WL#9 - I grabbed some of this little gem... I like the way it quickly recovered from intraday low of 16.
PSIX - reported increase in rev by 136%...
Headline: PSINET INC - Quarterly Revenues Increase 136% To $104.8 Million
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PSINet Inc. reported first quarter revenues were $104.8 million, an
increase of 136% over the $44.5 million reported for the first quarter of
1998 and an increase of 12% over the $93.9 million reported for the fourth
quarter of 1998. EBITDA for the quarter was a loss of $6.8 million, or 6.5%
of revenue, a four percentage point improvement when compared with an
EBITDA loss of $9.9 million for the fourth quarter of 1998 or 10.6% of
revenue, and a seventeen percentage point improvement when compared with an
EBITDA loss in the first quarter of 1998 of $10.5 million or 23.6% of
revenue. The net loss available to common shareholders for the first
quarter of 1999 was $59.3 million or $1.11 basic and diluted loss per
share. This compares favorably to First Call's consensus EPS estimates of a
$1.20 loss per share.
For comparison purposes, the net loss available to common shareholders
for the fourth quarter of 1998, which included a charge of $30.4 million
for acquired in-process research and development and a non-recurring charge
of $49.0 million to accrue costs related to the Chatterjee arbitration
award, was $132.6 million, or $2.56 basic and diluted loss per share. The
net loss available to common shareholders for the first quarter of 1998,
which included a charge of $7.0 million for acquired in-process research,
was $29.9 million, or $0.67 basic and diluted loss per share. There were no
charges for acquired in-process research and development in the first
quarter of 1999.
MANAGEMENT'S COMMENTS ON THE QUARTER
"PSINet had an excellent first quarter, introducing industry-leading
alternative local loop services like DSL and wireless business Internet
connectivity solutions," said William L. Schrader, chairman and chief
executive officer. "PSINet's global customer base is now approaching 60,000
business accounts and rapidly closing in on one million carrier customers,
as we continue to solidify a leading position in the world's top twenty
telecommunications markets. Today, PSINet has the first Internet network to
fully circle the globe, serving customers on four continents. Our strong
revenue growth, combined with our strategy of acquiring fiber bandwidth
worldwide to reduce costs, continues to drive significant increases in
shareholder value, as we move toward positive EBITDA."
"During the quarter, we substantially completed integrating all of our
newly acquired subsidiaries," said Harold S. "Pete" Wills, president and
chief operating officer. "Now that we have executed on our integration
strategy, we expect to increase our acquisition activities in 1999,
enhancing our market position in the top telecommunications markets around
the globe. We are also aggressively expanding our Web hosting business,
building out a 100,000 square foot data center in London, which will become
fully operational later this summer."
"PSINet's performance continues to track our commitment to moving our
business toward profitability, " said Edward D. Postal, senior vice
president and chief financial officer. "Through acquisitions of bandwidth
and related assets, together with careful cost control, we continue to
enhance our network while increasing our gross margin and improving
EBITDA."
QUARTERLY HIGHLIGHTS AND RECENT DEVELOPMENTS
Products and Services
- Launched PSINet's InterSky product, a business-grade wireless
Internet access service. This product is currently available in
seven U.S. cities and will be available in additional U.S. and
non-U.S. cities by the end of 1999. PSINet's wireless product
offers an affordable, high-speed alternative to traditional
land-based last-mile Internet services, commonly referred to as
"local loop connections".
- Announced an agreement with Covad Communications (NASDAQ: COVD)
as the first supplier for the recent launch of PSINet DSL
(Digital Subscriber Line) services. The services will be
introduced in Los Angeles in the second quarter, followed by
rollouts in other major metropolitan areas this summer.
Acquisitions and Alliances
- Continued our aggressive expansion in the European market, by
acquiring two French ISPs, Satelnet, and Planete.net. Both were
privately-held companies focusing primarily on the business
marketplace, which will be integrated with PSINet France, based
in Paris.
- Entered into or enhanced significant strategic alliances with
Micros-to-Mainframes, Inc. (NASDAQ: MTMC) and TimeBridge
Technologies as Premier Internet Integration Partners; Cisco
Systems, Inc. (NASDAQ: CSCO) and Ascend Communications, Inc.
(NASDAQ: ASND) to build upon and expand dial-up services and
PSIVoice; and Xedia Corporation to certify and deploy Xedia's
Access PointTM routers in our core network.
- Forged a strategic commercial alliance with the NFL's Baltimore
Ravens, which included rolling out Ravenszone.net in early April,
a virtual ISP that is expected to significantly enhance outreach
between fans and the team, as well as establish a new business
model for sports marketing. In addition, PSINet acquired naming
rights to the Ravens' NFL Stadium at Camden Yards in Baltimore,
which has become PSINet Stadium, as well as primary sponsorship
of all team activities, including extensive broadcast, print and
event marketing opportunities.
-- In April, PSINet entered the Latin American market with the
acquisition of two privately held Brazilian ISPs, Openlink in Rio
de Janeiro, and Horizontes Internet in the state of Minas Gerais.
These acquisitions position PSINet as one of the top five ISPs in
Brazil, the ninth largest telecommunications market in the world.
Each company serves both consumers and businesses with dedicated
and dial-up connectivity as well as Web hosting capabilities.
Network
- Acquired fiber cables linking Japan, China, Southeast Asia,
India, the Middle East, Europe and the U.K. PSINet also acquired
fiber connections linking existing PSINet operations in London,
Amsterdam, Brussels, Paris, Dusseldorf, Berlin, Munich,
Stuttgart, Frankfurt, Geneva, and Zurich. In 2000, PSINet expects
to add additional cities to the European network, including
Antwerp, Copenhagen, Lyon, Marseilles, Strasbourg, Hannover,
Hamburg, Cologne, Milan, Turin, Luxembourg, Monaco, Madrid,
Barcelona, Valencia, Stockholm, Gothenburg, Rotterdam, and
Vienna.
- Acquired dark fiber connecting the U.S. to Canada between
Seattle, Washington and Vancouver, British Columbia. The 20
strands of dark fiber will significantly increase network
capacity on PSINet's North American western corridor and link to
other PSINet fiber capacity currently being activated throughout
PSINet's global network.
Corporate
- In January 1999, PSINet surpassed the $240 million valuation
threshold promised to IXC Communications Inc. (NASDAQ: IIXC) in
connection with its February 1998 purchase of transcontinental
North American fiber-optic Internet network capacity, completely
satisfying the obligation under this agreement. Continued to
deploy the IXC fiber-optic bandwidth, the delivery of which
currently stands at about 20% of IXC's total commitment.
- Conversion of all 600,000 shares of the Series B 8% Convertible
Preferred Stock into 3,000,000 shares of common stock. The
preferred shares were issued as part of a $30 million private
placement that was completed on November 10, 1997. As a result of
the conversion, PSINet will no longer be required to pay 8%
annual dividends on this stock, which will result in annual
savings of approximately $2.4 million.
OPERATING RESULTS
- PSINet provided service to over 59,700 corporate customers
accounts at March 31, 1999, an increase of 79% over the 33,300
customers at March 31, 1998. Accounts outside the U.S.
represented 60% of PSINet's customer base at March 31, 1999,
compared with 40% at March 31, 1998.
- Average annual new contract value for business accounts increased
to $6,200 for the first quarter from $6,000 for the full year
1998 and $5,500 for the full year 1997. This continues to reflect
the increasing demand for value-added services and higher levels
of bandwidth.
- The business account retention rate remained strong for the
quarter at 81%, compared with a full-year retention rate in 1998
of 79%.
- PSINet's Carrier and ISP business added a net 28 new customers
this quarter, bringing the total served to 196. These ISPs
provide, along with PSINet's SOHO and consumer customers around
the world, Internet services to 898,000 customers using PSINet
Internet solutions.
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Year Ended: Qtr Ended:
HISTORIC PERFORMANCE METRICS 12/31/96 12/31/97 12/31/98 3/31/99
Business Accounts 17,800 26,400 54,700 59,700
Carrier Customers 135,000 257,000 863,000 898,000
Average New Contract
Value - Business Accounts $4,500 $5,500 $6,000 $6,200
Corporate Account
Retention Rate 79% 76% 79% 81%
Capital Expenditures
(in millions) $38.4 $50.1 $303.6 $101.6
Revenues (in millions):
North America $77.9 $106.8 $183.5 $59.0
% of Total Revenues 92% 88% 71% 56%
Europe $5.1 $10.9 $40.0 $15.9
% of Total Revenues 6% 9% 15% 15%
Asia $1.4 $4.2 $36.1 $29.9
% of Total Revenues 2% 3% 14% 29%
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BALANCE SHEET
At March 31, 1999, PSINet had cash, restricted cash and short-term
investments of $398.9 million, compared with $485.0 million at December 31,
1998.This includes an escrow of $93.8 million to fund the next three
semi-annual interest payments on PSINet's 10% Senior Notes.Property and
equipment, net of accumulated depreciation and amortization, increased to
$503.5 million at March 31, 1999, from $389.5 million at December 31,
1998.The March 31, 1999 balance includes $187.4 million in fiber assets.The
company's debt obligations were $1.3 billion at March 31, 1999, compared
with $1.1 billion at December 31, 1998. In early April, the Company repaid,
out of available cash, $100 million that it had borrowed during the first
quarter under its line of credit.This restores the availability of the line
of credit for future borrowings to $110 million.
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Consolidated Statements of Operations
(In millions of U.S. dollars, except loss per share)
Three Months Ended Three Months Ended
March 31, 1999 March 31, 1998
% of % of
Amount Revenue Amount Revenue
Revenue $104.8 100.0% $44.5 100.0%
Operating costs and expenses:
Data communications
and operations 76.0 72.5% 36.7 82.5%
Sales and marketing 18.6 17.7% 10.7 24.1%
General and administrative 17.1 16.3% 7.6 17.1%
Depreciation and amortization 26.8 25.6% 9.5 21.3%
Charge for acquired in-process
research and development (1) ---- 0.0% 7.0 15.7%
Total operating costs and
expenses 138.5 132.1% 71.5 160.7%
Loss from operations (33.7) (32.1)% (27.0) (60.7)%
Interest expense (29.6) (28.2)% (2.6) (5.8)%
Interest income 4.7 4.5% 0.5 1.3%
Other expense, net (0.1) (0.1)% -- (0.2)%
Loss before taxes (58.7) (56.0)% (29.1) (65.4)%
Income tax benefit ---- 0.0% ---- 0.0%
Net loss (58.7) (56.0)% (29.1) (65.4)%
Return to preferred
shareholders (0.6) (0.6)% (0.8) (1.8)%
Net loss available to common
shareholders $(59.3) (56.6)% $(29.9) (67.2)%
Weighted average shares
outstanding (thousands) 53,358 44,596
Basic and diluted loss
per share (1) $(1.11) $(0.67)
Basic and
diluted
loss per share
excluding one-time charges (1)
$(1.11) $(0.51)
EBITDA (2) $(6.8) $(10.5)
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(1) The $0.67 basic and diluted loss per share in the first quarter
of 1998 includes a $7.0 million charge for acquired in-process
research and development. There were no charges for acquired
in-process research and development in the first quarter of 1999.
(2) EBITDA is used in the Internet services industry as one measure
of a company's operating performance and historical ability to
service debt. EBITDA is not determined in accordance with
generally accepted accounting principles, is not indicative of
cash used by operating activities and should not be considered in
isolation or as an alternative to, or more meaningful than,
measures of performance determined in accordance with generally
accepted accounting principles. PSINet defines EBITDA as losses
before interest expense and interest income, taxes, depreciation
and amortization, other non-operating income and expenses, and
charges for acquired in-process research and development.
PSINet's definition of EBITDA may not be comparable to similarly
titled measures used by other companies.
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Condensed Consolidated Balance Sheets
(In millions of U.S. dollars)
March 31, December 31,
1999 1998 Assets
Cash, restricted cash and short-term investments $ 398.9 $ 485.0
Accounts receivable, net 54.7 50.2
Other current assets 41.7 30.0
Total current assets 495.3 565.2
Property and equipment, net 503.5 389.5
Goodwill and other intangibles, net 320.0 282.8
Other assets and deferred charges 52.4 46.7
Total assets $ 1,371.2 $ 1,284.2
Liabilities and shareholders' equity (deficit)
Current portion of long-term debt $ 166.2 $ 60.0
Trade accounts payable 64.2 90.0
Accrued expenses 127.8 120.2
Deferred revenue 20.5 19.4
Total current liabilities 378.7 289.6
Long-term debt 1,118.8 1,064.6
Deferred tax liabilities, net 6.1 6.1
Other liabilities 42.9 44.1
Total liabilities 1,546.5 1,404.4
Shareholders' equity (deficit)
Preferred stock ----- 28.8
Common stock and capital in excess
of par value 437.7 402.5
Accumulated deficit (486.9) (427.6)
Treasury stock (2.0) (2.0)
Accumulated other comprehensive income 22.6 36.7
Bandwidth asset to be delivered under IXC
agreement (146.7) (158.6)
Total shareholders' equity (deficit) (175.3) (120.2)
Total liabilities and shareholders' equity
(deficit) $ 1,371.2 $ 1,284.2
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Headquartered in Herndon, Virginia, PSINet is a global facilities-based
Internet protocol (IP) data communications carrier focused on the business
marketplace. PSINet offers a broad set of high-speed corporate LAN
connectivity services supporting managed security and guaranteed Internet,
intranet, electronic commerce, Web hosting services, and services for other
carriers and ISPs. PSINet operates an international technologically
advanced frame relay and ATM-based, IP-optimized network consisting of more
than 500 points of presence (POPs) around the world serving primary markets
in Brazil, Belgium, Canada, France, Germany, Hong Kong, Italy, Japan, the
Netherlands, the Republic of Korea, Switzerland, the United Kingdom and the
United States. PSINet information can be obtained by e-mail at
info@psi.com, by accessing the Web site at psinet.com or by
calling toll-free 1-800-799-0676.
PSINet's first quarter earnings conference call will be broadcast live
in its entirety at www.psinet.com beginning at 11:00 a.m. Eastern Daylight
Time.
Cautionary Statement Concerning Forward Looking Statements
Certain of the statements made in this release are forward-looking
statements that are subject to material risks and uncertainties. Actual
results could differ materially, as a result of a variety of factors,
including competitive developments, risks associated with the company's
growth, the development of the Internet market, regulatory risks and other
risks which are discussed in the company's fillings with the Securities and
Exchange Commission.
TEL: 703/375-1103 Media Contact: Reid Walker, PSINet Inc., Herndon
E-Mail: walkerre@psi.com
TEL: 703/375-1245 Investor Contact: Kelli Harrington Nemer
E-mail: harringtonk@psi.com
(c) 1999 Market News Publishing Inc. All rights reserved.
Tel:(604) 689-1101 Fax:(604) 689-1106
RapidFAX (tm) - To get the NEWS as it happens, call (604) 689-3041.
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