Broadwing (NASDAQ:BWNG)
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From May 2019 to May 2024
Broadwing Corporation (NASDAQ:BWNG):
-- Total Revenue Increases 2% Sequentially, 3% Year-Over-Year
-- Data/Broadband Revenue Increases 2% Sequentially, 14%
Year-Over-Year
-- Operating Loss Narrows 48%, Net Loss Narrows 54%,
Year-Over-Year
Broadwing Corporation (NASDAQ:BWNG), a leading provider of optical
network communications services and solutions, today announced its
first quarter 2006 financial and operational results.
For the first quarter 2006, Broadwing reported total revenue of
$224.0 million, compared to $220.0 million reported for the fourth
quarter 2005 and $218.3 million for the first quarter 2005. Net loss
for the quarter was $20.0 million, or a loss of $0.26 per share. This
compares to a net loss for the fourth quarter 2005 of $21.1 million,
or $0.29 per share; and a net loss for the first quarter 2005 of $43.5
million, or $0.62 per share.
Selected Highlights:
-- Total revenue increased 2% sequentially and 3% year-over-year,
despite industry-wide trend of pressure on legacy products
-- Data/broadband revenue increased 2% sequentially and 14%
year-over-year, with the year-over-year increase primarily due
to an increase in broadband transport
-- Operating loss for the first quarter narrowed 48%
year-over-year to $19.0 million
-- Net loss for the first quarter narrowed 54% year-over-year.
Net loss improvement year-over-year was primarily attributable
to revenue growth, network cost improvements, and Focal
integration.
"Broadwing continued to make steady progress toward profitability,
significantly narrowing our net loss year-over-year, increasing total
revenue and holding the line on cost of service," said Lynn Anderson,
chief financial officer of Broadwing. "Broadband transport services
continued to contribute in the first quarter to our year-over-year
revenue growth, while sales of newly introduced Converged Services
continue to ramp nicely according to our plan."
Quarterly Financial Results Detail
Broadwing Communications services revenue can be divided into two
main product categories: "data/broadband" and "voice." Data/broadband
consists of high-speed data transport services utilizing Internet
protocol ("IP") and ATM/frame relay platforms; Converged Services;
long-haul transmission of data, voice and Internet traffic over
dedicated circuits (Private Line); and Media transport services. Voice
includes revenue from sales of long distance/local voice services,
including Voice over Internet Protocol (VoIP) services.
Revenue from data/broadband services was $124.9 million, or 56% of
total revenue in the first quarter. Data/broadband revenue increased
2% from the prior quarter and 14% from the first quarter 2005, with
the year-over-year increase largely due to growth in broadband
transport, specifically in higher speed optical products.
Voice revenue from sales of long-distance and local voice services
was $99.1 million, a 2% increase from the prior quarter and an 8%
decrease from the first quarter 2005. The sequential increase was due
primarily to usage increase tied to more business days as compared to
the fourth quarter. The year-over-year decrease in voice services
revenue was due primarily to comparatively lower wholesale traffic
volumes that resulted from certain price increases the Company
implemented in the second half of 2005 and to continued rate pressure
in the enterprise space. Voice revenue was 44% of total revenue.
Net loss for the quarter was impacted by restructuring and other
charges of $2.6 million related to $4.8 million in staff reductions in
our network support operations in Columbia, Md., and the relocation of
our headquarters to Austin, Texas, offset in part by gains on disposal
of equipment totaling $2.2 million. In addition, the Company recorded
a $1.2 million increase in sales, general and administrative expense
as compared to the same period prior year associated with the adoption
of revised Statement of Financial Accounting Standards No. 123 ("SFAS
No. 123(R)"), a new method of accounting for stock options which
requires that compensation expense be recorded on stock options based
on the fair value of the awards.
Financial Position
In March Broadwing strengthened its financial position by
completing two private placements of its common stock. The Company
entered into definitive agreements with institutional investors with
respect to the private placement of 7,400,000 shares of its common
stock at a purchase price of $10.00 per share, and of 3,000,000 shares
of its common stock at a purchase price of $12.00 per share. The two
placements raised $110.0 million in gross proceeds, with shares issued
at a combined discount of 13% to the 20-day volume weighted average
price per share. Broadwing announced that it intends to use the net
proceeds of approximately $104.0 million for general corporate
purposes.
During the quarter, Broadwing made its final payment of principal
and interest on the Senior Convertible Notes that were privately
placed with a group of institutional investors in February 2004. The
Company paid 50% in cash and 50% in stock the total interest and
principal of $32.6 million due February 21, 2006 on the Notes. For
this final payment, Broadwing issued 1,894,239 shares of common stock
and paid approximately $16.0 million in cash. In addition, in the
first quarter Broadwing deposited $11.0 million in cash for future
equipment and service purchases at market prices to Ciena Corporation,
in accordance with the terms of the companies' litigation settlement
announced April 1, 2005. Broadwing has historically purchased
equipment from Ciena to help maintain, build and enhance the Broadwing
network.
Capital expenditures of $16.0 million as of March 31, 2006,
included $2.1 million of a Ciena deposit that was used for equipment
purchases. As of March 31, 2006, the amount deposited with Ciena for
future purchases was $11.0 million. Other capital expenditures in the
first quarter were primarily associated with Information Technology
(IT) initiatives and network investments to support new business.
As of March 31, 2006, cash, cash equivalents and investments
totaled $174.2 million.
Recent Announcements
"In the first quarter, we announced customer wins that exemplify
the advantage that Broadwing's quality network, comprehensive product
set, agility and customer focus give us when competing for enterprise
and wholesale customers' business," said Scott Widham, president of
Sales and Marketing. "Our suite of core voice and data offerings,
complemented by recently added Converged, Media and VoIP Services,
position Broadwing to address a broad range of enterprise and
wholesale customer needs -- as illustrated by Lufthansa's selection of
Broadwing voice services that was announced early in the quarter, and
a consistent stream of other key customer wins."
Broadwing announced that Aptela, a provider of hosted IP
communications services that replace traditional phone systems and
service, has selected Broadwing to provide Voice over IP access
service to the Public Switched Telephone Network (PSTN). Broadwing
PSTNConnect SIP service will replace service from several current
Aptela vendors, and will provide reliable, scalable and cost-effective
nationwide access to the PSTN for Aptela's wide variety of business
customers, who range from SOHOs (small offices/home offices) to
Fortune 500 companies. Broadwing PSTNConnect SIP enables Aptela to
connect users to Broadwing's entire local footprint over a single IP
interconnect, reducing the need for gateways and other network
equipment that can significantly increase the cost of VoIP deployment.
Broadwing also announced that Industry Retail Group Inc. (IRG)
chose Broadwing's Converged Network Layer 3 Multiprotocol Label
Switching (MPLS) virtual private network (VPN) solution to deliver
secure and reliable voice and data services to retailers and other
multi-site organizations. Through managed integration of best-in-class
technologies, IRG provides comprehensive network coverage and secure
bandwidth to meet its clients' unique business requirements. IRG works
with other network partners, but chose Broadwing's Converged Layer 3
MPLS VPN because of its high level of security and reliability.
Another factor in IRG's decision was the flexibility of Broadwing's
Converged Services which allow IRG to tailor solutions that leverage
its own skills and product suite to address its target market.
Broadwing announced the strengthening of its Network Security
Suite with the introduction of a dynamic solution to detect and
isolate Distributed Denial of Service (DDoS) attacks. Broadwing's DDoS
solution combines commercial and proprietary hardware, software and
managed service partnerships to provide a solution that is much more
flexible than typical "off-the-shelf" static hardware mitigation
solutions. DDoS attacks can be debilitating for businesses. The
Broadwing solution will allow it to respond in real time to DDoS
attacks, mitigating attacks at multiple layers while enabling
legitimate traffic to reach intended destinations. The Company said
that the service is expected to be generally available in the summer
of 2006, with custom DDoS offerings available in the interim.
Broadwing also announced the availability of North America's
largest fiber-based, real-time media multicast solution. The solution
allows media and broadcasting outlets to securely, efficiently and
cost-effectively distribute media content to multiple locations, in
effect providing a satellite solution on the ground. Customers can
enjoy a "best-of-all-worlds" solution for point-to-multipoint
broadcasts -- the asymmetrical bandwidth, simplicity and efficiency of
satellite, the quality of service of ATM and the scalability of IP --
without the drawbacks typically associated with video distribution
using those solutions on a stand-alone basis. The Dynamic synchronous
Transfer Mode (DTM) Multicast service is available from any of
Broadwing's 180+ network Points of Presence (POPs) and is managed by
its Television Operations Center (TOC).
Webcast Information
Broadwing will host a conference call to review its first quarter
2006 financial results and other operational developments, today, May
2 at 10:30 AM ET. The live broadcast of the conference will be
available via Broadwing's website, www.broadwing.com. An archived
audio of the conference call will be available for future reference
through the Broadwing website at www.broadwing.com.
About Broadwing Corporation
Broadwing Corporation, through its consolidated subsidiary
Broadwing Communications, LLC, delivers innovative data, voice, and
media solutions to enterprises and service providers. Enabled by its
one-of-a-kind, all-optical network and award-winning products and
services, Broadwing Communications provides communications solutions
with unparalleled customer focus and speed. For more information,
visit www.broadwing.com.
Broadwing and its logo are trademarks and/or service marks of
Broadwing Communications, LLC, and/or Broadwing Corporation. All
trademarks and service marks not belonging to Broadwing are the
property of their respective owners.
Investor Note Regarding Forward-Looking Statements
Statements in this press release regarding Broadwing Corporation
and/or Broadwing Communications, LLC (collectively "Broadwing"), that
are not statements of historical fact may include forward-looking
statements, and statements regarding Broadwing's beliefs, plans,
expectations or intentions regarding the future are 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. All such forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Broadwing's actual results could differ
materially from these statements.
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BROADWING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Unaudited
Quarter Ended
------------------------
March 31, March 31,
2006 2005
---------- ----------
Revenue $ 224,046 $ 218,255
Cost of revenue 143,721 147,623
Research and development (including equity-
based expense of $0 and $318 for the period
ending March 31, 2006 and 2005,
respectively) - 2,883
Sales, general and administrative (including
equity-based expense of $1,803 and
$632 for the period ending March 31, 2006
and 2005, respectively) 79,861 74,427
Litigation Settlement - 2,000
Depreciation 15,444 26,471
Amortization 1,404 1,418
Restructuring, severance and gain on sale of
fixed assets (including equity-based expense
of $2,364 and $0 for the period ending
March 31, 2006 and 2005, respectively) 2,631 (313)
---------- ----------
Total operating expenses 243,061 254,509
Operating loss (19,015) (36,254)
Other income, net 1,336 1,952
Interest expense, net of capitalized amounts (2,280) (9,163)
---------- ----------
Net loss $ (19,959) $ (43,465)
========== ==========
Net loss per share $ (0.26) $ (0.62)
========== ==========
Weighted average shares outstanding 77,169 70,398
========== ==========
BROADWING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Unaudited
Quarter Ended
----------------------------
March 31, December 31,
2006 2005
------------ ------------
Revenue $ 224,046 $ 219,969
Cost of revenue 143,721 142,013
Sales, general and administrative
(including equity-based expense of
$1,803 and $1,632 the period ending
March 31, 2006 and December 31, 2005,
respectively) 79,861 79,590
Depreciation 15,444 17,960
Amortization 1,404 1,404
Restructuring, severance and gain on sale
of fixed assets (including equity-based
expense of $2,364 for the period ending
March 31, 2006) 2,631 17
------------ ------------
Total operating expenses 243,061 240,984
Operating loss (19,015) (21,015)
Other income, net 1,336 1,171
Interest expense, net of capitalized
amounts (2,280) (1,235)
------------ ------------
Net loss $ (19,959) $ (21,079)
============ ============
Net loss per share $ (0.26) $ (0.29)
============ ============
Weighted average shares outstanding 77,169 73,875
============ ============
BROADWING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
Unaudited
March 31, December 31,
2006 2005
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 157,251 $ 66,706
Short-term investments 16,985 42,648
Trade accounts receivable, net 73,867 75,579
Other current assets 23,629 18,565
----------- -----------
Total current assets 271,732 203,498
Restricted cash, non-current 14,060 14,606
Property and equipment, net 261,268 260,681
Goodwill 58,354 58,354
Intangible assets, net 23,416 24,820
Other non-current assets, net 24,957 11,545
----------- -----------
Total assets $ 653,787 $ 573,504
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, net of discounts, and
capital lease obligations, current
portion $ 1,663 $ 33,072
Accounts payable 48,640 32,221
Accrued expenses and other liabilities 51,354 54,344
Accrued communication service costs 17,104 25,441
Deferred revenue, current portion 6,718 6,941
Accrued restructuring and other charges 4,492 3,965
----------- -----------
Total current liabilities 129,971 155,984
Notes payable, net of discounts, and
capital lease obligations, net of
current portion 20,382 20,819
Deferred revenue, net of current portion 17,639 17,939
Other long-term liabilities 12,317 13,750
----------- -----------
Total liabilities 180,309 208,492
Stockholders' equity:
Common stock(a) 876 747
Additional paid-in capital 3,308,876 3,180,764
Treasury stock, 1,228,180 shares at an
average cost of $7.70 per share (9,512) (9,512)
Accumulated other comprehensive income
(loss):
Unrealized investment gains (losses) (36) (220)
Accumulated deficit (2,826,726) (2,806,767)
----------- -----------
Total stockholders' equity 473,478 365,012
----------- -----------
Total liabilities and stockholders'
equity $ 653,787 $ 573,504
=========== ===========
(a) $0.01 per share par value; 1,900,000,000 authorized shares;
75,266,437 shares issued and 74,038,257 shares outstanding as of
12/31/05, and 88,082,830 shares issued and 87,155,664 shares
outstanding as of 03/31/06.
OTHER FINANCIAL INFORMATION
(In thousands)
Unaudited
Three Months Ended
March 31, March 31,
2006 2005
---------- -----------
Capital expenditures(a) $ 15,974 $ 13,452
(a) Capital expenditures of $15,974 as of March 31, 2006 included $2.1
million in cash that was previously deposited toward purchases of
Ciena equipment. Additionally, in the first quarter the company
prepaid $11.0 million for future equipment and service purchases
which is not yet included in capex.
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