VANCOUVER, Wash., Aug. 11 /PRNewswire/ --
GST Telecommunications, Inc., an Integrated Communications Provider (ICP) in California and the western United States, today reported revenues of $56.8 million for the quarter ending June 30, 2000, compared to $63.7 million reported for the first quarter of 2000 and $86.9 million in the corresponding quarter last year. Included in these revenues were construction and facility sale revenues of $3.6, $9.0 and $34.5 million for the second and first quarters of 2000 and second quarter of 1999, respectively. Construction revenues can vary significantly from quarter to quarter based on transaction activity.
Telecommunications service revenues decreased two percent to $53.2 million in the second quarter from $54.5 million in the first quarter. This reflects an increase of four percent over the $51.2 million reported in the second quarter of 1999.
Selling, general and administrative (SG&A) expenses for the three months ending June 30, 2000 were $31.2 million, a decrease of $4.4 million from the $35.6 million reported in the first quarter of 2000. Capital expenditures for the quarter totaled $17.5 million.
The Company reported second quarter adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $(15.1) million, compared to $(17.0) million reported in the first quarter and $2.4 million in the corresponding quarter in 1999. Net loss per share was $(1.57) for the three months ended June 30, 2000, compared to $(0.70) for the previous quarter and $(1.28) in the second quarter of 1999.
On May 17, 2000, the Company announced that it had filed in the U.S. Bankruptcy Court for the District of Delaware for protection under Chapter 11 of the U.S. Bankruptcy Code. In addition, a Letter of Intent was executed with Time Warner Telecom Inc. (Nasdaq: TWTC) for the sale of substantially all the assets of GST for $450 million in cash, and a commitment was secured from Heller Financial, Inc. to provide (Debtor In Possession) DIP financing for up to $50 million (and the potential for up to an additional $75 million) to continue day-to-day operations. Subsequently, the Letter of Intent with Time Warner Telecom Inc. expired and the Company sought and received Bankruptcy Court approval to proceed with an open bidding procedure for the auction of substantially all of its assets.
"GST continues to operate 'business as usual' during the bidding process," stated Tom Malone, acting chief executive officer. "We have been focused primarily on maintaining operational stability and conserving cash. With assistance from our construction partners, we have modified the terms of many of our construction agreements to accelerate cash receipts. These construction agreement revisions, combined with new fiscal conservation measures instituted over the last three months and operational efficiencies gained from continued process improvements, have resulted in a cash position whereby the Company has not yet needed to draw on the DIP financing secured from Heller Financial." As of August 8, 2000, the Company had unrestricted cash and cash equivalents of $27.7 million.
The bidding procedure stipulates that qualified buyers submit bids no later than August 11, with the final auction to be conducted on August 22. On August 25, 2000, the Company will appear before the U.S. Bankruptcy Court for the District of Delaware to seek approval of the sale of its assets to the highest and best bidder(s). If some or all of the Company's assets are not sold through the auction process, the Company will explore other options, including reorganization and restructuring.
Recap of Second Quarter Events
-- GST files voluntary Chapter 11 petition and executes Letter of Intent with Time Warner Telecom Inc. on May 17.
-- GST secures a commitment from Heller Financial, Inc. to provide Debtor In Possession (DIP) financing for up to $50 million to continue day-to-day operations.
-- Letter of Intent with Time Warner Telecom Inc. expires; GST receives approval from the U.S. Bankruptcy Court for the District of Delaware with jurisdiction over the Company's bankruptcy proceedings to proceed with an open auction for substantially all of its assets.
-- The final date for submitting bids for substantially all of the Company's assets is extended from July 31 to August 11, and the auction date is moved from August 4 to August 22.
-- The Company receives approval from the U.S. Bankruptcy Court for the modification of several major construction agreements, obtained with the consent of the applicable carriers, to provide accelerated cash flows from those agreements.
GST Telecommunications, Inc., an Integrated Communications Provider (ICP) headquartered in Vancouver, Wash., provides a broad range of integrated telecommunications products and services, including enhanced data and Internet services and comprehensive voice services throughout the United States, with a robust presence in California and the West. Facilities-based GST continues to focus on its western regional strategy by anchoring its next generation networks in local markets and connecting them via long haul fiber networks. Visit GST's Web site at www.gstcorp.com.
This release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from the projections made here. Factors which may affect actual results include the success of our strategic focus, the divestiture of our remaining non-core assets, our ability to complete network construction projects in a timely manner, and competition in our core ICP business. Additional factors which may affect actual results are contained in our current filings with the SEC, and also our report on Form 10-Q for the period ended June 30, 2000 to be filed by August 15, 2000. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.
TABLES TO FOLLOW
GST Telecommunications, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except share and per share amounts)
(unaudited)
Three Months
Three Months Six Months Ended
Ended June 30, Ended June 30, March 31,
2000 1999 2000 1999 2000
Revenue:
Telecommunication
services $53,236 $51,214 $107,690 $99,938 $54,454
Construction,
facility sales
and other 3,586 34,518 12,598 45,287 9,012
Product -- 1,157 205 2,239 205
56,822 86,889 120,493 147,464 63,671
Operating costs
and expenses:
Network
expenses 32,175 32,776 66,446 64,475 34,271
Facilities
administration
and
maintenance 6,453 4,265 12,229 9,400 5,776
Cost of
construction
revenues 2,428 20,027 8,483 25,865 6,055
Cost of product
revenues 2 655 307 1,350 305
Selling, general
and
admini-
strative 31,180 29,996 66,813 57,969 35,633
Depreciation
and
amortization 23,627 16,646 45,494 33,624 21,867
95,865 104,365 199,772 192,683 103,907
Loss from
operations (39,043) (17,476) (79,279) (45,219) (40,236)
Other expenses
(income):
Interest income (615) (2,622) (1,530) (6,483) (915)
Interest expense,
net of amounts
capitalized
(contractual
interest of
$18,293 not
recorded for
the three- and
six-month periods
ended June 30,
2000) 17,304 27,776 50,038 56,036 32,734
Other (1,932) 1,293 (47,534) 1,492 (45,602)
14,757 26,447 974 51,045 (13,783)
Loss before
reorganization
expenses (53,800) (43,923) (80,253) (96,264) (26,453)
Reorganization
expenses 4,598 -- 4,598 -- --
Net loss $(58,398) $(43,923) $(84,851) $(96,264) $(26,453)
Net loss per
share, basic
and diluted
(A) $(1.57) $(1.28) $(2.29) $(2.71) $(0.70)
Weighted
average
common
shares
outstanding 39,957,139 37,341,335 38,990,703 36,903,627 38,024,267
Adjusted
EBITDA (B) (15,085) 2,446 (32,043) (7,022) (16,958)
EBITDA Reconciliation
Three Months
Three Months Six Months Ended
Ended June 30, Ended June 30, March 31,
2000 1999 2000 1999 2000
Loss from
operations $(39,043) $(17,476) $(79,279) $(45,219) $(40,236)
Depreciation
and
amortization 23,627 16,646 45,494 33,624 21,867
Non-cash
compensation
included in
selling,
general and
administrative
expense -- 1,278 224 1,434 224
Non-cash
amortization
included in
cost of
product
revenues -- 375 250 750 250
EBITDA (C) $(15,416) $823 $(33,311) $(9,411) $(17,895)
Year 2000
remediation
costs -- 271 -- 542 --
Litigation costs 331 1,352 1,268 1,847 937
Adjusted EBITDA
(B) $(15,085) $2,446 $(32,043) $(7,022) $(16,958)
(A) Net loss per share is increased for preference shares' accretion
totaling $4,320 and $3,862 for the three- and six-month periods ended
June 30, 2000 and 1999, respectively.
(B) Earnings before interest, taxes, depreciation, amortization, non-cash
charges, litigation costs and year-2000 remediation.
(C) Earnings before interest, taxes, depreciation, amortization and non-
cash charges
GST Telecommunications, Inc.
Consolidated Condensed Balance Sheets
June 30, 2000 (unaudited) and December 31, 1999
(in thousands)
June 30, December 31,(A)
2000 1999
ASSETS
Current assets:
Cash and cash equivalents $29,392 $42,983
Restricted investments 150 19,828
Trade accounts receivable, net 40,708 45,244
Construction contracts receivable 35,127 26,823
Investments 910 44,596
Prepaid and other current assets 9,884 8,562
Total current assets 116,171 188,036
Restricted investments 3,457 9,848
Property, plant and equipment 994,929 944,410
less accumulated depreciation (151,169) (112,363)
843,760 832,047
Other assets 130,289 139,262
less accumulated amortization (56,187) (56,564)
74,102 82,698
$1,037,490 $1,112,629
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities not subject to compromise:
Accounts payable $7,780 $30,579
Accrued expenses 19,058 49,759
Deferred revenue 11,733 10,066
Current portion of capital lease obligations -- 6,693
Current portion of long-term debt -- 17,466
Total current liabilities not
subject to compromise 38,571 114,563
Liabilities subject to compromise 1,319,713 --
Long term liabilities not subject to compromise:
Long-term interest payable -- 43,134
Capital lease obligations, less current portion -- 16,813
Long-term debt, less current portion -- 1,151,778
Other liabilities 5,460 --
Redeemable preference shares 74,008 69,688
Shareholders' deficit:
Common shares 251,112 238,626
Accumulated deficit (651,374) (566,523)
Accumulated other comprehensive income -- 44,550
Total shareholders' deficit (400,262) (283,347)
$1,037,490 $1,112,629
(A) The information in this column was derived from the Company's audited
financial statements as of December 31, 1999.
