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FiberTower Reports 2008 Fourth Quarter and Full Year Results

Posted on: Thursday, 12 March 2009, 15:57 CDT

Achieves 23% Reduction in Adjusted EBITDA Loss for 2008 Fourth Quarter

SAN FRANCISCO, March 12 /PRNewswire-FirstCall/ -- FiberTower Corporation (Nasdaq: FTWR), a wireless backhaul services provider, today reported results for the fourth quarter and year ended December 31, 2008.

Highlights for the fourth quarter of 2008 included the following:

• Average monthly revenue per site grew 3% to $1,732 from $1,679 in the third quarter of 2008.
• Billing customer locations grew 5% to 6,096 from 5,832 at the end of the third quarter of 2008. Billing customer locations grew 58% year-over-year.
• Field EBITDA remained positive and continued to improve month over month.
• Adjusted EBITDA improved to a loss of $4.9 million from a loss of $6.4 million in the third quarter of 2008.
• Cash and Cash Equivalents balance of $ 154.4 million at December 31, 2008.
• Customer locations backlog of 1,463 at December 31, 2008.

"The fourth quarter completed a year in which we solidified our operating platform in order to take advantage of the long-term opportunities in our industry," stated Kurt Van Wagenen, President and Chief Executive Officer of FiberTower. "We continued to make financial and operational improvements during the quarter and have significantly broadened our product portfolio which now includes high capacity services for carrier, wholesale, and government customers in addition to our traditional T1 and Ethernet backhaul solutions. In 2009, we will focus on leveraging our enhanced operating platform as we seek opportunities to drive continued revenue growth."

2008 Fourth Quarter Consolidated Results

Service revenues for the three months ended December 31, 2008 increased $0.9 million, or 7%, to $14.3 million compared to $13.4 million for the third quarter of 2008. New billing customer locations and greater penetration in existing markets drove the increase in service revenues during the fourth quarter of 2008.

FiberTower's billing sites per sites deployed increased to 89% at December 31, 2008 compared to 88% at September 30, 2008. The Company's billing customer location rate per site increased to 2.21 at December 31, 2008, compared to 2.14 at September 30, 2008, while T-1 equivalents on FiberTower's Top 500 sites increased 2% to 18.2 at December 31, 2008 from 17.8 at September 30, 2008.

Operating expenses in the fourth quarter increased by $55.7 million from the third quarter of 2008 reflecting an impairment charge to FCC Licenses of $54.5 million. The Company's cost control efforts during the fourth quarter kept sales, general and administrative expenses, and marketing costs were flat compared to the third quarter of 2008. Net loss was $62.7 million for the fourth quarter compared to a net loss of $25.7 million in the third quarter of 2008, reflecting the impairment charge to FCC licenses, and a corresponding recognition of an income tax benefit of $20.2 million. Net loss for the fourth and third quarters of 2008 also included impairment charges to property and equipment and restructuring charges totaling $2.2 million and $1.3 million respectively. The net loss per share for the fourth quarter ended December 31, 2008 was $0.43 compared to a net loss per share of $0.18 for the third quarter of 2008.

Field EBITDA on a consolidated basis was positive for all three months of the fourth quarter of 2008 and continued to grow month over month. Field EBITDA is a metric the Company utilizes to measure the operating cash flow performance of its thirteen existing markets. Field EBITDA takes into account recurring service revenue and includes all market-specific expenses including Field SG&A and site operating costs - such as fiber expenses, facilities rent and site maintenance. It does not include any corporate overhead allocations.

On an adjusted EBITDA basis, the loss in the fourth quarter of 2008 improved by 23% to $4.9 million compared to a loss of $6.4 million in the third quarter of 2008. Adjusted EBITDA is defined as net income (loss) from operations before interest, taxes, depreciation and amortization, impairment and restructuring charges, stock-based compensation and other income (expense). The reconciliation of adjusted EBITDA, which is a non-GAAP financial measure, is located at the end of this news release.

Twelve Months 2008 Consolidated Results

Service revenues for the twelve months ended December 31, 2008 increased $22.1 million, or 81%, to $49.2 million compared to $27.1 million for the corresponding period in 2007. The increase in service revenues during 2008 was driven predominantly by new billing customer locations and greater penetration in existing markets.

Operating expenses for the twelve months ended December 31, 2008 increased by $3.7 million over 2007. Operating expenses in 2008 included the impairment charge to FCC licenses of $54.5 million taken in the fourth quarter of 2008 as well as a goodwill impairment charge of $86.1 million, a restructuring charge of $6.1 million, and impairment charges to property and equipment of $16.4 million. Sales, general and administrative expenses, and marketing costs decreased by $9.2 million in the twelve months ended December 31, 2008 compared to the prior year, driven largely by a workforce reduction implemented earlier in 2008. On an annualized basis, the Company expects to achieve savings of approximately $12 million from this reduction. Operating expenses in 2007 included a goodwill impairment charge of $147.9 million and impairment charges to property and equipment of $17.6 million.

Net loss for the twelve months of 2008 was $249.8 million compared to a net loss of $272.1 million for the corresponding period in 2007. The net loss in 2008 reflects the recognition of an income tax benefit of $20.2 million associated with the impairment charge to FCC licenses. The net loss per share for the twelve months ended December 31, 2008 was $1.73 compared to a net loss per share of $1.90 for the corresponding period in 2007.

On an adjusted EBITDA basis, the loss for the twelve months ended December 31, 2008 improved by 37% to $33.6 million compared to a loss of $53.2 million for the corresponding period in 2007.

Liquidity and Capital Resources

Capital expenditures totaled $36.8 million for the year ended December 31, 2008 compared to $105.3 million for the prior year. The bulk of the capital investments made by FiberTower in the twelve months ended December 31, 2008 were used towards the continued build-out of existing markets and adding new customers to existing sites.

Consolidated cash and cash equivalents at December 31, 2008 were $154.4 million, compared to $163.6 million at September 30, 2008. In the first quarter of 2009, the Company repurchased approximately $52.3 million of par value debt at an average price of approximately $28 per $100 dollar of par value.

"Our fourth quarter results reflect the financial discipline we have exercised throughout 2008," said Thomas Scott, Chief Financial Officer of FiberTower. "We continued to grow field EBITDA and deliver meaningful improvement in adjusted EBITDA. We will maintain our diligence in 2009 while supporting the pursuit of attractive investment opportunities. "

Conference Call Details

FiberTower has scheduled a conference call for Friday, March 13, 2009 at 11:30 a.m. Eastern Time to discuss 2008 fourth quarter results. Please dial 303-262-2053 and ask for the FiberTower call at least 10 minutes prior to the start time. A telephonic replay of the call will be available through 11:59 p.m. Eastern Time on March 20th and may be accessed by dialing 303-590-3000 using the passcode 11126390#. An audio archive will also be available on FiberTower's website at http://www.fibertower.com shortly after the call and will be accessible for approximately ninety 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 microwave and fiber networks in 13 major markets, customer commitments from six of the leading cellular carriers, and partnerships with the largest tower operators in the U.S., 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.

Use of Non-GAAP Financial Measures

This news release uses the non-GAAP financial measure "adjusted EBITDA." Adjusted EBITDA is a financial measure used by the Company to monitor the financial performance of its 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 our business. In addition, FiberTower'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.

Forward-Looking Statements

This report 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 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, expected cost savings associated with our reduction in workforce in 2008 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, anticipated 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.

Investor Contact: Gus Okwu / DRG&E 404-532-0086 gokwu@drg-e.com Company Contact: Ornella Napolitano, VP and Treasurer FiberTower Corporation 415-659-3580 onapolitano@fibertower.com

Key Operating Metrics 4Q07 1Q08 2Q08 3Q08 4Q08 Billing Sites: -------------- Billing Sites Added 157 199 237 146 33 Ending Billing Sites 2,148 2,347 2,584 2,730 2,763 Billing Sites / Sites Deployed 76% 81% 86% 88% 89% Average Monthly Revenue/ Site $1,337 $1,440 $1,605 $1,679 $1,732 Billing Customer Locations: ----------- Billing Customer Locations Added 599 649 779 553 264 Ending Billing Customer Locations 3,851 4,500 5,279 5,832 6,096 Colo rate 1.79 1.92 2.04 2.14 2.21 Billing T-1 Equivalents: ------------- Billing T-1 Equiv. Added 2,171 2,952 2,974 2,395 989 Ending Billing T-1 Equivalents 14,201 17,153 20,127 22,522 23,511 T-1s per Customer Location 3.69 3.81 3.81 3.86 3.86 T-1s/Billing Sites 6.61 7.31 7.79 8.25 8.51 T-1s per Site/Top 500 Sites NA 15.6 16.8 17.8 18.2 Sites Deployed: --------------- FiberTower Sites Constructed 158 98 98 87 24 Ending Sites Deployed 2,813 2,911 3,009 3,096 3,120 Backlog: -------- Customer Location Backlog* 3,511 2,300 1,463 Billing Sites are installed sites from which we provide revenue producing service(s) to customer(s). Average Monthly Revenue/Site is the average monthly revenue per billing site. Billing Customer Locations are carrier locations at which we currently provide revenue producing service(s). FiberTower sites could have multiple customer locations. Collocation Rate is the number of customer locations per billing site. Billing T1 Equivalent is either a T1 or another increment of bandwidth of approximately 1.54 megabits per second. Sites Deployed represents installed sites that are ready for the provision of services. FiberTower sites can be located on cell towers, rooftops, or other points of bandwidth aggregation. Customer Location Backlog is the number of sold customer locations not yet billing. (*Note that FiberTower reports backlog on a semi-annual basis.)

FIBERTOWER CORPORATION Consolidated Statements of Operations (In thousands, except per share data) Three Months Ended Year Ended December 31, December 31, ------------------ ---------------- 2008 2007 2008 2007 ---- ---- ---- ---- (unaudited) (unaudited) (unaudited) Service revenues $14,270 $8,269 $49,227 $27,144 Operating expenses: Cost of service revenues (excluding depreciation and amortization) 15,149 15,983 63,369 54,514 Cost of service revenues - Impairment of long-lived assets and other charges 2,121 11,929 16,439 17,561 Sales and marketing 855 1,752 5,456 7,906 General and administrative 4,744 8,565 20,237 27,026 Depreciation and amortization 6,989 5,332 24,897 18,459 Restructuring charges 125 - 6,087 - Impairment of FCC licenses 54,505 - 54,505 - Impairment of goodwill - 86,486 86,093 147,893 - ------ ------ ------- Total operating expenses 84,488 130,047 277,083 273,359 ------ ------- ------- ------- Loss from operations (70,218) (121,778) (227,856) (246,215) ------- -------- -------- -------- Other income (expense): Interest income 559 3,403 5,316 18,159 Interest expense (13,436) (10,883) (47,742) (44,560) Miscellaneous income, net 216 189 264 469 --- --- --- --- Total other (expense), net (12,661) (7,291) (42,162) (25,932) ------- ------ ------- ------- Loss before income taxes (82,879) (129,069) (270,018) (272,147) Income tax benefit 20,189 - 20,189 - ------ ------ ------ ------ Net loss $(62,690) $(129,069) $(249,829) $(272,147) ======== ========= ========= ========= Basic and diluted net loss per share $(0.43) $(0.90) $(1.73) $(1.90) ====== ====== ====== ====== Weighted average number of shares used in per share amounts: Basic and diluted 145,313 143,781 144,622 143,049 ======= ======= ======= ======= FIBERTOWER CORPORATION Consolidated Balance Sheets (In thousands, except par value) ------------------------------------ December 31, 2008 December 31, 2007 ----------------- ----------------- (unaudited) Assets: Current assets: Cash and cash equivalents $154,357 $223,330 Certificates of deposit - 5,000 Restricted cash and investments, current portion 343 35,757 Accounts receivable, net of allowances of $37 and $151 at December 31, 2008 and 2007, respectively 6,652 3,684 Prepaid expenses and other current assets 2,502 1,840 ----- ----- Total current assets 163,854 269,611 Restricted cash and investments 134 1,222 Property and equipment, net 236,585 240,799 FCC licenses 287,495 342,000 Goodwill - 86,093 Debt issuance costs, net 9,599 11,855 Intangible and other long-term assets, net 3,802 3,975 ----- ----- Total assets $701,469 $955,555 ======== ======== Liabilities and Stockholders' Equity: Current liabilities: Accounts payable $3,826 $13,672 Accrued compensation and related benefits 2,052 3,369 Accrued interest payable 4,628 4,629 Other accrued liabilities 1,984 3,555 Current portion of accrued restructuring costs 1,342 - ----- - Total current liabilities 13,832 25,225 Other liabilities 1,419 487 Deferred rent 6,175 4,223 Asset retirement obligations 4,048 3,311 Long-term accrued restructuring costs, net of current portion 2,436 - Convertible senior secured notes 430,317 415,778 Deferred tax liability 73,372 93,561 ------ ------ Total liabilities 531,599 542,585 Commitments and contingencies Stockholders' equity: Common stock, $0.001 par value; 400,000 shares authorized, 150,520 and 146,242 shares issued and outstanding at December 31, 2008 and 2007, respectively 151 146 Additional paid-in capital 794,095 787,371 Accumulated deficit (624,376) (374,547) -------- -------- Total stockholders' equity 169,870 412,970 ------- ------- Total liabilities and stockholders' equity $701,469 $955,555 ======== ======== FIBERTOWER CORPORATION Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, ---------------------- 2008 2007 ----------- ---------- (unaudited) Operating activities Net loss $(249,829) $(272,147) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 24,897 18,459 Decline in value of embedded derivative - (634) Accretion of convertible notes 14,539 12,653 Accretion of investments in debt securities (917) (1,791) Accretion of asset retirement obligations 440 327 Amortization of debt issuance costs 2,256 2,154 Stock-based compensation 6,274 9,150 Loss on disposal of equipment 68 746 Impairment of long-lived assets and other charges 16,439 17,561 Restructuring charges 4,046 - Impairment of FCC licenses 54,505 - Impairment of goodwill 86,093 147,893 Income tax benefit (20,189) - Net changes in operating assets and liabilities (excluding impact of business acquisition): Accounts receivable, net (2,968) (780) Prepaid expenses and other current assets (662) 784 Other long-term assets (127) (284) Accounts payable (9,846) (4,367) Accrued compensation and related benefits (1,317) (877) Accrued interest payable (1) (704) Other accrued liabilities and deferred rent 1,342 2,933 ----- ----- Net cash used in operating activities (74,957) (68,924) Investing activities Cash and cash equivalents acquired in merger, net of merger- related costs - - Purchases of short-term investments - (75,603) Maturities of short-term investments - 91,191 Purchases of certificates of deposit - - Maturities of certificates of deposit 5,000 - Maturities of restricted cash and investments 37,419 35,000 Purchase of restricted securities - - Purchase of property and equipment (36,795) (105,277) ------- -------- Net cash used in investing activities 5,624 (54,689) Financing activities Proceeds from issuance of convertible notes, net - - Proceeds from exercise of stock options 360 1,769 Repayment of notes receivable from stockholders - - - - Cash provided by financing activities 360 1,769 --- ----- Net increase (decrease) in cash and cash equivalents (68,973) (121,844) Cash and cash equivalents at beginning of year 223,330 345,174 ------- ------- Cash and cash equivalents at end of year $154,357 $223,330 ======== ======== Supplemental Disclosures Cash paid for interest $36,241 $36,872 ======= ======= Noncash investing and financing activities: Fair value of First Avenue Networks' common stock at date of merger $- $- == == Fair value of First Avenue Networks' common stock options and warrants assumed at date of merger $- $- == == Conversion of convertible preferred stock to common stock $- $- == ==

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. 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 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. The following table shows the calculation of the Company's total adjusted EBITDA reconciled to net loss.

Three months Three months Three months ended ended ended 12/31/08 9/30/08 12/31/07 Net loss $(62,690) $(25,675) $(129,069) Depreciation & amortization 6,989 6,090 5,332 Stock-based compensation 1,548 1,590 2,814 Interest income (559) (1,083) (3,403) Interest expense 13,436 11,397 10,975 Impairment of goodwill - - 86,486 Impairment of long-lived assets and other charges 2,121 885 11,929 Impairment of FCC licenses 54,505 - - Restructuring charges 125 438 - Miscellaneous (income) , net (216) (38) (189) Income tax benefit (20,189) - - Adjusted EBITDA $(4,930) $(6,396) $(15,125) Twelve months Twelve months ended ended 12/31/08 12/31/07 Net loss $(249,829) $(272,147) Depreciation & amortization 24,897 18,459 Stock-based compensation 6,274 9,150 Interest income (5,316) (18,159) Interest expense 47,742 44,560 Impairment of goodwill 86,093 147,893 Impairment of long-lived assets and other charges 16,439 17,561 Impairment of FCC licenses 54,505 - Restructuring charges 6,087 - Miscellaneous (income), net (264) (469) Income tax benefit (20,189) - Adjusted EBITDA $(33,561) $(53,152)

SOURCE FiberTower Corporation

Source: PR Newswire

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