Exhibit 99.3
Contact Information:
Ed Babcock
Hyperion Communications
814-274-9830
FOR IMMEDIATE RELEASE
HYPERION TELECOMMUNICATIONS, INC. AND ITS OPERATING COMPANIES ANNOUNCE THIRD
QUARTER RESULTS
Coudersport, PA - February 9, 1999
John J. Rigas, Chairman of Adelphia Communications Corporation ("Adelphia")
(NASDAQ NNM: ADLAC) and Hyperion Telecommunications, Inc. ("Hyperion" or
"the Company") (NASDAQ NNM: HYPT) reported results of operations for Hyperion
and its Operating Companies (defined in footnote) for the third quarter which
ended on December 31, 1998.
Due to the recently announced purchase of its partners' interests in the
Jacksonville, FL, Richmond, VA and Wichita, KS markets, Hyperion's and its
consolidated subsidiaries operating results are presented on both an adjusted
generally accepted accounting principles ("GAAP") basis (Exhibit A below) and in
accordance with historical GAAP (Exhibit B below). Adjusted GAAP reflects
Hyperion's consolidated results of operations adjusted for the results of
operations of all Operating Companies for which the Company acquired or will
acquire the outstanding partnership interests (a "roll-up"). Adjusted GAAP
results of operations are presented as if Hyperion consolidated these Operating
Companies during the entire periods presented. The Company will include
operating results in accordance with GAAP in its Form 10-Q, which will be filed
with the SEC by February 16, 1999.
Third quarter results saw adjusted GAAP revenue increase 144% to $19,562,000
over the same quarter in the prior fiscal year. The increase in revenues for the
third quarter was primarily due to the continued expansion of the Company's
customer base and its success in the deployment of switched services as a result
of the retail end user strategy adopted by the Company. During the December 1998
quarter, the Operating Companies sold 39,726 additional access lines, bringing
total sales to 133,686 access lines as of December 31, 1998. (The Company counts
access lines on a one for one basis, irrespective of the number of telephone
sets in use through trunks into a PBX; that is, no multipliers are used.)
Installed lines also increased 32,871 during the December 1998 quarter, bringing
total installed access lines to 110,005 at December 31, 1998, approximately 63%
of which are provisioned completely on the Company's network (on-net lines).
Third quarter adjusted GAAP gross margin was $11,545,000, or 59% of sales as
compared to $4,547,000, or 57% of sales for the same quarter in the prior fiscal
year. The strong gross margin performance was due to a combination of high
margin on-net business customers with access lines and high margin dedicated
access revenues from each of the markets consolidated from the three pending
roll-ups.
Third quarter adjusted EBITDA loss was $6,728,000 as compared to $1,304,000 for
the same quarter in the prior fiscal year. The EBITDA loss was in line with the
Company's expectations, and was due primarily to increased selling, general, and
administrative expenses as a result of the ramp up in direct sales and marketing
distribution channels and to increased costs associated with the Company's
network expansion efforts.
Third quarter adjusted GAAP net loss applicable to common stockholders was
$39,585,000 or ($0.71) per share as compared to $30,605,000 or ($0.88) per share
for the same quarter in the prior fiscal year and $32,393,000 or ($0.58) per
share for the September 1998 quarter. The increase in adjusted GAAP net loss for
the third quarter was due primarily to the above mentioned increase in selling,
general and administrative expenses, increased depreciation and amortization
expenses and increased preferred stock dividends associated with the Company's
financing activities. In particular, depreciation and amortization increased
substantially due to the significant capital investment the Company has made and
the consolidation of the Operating Companies involved in the pending roll-ups.
During the third quarter, the Company and its Operating Companies invested
$54,179,000 in capital expenditures, of which Hyperion's adjusted GAAP share was
$39,584,000. As of December 31, 1998, total gross property, plant and equipment
of the Company and its consolidated subsidiaries on an as adjusted GAAP basis
was approximately $573,359,000.
As of December 31, 1998, adjusted for the three pending roll-ups, Hyperion's
proportionate share of the gross, property, plant and equipment of the Company
and the Operating Companies was approximately 90%. Proportionate share reflects
the collective sum of Hyperion and Hyperion's economic interest in each of the
Operating Companies it owns and manages at Hyperion's ownership percentage as of
December 31, 1998 (adjusted for the three pending roll-ups). As of December 31,
1998, the Operating Companies had approximately 5,988 local route miles and
279,705 local fiber miles. The Company had customers located in approximately
6,460 buildings of which 1,748 buildings were connected with Company owned
fiber. To date, 20 Lucent 5ESS switches or remote switching modules have been
installed to provide local telephone service with eight additional regional
super switches planned for operation during 1999.
Hyperion Communications, is a majority owned subsidiary of Adelphia
Communications Corporation that provides integrated communications services to
business customers through its state-of-the-art fiber optic communications
network. By the year 2001, Hyperion will serve most cities in the eastern half
of the United States through the interconnection of its 46 existing markets with
more than 50 new markets, creating a single fiber optic backbone network. This
fully redundant, 16,000-mile local and long-haul fiber optic network will
support Hyperion's full line of communication service offerings, including local
and long distance voice services, messaging, high-speed data and Internet
services. For more information on Hyperion, visit the company's web site at
http://www.hyperioncom.net.
Exhibit A that follows sets forth the adjusted GAAP operating results for
Hyperion and consolidated subsidiaries, adjusted for the completed and pending
roll-up transactions, for the three and nine months ended December 31, 1997 and
1998, respectively.
Exhibit B that follows sets forth the operating results in accordance
with historical GAAP for Hyperion and its consolidated subsidiaries for the
three and nine months ended December 31, 1997 and 1998, respectively.
Footnote: Hyperion's Operating Companies consist of 22 networks serving
46 cities through (i) eight partnerships or limited liability companies with
local partners, encompassing nine networks, (ii) 10 wholly owned subsidiaries of
the Company, encompassing 11 networks, (iii) one corporation, encompassing one
network, in which the Company is a minority shareholder and (iv) one company,
encompassing one network, in which the Company is a majority equity holder
(collectively, the "Operating Companies").
EXHIBIT A
Hyperion Telecommunications, Inc. and its Operating Companies
Adjusted GAAP Operating Results (a)
Unaudited
Three Months Ended Nine Months Ended
December 31, December 31,
1997 1998 1997 1998
---- ---- ---- ----
Operating Revenue $ 8,010,000 $ 19,562,000 $ 18,715,000 $ 47,336,000
Direct Operating Expenses 3,463,000 8,017,000 8,876,000 22,432,000
-------------------------------- ----------------------------
Gross Margin 4,547,000 11,545,000 9,839,000 24,904,000
Sales, General & Administrative Expenses 5,851,000 18,273,000 14,925,000 39,608,000
-------------------------------- ----------------------------
EBITDA (b) (1,304,000) (6,728,000) (5,086,000) (14,704,000)
Depreciation & Amortization Expense 9,765,000 14,787,000 26,633,000 39,101,000
-------------------------------- ----------------------------
Operating Loss (11,069,000) (21,515,000) (31,719,000) (53,805,000)
Interest Income 5,673,000 1,849,000 7,781,000 10,345,000
Interest Income - Affiliate 93,000 3,576,000 276,000 8,396,000
Interest Expense (17,359,000) (12,716,000) (38,379,000) (39,597,000)
Other Income -- -- -- 1,113,000
-------------------------------- ----------------------------
Loss before Equity in Net Loss of Joint Ventures (22,662,000) (28,806,000) (62,041,000) (73,548,000)
Equity in Net Loss of Joint Ventures (2,149,000) (3,495,000) (5,078,000) (8,998,000)
-------------------------------- ----------------------------
Loss before Extraordinary Gain on Repurchase of Debt (24,811,000) (32,301,000) (67,119,000) (82,546,000)
Extraordinary Gain on Repurchase of Debt -- -- -- 237,000
-------------------------------- ----------------------------
Net Loss (24,811,000) (32,301,000) (67,119,000) (82,309,000)
Preferred Stock Dividends (5,794,000) (7,284,000) (5,794,000) (21,117,000)
-------------------------------- ----------------------------
Net Loss Applicable to Common Stockholders $(30,605,000) $(39,585,000) $(72,913,000)$(103,426,000)
================================ ============================
Basic and Diluted Net Loss per Weighted Average Share
of Common Stock $ (0.88) $ (0.71) $ (2.09)$ (1.95)
================================ ============================
Weighted Average Shares of Common Stock Outstanding 34,890,000 55,497,000 34,890,000 53,035,000
================================ ============================
<FN>
(a) Adjusted GAAP reflects Hyperion's consolidated operating results adjusted
for the consolidation of certain joint ventures (Buffalo, Syracuse, New
Jersey, Louisville, Lexington, Harrisburg, Richmond, Jacksonville, and
Wichita) in which Hyperion has bought out or is currently in the process
of buying out its partners' interests. All results of operations are
presented as if all of the purchases of these joint ventures had occurred
at the beginning of the periods presented.
(b) Earnings before interest, income taxes, depreciation and amortization and
other income/expense ("EBITDA") and similar measures of cash flow are
commonly used in the telecommunications industry to analyze and compare
telecommunications companies on the basis of operating performance,
leverage, and liquidity. While EBITDA is not an alternative indicator of
operating performance or an alternative to cash flows from operating
activities as a measure of liquidity as defined by GAAP, and while EBITDA
may not be comparable to other similarly titled measures of other
companies, management of the Company believes that EBITDA
is a meaningful measure of performance.
</FN>
EXHIBIT B
Hyperion Telecommunications, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Unaudited
Three Months Ended Nine Months Ended
December 31, December 31,
1997 1998 1997 1998
---- ---- ---- ----
Revenues $ 4,983,000 $ 15,043,000 $ 8,690,000 $ 34,776,000
---------------------------------- -------------------------------
Operating Expenses
Network Operations 2,657,000 6,664,000 5,263,000 18,709,000
Selling, General & Administrative 3,840,000 16,518,000 9,099,000 35,341,000
Depreciation & Amortization Expense 3,344,000 10,708,000 7,027,000 26,671,000
----------------------------------
-------------------------------
Total 9,841,000 33,890,000 21,389,000 80,721,000
---------------------------------- -------------------------------
Operating Loss (4,858,000) (18,847,000) (12,699,000) (45,945,000)
Other Income (Expense)
Interest Income 5,632,000 1,829,000 7,675,000 10,233,000
Interest Income - Affiliate 93,000 3,576,000 276,000 8,395,000
Interest Expense (16,770,000) (12,399,000) (35,934,000) (38,638,000)
Other Income -- -- -- 1,113,000
---------------------------------- -------------------------------
Loss Before Equity in Net Loss (15,903,000) (25,841,000) (40,682,000) (64,842,000)
of Joint Ventures
Equity in Net Loss of Joint Ventures (2,858,000) (3,776,000) (9,284,000) (9,580,000)
---------------------------------- -------------------------------
Loss before Extraordinary Gain on Repurchase of Debt (18,761,000) (29,617,000) (49,966,000) (74,422,000)
Extraordinary Gain on Repurchase of Debt -- -- -- 237,000
---------------------------------- -------------------------------
(18,761,000) (29,617,000) (49,966,000) (74,185,000)
Net Loss
Preferred Stock Dividends (5,794,000) (7,284,000) (5,794,000) (21,117,000)
---------------------------------- -------------------------------
Net Loss Applicable to Common Stockholders $(24,555,000) $ (36,901,000) $ (55,760,000) $ (95,302,000)
================================== ===============================
Basic and Diluted Net Loss per Weighted Average
Share of Common Stock $ (0.70) $ (0.66) $ (1.60) $ (1.80)
================================== ===============================
Weighted Average Shares of Common 34,890,000 55,497,000 34,890,000 53,035,000
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