here it is:
inStar Reports Second Quarter CLEC Revenues More Than Quadrupled Over 1997
NEW YORK--(BUSINESS WIRE)--AUGUST 5, 1998
CLEC Revenue Run Rate Exceeds $130 Million
EBITDA Losses Continue To Decline
WINSTAR COMMUNICATIONS, INC. (NASDAQ - WCII) reported today
revenues for the second quarter ended June 30, 1998 increased to $57.3
million, a gain of 21% over the preceding quarter's $47.4 million and
more than triple the year ago amount of $16.3 million. Revenues
benefited from continued strong growth in the company's
telecommunications business, where the addition of new markets and new
services led to an over 480% gain in revenue over the prior year.
"WinStar is very focused on executing its business plan, and in
the second quarter the company remained solidly on course with the
deployment of its network to additional cities, the sale and
installation of new lines, and the marketing of an expanded portfolio
of voice, data and Internet services," said Nathan Kantor, President
and Chief Operating Officer. "The company increased its nationwide
sales presence to 26 markets, and we expect to achieve our goal of
providing switched services to the 30 largest U.S. markets by the end
of this year. At the same time, WinStar's rapid expansion is being
managed with intense expense control to produce improvement in margins
and other measures of financial performance," added Kantor.
Revenues from CLEC operations increased to $30.0 million, a gain
of 61% over first quarter revenues of $18.6 million. CLEC revenues
totalled $4.0 million in the year-earlier quarter. The growth was
attributable to continued national sales and installation of local,
long distance and Internet services for small and medium sized
business customers, the geographic expansion of sales and network
operations and the rapidly expanding large account business unit. The
company's new broadband data services business also achieved
significant progress during the second quarter, increasing its
revenues 58% from the first quarter. Total CLEC service revenues
reached an annual run rate of $134 million at the end of June compared
to just $19 million a year ago.
Revenues from other telecommunications services, which consist of
wholesale operations, residential long distance and MIDCOM long
distance voice services, amounted to $14.7 million for the June
quarter. As previously stated, the company expects a gradual attrition
of this other revenue over subsequent quarters.
For the first six months of 1998, CLEC revenues reached $51.1
million compared to $6.0 million in 1997.
Information services revenues for the 1998 second quarter
amounted to $12.5 million compared to $8.7 million in the 1997
quarter. This gain of 45% was attributable to generally higher demand
and the marketing of new products targeted at the information
requirements of small and medium sized business. Information services
revenues for the first six months of 1998 reached $24.5 million, an
increase of 67% over the comparable 1997 amount of $14.7 million.
In line with its plan, WinStar achieved a second consecutive
improvement in the quarterly EBITDA loss. The loss was reduced to
$48.6 million in the June period compared to $48.9 million in the
first quarter. The company recorded a net loss applicable to common
shareholders of $105.6 million or $2.77 per share from continuing
operations in the 1998 second quarter.
Commenting on the company's most recent performance, William J.
Rouhana, Jr., Chairman and Chief Executive Officer, said today,
"During the second quarter, WinStar saw further evidence that the
financial model associated with the company's fixed wireless network
is working. WinStar's operations in New York, our most mature market,
achieved a gross margin exceeding 35% in the second quarter, and
current trends should lead to positive EBITDA being generated in New
York no later than the fourth quarter," Rouhana noted. "This is less
than two years after the company began selling switched services in
New York."
LINE ORDERS AND INSTALLATIONS INCREASE RAPIDLY
During the second quarter, WinStar continued to add substantial
numbers of customers, line orders and line installations. Line orders
for the period exceeded 75,000, an increase of over 30% from the first
quarter of 1998. Installations of CLEC lines rose to 50,000 during the
second quarter, representing approximately 20% sequential growth over
the first quarter of 1998. On a cumulative basis, installed lines
surpassed 195,000 at June 30.
WinStar continued to expand its telecommunications business and
the scope of related support services during the second quarter.
Services were being provided in 26 markets at June 30 versus 21 at the
end of March. The number of customers being served through WinStar's
CLEC operations reached more than 9,000 compared with slightly more
than 7,000 three months earlier. Additionally, roof rights, which
enable WinStar to install its Wireless Fiber(SM) services on customer
buildings, reached 3,000, an increase of over 500 from March 31. This
marked the first time more than 500 roof rights had been obtained in a
three month period.
Other Major Developments
WinStar reported these additional developments for the most
recent quarter:
- WinStar's average bandwidth in the top 50 U.S. markets will
rise above 750 MHz with the agreement to purchase 850 MHz of spectrum
in New York City from CellularVision USA, Inc.
- In April, the company announced it had agreed to purchase 14.9%
of the outstanding common stock of Advanced Radio Telecom Corp.
(NASDAQ-ARTT) from private investors. Advanced Radio Telecom holds 38
GHz licenses in the U.S. and Europe.
- WinStar's GoodNet unit was awarded a $40 million broadband
backbone service contract from AboveNet, a San Jose, CA, based
internet service provider.
- The company's workforce totalled 2,300 at June 30 compared to
2,100 at the end of March and 1,200 a year ago. The number of
salespeople at the end of the second quarter stood at 440. The sales
and service forces combined totalled 780.
- In May, WinStar signed a master agreement with CIGNA
Investments, Inc., to deliver Wireless Fiber services to 96 commercial
office buildings owned or managed by CIGNA.
- D&B International Business Information reports was added to
WinStar Telebase's Internet site, Dun & Bradstreet @AOL.
- The company obtained CLEC authority in Delaware in July,
bringing to 34 the total number of such authorizations, which
represent 48 of the largest U.S. markets.
- The company activated a full-duplex ATM-based, point-to-
multipoint broadband, fixed wireless demonstration network carrying
voice, data and video services in Washington, D.C. WinStar also
recently announced an expansion of an agreement with Siemens Telecom
Networks under which Siemens will add P-Com point- to-multipoint
radios to the network. This agreement will demonstrate the operability
of the point-to-multipoint network in a multi-vendor environment.
- WinStar received recognition for its innovative technology and
deployment of 17 fully integrated voice and data networks. The company
was presented with a SuperQuest Award as "Best New Competitive Local
Network" at the SUPERCOMM 98 Conference.
Rouhana concluded his remarks by saying "We are pleased by
WinStar's solid progress during the second quarter, including the
further rapid evolution of our network. Our achievements are being
recognized by industry peers, as was demonstrated by the SuperQuest
Award, which arose from the success we have attained in building a
national telecommunications company in less than two years time. We
expect the national introduction of our point-to- multipoint services
in 1999 will add to our technological leadership and service
capabilities."
WinStar Communications, Inc. is a national local communications
company, serving business customers, long distance carriers, fiber-
based competitive access providers, mobile communications companies,
local telephone companies, and other customers with broadband local
communications needs. The company provides its Wireless FiberSM
services using its licenses in the 28 and 38 GHz spectrum. The company
also provides long distance, Internet, data and information services.
Except for any historical information contained herein, the
matters discussed in this press release contain forward-looking
statements that involve risks and uncertainties which are described in
the company's SEC reports, including the 10-K for the period ended
December 31, 1998, and the 10Q for the period ended March 31, 1998.
WinStar is a registered trademark, and Wireless Fiber is a
service mark of WinStar Communications, Inc.
WinStar Communications, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
For the three months ended
June 30,
-----------------------------
1997 1998
----------- --------------
Operating revenues
Telecommunications services
CLEC $ 4,009 $ 30,002
Other 3,669 14,740
--------- ---------
Total telecommunications services 7,678 44,742
Information services 8,662 12,521
--------- ---------
Total operating revenues 16,340 57,263
--------- ---------
Operating expenses
Cost of services and products 15,908 46,181
Selling, general and
administrative expenses 39,228 59,693
Depreciation and amortization 4,896 16,895
--------- ---------
Total operating expenses 60,032 122,769
--------- ---------
Operating loss (43,692) (65,506)
Other (expense) income
Interest expense (20,194) (40,500)
Interest income 5,090 10,308
Loss from continuing operations
before income tax benefit (58,796) (95,698)
Income tax benefit -- 1,400
--------- ---------
Loss from continuing operations (58,796) (94,298)
Loss from discontinued operations -- --
--------- ---------
Net loss (58,796) (94,298)
Preferred stock dividends (2,346) (11,287)
--------- ---------
Net loss applicable to common
stockholders $ (61,142) $(105,585)
========= =========
Basic and diluted income loss per share:
From continuing operations $ (1.85) $ (2.77)
From discontinued operations -- --
--------- ---------
Net loss per share $ (1.85) $ (2.77)
========= =========
Weighted average shares outstanding 32,967 38,081
========= =========
For the six months ended
June 30,
------------------------------
1997 1998
------------ -------------
Operating revenues
Telecommunications services
CLEC $ 5,988 $ 51,117
Other 8,753 29,112
--------- ---------
Total telecommunications services 14,741 80,229
Information services 14,676 24,470
--------- ---------
Total operating revenues 29,417 104,699
--------- ---------
Operating expenses
Cost of services and products 28,867 88,956
Selling, general and
administrative expenses 68,781 113,304
Depreciation and amortization 8,397 28,294
--------- ---------
Total operating expenses 106,045 230,554
--------- ---------
Operating loss (76,628) (125,855)
Other (expense) income
Interest expense (30,992) (69,156)
Interest income 7,325 15,236
--------- ---------
Loss from continuing operations before
income tax benefit (100,295) (179,775)
Income tax benefit -- 2,500
--------- ---------
Loss from continuing operations (100,295) (177,275)
Loss from discontinued operations (477) (1,982)
--------- ---------
Net loss (100,772) (179,257)
Preferred stock dividends (2,346) (19,485)
--------- ---------
Net loss applicable to common
stockholders $(103,118) $(198,742)
========= =========
Basic and diluted income loss per share:
From continuing operations $ (3.13) $ (5.32)
From discontinued operations (0.01) (0.05)
--------- ---------
Net loss per share $ (3.14) $ (5.37)
========= =========
Weighted average shares outstanding 32,789 37,000
========= =========
WinStar Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
December 31, June 30,
1997 1998
--------------- --------------
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 402,359 $ 574,883
Short term investments 16,903 128,084
------------- --------------
Cash, cash equivalents and
short term investments 419,262 702,967
Accounts receivable, net of
allowance for doubtful
accounts 30,328 67,600
Inventories 10,296 13,052
Prepaid expenses and other
current assets 8,985 32,967
Net assets of
discontinued operations 2,105 3,734
------------- --------------
Total current assets 470,976 820,320
Investment in equity securities - 33,852
Property and equipment, net 284,835 380,149
Licenses, net 174,763 239,300
Intangible assets, net 14,293 114,421
Deferred financing costs 27,463 39,163
Other assets 4,071 13,083
------------- --------------
Total assets $ 976,401 $ 1,640,288
============= ==============
LIABILITIES AND
STOCKHOLDERS' DEFICIT
Current liabilities
Current portion of
long-term debt $ 386 $ 1,339
Accounts payable and
accrued expenses 97,714 91,373
Current portion of
capitalized lease
obligations 6,848 14,142
------------- --------------
Total current liabilities 104,948 106,854
Capitalized lease obligations,
less current portion 21,823 39,264
Long-term debt, less
current portion 768,469 1,270,726
Other liabilities - 10,588
Deferred income taxes 24,000 21,500
------------- --------------
Total liabilities 919,240 1,448,932
------------- --------------
Series C exchangeable
redeemable preferred stock 175,553 188,078
Series D senior cumulative
convertible redeemable
preferred stock - 200,000
Stockholders' equity (deficit)
Preferred stock 39 40
Common stock, par value
$.01; authorized 200,000
shares, issued and
outstanding 34,610 and
39,500, respectively 346 395
Additional paid-in-capital 255,741 383,105
Accumulated deficit (374,518) (553,775)
Accumulated other
comprehensive loss - (26,487)
------------- --------------
Total stockholders' deficit (118,392) (196,722)
------------- --------------
Total liabilities,
redeemable preferred
stock and
stockholders' deficit $ 976,401 $ 1,640,288
============= ==============
CONTACT:
Financial Community: or Press:
Daniel Briggs Beth Ellen Keyes
Director, Capital Market Relations (212) 584-4098
(212) 584-4032
KEYWORD: NEW YORK
BW1436 AUG 05,1998
13:40 PACIFIC
16:40 EASTERN
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