EXHIBIT 99.1
Friday October 13, 7:46 am Eastern Time
Press Release
SOURCE: RSL Communications, Ltd.
RSL COM Announces Third Quarter Expectations
Cash Usage Reduced
HAMILTON, Bermuda and NEW YORK, Oct. 13 /PRNewswire/ -- RSL Communications, Ltd.
(Nasdaq: RSLC - news), a premier provider of data, Internet, and voice services
focused on small and medium enterprises in Europe and the United States,
announced that third quarter 2000 revenues are expected to have been
approximately $375 to $380 million, and EBITDA(1), excluding deltathree.com, is
expected to be negative $40-$45 million.
Third quarter revenues were negatively impacted by the traditionally slow
European summer holiday period and the continuing strength of the U.S. dollar
versus the major foreign currencies. Adjusted for foreign currency impacts, the
Company expects revenue to have been approximately flat compared to the second
quarter of 2000. Gross margins were negatively affected by a seasonal decrease
in higher margin corporate revenues in Europe as well as continued competitive
pricing pressures in several markets. The Company also expects selling, general
and administrative expenses to increase primarily due to severance expenses in
conjunction with the Company's effort to reduce headcount, primarily in
headquarters, an increase in data sales efforts in several operations to support
the Company's focus on higher margin data/Internet products, and increased
customer acquisition costs.
RSL COM's recently appointed Chief Executive Officer, Paul Domorski, commented:
"While the third quarter has been challenging, my arrival at the end of the
period has brought a fresh look and new leadership to the Company. I immediately
embarked upon an intense strategic and operational review of every country,
market segment and product line. Over the next several weeks we expect to
announce important actions that should alter and significantly improve the
Company's long-term profile. Also under development is a new business model that
will reflect the current realities of the telecommunications marketplace."
Mr. Domorski continued, "The Company expects that certain operations which are
not expected to generate positive returns in the near term will be sold,
restructured or discontinued and a related charge is expected in the fourth
quarter. The amount of the charge will be quantified upon completion of the
review."
The Company has successfully enhanced controls on its cash resources and has
reduced its cash burn rate in the third quarter versus historical levels,
primarily due to the reduction of non-critical capital expenditures and working
capital management.
The Company expects to announce third quarter 2000 results on November 9, 2000.
RSL Communications, Ltd., is a facilities based communications company that
provides a broad range of data/Internet, voice and value-added product and
service solutions primarily to small and medium sized businesses and residential
customers in selected markets around the globe. Through its subsidiary,
deltathree.com, RSL COM also owns and operates a privately managed Internet
Protocol (IP) telephony network with 107 points of presence in over 40 countries
around the world. RSL COM is headquartered in Hamilton, Bermuda with executive
offices in New York City. The web address is http://www.rslcom.com.
(1) EBITDA, as used herein, consists of loss from operations before depreciation
and amortization. EBITDA has also been normalized to exclude non-cash
compensation expense and to exclude the EBITDA loss of deltathree.com, the
Company's publicly held internet telephony unit. This press release contains
forward-looking statements within the meaning of the "Safe Harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These statements are based
on management's current expectations or beliefs and are subject to a number of
risks and uncertainties that could cause actual results to differ materially
from those set forth in such statements. Factors which may affect actual results
include, but are not limited to, the Company's capital requirements, general
economic factors, the impact of rapid industry changes, increased competition,
pricing pressures, government regulation, the integration of acquisitions and
new operations, as well as other risks referenced from time to time in the
Company's filings with the Securities and Exchange Commission. For a detailed
discussion of these and other risk factors, please refer to the Company's
filings with the SEC, including the Company's Form 10-K for the fiscal year
ended December 31, 1999 and the Company's registration statement on Form S-4
filed with the Securities and Exchange Commission in July 2000. All subsequent
written and oral forward- looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by these
risk factors. The Company does not undertake any obligation to release publicly
any revisions to such forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
CONTACT: Jim Magrone, Vice President, Treasury and Investor Relations,
212-445-7443, or Kathleen Makrakis, Director of Investor Relations,
212-445-7463, both of RSL Communications.
SOURCE: RSL Communications, Ltd.
