High Speed Access Corp. Reports 64% Quarterly Growth in Residential Cable Modem Subscribers
DENVER--(BUSINESS WIRE)--Aug. 10, 1999--High Speed Access Corp. (Nasdaq: HSAC), a leading provider of high-speed Internet access via cable modem to residential and commercial end-users in exurban markets, today announced revenues of $641,000 for the second quarter ended June 30, 1999, an increase of 604% over net revenue of $91,000 generated for the period April 3, 1998 (Inception) to June 30, 1998.
HSAC's residential cable modem customers increased 64% to 5,195 from 3,169 at March 31, 1999. As of June 30, 1999, HSAC had commenced full operations and begun marketing its services to 740,000 homes passed by its cable partners systems, a 132% increase for the quarter. HSAC currently has the right to offer services to 1.8 million homes passed under existing contracts or letters of intent, and has commenced deployment activity for an additional 900,000 homes passed pending completion of definitive documentation, for a total of 2.7 million homes passed. These totals do not include approximately 10 million potential homes passed under equity incentive-based agreements with Charter, Road Runner, Classic Cable and Cable Management Associates.
April 29 June 30 Aug. 10,
1999 1999 1999
Homes Under Contract or
Letter of Intent 1.3 mil 1.6 mil 1.8 mil
Homes Marketed 319,000 740,000 804,000
Subscribers April 29 June 30
Residential Cable
Modem 3,510 5,195
Commercial 351 428
Dial Up 3,405 5,259
The net loss for the quarter was $15.3 million, or a pro forma loss of 38 cents per share, compared to a net loss of $1.8 million, or a pro forma loss of 22 cents per share, for the period April 3, 1998 (Inception) to June 30, 1998. The net loss available to common stockholders for the three months ended June 30, 1999 was $139.8 million, or a net loss available to common stockholders of $7.47 per share, which includes a $123.9 million non-cash charge to accumulated deficit to increase the carrying value of the Company's previously outstanding preferred stock to its redemption value at the time of our IPO. ( See Attached Unaudited Condensed Consolidated Statements of Operations)
The net loss for the second quarter before certain non-cash charges was $10.5 million, or an adjusted pro forma loss before non cash charges of 27 cents per share. This compares to a net loss of $1.6 million before non-cash charges for the period April 3, 1998 (Inception) to June 30, 1998, or an adjusted pro forma loss of 19 cents per share.
Non-cash charges for the second quarter of 1999 included $1.2 million of non-cash compensation expense from the issuance of stock options, $3.3 million for the amortization of distribution agreement cost and $252,000 of amortization of goodwill and other intangible assets. Non-cash charges for the amortization of distribution agreements during the quarter related to the issuance of warrants to strategic partners Microsoft and Charter Communications. From time to time, HSAC will incur these charges as strategic partners earn the right to purchase additional shares and HSAC is provided with additional homes passed.
For the first half of 1999, HSAC reported net revenue of $940,000 and a net loss of $23.3 million, or a pro forma net loss of 67 cents per share. The net loss available to common stockholders for the six months ended June 30, 1999 was $253.6 million, or a net loss available to common stockholders of $20.30 per share. This includes a $229.1 million non-cash charge to accumulated deficit to increase the carrying value of the Company's previously outstanding preferred stock to its redemption value at the time of our IPO. The net loss before certain non-cash charges for the first half of 1999 was $16.8 million, or a pro forma loss before non-cash charges of 49 cents per share. Non-cash charges for the first half of 1999 included $2.7 million of non-cash compensation expense from the issuance of stock options, $3.3 million for the amortization of distribution agreement cost and $472,000 of amortization of goodwill and other intangible assets.
"I am proud of High Speed Access Corp.'s achievements since successfully completing our IPO in June," said Ron Pitcock, the Company's co-founder and President. "We have achieved strong growth in such key measures as homes marketed and homes under contract or letter of intent, while working to further develop and enhance relationships with cable operators and strategic partners alike. We are especially excited about our recently signed agreement with Road Runner which will potentially make our services available to homes affiliated with their Time Warner, Fanch, and Insight cable systems."
"Looking ahead we will continue ramping our organization and working closely with key partners like Charter Communications and Road Runner to quickly deploy high speed data services in additional exurban markets."
Cash and cash equivalents as of June 30, 1999 totaled $218.2 million, and included $197.8 million raised in our IPO on June 4, 1999 and the concurrent offering to Microsoft, Cisco and Com21. Capital expenditures in the second quarter of $6.1 million supported the continued roll-out of the Company's unique full turnkey solution for high-speed Internet access to cable TV operators. Depreciation expense was $1.1 million for the second quarter of 1999.
About High Speed Access Corp.
High Speed Access Corp. is a leading provider of high speed Internet access via cable modem to residential and commercial end users in exurban areas. The Company believes that it provides the most comprehensive turnkey solution available to the cable operator. Its service enables subscribers to receive Internet access at speeds substantially faster than traditional Internet access at minimal cost to the cable operator. High Speed Access Corp. enters into long term exclusive contracts with cable operators to provide them with the Company's services. The Company pays its cable partners a portion of the monthly fees it receives from the end users in exchange for the opportunity to access and provide service to the cable partner's subscribers.
This press release contains statements about future events and expectations, which are "forward-looking statements." Any statement in this press release that is not a statement of historical fact may be deemed to be a forward-looking statement. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Specific factors that might cause such a difference include, but are not limited to: the company's unproven business model; the company's history of losses and anticipation of future losses; the potential fluctuations in the company's operating results; the company's competition; the company's potential inability to attract and retain end users; the company's potential inability to establish or maintain relationships with cable operators, including Charter; the possibility that our contract with Road Runner may not benefit us; and those risks and uncertainties discussed in filings made by the Company with the Securities and Exchange Commission, including those risks and uncertainties contained under the heading "Risk Factors" in the Company's Registration Statement on Form S-1 as filed with the Securities and Exchange Commission.
High Speed Access Corp.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
Three Months April 3, 1998 Six Months
Ended (Inception) Ended
June 30, to June 30,
1999 June 30, 1998 1999
Net Revenue $ 641 $ 91 $ 940
Costs and expenses:
Operating 4,027 261 6,150 Engineering 2,071 398 3,556 Sales and Marketing 3,619 657 5,657 General and Administrative 2,361 564 3,647 Non-cash compensation expense from stock options 1,157 - 2,680 Amortization of 3,305 - 3,305 distribution agreements Total costs and expenses 16,540 1,880 24,995
Loss from operations (15,899) (1,789) (24,055) Interest income (expense), net 647 (4) 766
Net loss (15,252) (1,793) (23,289)
Mandatorily redeemable convertible (604) (24) (1,122) preferred stock dividends Accretion of redemption value of mandatorily redeemable convertible preferred stock (123,916) - (229,148)
Net loss available to $(139,772) $ (1,817) $ (253,559) common stockholders
Basic and diluted net loss available to common stockholders per share $ (7.47) $ (0.29) $ (20.30)
Weighted average shares used in computation of basic and diluted net loss available 18,711,305 6,200,000 12,490,214 to common stockholders per share
Pro forma basic and diluted $ (0.38) $ (0.29) $ (0.67) net loss per share Weighted average shares used in computation of pro forma basic and diluted net 39,719,003 8,307,830 34,612,869 loss per share
Supplemental Information:
Net loss before non-cash charges:
Net loss before non-cash charges $ (15,252) $ (1,793) $ (23,289) Compensation expense from stock options 1,157 - 2,680 Amortization of distribution agreements 3,305 - 3,305 Amortization of 252 216 472 Intangible assets Non-cash charges $ (10,538) $ (1,577) $ (16,832)
Pro forma basic and diluted net $ (0.27) $ (0.19) $ (0.49) loss before non-cash charges (1)
Weighted average shares used in computation of pro forma basic and diluted net loss 39,719,003 8,307,830 34,612,869 before non-cash charges (1)
(1) Assumes conversion of mandatorily redeemable convertible
preferred stock into common stock at the beginning of the period
or at issuance, whichever is earlier.
CONTACT: Investors:
High Speed Access Corp.
George E. Willett, Chief Financial Officer
502/515-3333
or
Makovsky & Co.
Michael Lendener, AVP
212/508-9690
mlendener@makovsky.com
or
Media:
High Speed Access Corp.
Marian Neely-Carson, Vice President, Corp. Comm.
303/256-2000, ext. 2008
mncarlson@hsacorp.net
or
Makovsky & Co.
Leslie Feldman, Media Contact
212/508-9621
lfeldman@makovsky.com
|
