Weekly Financial Report - Feb 26, 2002

Williams To Restructure Balance Sheet, Considers Chapter 11 [Main Story]

Mpower Reaches Recapitalization Agreement-Plans Chapter 11 [Main Story]

Global Crossing Shareholders' Group Files Plan To Refinance Company [Main Story]

Group Telecom Announces Corporate Restructuring [Main Story]

US LEC Corp. (Nasdaq: CLEC), a provider of integrated voice, data and Internet telecommunications services, announced results for the fourth quarter and year ended December 31, 2001. Net revenues for the quarter ended December 31, 2001, totaled $51.5 million after allowances, compared with $33.6 million after allowances for the quarter ended December 31, 2000 and compared with $46.0 million for the quarter ended September 30, 2001. EBITDA losses narrowed to less than $(1.0) million from $(3.3) million (excluding a $5.0 million provision for doubtful accounts) in the third quarter of 2001. Net loss attributable to common shareholders was $(17.2) million, or $(0.66) per share (basic and diluted), on 26.1 million average shares outstanding for the quarter ended December 31, 2001, compared with a net loss of $58.5 million, or $(2.12) per share (basic and diluted), on 27.7 million average shares outstanding for the fourth quarter of last year. Net revenues for the twelve months ended December 31, 2001, totaled $178.6 million after allowances, compared with $115.0 million after allowances reported for the twelve months ended December 31, 2000, a 55% year over year increase. EBITDA loss for the twelve months ended December 31, 2001, was $(14.6) million (exclusive of a $5 million provision for doubtful accounts recorded in the third quarter of 2001) compared with an EBITDA loss of $(18.4) million (exclusive of the non-cash, non-recurring charge of $55 million related to reciprocal compensation recorded in the first quarter of 2000 and the $40 million provision related to disputed receivables in the fourth quarter of 2000) for the same period in 2000. Net loss attributable to common shareholders was $(76.7) million, or $(2.83) per share (basic and diluted) on 27.1 million average shares outstanding for the twelve months ended December 31, 2001, compared with net loss of $(126.5) million, or $(4.58) per share (basic and diluted), on 27.6 million average shares outstanding for the year ended December 31, 2000.

Allegiance Telecom, Inc. (Nasdaq: ALGX), an integrated communications provider (ICP), announced results for its fourth quarter and year-end 2001. Allegiance reported fourth quarter revenues of $151.8 million, an increase of 12.3 percent compared with 3Q01 and full year 2001 revenues of $516.9 million, an annual growth rate of over 80 percent. Margins also improved significantly with consolidated EBITDA loss of $22.2 million (excluding non-recurring charges associated with acquisitions).

ITC DeltaCom, Inc. (Nasdaq/NM:ITCD) reported results for the fourth quarter and year ended December 31, 2001. Total revenues in the fourth quarter of 2001 were $104.6 million, which represented an increase of 8% over total revenues in the fourth quarter of 2000, excluding prior-period amounts of $1.8 million recorded in the fourth quarter of 2000 under an interconnection settlement, and an increase of 2.1% over total revenues in the third quarter of 2001. EBITDA, as adjusted, was $13.7 million in the fourth quarter of 2001 compared to $9.4 million in the fourth quarter of 2000 and $8.6 million in the third quarter of 2001. The results for EBITDA, as adjusted, for the third and fourth quarters of 2001 are net of restructuring and special charges and net of $1.8 million recorded for prior-period interconnection agreement settlements in the fourth quarter of 2000.

Alaska Communications Systems Group, Inc. ("ACS") (Nasdaq:ALSK) reported financial results for the fourth quarter and full year ended December 31, 2001. Revenues for the quarter grew 8.5% to $85.9 million compared to $79.2 million in the same period last year. For the fourth quarter of 2001, EBITDA increased 17.8% to $32.6 million compared to $27.7 million for the same period last year. Revenues for the full year grew 6.0% during 2001 to $331.7 million compared to $313.0 million for 2000 and EBITDA increased 15.3% to $128.7 million for 2001.

HickoryTech Corporation (Nasdaq:HTCO) reported revenues of $108.5 million for the year ended Dec. 31, 2001, up 6 percent from $102.3 million in 2000. Net income in 2001 increased to $8.7 million, or 62 cents per diluted shared, from $7.7 million, or 55 cents per diluted share, in 2000. Net income, adjusted for certain non-recurring items in both 2001 and 2000, was $8.1 million, or 58 cents per diluted share, compared with $7.8 million, or 56 cents per diluted share, in 2000. These adjusted results, which more closely illustrate the company's recurring business, were in line with previously announced estimates.
Operating income for the year ended Dec. 31, 2001 was $23.9 million, an increase of 6.8 percent from $22.3 million in 2000. EBITDA for the year increased 11.1 percent over 2000, to $40.7 million.

Fitch Ratings downgraded Williams Communication Group, Inc.'s (WCG) senior unsecured rating to 'CC' from 'CCC-' and the convertible preferred stock to 'C' from 'CC'. The rating of Williams Communications, Inc.'s senior secured credit facility has also been downgraded to 'CCC-' from 'CCC+'. All of the ratings remain on Rating Watch Negative. The rating action reflects Fitch's concern that one potential outcome of WCG's ongoing discussions with its bank group regarding the restructuring of WCG's debt could result in a default. The company announced that it has expanded the scope of the restructuring options to include a Chapter 11 reorganization. Resulting from the continued sluggish demand for broadband services, the company has been hampered by slower than anticipated revenue ramp-up, EBITDA generation and improvement in credit protection metrics. The Rating Watch Negative is likely to be resolved pending the outcome of WCG's ongoing discussions with its bank group. The overbuild of broadband capacity combined with business failures within the broadband transport space have driven down the value of telecom assets pressuring the loan to value metric of the senior secured credit facility. The recovery prospects of unsecured bondholders have been significantly diminished. Given the need to effectively manage its liquidity during 2002 and the amount of cash required to meet debt service requirements together with WCG's limited access to public capital markets, Fitch believes the potential exists for WCG to restructure its capital structure to reduce interest expense and leverage. This scenario is magnified especially if industry conditions do not stabilize.

Level 3 Communications, Inc. (Nasdaq: LVLT) announced it has signed a definitive agreement to acquire CorpSoft, Inc., a major distributor, marketer and reseller of business software, which conducts its business under the name Corporate Software. Level 3 will pay approximately $89 million in cash to acquire the equity of Corporate Software. At the time of closing, it is anticipated that Corporate Software will have debt obligations, net of cash, of approximately $50 million. The privately held company had 2001 revenues of approximately $1.1 billion. Corporate Software had 2001 EBITDA of approximately $18 million, excluding stock-based compensation expense, one-time restructuring charges and other non-recurring employee costs.

Covista Communications, Inc. (NASDAQ symbol: CVST) announced that on February 20, 2002 its Board of Directors had approved the private sale of additional common stock of up to $12,500,000. The investment will include a cash infusion of $7,500,000 and the conversion of long-term debt of $5,000,000 to common stock. The funding for the investment is anticipated to come primarily from the current Chairman of Covista's Board and is subject to shareholder's approval at a Special Meeting, which the company expects to convene by the end of March.

Talk America (NASDAQ: TALK), an integrated communications provider, announced that it is offering to exchange up to $61.8 million principal amount of its currently outstanding 4 1/2% Convertible Subordinated Notes due September 2002 and up to $18.1 million principal amount of its currently outstanding 5% Convertible Subordinated Notes due December 2004. In conjunction with the exchange offers, the company is also soliciting holders to consent to the proposed amendment to the indenture governing the existing notes. Under the terms of the 4 1/2% Convertible Subordinated Notes exchange offer, Talk America is offering two exchange options: 1) $1,000 in principal amount of new 10% Senior Subordinated Notes due August 2007 in exchange for each $1,000 principal amount of the existing 4.5% Convertible Subordinated Notes due September 2002 that are tendered; or 2) $600 in principal amount of new 8% Convertible Senior Subordinated Notes due August 2007, convertible into common stock, at $5.00 per share, and $100 in cash, in exchange for each $1,000 in principal amount of the existing 4 1/2%
Convertible Subordinated Notes due September 2002 that are tendered. Under the terms of the 5% Convertible Subordinated Notes exchange offer, Talk America is offering: 10 $1,000 in principal amount of the new 10% Senior Subordinated Notes due August 2007 in exchange for each $1,000 principal amount of the existing 5% Convertible Subordinated Notes due December 2004. The company intends to pay accrued interest on the exchanged securities in cash upon completion of the exchange offers. As part of the exchange offers, Talk America is soliciting consents from current note holders to proposed amendments to the existing indentures to remove the obligation to repurchase the notes on the occurrence of certain designated events. Under both exchange offers, a holder's tender of existing notes for exchange will constitute a consent to the proposed amendment. You may also consent without tendering any existing notes for exchange. The company must receive consents from holders of more than 50% in total principal amount outstanding of an issue of the existing notes in order to amend the indentures for such issue. Holders of the Talk America 4 1/2% Convertible Subordinated Notes due September 2002 and the 5% Convertible Subordinated Notes due December 2004 will receive an offering circular outlining the details of the exchange by mail. If you hold your existing notes through a broker/dealer, you must contact the broker/dealer if you desire to tender your existing notes.

Lightship Telecom, an integrated business communications provider, announced a private equity investment of an additional $12.7 million by JPMorgan Partners and Megunticook Management. This new funding represents an initial investment from Megunticook Management and continued support from JPMorgan Partners (formerly JPMorgan Capital Partners) in the Bedford, NH-based company. This investment fully funds Lightship to profitability.

DSL.net, Inc. (NASDAQ: DSLN), a nationwide, direct provider of high-speed Internet access solutions for small and medium-sized businesses, has scheduled an investor conference call for Wednesday, March 6 at 11 AM EST to discuss its fourth quarter and fiscal 2001 results, as well as future plans and expectations. The company will release fourth quarter and full year 2001 results prior to the call.

SureWest Communications (Nasdaq:SURW) announced that it will release financial results for its fourth fiscal quarter and full year ended December 31, 2001, before the market opens on Tuesday, February 26, 2002. The company will host a conference call and live Webcast at 10:00 a.m. Eastern Time to discuss the results.