Exhibit 99.03
PRESS RELEASE
Contact Information
Ed Babcock
Adelphia Business Solutions
814-274-9830
FOR IMMEDIATE RELEASE:
---------------------
ADELPHIA BUSINESS SOLUTIONS, INC ANNOUNCES SECOND QUARTER RESULTS OF OPERATIONS
Coudersport, PA - August 9, 2000
John J. Rigas, Chairman of Adelphia Communications Corporation
("Adelphia") (NASDAQ NNM: ADLAC) and Adelphia Business Solutions, Inc. ("the
Company") (NASDAQ NNM: ABIZ) reported results of operations for the Company and
its Operating Companies (defined in footnote) for the second quarter which ended
on June 30, 2000. Second quarter results saw record levels of consolidated
operating revenues of $80.2 million, and record access line installations of
81,460. Net loss applicable to common shareholders for the second quarter
totaled $73.6 million, or $1.06 per share, compared with $38.9 million, or $0.70
per share, for the same period in the prior year. The Company now offers
communications services in 62 markets in the eastern half of the United States
with plans to expand to a total of 150 to 200 markets throughout the United
States by the end of 2001. Summarized financial results are included in Tables
1, 2 and 3 below.
As presented in Table 1, on a sequential quarterly basis, consolidated
revenues increased 15.7% to $80.2 million in the June 2000 quarter, from $69.3
million in the March 2000 quarter and were 134.4% higher than the comparable
period in the prior year. Gross margin as a percent of sales was 48.1% in the
June 2000 quarter as compared with 51.3% of sales in the March 2000 quarter. The
lower gross margin was due to start up costs in the Company's New Markets
(defined in Table 2) as regional switches and network rings are activated,
combined with higher start up costs in the Company's Original Markets (defined
in Table 2) associated with the Company's data and internet access products.
EBITDA losses for the June 2000 quarter were somewhat higher at $24.4 million
versus a $22.5 million EBITDA loss in the March 2000 quarter. EBITDA losses as a
percentage of revenues declined somewhat in the current quarter to 30.4% from
32.4% for the March 2000 quarter. EBITDA losses were in line with expectations
and the Company estimates EBITDA losses will be in a similar dollar range for
each of the remaining quarters of calendar 2000, as the Company continues to
invest in its direct sales force and build out of its national network strategy.
The Company currently expects revenue growth and installed access line growth
for the next two quarters to be similar to the growth achieved in the June 2000
quarter, subject to resolution of the current Verizon labor strike, and other
possible disruptions outside of the Company's control.
Table 2 presents the Company's financial results of operations for the
22 Original Markets and the Company's current expansion into its New Markets.
The Original Markets' sequential quarterly revenue growth remained very strong,
to $80.4 million in the June 2000 quarter, or 12.5% higher than the March 2000
quarter. Gross margin as a percent of sales in the Original Markets remained a
strong 68.1% in the June 2000 quarter as compared with 68.5% in the March 2000
quarter. The Original Markets' EBITDA of $12.4 million, or 15.4% of revenues in
the June 2000 quarter, was at approximately the same level as the March 2000
quarter.
<PAGE>
New Markets' revenues increased by 47.2% to $15.6 million in the June
2000 quarter from $10.6 million in the March 2000 quarter as these markets
continue to expand operations. New Markets' EBITDA losses increased to $32.2
million for the June 2000 quarter from a loss of $30.6 million in the March 2000
quarter as the markets prepare to commence operations on the Company's own
regional switches and network, most of which have been activated in the past
several months.
Access lines installed increased by 81,460 resulting in an installed
access line base of 493,632 as of June 30, 2000, 51% of which are serviced on
the Company's switches. Access lines sold as of June 30, 2000 totaled 509,405,
an increase of 76,268 in the quarter.
During the June 2000 quarter, the Company and its consolidated
subsidiaries invested approximately $123.2 million in capital expenditures which
was in line with expectations and relates primarily to the nationwide network
development efforts for fiber, and to dense wave division multiplexing and DSL
equipment. As of June 30, 2000, total gross property, plant and equipment of the
Company and its consolidated subsidiaries was approximately $1.3 billion.
During the June 2000 quarter, the Company funded a portion of its free
cash flow deficit with draws of approximately $95 million under a $500 million
bank credit commitment. The Company expects to fund its projected future
deficits through early 2002 through a combination of additional draws under the
credit facility, additional bank or institutional indebtedness, capital
contributions from minority partners (including potential Adelphia
contributions, of up to $300 million) relating to the creation of new
partnerships for the development of certain new markets, and the issuance of
public equity or equity linked securites of approximately $300 million, of which
Adelphia Communications would expect to purchase approximately $150 million. The
Company expects to implement these financing plans in 2000.
As of June 30, 2000, the Operating Companies had approximately 8,147
local route miles and 359,862 local fiber miles operational. The Company also
has 29,000 route miles of long haul fiber and over 3,000 route miles of local
fiber network under construction or being purchased under several fiber and
conduit contracts. As of June 30, 2000, the Company had customers located in
approximately 26,177 buildings, of which approximately 3,050 buildings were
connected to the Company's networks, and was collocated in 234 local exchange
carrier central offices. The Company plans to significantly expand its
collocation efforts over the next several quarters through the deployment of DSL
equipment in over 500 central offices, all of which will be connected with
Company owned or leased fiber. Additionally, to date, 29 Lucent 5ESS switches or
remote switching modules have been installed to provide local telephone service
with two additional regional switches planned for installation during 2000.
Adelphia Business Solutions is a majority owned subsidiary of Adelphia
Communications Corporation that provides integrated communications services to
business customers through its state-of-the-art fiber optic communications
network. The Company owns 100% of the interests in 59 of 62 markets in which it
currently offers communications services, with the remaining three markets
operating as 50% owned joint ventures with a local partner. By the end of 2001,
the Company expects to serve 150 to 200 markets throughout the United States
including substantially all major Tier I and Tier II cities, through the
interconnection of these markets, creating a single fiber optic backbone
network. This fully redundant, 33,000-mile long-haul fiber optic network,
combined with an estimated 15,000 local fiber route miles, will support the
Company's full line of communication service offerings, including local and long
distance voice services, messaging, high-speed data and internet services. For
more information on Adelphia Business Solutions, or to review an electronic
version of this press release visit the Company's web site at
http://www.adelphia-abs.com. In addition, the Company will be holding its
quarterly investor conference call on Thursday August 10, 2000, at 10 A.M. EST.
The quarterly conference call-in number is (800) 553-2506, passcode 772267. The
replay call-in number, which is available for the week following the call, is
(800) 625-5288, passcode 772267.
<PAGE>
Footnote: At June 30, 2000 the Company's Operating Companies were
comprised of four partnerships or limited liability companies with local
partners, and wholly or majority owned subsidiaries of the Company
(collectively, the "Operating Companies").
Certain statements in this release are forward-looking statements that
are subject to material risks and uncertainties. Actual results could differ
materially from those stated or implied by such forward-looking statements due
to risks and uncertainties associated with the Company's business, which include
among others, competitive developments, risks associated with the Company's
growth and financings, the development of the Company's markets, regulatory
risks, reliance on vendors, dependence on its customers and their spending
patterns and other risks which are discussed in the Company's filings with the
Securities and Exchange Commission. Additional information regarding factors
that may affect the business and financial results of Adelphia Business
Solutions can be found in the Company's filings with the Securities and Exchange
Commission, including the prospectus under Registration Statement File No.
333-11142 (formerly No. 333-88927), under the caption "Risk Factors." The
Company does not undertake to update any forward looking statements in this
press release or with respect to matters described herein.
<PAGE>
<TABLE>
Adelphia Business Solutions, Inc.
Table 1 - Unaudited Proforma Consolidated and
Joint Venture Operating Results
Quarter Ended June 30, 2000 Quarter Ended March 31, 2000 Quarter Ended June 30, 1999
------------------------------------------------------------------------------------------
Joint Joint Pro-forma Joint
Consolidated Venture Total Consolidated Venture Total Consolidated Venture Total
(dollars in thousands) Operating Operating Operating Operating Operating Operating Operating Operating Operating
Results Results Results Results Results Results Results Results Results
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 80,214 $ 15,777 $ 95,991 $ 69,301 $ 12,775 $ 82,076 $ 34,215 $ 9,742 $ 43,957
Direct Operating Expenses 41,661 4,112 45,773 33,732 3,601 37,333 11,671 3,565 15,236
---------------------------------------------------------------------------------------------
Gross Margin 38,553 11,665 50,218 35,569 9,174 44,743 22,544 6,177 28,721
Gross Margin Percentage 48.1% 73.9% 52.3% 51.3% 71.8% 54.5% 65.9% 63.4% 65.3%
Sales, General and Administrative Expenses 62,922 7,122 70,044 58,047 4,972 63,019 32,637 5,875 38,512
---------------------------------------------------------------------------------------------
EBITDA (a) (24,369) 4,543 (19,826) (22,478) 4,202 (18,276) (10,093) 302 (9,791)
---------------------------------------------------------------------------------------------
EBITDA Percentage of Revenues (30.4%) 28.8% (20.7%) (32.4%) 32.9% (22.3%) (29.5%) 3.1% (22.3%)
</TABLE>
<TABLE>
June 30, 2000 Quarter vs. June 30, 2000 Quarter vs.
March 31, 2000 Quarter June 30, 1999 Quarter
-------------------------------------------------------------------------
Joint Pro-forma Joint
Percent Change Comparison Consolidated Venture Total Consolidated Venture Total
Operating Operating Operating Operating Operating Operating
Results Results Results Results Results Results
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues 15.7% 23.5% 17.0% 134.4% 61.9% 118.4%
Direct Operating Expenses 23.5% 14.2% 22.6% 257.0% 15.3% 200.4%
-------------------------------------------------------------------------
Gross Margin 8.4% 27.2% 12.2% 71.0% 88.8% 74.8%
Sales, General and Administrative Expenses 8.4% 43.2% 11.1% 92.8% 21.2% 81.9%
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EBITDA (a) (8.4%) 8.1% (8.5%) (141.4%) NM (102.5%)
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<FN>
Table 1 summarizes operating results for (i) Adelphia Business Solutions and its
consolidated subsidiaries and (ii) its non-consolidated joint ventures. All
prior period operating results have been presented on a pro-forma basis,
adjusted for the consolidation of the Richmond, Jacksonville and Wichita markets
as if Adelphia Business Solutions' purchase of its partners' interests in these
markets had occurred at the beginning of each period presented. During July
2000, Adelphia Business Solutions purchased one of its partners interests in one
of the joint ventures which is not reflected in the table above
(a) Earnings before interest, income taxes, depreciation and amortization,
non-cash stock compensation and other income/expense ("EBITDA") and similar
measures of cash flow are commonly used in the telecommunications industry to
analyze and compare telecommunications companies on the basis of operating
performance, leverage, and liquidity. While EBITDA is not an alternative to
operating income as an indicator of operating performance or an alternative to
cash flows from operating activities as a measure of liquidity as defined by
GAAP, and while EBITDA may not be comparable to other similarly titled measures
of other companies, management of Adelphia Business Solutions believes that
EBITDA is a meaningful measure of performance </FN> </TABLE>
<PAGE>
<TABLE>
Adelphia Business Solutions, Inc.
Table 2 - Unaudited Original Markets Quarter Ended June 30, 2000 Quarter Ended March 31, 2000 Quarter Ended June 30, 1999
and New Markets Operating Results ---------------------------------------------------------------------------------------------
Original New Total Original New Total Original New Total
(dollars in thousands) Markets Markets Operating Markets Markets Operating Markets Markets Operating
Results Results Results Results Results Results Results Results Results
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 80,409 $ 15,582 $ 95,991 $ 71,489 $ 10,587 $ 82,076 $ 43,317 $ 640 $ 43,957
Direct Operating Expenses 25,612 20,161 45,773 22,525 14,808 37,333 13,205 2,031 15,236
---------------------------------------------------------------------------------------------
Gross Margin 54,797 (4,579) 50,218 48,964 (4,221) 44,743 30,112 (1,391) 28,721
Gross Margin Percentage 68.1% (29.4%) 52.3% 68.5% (39.9%) 54.5% 69.5% (217.3%) 65.3%
Sales, General and Administrative Expenese 35,407 20,473 55,880 29,656 17,450 47,106 17,002 11,223 28,225
Allocated Corporate Overhead Expense 6,989 7,175 14,164 7,002 8,911 15,913 5,397 4,890 10,287
---------------------------------------------------------------------------------------------
EBITDA (a) 12,403 (32,227) (19,826) 12,306 (30,582) (18,276) 7,713 (17,504) (9,791)
---------------------------------------------------------------------------------------------
EBITDA Percentage of Revenues 15.4% (206.8%) (20.7%) 17.2% (288.9%) (22.3%) 17.8% NM (22.3%)
</TABLE>
<TABLE>
June 30, 2000 Quarter vs. June 30, 2000 Quarter vs.
March 31, 2000 Quarter June 30, 1999 Quarter
------------------------------------------------------------------------
Original New Total Original New Total
Percent Change Comparison Markets Markets Operating Markets Markets Operating
Results Results Results Results Results Results
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues 12.5% 47.2% 17.0% 85.6% NM 118.4%
Direct Operating Expenses 13.7% 36.1% 22.6% 94.0% NM 200.4%
------------------------------------------------------------------------
Gross Margin 11.9% 8.5% 12.2% 82.0% NM 74.8%
Sales, General and Administrative Expenses 19.4% 17.3% 18.6% 108.3% NM 98.0%
Allocated Corporate Overhead (0.2%) (19.5%) (11.0%) 29.5% NM 37.7%
------------------------------------------------------------------------
EBITDA (a) 0.8% (5.4%) 8.5% 60.8% NM (102.5%)
------------------------------------------------------------------------
<FN>
Table 2 summarizes operating results for (i) Adelphia Business Solutions' 22
Original Markets which were in operation or under construction when Adelphia
Business Solutions completed its initial public offering in May 1998 (the
"Original Markets") and (ii) the additional markets in operation or under
development subsequent to May 1998, as a result of Adelphia Business Solutions'
geographic expansion (the "New Markets"). Corporate overhead has been allocated
primarily on the basis of the number of markets in service or under development
for each period presented.
(a) Earnings before interest, income taxes, depreciation and amortization,
non-cash stock compensation and other income/expense ("EBITDA") and similar
measures of cash flow are commonly used in the telecommunications industry to
analyze and compare telecommunications companies on the basis of operating
performance, leverage, and liquidity. While EBITDA is not an alternative to
operating income as an indicator of operating performance or an alternative to
cash flows from operating activities as a measure of liquidity as defined by
GAAP and while EBITDA may not be comparable to other similarly titled measures
of other companies, management of Adelphia Business Solutions believes that
EBITDA is a meaningful measure of performance
</FN>
</TABLE>
<PAGE>
<TABLE>
ADELPHIA BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
TABLE 3 - CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ---------------------------
1999 2000 1999 2000
--------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 34,215 $ 80,214 $ 55,653 $ 149,515
--------------- -------------- ------------- -------------
Operating expenses:
Network operations 11,671 41,661 20,175 75,393
Selling, general and administrative 32,637 62,922 53,646 120,969
Noncash stock compensation --- 426 --- 1,225
Depreciation and amortization 13,586 26,689 27,121 46,127
--------------- -------------- ------------ --------------
Total 57,894 131,698 100,942 243,714
--------------- -------------- ------------ --------------
Operating loss (23,679) (51,484) (45,289) (94,199)
Other income (expense):
Interest income 14,780 1,020 16,778 1,424
Interest income-affiliate 2,779 1,259 5,607 6,282
Interest expense (21,805) (15,264) (37,338) (28,194)
--------------- -------------- ------------ --------------
Loss before income taxes and equity in net
loss of joint ventures (27,925) (64,469) (60,242) (114,687)
Income tax expense (4) --- (4) ---
--------------- -------------- ------------ --------------
Loss before equity in net loss of joint ventures (27,929) (64,469) (60,246) (114,687)
Equity in net loss of joint ventures (3,291) (346) (7,094) (451)
--------------- -------------- ------------ --------------
Net loss (31,220) (64,815) (67,340) (115,138)
Dividend requirements applicable to preferred stock (7,720) (8,771) (15,199) (17,268)
--------------- -------------- ------------ --------------
Net loss applicable to common stockholders $ (38,940) $ (73,586) $ (82,539) $ (132,406)
=============== ============== ============ ==============
Basic and diluted net loss per weighted average
share of common stock $ (0.70) $ (1.06) $ (1.49) $ (1.91)
=============== ============== ============ ==============
Weighted average shares of
common stock outstanding 55,497 69,503 55,497 69,417
=============== ============== ============ ==============
</TABLE>
