SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)November 1, 1999
----------------
(October 28, 1999)
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ICG COMMUNICATIONS, INC.
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(Exact name of registrant as specified in charter)
Delaware 1-11965 84-1342022
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
161 Inverness Drive West, Englewood, Colorado 80112
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(Address of principal executive offices)
ICG HOLDINGS (CANADA) CO.
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(Exact name of registrant as specified in charter)
Canada 1-11052 Not Applicable
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
161 Inverness Drive West, Englewood, Colorado 80112
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(Address of principal executive offices)
ICG HOLDINGS, INC.
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(Exact name of registrant as specified in charter)
Colorado 33-96540 84-1158866
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
161 Inverness Drive West, Englewood, Colorado 80112
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(Address of principal executive offices)
ICG FUNDING, LLC
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(Exact name of registrant as specified in charter)
Delaware 333-40495 84-1434980
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
161 Inverness Drive West, Englewood, Colorado 80112
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(Address of principal executive offices)
Registrants' telephone numbers, including area codes (888)424
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1144 and (303) 414-5000
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<PAGE>
Item 5. Other Events.
------ ------------
In a press release dated October 28, 1999, ICG
Communications, Inc., a Delaware corportation (the "Company"),
announced its earnings information and results of operations for
the Company's 1999 third quarter. A copy of the press
release is attached.
Item 7. Exhibit.
------ --------
(c) Exhibit
-------
99.1 Press Release, dated October 28, 1999.
<PAGE>
INDEX TO EXHIBIT
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
<PAGE>
INDEX TO EXHIBIT
99.1 Press Release, dated October 28, 1999.
<PAGE>
EXHIBIT 99.1
Press Release, dated October 28, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrants have duly caused this report to be
signed on their behalf by the undersigned hereunto duly
authorized.
Dated: October 29, 1999 ICG COMMUNICATIONS, INC.
By:/s/ Harry R. Herbst
----------------------
Harry R. Herbst
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
ICG HOLDINGS (CANADA) CO.
By: /s/ Harry R. Herbst
---------------------
Harry R. Herbst
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
ICG HOLDINGS, INC.
By: /s/ Harry R. Herbst
---------------------
Harry R. Herbst
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
ICG FUNDING, LLC
By: ICG Communications, Inc.
Common Member and Manager
By: /s/ Harry R. Herbst
---------------------
Harry R. Herbst
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
EXHIBIT 99.1
[GRAPHIC OMITTED]
FOR IMMEDIATE RELEASE
For more information, contact:
Media Contact: Investor Contact:
Silvia McLachlan (303) 414-5347
(303) 414-5342 [email protected]
[email protected] ------------------------------
- ------------------------------
ICG Communications Adds Record 90,422 Lines
During the Third Quarter of 1999
ENGLEWOOD, CO. (Oct. 28, 1999) - ICG Communications, Inc. (NASDAQ: ICGX) today
announced its third quarter results, which were highlighted by the addition of
90,422 access lines, equivalent to 18 percent sequential growth and a 101
percent year over year growth. ICG ended the quarter with approximately 585,000
lines in service. In addition, the Company signed significant long-term
contracts for value-added advanced Internet products and services.
Revenue increased $131.9 million, or 64 percent, from $205.3 million for the
nine months ended September 30, 1998 to $337.2 million for the nine months ended
September 30, 1999. The Company's third quarter revenue was $115.2 million,
which excludes $16.2 million related to the recognition of local tandem
switching and transport elements of reciprocal compensation. Excluding all
revenue related to reciprocal compensation, the remaining components of the
Company's third quarter total revenue increased $13.4 million, or 17 percent,
compared to the second quarter of 1999.
- --------------------------------------------------------------------------------
Note: ICG will be hosting a conference call for analysts and investors on
October 28 at 9 a.m. MDT. To view the live Web-cast, or a replay, log onto ICG's
Web page at www.icgcom.com
- --------------------------------------------------------------------------------
<PAGE>
ICG Third Quarter Earnings Page 2 of 10
Based on a ruling by the California Public Utilities Commission (CPUC) that did
not involve ICG, the Company announced on September 21, 1999 that certain
receivables for tandem switching and common transport rate elements previously
billed to incumbent local exchange carriers (ILECS) may be uncollectible. Based
on the CPUC ruling, the Company made a decision to no longer record these
elements of reciprocal compensation in California or in any of the other states
where the Company operates. As a result, the Company's third quarter revenue
decreased $2.5 million, compared to the second quarter of 1999. ICG will
continue to bill and pursue the collection of the tandem and transport element
of reciprocal compensation.
Also, based on the CPUC ruling, the Company recorded a provision of $45.2
million for the potentially uncollectible accounts receivable related to the
tandem and transport elements recognized in periods through June 30, 1999. Third
quarter selling, general and administrative (SG&A) expense was $94.6 million,
including the $45.2 million provision. This amount compares to the 1999 second
quarter SG&A expense of $43.0 million. The Company's third quarter earnings
before interest, taxes, depreciation, amortization, and nonrecurring and noncash
charges (EBITDA) was a deficit of $(45.7) million, compared to $15.2 million for
the second quarter of 1999. EBITDA improved by $22.0 million for the nine-month
period ended September 30, 1999, compared to the same nine-month period in 1998.
<PAGE>
ICG Third Quarter Earnings Page 3 of 10
"During the third quarter, we solidified our role as a leading Internet
infrastructure provider," said J. Shelby Bryan, chairman and chief executive
officer of ICG. "We believe that we are well-positioned to capture 20 percent of
the nation's dial-up Internet traffic by the end of 2000."
ICG met several other objectives during the third quarter, including the signing
of definitive agreements for the sales of its FOTI and Satellite divisions and
the completion of a $200 million loan facility.
Revenue Components:
ICG's third quarter local services revenue, excluding reciprocal compensation,
grew by 23 percent, or $8.6 million, from the second quarter of 1999 due
primarily to the increase in access lines and related minutes of use. In
addition, special access services grew by $5.9 million, or 25 percent, between
the second and third quarters of 1999 as a result of the increased demand for
dedicated transport.
<TABLE>
<CAPTION>
ICG's Revenue Components
($ in millions)
Three months ended Annual Sequential
9/30/99 9/30/98 % Change 6/30/99 % Change
- ------------------------------- ------------ ----------- --------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Local services $69.5 46.2 50% $76.8 (10%)
Long distance 4.5 4.6 (2%) 5.1 (12%)
Special access 29.3 20.2 45% 23.4 25%
Switched termination 11.9 11.6 3% 12.4 (4%)
- ------------------------------- ------------ ----------- ------------
Total Revenue 115.2 82.6 39% 117.7 (2%)
- ------------------------------- ------------ ----------- --------------- ------------ --------------
</TABLE>
<PAGE>
ICG Third Quarter Earnings Page 4 of 10
Depreciation and Amortization, and Interest Expense:
Depreciation and amortization for the three months and nine months ended
September 30, 1999 was $45.1 and $126.1 million, respectively.
Interest expense, net of interest income, for the three months and nine months
ended September 30, 1999 was $49.1 million and $140.0 million.
Discontinued Operations:
The Company records results from its fiber optic (FOTI) and Satellite divisions
as discontinued operations. Subsequent to the end of the third quarter, the
Company announced the completion of the sale of its FOTI division. ICG expects
combined proceeds from the sale of its FOTI and Satellite divisions to be in
excess of $120 million.
Net Loss:
Net loss for the three months and nine months ended September 30, 1999 was
$155.8 million and $181.5 million, respectively.
Loss per share for the three months and nine months ended September 30, 1999 was
$3.29 and $2.12, respectively.
Operations:
At September 30, 1999, ICG had 4,449 operational fiber route miles (with another
523 miles under construction), compared to 3,995 route miles at September 30,
<PAGE>
ICG Third Quarter Earnings Page 5 of 10
1998. The Company increased its buildings connected by 51 percent, reaching
7,415 buildings connected at the end of the current quarter, compared to 4,901
buildings connected on September 30, 1998. ICG ended the quarter with 29 circuit
switches. In addition, the Company ended the quarter with 23 installed ATM
switches, which will be operational in the fourth quarter.
About ICG Communications:
ICG Communications, Inc. is one of the nation's fastest-growing, Internet
infrastructure service providers to the Internet service provider (ISP)
community. Through its nationwide communications network that serves more than
700 cities, ICG provides access for approximately 10 percent of the nation's
dial-up Internet traffic. In addition, ICG provides high-quality telecom
services, including local, long distance and data communications, to businesses
nationwide, as well as direct connectivity to interexchange carriers. For more
information on ICG Communications (NASDAQ: ICGX), visit the company's Web site
at http://www.icgcom.com.
###
Information and statements contained in this press release contain expressed or
implied, forward-looking disclosures that are based on the beliefs of management
as well as assumptions made based on information currently available to
management. These forward-looking statements and information involve risks and
uncertainty, including, but not limited to, future demand for the company's
services, general economic conditions, government regulations, competition and
customer strategies, capital deployment, the impact of pricing, and other risks
and uncertainties. Should one or more of these risks materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated or expected. These
risks are detailed from time to time in various reports filed by ICG with the
SEC, including Form 10-K filed for the fiscal year ended December 31, 1998,
Forms 10-Q for the quarters ended March 31, 1999 and June 30, 1999, and Form
10-Q to be filed for the quarter ended September 30, 1999.
<PAGE>
ICG Third Quarter Earnings Page 6 of 10
Attachments:
Key Operating Statistics,
Consolidated Statements of Operations, and
Consolidated Condensed Balance Sheets
<PAGE>
ICG Third Quarter Earnings Page 7 of 10
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Key Operating Statistics
As of, Sept 30, June 30, March 31, Dec 31, Sept 30,
1999 1999 1999 1998 1998
- -------------------------------- -------------- -------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Access lines in service 584,827 494,405 418,610 354,482 290,983
- -------------------------------- -------------- -------------- -------------- ------------ -------------
Fiber route miles
Operational 4,449 4,406 4,351 4,255 3,995
Under construction 523 -- -- -- --
- -------------------------------- -------------- -------------- -------------- ------------ -------------
Fiber strand miles
Operational 167,067 164,416 155,788 134,152 127,756
Under construction 19,224 -- -- -- --
- -------------------------------- -------------- -------------- -------------- ------------ -------------
Buildings connected
On network 939 874 789 777 684
Hybrid 6,476 5,915 5337 4,620 4,217
-------------- -------------- -------------- ------------ -------------
Total buildings 7,415 6,789 6,126 5,397 4,901
connected
- -------------------------------- -------------- -------------- -------------- ------------ -------------
Switches
Circuit 29 29 29 29 21
Data 16 16 17 16 15
-------------- -------------- -------------- ------------ -------------
Total switches 45 45 46 45 36
- -------------------------------- -------------- -------------- -------------- ------------ -------------
Collocations with ILECs 139 126 111 59 47
- -------------------------------- -------------- -------------- -------------- ------------ -------------
</TABLE>
<PAGE>
ICG Press Release, 10/28/99, Page 8
[GRAPHIC OMITTED]
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
($ in thousands except per share data)
<TABLE>
<CAPTION>
Year-over-year comparison Sequential comparison
-------------------------- -------------------------
Three months ended, Three months ended,
-------------------------- ---------------------------
Revenue: 9/30/99 9/30/98 % Change 9/30/99 6/30/99 % Change
------------- ------------ ------------ -------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Local services $ 69,454 46,171 50% $ 69,454 76,770 (10%)
Long distance 4,541 4,572 (1%) 4,541 5,093 (11%)
Special access 29,328 20,213 45% 29,328 23,438 25%
Switched terminating access 11,843 11,611 2% 11,843 12,353 (4%)
------------- ------------ ------------- ------------
Total revenue 115,166 82,567 39% 115,166 117,654 (2%)
Operating costs (66,284) (48,145) 38% (66,284) (59,458) 11%
Selling, general and administrative (94,558) (39,485) 139% (94,558) (42,975) 120%
------------- ------------ ------------- ------------
EBITDA (before nonrecurring and
noncash charges (45,676) (5,063) 802% (45,676) 15,221 (400%)
Depreciation and amortization (45,079) (22,715) 98% (45,079) (44,683) 1%
Provision for impairment of long-lived assets - - NA - (29,300) (100%)
Other, net (626) - NA (626) (398) 57%
------------- ------------ ------------- ------------
Operating loss (91,381) (27,778) 229% (91,381) (59,160) 54%
Interest expense (52,891) (45,958) 15% (52,891) (51,308) 3%
Interest income 3,772 8,190 (54%) 3,772 3,793 (1%)
Other, net (333) (350) (5%) (333) (1,843) (82%)
------------- ------------ ------------- ------------
Loss from continuing operations before
preferred dividends and extraordinary gain (140,833) (65,896) 114% (140,833) (108,518) 30%
Income tax expense - (45) - - NA
Accretion and preferred dividends on preferred
securities of subsidiaries (15,694) (13,987) 12% (15,694) (15,241) 3%
------------- ------------ ------------- ------------
Loss from continuing operations
before extraordinary gain (156,527) (79,928) 96% (156,527) (123,759) 26%
Discontinued operations:
Net income (loss) from discontinued operations 748 (15,535) (105%) 748 (692) (208%)
Loss on disposal of discontinued
operations - (1,201) (100%) - (7,959) (100%)
------------- ------------ ------------- ------------
748 (16,736) (104%) 748 (8,651) (109%)
============= ============ ============= ============
Net loss $ (155,779) (96,664) (61%) $ (155,779) (132,410) (18%)
============= ============ ============= ============
Net loss per share - basic and diluted:
Loss from continuing operations $ (3.31) (1.75) (89%) $ (3.31) (2.63) (26%)
Net income (loss) from discontinued operations 0.02 (0.37) 104% 0.02 (0.19) NA
------------- ------------ ------------- ------------
Net loss per share $ (3.29) (2.12) (55%) $ (3.29) (2.82) (17%)
============= ============ ============= ============
Weighted average number
of shares outstanding 47,320 45,588 47,320 46,988
============= ============ ============= ============
</TABLE>
<PAGE>
ICG Press Release, 10/28/99, Page 9
[GRAPHIC OMITTED]
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
($ in thousands except per share data)
<TABLE>
<CAPTION>
Nine months ended,
------------------------------
Revenue: 9/30/99 9/30/98 % Change
------------- ------------- ----------
<S> <C> <C> <C>
Local services $ 213,623 98,740 116%
Long distance 14,765 15,431 (4%)
Special access 75,328 53,883 40%
Switched terminating access 33,435 37,215 (10%)
------------- -------------
Total revenue 337,151 205,269 64%
Operating costs (179,391) (137,113) 31%
Selling, general and administrative (180,341) (112,699) 60%
------------- -------------
EBITDA (before nonrecurring and
noncash charges) (22,581) (44,543) (49%)
Depreciation and amortization (126,137) (54,310) 132%
Provision for impairment of long-lived assets (29,300) - NA
Other, net (91) (498) (82%)
------------- -------------
Operating loss (178,109) (99,351) 79%
Interest expense (151,637) (121,862) 24%
Interest income 11,669 22,175 (47%)
Other, net (2,676) (962) 178%
------------- -------------
Loss from continuing operations before
preferred dividends and extraordinary gain (320,753) (200,000) 60%
Income tax expense - (45) (100%)
Accretion and preferred dividends on
preferred securities of subsidiaries (45,739) (40,774) 12%
------------- -------------
Loss from continuing operations
before extraordinary gain (366,492) (240,819) 52%
Discontinued operations:
Net loss from discontinued operations (55) (57,235) (100%)
Loss on disposal of discontinued
operations (7,959) (1,201) 563%
------------- -------------
(8,014) (58,436) (86%)
Extraordinary gain on sales of operations
of NETCOM, net of income taxes 193,029 - NA
============= =============
Net loss $(181,477) (299,255) 39%
============= =============
Net loss per share - basic and diluted:
Loss from continuing operations $ (7.81) (5.36) (46%)
Net loss from discontinued operations (0.17) (1.30) 87%
Extraordinary gain 4.11 - NA
------------- -------------
Net loss per share $ (3.87) (6.66) 42%
============= =============
Weighted average number
of shares outstanding 46,948 44,922
============= =============
</TABLE>
<PAGE>
ICG Press Release, 10/28/99, Page 10
[GRAPHIC OMITTED]
CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited)
($ in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
Assets: 1999 1998
------------------------------------------
<S> <C> <C>
Cash, cash equivalents and short-term investments $ 170,659 $ 262,307
Receivables, net 140,935 113,559
Property and equipment, net 1,203,429 908,058
Other assets, net 207,314 202,883
Net assets of discontinued operations 65,113 102,840
------------------ ------------------
Total assets $ 1,787,450 $ 1,589,647
================== ==================
Liabilities and Stockholders' Deficit:
Accounts payable and accrued liabilities $ 150,597 $ 87,636
Capital leases 70,013 67,792
Debt 1,855,530 1,599,044
Other long-term liabilities 862 -
------------------ ------------------
Total liabilities 2,077,002 1,754,472
------------------ ------------------
Redeemable preferred securities of subsidiaries 505,396 466,352
Stockholders' deficit:
Common stock 475 464
Additional paid-in capital 595,516 577,940
Accumulated deficit (1,390,939) (1,209,462)
Accumulated other comprehensive loss - (119)
------------------ ------------------
Total stockholders' deficit (794,948) (631,177)
------------------ ------------------
Total liabilities and stockholders' deficit $ 1,787,450 $ 1,589,647
================== ==================
Diluted shares (in thousands) 50,318 56,183
</TABLE>
