FTGX Fibernet Telecom Grp. (MM)

Fourth Quarter of 2008 Revenues Increase 13.6% and EBITDA Increases 18.6% Over Comparable Period in 2007 NEW YORK, March 12 /PRNewswire-FirstCall/ -- FiberNet Telecom Group, Inc. (NASDAQ:FTGX), a leading provider of complex interconnection services, today announced its results for the fourth quarter and fiscal year ended December 31, 2008. Revenues for the fourth quarter of 2008 increased to $15.4 million, up 13.6% from $13.6 million for the fourth quarter of 2007 and up 3.4% from $14.9 million for the third quarter of 2008. EBITDA (as defined) for the fourth quarter of 2008 was $3.1 million, up 18.6% from $2.6 million for the fourth quarter of 2007 and up 2.5% from $3.0 million for the third quarter of 2008. FiberNet continued to achieve consistent revenue growth in its core product offerings of transport and colocation services. For the fourth quarter of 2008, revenues from transport and colocation services grew by 14.2% over the fourth quarter of 2007. Transport services remained the most significant component of FiberNet's revenues, accounting for 77.0% of the total revenues generated in the fourth quarter of 2008. On-net transport revenues were 45.8% and off-net transport revenues were 31.2% of the total revenues. Colocation services represented 22.4% of total revenue generated in the fourth quarter. Colocation revenues were the fastest growing area for the Company in the fourth quarter of 2008, increasing by 19.2% from the fourth quarter of 2007 and by 5.0% from the third quarter of 2008. Off-net transport revenues increased by 12.9% in the fourth quarter of 2008 from the fourth quarter of 2007 and by 2.6% from the third quarter of 2008. FiberNet's customer count also increased to 299 as of December 31, 2008, up from 254 at the end of the fourth quarter of 2007 and 295 at the end of the third quarter of 2008. For the full year 2008, revenues were $58.3 million, up 17.1% from $49.8 million in 2007. For the full year 2008, on-net transport, off-net transport, and colocation represented 45.7%, 31.1%, and 22.3% of the total revenues, respectively. EBITDA (as defined) for the full year 2008 was $11.6 million, an increase of 35.1% over $8.6 million in 2007. Jon A. DeLuca, President and CEO, stated, "We are proud of our fourth quarter and full year results. In a challenging environment, our business performed well. In particular, the capital investments that we made in our colocation business benefited our operating results. As we progress, our focus continues to be on cash flow generation and capital allocation." Cost of services for the fourth quarter of 2008 was $7.4 million, compared to $6.9 million for the fourth quarter of 2007 and $7.7 million for the third quarter of 2008. Cost of services for the full year 2008 was $29.4 million, compared to $25.5 million in 2007. Selling, general and administrative expenses for the fourth quarter of 2008 were $5.3 million, compared to $4.5 million in the fourth quarter of 2007 and $4.5 million in the third quarter of 2008. Selling, general and administrative expenses for the full year 2008 were $19.0 million, compared to $16.8 million in 2007. The net loss applicable to common stockholders for the fourth quarter of 2008 was $(73,000), or $(0.01) per share, compared to $(0.6) million, or $(0.08) per share, for the fourth quarter of 2007. The net loss applicable to common stockholders for the third quarter of 2008 was $(0.3) million, or $(0.04) per share. For the full year 2008, FiberNet's net loss applicable to common stockholders was $(1.7) million, or $(0.22) per share, compared to $(4.9) million in 2007, or $(0.66) per share. Capital expenditures for the fourth quarter of 2008 were $3.2 million, compared to $1.2 million in the third quarter of 2008 and $1.0 million in the fourth quarter of 2007. For the full year 2008, capital expenditures were $8.7 million, compared to $3.8 million recorded in 2007. More specifically for 2008, $3.3 million were invested for the implementation of customer specific orders and the implementation of network infrastructure to support new initiatives, $3.4 million were invested in colocation expansion projects and $2.0 million were invested in national network expansion projects. These projects include capacity expansions to the Company's metro networks in New York / New Jersey and Los Angeles, a capacity expansion to its metro Ethernet network and an extension of its network reach to the new markets of Chicago, Miami and San Francisco. For 2009 the Company expects to invest approximately $4.0 million in general capital expenditures, and $1.5 million in colocation expansion projects. As of December 31, 2008, FiberNet had total assets of $67.2 million and total stockholders' equity of $37.7 million. As of March 12, 2009, the Company had approximately 7.7 million shares of common stock outstanding, or 8.1 million shares of common stock outstanding on a fully-diluted basis, assuming the exercise of all outstanding options and warrants. Of the approximately 0.4 million outstanding options and warrants, approximately 60,000 are out-of-the-money as of March 12, 2009. The Company presents the financial metric EBITDA (as defined) because it is utilized in the determination of the majority of the financial covenants in its credit agreement, and the metric is calculated in accordance with its credit agreement. As of December 31, 2008, FiberNet was in full compliance with all of the financial covenants in its credit agreement. FiberNet Teleconference: FiberNet will hold a teleconference today, Thursday, March 12, 2009, at 11:00 a.m. EDT. To participate in the teleconference please call: 866-804-6924 and enter pass code 54540315, and from outside the U.S. call 857-350-1670 and enter the pass code. A replay of the teleconference will be available beginning Thursday, March 12, 2009 at 1:00 p.m. EDT through Thursday, March 26, 2009. To listen to the replay by phone, call 888-286-8010 and enter pass code 27046983, and from outside the U.S. call 617-801-6888 and enter the pass code. A webcast of the call will also be held today, beginning at 11:00 a.m. EDT. To listen, go to http://www.ftgx.com/investors-press/events/. The 4th quarter 2008 earnings results webcast will be archived for one year. About FiberNet Telecom Group, Inc. Celebrating its 10th anniversary, FiberNet Telecom Group, Inc. owns and operates integrated colocation facilities and diverse transport routes in the gateway markets of New York/New Jersey, Los Angeles, Chicago and Miami, designed to provide comprehensive broadband interconnectivity enabling the exchange of traffic over multiple networks. FiberNet's customized connectivity infrastructure provides an advanced, high bandwidth, fiber-optic solution to support the demand for network capacity and to facilitate the interconnection of multiple carriers' and customers' networks. For additional information about FiberNet, visit the company's website at http://www.ftgx.com/. Financial Information and Forward Looking Statements: This partial discussion of the statements of financial condition and operations of the Company should be read in conjunction with the consolidated financial statements and related notes contained in the Company's annual report on Form 10-K for the year ended December 31, 2008 to be filed with the Securities and Exchange Commission. Investors are cautioned that EBITDA (as defined) is not a financial measure under generally accepted accounting principles. EBITDA (as defined) is defined as net loss before income taxes, net interest expense, depreciation and amortization, stock related expense and other non-cash or non-recurring charges. The Company does not, nor does it suggest investors should, consider such a non-GAAP financial measure in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. EBITDA (as defined) should not be construed as an alternative to operating income or cash flows from operating activities, both of which are determined in accordance with GAAP, or as a measure of liquidity. Because it is not calculated under GAAP, FiberNet's EBITDA (as defined) may not be comparable to similarly titled measures used by other companies. EBITDA (as defined) is commonly used in the communications industry and by financial analysts, and others who follow the industry, as a measure of operating performance. The Company believes that it is appropriate to present this financial measure because certain of the financial covenants in the Company's credit agreement are based upon it. Various remarks about the Company's future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Such remarks are valid only as of today, and the Company disclaims any obligation to update this information. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. Reconciliation of Non-GAAP Financial Metric: Consolidated Financial Data (in thousands) (unaudited) Three Months Ended -------------------------------------------- December 31, December 31, September 30, 2008 2007 2008 ------------- ------------- ------------- Calculation of EBITDA (as defined): Net loss $(73) $(581) $(306) Plus: Operating expenses: Stock related expense for selling, general, and administrative matters 368 347 346 Depreciation and amortization 2,426 2,411 2,610 Income taxes (1) 62 64 62 Interest expense, net 309 367 306 -------- -------- -------- EBITDA (as defined) $3,092 $2,608 $3,018 (1)Quarterly effect of reclassification of incomes tax provisions. Consolidated Financial Data (in thousands) (unaudited) Year Ended December 31, ------------------------ 2008 2007 ------------ ---------- Calculation of EBITDA (as defined): Net loss $(1,660) $(4,938) Plus: Operating expenses: Stock related expense for selling, general, and administrative matters 1,642 1,108 Depreciation and amortization 10,024 9,419 Income taxes (1) 246 254 Interest expense, net 1,346 1,597 Extraordinary loss on early extinguishment of debt -- 1,146 --------- --------- EBITDA (as defined) $11,598 $8,586 (1) Effect of reclassification of incomes tax provisions. FIBERNET TELECOM GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Year Ended Three Months Ended December 31, December 31, (Audited) (Unaudited) 2008 2007 2008(1) 2007(1) Revenues $58,293 $49,777 $15,422 $13,581 Operating expenses: Cost of services 29,367 25,519 7,375 6,865 Selling, general and administrative expense 18,971 16,780 5,325 4,455 Depreciation and amortization 10,024 9,419 2,426 2,411 Total operating expenses 58,362 51,718 15,126 13,731 Income (loss) from operations (69) (1,941) 296 (150) Extraordinary loss on early extinguishment of debt - (1,146) - - Interest income 97 226 9 49 Interest expense (1,442) (1,823) (316) (416) Net loss before provision for income taxes (1,414) (4,684) (11) $(517) Provision for income taxes (246) (254) (62) (64) Net loss $(1,660) $(4,938) $(73) (581) Net loss per share - basic and diluted $(0.22) $(0.66) $(0.01) $(0.08) Weighted average common shares outstanding - basic and diluted 7,484 7,428 7,436 7,616 (1) Quarterly effect of reclassification of incomes tax provisions. FIBERNET TELECOM GROUP, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) December 31, December 31, 2008 2007 ASSETS Current Assets: Cash and cash equivalents $5,992 $8,220 Accounts receivable, net of allowance of $861 and $361 4,841 3,818 Prepaid expenses 587 612 Total current assets 11,420 12,650 Property, plant and equipment, net 52,579 54,921 Other Assets: Deferred charges, net of accumulated amortization of $362 and $160 665 845 Goodwill 1,613 1,613 Other assets 900 883 Total other assets 3,178 3,341 TOTAL ASSETS $67,177 $70,912 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $3,064 $3,553 Accrued expenses 5,572 7,227 Notes payable-current portion 1,750 700 Deferred revenues-current portion 1,200 1,282 Total current liabilities 11,586 12,762 Long-Term Liabilities: Notes payable 11,550 13,300 Deferred revenues, long-term 3,578 3,351 Other long-term liabilities 2,783 2,201 Total long-term liabilities 17,911 18,852 Total liabilities 29,497 31,614 Commitments and contingent liabilities Stockholders' Equity: Common stock, $0.001 par value, 2,000,000,000 shares authorized and 7,422,918 and 7,554,309 shares issued and outstanding 7 8 Additional paid-in-capital 445,238 445,368 Deferred rent (warrants) (1,213) (1,386) Accumulated deficit (406,352) (404,692) Total stockholders' equity 37,680 39,298 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $67,177 $70,912 ======= ======= FIBERNET TELECOM GROUP, INC CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2008 2007 Cash flows from operating activities: Net loss $(1,660) $(4,938) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 10,024 9,419 Stock related expense 1,642 1,109 Deferred rent expense (warrants) 173 173 Loss on early extinguishment of debt - 1,146 Other non-cash expenses 1,255 460 Change in assets and liabilities: (Increase) in accounts receivable (1,562) (710) Decrease in prepaid expenses 25 44 (Increase) decrease in other assets (66) 58 (Decrease) in accounts payable (115) (535) Increase in accrued expenses and other long-term liabilities 737 1,475 Increase (decrease) in deferred revenue 146 (841) Cash provided by operating activities 10,599 6,860 Cash flows from investing activities: Capital expenditures (8,719) (3,798) Common stock repurchase (3,575) (693) Long-term investment - (250) Cash used in investing activities (12,294) (4,741) Cash flows from financing activities: Proceeds from warrants exercise 189 626 Payment of financing costs of debt financings - (1,167) Repayment of debt financing - (14,160) Proceeds from debt financing - 14,000 Payment of financing costs of debt financings (22) - Repayment on notes payable (700) - Cash used in financing activities (533) (701) Net increase (decrease) in cash and cash equivalents (2,228) 1,418 Cash and cash equivalents at beginning of year 8,220 6,802 Cash and cash equivalents at end of year $5,992 $8,220 Supplemental disclosures of cash flow information: Interest paid $1,497 $1,435 Taxes paid 200 108 Acquisition of property, plant, and equipment not paid - 919 Amounts attributable to acquisition of Gateway Colocation recognized in goodwill and accrued expenses - 1,613 DATASOURCE: FiberNet Telecom Group, Inc. CONTACT: Norma I. Salcido, Director of Marketing & Communications, FiberNet Telecom Group, Inc., +1-212-405-6200, Web Site: http://www.ftgx.com/

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