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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 29, 1998
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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)
1122 Capital of Texas Highway South, 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 Exhibits 99.1 and 99.2 are two press releases issued by IXC
Communications, Inc., each dated July 29, 1998, both of which are hereby
incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
99.1 Press Release dated July 29, 1998
99.2 Press Release dated July 29, 1998
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 30, 1998
IXC Communications, Inc.
By: /s/ James F. Guthrie
--------------------------------------
James F. Guthrie
Executive Vice President
and Chief Financial Officer
3.
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<C> <S>
99.1 Press Release dated July 29, 1998
99.2 Press Release dated July 29, 1998
</TABLE>
4.
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EXHIBIT 99.1
(BW)(IXC-COMMUNICATIONS-2)(IIXC) IXC Communications, Inc. Announces
Two-For-One Stock Split
Business Editors/Technology Writers
AUSTIN, Texas -- (BUSINESS) -- July 29, 1998 -- IXC Communications, Inc.
(Nasdaq: IIXC) announced today that its directors and a majority of its common
stockholders have approved a two-for-one stock split of IXC Communications, Inc.
common stock.
The effective date for the stock split is anticipated to occur in
September 1998 after compliance with applicable law. On the effective date, IXC
Communications, Inc. common stockholders will receive one additional share for
each share of IXC Communications, Inc. common stock held.
As of July 22, 1998, there were approximately 36 million shares of IXC
Communications, Inc. common stock outstanding. Also approved was an increase in
the authorized number of shares of common stock and the creation of a new class
of preferred stock for future use by the Company.
IXC's network-based delivery solutions are designed to address the
increasing speed and capacity requirements of the global communications market.
Having recently completed the U.S.'s first new coast-to-coast fiber optic
network in a decade, IXC Communications, Inc. is at the forefront of the
industry's new class of emerging carriers.
The company's offerings include private line, broadband, Internet and
long distance switched and dedicated services. IXC is a publicly traded company
listed on Nasdaq under the symbol IIXC. IXC's Web site is located at
www.ixc-comm.com.
CONTACT: IXC Communications
Melissa Jackson, 512/231-5247 (PR)
[email protected]
Greta Wiechman, 888/267-9478 (IR)
[email protected]
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EXHIBIT 99.2
(BW)(IXC-COMMUNICATIONS)(IIXC) IXC Communications, Inc. Announces Second Quarter
Results; Gross Profit Up 111.7%; Gross Margin Increases to 31.0% from 20.1%
Business Editors/Technology Writers
AUSTIN, Texas -- (BUSINESS WIRE) -- July 29, 1998 -- IXC Communications,
Inc. (Nasdaq: IIXC) announced today that revenue for the second quarter of 1998
increased 37.0% to $155.9 million, from $113.8 million in the second quarter of
1997.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
for the quarter increased to $18.4 million from negative $1.5 million for the
prior year's second quarter. The net loss for the second quarter, which includes
an extraordinary loss of $69.8 million, was $102.5 million, or ($3.30) per
common share (basic and diluted), compared with a net loss of $27.9 million or
($0.87) per common share (basic and diluted) for the second quarter of 1997.
Current and prior year results have been restated to include the
operations of Eclipse (formerly Network Long Distance, Inc.), which was acquired
on June 3, 1998 in a transaction accounted for as a pooling of interests.
"IXC's operating performance in the second quarter reflects the key
initiatives we have undertaken to broaden and strengthen the technical and
management infrastructure of the Company, laying the foundation to support
anticipated profitable growth in coming periods," said Ben Scott, Chairman and
Chief Executive Officer.
"We have focused on expanding our nationwide fiber optic network, adding
high-value services for customers, building the varied capabilities of our
business, and improving the financial fundamentals of the Company."
Revenue increased $42.1 million in the second quarter of 1998 over the
second quarter of 1997, with consolidated switched long distance revenue growing
$30.2 million or 40.1%. Switched long distance revenue from the Company's
Eclipse subsidiary increased 14.7% to $28.6 million, from $24.9 million in the
second quarter of 1997, with IXC's historical switched revenue growing 52.7% to
$76.9 million, from $50.4 million in the comparable period in 1997. Private line
revenue increased $11.9 million, or 31.0%, versus the second quarter of 1997.
Gross profit increased $25.5 million, or 111.7%, versus the second
quarter of 1997. The increase in gross profit resulted from the growth in
revenue, partially offset by increased access costs related to the growth in
switched long distance traffic, and additional costs of leased off-net circuits
to support the revenue growth.
Gross profit as a percentage of revenue improved to 31.0% in the quarter
from 20.1% in the prior year's comparable quarter. Access costs were 69.8% of
switched long distance revenue in the current quarter versus 85.2% in the second
quarter of 1997 - the result of FCC mandated reductions in access costs per
minute of use, as well as close management of costs related to traffic mix and
overflow traffic.
Year over year quarterly operating and administrative costs dropped to
19.2% of revenue, versus 21.4% in the second quarter of 1997, representing an
increase of just $5.6 million. Such increase occurred due to the Company's
expanded operations and fiber network.
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The net loss for the second quarter of 1998 reflected the improvement in
EBITDA, offset by higher depreciation expense from the Company's fiber expansion
program, larger equity losses generated primarily from the Company's investments
in PSINet and MarcaTel, a long distance venture in Mexico, and increased
provision for income tax related to certain fiber sales agreements activated
during the year.
In addition, the net loss reflected pooling costs of $7.7 million
associated with the Eclipse merger, and an after-tax extraordinary charge of
$69.8 million related to the early redemption of $284.2 million of the Company's
12-1/2% Senior Notes during the quarter.
Pooling costs consist of professional services associated with the
merger, an accrual for termination costs associated with duplicate functions,
costs of exiting excess office space, writing off duplicate equipment and
software, and costs incurred to integrate business processes.
Loss per common share for the second quarter of 1998 reflects $15.5
million of dividends related to two classes of preferred stock issued during
1997 and to the 6-3/4% Convertible Preferred Stock issued in the first quarter
of 1998.
Excluding the second quarter nonrecurring pooling costs and the
extraordinary charge on early extinguishment of debt, net loss would have been
$41.7 million, or ($1.17) per common share (basic and diluted) versus the net
loss of $30.2 million, or ($0.87) per common share (basic and diluted) for the
second quarter of 1997.
On a sequential quarter basis, second quarter 1998 revenue declined 1.0%
to $155.9 million, compared with $157.6 million in the first quarter, with
private line revenue growing $6.6 million, or 15.1%, offset by a decrease in
consolidated long distance switched revenue of $8.3 million, or 7.3%.
The decline in long distance switched revenue was substantially
attributable to the expected reduction of switched traffic from Excel
Communications, Inc., as part of the renegotiation and renewal of the existing
switched services contract announced in April.
The new contract calls for $156 million in revenue, over four years, the
major portion of which is expected to be derived from higher margin private line
services.
Gross profit in the second quarter declined $1.3 million, or 2.6%,
versus the first quarter as a result of the revenue decline and the impact of a
nonrecurring favorable carrier dispute resolution recognized in the first
quarter. Operating and administrative expenses were essentially even with the
prior quarter, rising only 2.2%, and EBITDA declined $1.9 million, compared to
the first quarter, 1998.
For the first half of 1998, revenue increased $92.8 million, or 42.1% to
$313.5 million, compared with $220.7 million in the first half of 1997. Private
line revenue increased 35.9% to $94.2 million, from $69.4 million in the
comparable period in 1997, and consolidated long distance switched revenue grew
44.9% to $219.3 million, versus $151.3 million in the first half of 1997.
Switched long distance revenue from the Company's Eclipse subsidiary
increased 19.0% to $57.0 million, from $47.9 million in the first half of 1997,
with IXC's historical switched long distance revenue growing 56.9% to $162.3
million, from $103.4 million in the comparable period in 1997.
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Gross profit in the first half of 1998 increased $53.2 million to $98.0
million, or 118.6%, with gross profit as a percentage of revenue improving to
31.3% in the current period from 20.3% in the first half of 1997. The increase
in gross profit resulted from the growth of revenue, partially offset by
increased access costs related to the growth of switched traffic and additional
costs of leased off-net circuits to support the increased revenue in advance of
the Company's fiber expansion program.
Operating and administrative costs in the first half of 1998 increased
28.0% to $59.3 million, compared with $46.4 million in 1997, but decreased as a
percentage of revenue to 18.9% in the current period versus 21.0% in the first
half of 1997. The increase in operating and administrative costs related to the
Company's expanded scope of operations and fiber network.
EBITDA increased $40.2 million to $38.6 million in the first half of
1998 from a negative $1.5 million in the first half of 1997, reflecting revenue
growth, partially offset by increases in cost of services and operating
expenses.
The net loss in the first half of 1998 was $120.4 million, or ($4.14)
per common share (basic and diluted), compared with a net loss of $50.4 million,
or ($1.54) per common share (basic and diluted) in the first half of 1997.
The net loss in the first half of 1998 reflected increased depreciation
expense related to the Company's expanded fiber network, larger equity losses
primarily related to the Company's investments in PSINet and MarcaTel, and an
increased provision for income tax related to fiber sales agreements activated
during the second quarter of 1998, offset by the $40.2 million improvement in
EBITDA.
The net loss in the first half of 1998 reflected the pooling costs
related to the Eclipse merger and the extraordinary charge related to the early
redemption of debt. Loss per common share in the first half of 1998 reflected
$27.2 million of dividends related to three issues of preferred stock issued
since the first quarter of 1997.
Excluding the second quarter 1998 pooling costs and the extraordinary
charge, the net loss for the first half of 1998 would have been $72.9 million,
or ($2.04) per common share (basic and diluted), versus the $51.0 million net
loss, or ($1.48) per common share (basic and diluted) for comparable data in the
first half of 1997.
"This year we have made great progress strengthening our management team
and, through a number of key acquisitions, establishing our retail distribution
channel and developing the advanced platform for our Internet business," said
Mr. Scott.
Mr. Scott noted the following key events occurring in the second quarter
of 1998:
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- -- Completion of the acquisition of Eclipse Telecommunications, Inc. (formerly
Network Long Distance, Inc.) as the centerpiece of IXC's emerging retail
strategy.
- -- The acquisition of Network Evolutions, Inc. (NEI), SMARTNAP, The Data
Place, Inc., and ntr.net Corporation - key pieces in IXC's expansion of its
Internet business.
- -- An agreement to purchase a 34% stake in Applied Theory
Communications, Inc., a New York-based ISP, strongly positioning IXC as a
developer of Internet 2, the next generation IP technical infrastructure.
The expansion of the senior management team with the addition of the
following new executives:
-- David Hughart, President - Retail Division
-- Leo Welsh, President - Wholesale Division
-- Valerie Walden, Sr. Vice President - Switched and Private Line
Services
-- Dominick DeAngelo, Sr. Vice President - Internet Services
-- Greg Tolander, Sr. Vice President, Chief Information Officer
IXC's network-based delivery solutions are designed to address the
increasing speed and capacity requirements of the global communications market.
Having recently completed the U.S.'s first new coast-to-coast fiber optic
network in a decade, IXC Communications, Inc. is at the forefront of the
industry's new class of emerging carriers.
The company's offerings include private line, broadband, Internet and
long distance switched and dedicated services. IXC is a publicly traded company
listed on Nasdaq under the symbol IIXC. IXC's Web site is located at
www.ixc-comm.com.
Certain of the above statements set forth management'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 unavoidable
construction delays, increases in expenses, and other factors. Additional
information on factors that may affect the business and financial results of IXC
can be found in IXC's filings with the Securities and Exchange Commission.
<PAGE> 5
IXC Communications, Inc.
Summary of Operating Results
($000's except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Year To Date
June 30, June 30,
-------------------- --------------------
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Revenues:
Private line $ 50,433 $ 38,494 $ 94,249 $ 69,363
Long distance switched services 105,502 75,318 219,269 151,331
--------- -------- --------- --------
Total operating revenue 155,935 113,812 313,518 220,694
Gross profit 48,342 22,833 97,976 44,821
% 31.0% 20.1% 31.3% 20.3%
EBITDA 18,350 (1,547) 38,648 (1,542)
% 11.8% (1.4)% 12.3% (0.7)%
Depreciation and amortization 22,636 14,559 42,788 25,473
Pooling costs 7,681 -- 7,645 3,325
--------- -------- --------- --------
Operating loss (11,967) (16,106) (11,785) (30,340)
Interest expense, net 5,206 6,924 9,920 13,620
Equity in net loss of
unconsolidated subsidiaries 10,754 4,532 22,019 6,351
Other, net 219 102 249 291
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Loss before income taxes and
extraordinary loss (28,146) (27,664) (43,973) (50,602)
Income tax provision 4,551 250 6,619 (190)
--------- -------- --------- --------
Loss before extraordinary loss (32,697) (27,914) (50,592) (50,412)
Extraordinary loss on early
extinguishment of debt 69,810 -- 69,810 --
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Net loss $(102,507) $(27,914) $(120,402) $(50,412)
========= ======== ========= ========
Dividends applicable to
preferred stock 15,471 2,288 27,207 2,758
--------- -------- --------- --------
Net loss applicable to common
stockholders $(117,978) $(30,202) $(147,609) $(53,170)
========= ======== ========= ========
Loss per share before
extraordinary item $(1.35) $(0.87) $(2.18) $(1.54)
Loss per share from
extraordinary item (1.95) -- (1.96) --
--------- -------- --------- --------
Basic and diluted loss per share $(3.30) $(0.87) $(4.14) $(1.54)
========= ======== ========= ========
Weighted average common shares
outstanding 35,785 34,696 35,653 34,469
</TABLE>
CONTACT: IXC Communications
Melissa Jackson, 512/231-5247 (Media Contact)
[email protected]
Greta Wiechman, 888/267-9478 (Investor Contact)
[email protected]
