Internet America Reports First Fiscal Quarter Results
HOUSTON, Nov. 9 /PRNewswire-FirstCall/ — Internet America, Inc. (BULLETIN BOARD: GEEK) today announced the first fiscal quarter ended September 30, 2006 net income of $7,000, or $0.00 per share; revenue of $2.1 million and EBITDA (earnings before interest, taxes, depreciation and amortization) of $220,000. For the same quarter ended September 30, 2005, results were net income of $109,000, or $0.01 per share, revenues of $2.6 million and EBITDA of $330,000.
Billy Ladin, Chairman and Chief Executive Officer of Internet America, said, “We are pleased to report that we returned to profitability during the first quarter of fiscal 2007. Management feels that its work during fiscal 2006 to consolidate and streamline operations and expenses while continuing to implement our wireless strategy is beginning to show some improved results. Our wireless customer count has increased to approximately 3,400 as of September 30, 2006 and continued to grow to approximately 3,600 as of October 31, 2006. However, these positive results are continually affected by ongoing declines in revenue of our non-wireless Internet service products. The Company believes that the attrition in its dial-up subscriber base can be offset by wireless growth in the rural markets where broadband services, delivered over wireless networks, are needed and are not subject to the same levels of competition.”
Ladin added, “We continued to deploy new infrastructure to enable additional growth within markets we presently serve. This growth will help to replace declining revenues due to dial-up attrition and we believe this will allow us to stabilize and then begin to regain revenue and profits.”
Internet America is a leading Internet service provider serving the Texas market. Based in Houston, 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 investment 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 risks include, without limitation, that (1) we will not be able to increase our rural customer base at a rate that exceeds the loss of metropolitan area customers; (2) we will not improve EBITDA, profitability or product margins; (3) we will not continue to achieve operating efficiencies; (4) we will not be competitive with existing or new competitors; (5) we will not keep up with industry pricing or technological developments impacting the Internet; (6) needed financing will not be available to us if and as needed; (7) we will be adversely affected by dependence on network infrastructure, telecommunications providers and other vendors, by regulatory changes and by general economic and business conditions; (8) service interruptions or impediments could harm our business; (9) we may not be able to protect our proprietary technologies or successfully defend infringement claims and may be required to enter licensing arrangements on unfavorable terms; (10) we may be accused of infringing upon the intellectual property rights of third parties, which is costly to defend and could limit our ability to use certain technologies in the future; (11) government regulations could force us to change our business practices; (12) we may be unable to continually develop effective business systems, processes and personnel to support our business; (13) we may be unable to hire and retain qualified personnel, including our key executive officers; (14) provisions in our certificate of incorporation, bylaws and shareholder rights plan could limit our share price and delay a change of management; (15) our stock price has been volatile historically and may continue to be volatile; and (16) some other unforeseen difficulties may occur. This list is intended to identify certain of the principal factors that could cause actual results to differ materially from those described in the forward-looking statements included elsewhere herein. These factors are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements included in our other publicly filed reports and documents included in the Company’s most recent SEC filings.
Internet America, Inc. Unaudited Financial Summary (in thousands, except per share data and subscriber count) For the Quarter Ended 9/30/06 9/30/05 Subscribers 38,500 51,000 Internet services $2,084 $2,242 Other — 406 Total revenue 2,084 2,648 Connectivity and operations 992 1,535 Sales and marketing 41 75 General and administrative 831 708 EBITDA 220 330 Depreciation and amortization (207) (217) Interest expense (6) (4) Net income $7 $109 Basic income per share $0.00 $0.01 Weighted average shares – basic 12,508,914 12,514,812 Diluted income per share $0.00 $0.01 Weighted average shares – diluted 12,508,914 12,523,761
Reconciliation of net income (a GAAP measure) to EBITDA (a Non-GAAP measure)
(in thousands): For the Quarter Ended 9/30/06 9/30/05 Net income $7 $109 Add: Depreciation and amortization 207 217 Interest income 6 4 EBITDA $220 $330 For the Year Ended 9/30/06 9/30/05 Current assets $1,410 $2,571 Property and equipment, net 1,031 809 Other assets, net 4,745 4,962 Total assets $7,186 $8,342 Current liabilities $2,050 $2,436 Long-term liabilities 264 330 Total stockholders’ equity 4,872 5,576 Total liabilities and stockholders’ equity $7,186 $8,342
Internet America, Inc.
CONTACT: Internet America, Inc., +1-214-861-2550, orinvestor.relations@airmail.net
Web site: http://www.internetamerica.com/