Internet Agreements, Business Usage, and Geographic Expansion Fuel Growth
STOCKTON, Calif., July 27 /PRNewswire/ -- Pac-West Telecomm, Inc.
(Nasdaq: PACW), a rapidly growing provider of integrated telecommunications
services, today announced its results for the second quarter and six months
ended June 30, 2000. Pac-West's total revenues for the second quarter of 2000
were $33.3 million, an increase of 111 percent from revenues of $15.8 million
in the second quarter of 1999. Net income for the second quarter was
$1.3 million, an increase of 550 percent over net income of $0.2 million in
the second quarter of 1999. Diluted earnings per share for the second quarter
of 2000 were $0.04, compared to a loss per share of ($0.06) for the second
quarter of 1999. As of June 30, 2000, the Company had cash and short-term
investments totaling $134.9 million.
Increased Internet usage and growth in the number of Pac-West's small and
medium business customers helped fuel the Company's revenues. Pac-West has
agreements with more than 90 Internet service providers (ISPs), which
represent approximately 18 percent of the Internet traffic in California.
Pac-West currently serves over 13,000 small and medium businesses, ISPs, and
residential customers.
Wally Griffin, Pac-West's president and chief executive officer, said, "We
are continuing to execute our business plan to deliver bundled voice and data
services to the underserved small and medium business market. We are
continuing to expand our network throughout the western U.S. utilizing our
"smart-build" expansion strategy in which we build and own the intelligent
components of our network, while leasing fiber transport from other carriers
until we build enough traffic to justify purchasing fiber. This strategy
results in significant cost and time-to-market advantages over our competitors
that own their switches and construct their own fiber network. As we extend
our facilities into Colorado and Arizona, we expect to encounter the same high
demand for our bundled service packages as we have experienced in our current
markets. We are a real economy company, with real earnings and real cash
flow."
The following chart highlights some of the unaudited results for the
second quarters of 2000 and 1999, and the first six months of 2000 and 1999:
Q2 2000 Q2 1999 Change 6 Months 6 Months Change
Q2'99 to Ended Ended 1999 to
Q2'00 6/30/00 6/30/99 2000
Total Revenue $33.3 mil $15.8 mil 111% $64.1 mil $30.3 mil 112%
EBITDA * $10.3 mil $ 5.8 mil 78% $20.9 mil $11.9 mil 76%
Net Income $ 1.3 mil $0.2 mil 550% $ 3.6 mil $ 0.8 mil 350%
Earnings (Loss)
Per Share
(diluted) $0.04 $(0.06) NA $0.10 $(0.09) NA
Lines in Service 151,957 76,263 99% 151,957 76,263 99%
Minutes of Use 5.6 bil 3.5 bil 60% 11.0 bi l6.6 bil 67%
* EBITDA equals earnings before interest (net), income taxes, depreciation
and amortization.
Second Quarter Highlights
Pac-West Launches Into Broadband Market:
-- The Company signed a long-term fiber capacity agreement in California
to obtain exclusive rights to an OC-48, 811-mile SONET ring. The 20-
year agreement enables Pac-West to offer up to 2.4 gbps capacity on
selected routes between northern and southern California, the densest
information corridor in the country. The additional bandwidth capacity
enhances Pac-West's ability to cost-effectively deliver high-quality
voice, data, video and next-generation Internet services to its
customers.
-- Related to the abovementioned agreement, the Company has established a
relationship with Mainsail Networks to purchase Mainsail's Integrated
Multiservice Access Platform (IMAP(TM)), a next-generation, carrier-
class access product. Mainsail's IMAP(TM) technology enables Pac-West
to provision TDM, ATM and IP data and voice services directly from an
optical network, while simultaneously reducing the cost, time, and
complexity of provisioning.
-- The Company has been testing a wireless broadband Internet access
service utilizing the unlicensed spectrum, and expects a trial launch
to commence next month. In addition, the Company is on schedule to
launch a limited DSL trial in the central valley of California.
-- To help guide its expansion into broadband services, Pac-West announced
the appointment of Gary Ames, former president and CEO of MediaOne
International, to its Board of Directors. Mr. Ames was responsible for
developing and managing MediaOne Group's international interests in
broadband and wireless communications.
Access Line Growth Continues:
-- Access lines continued to grow with the increase of 27,617 lines in the
second quarter. This increase was due in part to several new multi-
year ISP agreements, including OneMain.com, one of the largest
independent Internet service providers in the country.
Small and Medium Business Market is Strong Component in Revenue and
Access Line Growth:
-- The Company increased business access lines to 34,463 in the second
quarter, an increase of 156% over 13,445 business access lines in the
second quarter of 1999. The Company attributes this growth to its
increased sales force, which now totals 139 sales people, and continued
strong demand for bundled communications services.
Expansion of Network into Western States:
-- Pac-West will open a switching facility in Denver this week. The
Company now has operations in California, Nevada, Washington and
Colorado, and plans to continue to expand its footprint into Arizona,
Utah and Oregon.
-- The Company has just signed an agreement with ZipLink, a wholesale
Internet connectivity provider, which will extend Pac-West's footprint
throughout the U.S. and Canada. This will be particularly beneficial
to Pac-West's regional ISP customers who are planning to expand, and
will enable Pac-West to offer local call roaming capabilities.
Six-Month Comparisons
-- Pac-West's total revenues for the first six months of 2000 were
$64.1 million, an increase of 112 percent from revenues of
$30.3 million for the first six months of 1999. Net income for the six
months was $3.6 million, an increase of 350 percent over net income of
$0.8 million in the first six months of the prior year. Diluted
earnings per share for the first six months of 2000 were $0.10, which
compares to a loss per share of ($0.09) for the first six months of
1999.
Looking Forward
"We are extremely excited about the opportunities that lie ahead in
broadband services," Griffin continued. "Our long-term capacity agreement is
a significant milestone in our plan to offer broadband services throughout the
western U.S. This agreement enables us to provide "broadband-on-demand" at
competitive prices, and to deliver high-quality voice, data, video and next-
generation Internet services over IP and ATM. As we expand our network
throughout the western states, we plan to continue to explore new wireless and
broadband technologies to capitalize on the tremendous demand for reliable,
high-speed connectivity."
About Pac-West Telecomm
Founded in 1980, Pac-West Telecomm, Inc. (Nasdaq: PACW) is a rapidly
growing provider of integrated telecommunications services throughout the
western U.S. Pac-West supplies Internet infrastructure and broadband services
to Internet service providers (ISPs) and integrated voice, data and Internet
services to small and medium-sized businesses. The Company currently has
operations in California, Nevada, Washington and Colorado, and is rapidly
expanding its network into other western states using a "smart-build" network
expansion strategy, in which it builds and owns the intelligent components of
its network, while leasing fiber transport from other carriers until building
enough traffic to justify purchasing fiber. Pac-West is a Safeguard
Scientifics (NYSE: SFE) partner company. For more information, please visit
http://www.pacwest.com .
Forward-Looking Statements
The foregoing discussion contains forward-looking statements. The
Company's future performance is subject to numerous risks and uncertainties
that could cause actual results to deviate substantially from those discussed
in these forward-looking statements. Factors that could impact the
variability of future results include: successful execution of the Company's
expansion activities into new geographic markets on a timely and cost-
effective basis; the pace at which new competitors enter the company's
existing and planned markets; competitive responses of the Incumbent Local
Exchange Carriers; execution of interconnection agreements with Incumbent
Local Exchange Carriers on terms satisfactory to the Company; maintenance of
the Company's supply agreements for transmission facilities; continued
acceptance of the Company's services by new and existing customers; the
outcome of legal and regulatory proceedings regarding reciprocal compensation
for Internet-related calls and certain of the Company's product offerings; the
ability to attract and retain talented employees; and the Company's ability to
successfully access markets, install switching electronics, and obtain the use
of leased fiber transport facilities and any required governmental
authorizations, franchises and permits, all in a timely manner, at reasonable
costs and on satisfactory terms and conditions, as well as regulatory,
legislative and judicial developments that could cause actual results to
differ materially from the future results indicated, expressed or implied, in
such forward-looking statements. These and other factors are discussed in the
Company's Prospectus dated November 3, 1999, and in its Annual Report as of
December 31, 1999, on Form 10-K as filed with the SEC.
For investor information on Pac-West Telecomm via fax at no additional
cost, please dial 1-800-PRO-INFO (732-544-2850 outside the U.S.) and enter
code PACW.
Pac-West Telecomm, Inc.
CONDENSED STATEMENTS OF OPERATIONS:
Unaudited ($ in 000s except per share amounts)
Quarter Ended Six Months Ended
June 30 June 30
2000 1999 2000 1999
Revenues $33,340 $15,848 $64,147 $30,264
Costs and expenses
Operating 10,181 4,691 20,205 8,753
Selling, general &
administrative 12,828 5,260 23,022 9,563
Depreciation &
amortization 4,848 1,843 8,977 3,292
Total costs and
expenses 27,857 11,794 52,204 21,608
Income from operations 5,483 4,054 11,943 8,656
Other income (10) --- (18) ---
Interest expense, net 2,926 3,794 5,267 7,317
Income before provision
for income taxes 2,567 260 6,694 1,339
Provision for income
taxes 1,250 103 3,069 535
Net income 1,317 157 3,625 804
Accrued preferred stock
dividends --- (1,183) --- (2,325)
Net income (loss)
applicable to common
stockholders $1,317 $(1,026) $3,625 $(1,521)
Basic weighted average
number of shares
outstanding 35,693,856 17,587,458 35,637,123 17,587,458
Diluted weighted
average number of
shares
outstanding 37,504,492 17,587,458 37,537,912 17,587,458
Basic net income
(loss) per share $ 0.04 $(0.06) $ 0.10 $(0.09)
Diluted net income
(loss) per share $ 0.04 $(0.06) $ 0.10 $(0.09)
CONDENSED BALANCE SHEETS:
Unaudited ($ in 000s)
As of As of
June 30, 2000 Dec. 31, 1999
Cash & short-term investments $134,932 $162,913
Other current assets 21,395 13,779
Total current assets 156,327 176,692
Equipment, vehicles and leasehold
improvements -- net 153,621 105,189
Acquisition goodwill, net 17,782 210
Deferred financing costs, net 5,347 5,648
Other assets, net 2,539 2,361
Total assets $335,616 $290,100
Accounts payable and accrued liabilities $47,903 $16,146
Other current liabilities 8,500 9,054
Total current liabilities 56,403 25,200
Long-term debt 150,000 150,017
Deferred income taxes 10,896 8,633
Total liabilities 217,299 183,850
Stockholders' equity 118,317 106,250
Total liabilities and stockholders' equity $335,616 $290,100
SOURCE Pac-West Telecomm, Inc.
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Related links:
http://www.pacwest.com
CONTACT:
Richard E. Bryson, Chief Financial Officer of
Pac-West Telecomm, Inc., 209-926-3086, email,
rbryson@pacwest.com; or General Information, Virginia Turner, or
Media, Mary Wallace, 415-986-1591, both of The Financial
Relations Board, for Pac-WEst Telecomm, Inc.
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