Dsl.Net (AMEX:BIZ)
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DSL.net, Inc. (AMEX: BIZ), a leading nationwide provider
of broadband communications services to businesses, today reported
second-quarter and year-to-date 2005 financial results.
Revenue for the second quarter of 2005 was $14.4 million, as
compared to revenue of $17.7 million for the second quarter of 2004.
Revenue for the six months ended June 30, 2005, was $29.8 million, as
compared to revenue of $35.5 million for 2004.
The Company generated gross margin (defined as revenue less
network expense) of $5.3 million for the second quarter of 2005,
compared to gross margin of $5.7 million for the second quarter of
2004. Gross margin for the six months ended June 30, 2005, was $10.6
million, compared to gross margin of $11.4 million for 2004.
Earnings before interest, taxes, depreciation, amortization, other
income (expense) and non-cash stock compensation ("Adjusted EBITDA")
for the second quarter of 2005 was positive $0.4 million, a 132%
improvement compared to negative $1.4 million for the second quarter
of 2004. Adjusted EBITDA for the six months ended June 30, 2005, was
positive $0.9 million, a 122% improvement over Adjusted EBITDA of
negative $4.2 million for 2004.
"Our financial results clearly demonstrate our success in running
our business in a cost-efficient manner that has preserved cash and
allowed us to pursue strategic and financing opportunities," said
Kirby G. "Buddy" Pickle, chief executive officer of DSL.net. "We
continue to pursue those opportunities. Of course, there is no
guarantee that we will consummate any given transaction on favorable
terms for all of our stakeholders, if at all."
Free cash flow (defined as Adjusted EBITDA minus capital
expenditures) for the second quarter of 2005 was positive $0.3
million, a 116% improvement over free cash flow of negative $1.6
million for the second quarter of 2004. For the first six months of
2005, free cash flow was positive $0.7 million, a 114% improvement
over free cash flow of negative $4.7 million for the 2004 period.
Net loss for the second quarter of 2005 was $3.1 million,
representing a 47% improvement over net loss of $5.8 million for the
second quarter of 2004. For the six months ended June 30, 2005, net
loss was $6.6 million, a 49% improvement over net loss of $12.9
million for the 2004 period. On a per share basis, the Company
reported a net loss applicable to common stockholders of $0.01 per
share for the second quarter of 2005, an 80% improvement compared to a
net loss of $0.05 per share for the 2004 period. For the six months
ended June 30, 2005, net loss applicable to common stockholders was
$0.03 per share, a 77% improvement compared to $0.13 per share for the
2004 period.
At June 30, 2005, the Company had total assets of $35.1 million,
including $8.5 million in cash.
The Company continues to operate under a "going concern"
qualification received from its independent registered public
accounting firm in their audit report on the Company's 2004 year-end
financial statements, which was filed by the Company with the
Securities and Exchange Commission on March 23, 2005, as part of its
Annual Report on Form 10-K for the year ended December 31, 2004.
DSL.net will host a conference call to discuss results for the
second quarter, as well as future plans and expectations, tomorrow,
August 11, 2005, at 11 a.m. Eastern Time. Interested parties may
listen to the live audio Webcast of the call by visiting the investor
relations section of DSL.net's Web site, www.dsl.net. The call also
may be accessed live via telephone by dialing 1-800-474-8920 and
entering confirmation code 4-8-4-4-9-0-3. For those unable to access
the live conference call, an audio replay will be available until 11
p.m., Eastern Time, through the end of the month, by dialing
1-888-203-1112 and entering code 4-8-4-4-9-0-3. Investors may also
access the call replay by visiting the investor relations section of
the Company's Web site.
About DSL.net
DSL.net, Inc. is a leading nationwide provider of broadband
communications services to businesses. The Company combines its own
facilities, nationwide network infrastructure and Internet Service
Provider (ISP) capabilities to provide high-speed Internet access,
private network solutions and value-added services directly to small-
and medium-sized businesses or larger enterprises looking to connect
multiple locations. DSL.net product offerings include T-1, DS-3 and
business-class DSL services, virtual private networks (VPNs), frame
relay, Web hosting, DNS management, enhanced e-mail, online data
backup and recovery services, firewalls and nationwide dial-up
services, as well as integrated voice and data offerings in select
markets. For more information, visit www.dsl.net, e-mail info@dsl.net,
or call 1-877-DSL-NET1 (1-877-375-6381).
This press release may contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
and, to the extent it does, these forward-looking statements are
subject to a variety of risks and uncertainties, many of which are
beyond DSL.net's control, which could cause actual results to differ
materially from those contemplated in these forward-looking
statements. In particular, the risks and uncertainties associated with
DSL.net's business include, among other things, (i) fluctuations in
DSL.net's quarterly operating results, which could adversely affect
the price of its common stock; (ii) DSL.net's unproven business model,
which may not be successful; (iii) DSL.net's ability to raise
sufficient additional capital on acceptable terms, or at all, to
finance continuing operations; (iv) DSL.net's failure to generate
sufficient revenue, contain certain discretionary spending, achieve
certain other business plan objectives, or obtain additional debt or
equity financing could have a material adverse effect on DSL.net's
results of operations or financial position, or cause it to
restructure its operations to further reduce operating costs or to
cease operations or to sell all or a portion of DSL.net's assets; (v)
DSL.net's ability to maintain compliance with the American Stock
Exchange's continuing listing requirements, which failure could
adversely impact the pricing and trading of DSL.net's common stock;
(vi) regulatory, legislative and judicial developments, which could
adversely affect the way DSL.net operates its business or increase its
costs of operations; (vii) competition; (viii) the marketplace's
receptiveness to DSL.net's offering of integrated voice and data
services; (ix) DSL.net's ability to recruit and retain qualified
personnel; and (x) DSL.net's dependence on third-party providers to
supply it with local DSL and T-1 facilities in areas where it has not
deployed its own equipment. Existing and prospective investors are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. DSL.net undertakes
no obligation, and disclaims any obligation, to update or revise the
information contained in this press release, whether as a result of
new information, future events or circumstances or otherwise. For
additional information regarding these and other risks faced by
DSL.net, see the disclosure contained under "Risk Factors'' in
DSL.net's Annual Report on Form 10-K for the year ended December 31,
2004, which has been filed with the Securities and Exchange
Commission.
DSL.net is a trademark of DSL.net, Inc. Other company names may be
trademarks of their respective owners.
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DSL.net, Inc.
Consolidated Statements of Operations
(dollars in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Revenue $14,387 $17,686 $29,827 $35,507
------------ ------------ ------------ ------------
Operating
expenses:
Network 9,114 11,946 19,183 24,146
Operations 1,792 2,432 3,557 5,621
General and
administrative 2,688 3,525 5,395 6,452
Sales and
marketing 353 1,179 783 3,521
Depreciation and
amortization 1,109 3,284 3,109 6,602
------------ ------------ ------------ ------------
Total operating
expenses 15,056 22,366 32,027 46,342
------------ ------------ ------------ ------------
Operating loss (669) (4,680) (2,200) (10,835)
Interest expense,
net (2,484) (1,177) (4,593) (2,159)
Other income
(expense), net 71 33 209 107
------------ ------------ ------------ ------------
Net loss $(3,082) $(5,824) $(6,584) $(12,887)
============ ============ ============ ============
Net loss applicable
to common
stockholders:
Net loss $(3,082) $(5,824) $(6,584) $(12,887)
Dividends on
Series X and Y
preferred stock - (420) - (910)
Accretion of
Series X and Y
preferred stock - (588) - (4,040)
Net loss
applicable to
common
stockholders $(3,082) $(6,832) $(6,584) $(17,837)
============ ============ ============ ============
Net loss per common
share - basic and
diluted $(0.01) $(0.05) $(0.03) $(0.13)
============ ============ ============ ============
Shares used in
computing net loss
per share, basic
and diluted 233,620,817 144,123,600 233,620,486 140,291,576
============ ============ ============ ============
Other data:
Reconciliation of net loss to
adjusted EBITDA & free cash
flow:
Net loss $(3,082) $(5,824) $(6,584) $(12,887)
Add back:
Interest and
other (income)
expense, net 2,413 1,144 4,384 2,052
Depreciation and
amortization 1,109 3,284 3,109 6,602
Stock
compensation - - - -
-------- ------------ ------------ ------------
Adjusted EBITDA 440 (1,396) 909 (4,233)
Less capital
expenditures 180 207 240 458
-------- ------------ ------------ ------------
Free cash flow $260 $(1,603) $669 $(4,691)
======== ============ ============ ============
DSL.net, Inc.
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
June 30, December 31,
2005 2004
------------------- -----------------------
Cash and cash
equivalents $8,452 $7,079
Accounts receivable, net
of allowances 5,203 6,344
Other current assets (a) 2,117 4,776
------------------- -----------------------
Total current assets 15,772 18,199
Net property and
equipment 9,891 12,719
Other assets 9,439 9,944
------------------- -----------------------
Total assets 35,102 40,862
=================== =======================
Current liabilities 10,430 13,926
Long-term obligations -
less current portion 19,150 14,830
Stockholders' equity 5,522 12,106
------------------- -----------------------
Total liabilities,
preferred stock and
stockholders equity $35,102 $40,862
=================== =======================
(a) Includes restricted cash of approximately $2 and $2,426 at June
30, 2005, and December 31, 2004, respectively.
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