EX-99.1 3 dex991.htm PRESS RELEASE PRESS RELEASE

Exhibit 99.1

 

LOGO

 

FOR IMMEDIATE RELEASE

 

Media Contact:    Investor Contact:

Jennifer Sharpe

   

James Stawski

704-319-1135

   

704-319-1189

jsharpe@uslec.com

   

jstawski@uslec.com

 

US LEC ANNOUNCES 24% REVENUE GROWTH TO REACH $310.8 MILLION AND $42.0 MILLION IN EBITDA FOR FULL YEAR 2003

 

COMPANY ACHIEVES $79.7 MILLION IN REVENUE AND $13.5 MILLION IN EBITDA FOR THE FOURTH QUARTER OF 2003

 

Charlotte, NC (February 26, 2004) - Continuing its trend of strong financial and operational growth, US LEC Corp. (Nasdaq: CLEC), a super-regional telecommunications carrier providing integrated voice, data and Internet services to businesses, today announced results for the quarter and year ended December 31, 2003. The year was highlighted by:

 

• Achieving annual revenues of $310.8 million, a $60.5 million, or 24% increase over 2002

 

• Reaching end-customer revenue totaling $211.3 million, a 42% increase over 2002

 

• Increasing US LEC’s customer base by 65% over the previous year to reach approximately 17,000

 

• Improving EBITDA to $42.0 million, a $35.1 million improvement over 2002 (see definition and reconciliation of EBITDA to net cash flow from operations below)

 

• Growing cash by $17.4 million to end 2003 at $43.1 million

 

• Raising $10 million in a private placement of two million shares of US LEC Class A common stock

 

• Acquiring substantially all of the assets of FASTNET® Corporation in December, adding $24 million of annualized revenue

 

• Reducing the Company’s senior debt by $6 million, further reinforcing its already-strong balance sheet

 

Revenues for the year ended December 31, 2003 totaled $310.8 million compared with $250.4 million reported for the year ended December 31, 2002, a 24% year-over-year increase. Net loss attributable to common shareholders was $(29.5) million, or $(1.08) per share (basic and diluted) on 27.4 million average shares outstanding for the year ended December 31, 2003, compared with net loss of $(60.0) million, or $(2.26) per share (basic and diluted), on 26.5 million average shares outstanding for the year ended December 31, 2002. EBITDA for the year ended December 31, 2003, was $42.0 million, including a $5.8 million recovery related to the settlement of the MCI pre-petition receivables, compared with EBITDA of $6.9 million, including a $9.5 million allowance for doubtful accounts related to MCI, for the year ended December 31, 2002.

 

Revenues for the fourth quarter ended December 31, 2003 totaled $79.7 million, compared with $73.7 million for the quarter ended December 31, 2002, and $79.7 million for the quarter ended September 30, 2003. Net loss attributable to common shareholders was $(4.8) million, or $(0.17) per share (basic and diluted), on 28.5 million average shares outstanding for the quarter ended December 31, 2003, compared with a net loss of $(8.0) million, or $(0.30) per share (basic and diluted), on 26.7

US LEC – Fourth Quarter and Year-end 2003 Results

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February 26, 2004

 

million average shares outstanding for the quarter ended December 31, 2002. EBITDA increased to $13.5 million, including a $3.5 million recovery related to the settlement of the MCI pre-petition receivables, compared with EBITDA of $9.6 million in the quarter ended December 31, 2002 and EBITDA of $10.4 million, including a $2.3 million recovery related to the settlement of the MCI pre-petition receivables, in the quarter ended September 30, 2003.

 

Aaron D. Cowell, president and chief executive officer of US LEC commented, “Our strong fourth quarter performance solidified our position as the premier competitive carrier in our markets. Annual revenue of $310.8 million and EBITDA of $42.0 million highlight our strong financial results. Our customer base increased by almost 50% over the fourth quarter of 2002, and by 65% over the same period including the customers acquired through the Fastnet acquisition. With this growth and our continued strong customer retention, US LEC now commands meaningful market share in the markets we serve in the Eastern United States. Our success reflects our ability to provide superior products backed by unmatched customer care. In addition, our focus on growing our data business has resulted in an almost 70% data take rate with new customers and greater than 50% data take rate across US LEC’s entire customer base. This translated to $14.4 million in data revenue for the quarter ended December 31, 2003, which now accounts for over 18% of the Company’s total revenue. With the integration of Fastnet on track, we anticipate that we will add their data products to our already strong portfolio of services in 2004. In sum, 2003 was an exceptional year for US LEC and we are committed to building on this momentum in 2004.”

 

Michael K. Robinson, executive vice president and chief financial officer of US LEC, added, “The Company achieved over $79.7 million in revenue, up 8% over the fourth quarter of 2002, and EBITDA increased to $13.5 million compared with $9.6 million last year. US LEC now has 22 out of 27 offices that are EBITDA positive including corporate allocations, compared to 18 in the third quarter of 2003 – solid evidence that our business model works. In addition, end-customer revenue, which for the quarter ended December 31, 2003, accounts for 73% of total revenue, reached $58.1 million, a 33% increase over the fourth quarter of 2002 and up 7% over the third quarter of 2003. We are pleased that our end-customer revenue base continues to grow as inter-carrier compensation continues to decline in both amount and as a percentage of revenue. US LEC also achieved its fourth consecutive quarter of positive cash growth to reach $43.1 at December 31, 2003. In addition to improved operational and financial metrics, we also took action to improve the long-term financial strength of the Company. Our efforts included raising $10 million in equity capital and reducing the Company’s senior debt by $6 million. US LEC is focused on executing its business plan and, as we enter 2004, we believe we are well positioned to take advantage of the significant opportunities our markets provide.”

 

Conference Call Information

 

US LEC will hold a conference call to discuss this press release today, February 26, 2004, at 2:00 p.m. Eastern Time. A live broadcast of the conference call will be available online at www.uslec.com, and www.fulldisclosure.com. To listen to the live call, visit either web site at least fifteen minutes early to download, and install any necessary audio software. For those who cannot listen to the live broadcast, a telephone replay will be available shortly after the call through the close of business on March 2, 2004 and replay via webcast will be available through March 26, 2004.

 

About US LEC

 

Based in Charlotte, NC, US LEC (Nasdaq: CLEC) is a leading telecommunications carrier providing integrated voice, data and Internet services to medium and large businesses and enterprise organizations. Throughout 15 eastern states and the District of Columbia, US LEC services include local and long distance calling services, advanced data services such as Frame Relay, Multi-Link Frame Relay and Asynchronous Transfer Mode, dedicated and dial-up Internet

US LEC – Fourth Quarter and Year-end 2003 Results

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February 26, 2004

 

services, managed data solutions, data center services and Web hosting. US LEC also provides selected voice services in 25 additional states and selected data services nationwide. For more information about US LEC, visit www.uslec.com.

 

Except for the historical information contained herein, this report contains forward-looking statements, subject to uncertainties and risks, including the demand for US LEC’s services, the ability of the Company to introduce additional products, the ability of the Company to successfully attract and retain personnel, competition in existing and potential additional markets, uncertainties regarding its dealings with ILECs and other telecommunications carriers and facilities providers, regulatory uncertainties, the possibility of adverse decisions related to reciprocal compensation and access charges owing to the Company, as well as the Company’s ability to begin operations in additional markets. These and other applicable risks are summarized in the “Forward-Looking Statements and Risk Factors” section and elsewhere in the Company’s Annual Report on Form 10-K for the period ended December 31, 2002, and in subsequent reports, which are on file with the Securities and Exchange Commission.

 

US LEC® and FASTNET™ are registered service marks of US LEC Corp. US LEC and Design (R) is a registered service mark and trademark of US LEC Corp.

US LEC – Fourth Quarter and Year-end 2003 Results

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February 26, 2004

 

US LEC Corp. and Subsidiaries

Condensed Consolidated Statements of Operations

(In Thousands, Except Per Share Data)

(Unaudited)

 

    

Three months ended

December 31,

    

Twelve months ended

December 31,

  
     2003
     2002
     2003
     2002
  

Revenue

    $ 79,695     $ 73,732     $ 310,825     $ 250,363  

Network Expenses (excluding depreciation and amortization shown below)

      38,753       34,589       148,699       121,127  

Depreciation and Amortization

      12,400       12,150       48,374       45,062  

Selling, General and Administrative Expenses

      27,591       29,516       119,519       122,378  
    
 
 
 

Operating Income (Loss) from Operations

      951       (2,523 )     (5,767 )     (38,204 )

Other (Income) Expense

      (176 )     —         614       —    

Net Interest Expense

      2,108       1,898       8,159       7,688  
    
 
 
 

Net Loss

      (981 )     (4,421 )     (14,540 )     (45,892 )
    
 
 
 

Preferred Stock Dividends

      (3,689 )     (3,475 )     (14,431 )     (13,596 )

Preferred Stock Accretion of Issuance Costs

      (141 )     (134 )     (553 )     (521 )
    
 
 
 

Net Loss Attributable to Common Stockholders

    $ (4,811 )   $ (8,030 )   $ (29,524 )   $ (60,009 )
    
 
 
 

Net Loss Attributable to Common Stockholders Per Common Share

                                 

Basic and Diluted

    $ (0.17 )   $ (0.30 )   $ (1.08 )   $ (2.26 )
    
 
 
 

Weighted Average Number of Shares Outstanding

                                 

Basic and Diluted

      28,490       26,700       27,392       26,546  
    
 
 
 

 

EBITDA consists of earnings (loss) before interest income and expense, income taxes, depreciation and amortization. EBITDA as used by the Company may be different than similarly used measures by other companies and is not a measure of financial performan

 

    

Three months ended

December 31,

    

Twelve months ended

December 31,

  
     2003
     2002
     2003
     2002
  

Operating Income (Loss) from Operations

    $ 951     $ (2,523 )   $ (5,767 )   $ (38,204 )

Other Income (Expense)

      176       —         (614 )     —    

Depreciation and Amortization

      12,400       12,150       48,374       45,062  
    
 
 
 

EBITDA

      13,527       9,627       41,993       6,858  

Changes in Working Capital

      3,784       488       21,377       (4,632 )

Net Interest Expense

      (2,108 )     (1,898 )     (8,159 )     (7,688 )

Misc Other

      404       (1,039 )     747       (183 )
    
 
 
 

Net Cash Provided by (used in) Operating Activities

    $ 15,607     $ 7,178     $ 55,958     $ (5,645 )
    
 
 
 

US LEC – Fourth Quarter and Year-end 2003 Results

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February 26, 2004

 

US LEC Corp. and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands, Except Per Share Data)

(Unaudited)

 

    

December 31,

2003

    

December 31,

2002

  

Assets

                 

Cash and cash equivalents

    $ 43,126     $ 25,715  

Restricted cash

      61       1,080  

Accounts receivable, net

      48,294       57,989  

Property and equipment, net

      165,793       178,810  

Deferred income taxes

      346       2,805  

Other assets

      27,679       18,915  
    
 

Total Assets

    $ 285,299     $ 285,314  
    
 

Liabilities and Stockholders’ Deficiency

                 

Accounts payable

    $ 20,343     $ 18,089  

Notes Payable

      1,300          

Deferred revenue

      14,046       8,048  

Accrued network costs

      25,088       26,952  

Accrued expenses

      24,263       22,522  

Deferred income taxes

      346       2,805  

Long-term debt

      125,818       130,617  
    
 

Total Liabilities

      211,204       209,033  
    
 

Series A Redeemable Convertible Preferred Stock

      245,255       230,272  

STOCKHOLDERS’ DEFICIENCY

                 

Common Stock - Class A

      297       269  

Additional paid-in capital

      90,852       78,526  

Accumulated Deficit

      (262,309 )     (232,786 )
    
 

Total Stockholders’ Deficiency

      (171,160 )     (153,991 )
    
 

Total Liabilities, Convertible Preferred Stock and Stockholders’ Deficiency

    $ 285,299     $ 285,314  
    
 

US LEC – Fourth Quarter and Year-end 2003 Results

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February 26, 2004

 

US LEC Corp. and Subsidiaries

Quarterly Statistical Highlights

(Unaudited)

 

Statistical Data:

   

Dec. 31,

2003

    

Sept. 30,

2003

   

June 30,

2003

   

March 31,

2003

   

Dec. 31,

2002

  

Switching centers in service

      27       26      26      26      26  

Number of customers

      16,983 1     13,970      12,345      10,988      10,290  

Number of data customers

      9,416 1     5,934      5,490      4,810      4,139  

Number of employees

      1,016       934      941      913      911  

Number of sales and sales support employees

      412       397      386      371      367  

Revenue (in 000s)3

                                      

Total Net Revenue

    $ 79,695     $ 79,723    $ 78,298    $ 73,108    $ 73,733 2

End-customer Revenue 4

    $ 58,078     $ 54,433    $ 51,190    $ 47,552    $ 43,520  

Data Revenue

    $ 14,417     $ 11,821    $ 10,820    $ 9,858    $ 8,213  

Active Channels5:

   

Dec. 31,

2003

    

Sept. 30,

2003

   

June 30,

2003

   

March 31,

2003

   

Dec. 31,

2002

  

Voice

      350,073       336,035      314,194      292,902      278,986  

Data

      142,534       124,275      107,704      95,338      82,559  

ISP

      17,753       18,675      19,342      20,826      22,516  
    
 
  
  
  

Totals:

      510,360       478,985      441,240      409,066      384,061  
    
 
  
  
  
1 Includes 1,688 business class customers acquired in the asset acquisition of Fastnet Corporation
2 Includes the subsequent event of $3.6 million additional carrier revenue recorded for the quarter
3 December 31, 2003 revenues include approximately $1.1 million of revenue from Fastnet.
4 Includes local, long distance and data revenue from end-customers
5 For a detailed explanation of these terms, please visit the network description section of the Company’s web site at www.uslec.com. These statistics do not include Fastnet data.