 3% sequentially. This sequential growth reflects the
impact of non-recurring revenue sources, which were higher than normal
in the third quarter. The recurring revenue grew a strong 16%
sequentially. Frame relay nodes increased to 20,209, a growth of 17%
over the 17,286 nodes in service at the end of the prior quarter.
Intermedia's enhanced data services network now delivers services to
more than 4,100 cities and connects to other carriers' networks
through 386 network-to-network interfaces (NNIs).
Interexchange and Integration Services
Interexchange revenue was $32.3 million for the fourth quarter, an
increase of 17% over the third quarter, and an increase of 51% over
the same period last year. Long distance billable minutes increased
113% to 139.4 million in the fourth quarter from 65.5 million for the
same quarter last year, and 26% sequentially. Domestic long distance
per minute revenue increased by 3% on average, and international per
minute revenue increased by 16% on average, as a result of the
Company's continued efforts to trim low margin revenue streams.
Also, total integration services increased by $1.0 million, or 100%,
to $2.0 million in the fourth quarter from $1.0 million in the prior
quarter.
1997 Unaudited Pro Forma Information
Manning noted that on a pro forma (unaudited) basis had the
acquisitions of Shared, LDS and National been completed by the fourth
quarter 1997, and their results combined with those of Intermedia, the
Company would have reported pro forma revenues of more than $675
million; a labor force of 3,395 including a sales team of 617 quota
carrying sales professionals in 102 sales offices; 92,209 business
customers; 207,064 access line equivalents; and 3,499 buildings
connected. (A pro forma information table is attached.)
Other Significant Milestones
Intermedia Communications:
-- Emerged as the largest independent CLEC (pro forma for the
pending acquisitions of Shared, LDS and National).
-- Completed two major acquisitions--DIGEX and the asset purchase
(switches and network) from Telco Communications.
-- Achieved organic growth of 98%.
-- Ended the year with $1.9 billion in assets.
-- Completed $1.7 billion in financing during 1997.
-- Reduced cost of capital to 11.5% from 18%.
-- Improved senior debt rating during 1997 to B/B2 from B-/B3.
The Company also announced today that its Board of Directors has
authorized a two-for-one stock split of its capital stock, subject to
shareholder approval of an increase in the Company's authorized
capital stock at the annual shareholder meeting to be held in May
1998. Should the shareholders approve the increase, a record date for
the stock split will be announced promptly after the shareholder
meeting.
Intermedia will host a conference call on Wednesday, February 25, from
10:30 a.m. to 11:30 a.m. Eastern Standard Time to review the Company's
1997 financial results. To participate in this conference, call (800)
633-8680. A 48-hour replay will be available by calling (800)
633-8284, ID 3811848.
Statements contained in this news release regarding expected financial
results and other planned events are forward-looking statements,
subject to uncertainties and risks, including, but not limited to, the
demand for Intermedia's services, and the ability of the Company to
successfully implement its strategies, including consummation of the
Shared Technologies Fairchild, LDS, and National acquisitions, the
successful integration of these acquisitions into Intermedia and the
consequent realization of projected synergies, each of which may be
impacted, among other things, by economic, competitive or regulatory
conditions. These and other applicable risks are summarized under the
caption "Risk Factors" in the Company's Form 10-K Annual Report for
its fiscal year ended December 31, 1996, and are updated periodically
through the filing of reports and registration statements with the
Securities and Exchange Commission.
Intermedia Communications is one of the nation's fastest growing
telecommunications companies, providing integrated telecommunications
solutions to business and government customers. These solutions
include voice and data, local and long distance, and advanced network
access services in major U.S. markets. Intermedia's enhanced data
portfolio, including frame relay networking, ATM, and a full range of
business Internet connectivity and web hosting services, offers
seamless end-to-end service virtually anywhere in the world.
Intermedia is headquartered in Tampa with sales offices in over 40
cities. Intermedia can be found on the World Wide Web at
intermedia.com.
INTERMEDIA COMMUNICATIONS INC.
Financial Highlights
Three Months Ended Twelve Months Ended
December 31, December 31,
1997 1996 1997 1996
Revenue:
Local network $16,510,096 $3,854,139 $41,966,928 $13,523,751
Enhanced data (1) 31,804,516 12,181,415 86,635,448 31,674,746
Interexchange 32,274,988 21,329,614 113,152,159 53,135,957
Integration 1,992,199 1,698,594 6,144,383 5,062,433
Total revenue 82,581,799 39,063,762 247,898,918 103,396,887
Expense:
Network operations 48,165,957 27,555,688 164,461,346 69,109,497
Facilities
administration and
maintenance 10,253,215 3,286,703 31,662,561 7,603,095
Cost of goods sold 477,830 1,218,093 3,014,598 4,392,515
Selling, general
and administrative 33,615,471 12,725,892 98,598,086 36,609,846
Depreciation and
amortization 19,339,062 7,767,146 53,612,983 19,835,686
Charge for
in-process R&D - - 60,000,000 -
Total operating
expenses
111,851,535 52,553,522 11,349,574 137,550,639
Loss from operations
(29,269,736) (13,489,760) (163,450,656) (34,153,752)
Other income
(expense):
Interest (20,767,013) (11,034,513) (60,661,977) (35,213,179)
Other 10,132,811 2,967,147 26,824,270 12,168,220
Loss before
extraordinary
items (39,903,938) (21,557,126) (197,288,363)(57,198,711)
Extraordinary item -
loss on early
extinguishment of
debt - - (43,834,156) -
Net loss (39,903,938) (21,557,126) (241,122,519) (57,198,711)
Preferred stock
dividends &
accretion (16,623,720) - (43,742,097) -
Net loss attributable
to common
shareholders
$(56,527,658)$(21,557,126)$(284,864,616)$(57,198,711)
Loss per common share:
Loss before
extraordinary item,
including preferred
stock dividends and
accretions $ (3.27) $ (1.33) $ (14.46) $ (4.08)
Extraordinary loss $ - $ (1.33) $ (2.63) $ -
Net loss per common
share $ (3.27) $ (1.33) $ (17.09) $ (4.08)
Weighted average shares
outstanding 17,276,686 16,257,759 16,670,090 14,017,597
EBITDA(2) $(9,930,674) $(5,722,616) $(49,837,674) $(14,318,066)
(1) Includes DIGEX effective July 1, 1997.
(2) Earnings before interest, taxes, depreciation and amortization
(EBITDA) is a measure of operating cash flow. EBITDA excludes an
in-process R&D charge and an extraordinary charge accounted for
in the third quarter 1997.
Other Data:
December 31, September 30,
1997 1997
Local and Long Distance Services:
Buildings connected(1) 3,005 2,703
Voice switches in operation 16 13
Long distance billable minutes 139,437,921 111,049,341
Access line equivalents 81,349 50,740
Access line equivalents per local switch(2) 5,007 3,493
Enhanced Data Services:
Data switches installed 136 130
Frame relay cities 4,104 3,787
Nodes in service 20,209 17,286
NNI connections 386 366
Gross PP&E $545,013,300 $453,544,957
Employees 2,056 1,820
Stock Price: High Low Close
First Quarter $26.25 $12.875 $ 16.625
Second Quarter $33.00 $ 15.50 $ 32.375
Third Quarter $48.00 $30.375 $46.9375
Fourth Quarter $61.875 $ 41.25 $ 60.75
(1) Includes both on-net direct connections with ICI-owned fiber
optic cable and on-net extended connections with leased circuits.
(2) Calculated by dividing the number of on-switch access line
equivalents by the number of switches providing local service.
Pro Forma (Unaudited)
Selected Information
NOTE: Reflects the acquisition of Shared, LDS and National as if they
occurred at the beginning of the period.
Intermedia Pro Forma (1)
4Q 1997 4Q 1997
Actual (Unaudited)
Revenue
4Q97 annualized (millions) $ 330.3 $ 676.5
Employees 2,056 3,395
Business customers 21,209 92,209
Access line equivalents 81,349 207,064
Sales force 365 617
Sales offices 47 102
Buildings connected 3,005 3,499
(1) Pro forma information is not necessarily indicative of the
results that would have occurred if the acquisitions were made at
the beginning of the period or of results that may occur in the
future. |
