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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| First Comms. | LSE:FCOM | London | Ordinary Share | COM SHS USD0.001 (REGS) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.015 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number : 8889E
First Communications, Inc.
01 October 2008
First Communications, Inc. Announces Interim Results for
Six Months Ended June 30, 2008
AKRON, OH, October 1, 2008 -- First Communications, Inc. (AIM: FCOM)(the "Company") a leading Midwest competitive local exchange carrier
and owner of wireless telecommunications towers, announces its interim results for the six months ended June 30, 2008.
Highlights for June 2008 Interim Results
* Proforma revenue growth of 3% for 1H08 to $77.4 million (1H07: $75.4 million)
* Strong proforma EBITDA growth of 32% in 1H08 to $11.6 million (1H07: $8.8 million)
* Proforma net income decrease from $4.9 million (1H07) to $3.1 million (1H08) due to tax expense and increased depreciation and
amortization expense.
The results for this period include full 6 month contributions from First Communications, LLC, and Xtension Services, Inc. ("Xtension")
and a almost 4 month contribution from FE Telecom. The selected financial information and management analysis shown below ('MD&A') shows a
pro-forma view including a full 6 months contribution from FirstEnergy Telecom Services Inc. ("FE Telecom") acquired on 10 March 2008.
Selected Financial Information
FIRST COMMUNICATONS INC
SELECTED PROFORMA FINANCIAL INFORMATION
For the Six Months Ended June 30, 2008 and 2007
(US $ 000's)
Six Months Ended June 30,
2008 (1) 2007 (2) Variance
Revenues, net $ 77,441 $ 75,406 $ 2,035
EBITDA $ 11,596 $ 8,791 $ 2,805
EBITDA margin 15.0% 11.7%
Net Income $ 3,087 $ 4,918 $ (1,831)
Net Income margin 4.0% 6.5%
Note (1): The above financials for the six months ended 30 June 2008 reflect proforma results, including a full 6 months contribution
from FE Telecom, acquired on 10 March 2008. (2): The six months ended June 30, 2007 are based on restated audited numbers.
For further information:
First Communications, Inc.
Joe Morris Tel: (330) 835-2472
Financial Dynamics
Harriet Keen / Haya Chelhot Tel: +44 (207) 831-3113
Sherrie Weldon Tel: (212) 850-5658
Collins Stewart Europe Limited - Nominated Adviser and Broker
Seema Paterson / Stewart Wallace Tel: +44 (207) 523-8350
Collins Stewart Europe Limited, which is regulated by the Financial Services Authority, as Nominated Adviser and Broker exclusively for
the Company, is not acting for any other person and will not be responsible to any person other than the Company for providing the
protections afforded to customers of Collins Stewart Europe Limited, or for advising any other person in connection with the arrangements
described in this announcement. The responsibilities of Collins Stewart Europe Limited, as Nominated Adviser, are owed solely to the London
Stock Exchange.
This document does not constitute or form part of any offer invitation to sell or issue, or any solicitation of any offer to purchase or
subscribe for any securities in any jurisdiction, nor shall this document or any part of it, or the fact of its distribution, form the basis
of, or be relied upon in connection with, or act as an inducement to enter into, any contract or commitment whatsoever.
Operational Highlights
Ray Hexamer, CEO of First Communications commented:
"The first half of 2008 has been another period of significant growth and progress for the Company. Below are a number of highlights:
* Opened up Detroit, Grand Rapids, Youngstown and Dayton commercial markets and added 25 new sales personnel;
* Launched Achieve Product Line (expanding our bundled product mix for small to medium sized business);
* Purchased fiber and tower assets of FE Telecom on 10 March 2008;
* Hired Rick Buyens as President of the Company to expand sales and operations into new markets. Rick previously held the position
of Executive V.P. of Sales and Marketing at McCleodUSA;
* Signed definitive agreement to purchase GlobalCom, expected to complete on 1 October 2008;
* Raised $120m of senior debt for acquisitions and refinanced out $25m of Preferred Stock; and
* Launched material operational improvement initiatives to increase EBITDA margins.
We are very pleased with the progress we have made these past six months in executing on our business plan. We have added substantial
assets with attractive financing while improving the key financial metrics of gross margin and EBITDA in the core business. We look forward
to utilizing the newly acquired FE Telecom assets in continued EBITDA margin improvement and revenue growth."
Management's Discussion and Analysis of Financial Condition and Results of Operations
Revenues
First Communications, Inc. reported revenues of $77.4 million for the six months ended June 30, 2008, an increase of 3% from $75.4
million reported for the six months ended June 30, 2007. The growth in revenue has resulted from the inclusion of 6 months of financial
results from FE Telecom (renamed First Telecom Services) offset by declines in legacy residential and non-dedicated voice services, compared
with 1H07. The Company's strategy has been to increasingly focus on the small and medium sized businesses market in key geographical areas,
and the supply of higher margin services including dedicated T1 integrated voice and data On-Net services, while de-emphasizing some of its
legacy voice services.
Cost of Facilities and Gross Profit
The Company's gross margins increased from 32% in the first half of 2007 to 38% in the first half of 2008 due to the successful increase
in the percentage of revenue serviced on our owned network ("On-Net") and selling higher margin dedicated T1 products while de-emphasizing
legacy voice services. In the last 3 months of the half year period, over 75% of new revenue was sold via T1 integrated voice and data
on-net services.
Sales, General and Administrative Expenses
As a percentage of revenues, First Communications selling, general and administrative expenses for the six months ended June 30, 2008
increased to 22.9% compared to 21.4% for the six months ended June 30, 2008. The increase in expenses came from the expansion of our sales
force, opening of new sales offices and adding a number of key management personnel in order to expand sales to the Company's core Midwest
markets and drive new On-Net higher margin business.
Depreciation and Amortization
Depreciation and amortization charges increased from $2.9 million in the six months ended June 30, 2007 (restated) to $5.6 million for
the six months ended June 30, 2008 based on the post acquisition fair market valuation of goodwill and customer lists along with the fair
market valuations for FE Telecom. The depreciation and amortization increase from stated v. restated financials for the June 30, 2007 period
was a result of purchase price accounting being applied to the Acceris II acquisition and a true-up of the estimated fair market values
compared to the actual appraisal completed in February of 2008.
EBITDA, Income from Operations and Cash Flow from Operations
The Company's EBITDA increased 32% from $8.8 million for the six months ended June 30, 2007 to $11.6 million for the six months ended
June 30 2008, representing an EBITDA margin increase from 12% to 15%. The Company's income from operations increased from $5.4 million for
the six months ended June 30, 2007 to $6.1 million for the six months ended June 30, 2008. As a percentage of revenue, income from
operations increased from 7% in the first half of 2007 to 8% in the first half of 2008, primarily a result of higher gross margins offset by
an increase in depreciation and amortization expense. Cash flow from operations increased from $2.5 million at the six months ended December
31, 2007 to $4.3 million at June 30, 2008.
Net Income
The Company reported $3.1 million of net income for the six months ended June 30, 2008 compared to $4.9 million for the second half of
2007. The decrease in net income was the result of an increase in depreciation and amortization expenses and the addition of tax expenses
for the June 30, 2008 period, making it difficult to make a comparison year on year. In 1H07 the operating companies of First
Communications, Inc. did not incur income tax expenses as they were treated as partnerships. For the six month period ended June 30, 2008
the Company incurred tax expenses of an estimated 38% of pre tax income.
Cash
Cash balances amounted to $9.3 million as at 31 December 2007 compared to $1.3 million at June 30, 2008. The decrease in the Company's
cash position came from the payment of federal income taxes, payments of deferred financing costs and payment of principle payments on the
new credit facility. This analysis relates to the aggregated statements of cash flow set out below.
Capital Expenditures
Capital expenditures for the year six months ended June 30, 2008 were $2.1 million for the expansion of our network, network and system
upgrades, instillation costs and capitalized labor.
About First Communications
First Communications is a leading competitive local exchange carrier in the Midwestern United States. Founded in 1998, First
Communications has built a highly scalable telecommunications platform, infrastructure and support system, which represents a combination of
world-class technology, and cutting-edge product offerings. First Communications has over 214,000 customers, owns 3,500 miles of fiber and
owns and manages 327 wireless towers leased to 391 tenants, with contractual rights and significant opportunity to increase the number of
towers. First Communications is led by a strong management team that has operated telecom companies throughout all cycles of the
telecommunications market.
For further information:
First Communications, Inc.
Joe Morris Tel: (330) 835-2472
Financial Dynamics
Harriet Keen / Haya Chelhot Tel: +44 (207) 831-3113
Sherrie Weldon Tel: (212) 850-5658
Collins Stewart Europe Limited - Nominated Adviser and Broker
Seema Paterson / Stewart Wallace Tel: +44 (207) 523-8350
FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2008
FIRST COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2008 2007
(Reviewed) (restated)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,267 $ 9,300
Accounts receivable - trade, less allowance for
doubtful accounts
of $607 at June 30, 2008 and $661 at December 14,614 13,793
31, 2007,respectively
Accounts receivable - related party 910 945
Federal income tax refund receivable 1,242 -
Inventory 2,860 136
Prepaid expenses 3,966 823
TOTAL CURRENT ASSETS 24,859 24,997
PROPERTY AND EQUIPMENT, NET 49,324 7,223
OTHER ASSETS
Goodwill 88,079 88,079
Other intangible assets, net 78,298 63,280
Deposits and other assets 6,321 1,357
TOTAL OTHER ASSETS 172,698 152,716
TOTAL ASSETS $ 246,881 $ 184,936
FIRST COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30, December 31,
2008 2007
(reviewed) (restated)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-tern debt $ 7,000 $ -
Line of credit - 625
Accounts payable - trade 10,584 13,220
Federal income tax payable - 362
Accrued expenses 2,865 2,600
Deferred tax liability, net - current 213 213
Deferred revenue - current 6,764 3,244
TOTAL CURRENT LIABILITIES 27,426 20,264
NON-CURRENT LIABILITIES
Long-term debt, net of current maturities 61,250 -
Deferred tax liability, net - long term 5,105 4,064
Deferred revenue - long term 15,273 170
TOTAL NON-CURRENT LIABILITIES 81,628 4,234
TOTAL LIABILITIES 109,054 24,498
Redeemable Preferred Stock, $0.001 par value; 10,000,000
shares authorized,
15,000 and 40,000 shares issued and
outstanding at June 30, 2008 and
December 31, 2007, respectively (liquidation 15,000 40,000
preference $1,000 per share)
SHAREHOLDERS' EQUITY
Series A Common Stock, $0.001 par value;
59,165,000 shares authorized,
26,067,000 shares issued and outstanding 26 26
Series B Non-Voting Common Stock, $0.001 par
value; 835,000 shares
authorized, 835,000 shares issued and 1 1
outstanding
Additional paid in capital 119,482 119,482
Retained earnings 3,318 929
TOTAL SHAREHOLDERS' EQUITY 122,827 120,438
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 246,881 $ 184,936
Notes:
December 31, 2007 results have been restated following completion of the Company's re-audit process.
FIRST COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2008
(in thousands, except per share data)
Six Months Six Months
Ended Ended
June 30, 2008 June 30, 2007
REVENUES, NET
Revenues, net $ 70,038 $ 63,877
Revenues, net - related party 3,736 3,275
TOTAL REVENUES, NET 73,774 67,152
COST OF FACILITIES, exclusive of
depreciation and
amortization stated below 46,097 46,427
SELLING, GENERAL AND ADMINISTRATIVE 17,573 14,259
EXPENSES
DEPRECIATION AND AMORTIZATION 5,244 2,278
OPERATING INCOME 4,860 4,188
OTHER INCOME (EXPENSE)
Interest expense (1,008) (725)
Other (11) 333
OTHER INCOME (EXPENSE), NET (1,019) (392)
INCOME BEFORE INCOME TAXES 3,841 3,796
PROVISION FOR INCOME TAXES 1,452 -
NET INCOME $ 2,389 $ 3,796
Notes:
Actual, reviewed results for 1H08 represent full six months for the existing businesses and the performance of FE Telecom from the date
of acquisition.
Proforma figures for 1H07 represent the combined audited financial statements of First Communications on a proforma basis (including
First Communications, LLC and Xtension, with Acceris included from the date of acquisition) and do not represent accounting consolidated
figures.
1H07 results have been restated following completion of the Company's re-audit process.
FIRST COMMUNICATIONS, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
For the Six Months Ended June 30, 2008 and 2007
(in thousands)
Restated
2008 2007
CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 2,389 $ 3,796
Add: Depreciation & Amortization 5.244 2,278
Add: Bad Debts Expense 450 -
Add: Deferred Taxes 1,041 -
Changes in Operating Assets & Liabilities
Account Receivable - trade, net 2,506 2,256
Inventory 45 12
Prepaid expenses (2,695) (15)
Deposits and other assets (1,159) (1,287)
Accounts payable (123) (3,250)
Federal tax payable (1,557) -
Accrued expenses 431 (2,334)
Deferred revenue (2,296) 1,091
CASH FLOW FROM OPERATING ACTIVITIES 4,276 2,547
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property and equipment (2,123) (758)
Acquisition of assets and assumption of (45,877) (16,456)
liabilities, net of cash acquired
Investment in Joint Venture (134) -
Net change in accounts receiveable - related party 35 356
CASH FLOW FROM INVESTING ACTIVITIES (48,099) (16,858)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of long term loans 68,250 15,000
Reduction in preferred stock (25,000) -
Payment of deferred financing costs (3,794) -
Net borrowings and payments on line of credit (625) 81
Change in Bank Overdraft (3,041) 1,943
Payments on debt - (9)
Payments of transaction costs related to sale of - (2,959)
Company
Cash Distributions to Owners - (2,037)
CASH FLOW FROM FINANCING ACTIVITIES 35,790 12,019
NET INCREASE (DECREASE) IN CASH $ (8,033) $ (2,292)
CASH, BEGINNING OF PERIOD $ 9,300 $ 2,785
CASH, END OF PERIOD $ 1,267 $ 493
Notes:
Actual, unaudited results for 1H08 represent full six months for the existing businesses and the performance of FE Telecom from the date
of acquisition.
Proforma figures for 1H07 represent the combined audited financial statements of First Communications on a proforma basis (including
First Communications, LLC and Xtension, with Acceris included from the date of acquisition) and do not represent accounting consolidated
figures.1H07 results have been restated following completion of the Company's re-audit process.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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