WHITE PLAINS, N.Y., Oct. 14, 2003 (PRIMEZONE) -- eLEC Communications Corp. (OTCBB:ELEC), a provider of local and long distance telephone service, today announced financial results for the third quarter ended August 31, 2003. eLEC reported net income for the third fiscal quarter of 2003 of $694,441, or $.04 per share, as compared to a net loss of ($391,095), or ($0.03) per share, for the third fiscal quarter of 2002.
eLEC also announced the sale of its wholly-owned subsidiary, Essex Communications, Inc. The sale will result in a fourth quarter book gain of approximately $7,000,000, resulting primarily from the elimination of liabilities from eLEC's consolidated financial statements. The customer base of Essex was sold, and certain liabilities of Essex were assumed, by a buyer on December 31, 2002. The remainder of Essex, which has been inactive and has had no sales since January 1, 2003, has now been sold.
The results of operations for the third fiscal quarter of 2003 as compared to the third fiscal quarter of 2002 were impacted by the sale in December 2002 of the customer base of Essex, which had approximately 25,000 lines billed at the end of the third quarter of 2002, as compared to approximately 11,000 lines billed at the end of the third quarter of fiscal 2003 by eLEC's two operating subsidiaries, New Rochelle Telephone and Telecarrier Services, both of which had no local service revenue in fiscal 2002.
The following are key operational comparisons for the third quarter of fiscal 2003 and fiscal 2002:
Quarterly revenues amounted to $1,275,889 in fiscal 2003, a decrease of $2,353,628 or 65%, from quarterly revenues of $3,629,517 in fiscal 2002. The gross margin in fiscal 2003 amounted to 49.1% as compared to a gross margin of 36.5% in fiscal 2002. The loss from operations amounted to ($493,562) in fiscal 2003, a decrease of $517,079, or 51.2%, from a loss from operations of ($1,010,641) in fiscal 2002.
The following are key operational comparisons between the first, second and third quarters of fiscal 2003:
Billed lines at the end of the third quarter amounted to 10,790 compared to 8,788 at the end of the second quarter and 4,499 at the end of the first quarter. The gross margin in the third quarter amounted to 49.1%, compared to 49.8% in the second quarter and 43.8% in the first quarter. The loss from operations in the third quarter amounted to ($493,562), compared to ($663,984) in the second quarter and ($974,897) in the first quarter.
eLEC's CEO, Paul Riss, stated, "We continue to make progress in our operations by decreasing costs and increasing revenues. Additionally, the sale of certain assets of Essex has generated profits for us in each of the last three quarters. With the sale in the fourth quarter of the remainder of Essex, we will see the equity on our balance sheet improve by approximately $7,000,000 at year-end. We anticipate that this transaction, coupled with the sale of our corporate headquarters building last week, will strengthen our financial condition so that we can grow our customer base more rapidly and generate operating profits in the future."
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
Nine Months Ended Three Months Ended
Aug. 31, Aug. 31,
2003 2002 2003 2002
----------- ----------- ----------- -----------
Revenues $ 3,776,334 $11,805,200 $ 1,275,889 $ 3,629,517
----------- ----------- ----------- -----------
Costs and expenses:
Costs of services 1,986,726 7,789,871 649,597 2,305,277
Selling, general
and
administrative 3,841,201 7,286,855 1,102,647 2,290,554
Depreciation and
amortization 80,850 180,546 17,207 44,327
----------- ----------- ----------- -----------
Total costs and
expenses 5,908,777 15,257,272 1,769,451 4,640,158
----------- ----------- ----------- -----------
Loss from
operations (2,132,443) (3,452,072) (493,562) (1,010,641)
----------- ----------- ----------- -----------
Other income
(expense):
Interest expense (105,509) (386,186) (36,065) (87,283)
Interest and other
income (loss) 88,063 (22,237) (34,300) 10,151
Gain on sale of
assets 3,511,297 -- 1,254,442 --
Gain on sale of
investment
securities
and other
investments 121,687 1,380,911 37,926 696,678
----------- ----------- ----------- -----------
3,615,538 972,488 1,222,003 619,546
----------- ----------- ----------- -----------
Income (loss)
before
taxes 1,483,095 (2,479,584) 728,441 (391,095)
Provision for
taxes 34,000 -- 34,000 --
----------- ----------- ----------- -----------
Net income (loss) 1,449,095 (2,479,584) 694,441 (391,095)
Other comprehensive
income --
un-realized income
on marketable
securities -- 92,258 -- 28,910
----------- ----------- ----------- -----------
Comprehensive
income
(loss) $ 1,449,095 $(2,387,326) $ 694,441 $ (362,185)
=========== =========== =========== ===========
Basic and diluted
earnings (loss)
per share $ 0.09 $ (0.16) $ 0.04 $ (0.03)
=========== =========== =========== ===========
Weighted average
number of common
shares
outstanding
Basic 15,633,829 15,606,818 15,684,369 15,608,282
=========== =========== =========== ===========
Diluted 15,664,231 15,606,818 15,733,552 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, May 31, 2003 and August 31, 2003, and any subsequent SEC filings.