Attached files
| file | filename |
|---|---|
| 8-K - 8-K - ARBINET Corp | v202001_8k.htm |
| EX-2.1 - EXHIBIT 2.1 - ARBINET Corp | v202001_ex2-1.htm |
| EX-99.1 - EXHIBIT 99.1 - ARBINET Corp | v202001_ex99-1.htm |
| EX-99.3 - EXHIBIT 99.3 - ARBINET Corp | v202001_ex99-3.htm |
| EX-99.4 - EXHIBIT 99.4 - ARBINET Corp | v202001_ex99-4.htm |
| EX-99.5 - EXHIBIT 99.5 - ARBINET Corp | v202001_ex99-5.htm |
Exhibit
99.2
FOR IMMEDIATE
RELEASE
Arbinet
Corporation Announces Third Quarter 2010 Financial Results
HERNDON, VA., November 11,
2010 - Arbinet Corporation (NASDAQ: ARBX), a leading provider of
telecommunications services to fixed and mobile operators, today reported
financial results for the third quarter ended September 30, 2010.
Quarter
Ended September 30, 2010
Total
revenues for the third quarter 2010 were $85.2 million, which included $78.1
million trading revenues and $7.0 million fee revenues. This
represents a 1.4% increase from total revenues of $83.9 million for the third
quarter 2009 and a 4.9% increase from total revenues of $81.2 million for the
second quarter 2010. The increase in total revenues was due to higher
traffic volumes for minutes bought and sold on Arbinet’s Exchange, which was
partially offset by declining average fee revenue per minute as a result of
changes in the mix of both geographic markets and the trading activity of
Members on the Exchange. In addition, Arbinet experienced increased carrier
services and other Member credits, decreased sales of certain premium
service offerings and decreases in usage minimums, which impacted fee revenues
in the quarter.
A total
of 3.40 billion minutes were bought and sold on Arbinet’s Exchange in the third
quarter 2010, up 35.7% and 9.1%, compared with 2.51 billion minutes in the third
quarter 2009 and 3.12 billion minutes in the second quarter 2010,
respectively. Arbinet completed 353.5 million calls during the third
quarter 2010, up 26.2% and 8.5%, compared with 280.1 million calls in the third
quarter 2009 and 325.9 million calls in the second quarter 2010,
respectively.
Third
quarter 2010 gross profit was $3.5 million, down 6.8% compared with $3.8 million
in the third quarter 2009, and down 16.8% compared with $4.2 million in the
second quarter 2010. The decrease in gross profit was due, in
part, to decreased fee revenues resulting from increased carrier services and
other Member credits, decreased sales of certain premium service offerings and
decreases in usage minimums.
Third
quarter 2010 loss from operations was ($3.8) million, compared with a loss from
operations of ($2.8) million in the third quarter 2009 and ($4.0) million in the
second quarter 2010. The increased loss from third quarter 2009 is
due, in part, to lower fee revenues, increased bad debt reserves, professional
fees for the matters in arbitration and for strategic alternatives, and
severance charges. Bad debt expense increased by a net $0.8 million as compared
with the year-ago quarter, related to an increase in reserves for a specific
account as well as a net increase in reserves on accounts overdue by more than
60 days, following increased collections efforts on aged balances which resulted
in minimal additional collections on the remaining accounts.
Net cash
used in operating activities from continuing operations in the third quarter
2010 was ($1.8) million compared with net cash provided by operating activities
from continuing operations in the third quarter 2009 of $2.9
million. At September 30, 2010, Arbinet had cash and cash equivalents
of $13.2 million and marketable securities of $5.2 million, totaling
approximately $18.4 million.
The
Company’s net loss in the third quarter 2010 was ($4.9) million, or ($0.90) per
basic and diluted share, compared with net loss of ($3.7) million, or ($0.68)
per basic and diluted share, in the third quarter 2009. The third
quarter 2010 net loss included other loss of ($1.1) million, primarily due to a
$0.9 million settlement of two arbitration matters and a $0.3 million impairment
of a certain investment recorded in other assets.
Commenting
on the Company’s third quarter 2010 results, Shawn O'Donnell, President and
Chief Executive Officer of Arbinet, stated, “The significant volume growth we
have achieved is encouraging and underscores our continued relevance in the
markets we serve. However, our business continues to be impacted by
lower trade rates resulting from pricing pressures as well as our changing
geographic mix. In particular, the growth we are experiencing in
certain highly competitive markets is partly offset by the below-average fees in
those markets, resulting in overall margin contraction. We believe a
continued focus on traffic growth and expanded scale will offset the impact of
lower prices in all our markets, over time, and allow us to capitalize on our
recent network upgrades. During the quarter, we recognized the
benefits of the bulk of our cost reduction initiatives and expect to see further
modest benefits during the fourth quarter.”
Nine
Months Ended September 30, 2010
For the
nine months ended September 30, 2010 total revenues were $253.9 million, which
included $230.5 million trading revenues and $23.5 million fee
revenues. This represents a 1.2% decrease from total revenues of
$257.0 million for the nine months ended September 30, 2009. The
increase in volume of minutes during the period were fully offset by a lower
average trade rate for minutes bought and sold on the Exchange caused by market
pressures on pricing and change in the mix of traffic to lower priced
markets.
A total
of 9.50 billion minutes were bought and sold on the Exchange for the nine months
ended September 30, 2010, an increase of 22.3% from the 7.77 billion minutes
that were bought and sold on the Exchange for the nine months ended September
30, 2009. There were 972.7 million completed calls in the nine months ended
September 30, 2010, representing a 13.2% increase from the 859.5 million
completed calls for the nine months ended September 30, 2009.
Fee
revenues decreased 9.8% to $23.5 million for the nine months ended September 30,
2010 from $26.0 million for the nine months ended September 30, 2009. Average
fee revenues decreased to $0.0025 per minute for the nine months ended September
30, 2010 from $0.0033 per minute for the nine months ended September 30,
2009. Average fee revenue per minute decreased as a result of changes
in the mix of both geographic markets and the trading activity of Members on the
Exchange. In addition, we experienced increased carrier services and other
Member credits, decreased sales of certain premium service offerings and
decreases in usage minimums.
For the
nine months ended September 30, 2010 gross profit was $12.5 million, up 4.2%
compared with $12.0 million gross profit for the nine months ended September 30,
2009.
Loss from
operations was ($11.2) million for the nine months ended September 30, 2010,
compared with loss from operations of ($6.9) million for the nine months ended
September 30, 2009. Bad debt expense increased by a net $1.6 million
as compared with the nine months ended September 30, 2009, related to an
increase in reserves for a specific account as well as a net increase in
reserves on accounts overdue by more than 60 days, following increased
collections efforts on aged balances which resulted in minimal additional
collections on the remaining accounts. Also contributing to the loss
during the nine months ended September 30, 2010 was $1.4 million of severance
charges and a cumulative total of $1.0 million for the following: the
final costs to relocate our corporate headquarters from New Jersey to Virginia,
expenses associated with the implementation of the 1-for-4 reverse stock split,
legal expenses for matters in arbitration, and additional professional fees
primarily associated with strategic alternatives pursued by the
Company.
Net cash
provided by operating activities from continuing operations for the nine months
ended September 30, 2010 was $1.0 million compared with net cash provided by
operating activities from continuing operations for the nine months ended
September 30, 2009 of $3.7 million.
The
Company’s net loss for the nine months ended September 30, 2010 was ($13.9)
million, or ($2.53) per basic and diluted share, compared with net loss of
($5.2) million, or ($0.96) per basic and diluted share, for the nine months
ended September 30, 2009. The net loss for the nine months
ended September 30, 2010 included other loss of ($1.1) million, primarily due to
a $0.9 million settlement of the NNP Arbitration and the Savontel Arbitration
and a $0.3 million impairment of a certain investment recorded in other
assets.
About
Arbinet Corporation
Arbinet
is a leading provider of international voice and IP solutions to carriers and
service providers globally. With more than 1,100 carriers across the world
utilizing the Arbinet network, Arbinet combines global scale with sophisticated
platform intelligence, call routing and industry leading credit management and
settlement capabilities. Customers and suppliers include many leading fixed
line, mobile, wholesale and VoIP carriers, as well as calling card, ISPs and
content providers around the world who buy and sell voice and IP
telecommunications capacity and content. The Company can be reached at its
corporate headquarters in Herndon, Virginia at (703) 456-4100 or by email at
sales@arbinet.com
Forward-Looking
Statements
This
press release contains forward-looking statements, including forward-looking
statements regarding our beliefs that our continued focus on traffic growth and
expanded scale will offset the impact of lower prices over time; our
ability to capitalize on our recent network upgrades; and our expectations
regarding the timing and amount of any cost savings as a result of our cost
reduction and restructuring initiatives. Various important
risks and uncertainties may cause our actual results to differ materially from
the results indicated by these forward-looking statements, including, without
limitation: our limited cash position, Members (in particular, significant
trading Members) not trading on the Exchange or not utilizing our new and
additional services; continued volatility in the volume and mix of trading
activity; our uncertain and long Member enrollment cycle; failure to manage our
credit risk; failure to manage and adequately estimate costs of our Carrier
Services business; pricing pressure; investment in our management team and
investments in our personnel; disruption or uncertainty resulting from recent
changes in senior management; regulatory uncertainty; system failures, human
error and security breaches that could cause us to lose Members and expose us to
liability; our ability to obtain and enforce patent protection for our methods
and technologies; losses in efficiency due to cost cutting and restructuring
initiatives; failure to extend the term of our credit facility with Silicon
Valley Bank; and economic conditions and volatility of financial markets,
decreased availability of credit to us or buyers on the Exchange, and the impact
they may have on us and the Members. For a further discussion of the risks
and uncertainties we face, please refer to Part I, Item 1A of our Annual Report
on Form 10-K, for the year ended December 31, 2009, filed with the Securities
and Exchange Commission (SEC) on March 17, 2010 and other periodic and current
filings that have been filed with the SEC and are available at www.sec.gov. We
assume 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:
Gary
Brandt, Chief Financial Officer
Arbinet
Corporation
(703)
456-4140
Andi
Salas / Jed Repko
Joele
Frank, Wilkinson Brimmer Katcher
(212)
355-4449
ARBINET
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In
thousands, except per share amounts)
(Unaudited)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Trading
revenues
|
$ | 78,121 | $ | 75,862 | $ | 230,454 | $ | 231,019 | ||||||||
|
Fee
revenues
|
7,035 | 8,080 | 23,452 | 26,001 | ||||||||||||
|
Total
revenues
|
85,156 | 83,942 | 253,906 | 257,020 | ||||||||||||
|
Cost
of trading revenues
|
78,250 | 75,810 | 230,601 | 231,170 | ||||||||||||
|
Indirect
cost of trading and fee revenues
|
3,387 | 4,355 | 10,788 | 13,843 | ||||||||||||
|
Total
cost of trading and fee revenues
|
81,637 | 80,165 | 241,389 | 245,013 | ||||||||||||
|
Gross
profit
|
3,519 | 3,777 | 12,517 | 12,007 | ||||||||||||
|
Other
operating expenses:
|
||||||||||||||||
|
Sales
and marketing
|
1,514 | 1,997 | 5,387 | 5,659 | ||||||||||||
|
General
and administrative
|
4,002 | 2,476 | 11,908 | 7,513 | ||||||||||||
|
Depreciation
and amortization
|
1,643 | 1,788 | 5,015 | 5,400 | ||||||||||||
|
Severance
charges
|
157 | 361 | 1,389 | 361 | ||||||||||||
|
Total
other operating expenses
|
7,316 | 6,622 | 23,699 | 18,933 | ||||||||||||
|
Loss
from operations
|
(3,797 | ) | (2,845 | ) | (11,182 | ) | (6,926 | ) | ||||||||
|
Interest
income
|
14 | 20 | 58 | 107 | ||||||||||||
|
Interest
expense
|
(120 | ) | (197 | ) | (465 | ) | (520 | ) | ||||||||
|
Foreign
currency transaction gain (loss)
|
18 | (685 | ) | (1,280 | ) | 2,081 | ||||||||||
|
Other
income (loss), net
|
(1,070 | ) | 66 | (938 | ) | 237 | ||||||||||
|
Loss
before income taxes
|
(4,955 | ) | (3,641 | ) | (13,807 | ) | (5,021 | ) | ||||||||
|
(Benefit)
provision for income taxes
|
(11 | ) | 59 | 62 | 197 | |||||||||||
|
Net
loss
|
(4,944 | ) | (3,700 | ) | (13,869 | ) | (5,218 | ) | ||||||||
|
Basic
and diluted net loss per common share
|
$ | (0.90 | ) | $ | (0.68 | ) | $ | (2.53 | ) | $ | (0.96 | ) | ||||
|
Weighted
average shares used in computing basic and diluted net loss per
share
|
5,490 | 5,413 | 5,480 | 5,444 | ||||||||||||
ARBINET
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
thousands)
(Unaudited)
|
As of
|
As of
|
|||||||
|
September 30, 2010
|
December 31, 2009
|
|||||||
|
Assets
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 13,240 | $ | 15,492 | ||||
|
Marketable
securities
|
5,208 | 6,407 | ||||||
|
Trade
accounts receivable, net of allowances
|
18,728 | 24,513 | ||||||
|
Prepaids
and other current assets
|
1,418 | 1,284 | ||||||
|
Total
current assets
|
38,594 | 47,696 | ||||||
|
Property
and equipment, net
|
17,360 | 17,821 | ||||||
|
Security
deposits
|
1,672 | 1,676 | ||||||
|
Intangible
assets, net
|
122 | 149 | ||||||
|
Other
assets
|
71 | 395 | ||||||
|
Total
Assets
|
$ | 57,819 | $ | 67,737 | ||||
|
Liabilities
and Stockholders' Equity
|
||||||||
|
Current
Liabilities:
|
||||||||
|
Accounts
payable
|
$ | 15,129 | $ | 11,676 | ||||
|
Deferred
revenue
|
699 | 1,434 | ||||||
|
Accrued
expenses and other current liabilities
|
6,037 | 6,172 | ||||||
|
Due
to Silicon Valley Bank
|
- | 2,014 | ||||||
|
Current
portion of long-term debt
|
4,965 | 3,600 | ||||||
|
Current
liabilities for discontinued operations
|
100 | 100 | ||||||
|
Total
current liabilities
|
26,930 | 24,996 | ||||||
|
Deferred
rent
|
2,212 | 2,343 | ||||||
|
Long-term
debt and other liabilities
|
198 | 66 | ||||||
|
Total
Liabilities
|
29,340 | 27,405 | ||||||
|
Stockholders'
Equity
|
||||||||
|
Common
stock
|
7 | 27 | ||||||
|
Additional
paid-in capital
|
177,164 | 175,906 | ||||||
|
Treasury
stock
|
(17,278 | ) | (17,122 | ) | ||||
|
Accumulated
other comprehensive income
|
2,990 | 2,056 | ||||||
|
Accumulated
deficit
|
(134,404 | ) | (120,535 | ) | ||||
|
Total
Stockholders' Equity
|
28,479 | 40,332 | ||||||
|
Total
Liabilities and Stockholders' Equity
|
$ | 57,819 | $ | 67,737 | ||||