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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) October 22, 1999
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IXC Communications, Inc.
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(Exact name of registrant as specified in its charter)
California 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 Exhibit 99.1 is the press release issued by IXC
Communications, Inc. dated October 22, 1999 which is hereby incorporated by
reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS
99.1 Press release dated October 22, 1999.
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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.
IXC Communications, Inc.
Dated: October 22, 1999 By: /s/ JEFFREY C. SMITH
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Jeffrey C. Smith
Senior Vice President, Chief
Administrative Officer,
General Counsel and Secretary
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EXHIBIT INDEX
Exhibit
Number Description
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99.1 Press release dated October 22, 1999.
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EXHIBIT 99.1
[IXC COMMUNICATIONS, INC. LOGO]
NEWS RELEASE
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IXC ANNOUNCES THIRD QUARTER RESULTS
Progress Made on Strategic Repositioning
Austin, TX - October 22, 1999 - IXC Communications, Inc. (Nasdaq: IIXC) today
announced improved financial performance over the second quarter 1999. The
Company reported revenue of $170 million and an EBITDA (earnings before interest
expense, income taxes, and depreciation and amortization) loss of $3 million for
third quarter 1999. Results for the second quarter 1999 included revenue of $158
million and an EBITDA loss of $11 million. In the third quarter 1998, revenue
was $185 million, and EBITDA was $35 million.
"We are pleased with the progress we have made this quarter " said IXC president
and CEO, John Zrno. "As reflected in our third quarter results, our efforts to
de-emphasize the switched wholesale business are now beginning to be realized.
As expected, we saw reduced revenue in the switched wholesale portion of the
business but improved EBITDA from savings in access and network facility costs."
THIRD QUARTER RESULTS
REVENUE
Revenue increased 8% from the second quarter 1999 and declined 8% from the third
quarter 1998. Compared with the third quarter of 1998, private line revenue
increased 23% to $76 million, data/Internet revenue increased 53% to $6 million,
and other revenue increased 22% to $11 million. Switched services declined 30%
to $78 million.
Private line and data/Internet customers continued to grow during the quarter,
representing an expanding share of IXC's recurring revenue base. The wholesale
business represented less than half of total switched services revenue in the
third quarter, consistent with IXC's intention on being a full-service provider
of communications solutions to businesses.
EBITDA
Third quarter EBITDA improved from the prior quarter but declined versus the
same period last year. Margin pressures in the wholesale portion of the switched
business and increased costs for expanding the business-to-business retail
operations were principal factors in the year-over-year comparison.
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EARNINGS
The net loss for the quarter was $86 million or $2.29 per share, including a $7
million restructuring charge related to reorganization of senior management.
This compared to a net loss of $131 million or $3.53 per share in the second
quarter, including a $26 million restructuring charge for the de-emphasis of the
switched wholesale business.
"My goal upon arriving at IXC was to reorganize the Company into a
customer-oriented organization. We have made great strides this quarter in
accomplishing that goal, through the reorganization of senior management, the
work on improving our back office systems and operations and capitalizing on the
new alliances completed during the quarter," said Zrno.
QUARTER HIGHLIGHTS
o VOICE OVER IP - IXC and e-Net signed a two-year agreement, to jointly
develop and market e-Net's ZeroPlus.com Internet telephony service over
IXC's Gemini2000 IP backbone. With the combination, businesses and
consumers will be able to place high-quality long distance calls via the
Internet.
o PSINET AGREEMENT - IXC entered into an agreement to provide PSINet with
approximately 14,000 miles of excess dark fiber and maintenance and related
services over a twenty-year term for a minimum of $500 million. The
agreement will occur in two phases. In the first phase, PSINet will
immediately acquire four dark fibers. In the second phase, beginning in
mid-2000, IXC will designate additional fibers from its continuing
nationwide build for PSINet's use. The long-term agreement, serves to
further strengthen a strategic relationship with a leading ISP, reduce
costs of building the network, and will generate recurring revenues from
maintenance and operations.
o NEXT GENERATION NETWORK EXPANSION - The fiber optic network is now over
13,800 route miles and reaches 43 of the top 50 MSAs and 62 of the top 100
MSAs in the U.S. On-net capacity tripled during the quarter to over 240,000
OC-48 equivalent miles.
o GEMINI2000 RECOGNIZED - Over 100 customers are currently on the 2.5 Gpbs
OC-48 IP backbone. Gemini2000 is the first public network to carry both
commercial and research traffic at speeds more than 20 times greater than
today's Internet. During the quarter, the network was recognized by the
International Engineering Consortium with the 1999 InfoVision Award for
innovation in Internet technology.
o IMPROVED BACKOFFICE / PROVISIONING - To improve service to our customers
and provide customers with a single point of contact, backoffice
departments have been reorganized according to customer segments. In
addition, to reduce the time to provision and bill customers, a system to
automate the order entry process is being implemented at sales sites around
the country. IXC is also in the process of automating a trouble management
system to enhance both customer care and operations of the network.
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NINE-MONTH RESULTS
On a year-to-date basis, revenue decreased 2% to $489 million from 1998, despite
a 30% decrease in switched service revenue. EBITDA was a loss of $9 million
versus $74 million for the prior year's nine-month period. The year-to-date loss
was $275 million or $7.43 per share, including $33 million in restructuring
charges. This compares to a loss of $178 million or $4.98 per share, including
an extraordinary item of $70 million, for the prior year. Current year results
include the operations of Coastal Telephone Company from its acquisition on May
10, 1999.
MERGER WITH CINCINNATI BELL
On July 21, 1999, the Company announced a merger agreement with Cincinnati Bell
Inc. (NYSE:CSN). The transaction was valued at $3.2 billion (including the
assumption of debt) and is on schedule to close during the fourth quarter.
"We have made remarkable progress toward combining our operations with
Cincinnati Bell. Through these efforts, the companies will be able to hit the
ground running as a single unit at the merger date. This union will enhance
shareholder value by combining IXC's next generation fiber network with
Cincinnati Bell's operational strengths. The combined company will be able to
provide more products to more customers more efficiently than either of the
partners alone," said Zrno.
ADDITIONAL INFORMATION ABOUT IXC
More complete information on IXC's third quarter results is available on IXC's
Web site at www.ixc-investor.com.
IXC's network-based delivery solutions are designed to address the speed and
capacity requirements of the communications market. IXC offerings include
private line, fast packet (ATM and frame relay), Internet and long distance
switched and dedicated services. IXC Communications, Inc. is at the forefront of
the industry's new class of emerging domestic carriers. IXC is a publicly traded
company listed on Nasdaq under the symbol IIXC. For more information, visit
IXC's Web site at www.ixc-comm.com.
# # #
Except for the historical information contained herein, this press release
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, and are subject to the safe harbors created thereby.
The Company's future actual results could differ materially from the
forward-looking statements discussed herein. In particular, no assurance can be
made that the restructuring of the Company's switched wholesale business will
have the results expected by the Company or that certain parts of the network
will be completed as scheduled. A list of the factors that could cause actual
results to differ materially can be found in the documents the Company files
with the SEC, including those contained in the Company's prospectus, and the
Form 10-K for the year ended December 31, 1998.
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IXC Contacts:
Media Contact: Investor Contact:
Melissa Jackson Greta Wiechman
Director, Public Relations Director, Investor Relations
(512) 231-5247 (888) 267-9478
[email protected] [email protected]
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IXC COMMUNICATIONS, INC.
SUMMARY OF OPERATING RESULTS
($000'S EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Quarter Ended Year To Date
September 30, September 30,
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1999 1998 1999 1998
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<S> <C> <C> <C> <C>
REVENUES:
Private line $ 76,073 $ 61,908 $ 220,506 $ 154,480
Long distance switched services 77,535 110,741 230,180 330,010
Broadband & Internet services 5,556 3,631 16,084 5,308
Other 10,963 8,989 22,607 8,989
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Total operating revenue 170,127 185,269 489,377 498,787
GROSS PROFIT 63,767 75,285 169,924 173,261
% 37.5% 40.6% 34.7% 34.7%
EBITDA (2,551) 35,191 (9,151) 73,839
% -1.5% 19.0% -1.9% 14.8%
Depreciation and amortization 50,651 34,801 126,494 77,589
Restructuring charge and other infrequent items 7,822 444 33,793 8,089
-- -- -- --
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OPERATING LOSS (61,024) (54) (169,438) (11,839)
Interest expense, net 9,497 5,421 21,943 15,341
Equity in net loss of unconsolidated subsidiaries 3,066 8,307 19,048 30,326
Other, net 4 35 13,238 284
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LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEM (73,591) (13,817) (223,667) (57,790)
Income tax provision (4,493) 1,647 1,818 8,266
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LOSS BEFORE EXTRAORDINARY ITEM (69,098) (15,464) (225,485) (66,056)
Extraordinary item -- (163) -- 69,647
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NET LOSS $(69,098) $(15,301) $(225,485) $(135,703)
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Dividends applicable to preferred stock (16,729) (15,341) (49,119) (42,548)
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Net loss applicable to common stockholders $(85,827) $(30,642) $(274,604) $(178,251)
======== ======== ========= =========
Basic and diluted loss per share $ (2.29) $ (0.85) $ (7.43) $ (4.98)
======== ======== ========= =========
Weighted average common shares outstanding 37,470 36,014 36,942 35,774
</TABLE>
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IXC COMMUNICATIONS, INC.
OPERATING SUMMARY BY SEGMENT
($000'S)
<TABLE>
<CAPTION>
Quarter Ended Year to Date Ended
September 30, September 30,
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1999 1998 1999 1998
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<S> <C> <C> <C> <C>
NET REVENUE
Private line $ 76,073 61,908 $220,506 $ 154,480
Switched Long Distance 77,535 110,741 230,180 330,010
Broadband/Internet 5,556 3,631 16,084 5,308
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Subtotal - Recurring 159,164 176,280 466,770 489,798
Other 10,963 8,989 22,607 8,989
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Total Revenue 170,127 185,269 489,377 498,787
GROSS PROFIT
Private line 49,301 42,158 141,500 93,091
% of Net Revenue 64.8% 68.1% 64.2% 60.3%
Switched Long Distance 3,638 24,404 4,644 74,412
% of Net Revenue 4.7% 22.0% 2.0% 22.5%
Broadband & Internet (135) (266) 1,173 (3,231)
% of Net Revenue (2.4%) (7.3%) 7.3% (60.9%)
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Subtotal - Recurring Gross Profit 52,804 66,296 147,317 164,272
% of Net Revenue 33.2% 37.6% 31.6% 33.5%
Other 10,963 8,989 22,607 8,989
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Total Gross Profit $ 63,767 $ 75,285 $169,924 $ 173,261
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</TABLE>
