Splitrock Reports 32 Percent Revenue Increase From Second to Third Quarter
Wednesday October 20, 8:04 am Eastern Time
Company Press Release
Splitrock Reports 32 Percent Revenue Increase From Second to Third Quarter
Rapid Growth In Demand For Internet Access Services to ISPs Drives Revenue Increase; Company Plans Increased Investments to Its Advanced Broadband Network For Next Generation Services and Applications
THE WOODLANDS, Texas--(BUSINESS WIRE)--Oct. 20, 1999-- Splitrock Services Inc. (NASDAQ: SPLT - news), a facilities-based network services provider to ISPs, telecommunications companies and business enterprise customers, today reported third quarter revenues of $23.7 million for the quarter ended September 30, 1999, an increase of 32.5 percent from $17.9 million in the second quarter of 1999, and a 54.1 percent increase from $15.4 million in the third quarter of 1998.
Total network costs were $29.5 million in the third quarter of 1999, versus $25.7 million in the third quarter of 1998 and $27.0 million in the second quarter of 1999. Legacy network costs -- a component of total network costs associated with operating and decommissioning the legacy network -- were $6.7 million in the third quarter, a decrease of 57.1 percent from $15.5 million in the third quarter of 1998 and a decline of 24.8 percent from the second quarter of 1999.
EBITDA for the third quarter of 1999 was a negative $11.9 million, representing a $1.0 million decrease or 7.8 percent improvement when compared to the second quarter of 1999. The EBITDA for the third quarter of 1998 was a negative $12.1 million. The net loss for the third quarter of 1999 was $26.0 million, compared with $18.5 million in the same quarter of 1998 and $25.9 million in the second quarter of 1999.
``Splitrock's strong revenue growth in the third quarter represents higher-than-expected demand from our ISP customers for wholesale dial-up services. While we saw rapid growth in network traffic during the third quarter from our largest customer, Prodigy, we also had major growth in our other ISP customers which accounted for 18% of revenues in the third quarter,' said Bill Wilson, president and chief executive officer of Splitrock. ``Going forward, we expect to continue growth with our new virtual Internet services in which we deliver an end-to-end solution for ISPs that includes customer support and billing capabilities and from our secure virtual private network services designed for enterprise remote access.'
``At the same time, we continued to invest in building and expanding our nationwide broadband dial-up access network that is attracting these customers and setting the stage for our continued expansion into new services and markets,' continued Wilson. ``That investment in our future is reflected in a substantial decline in costs associated with our legacy network and heavy expenditures in the new network. Our investments in building the next generation network for today's and tomorrow's Internet economy will continue in the quarters ahead. For example, we anticipate implementing major increases in network capacity over the next six quarters through a $129 million investment in dial access modem and fiber optronics technology equipment, the majority of which will be financed through third party leasing arrangements.'
About Splitrock
Headquartered near Houston, Texas, Splitrock has a nationwide broadband access platform that places ATM switches in hundreds of points of presence (POPs) providing ubiquitous coverage of US businesses and households. Splitrock's ``carry anything, anywhere' business strategy is implemented on this ``ATM-to-the-Edge(TM)' access platform which integrates data, video and voice traffic on one platform. Because of the unified nature of the network platform, Splitrock offers the same level and quality of service in markets like Cheyenne, WY as it does in major markets like Boston, MA. Splitrock's products and services include dial and dedicated Internet access, dial and dedicated VPN, frame relay and ATM to corporate end users, ISPs, and other telecommunications carriers. For more information, visit the company's web site at www.splitrock.net.
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This press release contains forward-looking statements that involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements are: substantial capital requirements; intense competition; changes in technology; changes in regulatory policy; and general economic conditions. Additional information concerning these and other important factors can be found in the periodic reports and registration statements filed by Splitrock with the Securities and Exchange Commission.
Splitrock Services Inc.
Consolidated Statement of Income and Selected Financial Data
(in thousands except share and per share data)
-------
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1999 1998 1999
---------------------- --------------------
Statement of Operations
Data:
Revenues $15,378 $23,703 $47,592 $57,944
Operating expenses:
Splitrock network
costs 10,211 22,832 20,935 56,982
Legacy network costs 15,489 6,652 42,600 28,523
Selling, general and
administrative 1,728 6,070 4,169 12,408
Depreciation and
amortization 2,804 8,039 7,711 19,276
---------------------- --------------------
Total operating
expenses 30,232 43,593 75,415 117,189
Loss from operations (14,854) (19,890) (27,823) (59,245)
---------------------- --------------------
Other income (expense):
Interest income 2,664 2,001 2,847 6,336
Interest expense (6,294) (8,125) (7,136) (24,471)
---------------------- --------------------
Loss before income tax ($18,484) ($26,014) ($32,112) ($77,380)
Provision for income tax -- -- -- --
---------------------- --------------------
Net loss ($18,484) ($26,014) ($32,112) ($77,380)
====================== ====================
Net loss per share -
basic and diluted ($0.42) ($0.49) ($0.74) ($1.59)
Weighted average shares -
basic and diluted 44,321,563 52,979,209 43,636,418 48,804,809
As of As of
Dec. 31, Sept. 30,
1998 1999
Balance Sheet Data: ----------------------
Cash and cash equivalents $ 28,330 $ 91,544
Unrestricted investments 120,475 33,745
Restricted investments 58,477 29,908
Property and equipment, net 73,899 88,736
Total assets 296,141 283,276
Long-term debt and capital
lease obligations
(including current portion) 275,581 268,413
Stockholders' deficit ($30,291) ($19,415)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1999 1998 1999
---------------------- ---------------------
Other Financial Data:
Capital expenditures $ 11,572 $ 7,372 $ 17,120 $ 32,683
EBITDA (12,050) (11,851) (20,112) (39,969)
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Contact:
Splitrock Services Inc.
Carol Singh, 281/465-1200
csingh@splitrock.net
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