EXHIBIT 99.1
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FOR IMMEDIATE RELEASE
Contact: Becky Haight
Investor Relations
Pathnet
877 227-5600
[email protected]
Patti Kelly
Media Relations
Pathnet
703 390-2868
[email protected]
PATHNET REPORTS STRONG SECOND QUARTER
RESTON, VA (AUGUST 10, 2000) -- Pathnet Telecommunications, Inc. (Pathnet), the
industry's first wholesale, convergent communications service provider combining
competitive local access services and long-haul transport in underserved
markets, today announced its financial and operating results for the quarter
ended June 30, 2000.
Second quarter revenue increased 14-fold to $12.6 million as compared to revenue
of $0.9 million in the second quarter of 1999. On a sequential basis, revenue
increased six-fold from $1.9 million in the prior quarter. As expected,
construction revenue accounted for approximately 90% of total revenue, with
service revenue comprising the balance. Earnings before interest, taxes,
depreciation and amortization (EBITDA) for the quarter was a loss of $11.3
million versus a loss of $5.3 million in the year-ago quarter.
Pathnet also announced the securing of a $210 million credit facility for the
purchase of goods and services from Nortel Networks. This facility has a term of
six years and will support the expansion of Pathnet's continued fiber optic
build-out. Pathnet also closed a $25 million second tranche of equity from
Colonial Pipeline Company.
At the SuperComm 2000 Conference in June, Pathnet recorded an industry first
when it announced the deployment of a softswitch connected directly to the
Public Switched Telephone Network (PSTN). This next-generation architecture
gives Pathnet the ability to offer its customers a full portfolio of advanced
access and transport services. These services include Internet dial access, xDSL
and Private Line connection services - all combined with high-capacity transport
on a single integrated platform: Pathnet VPOP (Virtual Point of Presence) Plus
Service.
In recent weeks, Pathnet signed new multi-year customer agreements with
Brainstorm, DSLi.com, I-Link and NaviPath - all of which have elected to adopt
Pathnet VPOP Plus Service to extend the reach of their product offerings.
"It was a satisfying quarter for us as we moved ahead on several important
fronts," said president and chief executive officer Richard Jalkut. "In addition
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to strong revenue growth and above-plan sales perfomance, we entered into a
credit facility with Nortel Networks to fund optical equipment used in lighting
our fiber-optic network. We also entered a partnering arrangement with Cisco
Systems under which we will utilize the latest Cisco solutions, including their
softswitches, gateways and optical muxes, in offering our unique VPOP Plus
Service family."
Customer demand for Pathnet products continues to increase rapidly. Pathnet more
than tripled its current sales backlog to a total of $200 million, up from $61
million at the end of the first quarter. Pathnet's sales backlog is now
comprised of $160 million in telecom services and $40 million in construction
and infrastructure services.
"As our network build-out gains momentum, customer demand is fueling our sales
funnel," said Bob Rouse, Pathnet chief operating officer. "Demand exceeded our
expectations in the quarter and our unique VPOP Plus Service family has been the
primary driver. Our backlog now includes agreements for over 7,000 PRIs, or the
conventional network equivalent of 161,000 dial access ports, along with 5,000
xDSL connections - services which will be turned up as our network comes
on-line," he added.
Pathnet completed 500 route miles of network and 21 collocations during the
quarter, bringing its total network to 7,400 route miles and a total of 86
collocations in 57 cities. The company continues to target 150 collocations in
80 cities by the end of the year. Pathnet increased its gross property and
equipment by $53 million in the quarter, bringing total property and equipment
acquired to $221 million at quarter-end.
SECOND QUARTER HIGHLIGHTS AND RECENT DEVELOPMENTS
o Secured $210 million credit facility from Nortel Networks
o Closed second tranche of equity from first quarter's strategic investment
transaction which adds $25 million to Pathnet's balance sheet in the third
quarter
o Increased sales backlog to $200 million
o Designated a Cisco Powered Network
o Deployed industry's first softswitch connected directly to the PSTN
o Completed Chicago-Denver fiber optic build and lit Chicago - Omaha route
o Signed Interconnection Agreements with Bell South and Bell Atlantic
o Completed 21 collocations, bringing cumulative total to 86
o Achieved CLEC approval in 9 new states, for a total of 25
Pathnet is the industry's first wholesale convergent communications service
provider offering competitive broadband local access services and high-capacity,
digital transport across under-served and second- and third-tier U.S. cities.
Pathnet provides service to traditional telecommunications carriers such as
inter-exchange carriers, as well as emerging carriers including Internet service
providers, competitive local exchange carriers and others. Pathnet currently has
7,400 route miles of completed network and 900 route miles of network under
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construction. Additional information about Pathnet can be found on the company's
web site at: WWW.PATHNET.NET.
THE STATEMENTS MADE BY PATHNET AND PATHNET TELECOMMUNICATIONS IN THIS PRESS
RELEASE MAY BE FORWARD-LOOKING IN NATURE. NO ASSURANCE CAN BE GIVEN THAT FUTURE
RESULTS WILL BE ACHIEVED; ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
PROJECTED IN FORWARD-LOOKING STATEMENTS. PATHNET AND PATHNET TELECOM BELIEVE
THAT THEIR PRIMARY RISK FACTORS INCLUDE, BUT ARE NOT LIMITED TO: SIGNING
ADDITIONAL AGREEMENTS WITH PRIVATE NETWORK OPERATORS AND OTHERS; OFFERING
SERVICES TO TELECOMMUNICATION SERVICE PROVIDERS; ENTERING INTO PARTNERING
ARRANGEMENTS; BUILDING A DIGITAL NETWORK; MEETING MARKET DEMAND AND CUSTOMER
SERVICE EXPECTATIONS; AND OBTAINING ADDITIONAL FINANCING. ADDITIONAL INFORMATION
CONCERNING THESE AND OTHER POTENTIALLY IMPORTANT FACTORS CAN BE FOUND WITHIN
PATHNET TELECOM'S REGISTRATION STATEMENT AND PATHNET'S PERIODIC REPORTS FILED
WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION UNDER THE FEDERAL SECURITIES
LAWS. STATEMENTS IN THIS RELEASE SHOULD BE EVALUATED IN LIGHT OF THESE IMPORTANT
FACTORS.
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PATHNET TELECOMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
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<CAPTION>
FOR THE THREE MONTHS ENDED
JUNE 30,
2000 1999
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(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Revenue $ 12,624 $ 865
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Expenses:
Cost of revenue 14,415 2,669
Selling, general and administrative 9,155 3,508
Contribution & Reorganization expenses 342 --
Depreciation 2,792 1,033
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Total expenses 26,704 7,210
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Net operating loss (14,080) (6,345)
Interest expense (9,292) (10,061)
Interest income 2,203 3,378
Other (143) 72
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Net loss $ (21,312) $ (12,956)
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Basic and diluted loss per
Common share $ (6.50) $ (4.46)
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Weighted average number of
Common shares outstanding 3,283 2,902
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Other Data:
EBITDA $ (11,288) $ (5,312)
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PATHNET TELECOMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT STATISTICAL DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
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(UNAUDITED)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 80,285 $ 90,662
Marketable securities available for sale, at market 6,216 42,652
Other current assets 9,765 2,486
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Total current assets 96,266 135,800
Property and equipment, net 208,811 131,928
Intangible assets 185,983 --
Restricted cash and marketable securities available for sale, at market 18,352 21,541
Pledged marketable securities held to maturity 20,873 21,265
Other assets 17,444 10,002
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Total assets $ 547,729 $ 320,536
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LIABILITIES, MANDATORILY REDEEMABLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Total current liabilities 62,422 30,588
Bonds payable, net of unamortized bond discount of $3,174 and $3,378 346,826 346,622
Other non-current liabilities 10,958 3,093
Total mandatorily redeemable preferred stock 37,892 35,970
Total stockholders' equity (deficit) 89,631 (95,737)
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Total liabilities, mandatorily redeemable preferred stock and
stockholders' equity (deficit) $ 547,729 $ 320,536
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Selected statistical data:
Route miles complete 7,400 6,800
Route miles under construction 900 700
Collocations 86 40
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