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FiberTower Reports 2010 First Quarter Results
May 06, 2010 (04:05 PM EDT)


SAN FRANCISCO, May 6 /PRNewswire-FirstCall/ -- FiberTower Corporation (Nasdaq: FTWR), a wireless backhaul services provider, today reported results for the first quarter ended March 31, 2010.

Highlights: First Quarter 2010 Compared to First Quarter 2009

  • Service revenues net of early termination liability (ETL) grew 17% to $17.2 million from $14.7 million.  
  • Average monthly revenue per deployed site also increased 17% to $1,842 from $1,572.  
  • Adjusted EBITDA net of ETL improved $3.1 million, or 63%, to a loss of $1.9 million from a loss of $5.0 million.  
  • Cash and cash equivalents balance was $47.5 million at March 31, 2010.
  • Announced new sales agreements with Verizon Wireless, MetroPCS and DSCI, a telecommunications provider serving business communities in New England.

"We had a strong start to 2010 with revenue increasing 17% year-over-year and sales booked in the first quarter at the highest level in recent company history," said Kurt Van Wagenen, FiberTower's president and chief executive officer.  "Equally important, our sales momentum includes a good mix of business providing wireless backhaul solutions on existing sites and new sites that are adjacent to our existing network.  In addition, we are experiencing increasing demand for our Ethernet and fiber-led backhaul solutions.  We continue to believe that we are well positioned to execute on the robust market opportunities that we are seeing."

2010 First Quarter Consolidated Results

Service revenues for the three months ended March 31, 2010 increased by $3.1 million, or 21%, to $17.8 million, compared to $14.7 million for the first quarter of 2009.  During the first quarter, FiberTower recorded $587,000 of non-recurring revenue associated with an early termination liability (ETL) of certain circuits.  Revenue excluding the ETL was $17.2 million, increasing 17% compared to the first quarter of 2009.  The sale of incremental bandwidth to customers at existing sites drove the increase in service revenues during the first quarter of 2010.

Operating expenses were $26.5 million in the first quarter, compared to $28.3 million in the first quarter of 2009, decreasing primarily due to lower general and administrative expense.  

First quarter 2010 Adjusted EBITDA loss improved to $1.3 million, or a loss of $1.9 million excluding ETL, compared to a loss of $5.0 million in the first quarter of 2009.  Adjusted EBITDA is defined as net income (loss) from operations before interest, taxes, depreciation and amortization, impairment and restructuring charges, stock-based compensation, gain on early extinguishment of debt, debt exchange expenses, and other income (expense).  The reconciliation of Adjusted EBITDA, which is a non-GAAP financial measure, to net income (loss) is provided at the end of this news release.

Net loss for the first quarter 2010 was $11.8 million, compared to net income of $26.7 million in the first quarter of 2009.  Interest expense decreased $11.7 million year-over-year from $15.1 million to $3.4 million.  For the first quarter of 2009, net income included the recognition of a gain of $53.7 million on the early extinguishment of debt, and a $1.5 million income tax benefit as a result of a decrease in the deferred tax liability.

Liquidity and Capital Resources

During the first quarter of 2010, cash consumption was $3.1 million, compared to $29.1 million in the first quarter of 2009, which included the impact of debt repurchases and accrued interest payments totaling $23.3 million.  Outstanding debt, including accretion, at March 31, 2010 was $156.3 million comprised of $125.8 million in the 9.0% Senior Secured Notes due 2016 and $30.5 million in the 9.0% Convertible Senior Secured Notes due 2012.

Capital expenditures for the first quarter of 2010 totaled $2.5 million, compared to $2.3 million in the first quarter of 2009.  Consolidated cash and cash equivalents at March 31, 2010 were $47.5 million, compared to $50.7 million at December 31, 2009.  

"FiberTower's consistently improving financial position has enabled us to actively pursue sales opportunities, which we believe will generate accelerating revenue growth as the year progresses," said Thomas Scott, chief financial officer of FiberTower.  "We believe future quarterly growth rates may increase as we turn up more of the recently sold business and expect to grow 2010 revenue 17% to 21% over 2009 revenue of $63.2 million in line with our previous guidance.  Also, we expect to turn Adjusted EBITDA positive at a corporate level no later than the third quarter of 2010."

Conference Call Details

FiberTower has scheduled a conference call for Friday, May 7 at 11:30 a.m. Eastern Time / 8:30 a.m. Pacific Time to discuss the first quarter 2010 financial results.  To participate on the live call, please dial 1-866-225-8754 at least 10 minutes before the start of the conference. International participants may dial 1-480-629-9692.  The conference ID number is 4285977.

Management will review a slide presentation concurrently via webcast summarizing results for the 2010 first quarter.  Investors may access the webcast and presentation from the "Investor Relations" section of the company's website at www.fibertower.com/corp/investors-presentations-and-events.shtml  

A telephone replay will be available until midnight PT on May 10th by dialing 1-800-406-7325 or 1-303-590-3030, and entering pass code #4285977.  A replay will also be available at the web address above for 90 days.

About FiberTower

FiberTower is a backhaul and access services provider focused primarily on the wireless carrier market. With its extensive spectrum footprint in 24 GHz and 39 GHz bands, carrier-class fiber and microwave networks in 13 major markets and master service agreements with nine U.S. wireless carriers, FiberTower is considered to be the leading alternative carrier for wireless backhaul. FiberTower also provides backhaul and access service to government and enterprise markets.  For more information, please visit our website at www.fibertower.com.

Forward-Looking Statements

This news release includes "forward-looking" statements, as that term is defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission, or SEC, in its rules, regulations and releases.  Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.  These include statements regarding, among other things, our future financial performance and results of operations including guidance for expected ranges of 2010 revenue, Adjusted EBITDA and capital expenditures, our financial and business prospects, the deployment of our services, capital requirements, financing prospects, planned capital expenditures, expected cost per site, anticipated customer growth, expansion plans, and anticipated cash balances.  There are many risks, uncertainties and other factors that can prevent the achievement of goals or cause results to differ materially from those expressed or implied by these forward-looking statements including, among other things, negative cash flows and operating losses, additional liquidity requirements, potential loss of significant customers, downturns in the wireless communication industry, regulatory costs and restrictions, potential loss of FCC licenses, equipment supply disruptions and cost increases, competition from alternative backhaul service providers and technologies, along with those risk factors described in the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, as filed with the SEC.

FIBERTOWER CORPORATION

Condensed Consolidated Statements of Operations

(unaudited)

(In thousands, except per share data)


Three Months Ended


March 31,


2010


2009

Service revenues

$                 17,823


$                 14,719

Operating expenses:




Cost of service revenues (excluding




   depreciation and amortization)

13,997


14,141

Sales and marketing

1,019


993

General and administrative

5,097


6,143

Depreciation and amortization

6,371


7,023

Total operating expenses

26,484


28,300

Loss from operations

(8,661)


(13,581)

Other income (expense):




Interest income

25


154

Interest expense

(3,362)


(15,115)

Gain on early extinguishment of debt, net

-


53,671

Miscellaneous income, net

190


115

Total other income (expense), net

(3,147)


38,825

Income (loss) before income taxes

(11,808)


25,244

Income tax benefit

-


1,468

Net income (loss)

$               (11,808)


$                 26,712





Basic and diluted net income (loss) per share attibutable to




    common stockholders

$                   (0.26)


$                     1.76





Shares used in computing basic and diluted




    net income (loss) per share

45,645


14,675











FIBERTOWER CORPORATION

Condensed Consolidated Balance Sheets

(In thousands, except par value)






March 31, 2010


December 31, 2009


(Unaudited)



Assets:




Current assets:




Cash and cash equivalents

$                  47,533


$                  50,669

Restricted cash and investments, current portion

3,974


3,898

Accounts receivable, net of allowances of $65 and $50




   at March 31, 2010 and December 31, 2009, respectively

6,036


6,824

Prepaid expenses and other current assets

2,192


2,119

Total current assets

59,735


63,510

Restricted cash and investments, net of current portion

7,671


7,702

Property and equipment, net

217,612


221,417

FCC licenses

287,495


287,495

Intangible and other long-term assets, net

4,257


4,302

Total assets

$                576,770


$                584,426





Liabilities and Stockholders’ Equity:




Current liabilities:




Accounts payable

$                    2,786


$                    3,209

Accrued compensation and related benefits

2,124


1,769

Accrued interest payable

2,059


465

Other accrued liabilities

792


1,138

Current portion of accrued restructuring costs

1,232


1,215

Current portion of obligation under capital lease

253


253

Total current liabilities

9,246


8,049

Other liabilities

1,042


809

Deferred rent

7,362


7,206

Asset retirement obligations

4,688


4,550

Accrued restructuring costs, net of current portion

1,309


1,560

Obligation under capital lease, net of current portion

3,515


3,471

Long-term debt

156,253


154,528

Deferred tax liability

71,904


71,904

Total liabilities

255,319


252,077

Commitments and contingencies




Stockholders’ equity:




Common stock, $0.001 par value; 400,000 shares authorized,




45,803 and 45,701 shares issued and outstanding at




March 31, 2010 and December 31, 2009, respectively

46


46

Additional paid-in capital

959,727


958,817

Accumulated deficit

(638,322)


(626,514)

Total stockholders’ equity

321,451


332,349

Total liabilities and stockholders’ equity

$                576,770


$                584,426











FIBERTOWER CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited)

(In thousands)


Three Months Ended March 31,


2010


2009

Operating activities




Net income (loss)

$      (11,808)


$     26,712

Adjustments to reconcile net income (loss) to net cash




      used in operating activities:




Depreciation and amortization

6,371


7,023

Impairment of long-lived assets and other charges

45


103

Increase in deferred rent

156


344

Accretion of asset retirement obligations

138


121

Accretion of accrued restructuring charges

72


104

Accretion of obligation under capital lease

45


-

Gain on early extinguishment of debt, net

-


(53,671)

Increase in carrying value of Notes due 2016

1,420


-

Accretion of Notes due 2012

305


5,035

Amortization of debt issuance costs

31


328

Stock-based compensation

903


1,401

Income tax benefit

-


(1,468)

Net changes in operating assets and liabilities:




Accounts receivable, net

788


790

Prepaid expenses and other current assets

(73)


501

Other long-term assets

(61)


21

Accounts payable

(423)


(1,450)

Accrued compensation and related benefits

355


163

Accrued interest payable

1,594


9,133

Other accrued liabilities

(420)


(396)

Net cash used in operating activities

(562)


(5,206)

Investing activities




Increase in restricted cash and investments

(45)


(147)

Purchase of property and equipment

(2,536)


(2,336)

Net cash used in investing activities

(2,581)


(2,483)

Financing activities




Cash paid for repurchases of Notes due 2012

-


(21,419)

Proceeds from exercise of stock options

7


-

Cash provided (used) in financing activities

7


(21,419)

Net decrease in cash and cash equivalents

(3,136)


(29,108)

Cash and cash equivalents at beginning of period

50,669


154,357





Cash and cash equivalents at end of period

$       47,533


$   125,249









Supplemental Disclosures




       Cash paid for interest on Notes due 2012 repurchased

$               -


$       1,859















Reconciliation of Non-GAAP Financial Measures:  

This news release includes the use of Adjusted EBITDA, which is a non-GAAP financial measure management uses to monitor the financial performance of the company's operations.  This measurement, together with GAAP measures such as revenue and loss from operations, assists management in its decision-making processes relating to the operation of the company's business.  Adjusted EBITDA is defined as net income (loss) from operations before interest, taxes, depreciation and amortization, impairment and restructuring charges, stock-based compensation, gain on early extinguishment of debt,   debt exchange expenses and other income (expense).  Adjusted EBITDA is not a substitute for operating income, net income (loss), or cash flow used in operating activities as determined in accordance with GAAP, as a measure of performance or liquidity.  In addition, the company's presentation of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.  This non-GAAP financial measure should be viewed in addition to, and not as an alternative for, the company's reported financial results as determined in accordance with GAAP.  During the first quarter of 2010, FiberTower recorded $587,000 in revenue associated with an early termination liability (ETL) of certain circuits. As this is not recurring revenue the company has adjusted revenue and Adjusted EBITDA to exclude the ETL. The following table shows the calculation of the company's total Adjusted EBITDA reconciled to net income (loss) and the reconciliation of revenue and Adjusted EBITDA excluding the ETL.

FIBERTOWER CORPORATION

Reconciliation of GAAP to Adjusted EBITDA

(In thousands)










Three months ended



3/31/10


12/31/09


3/31/09

Net income (loss)


$               (11,808)


$               (27,798)


$                26,712

Adjustments:







    Depreciation and amortization


6,371


6,800


7,023

    Stock-based compensation


903


4,462


1,401

    Exchange offer and redemption of debt expenses


-


4,222


-

    Interest income


(25)


(36)


(154)

    Interest expense


3,362


10,150


15,115

    Gain on early extinguishment of debt, net


-


-


(53,671)

    Impairment of long-lived assets and other charges







         and credits


(73)


150


92

    Income tax benefit


-


(160)


(1,468)

Adjusted EBITDA


$                 (1,270)


$                 (2,210)


$                 (4,950)








   Early termination liability ("ETL")


(587)


-


-

Adjusted EBITDA, net of ETL


$                 (1,857)


$                 (2,210)


$                 (4,950)










FIBERTOWER CORPORATION

Reconciliation of Revenue Adjusted for ETL

(In thousands)










Three months ended





3/31/10


3/31/09



Service Revenues


$                17,823


$                14,719



   Early termination liability ("ETL")


(587)


-



Revenue, net of ETL


$                17,236


$                14,719












SOURCE FiberTower Corporation