[GSTX reports Q4 results... CFO quits... earlier results restated.]
Thursday March 23, 7:31 am Eastern Time
Company Press Release
SOURCE: GST Telecommunications, Inc.
GST Telecom Reports Fourth Quarter Revenues of $69.0 Million
1999 Revenues Reach $321.9 Million
VANCOUVER, Wash., March 23 /PRNewswire/ -- GST
Telecommunications, Inc. (Nasdaq: GSTX - news), a leading
Integrated Communications Provider (ICP) in California and
the western United States, today announced revenues of $69.0
million for the quarter ending December 31, 1999, an increase
of 38 percent over $49.9 million reported for the
corresponding quarter in 1998. The Company reported total
revenues of $321.9 million for the 12 months ended December
31, 1999, up 97 percent compared with revenues of $163.3
million for 1998.
The Company reported fourth quarter adjusted Earnings Before
Interest, Taxes, Depreciation, and Amortization (EBITDA) of
$(13.1) million, compared to $(12.3) million in the
corresponding quarter in 1998. For the year, adjusted EBITDA
was $(20.9) million, improving from $(55.5) million reported
for fiscal year 1998. Net loss per share was $(5.11) compared
with $(4.52) in 1998.
As a result of accounting pronouncements, Securities and
Exchange Commission (SEC) industry guidance, and prevailing
industry practices related to the construction business, and
after analysis and consultation with its independent
auditors, GST decided to restate its quarterly results for
1999 (see table attached), primarily relating to construction
revenues and cost of construction revenues.
``Overall, 1999 was a year of investment for GST,' stated
Tom Malone, acting chief executive officer of GST. ``We saw
tremendous growth and development of our network assets. As
we move forward in 2000, our goal is to focus our strategy
and operations on how we can best utilize those assets.'
GST recently retained Deloitte Consulting to support
management's assessment of the Company's strategy. The
Company plans to release specifics on its five-year strategy
later this spring. In addition, GST has engaged the services
of Salomon Smith Barney to assist in exploring financing
options.
``We expect modest growth in our service business in the
first half of 2000,' continued Malone. ``Recent cost
cutting, process improvement and restructuring measures are
expected to streamline the business and drive service revenue
growth during the second half of the year. We also anticipate
capital expenditures for 2000 of approximately $140 to $160
million.'
In addition, GST announced that Dan Trampush, GST's current
chief financial officer, will be leaving the Company to
pursue other opportunities. The Company also announced that a
candidate has accepted the position of chief financial
officer, and expects to issue a formal announcement on
Tuesday, March 28.
Recap of Fourth Quarter Events
-- Divested the long distance and interconnect equipment
assets of Action Telecom.
-- Expanded GST's local fiber-optic network in Pasadena,
Calif.
-- Activated the second link of the National Transparent
Optical Network, connecting Seattle and Portland, Ore.
at 10 gigabits per second.
-- Introduced Enhanced Business Services, blending
Centrex service and the most popular business calling
features at one low price.
-- Turned up the Company's 38-mile local area network in
Houston.
Recap of Significant Events for 1999
-- Divested itself of its Guam assets, its long distance
assets of Action Telecom, and the majority of its
shared tenant operations.
-- Completed several fiber swaps and sales to enhance its
West Coast network assets, as well as to generate
additional cash.
-- Turned up NASA's Jet Propulsion Laboratory (JPL) as
the first user on the National Transparent Optical
Network (NTON).
-- Deployed long-haul and short-haul DWDM equipment
across segments of its network.
GST Telecommunications, Inc., an Integrated Communications
Provider (ICP) headquartered in Vancouver, Wash., provides a
broad range of integrated telecommunications products and
services, including enhanced data and Internet services and
comprehensive voice services throughout the United States,
with a robust presence in California and the West.
Facilities-based GST continues to focus on its western
regional strategy by anchoring its next generation networks
in local markets and connecting them via long haul fiber
networks. Visit GST's Web site at www.gstcorp.com.
This release contains forward-looking statements that involve
risks and uncertainties. GST's actual results may differ
materially from the projections made here. Factors that may
affect actual results include the success of the Company's
strategic focus, the divestiture of its remaining non-core
assets, its ability to complete network construction projects
in a timely manner, and competition in its core ICP business.
Additional factors that may affect actual results are
contained in GST's current filings with the SEC, and also its
report on Form 10-K for the period ended December 31, 1999 to
be filed by March 30, 2000. Forward-looking statements in
this release are made pursuant to the safe harbor provisions
contained in the Private Securities Litigation Reform Act of
1995.
GST Telecommunications, Inc.
Consolidated Condensed Statements of Operations
(in thousands, except share and per share amounts)
Three Months
Ended
Three Months Sept. 30,
Ended Dec. 31, Twelve Months 1999
(Unaudited) Ended Dec. 31, (Unaudited)
1999 1998 1999 1998 (As Restated)
Revenue:
Telecommunication
services $52,324 $43,775 $202,686 $149,783 $50,424
Construction,
facility sales
and other 16,168 4,819 115,147 8,826 53,692
Product 508 1,317 4,089 4,708 1,342
69,000 49,911 321,922 163,317 105,458
Operating costs
and expenses:
Network
expenses 32,991 29,433 129,761 104,320 32,295
Facilities
administration
and maintenance 6,326 4,846 21,074 16,703 5,348
Cost of
construction
revenues 11,872 924 74,940 1,424 37,203
Cost of product
revenues 445 792 2,484 2,999 689
Selling, general
and
administrative 32,415 26,575 122,974 96,506 32,590
Special charges -- 14,876 -- 30,580 --
Depreciation and
amortization 18,673 13,792 70,973 45,957 18,676
102,722 91,238 422,206 298,489 126,801
Loss from
operations (33,722) (41,327) (100,284) (135,172) (21,343)
Other expenses
(income):
Interest income (1,216) (4,925) (9,736) (24,145) (2,037)
Interest
expense, net
of amounts
capitalized 31,423 27,293 115,481 101,648 28,022
Other 2,946 1,588 (23,460) (57,985) (27,898)
33,153 23,956 82,285 19,518 (1,913)
Net loss $(66,875) $(65,283) $(182,569) $(154,690) $(19,430)
$(70,960) $(68,936) $(190,516) $(161,796) $(19,430)
Net loss per
share, basic
and diluted (A) $(1.88) $(1.90) $(5.11) $(4.52) $(0.52)
Weighted average
common shares
outstanding 37,713,259 36,249,428 37,270,710 35,834,196 37,550,357
Adjusted
EBITDA (B) $(13,071) $(12,263) $(20,910) $(55,449) $(817)
(A) Net loss per share is increased for preference shares' accretion
totaling $4,085 and $3,653 for the three month periods and $7,947 and
$7,106 for the twelve-month periods ended December 31, 1999 and 1998,
respectively.There was no preference shares' accretion for the
three-month period ended September 30, 1999.
(B) Earnings before interest, taxes, depreciation, amortization, non-cash
charges, litigation costs, year 2000 remediation and special charges.
EBITDA Reconciliation
Three Months
Ended
Three Months Sept. 30,
Ended Dec. 31, Twelve Months 1999
(Unaudited) Ended Dec. 31, (Unaudited)
1999 1998 1999 1998 (As
Restated)
Loss from operations $(33,722) $(41,327) $(100,284) $(135,172) $(21,343)
Depreciation and
amortization 18,673 13,792 70,973 45,957 18,676
Non-cash
compensation
included in
selling, general
and administrative
expense 499 (1,466) 2,161 (253) 228
Non-cash amortization
included in cost of
product revenues 375 375 1,500 1,500 375
Special charges -- 11,726 -- 27,430 --
EBITDA (C) $(14,175) $(16,900) $(25,650) $(60,538) $(2,064)
Year 2000
remediation costs 150 518 920 518 231
Litigation costs 954 969 3,820 1,421 1,016
Special charges -- 3,150 -- 3,150 --
Adjusted
EBITDA (B) $(13,071) $(12,263) $(20,910) $(55,449) $(817)
(C)Earnings before interest, taxes, depreciation, amortization and
non-cash charges.
GST Telecommunications, Inc.
Consolidated Condensed Balance Sheets
December 31, 1999 and 1998
(in thousands)
December 31,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $42,983 $86,070
Restricted investments 19,828 34,107
Trade accounts receivable, net 45,244 32,935
Construction accounts receivable 26,823 3,338
Investments 44,596 16,246
Prepaid and other current assets 8,562 9,601
Total current assets 188,036 182,297
Restricted investments 9,848 247,257
Property, plant and equipment 944,410 678,374
less accumulated depreciation (112,363) (62,522)
832,047 615,852
Other assets 139,262 145,906
less accumulated amortization (56,564) (40,029)
82,698 105,877
$1,112,629 $1,151,283
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $30,579 $26,411
Accrued expenses 49,759 37,445
Deferred revenue 10,066 6,030
Current portion of capital
lease obligations 6,693 5,649
Current portion of
long-term debt 17,466 13,417
Total current liabilities 114,563 88,952
Long-term interest payable 43,134 21,377
Capital lease obligations,
less current portion 16,813 19,741
Long-term debt, less current
portion 1,151,778 1,092,959
Redeemable preference shares 69,688 61,741
Shareholders' deficit:
Common shares 238,626 234,267
Accumulated deficit (566,523) (383,954)
Accumulated other
comprehensive income 44,550 16,200
Total shareholders' deficit (283,347) (133,487)
$1,112,629 $1,151,283
GST Telecommunications, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended
March 31, 1999
(Restated) (As Filed) Change
Revenue:
Telecommunication services $48,724 $48,724 $--
Construction, facility sales
and other 10,769 5,876 4,893
Product 1,082 1,082 --
60,575 55,682 4,893
Operating costs and expenses:
Network expenses 31,699 31,699 --
Facilities administration
and maintenance 5,135 5,135 --
Cost of construction revenues 5,838 2,514 3,324
Cost of product revenues 695 695 --
Selling, general and
administrative 27,973 27,275 698
Depreciation and amortization 16,978 16,978 --
88,318 84,296 4,022
Loss from operations (27,743) (28,614) 871
Other expenses (income):
Interest income (3,861) (3,861) --
Interest expense, net of
amounts capitalized 28,260 28,260 --
Other 199 199 --
24,598 24,598 --
Net loss $(52,341) $(53,212) $871
Net loss per share,
basic and diluted (A) $(1.44) $(1.46) $0.02
Weighted average common
shares outstanding 36,461,055 36,461,055 36,461,055
Adjusted EBITDA (B) $(9,468) $(10,339) $871
(A)Net loss per share is increased for preference shares' accretion
totaling $3,862 for the three month period ended June 30, 1999.
(B)Earnings before interest, taxes, depreciation, amortization, non-cash
charges, litigation costs, year 2000 remediation and special charges.
EBITDA Reconciliation
Three Months Ended
March 31, 1999
(Restated) (As Filed) Change
Loss from operations $(27,743) $(28,614) $871
Depreciation and amortization 16,978 16,978 --
Non-cash compensation included
in selling, general and
administrative expense 156 156 --
Non-cash amortization included
in cost of product revenues 375 375 --
EBITDA (C) $(10,234) $(11,105) $871
Year 2000 remediation costs 271 271 --
Litigation costs 495 495 --
Adjusted EBITDA (B) $(9,468) $(10,339) $871
(C)Earnings before interest, taxes, depreciation, amortization and
non-cash charges.
GST Telecommunications, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended
June 30, 1999
(Restated) (As Filed) Change
Revenue:
Telecommunication services $51,214 $51,214 $--
Construction, facility
sales and other 34,518 19,551 14,967
Product 1,157 1,157 --
86,889 71,922 14,967
Operating costs and expenses:
Network expenses 32,776 32,776 --
Facilities administration
and maintenance 4,265 4,265 --
Cost of construction revenues 20,027 6,954 13,073
Cost of product revenues 655 655 --
Selling, general and
administrative 29,996 28,802 1,194
Depreciation and amortization 16,646 16,646 --
104,365 90,098 14,267
Loss from operations (17,476) (18,176) 700
Other expenses (income):
Interest income (2,622) (2,622) --
Interest expense, net o
amounts capitalized 27,776 27,776 --
Other 1,293 1,293 --
26,447 26,447 --
Net loss $(43,923) $(44,623) $700
Net loss per share,
basic and diluted (A) $(1.28) $(1.30) $0.02
Weighted average common
shares outstanding 37,341,335 37,341,335 37,341,335
Adjusted EBITDA (B) $2,446 $1,746 $700
(A)Net loss per share is increased for preference shares' accretion
totaling $3,862 for the three month period ended June 30, 1999.
(B)Earnings before interest, taxes, depreciation, amortization, non-cash
charges, litigation costs, year 2000 remediation and special charges.
EBITDA Reconciliation
Three Months Ended
June 30, 1999
(Restated) (As Filed) Change
Loss from operations $(17,476) $(18,176) $700
Depreciation and amortization 16,646 16,646 --
Non-cash compensation included
in selling, general and
administrative expense 1,278 1,278 --
Non-cash amortization included
in cost of product revenues 375 375 --
EBITDA (C) $823 $123 $700
Year 2000 remediation costs 271 271 --
Litigation costs 1,352 1,352 --
Adjusted EBITDA (B) $2,446 $1,746 $700
(C) Earnings before interest, taxes, depreciation, amortization and
non-cash charges.
GST Telecommunications, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended
September 30, 1999
(Restated) (As Filed) Change
Revenue:
Telecommunication services $50,424 $50,424 $--
Construction, facility
sales and other 53,692 45,555 8,137
Product 1,342 1,342 --
105,458 97,321 8,137
Operating costs and expenses:
Network expenses 32,295 32,295 --
Facilities administration
and maintenance 5,348 5,348 --
Cost of construction revenues 37,203 16,722 20,481
Cost of product revenues 689 689 --
Selling, general and
administrative 32,590 30,828 1,762
Depreciation and amortization 18,676 18,676 --
126,801 104,558 22,243
Loss from operations (21,343) (7,237) (14,106)
Other expenses (income):
Interest income (2,037) (2,037) --
Interest expense, net of
amounts capitalized 28,022 28,022 --
Other (27,898) (27,898) --
(1,913) (1,913) --
Net loss $(19,430) $(5,324) $(14,106)
Net loss per share,
basic and diluted (A) $(0.52) $(0.14) $(0.38)
Weighted average common
shares outstanding 37,550,357 37,550,357 37,550,357
Adjusted EBITDA (B) $(817) $13,289 $(14,106)
(A)Net loss per share is increased for preference shares' accretion
totaling $3,862 for the three month period ended June 30, 1999.
(B) Earnings before interest, taxes, depreciation, amortization, non-cash
charges, litigation costs, year 2000 remediation and special charges.
EBITDA Reconciliation
Three Months Ended
September 30, 1999
(Restated) (As Filed) Change
Loss from operations $(21,343) $(7,237) $(14,106)
Depreciation and amortization 18,676 18,676 --
Non-cash compensation included
in selling, general and
administrative expense 228 228 --
Non-cash amortization included
in cost of product revenues 375 375 --
EBITDA (C) $(2,064) $12,042 $(14,106)
Year 2000 remediation costs 231 231 --
Litigation costs 1,016 1,016 --
Adjusted EBITDA (B) $(817) $13,289 $(14,106)
(C) Earnings before interest, taxes, depreciation, amortization and
non-cash charges.
Selected Statistical Information
(Unaudited)
Access Lines Dec. 31, Sept. 30,
1999 1999
Access Lines - Sold by quarter 52,286 38,712
Access Lines - Installed by quarter 42,166 30,887
Other Selected Statistical Information
Cities Served 49 49
GST Owned Route Miles * 5,332 5,210
Leased Route Miles 838 838
Route Miles (total) * 6,170 6,048
GST Owned Fiber Miles 312,260 301,446
Leased Fiber Miles 9,054 9,054
Fiber Miles (total) * 321,314 310,500
Collocations 113 98
Customers ** 90,668 96,527
Interconnection Agreements 12 12
Employees 1,317 1,297
Class 4/5 Switches Operational 15 15
Frame Relay Switches Operational 23 23
ATM Switches Operational 37 37
* The Company recently discovered errors in previous disclosures of fiber
miles and route miles.The Company is currently reviewing its network
records and these numbers reflect the Company's best estimate based on
its review to date.
** Customers divested with Guam and GST Home have been excluded from the
third quarter. Customers divested with Guam, GST home and GST Action
Telecom have been excluded from the fourth quarter.
The Company is hosting a conference call on Thursday, March
23 at 8:30 a.m. EST. Callers can access the call by dialing
800-886-8681 (domestic) or 212-748-2742 (international) and
entering reservation number 14705636. Replay is available for
one week by calling 800-633-8625 (domestic) or 858-812-6450
and entering reservation number 14705636.
For more information, please contact:
GST Telecommunications, Lisa Miles, 800-667-4366
SOURCE: GST Telecommunications, Inc. |
