Internet
America Announces Third Fiscal Quarter Financial Results
and Provides Operational Update [May 12, 2005]
DALLAS,
May 12, 2005 /PRNewswire-FirstCall via COMTEX/ -- Internet
America, Inc. (GEEK) today announced results for its
third fiscal quarter ending March 31, 2005. Results
for the third quarter were a loss of $258,000 versus
a loss of $104,000 for the quarter ending March 31,
2004. EBITDA (earnings before interest, taxes, depreciation
and amortization) was ($68,000) for the third quarter
versus ($108,000) for the third quarter of 2004.
The Company reported 3rd quarter 2005
revenue of $2,787,000 versus revenue of $2,771,000 in
the 2nd quarter ended December 31, 2004 and revenue
of $2,832,000 for the 3rd quarter of 2004. The Company
recorded a net loss of $257,681 or ($0.02) per share
for the third quarter compared to net loss of $104,200
or ($0.01) per share for the 3rd quarter of 2004. Internet
America's subscriber count was 55,158 on March 31, 2005,
compared to 57,915 on December 31, 2004.
"Our quarterly results were negatively
impacted this quarter by severance costs, increased
advertising expenditures normally incurred during this
time of year as well as an additional reserve recorded
for an on-going sales tax audit," said Billy Ladin,
CEO of Internet America. "We are pleased with the
speed and success of our continuing integration of our
recent acquisitions and the continued development of
our new markets. While proceeding with our rural expansion,
we have been able to significantly reduce our operating
expenses."
Reduction in Workforce
During March 2005 and April 2005 the
Company laid off 41 employees, which, combined with
normal attrition, reduced the total employee head count
from 108 to 63. This reduction in head count is expected
to result in a total annual savings of approximately
$1,797,000. The reduction in workforce was facilitated
by substantial simplification in our systems and departmental
structures as well as empowerment of our existing staff.
The Company does not expect to make additional reductions
in its workforce in the near future.
Reduction in Expenses
In addition to the direct cost reduction
in payroll, payroll taxes and benefits realized to date
following our recent reductions in workforce, we feel
that we can expect additional savings in occupancy costs
such as office space, telephone expenses, etc. as a
result of our operating with fewer people in our central
Dallas office. For instance, in May 2005 and June 2005
we expect additional monthly telecom savings of approximately
$29,000 and $23,000, respectively. Overall we expect
the reduction in head count and related reduction in
occupancy costs to translate into an annual savings
of approximately $2.4 million. While we incurred additional
severance costs in April, we feel that these expenses
are behind us and we look forward to returning to a
profitable quarter ending June 30, 2005.
Sales Tax Liability
The Texas State Comptroller's office
has been conducting a routine sales tax audit for the
calendar years 2001 through 2003. Based upon a preliminary
review by the Company and its outside consultants, management
believes that an additional sales tax assessment for
that period is probable. Management estimates the liability
to be in the range of approximately $100,000 to $250,000
including penalties and interest. Management believes
that all current sales taxes are being calculated and
paid correctly. Regardless, the Company expects to resolve
this issue during the next few months.
Mr. Ladin continued, "At this time,
management feels that it has integrated our new acquisitions,
consolidated our existing operations, reduced our workforce,
simplified our systems, and refocused the Company on
non- metropolitan wireless growth and on additional
acquisition opportunities. We are comfortable with our
present position and enthusiastic about our renewed
direction and focus."
3rd Quarter Conference Call Scheduled
Internet America has scheduled a conference call that
will be held on May 13, 2005 at 9:00 a.m. central (10:00
a.m. eastern) to discuss the Company's financial results
for the third quarter ended March 31, 2005.
What: Internet America Third Quarter
Earnings Release
When: Friday, May 13, 2005, at 9:00
a.m. central time
(10:00 a.m. eastern time)
How: Dial (800) 240-2430 to access the
call
Who: William E. Ladin, Jr., Chief Executive
Officer
Sandra T. Everett, Controller
A playback of the call will be available through May
20, 2005 by calling (800) 405-2236.
Internet America is a leading Internet
service provider primarily serving the Texas market.
Based in Dallas, Internet America offers businesses
and individuals a wide array of Internet services including
broadband Internet delivered wirelessly and over DSL,
dedicated high-speed access, web hosting, and dial-up
Internet access. Internet America provides customers
a wide range of related value-added services, including
Fax2email, online backup and storage solutions, parental
control software, and global roaming solutions. Internet
America focuses on the speed and quality of its Internet
services and its commitment to providing excellent customer
care. Additional information on Internet America is
available on the Company's web site at http://www.internetamerica.com
.
In this press release, the Company refers
to a non-GAAP financial measure called EBITDA because
of management's belief that this measure is a financial
indicator of the Company's ability to internally generate
operating funds. Management also believes that this
non-GAAP financial measure is useful information to
investors because it is widely used by professional
research analysts in the valuation and investments recommendations
of companies in the Company's peer group. EBITDA should
not be considered an alternative to net income, as defined
by GAAP.
This press release may contain forward-looking
statements relating to future business expectations.
These statements, specifically including management's
beliefs, expectations and goals, are subject to many
uncertainties that exist in Internet America's operations
and business environment. Business plans may change
and actual results may differ materially as a result
of a number of risk factors. These risk factors include,
without limitation, that the Company (1) will not be
able to maximize the integration efficiencies of these
recently completed acquisitions, (2) will not introduce
new applications and products or the applications and
products introduced by the Company will not be accepted
by current and/or new customers, (3) will not be able
to consummate additional acquisitions, (4) will not
continue to achieve operating efficiencies, and (5)
will be adversely affected by dependence on network
infrastructure, telecommunications carriers and other
suppliers, by regulatory changes and by general competitive,
economic and business conditions. These risk factors
are not intended to represent a complete list of all
risks and uncertainties in the Company's business and
should be read in conjunction with the more detailed
cautionary statements included in the Company's most
recent SEC filings.
Internet America, Inc.
(GEEK)
Unaudited Financial Summary
(in thousands, except per share data and subscriber
count)
Three Months Ended
03/31/05 03/31/04
Subscribers 55,000 65,000
Internet services revenue $2,570 $2,827
Other revenue 217 5
Total revenue 2,787 2,832
Connectivity and operations 1,923 1,342
Sales & marketing 181 314
General & administrative 751 1,284
EBITDA (A) (68) (108)
Depreciation and Amortization (184)
(67)
Interest (expense) income, net (6) 71
Net loss $(258) $(104)
Basic and diluted loss per share $(0.02)
$(0.01)
Weighted average shares - basic
and diluted 10,578,144 10,418,944
Reconciliation of net income (a GAAP measure) to EBITDA
(a Non-GAAP
measure)
(in thousands)
Three Months Ended
03/31/05 03/31/04
Net loss $(258) $(104)
Add:
Depreciation and Amortization 184 67
Interest expense (income), net 6 (71)
EBITDA (A) $(68) $(108)
Three Months Ended
03/31/05 03/31/04
Current assets $1,528 $2,460
Property and equipment, net 691 176
Other assets 5,031 4,361
Total assets $7,250 $6,997
Current liabilities $2,896 $3,518
Long-term debt 115 ---
Long-term capital lease obligations 204 ---
Total liabilities 3,215 3,518
Total stockholders' equity 4,035 3,479
Total liabilities and stockholders'
equity $7,250 $6,997
(A) EBITDA: Earnings before Interest, Taxes and Depreciation
and
Amortization. EBITDA is not a measurement of financial
performance
under generally accepted accounting principles (GAAP)
and should not
be considered an alternative to net income as a measure
of
performance. Management has consistently used EBITDA
on a
historical basis as a measurement of the Company's current
operating
cash income.
SOURCE Internet America, Inc.
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