Message #8 From:
NewsBot Date: August 8, 2006 01:01:00 PM
TRIN News Trinsic Announces Second Quarter Financial Results
TAMPA, Fla.--(BUSINESS WIRE)--Aug. 8, 2006--Trinsic, Inc. (OTCBB: TRIN), a provider of enhanced circuit-switched and IP (Internet protocol) telephony services, today announced its financial results for the second quarter of 2006. For the three-month period ended June 30, 2006, the company reported revenue of $43.9 million, a decrease of $6.9 million from the $50.8 million recognized during the second quarter of 2005. Net loss was $2.8 million, or $0.15 per share, for the quarter ended June 30, 2006 compared with a net loss of $3.3 million for the prior year period, or $0.59 per share. The company reported EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of $2.2 million for the latest quarter, compared with $1.1 million for the second quarter of 2005.
For the six-month period ended June 30, 2006, the company reported revenue of $87.7 million, down from the $107.9 million recognized during the second quarter of 2005. Net loss was $6.4 million, or $0.36 per share, for the six-month period ended June 30, 2006 compared with a net loss of $2.8 million, or $0.51 per share, for the same period in 2005. The company reported EBITDA of $2.9 million for the first half of the year, compared with $0.6 million for the first half of 2005.
Trey Davis, Trinsic's Chief Executive Officer, remarked, "During the second quarter, we completed the purchase of the final set of UNE-P local access lines from Sprint for which we previously provided services on a wholesale basis. In total, the acquisition increased our company-owned customer base by approximately 111,700 lines. Since these purchased access lines represented the entirety of Trinsic's wholesale business, we will no longer provide wholesale services.
"In an effort to concentrate our geographic presence, we anticipate completing the sale of substantially all of our residential and small business lines within BellSouth territories in the third quarter. The sale will generate cash for the company's operations and permit us to focus our efforts on markets in the Midwest and Northeast," Davis continued.
Trinsic ended the quarter with $0.7 million in cash. In June 2006, the company sold a building for $0.4 million and used the proceeds to reduce debt. We recorded a $0.1 million loss associated with the sale. Effective July 27, 2006, Trinsic finalized a settlement with an ILEC over disputed balances that will reduce our net accounts payable balance by $12.1 million in the third quarter of 2006. The company paid a total of $3.9 million, $0.5 million of which had been paid as of June 30, 2006. The remainder was paid in July. The settlement will result in a net gain of approximately $8.2 million that will be reflected in the company's third quarter statement of operations.
Investors and other interested parties should note that the information in this press release should be read in conjunction with the financial statements and footnotes contained in Trinsic's quarterly report filed with the Securities and Exchange Commission.
Consistent with Securities and Exchange and Commission's Regulation G, the following table provides a reconciliation of Trinsic's EBITDA for the three and six month periods ended June 30, 2006 and 2005 to the Generally Accepted Accounting Principles (GAAP) measure of net income. EBITDA is not a measure under GAAP, is not meant to be a replacement for GAAP and should not be considered as an alternative to net income as a measure of performance or to cash flows as a measure of liquidity. We have included EBITDA data to assist in understanding our operating results. EBITDA is a measure commonly used in the telecommunications industry, and many securities analysts use EBITDA as a way of evaluating our financial performance.
Trinsic, Inc. and Subsidiaries
Reconciliation EBITDA to Net Income
(In thousands)
Three Months
Ended Six Months Ended
June 30, June 30,
----------------- -----------------
2006 2005 2006 2005
-------- -------- -------- --------
Net income loss $(2,795) $(3,257) $(6,416) $(2,818)
Interest and other income (1,117) (490) (2,042) (7,293)
Interest and other expense 1,919 1,873 4,194 3,626
Depreciation and amortization 4,193 2,955 7,176 7,134
-------- -------- -------- --------
Earnings Before Interest, Taxes,
Depreciation and Amortization
(EBITDA) $2,200 $1,081 $2,912 $649
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This press release contains forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "estimate," "expect," and "projects" signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties, including the risks that we may continue to be EBITDA negative, anticipated increases in revenues may not materialize, average per line margins from the Sprint Nextel acquisition may not materialize, and anticipated reductions in operating expenses may not materialize. Some of these risks and uncertainties are identified in Trinsic's periodic filings with the Securities and Exchange Commission. Should any risks or uncertainties develop into actual events, these developments could have material adverse effects on Trinsic's business, financial condition, and results of operations. Trinsic assumes no obligation to update these forward-looking statements.
About Trinsic
Trinsic offers consumers and businesses advanced traditional and IP telephony services. All Trinsic products include proprietary services, such as Web-accessible, voice-activated calling and messaging features that are designed to meet customers' communications needs intelligently and intuitively. Trinsic is a member of the Cisco Powered Network Program and makes its services available on a wholesale basis to other communications and utility companies, including Sprint. Trinsic changed its name from Z-Tel Technologies, Inc. on January 3, 2005. For more information about Trinsic and its services, please visit www.trinsic.com.
Trinsic, Inc. and Subsidiaries
Consolidated Statements of Operations
(UNAUDITED)
(In thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2006 2005 2006 2005
----------- ---------- ----------- ----------
Revenues $43,878 $50,797 $87,734 $107,928
----------- ---------- ----------- ----------
Operating expenses:
Network operations,
exclusive of
depreciation and
amortization shown
below 28,158 26,999 52,985 56,833
Sales and marketing 1,065 3,692 2,672 8,911
General and
administrative 12,455 19,025 29,165 41,535
Depreciation and
amortization 4,193 2,955 7,176 7,134
----------- ---------- ----------- ----------
Total operating expenses 45,871 52,671 91,998 114,413
Operating loss (1,993) (1,874) (4,264) (6,485)
----------- ---------- ----------- ----------
Nonoperating income
(expense):
Interest and other
income 1,117 490 2,042 7,293
Interest and other
expense (1,919) (1,873) (4,194) (3,626)
----------- ---------- ----------- ----------
Total nonoperating
income (expense) (802) (1,383) (2,152) 3,667
----------- ---------- ----------- ----------
Net loss $(2,795) $(3,257) $(6,416) $(2,818)
=========== ========== =========== ==========
Weighted average shares
outstanding 18,451,371 5,533,564 17,994,581 5,526,088
=========== ========== =========== ==========
Basic and diluted net
loss per share $(0.15) $(0.59) $(0.36) $(0.51)
=========== ========== =========== ==========
Trinsic, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
June 30, December 31,
2006 2005
------------ ------------
Assets
Current assets:
Cash and cash equivalents $700 $79
Accounts receivable, net of allowance for
doubtful accounts of $25,111 and $20,489 16,160 13,713
Prepaid expenses and other current assets 3,719 4,713
------------ ------------
Total current assets 20,579 18,505
Property and equipment, net 16,427 19,931
Intangible assets, net 8,054 -
Other assets 3,159 2,884
------------ ------------
Total assets $48,219 $41,320
============ ============
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued liabilities $45,713 $40,248
Deferred revenue 6,717 6,013
Current portion of long-term debt and
capital lease obligations 9,040 2,418
------------ ------------
Total current liabilities 61,470 48,679
Long-term debt and capital lease obligations 684 1,025
------------ ------------
Total liabilities 62,154 49,704
------------ ------------
Commitments and contingencies
Stockholders' deficit:
Common stock, $0.01 par value; 150,000,000
shares authorized; 18,762,994 and
17,756,944 shares issued; 18,457,510 and
17,518,573 outstanding 185 175
Unearned stock compensation (415) (360)
Additional paid-in capital 417,037 416,127
Accumulated deficit (430,737) (424,321)
Treasury stock, 305,484 and 238,371 shares
at cost (5) (5)
------------ ------------
Total stockholders' deficit (13,935) (8,384)
------------ ------------
Total liabilities and stockholders'
deficit $48,219 $41,320
============ ============
Trinsic, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(UNAUDITED)
(In thousands)
Six Months Ended
June 30,
-----------------
2006 2005
-------- --------
Cash flows from operating activities:
Net loss $(6,416) $(2,818)
-------- --------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 7,176 7,134
Provision for bad debts 5,370 6,384
Gain on sale of building 97 -
Expense charged for granting of restricted stock 865 93
Change in operating assets and liabilities:
Increase in accounts receivable (7,817) (2,513)
Increase in prepaid expenses (355) (2,020)
Increase in other assets (275) (628)
Increase (decrease) in accounts payable and
accrued liabilities 5,465 (5,352)
Increase in deferred revenue 704 244
-------- --------
Total adjustments 11,230 3,342
-------- --------
Net cash provided by operating activities 4,814 524
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (1,053) (1,633)
Purchase of customer lists (3,592) -
-------- --------
Net cash used in investing activities (4,645) (1,633)
-------- --------
Cash flows from financing activities:
Payments on long-term debt and capital lease
obligations (925) (534)
Proceeds from sale of building 400 -
Principal repayments received on notes receivable
issued for stock - 250
Payoff of asset based loan - (12,934)
Proceeds from stand by credit facility 977 13,500
-------- --------
Net cash provided by financing activities 452 282
-------- --------
Net increase in cash and cash equivalents 621 (827)
Cash and cash equivalents, beginning of period 79 1,363
-------- --------
Cash and cash equivalents, end of period $700 $536
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