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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) August 3, 1999
-------------------------------
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 Exhibit 99.1 is a press release issued by IXC
Communications, Inc. dated August 3, 1999 which is incorporated by reference
herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
99.1 Press Release dated August 3, 1999
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: August 4, 1999
IXC Communications, Inc.
By: /s/ Jeffrey C. Smith
------------------------------
Jeffrey C. Smith
Senior Vice President, Chief
Administrative Officer,
General Counsel and Secretary
3.
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EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
99.1 Press Release dated August 3, 1999
4.
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EXHIBIT 99.1
IXC Communications, Inc. Announces Second Quarter Results
AUSTIN, Texas--(BUSINESS WIRE)--Aug. 3, 1999--IXC Communications, Inc.
(Nasdaq: IIXC) today announced revenue of $157.9 million for the second quarter
of 1999, up from $155.9 million in the second quarter of 1998. Earnings before
interest, taxes, depreciation and amortization (EBITDA) was a loss of $11.3
million, down from a positive $18.4 million in second quarter 1998. The net loss
for the quarter was $114.2 million, or $(3.53) per share (basic and diluted),
including a restructuring charge of $25.8 million, $(0.66) per share, and a
$24.1 million write down of certain investments. Both the restructuring charge
and the write down of the investments indicate a de-emphasis of the switched
wholesale business. This compared with a net loss of $102.5 million, or $(3.30)
per share, including an extraordinary charge of $69.8 million for the early
extinguishment of debt, in the second quarter of 1998. Second quarter results
for 1999 include the operations of Coastal Telephone Company from its
acquisition date on May 10, 1999. Prior year results have been restated to
include the operations of Eclipse (formerly Network Long Distance, Inc.), which
was acquired in a transaction accounted for as a pooling of interests in June
1998.
On a year-to-date basis revenue increased 1.8% to $319.3 million. EBITDA
decreased to a negative $6.6 million from a positive $38.6 million for the prior
year's six month period. The net loss for the six month period declined $36.0
million (29.9%) to $156.4 million including the restructuring and investment
write downs. The prior year's results included the extraordinary charge of $69.8
million.
CONSOLIDATED RESULTS
--------------------
Total revenue for the quarter included $73.6 million from private line, $5.4
million from data/Internet, $74.9 million from switched services and $4.1
million from other sources. Compared to the second quarter of 1998, private line
services increased 49.4% and data/Internet services more than quadrupled.
Switched services declined 29.0%, largely because of the conversion of the
Company's former largest switched services customer, Excel Communications, to a
private line contract with IXC as Excel moved its switched minutes to its own
network during 1998 and 1999.
Revenue for the six-month period included private line revenue of $144.4
million, data/Internet revenue of $10.5 million, switched services revenue of
$152.6 million and $11.6 million in other revenue. Private line revenue
increased 56.0% over the prior year largely due to three large customers,
including Excel Communications. Data/Internet revenue was over six times its
prior year's mark. Switched service revenue declined 30.4% due largely to the
loss of the Excel traffic.
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As expected, EBITDA for the quarter and six-month period declined versus
1998. The lower results were driven by the margin pressures in the switched
wholesale business and increased operating and administration costs related to
expansion of the Company's nationwide fiber network and IT infrastructure as
well as costs related to expansion of its retail distribution operation.
The previously announced restructuring of the switched wholesale business
resulted in a charge of $25.8 million during the second quarter. The charge
includes severance costs associated with restructuring, certain expenses related
to terminated customers who will be leaving the network and costs to dismantle
surplus switches and close the Company's microwave network. The restructuring is
expected to result in decreased revenue but improved gross margins from future
savings in access costs, network facility and other costs.
"The investment in our infrastructure coupled with low margins and
significant billing issues with the switched wholesale business has affected our
EBITDA performance. However, improvements in our back office and distribution
capabilities should allow the Company to compete more effectively in the market.
In addition, the positive effects of de-emphasizing the switched wholesale
business are expected to be seen in EBITDA performance in the quarters to come,
" said IXC president and CEO, John Zrno.
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 expected to close by the end of the year.
Concurrently, IXC announced lowered EBITDA and revenue expectations for both the
second quarter and the full year.
ADDITIONAL INFORMATION ABOUT IXC
--------------------------------
More complete information on IXC's second quarter results is available in
the "Quarterly Analysis" in the financial highlights section of 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 global communications market. Its offerings include
private line, fast packet (ATM and frame relay), Internet and long distance
switched and dedicated services. IXC is at the forefront of the industry's new
class of emerging domestic and international carriers. IXC is a publicly traded
company listed on Nasdaq under the symbol "IIXC." For more information, visit
IXC's Web site at
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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 Communications, Inc.
Summary of Operating Results
($000's except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Year To Date
June 30, June 30,
-------------------- --------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Private line $ 73,569 $ 49,232 $ 144,433 $ 92,572
Long distance switched
services 74,898 105,502 152,645 219,269
Broadband & Internet
services 5,353 1,201 10,528 1,677
Other 4,072 -- 11,644 --
--------- --------- --------- ---------
Total operating
revenue 157,892 155,935 319,250 313,518
Gross profit 49,603 48,342 106,157 97,976
% 31.4% 31.0% 33.3% 31.3%
EBITDA (11,345) 18,350 (6,600) 38,648
% -7.2% 11.8% -2.1% 12.3%
Depreciation and
amortization 39,565 22,636 75,843 42,788
Restructuring charge
and infrequent items 25,916 -- 25,971 --
Pooling costs -- 7,681 -- 7,645
--------- --------- --------- ---------
Operating loss (76,826) (11,967) (108,414) (11,785)
Interest expense, net 7,253 5,206 12,446 9,920
Equity in net loss of
unconsolidated
subsidiaries 13,111 10,754 15,982 22,019
Other, net 13,061 219 13,234 249
--------- --------- --------- ---------
Loss before income
taxes and extraordinary
item (110,251) (28,146) (150,076) (43,973)
Income tax provision 3,900 4,551 6,311 6,619
--------- --------- --------- ---------
Loss before
extraordinary item (114,151) (32,697) (156,387) (50,592)
Extraordinary item -- 69,810 -- 69,810
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Net loss $(114,151) $(102,507) $(156,387) $(120,402)
========= ========= ========= =========
Dividends applicable to
preferred stock (16,372) (15,471) (32,390) (27,207)
--------- --------- --------- ---------
Net loss applicable
to common stockholders $(130,523) $(117,978) $(188,777) $(147,609)
========= ========= ========= =========
Basic and diluted loss
per share $ (3.53) $ (3.30) $ (5.14) $ (4.14)
========= ========= ========= =========
Weighted average common
shares outstanding 36,946 35,785 36,714 35,653
</TABLE>
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IXC Communications, Inc.
Operating Summary By Segment
($000's)
<TABLE>
<CAPTION>
Quarter
Ended Quarter Ended Year to Date
March 31, June 30, Ended June 30,
------------------- -------------------
1999 1999 1998 1999 1998
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<S> <C> <C> <C> <C> <C>
Net Revenue
Private line $ 70,864 $ 73,569 $ 49,232 $ 144,433 $ 92,572
Switched Long
Distance 77,747 74,898 105,502 152,645 219,269
Broadband/Internet 5,175 5,353 1,201 10,528 1,677
--------- --------- --------- --------- ---------
Subtotal -
Recurring 153,786 153,820 155,935 307,606 313,518
Other 7,572 4,072 -- 11,644 --
--------- --------- --------- --------- ---------
Total Revenue 161,358 157,892 155,935 319,250 313,518
Gross Profit
Private line 44,762 47,441 26,784 92,203 50,935
% of Net Revenue 63.2% 64.5% 54.4% 63.8% 55.0%
Switched Long
Distance 3,418 (2,413) 23,154 1,005 50,004
% of Net Revenue 4.4% -3.2% 21.9% 0.7% 22.8%
Broadband &
Internet 802 503 (1,596) 1,305 (2,963)
% of Net Revenue 15.5% 9.4% (132.9%) 12.4% (176.7%)
--------- --------- --------- --------- ---------
Subtotal -
Recurring
Gross Profit 48,982 45,531 48,342 94,513 97,976
% of Net Revenue 31.9% 29.6% 31.0% 30.7% 31.3%
Other 7,572 4,072 -- 11,644 --
--------- --------- --------- --------- ---------
Total Gross
Profit $ 56,554 $ 49,603 $ 48,342 $ 106,157 $ 97,976
========= ========= ========= ========= =========
</TABLE>
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CONTACT: IXC Communications Inc., Austin
Media:
Melissa Jackson, 512/231-5247
[email protected]
or
Investor:
Greta Wiechman, 888/267-9478
[email protected]
