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Exhibit 99.1
e.spire(R) REPORTS RECORD THIRD QUARTER RESULTS
e.spire POSTS REVENUES OF $91.8 MILLION, RECORD ON-SWITCH LINE GROWTH OF
47,000, RECORD LOW EBITDA LOSS OF $4.4 MILLION, AND CONTINUED STRONG RESULTS FOR
ITS ENGINEERING/CONSTRUCTION AND WEB HOSTING SUBSIDIARIES
HERNDON, VA, OCTOBER 24, 2000 -- e.spire Communications, Inc. (NASDAQ:
ESPI), the communications company for the networked economy, today announced
record operational and financial results for the quarter ended September 30,
2000. Net revenues were $91.8 million, with revenues of $58.0 million, a record
high, for its core telecom business, $26.6 million for ACSI Network
Technologies, Inc., its engineering and construction subsidiary, and $7.2
million for CyberGate, Inc., its Web hosting subsidiary.
Net on-switch equivalent lines were up approximately 47,000. At the same time,
e.spire wrote off all remaining off-switch resale lines, which were in excess of
16,000, completing the elimination effort that began in 1999. At the end of the
third quarter, e.spire's access lines totaled 217,692.
"We continue to improve our operating and financial results and are performing
even better than anticipated," said e.spire Chairman and Acting Chief Executive
Officer George F. Schmitt. "I am proud of the performance of all three of our
business units and anticipate that improvements will continue in the coming
quarters. I am especially pleased that our core telecom EBITDA losses declined
by nearly 35% this quarter and that 19 of our 28 switched cities are EBITDA
positive."
"In addition to the strong operational results, we renegotiated our Senior
Secured Credit Facility; sold our dial-up ISP lines, exiting that business as we
had previously announced; and obtained binding commitments, pending shareholder
approval, of $125 million in new equity funding. As a result of the amendments
to our Senior Secured Credit Facility, we are now in compliance with our debt
covenants and expect to remain in compliance," added Schmitt.
Results by Business Unit
e.spire Communications, Inc.
e.spire, the integrated communications provider (ICP), reported net revenues of
$58.0 million, a 5% increase from $55.5 million in the previous quarter.
e.spire's net on-switch equivalent lines totaled 217,692, with a churn rate,
excluding resale lines, of less than 5% for the quarter. The gross margin for
the business unit was 46%, up from 36% last quarter.
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e.spire(R) REPORTS RECORD THIRD QUARTER RESULTS/Page 2
"We are pleased with our gross margin this quarter of 46% and will continue to
focus on improvements in coming quarters for our core telecom business," said
Christopher J. Resavy, e.spire Chief Operating Officer. "Our billing and
collection processes have improved. We have also improved the integrity of our
customer database, which we plan to continue to update and maintain. For the
first time, sales of our integrated data product and data equivalent line
additions exceeded our voice grade additions. We intend to continue to execute
on this strategy."
ACSI Network Technologies, Inc.
ACSI NT reported revenues of $26.6 million for the quarter, up 35% from $19.7
million in the third quarter 1999. The gross margin reported for the quarter was
43%. ACSI NT's revenues depend on the timing of contract wins and revenue
recognition for IRUs, a key component of ACSI NT's business.
"This was a good quarter for us, highlighted by the signing of a $52 million
contract with Global Metro Networks (USA), which gives us a base from which to
build in the coming four to five quarters," said Michael P. Miller, ACSI NT
President and COO. "We expect our fourth quarter revenues to be in the $17
million to $20 million range with a gross margin in the 40% to 50% range, and we
expect to remain cash flow positive."
CyberGate, Inc./ValueWeb
CyberGate, e.spire's Internet subsidiary, completed its transition from the
dial-up ISP business to a Web hosting and colocation business with the sale of
its ISP lines to EarthLink, Inc. The final purchase price is dependent on future
customer counts and the Company expects to record a gain in the fourth quarter
of 2000.
"We look forward to continued sequential growth of 10% to 20% each quarter in
our Web hosting and colocation business," said Tomas V. Mikaelsson, CyberGate
President and COO. "At the end of the quarter, we hosted 78,600 Web sites, up
almost 10% from last quarter, and up 97.1% over the prior year quarter's 39,888
sites."
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e.spire(R) REPORTS RECORD THIRD QUARTER RESULTS/Page 3
Financial Performance
e.spire's EBITDA improved by 50% from a loss of $8.8 million last quarter to a
loss of $4.4 million in the third quarter, and improved 80% from a loss of $21.8
million for the year-ago quarter. Net loss applicable to common stockholders and
net loss per common share for the third quarter 2000 was $(77.7) million, or
$(1.44) per common share, compared to $(81.6) million, or $(1.56) per common
share, for the second quarter of 2000.
Revenue Mix
"Our revenue mix continued to be biased toward retail voice, data and special
access services which have higher margins for us," said Bradley E. Sparks,
e.spire Chief Financial Officer. "We expect to see more growth in these areas as
revenues from resale lines, reciprocal compensation, and carrier access billing
declined to $18.9 million in the third quarter, compared to $19.0 million for
the previous quarter. We expect this trend to continue in the coming quarters."
Equity Funding and Liquidity
In September, e.spire announced that it had secured $125 million in equity
financing, including $50 million received in September. The remaining $75
million will be drawn as necessary, pending shareholder approval at a special
meeting scheduled for November 16, 2000. Concurrently, e.spire finalized a loan
agreement with its bank group. "e.spire used approximately $30 million of its
cash and short-term investments during the third quarter for capital
expenditures," added e.spire CFO Sparks. "At September 30, 2000, e.spire had
more than $43 million of unrestricted cash and short-term investments."
Shareholder Lawsuit
"While progress has been slower that we expected, we still believe we will
ultimately prevail in defending ourselves from this frivolous action," said
e.spire Chairman Schmitt. "We do not expect this to be resolved before next
year."
Outlook
"I expect our operating progress to continue going forward," said e.spire
Chairman Schmitt. "We have done what we said we would do so far and are
confident our operations will continue to improve."
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e.spire(R) REPORTS RECORD THIRD QUARTER RESULTS/Page 4
Corporate Background
ACSI NT
ACSI Network Technologies, Inc., a wholly owned subsidiary of e.spire
Communications, Inc., provides optical fiber infrastructure solutions and
strategic network design services for organizations deploying networks in major
metropolitan cities throughout the United States. Current clients include
telecommunications carriers, municipalities, school districts, utilities, and
Fortune 500 companies. ACSI NT has fiber inventory in Atlanta, Dallas, Houston,
Fort Lauderdale/Miami, Tampa, and Washington, DC/Northern Virginia, More
information about ACSI NT is available at ACSI NT's Web site, www.acsint.net.
CyberGate and ValueWeb
CyberGate is a wholly owned subsidiary of e.spire Communications, Inc.,
headquartered in Fort Lauderdale, FL. CyberGate's subsidiary, ValueWeb, offers a
comprehensive line of shared, dedicated, and colocation Web hosting solutions.
Featuring state-of-the-art facility and network infrastructure, e-commerce, and
Web design applications, ValueWeb provides businesses turnkey resources for
enhancing their Web sites' effectiveness in the marketplace. Now hosting nearly
80,000 Web sites for customers in more than 136 countries, ValueWeb is one of
the largest Web hosting companies in the world.
ValueWeb is an IBM Premier Business Partner, a Microsoft Certified Solution
Provider, a Network Solutions Alliance Partner, a Hewlett Packard Premier
Partner, an Intel iASP Alliance Member, and a Cobalt True Blue Sapphire Partner.
More information about ValueWeb dedicated servers and colocation services,
including interactive demonstrations of network architecture, is available on
the ValueWeb Web site, www.valueweb.com.
e.spire Communications
e.spire's national ATM backbone--one of North America's largest--transports
data over long-haul fiber networks and e.spire's local metropolitan networks to
47 e.spire-owned and -operated Alcatel data switches and 52 carrier-grade
routers. Through network-to-network interconnections, the e.spire data network
accesses nearly 400 points of presence, or POPS, throughout the United States.
e.spire's carrier-grade backbone now rivals the most extensive backbones in
performance, coverage, and redundancy.
e.spire operates 38 local area fiber-optic networks, including six in
Tier-1 markets (Atlanta, Miami/Fort Lauderdale, New York, Philadelphia. San
Antonio, and Washington, DC/Northern Virginia). In total, as of September 30,
2000, e.spire's network is comprised of 28 Class 5 voice switches, 184,233 fiber
miles, 3,883 route miles, 110 colocations, and 802 on-net buildings.
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e.spire(R) REPORTS RECORD THIRD QUARTER RESULTS/Page 5
e.spire has networks in the following metropolitan markets (a * indicates
networks that are not equipped with a Class 5 switch): Albuquerque, NM;
Amarillo, TX*; Atlanta, GA; Austin, TX; Baltimore, MD; Baton Rouge, LA*;
Birmingham, AL; Charleston, SC*; Chattanooga, TN*; Colorado Springs, CO;
Columbia, SC; Columbus, GA; Corpus Christi, TX*; Dallas, TX; El Paso, TX; Fort
Worth, TX; Fort Lauderdale/Miami, FL; Greenville, SC; Irving, TX*; Jackson, MS*;
Jacksonville, FL; Kansas City, KS/Kansas City, MO; Las Vegas, NV; Lexington, KY;
Little Rock, AR; Louisville, KY*; Mobile, AL; Montgomery, AL; New Orleans, LA;
New York, NY; Philadelphia, PA; San Antonio, TX; Shreveport, LA*; Spartanburg,
SC*; Tampa, FL; Tucson, AZ; Tulsa, OK; and Washington, DC/Northern Virginia.
e.spire Communications, Inc. is a leading integrated communications
provider, offering traditional local and long distance, dedicated Internet
access, and advanced data solutions, including ATM and frame relay. e.spire also
provides Web hosting, dedicated server, and colocation services through its
Internet subsidiary, CyberGate, Inc., and its subsidiary ValueWeb. e.spire's
subsidiary, ACSI Network Technologies, Inc., provides third parties, including
other communications concerns, municipalities, and corporations, with turnkey
fiber-optic design, construction, and project management expertise. More
information about e.spire is available at e.spire's Web site, www.espire.net.
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e.spire(R) REPORTS RECORD THIRD QUARTER RESULTS/Page 6
Certain statements regarding the development of the Company's businesses,
the markets for the Company's services and products, the Company's anticipated
capital expenditures, anticipated EBITDA and other statements are
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995) which can be identified as any statement that
does not relate strictly to historical or current facts. Forward-looking
statements use such words as plans, expects, will, will likely result, are
expected to, will continue, is anticipated, estimate, project, believes,
anticipates, intends and expects, may, should, continue, seek, could and other
similar expressions. Although the Company believes that its expectations are
based on reasonable assumptions, it can give no assurance that its expectations
will be achieved. The important factors that could cause actual results to
differ materially from those in the forward-looking statements herein (the
"Cautionary Statements") include, without limitation, the Company's degree of
financial leverage, risks associated with debt service requirements and interest
rate fluctuations, risks associated with acquisitions and the integration
thereof, the impact of restriction under the Company's financial instruments,
dependence on availability of transmission facilities, regulation risks
including the impact of the Telecommunications Act of 1996, contingent
liabilities, the impact of competitive services and pricing, the ability of the
Company to successfully implement its strategies, as well as the other risks
referenced from time to time in the Company's filings with the SEC, including
the Company's Form 10-K for the year ended December 31, 1999. 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 the
Cautionary Statements. 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:
Media Relations
Peggy Disney
703.639.6738
[email protected]
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