-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IJxlCVyeEnQeFa9L0npfOsUXRQVxJgOMj9V+OMuM0fDjMG+gUTWQU8M3S38GET5E hh+bLbvXolbcc47gaR1w9A== 0001157523-04-006569.txt : 20040721 0001157523-04-006569.hdr.sgml : 20040721 20040721093419 ACCESSION NUMBER: 0001157523-04-006569 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040721 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040721 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IBASIS INC CENTRAL INDEX KEY: 0001091756 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 043332534 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-27127 FILM NUMBER: 04923318 BUSINESS ADDRESS: STREET 1: 20 SECOND AVE CITY: BURLINGTON STATE: MA ZIP: 01803 BUSINESS PHONE: 7815057500 MAIL ADDRESS: STREET 1: 20 SECOND AVE CITY: BURLINGTON STATE: MA ZIP: 01803 8-K 1 a4684676.txt IBASIS INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 July 21, 2004 ------------------- Date of Report (Date of earliest event reported) ------------------- iBASIS, INC. --------------------- (Exact Name of Registrant as Specified in Charter) DELAWARE 0-27127 04-3332534 - -------------------------------------------------------------------------------- (State or Other Jurisdiction of (Commission (IRS Employer Incorporation) File Number) Identification No.) 20 Second Avenue, Burlington, MA 01803 --------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (781) 505-7500 (Registrant's telephone number, including area code) --------------- ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (C) EXHIBITS. EXHIBIT NUMBER DESCRIPTION ------------ ------------ Exhibit 99.1 Press Release, dated July 21, 2004 ITEM 9. REGULATION AND DISCLOSURE. On July 21, 2004, iBasis, Inc. (the "Company") issued a press release regarding results for the three months and year ended June 30, 2004. A copy of this press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K. This Current Report on Form 8-K and the press release attached hereto are being furnished by the Company pursuant to Item 12 of Form 8-K, insofar as they disclose historical information regarding the Company's results of operations for the three months and year ended June 30, 2004. In accordance with General Instruction B.6 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: July 21, 2004 iBasis, INC. By: /s/ Richard Tennant ---------------------------------------- Vice President, Finance and Administration And Chief Financial Officer (Principal Financial and Accounting Officer) EX-99.1 2 a4684676ex991.txt NEWS RELEASE Exhibit 99.1 iBasis Reports Record Revenue, Margin and Traffic Volume for Second Quarter 2004 BURLINGTON, Mass.--(BUSINESS WIRE)--July 21, 2004-- Company Achieves Goal of Positive Cash Flow; Continues Rapid Growth in Retail Prepaid Business; Completes Debt Refinancing iBasis, Inc. (OTCBB: IBAS), a leader in international long distance, VoIP, and prepaid calling cards, today announced results for the second quarter ended June 30, 2004. Revenue for the second quarter of 2004 was $61.2 million, compared to $39.1 million for the second quarter of 2003. Net loss for the second quarter of 2004 was $5.9 million, or $(0.13) per share, compared to net loss for the second quarter of 2003 of $5.5 million, or $(0.12) per share. Excluding debt refinancing charges and gains on debt exchanges, net loss for the second quarter of 2004 was $3.5 million, or $(0.08) per share, compared to net loss for the second quarter of 2003 of $9.2 million, or $(0.21) per share. Highlights of the second quarter include: -- Completed refinancing of $62.5 million in debt; -- Increased cash and achieved positive cash flow from operations; -- Achieved fourth consecutive quarter of revenue growth; -- Increased revenue 56% over Q2 2003 revenue and 7% over Q1 2004; and -- Increased Prepaid and Enhanced Services (PES) revenue 100% over Q1 2004. "We achieved two of our three all-important goals: positive cash flow by mid-2004, and debt refinancing. We expect to achieve the third goal, profitability, by year-end. "The debt refinancing is the culmination of a three-year effort to strengthen our balance sheet, during which we have reduced our debt by almost $147 million through bond exchanges and repurchases," said Ofer Gneezy, president and CEO of iBasis. "We extended the maturity dates significantly and created the very real potential to convert all of our debt to equity, which would eliminate the debt and interest payments entirely." "Once again, we achieved tremendous sequential growth in the PES business, more than doubling the Q1 revenue. We continue to have a substantial competitive advantage as a result of our international network and our superior quality of service. By leveraging The iBasis Network(TM) and our sophisticated back office systems, the PES business is driving a transformation towards a balance between PES and our wholesale business in margin contribution. ($ in millions) Wholesale VoIP PES Total - ------------------------------------------------------------------- Revenue $53.5 $7.7 $61.2 - ------------------------------------------------------------------- Gross Margin(a) $7.7 $1.4 $9.1 - ------------------------------------------------------------------- Gross Margin % 14.5% 17.8% 14.9% (a) Net Revenue less Data Communications and Telecommunications costs. Key Indicators Minutes of use on The iBasis Network(TM) in the second quarter 2004 rose to 1.1 billion minutes, a 30% increase over the 854 million minutes carried in the second quarter 2003, and an 8% increase over the 1 billion minutes in the first quarter 2004. Average revenue per minute continued to be relatively stable at 5.5 cents per minute in the second quarter 2004, down from 5.6 cents per minutes in the first quarter 2004. Average revenue per minute is based on our reported net revenue divided by the minutes of traffic for the applicable period. Operational Milestones In the second quarter 2004, Tier One carrier customers generated approximately 44% of iBasis Wholesale VoIP revenue, compared to 52% of Wholesale VoIP revenue in Q1 2004. Five of the top ten iBasis customers during the quarter were Tier One carriers. Overseas-originated calls accounted for 42% of revenue in the second quarter of 2004, compared to 45% of revenue in the first quarter 2004. iBasis ended the second quarter with 277 customers, up from 263 at the end of the first quarter. New customers announced during the quarter included Golden Telecom, a leading alternative provider of integrated telecommunications and Internet services in major cities of Russia and other countries of the Commonwealth of Independent States (CIS), and Telekom Malaysia, the national carrier of Malaysia. Both of these customers benefited from the iBasis DirectVoIP(TM) service, which enables cost-efficient direct VoIP interconnections with The iBasis Network for the exchange of international phone calls using VoIP equipment from a large selection of vendors. Also, during the quarter iBasis announced that for the third year in a row it has been ranked by carriers as the world's best international wholesale carrier in the 2004 International Wholesale Report Card, the industry reference survey published annually by independent telecommunications research and advisory firm ATLANTIC-ACM. Debt Refinancing In June, iBasis completed a refinancing of $62.5 million in debt. As a result of an exchange offer, $37.3 million of the Company's 5 3/4% Convertible Subordinated Notes due in March 2005, representing approximately 98% of the total amount outstanding, were tendered for the same principal amount of new 6 3/4% Convertible Subordinated Notes due in June 2009. The new notes are convertible into the Company's Common Stock at $1.85 per share. Approximately $0.9 million of the original notes was not tendered for exchange and remains outstanding. Simultaneous with the exchange offer, the Company prepaid all $25.2 million of its 11 1/2% Senior Secured Notes due in January 2005 for cash equal to the principal amount plus accrued but unpaid interest and warrants exercisable for 5,176,065 shares of the Company's Common Stock at $1.85 per share. The Company issued $29.0 million of new 8% Secured Convertible Notes due in June 2007, of which $25.2 million was used to finance the prepayment of the 11 1/2% Senior Secured Notes. The new notes are convertible into shares of the Company's Common Stock at $1.85 per share. As a result of a debt exchange in 2003, all of the interest on the $25.2 million of 11 1/2% Senior Secured Notes due in January 2005 was accounted for as a reduction of the gain on the debt exchange and not charged to the statement of operations as interest expense over the term of the debt. The interest on the $29.0 million of new 8% Secured Convertible Notes due in June 2007 will be recorded as a charge to the statement of operations. Although the refinancing resulted in a reduction in the Company's annual cash interest payments, it will result in an increase in interest expense on the statement of operations in the future. Guidance The following statements are forward-looking and actual results may differ materially due to factors noted below, among others. The information provided in this financial outlook is as of July 21, 2004, and supersedes all previous guidance. The Company believes it will continue to be cash flow positive for the balance of 2004, it will achieve positive cash flow for the year, and, partially as a result of the increased interest expense resulting from the debt refinancing, it will now achieve positive net income in Q4 2004. About iBasis Founded in 1996, iBasis (OTCBB: IBAS) is a leading wholesale carrier of international long distance telephone calls and a provider of retail international prepaid calling cards sold through major distributors. iBasis customers include many of the largest telecommunications carriers in the world, including ATT, Cable & Wireless, China Mobile, China Unicom, MCI, Sprint, Telefonica, Telenor, and Telstra. The Company's prepaid calling cards are sold through retail stores in major metropolitan markets throughout the U.S. iBasis has carried more than nine billion minutes of international voice over IP (VoIP) traffic over its global Cisco Powered Network(TM), and is one of the ten largest carriers of international voice traffic in the world(1). For three consecutive years service providers have named the Company as the best international wholesale carrier in ATLANTIC-ACM's annual International Wholesale Carrier Report Card(2). iBasis was also ranked the #1 fastest-growing technology company in New England in the 2002 and 2003 Technology Fast 50 programs sponsored by Deloitte & Touche. The Company can be reached at its worldwide headquarters in Burlington, Massachusetts, USA at 781-505-7500 or on the Internet at www.ibasis.com. Assured Quality Routing, ConnectPoint, and iBasis are registered marks, DirectVoIP, The iBasis Network, Internet Central Office, Internet Branch Office, and IP CallCard are trademarks of iBasis, Inc. Cisco and Cisco Powered Network are registered trademarks of Cisco Systems, Inc. All other trademarks are the property of their respective owners. Except for historical information, all of the expectations, projections and assumptions contained in the foregoing press release, including those relating to the company's current expectations regarding revenue growth, sources of revenue, margin improvement, profitability, future capital expenditures, and cash flows constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties. Important factors that could cause actual results to differ materially from such forward-looking statements include, but are not limited to, (i) the extent of adoption of the company's services and the timing and amount of revenue and margin generated by these services; (ii) fluctuations in the market for and pricing of these services; and (iii) the other considerations described as "Risk Factors" in the Company's most recent Forms 10-K and 10-Q, and the company's other SEC filings. We have no current intention to update any forward-looking statements. Use of Non-GAAP Financial Data The Company provides certain financial data in addition to providing financial results in accordance with GAAP. This data is not in accordance with, or an alternative to GAAP, and may be different from Non-GAAP financial data used by other companies. This Non-GAAP financial data includes average revenue per minute, which the Company believes provides useful information, to both its management and investors, about the Company's current performance. (1)Telegeography 2004 data compared with iBasis annualized Q1 2004 traffic volume. (2)ATLANTIC-ACM International Wholesale Carrier Report Card - 2002, 2003, & 2004. iBasis, Inc. Consolidated Balance Sheets (In thousands) June 30, December 31, 2004 2003 ---------- ------------ (Unaudited) Assets Cash and cash equivalents $18,217 $17,270 Accounts receivable, net 25,692 21,767 Prepaid expenses and other current assets 2,875 5,295 Property and equipment, net 11,817 17,175 Deferred debt financing costs, net 191 326 Long term investment in non-marketable security --- 5,000 Other assets 358 705 ------------ ---------- Total assets $59,150 $67,538 ============ ========== Liabilities and Stockholders' Deficit Accounts payable $24,510 $19,902 Accrued expenses 13,875 18,652 Deferred revenue 3,421 417 Current portion of long term debt 4,023 2,097 Long term debt, net of current portion 66,285 65,829 Other long term liabilities 1,200 2,749 ------------ ---------- Total liabilities 113,314 109,646 Stockholders' deficit: Common stock 48 46 Treasury stock, at cost (341) (341) Additional paid-in capital 373,590 370,393 Accumulated deficit (427,461) (412,206) ------------ ---------- Total stockholders' deficit (54,164) (42,108) ------------ ---------- Total liabilities and stockholders' deficit $59,150 $67,538 ============ ========== iBasis, Inc. Consolidated Statements of Operations (In thousands) Three Months Ended June 30, ---------------------- 2004 2003 ------------ --------- (Unaudited) Net revenue $ 61,175 $ 39,119 Cost and operating expenses: Data communications and telecommunications (excluding depreciation and amortization) 52,066 33,370 Research and development 3,542 3,442 Selling and marketing 2,131 1,903 General and administrative 3,266 2,820 Depreciation and amortization 2,787 5,749 Non-cash stock-based compensation --- 28 ------------ --------- Total costs and operating expenses 63,792 47,312 ------------ --------- Loss from operations (2,617) (8,193) Interest expense, net (795) (930) Gain on bond repurchases and exchanges --- 3,716 Other expenses, net (66) (98) Loss on long-term non-marketable security --- --- Debt refinancing charges: Transaction costs (1,954) --- Additional interest expense, net (481) --- ------------ --------- Net loss $(5,913) $(5,505) ====================== Basic and diluted net loss per share: Basic $(0.13) $(0.12) ============ ======== Diluted $(0.13) $(0.12) ============ ======== Weighted average common shares outstanding: Basic 46,287 44,652 ============ ========= Diluted 46,287 44,652 ============ ========= iBasis, Inc. Consolidated Statements of Operations (In thousands) Six Months Ended June 30, -------------------- 2004 2003 ---------- --------- (Unaudited) Net revenue $ 118,183 $ 80,960 Cost and operating expenses: Data communications and telecommunications (excluding depreciation and amortization) 100,656 68,297 Research and development 7,080 7,125 Selling and marketing 4,132 3,896 General and administrative 6,219 5,329 Depreciation and amortization 6,311 11,862 Non-cash stock-based compensation --- 57 ---------- --------- Total costs and operating expenses 124,398 96,566 ---------- --------- Loss from operations (6,215) (15,606) Interest expense, net (1,520) (2,287) Gain on bond repurchases and exchanges --- 16,615 Other expenses, net (85) (195) Loss on long-term non-marketable security (5,000) --- Debt refinancing charges: Transaction costs (1,954) --- Additional interest expense, net (481) --- ---------- --------- Net loss $(15,255) $(1,473) ==================== Basic and diluted net loss per share: Basic $ (0.33) $ (0.03) ========== ======== Diluted $ (0.33) $ (0.03) ========== ======== Weighted average common shares outstanding: Basic 45,674 44,651 ========== ========= Diluted 45,674 44,651 ========== ========= CONTACT: iBasis, Inc. Media: Chris Ward, 781-505-7557 cward@ibasis.net or iBasis, Inc. Investors: Richard Tennant, 781-505-7409 ir@ibasis.net -----END PRIVACY-ENHANCED MESSAGE-----