FOR IMMEDIATE RELEASE
STRONG REVENUE GROWTH IN
FIRST QUARTER 2001 AT CARRIER1
o FIRST QUARTER 2001 REVENUE OF $89.6 MILLION, UP 75% YEAR-OVER-YEAR,
AHEAD OF EXPECTATIONS
o DATA SERVICES REACHED $30.9 MILLION, MORE THAN AN EIGHT-FOLD INCREASE
YEAR-OVER-YEAR
o EIGHT-FOLD IMPROVEMENT OF GROSS MARGIN SEQUENTIALLY DUE TO DATA
REVENUE INCREASE
o LONG-TERM BUSINESS PLAN REMAINS FULLY FUNDED
ZURICH, MAY 14, 2001-- Carrier1 (Neuer Markt: CJN; NASDAQ: CONE), a leading
European provider of end-to-end Internet, voice, bandwidth, data centre and
access solutions to large users of communication services, today reported strong
revenue of $89.6 million for the three months ended March 31, 2001, a 75%
increase over the first quarter of 2000 and a 18% increase over the fourth
quarter of 2000. Revenue in the first quarter 2001 exceeded the Company's prior
revenue forecast of $87 million. EBITDA (earnings before interest, taxes,
depreciation, amortization, foreign currency exchange gains or losses, other
income (expense) and extraordinary items) loss for the first quarter 2001 was
$7.4 million, excluding bad debt expense of $7.0 million, for a total EBITDA
loss of $14.4 million.
"We took immediate action in the first quarter to reevaluate the credit
worthiness of our customer base and ensure that the company will benefit from a
high-quality revenue stream for the long-term", said Stig Johansson, president
and CEO of Carrier1. "The first quarter's strong revenue growth demonstrates
that our strategy of building a cost-efficient pan European network and
outsourcing quality services to large users of communication, establishes
Carrier1 as a recognized competitive force in this changing environment", he
added.
Mr. Johansson noted that Carrier1's long-term business plan is fully
funded, with a solid liquidity and financial position. At March 31, 2001, total
restricted and unrestricted cash and marketable securities stood at $261.4
million. At year-end 2001, this amount is expected to be approximately $200
million and the long-term debt is estimated at $233 million.
FULL YEAR 2001 FORECAST
Carrier1 is forecasting 2001 full year revenue of between $390 and $400
million, an approximate 50% increase over the total revenue of $261.6 million
reported in 2000. This assumes a more conservative assessment of current market
conditions and the desire to contain our exposure to future bad debts. Carrier1
expects its EBITDA for the year 2001 to break even, before bad debt expense of
approximately $12 to $17 million. Carrier1 continues to forecast that for the
full year 2001, data services revenue as a percentage of total revenue will
reach 40%.
FIRST QUARTER HIGHLIGHTS: DATA SERVICES INCREASE MORE THAN EIGHT-FOLD
YEAR-OVER-YEAR
During the first quarter, total revenue reached $89.6 million, an increase
of 75% compared with the $51.3 million reported in the first quarter of 2000,
and a 18% increase over the $76.2 million reported in the fourth quarter of
2000. Revenue from data services reached $30.9 million, more than eight times
the $3.6 million reported in the same period in 2000 and a sequential growth of
121% compared to the $14.0 million reported in the fourth quarter of 2000.
C1 Q1 2001 RESULTS/2
Included in the data service revenue are $7.9 million of one-time
sales. There were no such sales in the first quarter of 2000 and there were $3.3
million of one-time sales in the fourth quarter of 2000.
As more resources were allocated to serve increasing demand for data
services, voice revenue accounted for 65% of total revenue or $58.6 million, a
23% increase over the first quarter of 2000 and a 6% decrease over the $62.2
million reported in the fourth quarter of 2000. Average revenue per minute of
voice traffic decreased slightly during the first quarter to 13.5 cents.
GROSS MARGIN: For the three-month period ended March 31, 2001, gross margin
(revenues minus cost of services) improved to $4.9 million compared to a loss of
$3.3 million in the first quarter of 2000 and a positive gross margin of
$571,000 reported in the fourth quarter of 2000.
OPERATING COSTS: Selling, general and administrative expenses before bad debt
expense of $7.0 million were $12.3 million or 14% of revenue in the first
quarter of 2001, compared with $7.4 million or 14% of revenue in the first
quarter of 2000 and $10.3 million or 14% of revenue in the fourth quarter of
2000.
EBITDA: For the three-month period ending March 31, 2001, EBITDA loss, excluding
bad debt expense, was $7.4 million or (8%) of revenue. This compares to a loss
of $10.6 million, excluding bad debt of $271,000 or (21)% of revenue in the same
period of 2000. However, bad debt expense of $7 million increased the EBITDA
loss to $14.4 million. Recognizing the deteriorating economic situation in the
sector of telecommunications, the company is reviewing its customer base with a
view to improving the credit quality of its future revenue stream. As part of
this effort, the company will terminate or reduce future services to certain
customers. The company estimates that expenses related to this effort and its
future bad debt expense will amount to approximately 5% and 2.5% of revenue for
the second quarter of 2001 and the second half of 2001, respectively.
"Carrier1 took an active and conscious decision to secure the quality
of its current business in this time of constant change and uncertainty in the
telecommunications sector", said Alex Schmid, Chief Financial Officer of
Carrier1. "We are positioning the company to face tremendous opportunities in
the IP and Broadband services to large users and striving to develop long-term
relationships with our customers. Underlying Carrier1's outsourcing strategy is
an essential element of trust from our customers due to the critical nature of
our service offerings".
EARNINGS: For the three-month period ending March 31, 2001, net loss was $45.2
million including a currency exchange loss of $13.1 million, compared to a net
loss of $48.0 million including a currency exchange loss of $19.7 million in the
same period of 2000 and a loss of $20.6 million including a currency exchange
gain of $8.1 million in the fourth quarter of 2000.
CAPITAL EXPENDITURES: For the first quarter of 2001, capital expenditures were
$102 million, including final payments for major infrastructure projects
including the German ring, the Hannover cross-connect, the development of the
Southern Ring and the UK network. The company plans to invest approximately $203
million for the full year of 2001, as future capital expenditures are more
directly tied to incremental revenue generation. It is currently planned that
the focus of the investment budget for the remainder of 2001 will be on the
metropolitan networks.
C1 Q1 2001 RESULTS/3
NETWORK & SERVICE HIGHLIGHTS:
NETWORK OF 14,000 ROUTE KM: Carrier1's long-haul network currently links 35
cities in 13 countries, extending 14,000 contracted route km across Europe.
Approximately 10,000 route km are being activated including the Southern
European ring, the Scandinavian and the UK network.
Carrier1 also announced an expansion of its footprint in Italy through
the acquisition of 12 points of presence, most of which are concentrated in the
Northern part of the country. This acquisition will strengthen Carrier1's
positioning as an outsourcing partner of choice for local carriers, ISPs and
application and content providers in Italy.
METROPOLITAN RINGS: Carrier1 is complementing its long-haul network with 13
dense metropolitan networks in some of Europe's most important business centers,
supporting the delivery of advanced services that meet customer needs. By the
end of 2001, Carrier1 will have metropolitan networks in ten locations,
including Amsterdam, Berlin, Dusseldorf, Geneva, Hamburg, Hannover, London,
Milan, Munich and Paris. The Amsterdam network is completed while the Paris
network is being extended to reach further large communication-centric
locations. Three additional metropolitan networks are expected to be completed
in 2002, including Frankfurt, Rotterdam and the Hague.
CO-LOCATION SITES: Carrier1's service capability is complemented by
state-of-the-art co-location facilities in 11 European cities. Space is also
available for customers in 24 points of presence throughout Europe. Marketed
under the CLEARSPACE brand, the facilities are available on a stand-alone basis
or as part of our Internet and managed bandwidth services.
A CONFERENCE CALL WITH SUPPORT OF SLIDES WILL FOLLOW THIS PRESS RELEASE ON MAY
14,2001 AT 3:00 PM CENTRAL EUROPE TIME AND WILL BE SIMULTANEOUSLY WEBCAST ON
WWW.CARRIER1.COM. THIS WEBCAST WILL BE MADE AVAILABLE FOR 90 DAYS ON OUR
WEBSITE.
FINANCIAL TABLE FOLLOWS
C1 Q1 2001 RESULTS/4
Figures prepared in accordance THREE MONTHS THREE MONTHS THREE MONTHS
with U.S. GAAP (unaudited) ENDED MARCH ENDED MARCH ENDED DEC
$ 000, except per share data 31, 2001 31, 2000 31, 2000
Voice Revenue 58,627 47,709 62,176
Data related Revenue 30,950 3,558 14,019
TOTAL REVENUE 89,577 51,267 76,195
Cost of services 84,691 54,536 75,624
GROSS MARGIN 4,886 (3,269) 571
Selling, general and
administrative expenses(1) 19,324 7,638 14,094
EBITDA (2) (14,438) (10,907) (13,523)
Depreciation and amortisation 13,458 6,151 10,865
LOSS FROM OPERATIONS (27,896) (17,058) (24,388)
OTHER INCOME (EXPENSE):
Interest expense (8,088) (10,124) (7,818)
Interest income 3,843 2,684 5,661
Other income (expense) 3 (3) (2,145)
Currency Exchange Loss, Net (13,106) (19,687) 8,065
Total other income (expense) (17,348) (27,130) (3,763)
Loss before Income Tax Benefit
and extraordinary item (45,244) (44,188) (20,625)
Extraordinary item -- (3,789) --
NET LOSS (45,244) (47,977) (20,625)
EARNINGS (LOSS) PER SHARE
Loss before extraordinary item (1.06) (1.21) (0.49)
Extraordinary loss on early
extinguishment of debt -- (0.11) --
Net loss (1.06) (1.32) (0.49)
Weighted average shares 42,846,000 36,420,000 42,058,000
BALANCE SHEET DATA
Unrestricted Cash 52,431 162,162
Marketable Securities 184,979 198,186
Restricted cash 8,885 24,429
Restricted investments 15,071 29,951
Working Capital 271,864 392,610
Property and equipment, net 455,587 423,194
Investments in other ventures 35,172 31,008
Total Assets 968,881 1,054,261
Total Deferred Revenue 109,067 115,035
Long term debt 232,853 238,641
Equity 452,694 525,104
(1)includes bad debt expense of $7.0 million, $271,000 and $3.8 million
respectively in the first quarter 2001, first quarter 2000 and fourth quarter
2000.
(2)EBITDA is not a US GAAP measure. EBITDA stands for earnings before interest,
taxes, depreciation, amortization, foreign currency exchange gains or losses,
other income/expense and extraordinary items.
C1 Q1 2001 RESULTS/5
ABOUT CARRIER1
Carrier1 International S.A. is one of Europe's top providers of large system
solutions for end-to-end Internet, broadband, voice, data-centre and dialup
access communications to large users of telecommunications services with a
network that spans 14,000 contracted route kilometres in 13 countries, and links
35 European cities. Carrier1 provides its clients with carrier-grade transport
and network solutions as well as end-user-ready, value-added services that
customers then brand and market to their respective users.
FOR MEDIA AND INVESTOR INFORMATION, PLEASE CONTACT:
Nicole Blanchard Helene Baril
Carrier1 Carrier1
Vice President, Corporate Communications Director, Investor Relations
and Investor Relations helene.baril@carrier1.com
nicole.blanchard@carrier1.com Tel: +41 1 297 2615
Tel: +41 1 297 2605
U.S. MEDIA PLEASE CONTACT: George Sopko or Michael Kassin at Stanton Crenshaw
Communications, Tel: 212-780-1900 (george@stanton-crenshaw.com or
mkassin@stanton-crenshaw.com)
REFERENCES TO OUR WEB SITE ARE NOT INTENDED TO CREATE AN ACTIVE LINK.
FORWARD LOOKING STATEMENT:
THE INFORMATION CONTAINED IN THIS PRESS RELEASE CONTAINS "FORWARD-LOOKING"
STATEMENTS WITHIN THE MEANING OF THE U.S. FEDERAL SECURITIES LAWS. THESE
STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS
"BELIEVES", "EXPECTS", "PLANS", "ESTIMATES", "MAY", "WILL", "SHOULD" OR
"ANTICIPATES" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE
TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS, UNCERTAINTIES AND
ASSUMPTIONS.
THESE STATEMENTS INCLUDE THOSE REGARDING (i) THE COMPANY'S LONG-TERM BUSINESS
PLAN BEING FULLY FUNDED, (ii) ITS PLAN TO STRENGTHEN THE CREDIT QUALITY OF ITS
LONG-TERM REVENUE, (iii) ITS BUILD-OUT AND SALES STRATEGY, (iv) ITS YEAR-END
2001 TOTAL CASH AND MARKETABLE SECURITIES POSITION AND LONG-TERM DEBT POSITION,
(v) ITS TOTAL REVENUE, DATA REVENUE, EBITDA AND BAD DEBT EXPENSE FOR THE YEAR
2001; (vi) ITS BAD DEBT AND RELATED EXPENSES FOR THE SECOND QUARTER 2001 AND THE
SECOND HALF OF 2001, (vii) THE OPPORTUNITIES IN IP AND BROADBAND SERVICES AND
THE COMPANY'S POSITIONING TO FACE SUCH OPPORTUNITIES AND DEVELOP LONG-TERM
CUSTOMER RELATIONSHIPS, (viii) THE AMOUNT OF THE COMPANY'S CAPITAL EXPENDITURES
FOR 2001 AND THE STRATEGY AND FOCUS OF THE APPLICATION OF THE CAPITAL
EXPENDITURE, (ix) THE CONTRACTUAL NATURE OF ITS NETWORK AND ITS PLAN TO ACTIVATE
PARTS OF IT, (x) THE ANTICIPATED IMPACT OF THE COMPANY'S ACQUISITION OF PoPs IN
ITALY, AND (xi) THE BUILD-OUT OF ITS METROPOLITAN RINGS AND THE TIMING THEREOF.
THESE STATEMENTS ARE BASED ON THE CURRENT EXPECTATIONS OF THE MANAGEMENT OF
CARRIER1 AND PERFORMANCE IS SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THESE STATEMENTS. SUCH
RISKS INCLUDE BUT ARE NOT LIMITED TO, THE DETERIORATION OF THE MARKET ECONOMY,
INCLUDING IN EUROPE AND THE TECHNOLOGY AND TELECOMMUNICATIONS SEGMENTS, THE
DETERIORATION OF THE FINANCIAL STRENGTH OF OUR CUSTOMER BASE, ADVERSE
REGULATORY, TECHNOLOGICAL, JUDICIAL OR COMPETITIVE DEVELOPMENTS; DECLINE IN
CARRIER1'S SERVICES OR PRODUCTS; INABILITY TO TIMELY DEVELOP AND INTRODUCE NEW
TECHNOLOGIES, PRODUCTS AND SERVICES; PRESSURE ON PRICING RESULTING FROM
COMPETITION; UNFORESEEN CONSTRUCTION DELAYS AND FAILURE TO RECEIVE ON A TIMELY
BASIS NECESSARY PERMITS OR OTHER GOVERNMENTAL APPROVALS, FAILURE TO OBTAIN ANY
NECESSARY FINANCING IF MANAGEMENT'S BUSINESS PLAN ASSUMPTIONS ARE NOT MET,
PERFORMANCE FAILURE BY THIRD PARTIES WITH WHOM CARRIER1 HAS CONTRACTED INCLUDING
FOR THE SUPPLY OR MAINTENANCE OF INFRASTRUCTURE COMPONENTS AND BY JOINT VENTURE
PARTNERS; THE RISK OF TERMINATION OF CERTAIN JOINT VENTURES THROUGH WHICH
CARRIER1 OPERATES; THE AMOUNT OF INDEBTEDNESS INCURRED BY CARRIER1 AND ITS
OBLIGATIONS THEREUNDER.
FOR A MORE DETAILED DISCUSSION OF THESE RISKS, UNCERTAINTIES AND OTHER FACTORS
AFFECTING THE COMPANY, PLEASE REFER TO THE COMPANY'S PROSPECTUS AND PERIODIC
REPORTS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K,
10-Q AND 8-K, INCLUDING ITS 10-K FOR THE YEAR ENDED 31 DECEMBER 2000.
CORRESPONDING FILINGS ARE AVAILABLE AT THE FRANKFURT STOCK EXCHANGE.