NEW ROCHELLE, N.Y., July 16, 2003 (PRIMEZONE) -- eLEC Communications Corp. (OTCBB:ELEC), a provider of local and long distance telephone service, today announced financial results for the second quarter ended May 31, 2003. eLEC reported net income for the second fiscal quarter of 2003 of $48,855, or $0.00 per share, as compared to a net loss of ($923,819), or ($0.06) per share, for the second fiscal quarter of 2002.
The results of operations for the second fiscal quarter of 2003 as compared to the second fiscal quarter of 2002 were impacted by the sale of the customer base of the company's competitive local exchange carrier ("CLEC"), Essex Communications, Inc., which closed on December 31, 2002. In addition, eLEC has been operating two CLECs, New Rochelle Telephone and Telecarrier Services, in fiscal 2003, both of which had no local service revenue in fiscal 2002.
The following are key operational comparisons for the second quarter of fiscal 2003 and fiscal 2002:
Quarterly revenues amounted to $1,153,416 in fiscal 2003, a decrease of $2,547,175 or 69%, from quarterly revenues of $3,700,591 in fiscal 2002. The gross margin in fiscal 2003 amounted to 49.8%, an increase of 16.1%, as compared to a gross margin of 33.7% in fiscal 2002. The loss from operations amounted to ($706,301) in fiscal 2003, a decrease of $700,522, or 50%, from a loss from operations of ($1,406,823) in fiscal 2002. A gain on the sale of assets of Essex of $659,966 was recognized in fiscal 2003.
The following are key operational comparisons between the first and second quarters of fiscal 2003:
Second quarter revenues amounted to $1,153,416, an increase of $741,416, or 180%, as compared to aggregate revenues of New Rochelle Telephone and Telecarrier Services in the first quarter of approximately $412,000. (Sales for Essex, which operated for one month in the first quarter of fiscal 2003, are not included in the comparison to the first quarter numbers.) Billed lines at the end of the second quarter amounted to 8,788, an increase of 4,289, or 95%, as compared to billed lines at the end of the first quarter of 4,499. The gross margin in the second quarter amounted to 49.8%, an increase of 6%, as compared to a gross margin of 43.8% in the first quarter. The loss from operations in the second quarter amounted to ($706,301), a decrease of $268,596, or 28%, as compared to a first quarter loss from operations of ($974,897).
eLEC's CEO, Paul Riss, stated, "We continue to see improved financial information as a result of the operating changes and accomplishments we have made. We are especially pleased with the enhanced gross margins we are achieving this year by being more selective in the states in which we operate. In addition to New York and New Jersey, we are now offering local and long distance services in Pennsylvania."
"In June 2003, which is the first month of our third fiscal quarter, we billed approximately 9,300 lines for aggregate revenues of approximately $480,000," continued Riss. "We also have approximately 1,500 new lines that have just been sold and will be added to billing. We continue to look for financing sources that will help us to accelerate our line growth, and we are making progress on the sale of our corporate headquarters building. Our contract to sell the building, however, still contains contingencies. Therefore, there can be no assurance that we will be able to successfully consummate this proposed transaction."
eLEC Communications Corp. is a competitive local exchange carrier that is taking advantage of the convergence of the current and future competitive technological and regulatory developments in the telecommunications industry. eLEC offers small businesses and residential customers an integrated set of telecommunications products and services, including local exchange, local access, domestic and international long distance telephone, and a full suite of features including items such as three-way calling, call waiting and voice mail.
eLEC Communications Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
and Comprehensive Income (Loss)
(Unaudited)
For the For the
Six Months Ended Three Months Ended
May 31, May 31,
2003 2002 2003 2002
---------- ---------- ---------- ----------
Revenues $2,500,445 $8,175,683 $1,153,416 $3,700,591
---------- ---------- ---------- ----------
Costs and expenses:
Costs of services 1,337,129 5,484,594 579,434 2,454,267
Selling, general
and
administrative 2,780,871 5,039292 1,247,456 2,571,063
Depreciation and
amortization 63,643 136,219 32,827 82,084
---------- ---------- ---------- ----------
Total costs and
expenses 4,181,643 10,660,105 1,859,717 5,107,414
---------- ---------- ---------- ----------
Loss from
operations (1,681,198) (2,484,422) (706,301) (1,406,823)
---------- ---------- ---------- ----------
Other income
(expense):
Interest expense (69,444) (298,903) (34,357) (154,046)
Interest and other
income 164,680 10,603 79,622 6,098
Gain on sale of
assets 2,256,855 -- 659,966 --
Gain on sale of
investment
securities and
other
investments 83,761 684,233 49,925 630,952
---------- ---------- ---------- ----------
2,435,852 395,933 755,156 483,044
---------- ---------- ---------- ----------
Net income (loss) 754,654 (2,088,489) 48,855 (923,819)
Other comprehensive
income - unrealized
income on marketable
securities 4,226 514,817 13,796 483,721
---------- ---------- ---------- ----------
Comprehensive income
(loss) $ 758,880 ($1,573,672) $ 62,651 ($440,098)
---------- ---------- ---------- ----------
Basic and diluted
earnings (loss)
per share $ 0.05 ($0.13) $ 0.00 ($0.06)
---------- ---------- ---------- ----------
Weighted average
number of common
shares outstanding
Basic 15,608,282 15,606,079 15,608,282 15,608,282
Diluted 15,629,293 15,606,079 15,632,209 15,608,282
This release contains forward-looking statements that involve risks and uncertainties. eLEC's actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, among others, certain risks and uncertainties over which the company may have no control. For further discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see the discussions contained in eLEC's Annual Report on Form 10-KSB for the year ended November 30, 2002 and its Quarterly Report on Form 10-QSB for the quarters ended February 28, 2003 and May 31, 2003 and any subsequent SEC filings.