EXHIBIT 99.1
GLOBIX
FOR IMMEDIATE RELEASE
---------------------
GLOBIX REPORTS SECOND QUARTER RESULTS
QUARTER RESULTS INCLUDE MERGER WITH NEON
NEW YORK, NY (MAY 13, 2005) -- Globix Corporation (AMEX: GEX), a leading
provider of application, media, IP infrastructure and network transport
services, today reported financial results for its second quarter which ended
March 31, 2005. The results reflect the recent merger with NEON Communications
for the period of March 7, 2005, the date of the merger close, through March 31,
2005. Following the merger, the Company now operates a Hosting and Internet
Services division (Globix division) and a Network Transport Services Division
(NEON division)
Revenue for the quarter was $20 million, which was $5.0 million or 33.3% higher
than the same period in 2004. Included in revenue for the quarter was $3.2
million resulting from the Neon acquisition. On a pro-forma basis, the Neon
division's revenue for the full month of March was $4.2 million. Neon's revenue
for the quarter ended March 31, 2005 was $12.3 million an increase of 6% from
$11.6 million for the same period in 2004. "Our NEON division continues to see
lit services demand, with long term contracts, from the growing wireless carrier
segment along with demand from existing customers for `on-net' services as a
result of our expanding network footprint", stated Pete Stevenson, CEO of
Globix. Below is a pro-forma revenue table (showing revenues from each of the
companies and the service lines for the periods indicated and the aggregate of
such revenues in those periods) and a breakdown by major services:
PRO FORMA REVENUE BREAKDOWN
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------- ------------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2005 2004 2005 2004
------- ------- ------- -------
Globix $16,807 $15,029 $33,338 $29,414
Neon 12,310 11,556 24,567 22,308
------- ------- ------- -------
Total Pro Forma Revenue 29,117 26,585 57,905 51,722
======= ======= ======= =======
REVENUE BY SERVICE LINE
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------- ------------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2005 2004 2005 2004
---- ---- ---- ----
Internet Hosting and Co-Location $ 6,438 $ 5,793 $12,508 $11,748
Managed Services 5,546 4,632 10,972 8,804
Network Services and Internet Access 4,036 4,508 8,014 8,732
Lit Fiber Services 2,777 -- 2,777 --
Dark Fiber Services 343 -- 343 --
Hadware and Software Sales and Other 890 96 1,947 130
------- ------- ------- -------
Total Revenue 20,030 15,029 36,561 29,414
======= ======= ======= =======
Loss from operations for the Company was $5.1 million for the quarter and
included a litigation settlement of $.8 million. Excluding the settlement, loss
from operations was $4.3 million, compared to a loss of $4.8 million for the
same period last year.
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On a non-GAAP basis, Adjusted EBITDA was a loss of $380 thousand and included
the aforementioned litigation settlement of $800 thousand as well as the
addition of Neon's adjusted positive EBITDA of $365 thousand. Globix Adjusted
EBITDA for the same period last year was a loss of $436 thousand. EBITDA is
defined as net loss plus interest, taxes, depreciation and amortization.
Adjusted EBITDA is defined as EBITDA further adjusted to exclude non-cash stock
based compensation and impairment charges and to include rental income. EBITDA
and Adjusted EBITDA are not recognized financial measures under GAAP and do not
purport to be alternatives to operating loss as indicators of operating
performance. We provide information as to Adjusted EBITDA because we believe
that it is useful to investors as a performance measure and may help investors
understand the Company's cash resources and requirements. In addition, the
Company uses Adjusted EBITDA in its internal business planning process, in
setting performance goals for the Company and for incentive compensation
purposes. Adjusted EBITDA does not represent cash flow from operations, as
defined under U.S. generally accepted accounting principles, and is not a
measure of operating profitability or net income. Adjusted EBITDA should not be
considered a substitute for financial measures that are computed in accordance
with U.S. generally accepted accounting principles. Moreover, our computation of
Adjusted EBITDA may differ from those used by other companies and should not be
considered comparable. A reconciliation between Globix's Adjusted EBITDA(loss)
and operating loss is provided below:
RECONCILIATION OF LOSS FROM OPERATIONS TO ADJUSTED EBITDA
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------- ------------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2005 2004 2005 2004
------- ------- ------- -------
Loss from Operations ($5,063) ($4,817) ($9,078) ($26,936)
Adjusted for
Depreciation/Amortization 4,472 3,473 8,015 6,844
Loss on impairment of assets 659 17,972
Rental Income 208 270 420 410
Non cash comp (stock options) 3 (21) 26 13
------- ------- ------- -------
ADJUSTED EBITDA (380) (a) (436) (617) (a) (1,697)
======== ======= ======= =======
(a) 2005 adjusted EBITDA includes approximately $800 of one-time litigation
expense. In addition 2005 adjusted EBITDA results reflects $365 of
adjusted EBITDA for Neon (March 7 - 31, 2005).
Globix (excluding the Neon division) ended the second quarter with approximately
1,335 enterprise customers with an average Monthly Recurring Revenue per
customer (ARPU) of $3.6 thousand. The ARPU represents an increase of 9.1% over
the same quarter last year despite a 6% decrease in total customers. This is a
result of the company's consistent strategy of focusing on value added services,
such as Managed Security Services, for both existing and current clients.
"Our most recent financial results demonstrate that both divisions are growing
their base of business in what continues to be a competitive environment. Of
equal importance, is that with our integration well underway we are seeing new
growth opportunities resulting from the combined services and assets of both
divisions", commented Stevenson.
Globix will also file Form 8K on Friday, May 20th which will include NEON's
audited financials for 2004. Following the issuance of the 8K, the Company will
hold an investor conference call on Tuesday, May 24th at 4p.m.(EDT). Further
details regarding the call will be forthcoming.
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GLOBIX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Share and Per Share Data)
MARCH 31, SEPTEMBER 30,
2005 2004
--------- ---------
(Unaudited)
-----------
ASSETS
Current assets:
Cash and cash equivalents ........................................................... $ 9,140 $ 12,075
Short-term investments .............................................................. 6,756 7,625
Marketable securities ............................................................... 15 458
Accounts receivable, net of allowance for doubtful accounts of $1,646 and
$2,248, respectively .............................................................. 10,461 6,157
Prepaid expenses and other current assets ........................................... 5,525 5,101
Restricted cash ..................................................................... 2,401 2,413
--------- ---------
Total current assets ...................................................... 34,298 33,829
Investments ......................................................................... 1,318 1,988
Investments, restricted ............................................................. 9,952 2,324
Property, plant and equipment, net .................................................. 208,202 90,822
Intangible assets, net of accumulated amortization of $4,610 and $3,699,
respectively ...................................................................... 11,245 7,656
Other assets ........................................................................ 4,030 1,923
--------- ---------
Total assets .............................................................. $ 269,045 $ 138,542
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligation and mortgage payable .................... $ 764 $ 555
Accounts payable .................................................................... 12,427 6,599
Accrued liabilities ................................................................. 16,786 8,357
Deferred revenue .................................................................... 5,949 2,852
--------- ---------
Total current liabilities ................................................. 35,926 18,363
Capital lease obligations, net of current portion ................................... 215 121
Mortgage payable .................................................................... 19,434 19,606
11% Senior Notes .................................................................... 60,770 72,202
Accrued interest - 11% Senior Notes ................................................. 6,135 3,349
Other long term liabilities ......................................................... 24,858 8,026
--------- ---------
Total liabilities ......................................................... 147,338 121,667
--------- ---------
Commitments and contingencies
CUMULATIVE CONVERTIBLE PREFERRED STOCK (NOTE 9) ..................................... 12,639 --
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 500,000,000 shares authorized; 48,675,461 and
16,460,000 issued and outstanding, as of March 31, 2005 and September 30, 2004 .... 487 165
Additional paid-in capital .......................................................... 207,192 100,012
Deferred compensation ............................................................... (7) (8)
Accumulated other comprehensive income .............................................. 6,736 4,498
Accumulated deficit ................................................................. (105,340) (87,792)
--------- ---------
Total stockholders' equity ................................................ 109,068 16,875
--------- ---------
Total liabilities, cumulative convertible preferred stock and
stockholders' equity .................................................... $ 269,045 $ 138,542
========= =========
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GLOBIX CORPORATION AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Thousands, Except Share and Per Share Data)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
------------------------------ ------------------------------
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2005 2004 (*) 2005 2004 (*)
------------ ------------ ------------ ------------
Revenue, net ...................................... $ 20,030 $ 15,029 $ 36,561 $ 29,414
Operating costs and expenses:
Cost of revenue (excluding depreciation
and amortization shown below) ............... 11,418 8,689 21,117 17,127
Selling, general and administrative ........... 9,203 7,025 16,507 14,407
Loss on impairment of assets .................. -- 659 -- 17,972
Depreciation and amortization ................. 4,472 3,473 8,015 6,844
------------ ------------ ------------ ------------
Total operating costs and expenses .... 25,093 19,846 45,639 56,350
------------ ------------ ------------ ------------
Loss from operations .............................. (5,063) (4,817) (9,078) (26,936)
Interest and financing expense ................ (2,355) (3,058) (4,843) (6,511)
Interest income ............................... 102 137 228 316
Other (expense) income, net ................... (785) 899 (673) 1,196
Gain (loss) on discharge of debt .............. (3,182) -- (3,182) 1,747
------------ ------------ ------------ ------------
Loss before income taxes .......................... (11,283) (6,839) (17,548) (30,188)
Income tax expense ................................ -- 35 -- 35
------------ ------------ ------------ ------------
Net loss .......................................... $ (11,283) $ (6,874) $ (17,548) $ (30,223)
============ ============ ============ ============
Basic and diluted loss per share .................. $ (0.45) $ (0.42) $ (0.85) $ (1.84)
============ ============ ============ ============
Weighted average common shares
outstanding--basic and diluted ................ 25,048,634 16,460,000 20,707,127 16,460,000
============ ============ ============ ============
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ABOUT GLOBIX:
Globix Corporation (AMEX: GEX) is a leading provider of application, media, IP
infrastructure and network services. Globix delivers tailored and scalable
business solutions that are cost effective, helping clients optimize and protect
revenue streams, improve user satisfaction and reduce technology operating costs
and risks. NEON, a wholly-owned subsidiary of Globix, provides advanced optical
networking to carriers and large enterprise customers in the Northeast and
mid-Atlantic. Globix and its subsidiaries have operations in New York, NY,
Boston, MA, London, U.K., Santa Clara, CA, Fairfield, NJ, Washington D.C. and
Atlanta, GA. For more information visit www.globix.com.
RISK FACTORS AND FORWARD-LOOKING INFORMATION
This press release contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. These statements are based
on current information and expectations and are subject to risks and
uncertainties that could cause the company's actual results to differ materially
from those expressed or implied in the forward-looking statements. These risks
and uncertainties include: the Company's ability to retain existing customers
and attract new customers; its ability to match its operating cost structure
with revenue to achieve positive cash flow; its ability to integrate the
operations of NEON into its existing operations; the sufficiency of existing
cash and cash flow to complete the Company's business plan and fund its working
capital requirements; the insolvency of vendors and other parties critical to
the company's business; the company's existing debt obligations and history of
operating losses; its ability to integrate, operate and upgrade or downgrade its
network; the company's ability to recruit and retain qualified personnel needed
to staff its operations; potential market or technological changes that could
render the Company's products or services obsolete; changes in the regulatory
environment; and other changes that are discussed in the Company's Annual Report
on Form 10-K and other documents that the Company files with the SEC.
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CONTACT:
Globix Corporation
Amanda Dempsey
Director, Marketing Communications
212-625-7656
adempsey@globix.com
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