WCII- up in after hours trading, better that expected revenues...
Wednesday May 12, 4:03 pm Eastern Time
Company Press Release
WinStar Reports First Quarter Results
Core Revenues More Than Triple From One Year Ago
NEW YORK--(BUSINESS WIRE)--May 12, 1999-- Gross Margins More Than Double to 23%
Due to Continued On-Net Progress
WINSTAR COMMUNICATIONS, INC. (NASDAQ: WCII - news) today reported core telecom revenues more than tripled from one year ago,
totaling $69 million for the 1999 first quarter. This represents more than a 23% increase over the preceding quarter's total of $56 million.
WinStar's current core telecom run rate exceeds $280 million, as compared with $209 million at December 31, 1998. In addition, the Company's
gross margins increased to 23% in the quarter, more than double the 11% reported for the fourth quarter.
WinStar's total revenue for the quarter ended March 31, 1999 increased to $88 million, almost double the $46 million reported for the 1998 first
quarter, and up from $81 million in the previous quarter. The Company recorded a net loss applicable to common shareholders of $165 million,
or $3.72 per share, beating the consensus of analyst earnings estimates. WinStar's EBITDA loss for the quarter was $79.8 million, which was
also better than analyst estimates.
These strong results were fueled by an increased ability to utilize the Company's key capital asset - its rapidly expanding, end-to-end
broadband network. These accomplishments were evidenced by:
-- An increase in the percentage of on-net line installations to over 40% of newly added lines in the quarter, bringing the cumulative
on-net line total to 24% as of March 31, up from 20% at December 31;
-- Strong sales of data products associated with WinStar's complete set of Internet-related, enhanced services for business, which are
made available over the Company's own switches and backbone network;
-- Increased penetration in networked buildings to 14% on average - well above WinStar's long-term goal of 10% on-net building
penetration;
-- The percentage of new customers purchasing multiple services under the Millennium program, which increased to 60%, more than
double the 25% year-ago figure;
-- The impact of its long-haul fiber purchase from Williams Communications, which has already significantly reduced the costs
associated with long-haul transport of voice and data traffic; and
-- Significant progress in the Company's domestic and international network expansion, aided by the increasing use of Lucent
Technologies' resources.
William J. Rouhana, Jr., WinStar's chairman and chief executive officer, said, ''WinStar starts 1999 with outstanding momentum in both
revenue and gross margin expansion. These quarterly results demonstrate the importance of our Lucent and Williams agreements, our
greater focus on the availability of our network and our broader set of enhanced services for businesses. As a result of these initiatives,
WinStar is uniquely positioned to drive traffic onto an increasingly available end-to-end broadband network.''
''We have systematically assembled the network, products and services that greatly enhance our ability to generate margins, while making
our broadband network more useful to the business customer,'' Rouhana added.
''Throughout the quarter, we focused on expanding the amount of on-net traffic on the WinStar network,'' said Nathan Kantor, WinStar's
president and chief operating officer, ''and the results show our significant progress. We will continue to focus on adding new on-net
customers to our broadband network, and on migrating existing WinStar customers to the network, while selling high-margin voice and data
services to our expanding customer base.''
First Quarter Highlights
WinStar's first quarter results included the following highlights:
-- WinStar's breakthrough marketing program, Project Millennium, significantly contributed to increasing the percentage of on-net
lines added in the quarter to over 40% from under 15% a year ago. Project Millennium also produced higher levels of multiple service
orders, one-call sales closings and long-term contracts.
-- In New York City, WinStar's most mature market, the Company significantly increased its positive EBITDA for the second
consecutive quarter as revenue and on-net percentages grew. The percentage of newly added customer lines fully on the WinStar
network in New York reached 72% in the quarter, bringing the total of on-net lines at the end of the quarter to 56%. In addition, 100%
of the lines added in New York during the quarter were on the Company's own switches.
-- The Company's mature markets, which also include Los Angeles, Chicago, Boston and Dallas, continued to demonstrate similar
revenue and customer growth. The percentage of on-net customer lines in the mature market group increased to 39%.
-- The Company added over 600 building access rights during the quarter - the fourth consecutive quarter in which more than 500
access rights had been obtained. As of March 31, the Company had access rights to an industry-leading total of more than 4,800
buildings in key U.S. markets.
-- WinStar completed 17 new hub sites since January 1, 1999, bringing its total in service to 79. In addition, 36 hub sites are currently
under construction, with 21 set to begin construction in the near future.
-- WinStar continued its expansion into 50 leading international markets by obtaining spectrum in three of its top 10 targeted global
markets - Tokyo, Osaka and Buenos Aires - through alliances with, or acquisition of, overseas companies. In addition, WinStar
received a nationwide preferred spectrum allocation in the United Kingdom that covers major cities throughout the UK, including
London, WinStar's fourth-largest targeted international market, Birmingham and Manchester. The Company remains on schedule to
offer its broadband data services in six global markets by the end of the year.
WinStar Communications, Inc. is a pioneer in providing business customers with broadband communications services, including local and
long distance phone service, as well as high-speed Internet access, data and information services. WinStar provides these Wireless
Fiber(SM) services in more than 30 U.S. markets over its own local broadband networks, using its licenses in the 28 and 38 GHz spectrum,
which are connected to the Company's nationwide fiber-optic network. In the past year, WinStar has become one of the largest Internet
companies in the U.S. Recently, the company announced a destination Web site for businesses, Office.com(SM), a service from WinStar.
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.
WinStar is a registered trademark, and Wireless Fiber and Office.com are service marks of WinStar Communications, Inc.
WinStar Communications, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
December 31, March 31,
1998 1999
----------- ------------
ASSETS (Unaudited)
Current assets
Cash and cash equivalents $ 208,257 $ 329,901
Short term investments 104,773 79,663
----------- ------------
Cash, cash equivalents
and short term investments 313,030 409,564
Accounts receivable, net
of allowance for doubtful accounts 70,939 90,482
Inventories 14,880 17,271
Prepaid expenses and
other current assets 28,402 61,823
----------- ------------
Total current assets 427,251 579,140
Investment in equity securities 26,400 38,938
Property and equipment, net 639,673 841,185
Licenses, net 310,649 319,118
Other intangible assets, net 178,050 175,060
Deferred financing costs 53,308 50,891
Other assets 27,851 24,899
----------- ------------
Total assets $ 1,663,182 $ 2,029,231
=========== ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Current portion of long-term debt $ 6,487 $ 8,102
Current portion of capitalized
lease obligations 59,021 96,210
Accounts payable and
accrued expenses 159,252 135,614
Deferred revenues - current 2,105 7,765
Net liabilities of
discontinued operations 7,254 5,854
----------- ------------
Total current liabilities 234,119 253,545
Capitalized lease obligations,
less current portion 49,354 146,987
Long-term debt, less current portion 1,396,635 1,526,890
Deferred revenues - non current - 78,343
Other liabilities 12,588 13,564
Deferred income taxes 18,500 17,500
----------- ------------
Total liabilities 1,711,196 2,036,829
----------- ------------
Series C cumulative exchangeable
redeemable preferred stock 201,478 208,614
Series D senior cumulative convertible
redeemable preferred stock 200,000 200,000
Stockholders' equity (deficit)
Series A Preferred stock 41 42
Series E Preferred stock 1 1
Common stock, par value $.01;
authorized 200,000 shares,
issued and outstanding 41,403
and 46,766, respectively 414 468
Additional paid-in-capital 404,112 576,974
Accumulated deficit (819,242) (972,154)
Accumulated other
comprehensive loss (34,818) (21,543)
----------- ------------
Total stockholders' deficit (449,492) (416,212)
----------- ------------
Total liabilities, redeemable
preferred stock and
stockholders' deficit $ 1,663,182 $ 2,029,231
=========== ============
-0-
WinStar Communications, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
For the three months ended
March 31,
----------------------------
1998 1999
----------- ------------
Operating revenues
Telecommunications services
Core $ 18,635 $ 68,587
Other 15,394 7,275
----------- ------------
Total telecommunications services 34,029 75,862
Information services 11,949 12,231
----------- ------------
Total operating revenues 45,978 88,093
----------- ------------
Operating expenses
Cost of services and products 41,252 67,942
Selling, general and
administrative expenses 52,492 99,921
Depreciation and amortization 11,399 28,483
----------- ------------
Total operating expenses 105,143 196,346
----------- ------------
Operating loss (59,165) (108,253)
Other (expense) income
Interest expense (28,613) (50,563)
Interest income 4,885 5,009
Other expense - (105)
----------- ------------
Loss from continuing
operations before income
tax benefit (82,893) (153,912)
Income tax benefit 1,100 1,000
----------- ------------
Loss from continuing operations (81,793) (152,912)
Loss from discontinued operations (3,166) -
----------- ------------
Net loss (84,959) (152,912)
Preferred stock dividends (8,198) (12,191)
----------- ------------
Net loss applicable to
common stockholders $ (93,157) $ (165,103)
=========== ============
Basic and diluted loss per share:
From continuing operations $ (2.51) $ (3.72)
From discontinued operations (0.09) -
----------- ------------
Net loss per share $ (2.60) $ (3.72)
=========== ============
Weighted average shares outstanding 35,899 44,384
=========== ============
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