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PEER 1 Networks Reports Fourth Quarter and Year-End Results for Fiscal 2009

^{Published on 2009-09-24 13:08:03 - Market Wire}
 

 Selected Financial Highlights comparing fiscal 2009 to 2008: - Revenue increased 3.3% to $92.3 million from $89.35 million; - Gross profit decreased 1.9% to $39.75 million from $40.51 million; - Operating income decreased 16% to $12.33 million from $14.69 million; - Normalized EBITDA decreased 1% to $27.85 million from $28.1 million; - Net income decreased to $5.7 million from $7.1 million. Corporate highlights for fiscal 2009: - Added 5,478 square feet of additional data center space at 151 Front Street in Toronto; - Entered into a long term lease on a site in the Greater Toronto Area with a 41,000 square foot building that will be transformed into an energy efficient data center accommodating all of our core service offerings; - Launched European expansion by opening an office and commissioning a data center in the United Kingdom; - Hired industry veteran Dominic Monkhouse to lead European operations; - Secured a credit agreement with National Bank Financial Group for a term and revolving credit facility of US$40 million in aggregate; and - Expanded Herndon, Virginia data center by leasing 8,614 square feet of contiguous space that will increase capacity by approximately 2,880 servers. 

 EBITDA Reconciliation EBITDA Reconciliation (unaudited - prepared by management) (in $ thousands) Three Months Ended Twelve Months Ended ----------------------------------------------------- 30-Jun-09 30-Jun-08 30-Jun-09 30-Jun-08 Net Profit 577 1,734 5,722 7,064 Income tax expense 1,046 1,451 4,661 5,237 Interest expense 928 570 2,194 2,267 Amortization - licences, fixed assets and deferred network costs 3,498 3,028 13,243 11,048 Stock based compensation 456 273 2,282 1,453 Loss (gain) on disposal of assets (26) 2 (47) (12) Amortization of deferred gain (19) (20) (79) (79) Foreign exchange loss (gain) 2 126 (130) 367 ------------------------------------------------------------------------- EBITDA 6,462 7,164 27,846 27,345 Provision for sales / use tax - 624 - 624 Integration costs - - - 93 ------------------------------------------------------------------------- Normalized EBITDA 6,462 7,788 27,846 28,062 

 PEER 1 NETWORK ENTERPRISES, INC. Consolidated Balance Sheet June 30, 2009 (in thousands of United States dollars) 2009 2008 ------------------------------------------------------------------------- Assets Current: Cash and cash equivalents $ 15,744 $ 11,026 Accounts receivable 3,449 4,051 Future income tax asset 237 104 Prepaid expenses 1,130 801 ------------------------------------------------------------------------- 20,560 15,982 Other assets 2,692 3,075 Future income tax asset 1,042 1,841 Property and equipment 36,856 33,818 Equipment under capital lease 1,013 1,267 Goodwill 1,715 1,715 Intangible assets 2,552 2,500 ------------------------------------------------------------------------- $ 66,430 $ 60,198 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current: Accounts payable and accrued liabilities $ 7,936 $ 8,810 Deferred revenue 2,886 3,553 Current portion of deferred gain 79 79 Current portion of deferred lease inducements 138 134 Current portion of derivative liabilities 89 - Current portion of notes payable 2,250 3,286 Current portion of obligations under capital lease 211 226 Income taxes payable 2,200 1,435 ------------------------------------------------------------------------- 15,789 17,523 Deferred gain 493 571 Deferred lease inducements 664 739 Derivative liabilities 179 - Notes payable 12,303 12,008 Obligation under capital lease 363 655 ------------------------------------------------------------------------- 29,791 31,496 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Shareholders' equity 36,639 28,702 ------------------------------------------------------------------------- $ 66,430 $ 60,198 ------------------------------------------------------------------------- ------------------------------------------------------------------------- PEER 1 NETWORK ENTERPRISES, INC. Consolidated Statements of Shareholders' Equity For the Year Ended June 30, 2009 (in thousands of United States dollars except number of shares) 2009 2008 ------------------------------------------------------------------------- Number Amount Number Amount ------------------------------------------------------------------------- SHARE CAPITAL Common shares Balance at beginning of year 118,504,368 $ 26,539 115,994,291 $ 25,254 Stock options exercised 131,670 70 572,577 296 Warrants exercised 678,285 341 1,937,500 989 ------------------------------------------------------------------------- Balance at end of year 119,314,323 26,950 118,504,368 26,539 ------------------------------------------------------------------------- Warrants Balance at beginning of year 3,139,904 678 5,077,404 917 Warrants expired/exercised (678,285) (185) (1,937,500) (239) ------------------------------------------------------------------------- Balance at end of year 2,461,619 493 3,139,904 678 ------------------------------------------------------------------------- Total - share capital 27,443 27,217 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONTRIBUTED SURPLUS Balance at beginning of year 2,509 1,092 Stock-based compensation 2,282 1,453 Options exercised and shares distributed under the stock option plan (25) (36) ------------------------------------------------------------------------- Balance at end of year 4,766 2,509 ------------------------------------------------------------------------- ------------------------------------------------------------------------- RETAINED EARNINGS Balance at beginning of year (1,013) (8,077) Net income 5,722 7,064 ------------------------------------------------------------------------- Balance at end of year 4,709 (1,013) ------------------------------------------------------------------------- ------------------------------------------------------------------------- ACCUMULATED OTHER COMPREHENSIVE INCOME Balance at beginning of year (11) (11) Other comprehensive income (268) - ------------------------------------------------------------------------- Balance at end of year (279) (11) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total - shareholders' equity $ 36,639 $ 28,702 ------------------------------------------------------------------------- ------------------------------------------------------------------------- PEER 1 NETWORK ENTERPRISES, INC. Consolidated Statement of Operations For the Year Ended June 30, 2009 (in thousands of United States dollars, except per share amounts) 2009 2008 ------------------------------------------------------------------------- Revenue Co-location Services $ 25,080 $ 27,397 Hosting Services 67,229 61,950 ------------- ------------- 92,309 89,347 Cost of revenue 52,560 48,835 ------------------------------------------------------------------------- Gross profit 39,749 40,512 Operating expenses 27,419 25,824 ------------------------------------------------------------------------- Operating income before other items 12,330 14,688 ------------------------------------------------------------------------- Other items: Interest income (70) (328) Integration costs - 93 Gain on disposal of property and equipment (47) (12) Foreign exchange loss (gain) (130) 367 Interest expense - long term 2,194 2,267 ------------------------------------------------------------------------- 1,947 2,387 ------------------------------------------------------------------------- Income before income taxes 10,383 12,301 Income tax expense 4,661 5,237 ------------------------------------------------------------------------- Net income $ 5,722 $ 7,064 Other comprehensive income: Change in unrealized fair value of derivatives designated as cash flow hedges (268) - ------------------------------------------------------------------------- Comprehensive income $ 5,454 $ 7,064 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income attributable to: Common shares $ 5,722 $ 7,064 Comprehensive income attributable to: Common shares $ 5,454 $ 7,064 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted earnings per share $ 0.05 $ 0.06 ------------------------------------------------------------------------- ------------------------------------------------------------------------- PEER 1 NETWORK ENTERPRISES, INC. Consolidated Statement of Cash Flows For the Year Ended June 30, 2009 (in thousands of United States dollars) 2009 2008 ------------------------------------------------------------------------- Operating Activities: Net income $ 5,722 $ 7,064 Adjustments for non-cash items: Amortization of property and equipment 11,880 9,458 Amortization of intangible assets 1,363 1,590 Increase in accrued interest and accretion of convertible debt 82 18 Bad debt expense 650 494 Gain on disposal of property and equipment (47) (12) Amortization of deferred gain (79) (79) Amortization of deferred loan origination fees 774 648 Future income tax expense 655 2,040 Stock-based compensation included in income for the year 2,282 1,453 Decrease in deferred lease inducements (71) (236) Changes in non-cash working capital: Change in accounts receivable (47) (122) Increase in prepaid expenses (329) (112) Increase (decrease) in accounts payable and accrued liabilities (992) 341 Increase in income taxes payable 765 959 Decrease in deferred revenue (667) (683) ------------------------------------------------------------------------- Cash flows from operating activities 21,941 22,821 ------------------------------------------------------------------------- Investing Activities: Investment in other assets (56) 78 Acquisition of property and equipment (14,451) (17,017) Acquisition of intangible assets (1,511) (975) Proceeds on disposition of equipment 47 46 ------------------------------------------------------------------------- Cash flows used in investing activities (15,971) (17,868) ------------------------------------------------------------------------- Financing Activities: Proceeds from notes payable 15,000 - Repayments of notes payable (16,158) (3,554) Payment of capital lease obligations (199) (91) Issuance of capital stock 201 1,011 ------------------------------------------------------------------------- Cash flows used in financing activities (1,156) (2,634) ------------------------------------------------------------------------- Foreign exchange gain (loss) on cash and cash equivalents (96) (47) ------------------------------------------------------------------------- Increase in cash and cash equivalents 4,814 2,319 Cash and cash equivalents, beginning 11,026 8,754 ------------------------------------------------------------------------- Cash and cash equivalents, ending $ 15,744 $ 11,026 ------------------------------------------------------------------------- -------------------------------------------------------------------------