2008-08-07 15:05:00
Arbinet Announces Second Quarter Financial Results
NEW BRUNSWICK, N.J., Aug. 7 /EMWNews/ -- Arbinet-thexchange, Inc. (Nasdaq: ARBX), a leading provider of innovative voice and IP solutions for buying and selling telecommunications capacity, today reported financial results for the second quarter ended June 30, 2008. Second quarter 2008 fee revenues were $13.6 million, a 6.6% increase over first quarter 2008 and 8.5% better than the second quarter of 2007. A total of 3.55 billion minutes were bought and sold on Arbinet's exchange in the second quarter 2008, compared to 3.48 billion minutes in the second quarter 2007. Arbinet completed 502.9 million calls during the second quarter 2008, compared to 475.5 million calls in the second quarter 2007. Second quarter 2008 income from continuing operations was $132,000 or $0.01 per diluted share, compared to a loss from continuing operations of ($1.7) million or ($0.07) per diluted share in the second quarter 2007. Loss from the Company's discontinued digital media operations was approximately ($0.8) million or $(0.03) per diluted share in each period. The Company also announced that it entered into an agreement on August 5, 2008 to sell substantially all of the assets of Broad Street Digital Limited. The agreement contains certain closing conditions, and the transaction is expected to close in the third quarter of 2008. In connection with the sale, the Company recorded a write down of $250,000 to adjust the carrying value of the Broad Street Digital assets to the estimated net proceeds from the transaction. In addition, the Company announced it had ceased all activities in its Digital Media segment, resulting in the reclassification of all digital media operating activities as discontinued operations. The Company estimates that the unwinding of these operations will carry over to third quarter and will result in a charge of approximately ($0.7) million or ($0.03) per diluted share for the period ended September 30, 2008. William M. Freeman, President and Chief Executive Officer of Arbinet, said, "We remain focused on our strategic priorities to improve growth and profitability and are pleased with the progress we have made in focusing on our core voice and data business, increasing liquidity on the exchange and growing our data business. Our accomplishments this quarter include, among other things, finalizing the sale of Broad Street Digital, expansion of our sales and trading organization by 10%, and a 5% increase in membership to 1,091 members. We are committed to capitalizing on our technology to increase our membership base and continue our global expansion, and look forward to the continued execution of our strategic plan to drive sustainable growth and value for our shareholders." Quarterly Conference Call Arbinet will host a conference call to discuss its second quarter 2008 results at 5:00 p.m. Eastern Time today. The dial-in number for the live audio call beginning at 5:00 p.m. Eastern Time is 888-562-3654, or 973-582-2703 for international callers; the passcode is 58469836. A live web cast of the conference call will be available on Arbinet's web site at http://www.arbinet.com. A replay of the call will be available from 8:00 p.m. Eastern Time on Thursday, August 7, 2008 through midnight on August 14, 2008 at http://www.arbinet.com and by telephone at 800-642-1687, or 706-645-9291 for international callers; the passcode is 58469836.
About Arbinet
Arbinet is a leading provider of innovative voice and IP solutions
empowering communications companies to create the most efficient and
valuable global interconnections. Arbinet offers the greatest flexibility
in global scale, platform intelligence, and managed solutions to achieve
commercial efficiency and interconnection simplicity.
Arbinet manages business relationships, back office operations and call
routing for Members who route through Arbinet approximately 2% of the
world's international voice traffic to over 1,300 destinations worldwide.
Arbinet Members include fixed line, mobile, wholesale and VoIP carriers as
well as calling card, ISPs, ASPs and content providers around the world who
buy and sell voice and IP telecommunications capacity. For more information
about Arbinet's solutions, visit http://www.arbinet.com
Forward-Looking Statements
This press release contains forward-looking statements regarding
anticipated future revenues, growth, capital expenditures, management's
future expansion plans, expected product and service developments or
enhancements, and future operating results. Such forward-looking statements
may be identified by, among other things, the use of forward-looking
terminology such as: "believes," "expects," "may," "will," "should" or
"anticipates," or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy that involve risks
and uncertainties. Various important risks and uncertainties may cause
Arbinet's actual results to differ materially from the results indicated by
these forward-looking statements, including, without limitation: the
ability of Arbinet to complete the sale of Broad Street Digital Limited;
members (in particular, significant trading members) not trading on our
exchange or utilizing our new and additional services (including
DirectAxcess(SM), PrivateExchange(SM), AssuredAxcess(SM) and
PeeringSolutions(SM)); continued volatility in the volume and mix of
trading activity; our uncertain and long member enrollment cycle; the
failure to manage our credit risk; failure to manage our growth; pricing
pressure; investment in our management team and investments in our
personnel; regulatory uncertainty; system failures, human error and
security breaches that could cause Arbinet to lose members and expose it to
liability; and Arbinet's ability to obtain and enforce patent protection
for our methods and technologies. For a further list and description of the
risks and uncertainties the Company faces, please refer to Part I, Item 1A
of the Company's Annual Report on Form 10-K, filed with the Securities and
Exchange Commission on March 17, 2008, and other filings that have been
filed with the Securities and Exchange Commission. Arbinet assumes no
obligation to update any forward-looking statements, whether as a result of
new information, future events or otherwise and such statements are current
only as of the date they are made.
Contacts:
Jack Wynne, CFO
Arbinet-thexchange, Inc.
732-509-9230
Andrea Priest / Andi Salas
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
ARBINET - THEXCHANGE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2008 2007 2008
($ in thousands, except per share data)
Trading revenues $122,109 $123,002 $251,628 $235,443
Fee revenues 12,503 13,571 25,146 26,301
Total revenues 134,612 136,573 276,774 261,744
Cost of trading revenues 122,212 123,114 251,772 235,584
12,400 13,459 25,002 26,160
Cost and expenses:
Operations and
development 5,074 5,139 10,080 10,418
Sales and marketing 2,500 3,155 4,854 5,791
General and
administrative 3,548 3,197 7,373 6,130
Depreciation and
amortization 1,925 1,886 3,978 3,716
Severance charges 1,021 - 1,021 -
Reserve for litigation 790 - 1,940 -
Total costs and expenses 14,858 13,377 29,246 26,055
Income (loss) from operations (2,458) 82 (4,244) 105
Interest income 683 225 1,475 642
Interest expense (239) (142) (571) (307)
Other income (expense), net 416 66 680 95
Income (loss) from continuing
operations before income taxes (1,598) 231 (2,660) 535
Provision for income taxes 76 99 162 180
Income (loss) from
continuing operations (1,674) 132 (2,822) 355
Discontinued operations:
(Loss) from discontinued
operations, net of income
tax $0 in 2007 and $11 in 2008 (799) (784) (1,528) (1,456)
Net (loss) $(2,473) $(652) $(4,350) $(1,101)
Net (loss) attributable to
common stockholders $(2,473) $(652) $(4,350) $(1,101)
Basic net income (loss)
per share:
Continuing operations $ (0.07) $0.01 $(0.11) $0.01
Discontinued operations $ (0.03) $(0.03) $(0.06) $(0.06)
Net (loss) $ (0.10) $(0.02) $(0.17) $(0.05)
Diluted net income (loss)
per share:
Continuing operations $ (0.07) $0.01 $(0.11) $0.01
Discontinued operations $ (0.03) $(0.03) $(0.06) $(0.06)
Net(loss) $ (0.10) $(0.02) $(0.17) $(0.05)
Dividends $ - $(0.40) $ - $(0.40)
Shares used in computing
basic net income (loss)
per share 25,478,294 24,921,380 25,468,272 24,755,953
Shares used in computing
diluted net
income (loss) per share 25,478,294 25,399,547 25,468,272 25,430,552
Other comprehensive
income:
Cumulative unrealized
(loss) in available-for-
sale securities (5) (21) (6) (8)
Foreign currency
translation adjustment 62 (11) 68 (147)
Comprehensive (loss) $(2,416) $(684) $(4,288) $(1,256)
ARBINET - THEXCHANGE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, June 30,
2007 2008
($ in thousands, except per share data)
ASSETS
Current Assets:
Cash and cash equivalents $ 28,556 $ 20,385
Marketable securities 20,344 9,501
Trade accounts receivable (net
of allowance of $1,481 and
$1,758 at December 31, 2007 and
June 30, 2008, respectively) 28,451 24,178
Prepaids and other current assets 2,421 5,442
Total current assets 79,772 59,506
Property and equipment, net 23,002 22,880
Security deposits 2,430 2,287
Intangible assets, net 2,018 1,879
Goodwill 2,196 2,201
Other assets 76 34
Long term assets of discontinued operations 440 461
Total Assets $109,934 $ 89,248
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Capital lease obligation $ 7 $ -
Notes payable 493 20
Due to Silicon Valley Bank 285 1,296
Accounts payable 16,123 11,701
Deferred revenue 2,499 2,184
Accrued and other current
liabilities 8,250 7,607
Current liabilities of
discontinued operations 334 101
Total current liabilities 27,991 22,909
Other long-term liabilities 2,282 1,779
Total liabilities 30,273 24,688
Commitments and Contingencies - -
Stockholders' Equity:
Preferred Stock, 5,000,000 shares
authorized - -
Common Stock, $0.001 par value,
60,000,000 shares authorized,
26,355,641 and 26,613,581
shares issued and outstanding,
respectively 26 27
Additional paid-in-capital 181,644 173,378
Treasury stock, 674,233 and 2,132,084
shares, respectively (4,613) (10,340)
Accumulated other comprehensive loss (455) (462)
Accumulated deficit (96,941) (98,043)
Total Stockholders' Equity 79,661 64,560
Total Liabilities and
Stockholders' Equity $109,934 $ 89,248
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