Mpower Holding Reports Fourth Quarter 2002 Results
ROCHESTER, NY—February 13, 2003—Mpower Holding Corporation (AMEX:MPE), the parent company of Mpower Communications Corp., a provider of broadband high-speed Internet access and telephone services to business customers, today announced results of its operations for the fourth quarter ended December 31, 2002.
- Mpower reported fourth quarter 2002 revenue of $60.6 million, a 6% increase over the third quarter of 2002. Core customer revenue, or revenue from the sale of data and telephone services, grew to $50.8 million in the quarter, representing 84% of the company's revenue, with switched access accounting for the remaining 16% of quarterly revenue.
- Gross margin increased 10% to $25.0 million, or 41% of revenue, in the fourth quarter versus $22.7 million, or 40% of revenue in the third quarter of 2002.
- Mpower's EBITDA loss in the fourth quarter was $10.7 million, a 40% improvement over the $17.7 million EBITDA loss reported in the third quarter. EBITDA represents earnings before interest, taxes, stock-based compensation, depreciation and amortization and excludes network optimization costs, impairment of long-term assets and reorganization costs.
- Mpower ended the fourth quarter with $11.0 million in unrestricted cash, cash equivalents and investments.
Mpower continues to implement efforts to improve its cash reserves. The company has implemented stringent cash management policies and continues to actively explore additional funding alternatives. In addition, on January 8, 2003, Mpower announced its plans to sell customers and assets in Florida, Georgia, Ohio, Michigan and Texas to other service providers. Each of these transactions is expected to close by the beginning of the second quarter 2003.
In connection with the company's decision to sell these operating markets, accounting principles generally accepted in the United States ("GAAP") require Mpower to present the asset groups associated with these markets as discontinued operations in its historical financial statements for 2000, 2001 and 2002. The results reported today do not reflect discontinued operations as required by GAAP.
Arthur Andersen, Mpower's former auditor for the years ended December 31, 2000 and 2001, is no longer able to perform audits of publicly traded companies. In order to comply with GAAP requirements related to the financial presentation for discontinued operations, Mpower's new auditor, Deloitte & Touche, is required to re-audit Mpower's financial statements for the years ended December 31, 2000 and 2001 to provide Mpower with an audit opinion on such financial statements. Deloitte & Touche has informed Mpower that the re-audit for the years ended December 31, 2000 and 2001 is required only because of the unavailability of Arthur Andersen. These re-audits have commenced and are expected to be completed in time for Mpower to file its Form 10-K on a timely basis. Mpower expects to release fully audited fourth quarter and full year 2002 results at that time and plans to hold a conference call to discuss these results in further detail.
About Mpower Holding Corporation
Mpower Holding Corporation (AMEX:MPE) is the parent company of Mpower Communications, a facilities-based broadband communications provider offering a full range of data, telephony, Internet access and Web hosting services for small and medium-size business customers. Further information about the company can be found at www.mpowercom.com.
Forward-Looking Statements
Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Mpower Holding Corporation cautions investors that certain statements contained in this press release that state management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. Management wishes to caution the reader these forward-looking statements are not historical facts and are only estimates or predictions. Actual results may differ materially from those projected as a result of risks and uncertainties including, but not limited to, the results of the re-audit of our financial statement for the years ended December 31, 2000 and 2001 described herein, the expected financial and operational improvements from the transactions described herein, market makers independent decisions to create a market in the common stock of the company, future sales growth, market acceptance of our product offerings, our ability to secure adequate financing or equity capital to fund our operations, network expansion, our ability to manage rapid growth and maintain a high level of customer service, the performance of our network and equipment, our ability to enter into strategic alliances or transactions, the cooperation of incumbent local exchange carriers in provisioning lines and interconnecting our equipment, regulatory approval processes, changes in technology, price competition and other market conditions and risks detailed from time to time in our Securities and Exchange Commission filings. The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of future events, new information, or otherwise.
