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UNITED STATES
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) July 3, 1997
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IXC Communications, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-20803 74-2644120
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(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
5000 Plaza on the Lake, Suite 200, Austin, Texas 78746
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (512) 328-1112
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Not applicable
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS
Attached as Exhibit 99.1 is the press release issued by IXC
Communications, Inc. dated July 3, 1997 which is hereby incorporated by
reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
99.1 Press release dated July 3, 1997
2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 21, 1997
IXC Communications, Inc.
By: /s/ JOHN J. WILLINGHAM
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John J. Willingham
Senior Vice President
Chief Financial Officer
and Assistant Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
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<C> <S>
99.1 Press release dated July 3, 1997
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EXHIBIT 99.1
IXC News Release
1997 PROGRESS REPORT
AUSTIN, Texas - July 3, 1997 - IXC Communications, Inc. (NASDAQ:IIXC) today
reported on the status of the development of its expanded fiber optics network,
its private line business and its switched services business.
The Company indicated that the Company's network expansion and private line
business have achieved excellent results, and the Company has achieved
significant revenue growth in its new switched services business, but revenues
and EBITDA for the switched services business have not met the Company's
expectations. Consequently, the Company expects its revenues and EBITDA for the
second quarter and the year will be below its previous estimates. The Company
now believes that 1997 EBITDA will be in the range of $20 - $30 million, and
1998 EBITDA will be $125 million or more.
NETWORK EXPANSION - STATE-OF-THE-ART TECHNOLOGY AND LOW NETWORK COST. The
Company remains the leading independent supplier of state-of-the-art long haul
capacity to carrier customers. As of June 30, 1997, the Company has completed
and placed in operation approximately 3,380 fiber route miles of its previously
announced fiber expansion plan, with an additional 3,000 fiber route miles to be
completed by approximately year-end. In addition, the Company is in the process
of completing cost-sharing arrangements which will allow the Company to
significantly increase its network to over 15,000 fiber route miles during the
1998-1999 time frame. The fiber optics being deployed by the Company utilize
state-of-the-art LS dispersion shifted fiber on routes generally diverse from
other carriers, use the most secure rights-of-way, and incorporate the latest
optronics technology. The Company was the first to commercially deploy OC-192
optronic technology which provides greater capacity and operating economies.
With the Company's previously existing 1,900 route miles of fiber optics, the
Company now has over 5,200 route miles of fiber optic cable and electronics in
operation, with approximately 1,500 additional route miles of fiber optic cable
currently under construction. The Company expects to have over 8,300 fiber route
miles in operation by the end of 1997 and approximately 11,000 fiber route miles
by the end of 1998. The foregoing is in addition to approximately 5,000 route
miles of digital microwave, over 160,000 DS-3 miles of leased fiber capacity,
and over 39,000 DS-3 miles of fiber capacity obtained in capacity swaps with
other carriers.
The Company is significantly expanding the scope of its network because of its
success in obtaining cost-sharing arrangements with other carriers. Such
arrangements have reduced the net construction cost of the expansion plan to
approximately $22,000 per mile, compared to an industry average of $85,000 -
$100,000 per mile. As part of these cost-sharing arrangements, the Company
previously announced two significant sales of dark fiber for a total of $219
million. Because of these and other cost-sharing arrangements in process, the
Company has a
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number of additional strategic routes that can be achieved at a very low cost
per mile and will permit the Company to extend the reach of its network as well
as add redundancy and self-healing SONET rings to the network.
PRIVATE LINE BUSINESS - AHEAD OF EXPECTATIONS. The Company's private line
business (the transmission of voice and data over dedicated circuits) has met
all of the Company's expectations for revenue for the first half of 1997, and is
expected to exceed expectations for the remainder of 1997 and 1998. The
Company's backlog for its private line business currently totals over $200
million, including significant new orders awaiting activation as the Company's
network build from Los Angeles to New York is completed later in the year. The
network expansion has added and will continue to add high capacity new routes
and increase the capacity of existing routes, allowing the Company to lease
additional circuits to its customers, including high capacity, high margin
circuits on OC-48s, OC-12s and OC-3s. In addition, as the fiber network comes
online, numerous circuits currently being leased will move onto the fiber
network, thereby reducing leased circuit expense and significantly increasing
EBITDA.
SWITCHED SERVICES BUSINESS - LAGGING PLAN. The Company has been successful in
establishing its new switched services business (the transmission of long
distance traffic processed through the Company's switches) and in achieving
significant revenue growth since its inception in late 1995 (switched services
revenues were $53.0 million in the first quarter of 1997 as compared to $3.6
million in the first quarter of 1996), with continued strong demand for its
switched products. However, EBITDA in the switched services business has fallen
significantly below the Company's expectations. To date, the Company's EBITDA
from switched services has continued to be negative and is likely to remain
negative for the balance of the year.
The shortfall is due to two factors. First, the switched traffic generated by
the Company's long distance customers has been comprised of a higher mix of
minutes originating or terminating in high access cost LATAs (Local Access
Transport Areas) than was anticipated. The second cause of the shortfall has
resulted from incurring uneven traffic patterns across the Company's switch
network, creating high network overflow costs.
The Company is taking steps immediately to bring this business segment to a
positive cash flow as quickly as possible including: initiating an intensive
examination of the traffic distributions of each of its customers: identifying
customers generating an unprofitable mix of traffic, and where appropriate,
adjusting contract terms; pre-screening new contract proposals to evaluate the
financial impact of expected traffic distributions; and adding switch capacity
to reduce the cost of network overflow traffic. The Company believes that its
efforts to maintain a profitable mix of switched minutes may temporarily slow
the growth rate of switched services revenue, but coupled with reductions in
leased circuit expense as the network is completed, will provide steady
improvement in switched service operating results during the remainder of the
year and 1998.
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Certain of the above statements set forth the Company's expectations or
predictions of the future based on current facts and analyses. Actual results
may differ materially from those indicated in such statements due to
construction delays, an increase in expenses, the Company's inability to
complete additional cost-sharing arrangements and other factors. Additional
information on other factors that may affect the business and financial results
of the Company can be found in filings with the Securities and Exchange
Commission.
The Company will be holding a conference call to discuss its results on
Thursday, July 3, 1997, at 9:00 a.m. EST.
Austin, Texas-based IXC Communications, Inc. is one of the United States'
largest suppliers of digital transmission and long distance services. The
company owns and operates one of the newest nationwide digital networks and
makes network capacity available to local telephone companies, national and
regional long distance carriers, value-added carriers, cable and utilities
companies, and Internet service providers. The Company services include private
line and broadband products, as well as 1+ switched and 1+ dedicated outbound
calling 800/888 switched and dedicated inbound calling, calling card and debit
card services. The Company is a publicly traded company, listed on NASDAQ under
the symbol IIXC and has additional information available on its web site at
www.ixc-comm.net.
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Investor Contact:
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James F. Guthrie
Executive Vice President
IXC Communications, Inc.
(512) 427-3713
[email protected]
