NASC -Network Access Solutions Announces Strong Results
for the Second Quarter Ended June 30, 1999
- Total Quarterly Revenue Increases 32% - - Total Six Months Revenue Increases 57% - - Central
Office Installations 70% Ahead of Schedule -
STERLING, VA--(BUSINESS WIRE)--July 20, 1999-- Network Access Solutions (''NAS'') (Nasdaq: NASC - news), a
leading provider of digital subscriber line (DSL)-enabled networking solutions to businesses, today announced results for the
three months ended June 30, 1999, its first quarter as a publicly-traded company.
Total revenue for the three months ended June 30, 1999, was $3.7 million, a 32% increase over total revenue of $2.8 million
for the three months ended June 30, 1998. For the six months ended June 30, 1999, total revenue increased 57% to $8.5
million as compared to $5.4 million for the six months ended June 30, 1998.
The net loss applicable to common stockholders for the three months ended June 30, 1999, was $10.6 million, or $0.27 per
fully diluted share, as compared to a profit of $43 thousand for the three months ended June 30, 1998. EBITDA for the three
months ended June 30, 1999, was negative $5.2 million as compared to positive $89 thousand for the three months ended
June 30, 1998.
MANAGEMENT'S COMMENTS ON THE QUARTER
''The second quarter of 1999 was an exciting one for NAS,'' said Jonathan Aust, chairman, president, CEO and founder.
''Our strategy for achieving dominant coverage throughout our target markets has accelerated due, in part, to the proceeds we
received from our successful initial public offering. At June 30, we were taking orders into 126 central offices in eight markets,
70% more than the 74 central offices that we had planned to have available to us. Our sales force of 113 employees is proving
the power of our direct sales strategy, which is evidenced by our winning key accounts, such as the Department of Justice. On
the wholesale side, we have been able to capitalize on our dominant market position and have become a key vendor for IXC
Communications and DSLNetworks.''
''Our revenue is ahead of plan,'' added Scott Yancey, chief financial officer. ''This is due to our success in recruiting and hiring
high-quality, talented sales people during the quarter. As a result, our sales effort has exceeded our expectations. We averaged
over $175 per month, per line, in expected revenue for orders received during the quarter. This, coupled with the speed at
which we are deploying central offices, has positioned us well to continue on this high growth track.''
KEY OPERATIONAL METRICS
Quarter Ended
6/30/99 3/31/99
Central Office Collocations (COs) 126 51
Installed DSL Lines 300 -
Sales Employees 113 35
Customers 510 402
HIGHLIGHTS FROM THE QUARTER
On June 4th, NAS successfully completed its initial public offering of 7,500,000 shares of Common Stock at an initial
public offering price of $12.00, raising approximately $83.7 million. NAS is using the proceeds from its offering to
expand its depth of coverage, as well as market its high-speed network solutions to businesses throughout its target
markets.
A group of leading communications companies, including SBC Communications, Inc. (NYSE: SBC - news) and
Telefonos de Mexico (NYSE: TMX - news), invested over $11 million in NAS, as part of the IPO. Management
believes that SBC and Telefonos de Mexico's investments reflect their understanding of NAS' business model and the
Company's ability to execute on its business plan. Furthermore, this investment allows NAS to explore a more strategic
relationship with SBC in support of their out-of-region strategy.
NAS was chosen by DSLNetworks Inc. to be the preferred provider of high-speed Internet and LAN access in NAS'
nine target markets. Through the partnership, NAS will deliver business-class services ideally suited for small, mid-sized
businesses and telecommuters requiring fast, always on and affordable Internet access. Furthermore, the opportunity
gives NAS the ability to reach customers outside of its nine markets through DSLNetworks' national coverage
capability.
IXC Communications (Nasdaq: IIXC - news) selected NAS to provide integrated voice and data over DSL. NAS will
provide channelized MSDSL T1 replacement service, enabling IXC to extend its high-speed data access coverage and
to provide more affordable T1 services to its customers.
Due to its ability to immediately deliver a DSL-based T1 replacement, NAS was selected by the Department of Justice
(''DOJ'') to provide high-speed network connectivity for the department's bureaus and agencies across the United
States. Additionally, NAS will provide the DOJ with a full suite of networking solutions including network design,
system hardware and integration services.
MANAGEMENT'S BUSINESS OUTLOOK
Commenting on the outlook for NAS, Aust said, ''Our progress in the second quarter exemplifies our ability to rapidly grow
our network and deliver on our operating targets. We are ahead of our operating targets on every level and are confident that
we will surpass our goal of 360 central office collocations, covering over 80% of the businesses and residences in our nine
target markets by year-end 1999. Furthermore, we will continue to seek strategic alliances and partnerships that further our
position as the premier provider of DSL-enabled broadband networking solutions to businesses.''
Network Access Solutions
Consolidated Statement of Operations
(Unaudited)
($ in 000's, except per share information)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
---- ---- ---- ----
Revenue:
Product
sales $2,913 $ 2,297 $ 6,868 $4,492
Consulting
services 665 462 1,367 779
Network
services 166 82 285 122
---- --- ---- ---
Total
revenue 3,744 2,841 8,520 5,393
Cost of revenue:
Product
sales 2,488 1,947 6,023 3,804
Consulting
services 476 285 776 446
Network
services 612 7 783 8
---- ----- ---- ----
Total
cost of
revenue 3,576 2,239 7,582 4,258
Gross profit 168 602 938 1,135
---- ---- ---- -----
Operating expenses:
Selling,
general and
administrative 5,385 509 7,917 1,046
Amortization of
deferred
compensation 4,728 - 5,268 -
Depreciation and
amortization 698 9 885 13
---- ---- ---- ----
Total
operating
expenses 10,811 518 14,070 1,059
------ ---- ------ -----
Income (loss)
from
Operations (10,643) 84 (13,132) 76
Interest
income 310 - 364 -
Interest
expense (108) (14) (171) (27)
Benefit
(provision)
for income taxes 72 (27) 72 (19)
---- ----- ---- ----
Net Loss (10,369) 43 (12,867) 30
Preferred stock
dividends and
accretion 250 - 597 -
Net Loss applicable
to common
stockholders $(10,619) $ 43 $(13,464) $ 30
------- ---- -------- ----
Basic and
Diluted Earnings
Per Share $(0.27) $ - $(0.36) $ -
------- ----- ------ -----
Weighted Average
Shares
Outstanding 38,677,808 21,915,000 37,346,301 21,915,000
========== ========== ========== ==========
Other Data:
EBITDA(1) $(5,217) $ 93 $(6,979) $ 89
======== ======= ======== =====
(1) EBITDA is defined as earnings (losses) before interest, taxes,
depreciation, amortization non-cash stock based compensation and other
non-operating income or expense.
Network Access Solutions
Selected Balance Sheet Data
(Unaudited)
($ in 000's, except per share information)
As of
June 30,
1999 1998
---- ----
Selected Balance Sheet Data:
Cash and cash equivalents $82,655 $ 434
Net property and equipment 27,858 146
Total assets 113,978 2,490
Current liabilities 9,597 1,877
Long-term obligations 11,705 333
Stockholders' equity 92,676 280
ABOUT NAS
Founded in 1994, Sterling, Virginia-based Network Access Solutions (''NAS'') is a leading provider of digital subscriber line
(DSL)-enabled networking solutions to businesses. Through its branded CuNet (pronounced ''copper net'') service, NAS
offers customers high-speed, ''always on'' local, metropolitan and wide-area connectivity services using DSL technology. As a
complement to CuNet, NAS offers customers a complete suite of value-added enterprise networking solutions, including
network integration, network management, network security and professional services. The CuNet network supports both
legacy telecommunications infrastructures, including traditional voice, and newer, packet-based communications, including
ATM, Frame Relay and IP. CuNet is currently available in Baltimore, MD; Boston, MA; New York, NY; Philadelphia, PA;
Washington, D.C.; Norfolk, VA and Pittsburgh, PA; and is expected to be available in Wilmington, DE by the end of 1999.
For more information, visit the company's website: nas-corp.com.
This press release contains forward-looking statements 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 statements are subject to a variety of
risks and uncertainties, many of which are beyond the Company'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 those described
under ''Risk Factors'' in the Company's Prospectus, which include, among other things, (i) the Company's ability to
successfully market its services to current and new customers; (ii) the extent of increasing competition; (iii) trends in regulatory,
legislative and judicial developments; and (iv) the Company's ability to manage 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. The Company undertakes no obligation to update or revise the information contained in this press release,
whether as a result of new information, future events or circumstances or otherwise.
Contact:
Network Access Solutions
Kathy Null
703/995-2653
or
Abernathy MacGregor Frank
Jason Thompson
212/371-5999 |
