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To:
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All Employees | |
From:
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Steve Courter, CEO | |
Date:
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November 2, 2006 | |
Subject:
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Third Quarter 2006 Results |
| Broadwing / Level 3 Communications a powerful combination |
| Strong revenue growth in key product lines continues |
| Strongest Adjusted EBITDA performance in company history |
| Narrowed operating loss and net loss year-over-year |
| Recent wins illustrative of traction in VoIP, Broadband and Media Transport services |
| AOL doubles initial AIM Phoneline contract with Broadwing | ||
| GameRail partners with Broadwing to build nationwide Ethernet private network for online gaming traffic | ||
| Broadwings Media Network carrying more high-profile sports and entertainment programming |
| Broadwing launches usage-based billing for Converged MPLS |
| Strong revenue growth driven by sales of Broadband and Data |
| 3Q06 total revenue UP 6% or $13.2M y/y driven by sales of Broadband and Converged VPN Services, offset in part by lower revenue from LD voice services; UP 4% vs. 2Q06 | ||
| 3Q06 Broadband/Data revenues UP 12% y/y due to intro of Converged VPN services and to increased broadband sales, esp. higher speed optical products; UP 4% vs. 2Q06 | ||
| 3Q06 Voice revenues flat y/y due primarily to impact of rate compression; UP 2% vs. 2Q06 |
| Significantly improved gross profit/gross margin y/y |
| 3Q06 gross profit: $87.4M UP 16% y/y and UP 3% vs. 2Q06 | ||
| 3Q06 gross margin: 38% vs. 34% in 3Q05 UP over 300 basis points y/y |
| Third quarter of positive Adjusted EBITDA: $8.0M strongest performance in company history. |
| Reduced net loss significantly year-over-year: 3Q06 net loss of $16.8M narrowed 45% y/y |
| Maintained strong balance sheet: |
| Low debt compared to peers and no net debt | ||
| Cash, equivalents, and short-term investments of $341.3M at 9/30/06 |
| Key benefits of the combination: |
| Combined network footprint / product set expected to bolster market position domestically & internationally | ||
| Improved buyer power to obtain reductions in access, equipment and third-party costs | ||
| Increased ability to invest and innovate to meet markets evolving needs | ||
| Greater scale, scope and reach which will make us a more attractive partner for national and international companies |
| Customer experience will remain our top priority throughout integration |
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Consolidated Revenues | $231.9M | ||
up 6% from 3Q05 | ||||
up 3% from 2Q06 | ||||
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Consolidated Net Loss | $16.8M vs. $30.5M in 3Q05 | ||
45% improvement year-over-year | ||||
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Adjusted EBITDA | $8.0M | ||
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Cash, cash equivalents, short term investments: | $341.3M at 9/30/06 |