Portfolio: Choice One Communications

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PORTFOLIO

A weekly report compiled from the proxy statement and annual report of a
publicly held company with local headquarters or a company with a major
division in the area

NASDAQ–CWON

Based in Rochester, Choice One Communications Inc. is a communications
provider offering broadband data and voice telecommunications services
primarily to small and midsize businesses in the northeastern United States.
The company’s offerings include high-speed data and Internet services, and
local and long-distance telephone services. Choice One was founded in June
1998 by a group of telecommunications executives led by Steve Dubnik, the
former chief operating officer of North American Operations of ACC Corp.

The company made its initial public offering of 7,145,000 common shares on
Feb. 17. The company is expected to use the proceeds to fund its expansion
throughout the Northeast.

In November 1999, Choice One acquired Atlantic Connections LLC, a local and
long-distance service provider with operations in New Hampshire and
Massachusetts. The cost of the acquisition included an initial cash purchase
price of approximately $8.3 million plus up to an additional $2.1 million to
be paid in cash, or at Choice One’s option, in common stock.

During the period from its inception on June 2, 1998, through December 31,
1998, Choice One was in the development stage of operations and did not
generate any revenue. The company incurred a net loss of $5.1 million, or 28
cents per share, during that start-up period, mainly due to selling, general
and administrative expenses. Choice One became operational in nine markets by
the end of 1999 and generated $4.5 million in revenue for the year. The
company reported a net loss of $32.5 million, or $1.47 per share, in 1999.

The company’s fiscal year ended on Dec. 31.

Common shares outstanding (as of Feb. 17) 29,938,047
Price per share of common stock on Feb. 18 $36.00
Total market value on Feb. 18 $1,077,769,692.00
Controlled by all directors and officers as a group 22,247,427(1)
(74.16 percent)
Performance Record
(Dollars in thousands except per-share data)
1999 1998
Total revenue $4,518 $–
Net income (loss) (32,475) (5,074)
Net income per share
(loss) (1.47) (0.28)
Stockholders’ equity 26,724 13,130
Total assets 94,512 24,472
Long-term debt 51,500 —

Directors Number of common shares(1)
Steve Dubnik, 37, chairman, president
and CEO 2,200,253
John Ehrenkranz, 34, managing director,
Morgan Stanley & Co. Inc. 11,043,826
Bruce Hernandez, 39, principal and CEO,
Waller Sutton Media Partners L.P. 1,323,007
Royce Holland, 51, chairman and CEO of
Allegiance Telecom Inc. 66,150
Michael Janson, 52, managing director,
Morgan Stanley & Co. Inc. 11,043,826
Robert Van Degna, 55, managing director,
Fleet Equity Partners 2,646,014

Executive Compensation
Officer 1999 cash compensation(2)
Steve Dubnik, president and CEO 162,154
Kevin Dickens, senior vice president,
operations and engineering 150,571
Mae Squier-Dow, senior vice president, sales,
marketing and service 150,571
Philip Yawman, senior vice president,
corporate development 150,159
Ajay Sabherwal, senior vice president, finance,
and chief financial officer 118,460
Above executive officers as a group $731,915

Footnotes:
(1)Includes shares subject to vesting requirements and shares owned
in partnership.
(2)Includes salaries, bonuses, value realized from stock options
exercised and all other compensation.

Researched by Bill Myers

2/25/00–Rochester Business Journal