Exhibit 99.1
iBasis Reports Results for Second Quarter 2003; Company Achieves
Positive Cash Flow from Operations and Reduces Debt by $6 Million
BURLINGTON, Mass.--(BUSINESS WIRE)--Aug. 6, 2003--iBasis, Inc.
(OTCBB: IBAS), the leader in Internet-based voice communications,
today announced results for the second quarter ended June 30, 2003.
Unless otherwise noted, all financial and other information in this
release excludes discontinued operations, which have been reported
separately.
Second quarter revenue was $39.1 million, compared to revenue of
$41.9 million in the second quarter of 2002. Net loss from continuing
operations for the second quarter 2003 was $5.5 million, or $0.12 per
share, based on 44.7 million weighted average shares outstanding. This
net loss compares to a second quarter 2002 net loss from continuing
operations of $19.7 million, or $0.44 per share, based on 45.2 million
weighted average shares outstanding.
Highlights of the second quarter include:
-- Positive cash flow from operations;
-- Quarterly reduction in cash of only $2.9 million;
-- Operating expenses of $8.2 million in Q2 2003; consistent with
Q1 and down 28% from $11.4 million (excluding bad debt
expense) in Q2 2002;
-- Reduction of debt by approximately $6.1 million through
exchanges of $12.2 million of convertible bond debt for senior
secured notes in the amount of $6.1 million
"We are pleased to have achieved positive cash flow from
operations this quarter," said Ofer Gneezy, president and CEO of
iBasis. "We also managed our working capital and operating expenses
well and conserved cash during the quarter.
"The lengthy delay in implementing the restructuring of the China
telecommunications industry, which was announced a year ago, was a
significant factor in the weakness we experienced in our China
business during the quarter. Now that it is finally in place, we
believe the restructuring presents excellent new business
opportunities for us in China.
"We continued to grow our global footprint, adding more than 10
countries during the quarter, and bringing the total number of points
of presence on the iBasis Network to approximately 860. This
incremental increase in our footprint, and our new international
prepaid calling service position us well for the second half of 2003."
New International Prepaid Calling Card Service
At the end of the quarter iBasis launched an international prepaid
calling card service for major calling card distributors. "We have
been providing hosted prepaid billing services and wholesale
international call completion to calling card service providers for
some time," said Gneezy. "We are now delivering consumer services
through distribution and participating more directly in the $4 billion
U.S. retail prepaid market in which typically margins are higher and
cash flow is stronger. The first product of this new service, the
Bravo! card, reached retail outlets in major U.S. markets in July."
Key Indicators
Minutes of use on The iBasis Network(TM) in the second quarter
rose to 854 million minutes, a 38% increase over the 620 million
minutes carried in the second quarter 2002, and an 8% sequential
increase over the 792 million minutes in the first quarter 2003.
Average revenue per minute was 4.6 cents per minute in the second
quarter 2003, compared to 5.3 cents per minute in the first quarter
2003.
Operational Milestones
In the second quarter 2003, overseas-originated calls accounted
for 40% of wholesale revenue and 41% of wholesale traffic, compared to
50% of wholesale revenue and 43% of wholesale traffic in the first
quarter 2003. Tier One carrier customers generated approximately 61%
of revenue in the second quarter 2003, compared to 62% of revenue in
the first quarter 2003.
During the quarter, iBasis continued to expand its customer base,
with major service providers from every region connecting to The
iBasis Network. Customers announced in the second quarter included
Rostelecom, the national long distance carrier of Russia; Albacom, the
leading competitive carrier in Italy; and 3U Telecom, a leading retail
carrier operating in the U.S., Germany, France, Italy, Switzerland,
Austria, and the Netherlands. iBasis finished the quarter with 209
customers.
Financial Highlights
Gross margin declined to 14.7% of revenue or $5.7 million during
the second quarter 2003, compared with 16.5% or $6.9 million in the
first quarter 2003, and 10.1% or $4.2 million in the second quarter of
2002.
The decrease in cash during the quarter was $2.9 million,
consisting of $0.4 million of cash generated from operating activities
offset primarily by $1.5 million in principal repayments on capital
leases, and $1.6 million of capital expenditures. The company ended
the second quarter with $21.2 million in cash.
Debt Reduction
During the second quarter, iBasis retired $12.2 million of the
company's 5.75% Convertible Subordinated Notes in exchange for a new
senior secured debt instrument at 50% of the face value of the retired
notes and warrants to purchase shares of iBasis common stock. These
transactions resulted in a gain of $3.7 million that is included in
results from continuing operations in Q2 2003, in accordance with
recent changes in accounting rules.
Since early in Q4 2001, the company has reduced its debt by more
than $137 million through repurchases of convertible notes and vendor
lease debt and through note exchanges. The outstanding face amount on
the company's 5.75% Convertible Subordinated Notes is $38.2 million,
down from the original face amount of $150 million. In addition the
company has $25 million in senior secured debt.
Guidance
The following statements are forward-looking and actual results
may differ materially due to factors noted below, among others. The
information provided in this financial outlook is as of August 6,
2003, and supersedes all previous guidance.
The company is maintaining previous guidance. The company believes
it will achieve positive cash flow and net income in mid-2004.
About iBasis
Founded in 1996, iBasis (OTCBB: IBAS) is a leading provider of
wholesale international telecommunications services. The company was
named by service providers for two consecutive years as the best
international wholesale carrier in Atlantic-ACM's annual International
Wholesale Carrier Report Card(1). iBasis is a preferred provider for
many of the largest carriers in the world, including AT&T, Cable &
Wireless, China Mobile, China Unicom, MCI, Rostelecom, Sprint,
Telefonica, Telenor, and Telstra. iBasis has carried more than six
billion minutes of international voice traffic over its global Cisco
Powered Network(TM), and is one of the ten largest carriers of
international voice traffic in the world(2). Based on its revenue
growth from 1997 through 2001, iBasis was ranked the #8
fastest-growing technology company in North America and the #1
fastest-growing technology company in New England in the Technology
Fast 500 national program sponsored by Deloitte & Touche. The company
can be reached at its worldwide headquarters in Burlington,
Massachusetts, USA at 781-505-7500 or on the Internet at
www.ibasis.com.
Assured Quality Routing, ConnectPoint, and iBasis are registered
marks, The iBasis Network, Internet Central Office, Internet Branch
Office, and IP CallCard are trademarks of iBasis, Inc. Cisco and Cisco
Powered Network are registered trademarks of Cisco Systems, Inc. All
other trademarks are the property of their respective owners.
Except for historical information, all of the expectations,
projections and assumptions contained in the foregoing press release,
including those relating to the company's current expectations
regarding revenue growth, sources of revenue, margin improvement and
future capital expenditures constitute forward-looking statements
under the Private Securities Litigation Reform Act of 1995 and involve
risks and uncertainties. Important factors that could cause actual
results to differ materially from such forward-looking statements
include, but are not limited to, (i) the extent of adoption of the
company's services and the timing and amount of revenue generated by
these services; (ii) fluctuations in the market for and pricing of
these services; and (iii) the other considerations described as "Risk
Factors" in iBasis' most recent Forms 10-K and 10-Q, and the company's
other SEC filings. We have no current intention to update any
forward-looking statements.
(1)Atlantic-ACM International Wholesale Carrier Report Card 2003 -
February 2003
(2)Telegeography 2003 data compared with iBasis 2002 actual
traffic volume.
iBasis, Inc.
Consolidated Balance Sheets
June 30, December 31,
2003 2002
------------- -------------
Assets
Cash and cash equivalents $21,214,204 $32,316,609
Accounts receivable, net 16,478,521 20,853,573
Prepaid expenses and other current assets 5,037,000 5,374,390
Property and equipment, net 22,318,435 32,357,491
Deferred debt financing costs, net 461,041 1,381,927
Long term investment in non-marketable
security 5,000,000 5,000,000
Other assets 1,187,287 1,240,321
------------- -------------
Total assets $71,696,488 $98,524,311
============= =============
Liabilities and Stockholders' Deficit
Accounts payable 12,833,334 $13,142,280
Accrued expenses 18,045,367 18,147,455
Current portion of long-term debt 3,703,146 5,348,852
Long term debt, net of current portion 66,461,155 93,589,694
Other long term liabilities 4,662,231 2,268,455
------------- -------------
Total liabilities 105,705,233 132,496,736
Stockholders' deficit:
Common stock 45,792 45,785
Preferred stock -- --
Treasury stock; 1,135,113 shares at
cost (340,534) (340,534)
Additional paid-in capital 370,306,173 368,927,164
Deferred compensation (28,585) (85,756)
Accumulated deficit (403,991,591) (402,519,084)
------------- -------------
Total stockholders' deficit (34,008,745) (33,972,425)
------------- -------------
Total liabilities and stockholders'
deficit $71,696,488 $98,524,311
============= =============
iBasis, Inc.
Consolidated Statements of Operations
Three Months Ended June 30,
----------------------------
2003 2002
------------ -------------
Net revenue $39,118,853 $41,922,786
Costs and operating expenses:
Data communications and
telecommunications 33,370,114 37,698,117
Research and development 3,441,756 4,039,963
Selling and marketing 1,902,590 3,275,471
General and administrative 2,820,011 11,804,658
Depreciation and amortization 5,748,916 9,319,064
Non-cash stock-based compensation 28,584 334,266
Loss on sale of messaging business -- 317,625
Restructuring costs -- 4,361,697
------------ -------------
Total cost and operating expenses 47,311,971 71,150,861
Loss from operations (8,193,118) (29,228,075)
Interest income 41,413 330,259
Interest expense (971,264) (3,626,724)
Gains on bond repurchases and exchanges 3,715,595 12,960,120
Other expenses, net (97,500) (90,450)
------------ -------------
Loss from continuing operations (5,504,874) (19,654,870)
Loss from discontinued operations -- (61,531,424)
------------ -------------
Net loss applicable to common
stockholders $(5,504,874) $(81,186,294)
============ =============
Basic and diluted net loss per share:
Loss from continuing operations $ (0.12) $ (0.44)
Loss from discontinued operations -- (1.36)
------------ -------------
Basic and diluted net loss per share $(0.12) $(1.80)
============ =============
Weighted average common shares
outstanding 44,651,567 45,225,198
============ =============
iBasis, Inc.
Consolidated Statements of Operations
Six Months Ended June 30,
--------------------------
2003 2002
------------ -------------
Net revenue $80,960,120 $83,648,996
Costs and operating expenses:
Data communications and telecommunications 68,296,734 73,286,078
Research and development 7,124,537 9,515,657
Selling and marketing 3,896,357 6,864,148
General and administrative 5,329,266 17,338,792
Depreciation and amortization 11,862,158 19,227,038
Non-cash stock-based compensation 57,171 668,531
Loss on sale of messaging business -- 2,498,165
Restructuring costs -- 4,361,697
------------ -------------
Total cost and operating expenses 96,566,223 133,760,106
Loss from operations (15,606,103) (50,111,110)
Interest income 111,564 690,830
Interest expense (2,398,355) (7,529,748)
Gains on bond repurchases and exchanges 16,615,384 23,354,551
Other expenses, net (195,000) (183,560)
------------ -------------
Loss from continuing operations (1,472,510) (33,779,037)
Loss from discontinued operations -- (65,369,936)
------------ -------------
Net loss applicable to common
stockholders $(1,472,510) $(99,148,973)
============= =============
Basic and diluted net loss per share:
Loss from continuing operations $ (0.03) $ (0.74)
Loss from discontinued operations -- (1.45)
------------ -------------
Basic and diluted net loss per share $(0.03) $(2.19)
============ =============
Weighted average common shares
outstanding 44,650,759 45,203,182
============ =============
CONTACT: iBasis, Inc.
Richard Tennant, 781-505-7409
ir@ibasis.net