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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 : 0813Y
First Communications, Inc.
27 August 2009
First Communications, Inc. Announces Audited Results for
The Year Ended December 31, 2008 and Restated Unaudited Interim Results for the
Six Months Ended June 30, 2008
+------+---------------------------------------------------------------------------------------+
| - | Finalisation of its December 31, 2008 financial statements, as audited by its newly |
| | retained independent auditor, Ernst & Young LLP; |
| | |
+------+---------------------------------------------------------------------------------------+
| - | Contribution of the tower assets of its subsidiary to Diamond Communications, Inc. |
| | ("Diamond"); |
| | |
+------+---------------------------------------------------------------------------------------+
| - | An amendment to its existing credit facility (the "Facility"); and |
| | |
+------+---------------------------------------------------------------------------------------+
| - | Restatement of its interim results for the six months ended June 30, 2008. |
| | |
+------+---------------------------------------------------------------------------------------+
AKRON, OH, August 27, 2009 - Today First Communications, Inc. (AIM: FCOM) (the
"Company"), a leading Midwest competitive local exchange carrier providing data
and voice services, announces the following developments:
December 31, 2008 Audited Financial Statements
The Company confirms that it has today posted its audited financials to its
shareholders and that these will shortly be available on its website. The
Company believes that as a result and following the announcement of its results
for the twelve month period ended December 31, 2008, that the suspension in
trading of its common stock on the AIM, initiated on March 18, 2009, will be
lifted later today. The Company requested the suspension when it identified
accounting irregularities by an individual within the Company (who is no longer
with the Company) resulting in a material overstatement of its first half
results for 2008. The Company has since investigated and has completed an
extensive audit process with its auditors. The Company has reviewed and
corrected its previously announced unaudited interim results for the six months
ended June 30, 2008.
Furthermore, the Board and management have taken action to ensure its
financial procedures will not be compromised going forward, including the
appointment of J. Lyle Patrick as Interim Chief Financial Officer in March of
2009. The Company has also received support from its key stakeholders and agreed
on amended terms with its banks, including a waiver by the lenders of all
identifiable, existing defaults under the Facility.
Discussion of 2008 Results
Items of note in the year ended December 31, 2008 results (see note below):
+------+-----+----------------------------------------------------------------------------------+
| - | The Company completed the acquisition of FirstEnergy Telecom Services, Inc. Assets |
| | ("FTS") in March of 2008 and GCI Globalcom Holdings, Inc. ("Globalcom") in October of |
| | 2008; |
| | |
+------+----------------------------------------------------------------------------------------+
| - | Revenue for 2008 of $153.5 million (compared to $141.0 million reported for 2007); |
| | |
+------+----------------------------------------------------------------------------------------+
| - | Decrease in gross margin from 32.2% to 30.6% from 2007 to 2008; |
| | |
+------+----------------------------------------------------------------------------------------+
| - | EBITDA (as defined below) of $0.8 million for 2008, however this is stated before the |
| | below items which has led to a lower EBITDA compared to a pro forma adjusted EBITDA, |
| | were the Company to report on this basis for the year: |
| | |
+------+----------------------------------------------------------------------------------------+
| | - | Pro forma results for Globalcom and FTS for the months in 2008 when not owned by |
| | | the Company (rather than inclusion from the date of acquisition only); |
| | | |
+------+-----+----------------------------------------------------------------------------------+
| | - | Add-back of exceptional costs in relation to the Renaissance transaction; |
| | | |
+------+-----+----------------------------------------------------------------------------------+
| | - | Add-back of various one-time transactional and other costs associated with the |
| | | Globalcom acquisition; and |
| | | |
+------+-----+----------------------------------------------------------------------------------+
| | - | Lower net income primarily resulting from lower EBITDA as discussed above, the |
| | | impairment of goodwill and other intangibles, and a change in estimates |
| | | associated with the amortizable lives for customer lists, all as discussed in |
| | | more detail below in the section labeled "Managements Discussion and Analysis |
| | | of Financial Condition and Results of Operations". |
| | | |
| | | |
+------+-----+----------------------------------------------------------------------------------+
Note: The results for the year 2008 include a full 12 month contributions from
First Communications, LLC ("FC LLC"), and Xtension Services, Inc. ("Xtensions"),
and just over 9 months contribution from FTS and a 3 months contribution from
Globalcom. The 2007 pro forma results reflect a full year's contribution from FC
LLC and Xtensions.
EBITDA is defined herein as net income (loss) before depreciation and
amortization, impairment of goodwill and other intangibles, interest expense,
and provision for (benefit from) income taxes.
Selected Financial Information
+--+-------------------------+--+------------+-------------+------------+--+
| FIRST COMMUNICATIONS, INC. |
| SELECTED FINANCIAL INFORMATION |
| For the Years Ended December 31, 2008 and 2007 |
| (all numbers in 000's) |
+--------------------------------------------------------------------------+
| | | | Year Ended December 31, | |
+--+-------------------------+--+---------------------------------------+--+
| | | | 2008 | 2007 | Variance | |
+--+-------------------------+--+------------+-------------+------------+--+
| | | | |(Pro forma) | | |
+--+-------------------------+--+------------+-------------+------------+--+
| | | | | | | |
+--+-------------------------+--+------------+-------------+------------+--+
| Revenues, net | | $ | $ | $ | |
| | | 153,507 | 140,959 | 12,548 | |
+----------------------------+--+------------+-------------+------------+--+
| | | | | | |
+----------------------------+--+------------+-------------+------------+--+
| Gross Margin | | 46,917 | 45,463 | 1,454 | |
+----------------------------+--+------------+-------------+------------+--+
| | Gross Margin % | | 30.6% | 32.2% | | |
+--+-------------------------+--+------------+-------------+------------+--+
| | | | | | | |
+--+-------------------------+--+------------+-------------+------------+--+
| SG&A Expenses | | 46,675 | 31,867 | 14,808 | |
+----------------------------+--+------------+-------------+------------+--+
| SG&A as % of Revenues | | 30.4% | 22.6% | | |
+----------------------------+--+------------+-------------+------------+--+
| | | | | | |
+----------------------------+--+------------+-------------+------------+--+
| EBITDA | | 835 | 14,431 | (13,596) | |
+----------------------------+--+------------+-------------+------------+--+
| | | | | | | |
+--+-------------------------+--+------------+-------------+------------+--+
| Depreciation and | | 19,031 | 6,580 | 12,451 | |
| Amortization | | | | | |
+----------------------------+--+------------+-------------+------------+--+
| | | | | | |
+----------------------------+--+------------+-------------+------------+--+
| Impairment of Goodwill and | | 53,500 | - | 53,500 | |
| Other Intangibles | | | | | |
+----------------------------+--+------------+-------------+------------+--+
| | | | | | |
+----------------------------+--+------------+-------------+------------+--+
| Net Income (Loss) | | $ | $ 5,847 | $ | |
| | | (76,195) | | (82,042) | |
+--+-------------------------+--+------------+-------------+------------+--+
Operational Highlights and Current Outlook:
Ray Hexamer, CEO of First Communications commented:
"We are happy to have put the challenges of 2008 behind the Company. The
impropriety discovered compromised the Company, but our Board, investors, bank
group, auditors, and management rallied around correcting any issues and setting
the foundation for continued growth going forward. We made significant progress
in 2008 with two great acquisitions in Globalcom and FTS. The assets we have
assembled and the efficiencies we expect to create going forward puts First
Communications in a position to continue our path in 2009 with the intention of
becoming the dominant Midwest provider of data and voice services.
2008 operating highlights include the following:
+----+----------------------------------------------------------------------------------------+
| - | Expanded sales staff from 20 at the start of 2008 to over 60 by year end; |
| | |
+----+----------------------------------------------------------------------------------------+
| - | Sold 723 T-1s in the fourth quarter of 2008 compared to 156 in the first quarter of |
| | 2008; |
+----+----------------------------------------------------------------------------------------+
| - | Ramped T-1s installed from 73 in the first quarter of 2008 to 650 in the fourth |
| | quarter of 2008; |
| | |
+----+----------------------------------------------------------------------------------------+
| - | Expanded the fiber network and lit additional routes; and |
| | |
+----+----------------------------------------------------------------------------------------+
| - | Integrated Globalcom and FTS and realized $5.8 million of annualized savings by year |
| | end 2008 on Globalcom acquisition closed in October 2008. |
| | |
+----+----------------------------------------------------------------------------------------+
Coupled with a full year's operating and financial results from Globalcom and
FTS, we believe these actions above, and many others already in motion, such as
focusing on higher margin customers, reduction of personnel in April 2009 and
other general and administrative cost reductions, will drive the Company to
greater financial success in 2009 and beyond."
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Revenues
First Communications, Inc. reported revenues of $153.5 million for the year
ended December 31, 2008, compared to $141.0 million reported for the year ended
December 31, 2007. The growth in revenue has resulted from the inclusion of
financial results from FTS and Globalcom offset to some degree by declines in
legacy residential and voice services compared to the previous year. The
Company's strategy has been to increasingly focus on the small and medium sized
commercial 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.
Gross Margin
The Company's gross margins decreased from 32.2% in 2007 to 30.6% in 2008 due to
declines in margins in legacy residential and voice services, offset to some
degree by higher margins from Globalcom and FTS.
Sales, General and Administrative Expenses
As a percentage of revenues, the Company's selling, general and administrative
expenses for the year ended December 31, 2008 increased to 30.4% compared to
22.6% for the year ended December 31, 2007. The increase in expenses came from
the expansion of the Company's sales force, opening of new sales offices, costs
associated with integrating two new subsidiaries, and Renaissance transaction
costs as discussed above.
Depreciation and Amortization of Other Intangibles
Depreciation and amortization charges increased from $6.6 million for the year
ended December 31, 2007 to $19.0 million for the year ended December 31, 2008.
The increase is primarily due to the impact of additional tangible and
intangible assets associated with the two new subsidiaries acquired during the
year and the change in the amortization period for customer related intangibles
from eight to four years.Specific non-cash charges to other intangibles were as
follows:
+----+----------------------------------------------------------------------------------------+
| | Purchase Price Adjustment $8.9 million related to Globalcoms customer lists due to a |
| | change in assumed lives; |
| | |
+----+----------------------------------------------------------------------------------------+
| | Write off of Globalcoms trademark value of $600K; and |
| | |
+----+----------------------------------------------------------------------------------------+
| | Write off of the Companys investment in PowerGrid of $500K. |
| | |
+----+----------------------------------------------------------------------------------------+
Impairment of Goodwill and Other Intangibles (Customer Lists)
As a result of general market conditions related to borrowing costs and a more
recent analysis of the discounted cash flow supporting the Company's goodwill
balance using updated assumptions, an exceptional non-cash impairment to
goodwill was recorded of $28.2 million. Additionally, a similar impairment
occurred related to the valuation of certain of the Company's customer lists
(recorded as other intangibles), resulting in a charge of $25.3 million.
EBITDA, Income from Operations, and Net Income
The Company's EBITDA decreased from $14.4 million for the year ended December
31, 2007 to $0.8 million for the year ended December 31, 2008. The Company's
income from operations decreased from $7.0 million for the year ended December
31, 2007 to a $72.3 million loss for the year ended December 31, 2008. The
Company reported a $76.2 million net loss for the year ended December 31, 2008
compared to income of $5.8 million for 2007. As noted above, the decrease in
EBITDA related primarily to declining sales related to the de-emphasis of some
of the Company's legacy voice services and sales, general and administrative
expenses, with the decrease in income from operations and net income primarily
resulting from the increase in depreciation and amortization expense and the
impairment of goodwill and other intangible assets.
Cash
Cash balances amounted to $0.3 million as at December 31, 2008 compared to $9.3
million at December 31, 2007. The decrease in the Company's cash position
resulted from lower margin sales, higher SG&A costs and exceptional transaction
related costs.
Capital Expenditures
Capital expenditures for the year ended December 31, 2008 were $6.0 million
related to the expansion of the Company's network, network and system upgrades,
installation costs and capitalized labor. In addition, fixed assets of
approximately $31.2 million were acquired through the Company's two 2008
acquisitions.
Post Balance Sheet Events
Tower Asset Contribution
On August 20, 2009, the Company entered into a transaction in which the Company
contributed to Diamond Communications, LLC ("Diamond") all of the assets of FTS
(the "Contributed Assets") relating to the business (the "Tower Business") of
wireless antenna and equipment collocation operations, capabilities and
applications, which includes all wireless antenna collocation contracts and
associated revenue and liabilities, FTS owned towers (collectively, the
"Towers") and the rights and obligations under certain agreements with various
operating affiliates of FirstEnergy Corp (the "Affiliate Agreements") to service
existing contracts and develop new contracts to provide wireless collocation
applications and capabilities, DAS, Wi-Fi systems, and new tower site
development. In exchange for the contribution of the Contributed Assets, Diamond
agreed that the Contributed Assets would remain subject to the lien of the
Company's lender group to the extent the lien related to $50 million of the
Company's debt which had been incurred in connection with the acquisition of
and/or the conduct of the Tower Business. Diamond also agreed to provide a
limited guarantee of this portion of the Company's debt. The Company also
was issued Class A and Class B membership Units in Diamond with a negotiated
value of $20 million resulting in an interest of 13.6% in Diamond. As of
December 31, 2008, the net book value of the Contributed Assets was $44.3
million and the profit before tax was $5.05 million. Subsequent to the
acquisition of FTS on March 7, 2008, the Company recorded $7.8 million in
revenues derived from the Contributed Assets in the year ended December 31,
2008.
As part of the transaction, the Company has the opportunity to receive
additional units of Class A and B Membership Units in Diamond under an earn-out
formula (the "Earn-Out Units"). The number of Earn-Out Units to which the
Company may be entitled to is based on the net annualized recurring revenue from
certain qualifying leases earned during the period beginning on April 17, 2009
and ending on March 31, 2011. The maximum value of the Earn-Out Units is $18.57
million.
The agreement contains representation, warranties and covenants that are typical
of transactions of this size and type including, without limitation, mutual
indemnification obligations for breaches of those representations, warranties
and covenants that are subject to baskets and caps depending on the source of
the indemnification claim. Any indemnification obligation the Company might have
(although none are anticipated) will be first satisfied through a return of the
units of membership interest the Company has received.
Amendment to Facility
Effective as of August 20, 2009, the Company entered into an 'Amendment No. 2'
to its Facility (the "Amendment"). Diamond subsequently repaid the portion of
the debt guaranteed by it as described above, resulting in the term debt of the
Company reducing by $40.0 million, and the amounts outstanding under the
revolver reducing by $10.0 million, although the revolver is available for
future drawdown. Overall the Facility has been reduced to $87.5 million, and as
at August 20, 2009 the net debt of the Company was $77.5 million.
As part of the Amendment, the Company's lenders agreed to waive all
identifiable, existing defaults under the Facility. The following is a summary
of some of the key terms of the Amendment:
Capital contribution
- the Company is required to receive at least $10 million of cash capital
contributions by January 31, 2010. At least $10 million of such contributions
must be used to repay revolving loans that are part of the Facility, and the
commitment to make revolving loans is permanently reduced by 50% of the
aggregate of such repayment. One-half of the amounts then remaining are used to
prepay the term loans that are part of the Facility (in inverse order of
maturity), with the other one-half being available to the Company for working
capital and/or capital expenditure purposes.
Maturity Date
- The maturity date of the loans under the Facility has been amended so that the
scheduled maturity date will occur earlier than under the terms of the previous
facility (March 6, 2013). The scheduled maturity date will occur based on how
much capital is contributed by the end of January 2010.
+-----------------------------------+-----------------------------------+
| Amount of Capital Contributed | Scheduled Maturity Date |
| (in thousands) | |
+-----------------------------------+-----------------------------------+
| <$10,000 | December 7, 2010 |
+-----------------------------------+-----------------------------------+
| >$10,000 and <$17,500 | September 7, 2011 |
+-----------------------------------+-----------------------------------+
| >$17,500 and <$25,000 | December 7, 2011 |
+-----------------------------------+-----------------------------------+
| >$25,000 | June 7, 2012 |
+-----------------------------------+-----------------------------------+
Financial Covenants
+------+---------------------------------------------------------------------------------------+
| - | The Facility has a minimum EBITDA test, a maximum leverage test, a minimum fixed |
| | charge test, and a limitation on capital expenditures. |
+------+---------------------------------------------------------------------------------------+
| - | Minimum EBITDA will be a quarterly test beginning July 1, 2009 with levels of $2.8 |
| | million at September 30, 2009, $8.8 million at December 31, 2009, $13.6 million at |
| | March 31, 2010, $17.8 million at June 30, 2010, and $18.8 million at September 30, |
| | 2010. Until June 30, 2010, EBITDA shall be determined on a cumulative basis since |
| | July 1, 2009. Thereafter, it shall be determined on a last twelve months basis. |
| | |
+------+---------------------------------------------------------------------------------------+
| - | Maximum leverage (total debt to EBITDA) of 5.5 to 1.0 at March 31, 2010, 5.0 to 1.0 |
| | at June 30, 2010, 4.25 to 1.0 at September 30, 2010, 4.0 to 1.0 at December 31, 2010, |
| | and 3.50 to 1.0 thereafter. |
| | |
+------+---------------------------------------------------------------------------------------+
| - | Minimum fixed charge coverage of 1.0 to 1.0 at December 31, 2010 and March 31, 2011, |
| | 1.1 to 1.0 at June 30, 2011 and 1.2 to 1.0 thereafter. |
| | |
+------+---------------------------------------------------------------------------------------+
| - | Maximum capital expenditures of $10 million during any consecutive twelve-month |
| | period. |
| | |
+------+---------------------------------------------------------------------------------------+
Pricing and Fees
The new pricing grid, based on leverage, will be as follows. It will apply for
revolving loans and term loans.
+-------+--------------------------+--------------+-----------+------------+
|Level | Total Debt to EBITDA | Commitment | LIBOR |ABR Margin |
| | | Fee | Margin | |
+-------+--------------------------+--------------+-----------+------------+
| I | >6.00 to 1.00 | 100 bps | 600 bps | 500 bps |
+-------+--------------------------+--------------+-----------+------------+
| II | >4.50 to 1.00 and <6.00 | 75 bps | 550 bps | 450 bps |
| | to 1.00 | | | |
+-------+--------------------------+--------------+-----------+------------+
| III | <4.50 to 1.00 | 50 bps | 500 bps | 400 bps |
+-------+--------------------------+--------------+-----------+------------+
Restatement of the Six Months ended June 30, 2008 Results
Further to the announcement, dated March 18, 2009, that the Company had become
aware of a material misstatement in its historical financial results as a result
of accounting irregularities by an individual (who is no longer with the
Company), the Company determined that its historical results for the six month
period ended June 30, 2008, as previously reported, were materially inaccurate,
resulting in an overstatement of its results of operations in such period. As a
result, a restatement of its accounts for the six months ended June 30, 2008 was
performed.
On becoming aware of the situation, the Company took immediate steps to ensure
that its financial procedures were supplemented and retained a forensic team to
investigate its accounts in order to determine the extent of the misstatement.
In addition, the Company had discussions with its key stakeholders, including
its banks.
The Company confirms that it has today posted its restated accounts to its
shareholders and that these will shortly be available on its website. The
Company believes that as a result, and following the announcement of its audited
results for the twelve month period ended December 31, 2008, that the suspension
in trading of its common stock on AIM, initiated on March 18, 2009, will be
lifted later today.
The six months restated condensed financial statements compared to those
previously filed reflect a decrease in revenue of $4.5 million, an increase in
costs of facilities by $1.5 million, an increase in selling, general and
administrative expenses of $1.4 million, all resulting in a decrease in EBITDA
of $7.4 million. Net income decreased from $2.4 million to a loss of $5.9
million. The decrease in EBITDA primarily reflects approximately $5.0 million of
improper entries primarily related to revenue as well as $2.4 million in entries
made to better reflect the accruals for cost of facilities and in the allowance
for doubtful accounts. Net income was impacted by those same entries, in
addition to an increase in depreciation and amortization of $5.6 million
primarily related to an accounting method change in the lives associated with
customer lists (from eight years to four years), offset by a $4.8 million change
in income tax expense as the net loss before income taxes created a tax benefit,
as opposed to a provision.
Following the identification of the accounting irregularities set out above, the
Company has put in place revised financial reporting procedures in order to
ensure that key financial controls are in place. The Company believes that its
current procedures are sufficient in terms of its obligations as a quoted
company on AIM, however recognizes that it needs to enhance its internal systems
given the circumstances and will put this in place over the next three months,
in consultation with its auditors.
Appointment of Interim Chief Financial Officer
In March 2009, James Lyle Patrick, 57, was appointed Interim Chief Financial
Officer. Mr. Patrick comes with a background of finance, accounting and
telecommunications experience. In addition to fourteen years with Arthur
Andersen, he has approximately twenty year's experience as Chief Financial
Officer with Consolidated Communications, McLeodUSA, Completel, MetroPCS and US
LEC. He has substantial public company experience, having served as CFO at
MetroPCS, a NYSE quoted wireless communications provider with a market
capitalization of $2.8 billion and at US LEC, formerly a Nasdaq quoted
competitive telecommunications company, which was acquired by Paetec in 2007 for
$450 million. Mr. Patrick is a member of the AICPA, is the former Chairman of
CompTel (US Competitive Telecom Trade Organization), a former Board member of
USTA (United States Telecom Association) and is the former Chairman of the
Illinois Telephone Association.
Mr. Patrick is currently a director of Deltathree, Inc. Mr. Patrick has not
been a director of any other company or partnership in the past five years. Mr.
Patrick does not own any shares in First Communications, Inc.
As required to be disclosed under the AIM Rules for Companies, J. Lyle Patrick
was the CFO of McLeodUSA until July 2001. McLeodUSA subsequently filed for a
voluntary petition for bankruptcy relief under Chapter 11 in January 2002, these
matters were settled in January 2007 with no finding of fault.
There are no further disclosures required under Schedule 2 paragraph (g) of the
AIM Rules for Companies.
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 and owns
3,500 miles of fiber. First Communications is led by a strong management team
that has operated telecom companies throughout all cycles of the
telecommunications market.
Forward-looking Statements
This press release contains statements relating to future results of First
Communications and statements which may be identified by the use of the words
"may", "intend", "expect" and like words that are "forward-looking statements".
Actual results may differ materially from those projected as a result of certain
risks and uncertainties.
+-----------------------------+----------------------------------------+
| For Further Information: |
| |
+----------------------------------------------------------------------+
| First Communications, Inc. |
+----------------------------------------------------------------------+
| Joe Morris | Tel: (330) 835-2472 |
+-----------------------------+----------------------------------------+
| |
+----------------------------------------------------------------------+
| Collins Stewart Europe Limited - Nominated Adviser and Broker |
+----------------------------------------------------------------------+
| Piers Coombs/Stewart | Tel: +44 (0) 207 523-8350 |
| Wallace | |
+-----------------------------+----------------------------------------+
RESTATED JUNE 30, 2008 CONDENSED FINANCIAL STATEMENTS
+----------------------------------------+--------------+-------------+-------------+
| |
+---------------------------------------------------------------------+
| FIRST COMMUNICATIONS, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| As of June 30, 2008 |
| (in thousands) |
| |
+-----------------------------------------------------------------------------------+
| | Original | Restated |
| | As of | As of |
+----------------------------------------+--------------+---------------------------+
| | June 30, | June 30, 2008 |
| | 2008 | |
+----------------------------------------+--------------+---------------------------+
| ASSETS | (unaudited) | (unaudited) |
+----------------------------------------+--------------+---------------------------+
| | | |
+----------------------------------------+--------------+---------------------------+
| CURRENT ASSETS | | |
+----------------------------------------+--------------+---------------------------+
| Cash and cash equivalents | $ 1,267 | $ 1,437 |
+----------------------------------------+--------------+---------------------------+
| Accounts receivable - trade, less | | |
| allowance for | | |
+----------------------------------------+--------------+---------------------------+
| doubtful accounts of $607 and $1,110, | 15,524 | 13,164 |
| respectively | | |
+----------------------------------------+--------------+---------------------------+
| Income tax receivable | 1,242 | 4,798 |
+----------------------------------------+--------------+---------------------------+
| Inventory | 2,860 | 2,955 |
+----------------------------------------+--------------+---------------------------+
| Prepaid expenses | 3,966 | 3,327 |
+----------------------------------------+--------------+---------------------------+
| | | |
+----------------------------------------+--------------+---------------------------+
| TOTAL CURRENT ASSETS | 24,859 | 25,681 |
+----------------------------------------+--------------+---------------------------+
| | | |
+----------------------------------------+--------------+---------------------------+
| PROPERTY AND EQUIPMENT, net | 49,324 | 23,206 |
| | | |
+----------------------------------------+--------------+---------------------------+
| OTHER ASSETS | | |
+----------------------------------------+--------------+---------------------------+
| Goodwill | 88,079 | 90,820 |
+----------------------------------------+--------------+---------------------------+
| Other intangible assets, net | 78,298 | 98,482 |
+----------------------------------------+--------------+---------------------------+
| Deposits and other assets | 6,321 | 6,337 |
+----------------------------------------+--------------+---------------------------+
| | | |
+----------------------------------------+--------------+---------------------------+
| TOTAL OTHER ASSETS | 172,698 | 195,639 |
+----------------------------------------+--------------+---------------------------+
| | | |
+----------------------------------------+--------------+---------------------------+
| TOTAL ASSETS | $ 246,881 | $ 244,526 |
+----------------------------------------+--------------+-------------+-------------+
+----------------------------------------+--------------+-------------+
| FIRST COMMUNICATIONS, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| As of June 30, 2008 |
| (in thousands, except for per share data) |
| |
+---------------------------------------------------------------------+
| | Original | Restated |
| | As of | As of |
+----------------------------------------+--------------+-------------+
| | June 30, | June 30, |
| | 2008 | 2008 |
+----------------------------------------+--------------+-------------+
| LIABILITIES, REDEEMABLE PREFERRED | (unaudited) |(unaudited) |
| STOCK AND SHAREHOLDERS' EQUITY | | |
+----------------------------------------+--------------+-------------+
| | | |
+----------------------------------------+--------------+-------------+
| CURRENT LIABILITIES | | |
+----------------------------------------+--------------+-------------+
| Current portion of long-term debt | $ 7,000 | $7,000 |
| Line of credit | - | 3,750 |
+----------------------------------------+--------------+-------------+
| Accounts payable - trade | 10,584 | 12,906 |
+----------------------------------------+--------------+-------------+
| Income tax payable | - | 1,926 |
+----------------------------------------+--------------+-------------+
| Accrued expenses | 2,865 | 1,051 |
+----------------------------------------+--------------+-------------+
| Deferred tax liability, net | 213 | 212 |
+----------------------------------------+--------------+-------------+
| Deferred revenue | 6,764 | 6,482 |
+----------------------------------------+--------------+-------------+
| | | |
+----------------------------------------+--------------+-------------+
| TOTAL CURRENT LIABILITIES | 27,426 | 33,327 |
+----------------------------------------+--------------+-------------+
| | | |
+----------------------------------------+--------------+-------------+
| NON-CURRENT LIABILITIES | | |
+----------------------------------------+--------------+-------------+
| Long-term debt, net of current | 61,250 | 61,250 |
| maturities | 5,105 | 5,105 |
| Deferred tax liability, net | | |
+----------------------------------------+--------------+-------------+
| Deferred revenue | 15,273 | 15,273 |
+----------------------------------------+--------------+-------------+
| | | |
+----------------------------------------+--------------+-------------+
| TOTAL NON-CURRENT LIABILITIES | 81,628 | 81,628 |
+----------------------------------------+--------------+-------------+
| | | |
+----------------------------------------+--------------+-------------+
| TOTAL LIABILITIES | 109,054 | 114,955 |
+----------------------------------------+--------------+-------------+
| | | |
+----------------------------------------+--------------+-------------+
| REDEEMABLE PREFERRED STOCK, $0.001 par | | |
| value; 10,000,000 shares | | |
+----------------------------------------+--------------+-------------+
| authorized, 15,000 shares issued | | |
| and outstanding (liquidation | | |
+----------------------------------------+--------------+-------------+
| preference $1,000 per share) | 15,000 | 15,000 |
+----------------------------------------+--------------+-------------+
| | | |
+----------------------------------------+--------------+-------------+
| SHAREHOLDERS' EQUITY | | |
+----------------------------------------+--------------+-------------+
| Series A Common Stock, $0.001 par | | |
| value; 59,165,000 shares authorized, | | |
+----------------------------------------+--------------+-------------+
| 26,067,000 shares issued and | 26 | 26 |
| outstanding | | |
+----------------------------------------+--------------+-------------+
| Series B Non-Voting Common Stock, | | |
| $0.001 par value; 835,000 shares | | |
+----------------------------------------+--------------+-------------+
| authorized, issued and outstanding | 1 | 1 |
+----------------------------------------+--------------+-------------+
| Additional paid in capital | 119,482 | 119,482 |
+----------------------------------------+--------------+-------------+
| Retained earnings (deficit) | 3,318 | (4,938) |
+----------------------------------------+--------------+-------------+
| | | |
+----------------------------------------+--------------+-------------+
| TOTAL SHAREHOLDERS' EQUITY | 122,827 | 114,571 |
+----------------------------------------+--------------+-------------+
| | | |
+----------------------------------------+--------------+-------------+
| TOTAL LIABILITIES, REDEEMABLE | $ 246,881 | $ 244,526 |
| PREFERRED STOCK AND SHAREHOLDERS' | | |
| EQUITY | | |
+----------------------------------------+--------------+-------------+
+--------------------------------------+--+-------------+--+-------------+
| FIRST COMMUNICATIONS, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| For the Six Months Ended June 30, 2008 |
| (in thousands) |
| |
+------------------------------------------------------------------------+
| | | | | |
+--------------------------------------+--+-------------+--+-------------+
| | | Original | | Restated |
| | | Six Months | | Six Months |
+--------------------------------------+--+-------------+--+-------------+
| | | Ended | | Ended |
+--------------------------------------+--+-------------+--+-------------+
| | | June 30, | | June 30, |
| | | 2008 | | 2008 |
+--------------------------------------+--+-------------+--+-------------+
| | |(unaudited) | |(unaudited) |
+--------------------------------------+--+-------------+--+-------------+
| REVENUES, NET | | $ 73,774 | | $ 69,302 |
+--------------------------------------+--+-------------+--+-------------+
| | | | | |
+--------------------------------------+--+-------------+--+-------------+
| COST OF FACILITIES, exclusive of | | | | |
| depreciation and | | | | |
+--------------------------------------+--+-------------+--+-------------+
| amortization stated below | | 46,097 | | 47,665 |
+--------------------------------------+--+-------------+--+-------------+
| | | | | |
+--------------------------------------+--+-------------+--+-------------+
| SELLING, GENERAL AND ADMINISTRATIVE | | 17,573 | | 19,022 |
| EXPENSES | | | | |
+--------------------------------------+--+-------------+--+-------------+
| | | | | |
+--------------------------------------+--+-------------+--+-------------+
| DEPRECIATION AND AMORTIZATION | | 5,244 | | 10,818 |
+--------------------------------------+--+-------------+--+-------------+
| | | | | |
+--------------------------------------+--+-------------+--+-------------+
| OPERATING INCOME (LOSS) | | 4,860 | | (8,203) |
+--------------------------------------+--+-------------+--+-------------+
| | | | | |
+--------------------------------------+--+-------------+--+-------------+
| OTHER INCOME (EXPENSE), NET | | | | |
+--------------------------------------+--+-------------+--+-------------+
| Interest expense | | (1,008) | | (795) |
+--------------------------------------+--+-------------+--+-------------+
| Other | | (11) | | (184) |
+--------------------------------------+--+-------------+--+-------------+
| OTHER INCOME (EXPENSE), NET | | (1,019) | | (979) |
+--------------------------------------+--+-------------+--+-------------+
| | | | | |
+--------------------------------------+--+-------------+--+-------------+
| INCOME (LOSS) BEFORE INCOME TAXES | | 3,841 | | (9,182) |
+--------------------------------------+--+-------------+--+-------------+
| | | | | |
+--------------------------------------+--+-------------+--+-------------+
| PROVISION (BENEFIT) FOR INCOME TAXES | | 1,452 | | (3,315) |
+--------------------------------------+--+-------------+--+-------------+
| | | | | |
+--------------------------------------+--+-------------+--+-------------+
| NET INCOME (LOSS) | | $ 2,389 | | $ (5,867) |
| | | | | |
+--------------------------------------+--+-------------+--+-------------+
+-------------------------------------------+------------+--+------------+
| FIRST COMMUNICATIONS, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| For the Six Months Ended June 30, 2008 |
| (in thousands) |
| Original Restated |
| Six Months Six Months |
| Ended Ended |
| June 30, June 30, |
| 2008 2008 |
| (unaudited) (unaudited) |
| CASH FLOW FROM OPERATING ACTIVITIES |
| Net income (loss) $ |
| 2,389 $ (5,867) |
| Depreciation & amortization |
| 5,244 10,818 |
| Deferred taxes |
| 1,041 1,040 |
| Changes in Operating Assets & Liabilities |
| Account receivable - net, |
| 2,991(a) 2,909 |
| Inventory |
| 45 (249) |
| Prepaid expenses |
| (2,695) (1,837) |
| Deposits and other assets |
| (1,159) (1,273) |
| Accounts payable - trade |
| (123) (424) |
| Income tax receivable and payable |
| (1,557) (3,234) |
| Accrued expenses |
| 431 (1,549) |
| Deferred revenue |
| (2,296) (2,588) |
| CASH FLOW PROVIDED BY (USED IN) |
| 4,311 (2,254) |
| OPERATING ACTIVITIES |
| CASH FLOW FROM INVESTING ACTIVITIES |
| Purchase of property and equipment |
| (2,123) (1,539) |
| Acquisition of assets and assumption |
| (45,877) (46,625) |
| of liabilities, net of cash acquired |
| Investment in joint venture |
| (134) - |
| CASH FLOW USED IN INVESTING ACTIVITIES |
| (48,134) (48,164) |
| CASH FLOW FROM FINANCING ACTIVITIES |
| Net borrowings of and payments on long term |
| 68,250 68,250 |
| loans |
| Reduction in redeemable preferred stock |
| (25,000) (25,000) |
| Payment of deferred financing costs |
| (3,794) (3,821) |
| Net borrowings of and payments on line of |
| (625) 3,125 |
| credit |
| Change in bank overdraft |
| (3,041) - |
| |
| CASH FLOW PROVIDED BY FINANCING ACTIVITIES |
| 35,790 42,554 |
| NET (DECREASE) IN CASH |
| (8,033) (7,863) |
| CASH, BEGINNING OF PERIOD |
| 9,300 9,300 |
| CASH, END OF PERIOD |
| 1,267 1,437 |
| * |
+------------------------------------------------------------------------+
| | | | |
+-------------------------------------------+------------+--+------------+
| | | | Restated |
+-------------------------------------------+------------+--+------------+
| | December | | December |
| | 31, | | 31, |
+-------------------------------------------+------------+--+------------+
| | 2008 | | 2007 |
+-------------------------------------------+------------+--+------------+
| | | | |
+-------------------------------------------+------------+--+------------+
| ASSETS | | | |
+-------------------------------------------+------------+--+------------+
| | | | |
+-------------------------------------------+------------+--+------------+
| CURRENT ASSETS | | | |
+-------------------------------------------+------------+--+------------+
| Cash and cash equivalents | $ 328 | | $ 9,300 |
+-------------------------------------------+------------+--+------------+
| Accounts receivable - trade, less | | | |
| allowance for doubtful accounts | | | |
+-------------------------------------------+------------+--+------------+
| of $2,055 and $661 at December 31, 2008 | 20,934 | | 14,738 |
| and 2007, respectively | | | |
+-------------------------------------------+------------+--+------------+
| | | | |
+-------------------------------------------+------------+--+------------+
| Income tax receivable | 2,473 | | - |
+-------------------------------------------+------------+--+------------+
| Inventory | 2,802 | | 136 |
+-------------------------------------------+------------+--+------------+
| Prepaid expenses | 2,263 | | 823 |
+-------------------------------------------+------------+--+------------+
| | | | |
+-------------------------------------------+------------+--+------------+
| TOTAL CURRENT ASSETS | 28,800 | | 24,997 |
+-------------------------------------------+------------+--+------------+
| | | | |
+-------------------------------------------+------------+--+------------+
| | | | |
+-------------------------------------------+------------+--+------------+
| PROPERTY AND EQUIPMENT, NET | 40,881 | | 7,223 |
+-------------------------------------------+------------+--+------------+
| | | | |
+-------------------------------------------+------------+--+------------+
| OTHER ASSETS | | | |
+-------------------------------------------+------------+--+------------+
| Goodwill | 105,202 | | 88,079 |
+-------------------------------------------+------------+--+------------+
| Other intangible assets, net | 69,518 | | 63,280 |
+-------------------------------------------+------------+--+------------+
| Deposits and other assets | 6,492 | | 1,357 |
+-------------------------------------------+------------+--+------------+
| | | | |
+-------------------------------------------+------------+--+------------+
| TOTAL OTHER ASSETS | 181,212 | | 152,716 |
+-------------------------------------------+------------+--+------------+
| | | | |
+-------------------------------------------+------------+--+------------+
| TOTAL ASSETS | $ | | $ |
| | 250,893 | | 184,936 |
+-------------------------------------------+------------+--+------------+
+------------------------------------------+------------+--+------------+
| FIRST COMMUNICATIONS, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| As of December 31, 2008 and 2007 |
| (in thousands, except for per share data) |
| |
+-----------------------------------------------------------------------+
| | | | Restated |
+------------------------------------------+------------+--+------------+
| | December | | December |
| | 31, | | 31, |
+------------------------------------------+------------+--+------------+
| | 2008 | | 2007 |
+------------------------------------------+------------+--+------------+
| | | | |
+------------------------------------------+------------+--+------------+
| LIABILITIES, REDEEMABLE PREFERRED STOCK | | | |
| AND SHAREHOLDERS' EQUITY | | | |
+------------------------------------------+------------+--+------------+
| | | | |
+------------------------------------------+------------+--+------------+
| CURRENT LIABILITIES | | | |
+------------------------------------------+------------+--+------------+
| Current portion of long-term debt | $ 9,500 | | $ - |
+------------------------------------------+------------+--+------------+
| Revolver | 10,000 | | 625 |
+------------------------------------------+------------+--+------------+
| Accounts payable - trade | 20,321 | | 13,220 |
+------------------------------------------+------------+--+------------+
| Income tax payable | - | | 362 |
+------------------------------------------+------------+--+------------+
| Accrued expenses | 16,548 | | 2,600 |
+------------------------------------------+------------+--+------------+
| Deferred tax liability, net - | 221 | | 213 |
+------------------------------------------+------------+--+------------+
| Deferred revenue - | 4,769 | | 3,244 |
+------------------------------------------+------------+--+------------+
| | | | |
+------------------------------------------+------------+--+------------+
| TOTAL CURRENT LIABILITIES | 61,359 | | 20,264 |
+------------------------------------------+------------+--+------------+
| | | | |
+------------------------------------------+------------+--+------------+
| NON-CURRENT LIABILITIES | | | |
+------------------------------------------+------------+--+------------+
| Revolver | 8,755 | | - |
+------------------------------------------+------------+--+------------+
| Long-term debt, net of current | 104,000 | | - |
| maturities | | | |
+------------------------------------------+------------+--+------------+
| Deferred tax liability, net | 538 | | 4,064 |
+------------------------------------------+------------+--+------------+
| Deferred revenue | 14,685 | | 170 |
+------------------------------------------+------------+--+------------+
| Other long-term liabilities | 2,313 | | - |
+------------------------------------------+------------+--+------------+
| | | | |
+------------------------------------------+------------+--+------------+
| TOTAL NON-CURRENT LIABILITIES | 130,291 | | 4,234 |
+------------------------------------------+------------+--+------------+
| | | | |
+------------------------------------------+------------+--+------------+
| TOTAL LIABILITIES | 191,650 | | 24,498 |
+------------------------------------------+------------+--+------------+
| | | | |
+------------------------------------------+------------+--+------------+
| REDEEMABLE PREFERRED STOCK, $0.001 par value; | | |
| 10,000,000 | | |
| shares authorized, | | |
+-------------------------------------------------------+--+------------+
| 15,000 and 40,000 shares issued and | | | |
| outstanding at | | | |
+------------------------------------------+------------+--+------------+
| December 31, 2008 and 2007, respectively | 15,468 | | 40,000 |
| (liquidation 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 (deficit) | (75,734) | | 929 |
+------------------------------------------+------------+--+------------+
| | | | |
+------------------------------------------+------------+--+------------+
| TOTAL SHAREHOLDERS' EQUITY | 43,775 | | 120,438 |
+------------------------------------------+------------+--+------------+
| | | | |
+------------------------------------------+------------+--+------------+
| | | | |
+------------------------------------------+------------+--+------------+
| TOTAL LIABILITIES, REDEEMABLE PREFERRED | $ | | $ 184,936 |
| STOCK AND SHAREHOLDERS' EQUITY | 250,893 | | |
+------------------------------------------+------------+--+------------+
+---------------------------------------+--+------------+--+------------+
| FIRST COMMUNICATIONS, INC. AND SUBSIDIARIES |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| For the years ended December 31, 2008 and 2007 |
| (in thousands) |
| |
+-----------------------------------------------------------------------+
| | | Year | | Restated |
| | | Ended | | Year |
| | | December | | Ended |
| | | 31, 2008 | | December |
| | | | | 31, 2007 |
+---------------------------------------+--+------------+--+------------+
| | | | | |
+---------------------------------------+--+------------+--+------------+
| | | | | |
+---------------------------------------+--+------------+--+------------+
| REVENUES, NET | | $ | | $140,959 |
| | | 153,507 | | |
+---------------------------------------+--+------------+--+------------+
| | | | | |
+---------------------------------------+--+------------+--+------------+
| COST OF FACILITIES, exclusive of | | | | |
| depreciation and | | | | |
+---------------------------------------+--+------------+--+------------+
| amortization stated below | | 106,590 | | 95,496 |
+---------------------------------------+--+------------+--+------------+
| SELLING, GENERAL AND ADMINISTRATIVE | | 46,675 | | 31,867 |
| EXPENSES | | | | |
+---------------------------------------+--+------------+--+------------+
| IMPAIRMENT OF GOODWILL AND INTANGIBLE | | 53,500 | | - |
| ASSETS | | | | |
+---------------------------------------+--+------------+--+------------+
| DEPRECIATION AND AMORTIZATION | | 19,031 | | 6,580 |
+---------------------------------------+--+------------+--+------------+
| | | | | |
+---------------------------------------+--+------------+--+------------+
| OPERATING INCOME (LOSS) | | (72,289) | | 7,016 |
+---------------------------------------+--+------------+--+------------+
| | | | | |
+---------------------------------------+--+------------+--+------------+
| OTHER INCOME (EXPENSE), NET | | | | |
+---------------------------------------+--+------------+--+------------+
| Interest expense | | (9,777) | | (1,416) |
+---------------------------------------+--+------------+--+------------+
| Other | | 593 | | 835 |
+---------------------------------------+--+------------+--+------------+
| OTHER INCOME (EXPENSE), NET | | (9,184) | | (581) |
+---------------------------------------+--+------------+--+------------+
| | | | | |
+---------------------------------------+--+------------+--+------------+
| INCOME (LOSS) BEFORE INCOME TAXES | | (81,473) | | 6,435 |
+---------------------------------------+--+------------+--+------------+
| | | | | |
+---------------------------------------+--+------------+--+------------+
| PROVISION (BENEFIT) FOR INCOME TAXES | | (5,278) | | 588 |
+---------------------------------------+--+------------+--+------------+
| | | | | |
+---------------------------------------+--+------------+--+------------+
| NET INCOME (LOSS) | | | | $ 5,847 |
| | | $ (76,195) | | |
| | | | | |
+---------------------------------------+--+------------+--+------------+
Notes:
Actual results for 2008 represent a full year's results for FC LLC and Xtensions
and the performance of FTS and Globalcom from the date of acquisition.
Figures for 2007 represent the combined financial statements of First
Communications on a pro forma basis (including FC and Xtensions) and do not
represent accounting consolidated figures.
+--------------------------------------------------------+---------------------+--------------------+
| |
| |
| FIRST COMMUNICATIONS, INC |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| For the years ended December 31, 2008 and 2007 |
| (in thousands) |
| |
| |
+---------------------------------------------------------------------------------------------------+
| | | Restated |
| | Year Ended | Year Ended |
+--------------------------------------------------------+---------------------+--------------------+
| | December 31, | December 31, |
| | 2008 | 2007 |
+--------------------------------------------------------+---------------------+--------------------+
| | | |
+--------------------------------------------------------+---------------------+--------------------+
| CASH FLOW FROM OPERATING ACTIVITIES | | |
+--------------------------------------------------------+---------------------+--------------------+
| Net income (loss) | $ | $ 5,847 |
| | (76,195) | |
+--------------------------------------------------------+---------------------+--------------------+
| Depreciation & amortization | 19,031 | 5,990 |
+--------------------------------------------------------+---------------------+--------------------+
| Deferred taxes | (4,951) | 225 |
+--------------------------------------------------------+---------------------+--------------------+
| Impairment of goodwill and intangibles assets | 53,500 | - |
+--------------------------------------------------------+---------------------+--------------------+
| | | |
+--------------------------------------------------------+---------------------+--------------------+
| Changes in Operating Assets & Liabilities | | |
+--------------------------------------------------------+---------------------+--------------------+
| Account receivable - trade, net | 4,062 | |
| | | (1,265)(a) |
+--------------------------------------------------------+---------------------+--------------------+
| Inventory | 104 | 105 |
+--------------------------------------------------------+---------------------+--------------------+
| Prepaid expenses | (122) | (258) |
+--------------------------------------------------------+---------------------+--------------------+
| Deposits and other assets | (54) | (1,568) |
+--------------------------------------------------------+---------------------+--------------------+
| Accounts payable - trade | 2,684 | (3,786) |
+--------------------------------------------------------+---------------------+--------------------+
| Income taxes payable | (2,256) | 363 |
+--------------------------------------------------------+---------------------+--------------------+
| Accrued expenses | 8,280 | (5,187) |
+--------------------------------------------------------+---------------------+--------------------+
| Deferred revenue | (5,810) | 1,287 |
+--------------------------------------------------------+---------------------+--------------------+
| Other long-term liabilities | 2,313 | - |
+--------------------------------------------------------+---------------------+--------------------+
| CASH FLOW PROVIDED BY OPERATING ACTIVITIES | 586 | 1,753 |
+--------------------------------------------------------+---------------------+--------------------+
| | | |
+--------------------------------------------------------+---------------------+--------------------+
| CASH FLOW FROM INVESTING ACTIVITIES | | |
+--------------------------------------------------------+---------------------+--------------------+
| Purchase of property and equipment | (6,042) | (2,363) |
+--------------------------------------------------------+---------------------+--------------------+
| Acquisition of assets and assumption of liabilities, | (104,837) | (88,706) |
| net of cash acquired | | |
+--------------------------------------------------------+---------------------+--------------------+
| Investment in joint venture | - | |
| | | - |
+--------------------------------------------------------+---------------------+--------------------+
| Net change in accounts receivable - related party | - | - |
+--------------------------------------------------------+---------------------+--------------------+
| CASH FLOW USED IN INVESTING ACTIVITIES | (110,879) | (91,069) |
+--------------------------------------------------------+---------------------+--------------------+
| | | |
+--------------------------------------------------------+---------------------+--------------------+
| CASH FLOW FROM FINANCING ACTIVITIES | | |
+--------------------------------------------------------+---------------------+--------------------+
| Proceeds from common stock Issuance | - | 81,631 |
+--------------------------------------------------------+---------------------+--------------------+
| Proceeds from issuance of debt | 120,000 | 15,000 |
+--------------------------------------------------------+---------------------+--------------------+
| Reduction in redeemable preferred stock | (25,000) | |
| | | - |
+--------------------------------------------------------+---------------------+--------------------+
| Payment of deferred financing costs | (5,309) | |
| | | - |
+--------------------------------------------------------+---------------------+--------------------+
| Net borrowings and payments on line of credit | 18,130 | 706 |
+--------------------------------------------------------+---------------------+--------------------+
| Change in bank overdraft | - | 5,114 |
+--------------------------------------------------------+---------------------+--------------------+
| Payments on debt | (6,500) | (9) |
+--------------------------------------------------------+---------------------+--------------------+
| Payments of transaction costs related to sale of | | (2,959) |
| Company | - | |
+--------------------------------------------------------+---------------------+--------------------+
| Cash distributions to owners | | (3,653) |
| | - | |
+--------------------------------------------------------+---------------------+--------------------+
| CASH FLOW PROVIDED BY FINANCING ACTIVITIES | 101,321 | 95,830 |
+--------------------------------------------------------+---------------------+--------------------+
| | | |
+--------------------------------------------------------+---------------------+--------------------+
| NET INCREASE (DECREASE) IN CASH | (8,972) | 6,514 |
+--------------------------------------------------------+---------------------+--------------------+
| CASH, BEGINNING OF PERIOD | 9,300 | 2,786 |
+--------------------------------------------------------+---------------------+--------------------+
| CASH, END OF PERIOD | 328 | 9,300 |
+--------------------------------------------------------+---------------------+--------------------+
| | | |
+--------------------------------------------------------+---------------------+--------------------+
Notes:
Actual results for 2008 represent a full year's results for FC LLC and Xtensions
and the performance of FTS and Globalcom from the date of acquisition.
Figures for 2007 represent the combined financial statements of First
Communications on a pro forma basis (including FC and Xtensions) and do not
represent accounting consolidated figures.
(a) Includes $ (3,599) of accounts receivable - related party re-classed from
Cash Flow from Investing Activities
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR CKAKNBBKBOFB
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