<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 333-02260-01
GST USA, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
Delaware 83-0310464
---------------------------- ---------------------------
(State or Other Jurisdiction (IRS Employer Identification
of Incorporation or Organization) Number)
4001 Main Street, Vancouver, WA 98663
-------------------------------------- --------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (360) 356-7100
--------------
N/A
- -------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL
INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE
FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT
CONTEMPLATED THEREBY.
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
<PAGE>
GST USA, INC.
FORM 10-Q/A
INDEX
THIS REPORT ON FORM 10-Q/A CONSTITUTES AMENDMENT NO. 1 TO THE REGISTRANT'S
REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1999, AND AMENDS, IN ITS
ENTIRETY, PART I, ITEMS 1 AND 2, AND PART II, ITEM 6 OF SUCH REPORT AS
ORIGINALLY FILED AUGUST 16, 1999. SEE NOTE 2 OF NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS FOR A DISCUSSION OF THE BASIS FOR SUCH AMENDMENTS.
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets - June 30,
1999 and December 31, 1998 2
Condensed Consolidated Statements of Operations - Three and
Six Months Ended June 30, 1999 and 1998 3
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1999 and 1998 4
Notes to Condensed Consolidated Financial
Statements 5-6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (REDUCED DISCLOSURE
NARRATIVE) 7-9
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
SIGNATURES 11
</TABLE>
-1-
<PAGE>
GST USA, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1999 DECEMBER 31, 1998 (1)
-------------------- -------------------
(As Restated)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 44,973 $ 85,884
Restricted investments 35,272 34,107
Accounts receivable, net 42,042 32,935
Investments 46 46
Inventory, net 1,454 1,485
Prepaid and other current assets 21,038 11,316
--------------------- -------------------
Total current assets 144,825 165,773
--------------------- -------------------
Restricted investments 119,710 247,257
Property and equipment 826,786 678,374
less accumulated depreciation (82,919) (62,522)
--------------------- -------------------
743,867 615,852
Other assets 136,872 138,773
less accumulated amortization (47,592) (38,877)
--------------------- -------------------
89,280 99,896
--------------------- -------------------
Total assets $ 1,097,682 $ 1,128,778
--------------------- -------------------
--------------------- -------------------
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Accounts payable $ 29,301 $ 26,229
Accrued expenses 39,623 36,621
Payable to parent 360,297 354,679
Deferred revenue 16,163 6,030
Current portion of capital lease obligations 6,539 5,649
Current portion of long-term debt 13,533 12,127
--------------------- -------------------
Total current liabilities 465,456 441,335
--------------------- -------------------
Capital lease obligations, less current portion 17,051 19,741
Long-term debt, less current portion 948,172 919,075
Shareholder's deficit:
Common shares 78,462 78,462
Accumulated deficit (411,459) (329,835)
--------------------- -------------------
(332,997) (251,373)
--------------------- -------------------
Total liabilities and shareholder's deficit $ 1,097,682 $ 1,128,778
--------------------- -------------------
--------------------- -------------------
</TABLE>
(1) The information in this column was derived from GST USA's audited financial
statements as of December 31, 1998.
See notes to condensed consolidated financial statements.
-2-
<PAGE>
GST USA, Inc.
Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------ ------------ ------------
(As Restated) (As Restated)
<S> <C> <C> <C> <C>
Revenues:
Telecommunications services $ 51,214 $ 37,737 $ 99,938 $ 66,917
Construction, facility sales and other 34,518 756 45,287 756
Product 1,157 1,034 2,239 1,898
------------- ------------ ------------ ------------
Total revenues 86,889 39,527 147,464 69,571
------------- ------------ ------------ ------------
Operating costs and expenses:
Network expenses 32,776 25,825 64,475 46,953
Facilities administration and maintenance 4,265 3,701 9,400 7,656
Cost of construction revenues 20,027 200 25,865 200
Cost of product revenues 655 707 1,350 1,396
Selling, general and administrative 29,355 23,943 56,299 43,907
Depreciation and amortization 16,639 11,069 33,610 19,730
------------- ------------ ------------ ------------
Total operating costs and expenses 103,717 65,445 190,999 119,842
------------- ------------ ------------ ------------
Loss from operations (16,828) (25,918) (43,535) (50,271)
------------- ------------ ------------ ------------
Other expenses (income):
Interest income (2,614) (6,785) (6,472) (11,718)
Interest expense, net of amounts capitalized 21,211 19,256 43,077 34,688
Gain on sale of subsidiary shares --- --- --- (61,266)
Other 1,291 492 1,484 494
------------- ------------ ------------ ------------
19,888 12,963 38,089 (37,802)
------------- ------------ ------------ ------------
Loss before income taxes (36,716) (38,881) (81,624) (12,469)
------------- ------------ ------------ ------------
Income tax expense --- --- --- ---
------------- ------------ ------------ ------------
Net loss $ (36,716) $ (38,881) $ (81,624) $ (12,469)
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
</TABLE>
See notes to condensed consolidated financial statements.
-3-
<PAGE>
GST USA, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
------------------------------------
1999 1998
-------------- ----------------
(As Restated)
<S> <C> <C>
Operations:
Net loss $ (81,624) $ (12,469)
Adjustments to reconcile net loss to net cash
used in operations:
Depreciation and amortization 36,111 22,144
Accretion and accrual of interest 23,377 16,490
Non-cash stock compensation and other expense 1,434 1,123
Loss on disposal of assets 1,755 38
Gain on sale of subsidiary shares --- (61,266)
Changes in non-cash operating working capital:
Accounts receivable, net (9,276) (6,575)
Inventory 31 (137)
Prepaid, other current and other assets,
net (9,722) 1,289
Accounts payable and accrued liabilities 14,297 (6,250)
Deferred revenue 10,133 6
-------------- ----------------
Cash used in operations (13,484) (45,607)
-------------- ----------------
Investments:
Acquisition of subsidiaries, net of cash acquired --- (35,471)
Proceeds from sale of investments --- 328
Purchase of property and equipment (151,803) (80,458)
Proceeds from sale of property and equipment --- 3,562
Purchase of other assets (177) (2,053)
Change in investments restricted for the
purchase of property and equipment 110,231 (254,335)
Proceeds from the sale of subsidiary shares, net --- 85,048
Cash disposed of in sale of subsidiary --- (5,252)
-------------- ----------------
Cash used in investing activities (41,749) (288,631)
-------------- ----------------
Financing:
Proceeds from long-term debt 1,040 299,874
Principal payments on long-term debt and capital
leases (7,053) (4,526)
Increase in payable to parent 4,184 10,776
Deferred debt financing costs --- (12,701)
Change in investments restricted to finance
interest payments 16,151 17,703
-------------- ----------------
Cash provided by financing activities 14,322 311,126
-------------- ----------------
Decrease in cash and cash
equivalents (40,911) (23,112)
Cash and cash equivalents, beginning of period 85,884 198,870
-------------- ----------------
Cash and cash equivalents, end of period $ 44,973 $ 175,758
-------------- ----------------
-------------- ----------------
</TABLE>
See notes to condensed consolidated financial statements.
-4-
<PAGE>
GST USA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles. However, certain information or
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed, or
omitted, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, the statements include all adjustments
necessary (which are of a normal and recurring nature) for the fair presentation
of the results of the interim periods presented. The results of operations for
the periods presented are not necessarily indicative of the results to be
expected for the full fiscal year or for subsequent periods. These financial
statements should be read in conjunction with GST USA's audited consolidated
financial statements for the fiscal year ended December 31, 1998 as included in
GST USA's annual report on Form 10-K/A.
2. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS FOR PRIOR PERIODS
The Company has restated its result for the three and six month
periods ended June 30, 1999 to reflect the following three changes:
1) For a certain construction contract involving both monetary and
non-monetary events, the Company is restating construction revenue,
cost of construction revenues and property and equipment to comply
with Emerging Issues Task Force 86-29, "Nonmonetary Transactions."
The Company had previously accounted for only the value of the net
cash impact and believes that recording all portions of the contract
on their relative fair values is a more appropriate treatment.
2) The Company is restating its cost of construction revenues related
to conduit transactions in which it leases or sells certain conduits
while retaining others for its own use. The Company believes that
using a weighted average conduit cost for each conduit in the system,
whether retained or sold/leased, is more appropriate than the
incremental cost of the sold/leased conduits previously used.
3) The Company determined that certain software development costs were
more appropriately expensed in accordance with American Institute of
Certified Public Accountants Statement of Position 98-1, "Accounting
for the Costs of Computer Software Developed or Obtained for
Internal Use."
The effect of the restatement is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------- ----------------------------
JUNE 30, 1999 JUNE 30, 1999
---------------------------- ----------------------------
(AS REPORTED) (AS RESTATED) (AS REPORTED) (AS RESTATED)
<S> <C> <C> <C> <C>
Construction, facility sales and other revenue $ 19,551 $ 34,518 $ 25,427 $ 45,287
Cost of construction revenues 6,954 20,027 9,468 25,865
Selling, general and administrative expense 28,161 29,355 54,407 56,299
Net loss (37,416) (36,716) (83,195) (81,624)
Property and equipment 825,215 826,786 825,215 826,786
Accumulated deficit at June 30, 1999 (413,030) (411,459) (413,030) (411,459)
</TABLE>
3. TRANSFER OF SUBSIDIARIES
Effective January 1, 1999, GST USA's parent, GST Telecommunications,
Inc. ("GST"), transferred the ownership of GST Action Telcom, Inc. (the
"Transferred Subsidiary") to GST USA. The condensed consolidated financial
statements included herein give effect to such transfer as if the Transferred
Subsidiary was consolidated into GST USA as of the date of acquisition of the
Transferred Subsidiary by GST.
4. BASIC AND DILUTED NET LOSS PER SHARE
GST USA does not have equity instruments that are considered common
stock equivalents, and, as weighted average common shares total only 20 and 10
for June 30, 1999 and December 31, 1998, respectively, all of which are owned by
GST, income (loss) per share data is meaningless and is not presented in the
accompanying condensed financial statements.
-5-
<PAGE>
GST USA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
5. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
------------------------------
1999 1998
------------- -------------
(As Restated)
<S> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid for interest $ 24,079 $ 27,336
Cash paid for income taxes --- ---
Supplemental schedule of non-cash investing and
financing activities:
Recorded in business combinations:
Assets --- 45,719
Liabilities --- 10,248
Disposition of subsidiary:
Assets (1,373) 35,480
Liabilities 216 4,218
Minority interest --- 12,732
Amounts in accounts payable and accrued
liabilities for the purchase of fixed assets
at end of period 27,220 23,770
Assets acquired through capital leases 1,194 6,043
</TABLE>
6. ACCRUED SEVERANCE
In the fourth quarter of 1998, GST USA accrued $1,113 in severance
related costs. The following table details activity related to the severance
accrual.
<TABLE>
<S> <C>
Accrual at December 31, 1998 $1,113
Payments (737)
Adjustments (61)
------
Accrual at June 30, 1999 $ 315
------
------
</TABLE>
7. ADOPTION OF NEW ACCOUNTING STANDARD
In June 1999, the FASB issued Interpretation No. 43, "Real Estate
Sales," an interpretation of FASB Statement No. 66, "Accounting for Sales of
Real Estate." Interpretation No. 43 clarifies that the phrase ALL REAL ESTATE
SALES, from Paragraph 1 of Statement No. 66, includes sales of real estate
with property improvements or integral equipment that cannot be removed and
used separately from the real estate without incurring significant costs.
This Interpretation applies to all sales of real estate with property
improvements or integral equipment entered into after June 30, 1999. GST USA
is currently evaluating Interpretation No. 43 to determine the impact it will
have on its financial statements.
-6-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain information included in this Quarterly Report may be deemed to
include 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, that involve risk and uncertainty, such as information
relating to expected capital expenditures and expected trends in operating
losses and cash flows, as well as any statements preceded by, followed by, or
that include the words "intends," "estimates," "believes," "expects,"
"anticipates," "should," "could," or similar expressions, and other statements
contained herein regarding matters that are not historical facts. Although GST
USA believes that its expectations are based on reasonable assumptions, it can
give no assurance that its expectations will be achieved. The important factors
that could cause actual results to differ materially from those in the
forward-looking statements herein (the "Cautionary Statements") include, without
limitation, risks associated with GST USA's operating losses, risks relating to
GST USA's development and expansion and possible inability to manage growth,
risks relating to GST USA's significant capital requirements, substantial
indebtedness and possible inability to service its debt, risks relating to
competition and regulatory developments, risks relating to implementing local
and enhanced services, risks relating to its long distance business, as well as
other risks referenced from time to time in GST USA's filings with the
Securities and Exchange Commission, including Amendment No. 5 to Form S-4, as
filed on August 4, 1999 and GST USA's Form 10-K/A for the fiscal year ended
December 31, 1998. All subsequent written and oral forward-looking statements
attributable to GST USA or persons acting on its behalf are expressly qualified
in their entirety by the Cautionary Statements. GST USA does not undertake any
obligation to release publicly any revisions to such forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
OVERVIEW
GST USA is a wholly-owned subsidiary of GST Telecommunications, Inc.
("GST"). GST USA was formed to hold the capital stock of the consolidated
operating subsidiaries of GST. GST USA, through its subsidiaries, provides a
broad range of integrated telecommunications products and services, including
enhanced data and Internet services and comprehensive voice services throughout
the United States, with a robust presence in California and the West. GST USA
continues to focus on its western regional strategy by anchoring its next
generation networks in local markets and connecting them via long haul fiber
networks. GST USA's products include local dial tone, long distance, Internet,
data transmission and private line services.
The following table highlights key statistical information about GST USA, as of
June 30, 1999:
<TABLE>
<CAPTION>
- ------------------------------------------------------- -----------------------------------------------------
<S> <C>
Access Lines, sold this quarter 52,173
- ------------------------------------------------------- -----------------------------------------------------
Access Lines, installed this quarter 30,696
- ------------------------------------------------------- -----------------------------------------------------
Cities Served 48
- ------------------------------------------------------- -----------------------------------------------------
Route Miles, total 5,838 (86% owned, 14% leased)
- ------------------------------------------------------- -----------------------------------------------------
Fiber Miles, total 286,500 (97% owned, 3% leased)
- ------------------------------------------------------- -----------------------------------------------------
Collocations 92
- ------------------------------------------------------- -----------------------------------------------------
Buildings On-Net 715
- ------------------------------------------------------- -----------------------------------------------------
Class 4/5 Switches Operational 15
- ------------------------------------------------------- -----------------------------------------------------
-7-
<PAGE>
- ------------------------------------------------------- -----------------------------------------------------
Frame Relay Switches Operational 24
- ------------------------------------------------------- -----------------------------------------------------
ATM Switches Operational 35
- ------------------------------------------------------- -----------------------------------------------------
Customers 107,425
- ------------------------------------------------------- -----------------------------------------------------
Interconnection Agreements 13
- ------------------------------------------------------- -----------------------------------------------------
Employees 1,258
- ------------------------------------------------------- -----------------------------------------------------
</TABLE>
We recently discovered errors in previous disclosures of fiber miles and
route miles. We are currently reviewing our network records and these numbers
reflect our best estimate based on our review to date. These numbers reflect
a downward restatement of approximately 985 route miles and 20,882 fiber
miles.
RESULTS OF OPERATIONS
REVENUES. Total revenue for the three month and six month periods
ended June 30, 1999 increased $47.4 million, or 119.8%, and $77.9 million, or
112.0%, respectively, over the comparable three and six month periods ended
June 30, 1998. Telecommunications services revenues for the three and six
month periods ended June 30, 1999 increased $13.5 million, or 35.7%, and
$33.0 million, or 49.3%, respectively, over the comparable three and six
month periods ended June 30, 1998. The increase in telecommunications
services revenues resulted from increased local, long distance, data, and
Internet services revenue as GST USA launched new products and entered new
markets. GST USA is bundling these products to provide better access and
services to its customers. In addition, for the six-month period ended June
30, 1999, the increase was also attributable to 1998 strategic acquisitions,
including the acquisition of ICON Communications, Corp. Reciprocal
compensation, which GST USA recognizes based on interconnection agreements,
totaled $1.5 million and $2.2 million for the three and six month periods
ended June 30, 1999, respectively, as compared to $0 for both the three and
six month periods ended June 30, 1998. Construction, facility sales and other
revenue for the three and six month periods ended June 30, 1999 increased
$33.8 million and $44.5 million, respectively, over the comparable three and
six month periods ended June 30, 1998. The increase in construction, facility
sales and other revenue was attributable to revenue from several agreements
to sell or lease conduit and fiber capacity to other carriers. Product
revenue for the three and six month periods ended June 30, 1999 increased $.1
million, or 11.9%,and $.3 million, or 18.0%, respectively, over the three and
six month periods ended June 30, 1998.
OPERATING EXPENSES. Total operating expenses for the three and six
month periods ended June 30, 1999 increased $38.3 million, or 58.5%, and
$71.2 million, or 59.4%, respectively, over the comparable three and six
month periods ended June 30, 1998. Network expenses, which include direct
local and long distance circuit costs, were 64.0% and 64.5%, respectively, of
telecommunications services revenues for the three and six month periods
ended June 30, 1999 compared to 68.4% and 70.2% for the comparable periods in
the previous year. The decrease in network expenses as a percentage of
telecommunications services revenue resulted primarily from an increase in
traffic carried on GST USA's network. Facilities administration
and maintenance expenses for the three and six month periods ended June 30,
1999 were 8.3% and 9.4%, respectively, of telecommunications services
revenues compared to 9.8% and 11.4% for the comparable periods ended June 30,
1998. The decrease in these expenses as a percentage of telecommunications
services revenues primarily results from the inclusion of revenues from
strategic acquisitions, substantially all of which are not generated on GST
USA's networks.
Cost of construction revenues for the three and six month periods
ended June 30, 1999 were $20.0 million and $25.9 million, respectively, an
increase of $19.8 million and $25.7 million over the comparable periods in the
previous year. The increase was caused by the increase in construction,
facility sales and other revenue. For the three and six month periods ended
June 30, 1999, cost of construction revenues were 58.0% and 57.1%,
respectively, of construction revenues, compared to 26.5% for both the three
and six month periods ended June 30, 1998.
Consistent with the comparable periods in 1998, cost of product
revenues for the three and six month periods ended June 30, 1999 were $.7
million and $1.4 million, respectively. For the three and six month periods
ended June 30, 1999 cost of product revenues were 56.6% and 60.3%,
respectively, of product revenues, compared to 68.4% and 73.6% for the
comparable three and six month periods ended June 30, 1998.
-8-
<PAGE>
Selling, general and administrative expenses for the three and six
month periods ended June 30, 1999 increased $5.4 million, or 22.6%, and $12.4
million, or 28.2%, respectively, as compared to the three and six month
periods ended June 30, 1998. The increase is due primarily to the expansion
of GST USA's local and enhanced services operations, which resulted in
additional marketing, management information and sales staff, and to selling,
general and administrative expenses related to companies acquired in 1998. In
addition, GST USA had increased litigation costs related to its legal
proceedings. See "Legal Proceedings" in "Part II: Other Information." As a
percentage of total revenue, selling, general and administrative expenses for
the three and six months ended June 30, 1999 were 33.8% and 38.2%,
respectively, compared to 60.6% and 63.1%, respectively, for the three and
six months ended June 30, 1998.
Depreciation and amortization for the three and six month periods ended
June 30, 1999 increased $5.6 million, or 50.3%, and $13.9 million, or 70.3%,
respectively, as compared to the three and six months periods ended June 30,
1998. The increase is attributable to newly-constructed networks and related
equipment being placed into service and to the amortization of intangible assets
related to companies acquired by GST USA in 1998. GST USA expects that
depreciation will continue to increase as it expands its networks and longhaul
fiber optic facilities and installs additional switches. Depreciation and
amortization expense was 19.1% and 22.8% of total revenue for the three and six
months ended June 30, 1999 compared to 28.0% and 28.4% for the comparable three
and six month periods ended June 30, 1998.
OTHER EXPENSES/INCOME. For the three and six month periods ended
June 30, 1999, GST USA recorded net other expense of $19.9 million and $38.1
million, respectively, compared to net other expense of $13.0 million and net
other income of $37.8 million for the comparable three and six month periods
ended June 30, 1998, respectively. For the six months ended June 30, 1998,
net other income includes a $61.3 million gain resulting from GST USA's sale
of its remaining 63% interest in NACT Telecommunications, Inc. (the "Nact
Sale"). Excluding such gain, net other expense would have increased $14.6
million for the six month period ended June 30, 1999 as compared to the same
period in the previous year. The increase in net other expense related
primarily to increased interest expense resulting from the issuance in May,
1998 of $500.0 million principle amount at maturity of 10.5% senior secured
discount notes.
NET INCOME/LOSS. Net loss for the three month period ended June 30,
1999 decreased $2.2 million, or 5.6%, to $36.7 million from $38.9 million for
the three months ended June 30, 1998. Net loss for the six month period ended
June 30, 1999 increased $69.1 million, or 554.6%, to $81.6 million from $12.5
million for the six month period ended June 30, 1998. Excluding the $61.3
million gain on the NACT Sale, net loss would have increased $7.8 million for
the six months ended June 30, 1999 as compared to the six months ended June
30, 1998. Such increase primarily relates to increased interest expense.
-9-
<PAGE>
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
None.
-10-
<PAGE>
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf of
the undersigned thereunto duly authorized.
Date: March 29, 2000 GST USA, INC.
(Registrant)
/s/ Daniel L. Trampush
-------------------------------------
Daniel L. Trampush,
(Senior Vice President and Chief Financial
Officer)
-11-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GST USA'S
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 44,973,000
<SECURITIES> 35,272,000
<RECEIVABLES> 45,085,000
<ALLOWANCES> (3,043,000)
<INVENTORY> 1,454,000
<CURRENT-ASSETS> 144,825,000
<PP&E> 826,786,000
<DEPRECIATION> (82,919,000)
<TOTAL-ASSETS> 1,097,682,000
<CURRENT-LIABILITIES> 465,456,000
<BONDS> 824,607,000
65,603,000
0
<COMMON> 240,212,000
<OTHER-SE> (332,997,000)
<TOTAL-LIABILITY-AND-EQUITY> 1,097,682,000
<SALES> 147,464,000
<TOTAL-REVENUES> 147,464,000
<CGS> 91,690,000
<TOTAL-COSTS> 190,999,000
<OTHER-EXPENSES> (4,988,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,077,000
<INCOME-PRETAX> (81,624,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (81,624,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (81,624,000)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
