US LEC Corp. Announces Strong First Quarter 2001 Results

Q1 Core Revenue Grows 56% Year Over Year and 12% Over Prior Quarter;

EBITDA Loss Improves to $5.3 Million



* Added over 11,300 business trunks, a 14% increase from the previous

quarter.

* Added over 5,700 business lines, a 21% increase from the previous

quarter.

* Exceeded the 500th customer milestone for installation of data services

including frame relay, digital private line, web hosting and US LECnet.

* Announced that the United States General Services Administration (GSA)

has selected US LEC to provide telecommunications services to

additional locations in Atlanta, Georgia, and for the first time in

Jacksonville, Florida, adding to US LEC's GSA contracts in Memphis,

Tennessee.

* Announced that ECPI College of Technology has selected US LEC to

provide an integrated package of voice and data services to ten

campuses located in Virginia and North Carolina.

* Introduced services to our Hickory, NC, Gainesville, FL, and

Fredericksburg, VA markets.



Apr 27, 2001, 01:00 ET from US LEC Corp.

    CHARLOTTE, N.C., April 27 /PRNewswire/ -- US LEC Corp. (Nasdaq:   CLEC) a
 leading provider of integrated voice, data and Internet telecommunications
 services today announced strong first quarter results with record core revenue
 or revenue excluding reciprocal compensation and related facilities revenue,
 of $34.3 million and EBITDA losses narrowing to ($5.3) million.
     Net revenues for the quarter ended March 31, 2001, increased 50% to
 $38.1 million, compared with $25.4 million for the quarter ended
 March 31, 2000, and 13% sequentially compared to $33.6 million reported in the
 fourth quarter of 2000.  EBITDA loss for the first quarter improved to
 ($5.3) million compared to an EBITDA loss of ($5.8) million (excluding the
 $40 million provision for disputed receivables) in the fourth quarter of 2000.
 The Company reported a net loss of ($18.4) million, or ($0.66) per share, on
 27.8 million average shares outstanding for the first quarter ended
 March 31, 2001, compared with net loss of ($39.6) million, or ($1.44) per
 share, on 27.5 million average shares outstanding for the first quarter last
 year.
     Commenting on the Company's first quarter 2001 results, Aaron D. Cowell,
 US LEC's president, said, "We are very pleased to report another solid quarter
 for US LEC.  We are on target for our financial plans for 2001.  As a company,
 we are focused on high quality revenue streams and on providing exceptional
 customer care.  These disciplines have resulted in record sales and
 installations during the quarter making March our best month ever.  As a
 highlight, we're particularly pleased with our strong results in the data
 services marketplace.  We reached the 500 data customer installation milestone
 in February and our data revenues increased 32% for the quarter.
 Additionally, 40% of our new customers in the first quarter selected US LEC
 for data services.  We are confident our demonstrated ability to integrate
 best-of-class data services with proven local and long distance services in a
 bundled offering is providing a compelling competitive advantage for US LEC."
     Michael K. Robinson, executive vice president and chief financial officer
 of US LEC added, "US LEC solidly met its financial targets for the quarter.
 We remain focused on managing the cost side of the equation in today's
 difficult financial market environment.  Notably, one of our most important
 metrics, core revenue, increased 56% to $34.3 million in the first quarter
 over last year, and increased 12% sequentially over the previous quarter.  In
 addition, we achieved gross margins of 50% while continuing to expand into
 additional markets and adding to our network infrastructure to support future
 growth.  Our EBITDA losses continued to narrow and with approximately
 $70 million cash on hand and $20 million available in our credit line, we
 believe our announced business plan is fully funded to EBITDA positive.  In
 addition, we believe that we are well positioned to meet our growth objectives
 for the year while continuing our march to positive EBITDA."
     US LEC Corp will hold a conference call to discuss this press release on
 Friday, April 27, 2001, at 10:00 a.m. EDT.  A live broadcast of the conference
 call will be available online at www.uslec.com, and www.streetevents.com.  To
 listen to the live call, please go to either web site at least fifteen minutes
 early to register, download, and install any necessary audio software.  For
 those who cannot listen to the live broadcast, a replay will be available
 shortly after the call through the close of business on May 3, 2001.
     US LEC currently offers local, long distance, data, Internet and enhanced
 services to customers in Alabama, Florida, Georgia, Kentucky, Louisiana,
 Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina,
 Tennessee, Virginia and Washington D.C.  In addition, US LEC is currently
 certified to provide telecommunications services in Connecticut, Delaware,
 Indiana, Massachusetts, New Jersey, New York, Ohio and Texas.  US LEC's
 network is currently comprised of 23 Lucent 5ESS(R) AnyMedia(TM) digital
 switches, 17 Lucent CBX500 ATM switches, and an Alcatel MegaHub(R) 600ES
 switch in Charlotte.  The Company primarily serves telecommunications-
 intensive customers such as businesses, universities, financial institutions,
 professional service firms, hospitals, Internet service providers, hotels, and
 government agencies.  US LEC can be found on the World Wide Web at
 www.uslec.com.
     Except for the historical information contained herein, this report
 contains forward-looking statements, subject to uncertainties and risks,
 including the demand for US LEC's services, the ability of the Company to
 introduce additional products, the ability of the Company to successfully
 attract and retain personnel, competition in existing and potential additional
 markets, uncertainties regarding its dealings with ILECs and other
 telecommunications carriers and facilities providers, regulatory
 uncertainties, the possibility of adverse decisions related to reciprocal
 compensation and access charges owing to the Company by BellSouth, Sprint and
 other carriers, as well as the Company's ability to begin operations in
 additional markets.  These and other applicable risks are summarized in the
 "Forward-Looking Statements and Risk Factors" section and elsewhere in the
 Company's Annual Report on Form 10-K for the period ended December 31, 2000,
 and in other reports which are on file with the Securities and Exchange
 Commission.
 
                         US LEC Corp. and Subsidiaries
                     Consolidated Statements of Operations
                     (in thousands, except per share data)
                                  (Unaudited)
 
 
                                                        Three Months Ended
                                                             March 31,
                                                       2001           2000
     Revenue, net                                   $  38,055      $  25,363
     Cost of services                                  19,171         11,051
     Gross margin                                      18,884         14,312
 
     Selling, general and administration               24,228         16,013
     Loss on resolution of disputed revenue                --         55,345
     Depreciation and amortization                      7,775          4,393
     Interest income                                   (1,248)          (114)
     Interest expense                                   3,228          2,004
     Loss before income taxes                         (15,099)       (63,329)
 
     Income tax benefit                                    --        (23,727)
 
     Net loss                                       $ (15,099)     $ (39,602)
 
     Less: Preferred stock dividends                   (3,131)            --
     Less: Accretion of preferred stock issuance cost    (120)            --
 
     Net loss attributable to common stockholders   $ (18,350)     $ (39,602)
 
     Net loss per common share:
      Basic and diluted                             $   (0.66)     $   (1.44)
 
     Weighted average number of common shares outstanding:
      Basic and diluted                                27,768         27,513
 
     EBITDA(A)                                      $  (5,344)     $  (1,701)
 
 
     (A) EBITDA consists of earnings (loss) before interest income and expense,
         income taxes, depreciation and amortization, excluding loss of
         $55.3 million on resolution of disputed revenue.
 
 
                         US LEC Corp. and Subsidiaries
                     Condensed Consolidated Balance Sheets
                     (in thousands, except per share data)
                                  (Unaudited)
 
 
                                                     March 31,    December 31,
                                                        2001          2000
 
     ASSETS
 
     Cash and cash equivalents                      $  69,735      $ 105,821
     Restricted cash                                    1,300          1,300
     Accounts receivable, net                          70,935         61,165
     Prepaid expenses and other assets                  8,147          4,802
     Property and equipment, net                      187,940        188,052
     Deferred income taxes                              4,775          4,148
     Other assets                                       8,384          7,871
       Total assets                                 $ 351,216      $ 373,159
 
     LIABILITIES AND STOCKHOLDERS'
      DEFICIENCY
 
     Accounts payable                               $  23,529      $  30,556
     Deferred revenue                                   4,818          3,350
     Accrued network costs                              9,535          9,302
     Accrued expenses                                  13,009         15,199
     Deferred income taxes                              4,775          4,148
     Long-term debt                                   130,000        130,000
       Total liabilities                              185,666        192,555
 
     Series A Redeemable Convertible Preferred Stock  206,106        202,854
 
     STOCKHOLDERS' DEFICIENCY
 
     Common stock - Class A, $.01 par value (122,925
      authorized shares, 11,228 outstanding
      at March 31, 2001)                                  112            109
     Common stock - Class B, $.01 par value (17,075
      authorized shares, 16,540 outstanding
      at March 31, 2001)                                  165            168
     Additional paid-in capital                        73,813         73,813
     Retained deficit                                (114,646)       (96,340)
       Total stockholders' deficiency                 (40,556)       (22,250)
 
     TOTAL LIABILITIES AND STOCKHOLDERS'
      DEFICIENCY                                    $ 351,216      $ 373,159
 
 
                         US LEC Corp. and Subsidiaries
                        QUARTERLY STATISTICAL HIGHLIGHTS
 
 
                              March 31,  December 31, September 30,  June 30,
                                2001          2000        2000         2000
 
     Local Switches in Service   23            23           21            19
     Number of States Served     12            12           11            10
     Number of Customers      4,446         3,929        3,410         2,808
     Number of Employees        849           816          741           632
     Number of Sales Employees  355           330          289           234
 
 
     CONTACT:  financial, Michael K. Robinson, Executive Vice President & Chief
 Financial Officer, 704-319-1000, or mrobinson@uslec.com, or investors, James
 Stawski, Director of Investor Relations, 704-319-1189, or jstawski@uslec.com,
 or media, Jennifer Sharpe, Public Relations Manager, 704-319-1135, or
 jsharpe@uslec.com, all of US LEC Corp
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X14151654
 
 

SOURCE US LEC Corp.
    CHARLOTTE, N.C., April 27 /PRNewswire/ -- US LEC Corp. (Nasdaq:   CLEC) a
 leading provider of integrated voice, data and Internet telecommunications
 services today announced strong first quarter results with record core revenue
 or revenue excluding reciprocal compensation and related facilities revenue,
 of $34.3 million and EBITDA losses narrowing to ($5.3) million.
     Net revenues for the quarter ended March 31, 2001, increased 50% to
 $38.1 million, compared with $25.4 million for the quarter ended
 March 31, 2000, and 13% sequentially compared to $33.6 million reported in the
 fourth quarter of 2000.  EBITDA loss for the first quarter improved to
 ($5.3) million compared to an EBITDA loss of ($5.8) million (excluding the
 $40 million provision for disputed receivables) in the fourth quarter of 2000.
 The Company reported a net loss of ($18.4) million, or ($0.66) per share, on
 27.8 million average shares outstanding for the first quarter ended
 March 31, 2001, compared with net loss of ($39.6) million, or ($1.44) per
 share, on 27.5 million average shares outstanding for the first quarter last
 year.
     Commenting on the Company's first quarter 2001 results, Aaron D. Cowell,
 US LEC's president, said, "We are very pleased to report another solid quarter
 for US LEC.  We are on target for our financial plans for 2001.  As a company,
 we are focused on high quality revenue streams and on providing exceptional
 customer care.  These disciplines have resulted in record sales and
 installations during the quarter making March our best month ever.  As a
 highlight, we're particularly pleased with our strong results in the data
 services marketplace.  We reached the 500 data customer installation milestone
 in February and our data revenues increased 32% for the quarter.
 Additionally, 40% of our new customers in the first quarter selected US LEC
 for data services.  We are confident our demonstrated ability to integrate
 best-of-class data services with proven local and long distance services in a
 bundled offering is providing a compelling competitive advantage for US LEC."
     Michael K. Robinson, executive vice president and chief financial officer
 of US LEC added, "US LEC solidly met its financial targets for the quarter.
 We remain focused on managing the cost side of the equation in today's
 difficult financial market environment.  Notably, one of our most important
 metrics, core revenue, increased 56% to $34.3 million in the first quarter
 over last year, and increased 12% sequentially over the previous quarter.  In
 addition, we achieved gross margins of 50% while continuing to expand into
 additional markets and adding to our network infrastructure to support future
 growth.  Our EBITDA losses continued to narrow and with approximately
 $70 million cash on hand and $20 million available in our credit line, we
 believe our announced business plan is fully funded to EBITDA positive.  In
 addition, we believe that we are well positioned to meet our growth objectives
 for the year while continuing our march to positive EBITDA."
     US LEC Corp will hold a conference call to discuss this press release on
 Friday, April 27, 2001, at 10:00 a.m. EDT.  A live broadcast of the conference
 call will be available online at www.uslec.com, and www.streetevents.com.  To
 listen to the live call, please go to either web site at least fifteen minutes
 early to register, download, and install any necessary audio software.  For
 those who cannot listen to the live broadcast, a replay will be available
 shortly after the call through the close of business on May 3, 2001.
     US LEC currently offers local, long distance, data, Internet and enhanced
 services to customers in Alabama, Florida, Georgia, Kentucky, Louisiana,
 Maryland, Mississippi, North Carolina, Pennsylvania, South Carolina,
 Tennessee, Virginia and Washington D.C.  In addition, US LEC is currently
 certified to provide telecommunications services in Connecticut, Delaware,
 Indiana, Massachusetts, New Jersey, New York, Ohio and Texas.  US LEC's
 network is currently comprised of 23 Lucent 5ESS(R) AnyMedia(TM) digital
 switches, 17 Lucent CBX500 ATM switches, and an Alcatel MegaHub(R) 600ES
 switch in Charlotte.  The Company primarily serves telecommunications-
 intensive customers such as businesses, universities, financial institutions,
 professional service firms, hospitals, Internet service providers, hotels, and
 government agencies.  US LEC can be found on the World Wide Web at
 www.uslec.com.
     Except for the historical information contained herein, this report
 contains forward-looking statements, subject to uncertainties and risks,
 including the demand for US LEC's services, the ability of the Company to
 introduce additional products, the ability of the Company to successfully
 attract and retain personnel, competition in existing and potential additional
 markets, uncertainties regarding its dealings with ILECs and other
 telecommunications carriers and facilities providers, regulatory
 uncertainties, the possibility of adverse decisions related to reciprocal
 compensation and access charges owing to the Company by BellSouth, Sprint and
 other carriers, as well as the Company's ability to begin operations in
 additional markets.  These and other applicable risks are summarized in the
 "Forward-Looking Statements and Risk Factors" section and elsewhere in the
 Company's Annual Report on Form 10-K for the period ended December 31, 2000,
 and in other reports which are on file with the Securities and Exchange
 Commission.
 
                         US LEC Corp. and Subsidiaries
                     Consolidated Statements of Operations
                     (in thousands, except per share data)
                                  (Unaudited)
 
 
                                                        Three Months Ended
                                                             March 31,
                                                       2001           2000
     Revenue, net                                   $  38,055      $  25,363
     Cost of services                                  19,171         11,051
     Gross margin                                      18,884         14,312
 
     Selling, general and administration               24,228         16,013
     Loss on resolution of disputed revenue                --         55,345
     Depreciation and amortization                      7,775          4,393
     Interest income                                   (1,248)          (114)
     Interest expense                                   3,228          2,004
     Loss before income taxes                         (15,099)       (63,329)
 
     Income tax benefit                                    --        (23,727)
 
     Net loss                                       $ (15,099)     $ (39,602)
 
     Less: Preferred stock dividends                   (3,131)            --
     Less: Accretion of preferred stock issuance cost    (120)            --
 
     Net loss attributable to common stockholders   $ (18,350)     $ (39,602)
 
     Net loss per common share:
      Basic and diluted                             $   (0.66)     $   (1.44)
 
     Weighted average number of common shares outstanding:
      Basic and diluted                                27,768         27,513
 
     EBITDA(A)                                      $  (5,344)     $  (1,701)
 
 
     (A) EBITDA consists of earnings (loss) before interest income and expense,
         income taxes, depreciation and amortization, excluding loss of
         $55.3 million on resolution of disputed revenue.
 
 
                         US LEC Corp. and Subsidiaries
                     Condensed Consolidated Balance Sheets
                     (in thousands, except per share data)
                                  (Unaudited)
 
 
                                                     March 31,    December 31,
                                                        2001          2000
 
     ASSETS
 
     Cash and cash equivalents                      $  69,735      $ 105,821
     Restricted cash                                    1,300          1,300
     Accounts receivable, net                          70,935         61,165
     Prepaid expenses and other assets                  8,147          4,802
     Property and equipment, net                      187,940        188,052
     Deferred income taxes                              4,775          4,148
     Other assets                                       8,384          7,871
       Total assets                                 $ 351,216      $ 373,159
 
     LIABILITIES AND STOCKHOLDERS'
      DEFICIENCY
 
     Accounts payable                               $  23,529      $  30,556
     Deferred revenue                                   4,818          3,350
     Accrued network costs                              9,535          9,302
     Accrued expenses                                  13,009         15,199
     Deferred income taxes                              4,775          4,148
     Long-term debt                                   130,000        130,000
       Total liabilities                              185,666        192,555
 
     Series A Redeemable Convertible Preferred Stock  206,106        202,854
 
     STOCKHOLDERS' DEFICIENCY
 
     Common stock - Class A, $.01 par value (122,925
      authorized shares, 11,228 outstanding
      at March 31, 2001)                                  112            109
     Common stock - Class B, $.01 par value (17,075
      authorized shares, 16,540 outstanding
      at March 31, 2001)                                  165            168
     Additional paid-in capital                        73,813         73,813
     Retained deficit                                (114,646)       (96,340)
       Total stockholders' deficiency                 (40,556)       (22,250)
 
     TOTAL LIABILITIES AND STOCKHOLDERS'
      DEFICIENCY                                    $ 351,216      $ 373,159
 
 
                         US LEC Corp. and Subsidiaries
                        QUARTERLY STATISTICAL HIGHLIGHTS
 
 
                              March 31,  December 31, September 30,  June 30,
                                2001          2000        2000         2000
 
     Local Switches in Service   23            23           21            19
     Number of States Served     12            12           11            10
     Number of Customers      4,446         3,929        3,410         2,808
     Number of Employees        849           816          741           632
     Number of Sales Employees  355           330          289           234
 
 
     CONTACT:  financial, Michael K. Robinson, Executive Vice President & Chief
 Financial Officer, 704-319-1000, or mrobinson@uslec.com, or investors, James
 Stawski, Director of Investor Relations, 704-319-1189, or jstawski@uslec.com,
 or media, Jennifer Sharpe, Public Relations Manager, 704-319-1135, or
 jsharpe@uslec.com, all of US LEC Corp
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X14151654
 
 SOURCE  US LEC Corp.