Earnings Report:
corporate-ir.net
Excite@Home Reports First Quarter 2001 Results; Worldwide
Broadband Subscribers Increased By Approximately 450,000;
Residential Broadband Access Revenues Increased 80%
REDWOOD CITY, Calif.--(BUSINESS WIRE)--April 23, 2001--Excite@Home (NASDAQ:ATHM) today reported its financial and
operating results for the first quarter of 2001.
Revenues for the first quarter totaled $142.8 million, an
increase of 3% compared to the first quarter of 2000. The
increase in revenues was driven by growth in consumer
access revenues related to Excite@Home's residential
broadband services, which was partially offset by lower
revenues from media/advertising services. In the first
quarter Excite@Home's worldwide residential broadband
subscriber base grew to 3,200,000, up 126% from 1,416,000
at March 31, 2000. Net subscriber additions in the quarter
totaled 449,000, an increase of 40% from the 321,000 added
in the first quarter of 2000. Excite@Home's subscriber
totals exclude all subscribers of Cablevision Systems
Corp., with whom the company has decided to terminate its
relationship. Historical numbers also exclude Cablevision
for comparison purposes.
Net operating loss, which excludes non-operating costs and
other items, was $61.6 million for the quarter, or $0.15
per share, compared to a net operating loss of $4.6
million, or $0.01 per share, in the first quarter of 2000.
The increase in net operating loss was driven primarily by
increased investment in the build-out and upgrade of
Excite@Home's broadband network. Non-operating costs and
other items include expenses for the amortization of
goodwill and other intangible assets, cost and amortization
of distribution agreements, equity share of losses of
affiliated companies, write-down of goodwill and intangible
assets, and restructuring charges associated with
workforce reductions.
Net loss for the quarter, which includes all of the items
specified above, was $832.6 million or $2.05 per share,
compared to a loss of $676.5 million, or $1.75 per share
in the first quarter of 2000. The increase in net loss
compared to the year-ago period was driven primarily by a
write-down of goodwill and other intangible assets and
other restructuring charges related to the company's
acquired media assets. The write-down and restructuring
charges totaled $630.5 million in the quarter.
Commenting on the quarter, Excite@Home executive vice
president and chief financial officer Mark McEachen
said, "We performed very well in our core broadband
operations, which now make up nearly two-thirds of our
total revenue. Our residential broadband businesses turned
in another quarter of strong growth both domestically and
overseas, and our commercial division continues to grow by
monetizing Excite@Home's unique position as the world's
leading carrier of broadband traffic. Even more
importantly, we exited the quarter at the highest levels of network reliability and scale in our history. We are
absolutely focused on continuing these trends by putting
our resources fully behind the broadband opportunity."
Business Segment Summary Consumer Access
Consumer access revenues are comprised primarily of
Excite@Home's share of subscription fees paid by
residential broadband subscribers in North America. These
revenues totaled $75.4 million in the first quarter, an
increase of 80% from the first quarter of 2000. The
increase was driven by growth in Excite@Home's North
American residential subscriber base. North American
subscribers totaled 2,867,000 at March 31, 2001, an increase of 112% from a year ago.
Excite@Home's addressable market for residential broadband
services grew to 33 million upgraded cable homes passed in
North America, an increase of 38% from a year ago. The
upgraded footprint represents 61% of Excite@Home's total
homes under contract in North America. Service penetration
of upgraded homes in North America was
· 8.7% in the first quarter, up from 5.6% a year ago.
Subscriber and addressable-market figures include certain
areas served by Excite@Home affiliates that Excite@Home
expects to convert to the @Home service. Commercial
Services
Commercial services revenues are generated through the sale
of @Work broadband services to small and medium-sized
enterprises via cable, T1 connections, and the sale of very
high-speed connectivity to content delivery networks and
Internet content providers. Commercial services revenue
totaled $15.5 million in the first quarter, an increase of
15% from the first quarter of 2000. The increase in
revenues was driven by growth in bandwidth under contract,
which totaled 8 gigabits at quarter-end. Net bandwidth
sold in the quarter was 1.5 gigabits, an increase of 152%
from a year ago. Total @Work accounts at quarter-end
totaled 11,790 an increase of 90% over the year-ago figure.
Media/Advertising
Media revenues are comprised primarily of fees for
advertising and sponsorships on Excite@Home's open-web and
broadband media properties as well as online marketing
services revenues generated by Excite@Home's MatchLogic
subsidiary. Media revenues totaled $45.1 million in the
first quarter, a decrease of 41% compared to the year-ago
quarter. The decline was driven primarily by general
softness in the online advertising market.
Traffic on the Excite Network, which includes Excite@Home's
broadband and narrowband media properties, averaged 146
million daily page views in March, up 1% from 144 million
page views a year ago. Broadband page views averaged more
than 14 million per day in March, up approximately four
times from March 2000. In March, the Excite Network ranked
sixth in overall digital media reach according to Nielsen
Net Ratings, reaching 31 million unique visitors.
International Services
International revenues are generated through fees paid to
Excite@Home for services provided to broadband subscribers
outside North America, as well as advertising on
Excite@Home's consolidated international portal properties.
Excite@Home also participates in non-consolidated media
joint ventures in Japan, Australia, Italy and the United
Kingdom.
First quarter international revenues were $6.8 million, a
6% increase over first quarter 2000. The increases was
driven by growth in broadband subscribers, which numbered
333,000 at the end of March, up more than five times from
61,000 a year ago. Subscriber growth was led by @Home
Japan, which is now the largest provider of broadband
service in Japan after less than a year of operations.
Growth in access revenues in the first quarter of 2001 was
offset by revenues included in the year-ago period for
services provided by Excite@Home to @Home Japan and
Excite@Home Australia in conjunction with the launch of
broadband services by those joint ventures. Financial Detail
· Net interest expense for the quarter was $3.3
million. Net interest expense includes the impact of other
income/expense from portfolio sales and other items.
· EBITDA for the quarter was negative $23.0 million,
compared to positive EBITDA of $11.8 million in the first
quarter of 2000. Depreciation and amortization included in
operating expenses was $35.4 million, up from $19.6 million
in the year-ago period.
· Capital expenditures totaled $68.4 million in the
first quarter. Capital expenditures were directed primarily
at expanding and increasing the reliability of
Excite@Home's broadband network.
· Excite@Home's cash balance was $104.5 million as of
March 31, 2001, down from $200.8 million at the end of
2000. The decrease in cash was driven primarily by capital
expenditures and the company's operating losses. The
company also paid approximately $6 million in cash
severance costs associated with workforce reductions during
the quarter.
The company announced on April 17 that it is taking several
immediate measures to conserve cash and raise additional
funds to continue its leadership in broadband services.
These measures include expense reductions; a non-binding
agreement with AT&T under which AT&T would provide
Excite@Home with $75 million to $85 million in connection
with the restructuring of the backbone fiber agreement
between the companies and with a joint initiative to
maintain and improve current network performance levels;
debt and/or equity financing from third parties; the
potential sale or restructuring of media operations not
directly supporting the company's broadband strategy.
Forward-Looking Statements and Financial Outlook
Excite@Home also provided an update on its financial
outlook for the remainder of 2001. The company expects
second quarter 2001 revenues to be similar to the first
quarter level, and expects a pro forma net operating loss
in the second quarter of $0.16 to $0.17 per share. The
increase in net operating loss compared to the first
quarter is expected to result from higher net interest
expense driven by increased leasing of capital equipment
and lower other income from portfolio gains.
The company forecasts improving operating losses in the
second half of the year. The company expects third quarter
revenues to grow at a low-single-digit rate compared to
the third quarter of 2000 and fourth quarter revenues to
grow at a high-single-digit rate compared to the fourth
quarter of 2000.
The company expects its worldwide subscriber base to grow
by 13 - 15% in the second quarter. By the end of 2001, the
company expects to have a total of between 4.8 million and
5.1 million worldwide subscribers excluding Cablevision.
These expectations are subject to risk and uncertainty, and
are subject to modification should the company choose to
divest or otherwise exit any of its operations. See
cautionary note regarding forward-looking statements below. Conference Call Scheduled for April 23
Excite@Home will host a listen-only conference call to
present its results and outlook at 2:00 PM Pacific Time on
April 23. The call will be available to the public via an
audio webcast at the company's investor relations website,
www.excitehome.net/ir. A replay of the call will also be archived on the website. Cautionary Note Regarding Forward-
looking Statements
This press release contains forward-looking statements that
involve risks and uncertainties, including those relating
to the company's financial outlook for future periods,
including revenue and operating losses and its goals for
the growth of its broadband subscriber base and footprint.
Actual results may differ materially due to a number of
factors, including general adverse economic and industry
conditions; the company's ability to raise funds through
debt or equity financing or other mechanisms; the company's
ability execute on its expense reduction plans; the
company's ability to negotiate and execute definitive
agreements with AT&T as contemplated in the agreement
mentioned in this press release; its incurrence of
unanticipated expenses including increased spending to
improve network performance and stimulate growth in
broadband subscribers and expand international operations;
the effectiveness of those efforts, which cannot be
assured; the increasingly competitive environment for
Internet advertising sales and e-commerce services, which
can be expected to limit the growth of media revenues; the
company's dependence on its contractual relationships with
its cable partners, including their commitments to transfer
subscribers to our network, upgrade the cable plant and
market and install the @Home service; the company's ability
to successfully integrate its acquired companies; the
company's ability to expand its online marketing programs;
the company's ability to expand its international
operations and relationships and the company's ability to
maintain and enhance the performance of its network.
Reported results should not be considered as an indication
of future performance. The matters discussed in this press
release also involve risks and uncertainties described in
Excite@Home's Form 10-K and other filings with the
Securities and Exchange Commission. Excite@Home assumes no
obligation to update the forward-looking information
contained in this press release. About Excite@Home
Excite@Home is the leader in broadband, offering consumers
residential broadband services and businesses high-speed
commercial services. Excite@Home has three joint ventures
outside of North America to deliver high-speed Internet
services and has localized versions of the Excite service
in 15 leading international markets.
Note to Editors: Excite@Home, @Home, Excite and the "@"
stylized logo are trademarks of At Home Corporation and may
be registered in certain jurisdictions.
EXCITE@HOME
UNAUDITED CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
(In thousands, except per share data)
Three Months Three Months
Ended March 31, Ended
December 31,
2001 2000 2000
----------- ----------- -----------
Revenues (1)
Consumer access $ 75,360 $ 41,977 $ 66,872
Commercial services 15,546 13,467 16,086
Media / advertising 45,057 76,223 79,315
International 6,830 6,396 6,785
----------- ----------- -----------
Total revenues 142,793 138,063 169,058
Operating costs (2)
Cost of services
and products 92,634 57,239 83,583
Product development
and engineering 29,405 20,975 24,009
Sales and marketing 61,705 56,926 79,593
General and
administrative 17,402 10,724 17,829
----------- ----------- -----------
Total operating
costs 201,146 145,864 205,014
----------- ----------- -----------
Operating loss (58,353) (7,801) (35,956)
Interest and other
income (expense),
net (3,296) 3,193 121
----------- ----------- -----------
Net operating loss (61,649) (4,608) (35,835)
Non-operating costs
and other items
Equity share of
losses of
affiliated companies 13,670 4,815 12,525
Cost and
amortization of
distribution
agreements 24,653 93,965 24,621
Costs and
amortization of
goodwill, intangible
assets, deferred
compensation and other
acquisition-related
amounts 102,116 573,133 588,152
Write-down of goodwill,
other intangible assets
and other assets 630,516 -- 4,765,169
----------- ----------- -----------
Total non-operating
costs and
other items 770,955 671,913 5,390,467
Net loss $ (832,604) $ (676,521) $(5,426,302)
=========== =========== ===========
Net loss per share
excluding non-operating
costs and other items -
basic and diluted $ (0.15) $ (0.01) $ (0.09)
=========== =========== ===========
Net loss per share -
basic and diluted $ (2.05) $ (1.75) $ (13.43)
=========== =========== ===========
Shares used in per
share calculations 406,203 387,644 404,013
=========== =========== ===========
(1) Revenue from
related parties $ 10,572 $ 12,094 $ 8,824
=========== =========== ===========
(2) Depreciation and
amortization included
in operating costs $ 35,372 $ 19,589 $ 30,426
=========== =========== ===========
EXCITE@HOME
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2001 2000
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 60,598 $ 64,508
Restricted cash 29,466 34,139
Short-term investments 14,469 102,115
----------- -----------
Total cash, cash equivalents
and short-term investments 104,533 200,762
Accounts receivable, net 38,037 65,899
Accounts receivable - related parties 64,258 54,126
Other current assets 45,180 42,626
----------- -----------
Total Current Assets: 252,008 363,413
----------- -----------
Property, equipment
and improvements, net 406,581 366,127
Investments in affiliated companies 33,645 35,032
Other investments 39,803 73,628
Distribution agreements, net 216,040 239,357
Goodwill and other
intangible assets, net 211,385 908,788
Other assets 120,996 120,355
----------- -----------
Total Assets: $ 1,280,458 $ 2,106,700
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 58,676 $ 65,060
Accounts payable -
related parties 7,209 10,892
Accrued compensation and
related expenses 19,010 21,940
Deferred revenue 41,391 40,381
Other accrued liabilities 122,644 101,826
Current portion of capital
lease and other obligations 78,996 70,258
----------- -----------
Total Current Liabilities: 327,926 310,357
----------- -----------
Convertible notes and debentures 745,386 743,525
Capital lease and other
obligations, less current portion 76,470 85,904
Other liabilities 11,603 10,397
Stockholders' Equity:
Convertible preferred stock 270,592 286,208
Common stock 9,831,060 9,809,893
Deferred compensation (28,557) (34,070)
Accumulated other
comprehensive income 3,181 19,085
Accumulated deficit (9,957,203) (9,124,599)
----------- -----------
Total Stockholders' Equity: 119,073 956,517
----------- -----------
Total Liabilities and
Stockholders' Equity: $ 1,280,458 $ 2,106,700
=========== ===========
--30--eb/sf*
CONTACT:
Excite@Home
Joe Shiffler, 650-556-2030 (IR)
Alison Bowman, 650-556-2355 (PR) |
