Inphonic (NASDAQ:INPC)
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InPhonic, Inc. (NASDAQ:INPC), a leading online seller of
wireless services, today reported financial results for its third
quarter ended September 30, 2005.
Consolidated Financial Results
GAAP Results
-- Revenues were $96.7 million for the third quarter 2005,
compared to $54.1 million for the third quarter 2004, an
increase of 79% year over year.
-- Net loss attributable to common stockholders was $(5.0)
million or $(0.14) per basic and diluted share for the third
quarter 2005, a 55% improvement compared to a net loss
attributable to common stockholders of $(11.0) million, or
$(0.94) per basic and diluted share, for the third quarter
2004.
-- The net loss attributable to common stockholders for the third
quarter 2005 included stock-based compensation of
approximately $4.0 million and depreciation and amortization
of $2.5 million. The net loss attributable to common
stockholders for the third quarter 2004 included stock-based
compensation of $1.7 million and depreciation and amortization
of $1.6 million.
-- Sales and marketing expenses for the third quarter 2005 were
$24.7 million, including stock-based compensation of $0.8
million. This compares to $11.1 million for the third quarter
2004, including stock-based compensation of $0.3 million.
General and administrative expenses for the third quarter 2005
were $16.9 million, including stock-based compensation of $3.2
million. This compares to $11.5 million for the third quarter
2004, including stock-based compensation of $1.4 million.
Non-GAAP Results
-- Non-GAAP Revenues were $94.3 million for the third quarter
2005, compared with Non-GAAP Revenues of $40.8 million for the
third quarter 2004, an increase of 131% year over year.
-- Adjusted EBITDA for the third quarter 2005 was $11.0 million,
compared to Adjusted EBITDA of $4.5 million for the third
quarter 2004, an improvement of 144% year over year.
-- Adjusted Earnings before Taxes ("Adjusted EBT") for the third
quarter 2005 was $9.6 million, or $0.25 per diluted share,
reflecting an improvement of $6.4 million compared to Adjusted
EBT of $3.2 million, or 9.5 cents per diluted share for the
third quarter 2004.
-- Non-GAAP Sales and Marketing Expenses for the third quarter
2005 were $20.0 million, compared to Non-GAAP Sales and
Marketing Expenses of $8.9 million for the third quarter 2004.
Non-GAAP General and Administrative Expenses for the third
quarter 2005 were $9.6 million, compared to Non-GAAP General
and Administrative Expenses of $5.3 million, for the third
quarter 2004.
The components of Non-GAAP Revenues, Adjusted EBITDA, Adjusted
EBT, Adjusted EBT per diluted share, Non-GAAP Sales and Marketing
Expenses and Non-GAAP General and Administrative Expenses are
discussed below under "Non-GAAP Financial Measures", and a
reconciliation between GAAP and Non-GAAP results is shown immediately
following the Unaudited Condensed Consolidated Statements of Cash
Flows.
"As we have communicated in the past, we continue to evaluate all
of our businesses with the goal of realizing our growth prospects and
maximizing stockholder value," said David A. Steinberg, chairman and
chief executive officer. "Our financial results reflect solid
execution across our WAS business and continued revenue and margin
pressure in our MVNO business. As we transition it from a subscriber
to a software based business, we expect to grow the business at a
faster pace with higher gross margins. After having achieved our nine
month 2005 goals, we believe that we have made excellent progress this
quarter in our efforts to streamline the Company and position it for
profitable future growth."
Operating Highlights
-- Extended Radio Shack relationship with Direct-to-You Virtual
Inventory program with Radio Shack's Retail Services division,
expanding InPhonic's wireless activation reach into the
offline retail marketplace, which currently represents 91% of
all activations.
-- Implemented Direct-to-You program with Radio Shack's client,
Sam's Club, a division of Wal-Mart, and the nation's largest
members-only warehouse club with more than 46 million members;
-- Signed a new agreement with marketing partner, America Online,
to implement the launch of AOLMobile.com, customized and
powered by InPhonic;
-- Established additional third-party solutions to our wireless
service offerings, with MobiTV, a global provider of
television and radio services, and TeleNav, a next-generation
GPS navigation service, to our wireless phone add-on product
offerings;
-- Launched next-generation InPhonic Storefront 5.0 technology
platform, including a new comprehensive shopping cart;
-- Signed a non-binding letter of intent to sell certain assets
of the InPhonic's Liberty Wireless MVNO business to Vaya, LLC
("Vaya"). Under the proposed agreement, the customers would
not experience any change in service, billing or coverage, as
Vaya would continue to utilize InPhonic's MVNE platform on a
per unit software license basis.
Business Outlook
The following business outlook is based on current information and
expectations as of November 8, 2005. It is currently expected the
outlook will not be updated until the release of InPhonic's next
quarterly earnings announcement, notwithstanding subsequent
developments; however, InPhonic may update the outlook or any portion
thereof at any time.
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Figures in millions, except Adjusted EBT Guidance Guidance
per diluted share Q4 2005 FY 2005
---------------------------------------- ----------------------------
Revenues $104.0-106.0 $345.0-355.0
Adjusted EBITDA $16.0-$17.0 $36.0-37.0
Adjusted EBT per diluted share $0.36-$0.39 $0.75-0.79
*T
Non-GAAP Financial Measures
To supplement the Company's unaudited condensed consolidated
financial statements, which are presented in accordance with generally
accepted accounting principles in the United States ("U.S. GAAP"),
InPhonic uses the following Non-GAAP measures of certain components of
financial performance.
Non-GAAP Revenues - Revenues excluding, for comparison purposes,
the effects of: one-time and non-recurring revenues, which are defined
as net revenues that have been eliminated during the period or relate
to a prior period and that are not expected to recur in future
periods. In addition, the Company recently disclosed that it had
signed a letter of intent to sell certain assets of its Liberty
Wireless MVNO business, and Non-GAAP Revenues also includes an
adjustment to eliminate net revenues associated with the assets that
may be sold in the transaction.
Non-GAAP Sales and Marketing Expenses - Sales and marketing
expenses adjusted for stock-based compensation, one-time and
non-recurring expenses, which are defined as expenses that have been
eliminated during the period and that are not expected to recur in
future periods. In addition, the Company recently disclosed that it
had signed a non-binding letter of intent to sell certain assets of
its Liberty Wireless MVNO business, and Non-GAAP sales and marketing
expenses also includes an adjustment for certain costs associated with
the assets that may be sold in the transaction.
Non-GAAP General and Administrative Expenses - General and
administrative expenses adjusted for stock-based compensation,
settlement costs, one-time and non-recurring expenses, which are
defined as expenses that have been eliminated during the period and
that are not expected to recur in future periods. In addition, the
Company recently disclosed that it had signed a letter of intent to
sell certain assets of its Liberty Wireless MVNO business, and
Non-GAAP general and administrative expenses also includes an
adjustment for certain costs associated with the assets that may be
sold in the transaction.
Adjusted EBITDA -Earnings before interest, taxes, depreciation and
amortization adjusted for stock-based compensation, loss on
investments, restructuring costs, settlement costs, one-time and
non-recurring expenses, which are defined as expenses that have been
eliminated during the period and that are not expected to recur in
future periods. In addition, the Company recently disclosed that it
had signed a letter of intent to sell certain assets of its Liberty
Wireless MVNO business, and Adjusted EBITDA also includes an
adjustment for certain revenues and costs associated with the assets
that may be sold in the transaction.
Adjusted EBT - Earnings excluding net interest and other expense
(income), stock-based compensation, restructuring costs, loss on
investments, depreciation and amortization related to acquisitions,
settlement costs, one-time and non-recurring expenses, which are
defined as expenses that have been eliminated during the period and
are not expected to recur in future periods. In addition, the Company
recently disclosed that it had signed a letter of intent to sell
certain assets of its Liberty Wireless MVNO business, and Adjusted EBT
also includes an adjustment for certain revenues and costs associated
with the assets that may be sold in the transaction.
Adjusted EBT per diluted share - per share value of Adjusted EBT
on a fully-diluted basis.
The Company believes that the presentation of the above Non-GAAP
measures provides useful information to management and investors
regarding certain additional financial and business trends relating to
its financial condition and results of operations. The Company
believes when U.S. GAAP results are viewed in conjunction with these
Non-GAAP measures, investors are provided with a more meaningful
understanding of the Company's ongoing operating performance. In
addition, the Company's management uses these measures for reviewing
the Company's financial results.
These measures should be considered in addition to results
prepared in accordance with U.S. GAAP, but should not be considered a
substitute for, or superior to, GAAP results. The Company has
reconciled Non-GAAP financial measures included in this press release
to the nearest GAAP measure. Investors are encouraged to review the
related GAAP financial measures and the reconciliation of these
Non-GAAP financial measures to their most directly comparable GAAP
financial measure.
Forward-Looking Statements
This press release contains forward-looking statements, including,
without limitation, all statements related to future financial
performance, plans to grow our business and build our brand. Words
such as "expect," "anticipate," "believe" and similar expressions are
intended to identify forward-looking statements. These forward-looking
statements are based upon our current expectations. Forward-looking
statements involve risks and uncertainties. Our actual results and the
timing of events could differ materially from those anticipated in
such forward-looking statements as a result of these risks and
uncertainties, which include, without limitation, uncertainty as to
whether or when the sale of certain assets of Liberty Wireless will be
completed and the final terms and timing of such sale, risks related
to our fluctuating operating results, seasonality in our business, our
ability to acquire products on reasonable terms, our online business
model, demand for our products, the strength of our brand,
competition, our ability to fulfill orders and other risks detailed in
our filings with the Securities and Exchange Commission, including our
Annual Report on Form 10-K for the Year ended December 31, 2004 and
our Quarterly Reports on Form 10-Q. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only
as of the date of this press release. All forward-looking statements
are qualified in their entirety by this cautionary statement, and
InPhonic undertakes no obligation to revise or update any
forward-looking statements to reflect events or circumstances after
the date hereof.
Conference Call
Company management will be holding a conference call to discuss
its third quarter 2005 financial results Today, Tuesday, November 8,
2005 after the close of the day's trading on the NASDAQ Stock Market.
InPhonic will host a conference call, open to the general public, at
5:00 PM Eastern Time to discuss financial results and provide a
Company update.
The conference call can be accessed by the following:
-- 800-811-0667 (Domestic) or 913-981-4901 (International);
passcode 8114069.
-- The replay will be available through November 17, 2005 by
dialing 888-203-1112 (Domestic) or 719-457-0820
(International); passcode 8114069.
-- The Company will also audio Webcast the call. A link to the
audio Webcast will be available on the Company's website at
www.inphonic.com in the Investor Relations section.
-- More call information and an audio archive following the call
will be available on the Company's website at www.inphonic.com
in the Investor Relations section.
-- Individual investors can listen to the call at
www.fulldisclosure.com, Thomson/CCBN's individual investor
portal.
-- Institutional investors can access the call via the
password-protected event management site,
www.streetevents.com.
About InPhonic
Headquartered in Washington, D.C., InPhonic, Inc. (NASDAQ: INPC)
is a leading online seller of wireless services and products. InPhonic
sells these services and devices, and provides world-class customer
service through websites that it creates and manages for online
businesses, national retailers, member-based organizations and
associations under their own brands. InPhonic also operates Wirefly
(www.wirefly.com), a leading mobile phones and wireless plans
comparison site that was awarded "Best of the Web" by Forbes magazine
in 2004. InPhonic also delivers a full range of mobility solutions to
enterprise clients through its Mobile Virtual Network Enablement
(MVNE) platform. In 2004, InPhonic was selected #1 company of the year
on the Inc. 500 - Inc. Magazine's list of the fastest-growing
privately held companies in the United States. More recently, InPhonic
was named T-Mobile's Internet Partner of the Year for 2004. For more
information on the company, its products and services, visit the
InPhonic Corporate Web site at www.inphonic.com. INPCG
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INPHONIC, INC. & SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share and share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2004 2005 2004 2005
----------- ----------- ----------- -----------
Revenues:
Activations and
services $44,483 $69,865 $118,309 $188,373
Equipment 9,578 26,872 25,930 66,589
----------- ----------- ----------- -----------
Total revenues 54,061 96,737 144,239 254,962
Cost of revenues,
exclusive of
depreciation and
amortization:
Activations and
services 7,150 2,457 18,985 12,236
Equipment 23,666 55,097 62,903 137,835
----------- ----------- ----------- -----------
Total cost of
revenues 30,816 57,554 81,888 150,071
Operating expenses:
Sales and marketing,
exclusive of
depreciation and
amortization 11,140 24,718 32,477 63,744
General and
administrative,
exclusive of
depreciation and
amortization 11,489 16,901 33,548 48,202
Depreciation and
amortization 1,583 2,460 4,617 6,379
Restructuring costs - 453 - 848
Loss on investment - - 150 228
----------- ----------- ----------- -----------
Total operating
expenses 24,212 44,532 70,792 119,401
----------- ----------- ----------- -----------
Loss from operations (967) (5,349) (8,441) (14,510)
----------- ----------- ----------- -----------
Other income (expense):
Interest income 82 549 215 1,576
Interest expense (257) (152) (624) (665)
----------- ----------- ----------- -----------
Total other income
(expense) (175) 397 (409) 911
----------- ----------- ----------- -----------
Net loss (1,142) (4,952) (8,850) (13,599)
Preferred stock
dividends and
accretion (9,872) - (15,529) -
----------- ----------- ----------- -----------
Net loss
attributable to
common
stockholders $(11,014) $(4,952) $(24,379) $(13,599)
=========== =========== =========== ===========
Basic and diluted net
loss per share $(0.94) $(0.14) $(2.10) $(0.40)
=========== =========== =========== ===========
Basic and diluted
weighted average
shares outstanding 11,720,861 35,515,210 11,614,626 34,099,325
=========== =========== =========== ===========
Unaudited Stock-Based Three Months Ended Nine Months Ended
Compensation September 30, September 30,
(in thousands) ----------------------- -----------------------
2004 2005 2004 2005
----------- ----------- ----------- -----------
Sales and marketing $277 $764 $597 $1,974
General and
administrative 1,394 3,161 4,007 11,747
----------- ----------- ----------- -----------
Total stock-based
compensation $1,671 $3,925 $4,604 $13,721
=========== =========== =========== ===========
INPHONIC, INC. & SUBSIDIARIES
Unaudited Selected Segment Information
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2004 2005 2004 2005
--------- --------- --------- ---------
Revenue:
Wireless Activation and
Services (a) $39,084 $90,406 $100,565 $229,333
MVNO Services (b) 13,239 5,359 38,087 22,031
Data Services 1,738 972 5,587 3,598
--------- --------- --------- ---------
Total revenues $54,061 $96,737 $144,239 $254,962
========= ========= ========= =========
Cost of revenues, excluding
depreciation and amortization:
Wireless Activation and
Services (a) $21,731 $54,317 $56,121 $134,985
MVNO Services (b) 8,680 3,066 24,394 14,486
Data Services 405 171 1,373 600
--------- --------- --------- ---------
Total cost of revenues $30,816 $57,554 $81,888 $150,071
========= ========= ========= =========
(a) Wireless Activations and Services segment includes financial
results of the Wireless Activations and Satellite Television
units.
(b) MVNO Services segment includes financial results of the MVNO
Services and MVNE Services units.
INPHONIC, INC & SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
December 31, September 30,
2004 2005
------------- -------------
Assets
Current assets:
Cash and cash equivalents $100,986 $81,526
Short-term investments - 5,005
Accounts receivable 19,039 42,746
Inventory, net 10,860 34,061
Prepaid expenses 11,434 2,001
Deferred costs and other current assets 2,391 3,785
------------- -------------
Total current assets 144,710 169,124
Restricted cash and cash equivalents 500 500
Property and equipment, net 5,975 11,024
Goodwill 9,479 30,676
Intangible assets, net 1,490 15,008
Deposits and other assets 1,635 2,506
------------- -------------
Total assets $163,789 $228,838
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $16,922 $34,066
Accrued expenses and other liabilities 23,502 33,976
Short-term capital lease obligations 279 335
Deferred revenue 10,723 15,751
------------- -------------
Total current liabilities 51,426 84,128
Long-term capital lease obligations, net of
current portion 261 356
Long-term debt - 15,000
------------- -------------
Total liabilities 51,687 99,484
------------- -------------
Stockholders' equity:
Common stock, $0.01 par value
Authorized 200,000,000 shares at
December 31, 2004 and September 30,
2005; issued and outstanding 32,252,573
and 35,616,720 shares at December 31,
2004 and September 30, 2005,
respectively; 324 357
Additional paid-in capital 238,241 269,058
Accumulated deficit (126,463) (140,061)
------------- -------------
Total stockholders' equity 112,102 129,354
------------- -------------
Total liabilities and stockholders'
equity $163,789 $228,838
============= =============
INPHONIC, INC & SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Nine Months Ended Three Months Ended,
September 30, September 30,
------------------- -------------------
2004 2005 2004 2005
--------- --------- --------- ---------
Cash flows from operating
activities:
Net loss $(8,850) $(13,599) $(1,142) $(4,953)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and
amortization 4,617 6,379 1,583 2,460
Non-cash interest expense,
net 71 486 46 162
Stock-based compensation 4,604 13,721 1,671 3,925
Write-off of investment 150 228 - -
Changes in operating assets
and liabilities, net of
assets and liabilities
received from business
acquisition:
Accounts receivable (5,417) (23,621) (3,989) (3,079)
Inventory (4,673) (20,376) (1,538) (16,270)
Prepaid expenses (26) (1,267) (282) (526)
Deferred costs 1,184 (1,060) 757 (1,224)
Deposits and other assets (105) (1,357) 523 (918)
Accounts payable 10,448 17,144 3,080 9,768
Accrued expenses and other
liabilities 1,909 5,900 893 2,245
Deferred revenue (4,486) 5,028 (3,819) 2,891
--------- --------- --------- ---------
Net cash used in
operating activities (574) (12,394) (2,217) (5,519)
Cash flows from investing
activities:
Net cash paid for acquisitions - (11,857) - (3,225)
Cash paid for intangible
assets - (2,532) - (93)
Note receivable from
stockholder (45) - (15) -
Purchase of short-term
investments - (5,005) - 12,855
Capitalized expenditures,
including internal
capitalized labor (3,973) (9,111) (1,614) (3,085)
--------- --------- --------- ---------
Net cash (used in)
provided by investing
activities (4,018) (28,505) (1,629) 6,452
Cash flows from financing
activities:
Net principal borrowings
(repayments) on debt (281) 151 (92) 297
Net borrowings on line of
credit 1,651 15,000 (51) 15,000
Proceeds from debt borrowings 2,250 - - -
Preferred series D-4 dividends
paid (92) - - -
Proceeds from exercise of
warrants and options 68 9,669 68 3,126
Repurchase of common stock - (3,090) - (3,090)
Costs of initial public
offering (1,378) (291) (1,378) -
Borrowings for capital leases 84 - 84 -
--------- --------- --------- ---------
Net cash provided by
(used in) financing
activities 2,302 21,439 (1,369) 15,333
--------- --------- --------- ---------
Net (decrease) increase
in cash and cash
equivalents (2,290) (19,460) (5,215) 16,266
Cash and cash equivalents at
December 31, 2003 and 2004 and
June 30, 2004 and 2005,
respectively 29,048 100,986 31,973 65,260
--------- --------- --------- ---------
Cash and cash equivalents at
September 30, 2004 and 2005,
respectively $26,758 $81,526 $26,758 $81,526
========= ========= ========= =========
Supplemental disclosure of cash
flows information:
Cash paid during the period
for:
Interest $552 $107 $210 $90
Income taxes - - - -
Supplemental disclosure of non-
cash activities:
Preferred stock dividends and
accretion to redemption
value $(15,529) $- $(9,872) $-
Issuance of common stock in
business acquisitions - 9,123 - -
Issuance of common stock in
intangible asset purchase - 1,721 - -
Issuance of common stock
warrants for debt fees 816 - - -
Issuance of common stock to
settle a liability 50 - - -
Release of funds in escrow
related to acquisitions - 10,700 - -
INPHONIC, INC & SUBSIDIARIES
Reconciliation of Non-GAAP measures to the nearest comparable GAAP
measures
(Unaudited, in millions)
Non-GAAP financial metrics:
Three Months Ended
September 30, 2004
--------------------------------
Non-GAAP
Actual Adjustments Results
------ ----------- --------
Revenues $54.1 $(13.3) (a) $40.8
Cost of revenues $30.8 $(8.7) (a) $22.1
Sales and marketing expenses $11.1 $(0.3) (d) $8.9
$(1.9) (a)
General and administrative expenses $11.5 $(1.4) (d) $5.3
$(4.8) (a)
Three Months Ended
September 30, 2005
--------------------------------
Non-GAAP
Actual Adjustments Results
------ ----------- --------
Revenues $96.7 $(4.8) (a) $94.3
2.4 (b)
Cost of revenues $57.6 $(3.9) (a) $53.7
Sales and marketing expenses $24.7 $(2.5) (b) $20.0
(1.4) (b)
(0.8) (d)
General and administrative expenses $16.9 $(1.8) (a) $9.6
(1.1) (b)
(1.2) (c)
(3.2) (d)
----
(a) Adjustment to reflect the removal of the results of operations
related to the Liberty Wireless MVNO business as a result of the
pending and proposed sale of certain assets of Liberty Wireless.
There can be no assurance as to whether or when a definitive
agreement relating to the sale of Liberty Wireless will be signed
and closed, if at all.
(b) Adjustment to reflect non-recurring revenues and expenses
associated with the integration of acquisitions and streamlining
our business including terminated marketing programs, carrier
disputes, rebate and other employee and settlement costs. The
non-recurring items increase revenues by $2.4 million, and
decrease sales and marketing expenses by $1.4 million and general
and administrative expenses by $1.1 million.
(c) Adjustment for costs incurred during the period related to the
dismissal of certifying accountants, incremental costs of
complying with the Sarbanes-Oxley Act of 2002 of $1.2 million.
(d) Adjustment to exclude the impact of stock-based compensation on
general and administrative expenses and sales and marketing
expenses.
INPHONIC, INC & SUBSIDIARIES
Reconciliation of Non-GAAP measures to the nearest comparable GAAP
measures
(Unaudited, in millions)
Adjusted EBITDA:
Three Months Ended
September 30,
-----------------------
2004 2005
------- -------
Net loss $(1.1) $(5.0)
Non-recurring revenue adjustments (13.3) (a) (4.8) (a)
2.4 (b)
Add Back:
Taxes - -
Net interest and other expense (income) 0.2 (0.4)
Depreciation and amortization 1.6 2.5
Restructuring costs - 0.5
Loss on investment - -
Pro forma Liberty Wireless costs 15.4 (a) 8.2 (a)
Non-recurring expenses - 2.5 (b)
Non-recurring accounting and compliance costs - 1.2 (c)
Stock-based compensation 1.7 (d) 3.9 (d)
------- -------
Adjusted EBITDA $4.5 $11.0
======= =======
(a) Adjustment to the removal of the results of operations related to
the Liberty Wireless MVNO business as a result of the pending and
proposed sale of certain assets of Liberty Wireless. There can be
no assurance as to whether or when a definitive agreement relating
to the sale of Liberty Wireless will be signed and closed, if at
all.
(b) Adjustment to reflect non-recurring revenues and expenses
associated with the integration of acquisitions and streamlining
our business including terminated marketing programs, carrier
disputes, rebate and other employee and settlement costs. The
non-recurring items would increase revenues by $2.4 million, and
decrease sales and marketing expenses and general and
administrative expenses by $2.5 million.
(c) Adjustment for the costs related to the dismissal of certifying
accountants during the period, incremental costs of complying with
the Sarbanes-Oxley Act of 2002 of $1.2 million.
(d) Adjustment to exclude the impact of stock-based compensation on
general and administrative and sales and marketing expenses.
INPHONIC, INC & SUBSIDIARIES
Reconciliation of Non-GAAP measures to the nearest comparable GAAP
measures
(Unaudited, in millions except share and per share amounts)
Adjusted EBT:
Three Months Ended
September 30,
------------------------------
2004 2005
----------- -----------
Net loss $(1.1) $(5.0)
Non-recurring revenue adjustments (13.3) (a) (4.8) (a)
2.4 (b)
Add Back:
Taxes - -
Net interest and other expense (income) 0.2 (0.4)
Amortization related to acquired
intangibles 0.3 1.1
Restructuring costs - 0.5
Loss on investment - -
Pro forma Liberty Wireless costs 15.4 (a) 8.2 (a)
Non-recurring expenses - 2.5 (b)
Non-recurring accounting and compliance
costs - 1.2 (c)
Stock-based compensation 1.7 (d) 3.9 (d)
----------- -----------
Adjusted EBT $3.2 $9.6
=========== ===========
Adjusted EBT per share $0.09 $0.25
Basic Weighted average shares 11,720,861 35,515,210
Add: Diluted shares 21,864,272 ** 2,245,482
----------- -----------
Weighted average diluted shares used in
per share calculation 33,585,133 ** 37,760,692
Outstanding common shares
at period end 35,616,720
Outstanding options and
restricted stock at period
end 6,524,196
Outstanding warrants at
period end 897,647
** - Diluted shares for 2004 do not include the impact of treasury
stock
----
(a) Adjustment to the removal of the results of operations related to
the Liberty Wireless MVNO business as a result of the pending and
proposed sale of certain assets of Liberty Wireless. There can be
no assurance as to whether or when a definitive agreement relating
to the sale of Liberty Wireless will be signed and closed, if at
all.
(b) Adjustment to reflect non-recurring revenues and expenses
associated with the integration of acquisitions and streamlining
our business including terminated marketing programs, carrier
disputes, rebate and other employee and settlement costs. The
non-recurring items would increase revenues by $2.4 million, and
decrease sales and marketing expenses and general and
administrative expenses by $2.5 million.
(c) Adjustment for the costs related to the dismissal of certifying
accountants during the period, incremental costs of complying with
the Sarbanes-Oxley Act of 2002 of $1.2 million.
(d) Adjustment to exclude the impact of stock-based compensation on
general and administrative and sales and marketing expenses.
*T