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) May 3, 2000
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(April 26, 2000)
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ICG COMMUNICATIONS, INC.
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(Exact name of registrant as specified in charter)
Delaware 1-11965 84-1342022
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
161 Inverness Drive West, Englewood, Colorado 80112
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(Address of principal executive offices)
ICG HOLDINGS (CANADA) CO.
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(Exact name of registrant as specified in charter)
Canada 1-11052 Not Applicable
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
161 Inverness Drive West, Englewood, Colorado 80112
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(Address of principal executive offices)
ICG HOLDINGS, INC.
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(Exact name of registrant as specified in charter)
Colorado 33-96540 84-1158866
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
161 Inverness Drive West, Englewood, Colorado 80112
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(Address of principal executive offices)
ICG FUNDING, LLC
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(Exact name of registrant as specified in charter)
Delaware 333-40495 84-1434980
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
161 Inverness Drive West, Englewood, Colorado 80112
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(Address of principal executive offices)
Registrants' telephone numbers, including area codes (888)424
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1144 and (303) 414-5000
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<PAGE>
Item 5. Other Events.
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In a press release dated April 26, 2000, ICG
Communications, Inc., a Delaware corportation (the "Company"),
announced its earnings information and results of operations for
the Company's 2000 first quarter. A copy of the press release is
attached.
Item 7. Exhibit.
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(c) Exhibit
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99.1 Press Release, dated April 26, 2000.
<PAGE>
INDEX TO EXHIBIT
Exhibit No. Description
- ----------- -------------
99.1 Press Release, dated April 26, 2000.
<PAGE>
EXHIBIT 99.1
Press Release, dated April 26, 2000.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrants have duly caused this report to be
signed on their behalf by the undersigned hereunto duly
authorized.
Dated: May 3, 2000 ICG COMMUNICATIONS, INC.
By:/s/ Harry R. Herbst
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Harry R. Herbst
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
ICG HOLDINGS (CANADA) CO.
By: /s/ Harry R. Herbst
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Harry R. Herbst
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
ICG HOLDINGS, INC.
By: /s/ Harry R. Herbst
---------------------
Harry R. Herbst
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
ICG FUNDING, LLC
By: ICG Communications, Inc.
Common Member and Manager
By: /s/ Harry R. Herbst
---------------------
Harry R. Herbst
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
[GRAPHIC OMITTED] FOR IMMEDIATE RELEASE
For more information contact:
Investor Relations
(303) 414-5347
[email protected]
ICG Reports First Quarter 2000 Results
174,000 Lines, $157 Million Revenue and $19 Million EBITDA
ENGLEWOOD, COLORADO (April 26, 2000) - ICG Communications, Inc. (NASDAQ: ICGX)
today announced first quarter results that reflect another record for access
line installations, adding 174,000 lines for its ISP and business customers. The
Company ended the first quarter with approximately 905,000 access lines in
service, a 116 percent increase over first quarter 1999. First quarter revenue
was $157.2 million, an increase of $52.9 million, or 51 percent over first
quarter 1999, and EBITDA was $19.2 million, an increase of $11.4 million, or 144
percent, over the comparable period in 1999.
"We set forth an aggressive growth plan for 2000, and we are right on track to
meet our commitments," said ICG Chairman and Chief Executive Officer, J. Shelby
Bryan. "I am confident that the combination of our experienced management team,
substantial new funding and our demonstrated sales and provisioning capability
will enable ICG to continue to successfully meet its targets."
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Invitation: Today, ICG executive management is hosting a conference call and
simultaneous Webcast at 9:00 a.m. mountain time, 11:00 a.m. eastern time. Please
log on to the ICG Web page at www.icgcom.com to view and listen to our year-end
results discussion. The Webcast will remain available for replay on the ICG Web
site.
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<PAGE>
First Quarter Review
In addition to record line installations in the quarter, the Company received
orders for approximately 200,000 new lines and exited the first quarter with a
backlog of approximately one-half million lines to be installed during the
remainder of the year. Both sales and provisioning capabilities are on track to
deliver substantial growth in 2000.
First quarter network expansion included deployment of four new switches located
in Ontario, California, Irvine, California, Miami, Florida and Garfield Heights,
Ohio. The Company increased capacity in its new and existing markets, increasing
total switch port capacity by over 200,000 during the quarter. In addition, by
the end of the quarter the Company had leased the sites, ordered equipment and
entered into interconnection agreements related to its 22-market expansion plan.
During the first quarter ICG continued to add significant network capacity. The
Company increased its nationwide network backbone to OC12 from OC3, effectively
increasing capacity by a factor of four, and is on schedule to increase capacity
further to OC48 by mid-year.
As part of its Internet gateway strategy, ICG acquired CPUs, or servers, that
will be installed in over 150 locations by the end of the third quarter. As the
Company phases in these servers, advanced network management capabilities such
as application distribution and content management and delivery services will be
offered to Internet service provider (ISP) customers and content providers.
Financial Review
Revenue
First quarter revenue was $157.2 million, an 11 percent increase over the fourth
quarter 1999 and a 51 percent increase over the first quarter 1999 as adjusted
for discontinued operations. Local services revenue of $102.6 million
contributed 65 percent of total revenue and includes revenue from regional
business customers, ISP customers and associated reciprocal compensation revenue
for call termination. Special access revenue of $39.8 million compares to $38.5
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<PAGE>
million in the fourth quarter 1999, with each period recognizing revenue from a
long-term fiber optic lease agreement of $11.5 million and $13.0 million,
respectively. Special access revenue was up 77 percent compared to the first
quarter 1999. Long distance revenue was $4.3 million and switched termination
revenue was $10.5 million.
Operating Costs and Gross Operating Margin
First quarter operating costs were $82.9 million resulting in a gross margin on
sales of 47 percent. Operating costs were $59.5 million in the fourth quarter
1999, which benefited from identification of $9.5 million in capitalized costs
related to capital activities during the second and third quarters of 1999.
First quarter 1999 operating costs were $53.6 million
Selling, General and Administrative (SG&A) Expenses
First quarter SG&A expenses were $55.1 million. SG&A expenses were $12.3 million
higher than the same period in 1999 as a result of the Company scaling its
business.
Earnings
The first quarter loss from continuing operations was $121.3 million, or $2.52
per share. This compares to a loss from continuing operations of $86.2 million,
or $1.85 per share, in the first quarter 1999, and compares to a loss of $100
million, or $2.10 per share, in the fourth quarter 1999.
Reciprocal Compensation
During the first quarter, ICG entered into an agreement with Bell South that
defines terms for reciprocal compensation for the next three years. This
agreement provides increased certainty related to the amount of reciprocal
compensation that the Company expects to receive in future periods.
Capital Expenditures and Liquidity
Capital expenditures for the first quarter were $216.4 million, which included
$57.5 million for long-haul network capacity acquired under long-term lease. The
Company drew down $95.0 million in long-term debt under its senior banking
3
<PAGE>
facility. The Company ended the quarter with $71.8 million in cash and
short-term investments.
Enhanced Management Team
ICG continued to add strong leadership in key areas of the company. Jim
Washington joined the Company as Executive Vice President of Network Services,
Pam Jacobson as Executive Vice President of Sales and Marketing and Terry
Wingfield, Jr. as Executive Vice President of Corporate Development.
Subsequent to Quarter-end
The Company completed the previously announced equity transaction for a private
placement of $750 million in convertible preferred shares. In addition, the
Company finalized agreements with vendors for approximately $200 million in
financing for network equipment. These transactions together with operating cash
flow are expected to fund the Company's 2000 expansion program as well as
capital plans into 2001.
Forward Looking Statement Disclosure
Information and statements presented in this press release may contain forward
looking disclosures, expressed or implied, that are based on the beliefs of
management as well as assumptions made based on information currently available
to management. These forward looking statements and information involve risks
and uncertainties including, but not limited to, the ability of the Company to
raise capital, future demand for the Company's services, general economic
conditions, government regulations, competition and customer strategies, capital
deployment, the impact of pricing and other risks and uncertainties. Should one
or more of these risks materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described in this press
release as anticipated, believed, estimated or expected. These risks are
detailed from time to time in various reports filed by ICG with the Securities
and Exchange Commission, including Forms 10-K (filed for the year-ended December
31, 1999) and Forms 10-Q filed quarterly subsequent to March 31, June 30 and
September 30, 1999.
4
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<TABLE>
<CAPTION>
Key Operating Statistics
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As of Mar. 31, 2000 Dec. 31, 1999
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<S> <C> <C>
Access lines/ports in service 904,629 730,975
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Total port capacity (customer port equivalent) 1,137,439 932,143
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Fiber route miles (operational) 4,807 4,596
Under construction 368 531
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Buildings connected
On network 1,046 963
Hybrid 7,746 7,115
Total buildings connected 8,792 8,078
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Switches
Circuit 35 31
Data- Frame relay 16 16
Data- ATM 24 24
Total switches 75 71
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Long-haul capacity under long-term leases:
Miles 18,000 18,000
Capacity OC12 OC 3
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Collocations with ILECs 183 147
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VoIP Gateways 181 140
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</TABLE>
5
<PAGE>
ICG Press Release, 4/26/00, Page 6
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
($ in thousands, except per share data)
<TABLE>
<CAPTION>
Comparative periods
Three months Sequential Year-over-year
ended, Three months ended, Three months ended,
3/31/00 12/31/99 % Change 3/31/99 % Change
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Revenue:
<S> <C> <C> <C> <C> <C>
Local services $ 102,595 $ 86,318 19% $ 67,399 52%
Long distance 4,284 3,968 8% 5,131 (17%)
Special access 39,831 38,524 3% 22,562 77%
Switched terminating access 10,514 13,265 (21%) 9,239 14%
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Total revenue 157,224 142,075 11% 104,331 51%
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Operating costs (82,902) (59,536) 39% (53,649) 55%
Selling, general and administrative (55,089) (59,415) (7%) (42,808) 29%
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EBITDA (before nonrecurring and
noncash charges) 19,233 23,124 (17%) 7,874 144%
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Depreciation and amortization (64,599) (48,102) 34% (36,375) 78%
Provision for impairment of long-lived assets - (2,515) NA - NA
Other, net (432) (296) 46% 933 (146%)
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Operating loss (45,798) (27,789) 65% (27,568) 66%
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Interest expense (62,634) (60,783) 3% (47,438) 32%
Interest income 3,277 4,631 (29%) 4,104 (20%)
Other, net 459 154 198% (500) (192%)
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Loss from continuing operations before income taxes,
preferred dividends and extraordinary gain (104,696) (83,787) 25% (71,402) 47%
- -------------------------------------------------------------------------------------------------------------
Income tax expense - (25) NA - NA
Accretion and preferred dividends on preferred
securities of subsidiaries (16,637) (16,158) 3% (14,804) 12%
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Loss from continuing operations before extraordinary
gain (121,333) (99,970) 21% (86,206) 41%
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Discontinued operations:
(Loss) income from discontinued operations - (981) NA (111) NA
(Loss) gain on disposal of discontinued operations - 45,784 NA - NA
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- 44,803 NA (111) NA
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Extraordinary gain on sales of operations
of NETCOM, net of income taxes (301) 2,482 (112%) 193,029 (100%)
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Net ( loss) income $ (121,634) $ (52,685) (131%) $ 106,712 (214%)
=============================================================================================================
Net loss per share - basic and diluted:
Loss from continuing operations $ (2.52) $ (2.10) (20%) $ (1.85) 36%
Income (loss) from discontinued operations - 0.94 100% - NA
Extraordinary gain - 0.05 NA 4.14 NA
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Net loss per share - basic and diluted $ (2.52) $ (1.11) (127%) $ 2.29 (210%)
=============================================================================================================
Weighted average number of shares outstanding
- basic and diluted 48,189 47,618 46,538
=============================================================================================================
</TABLE>
<PAGE>
ICG Press Release, 4/26/00, Page 7
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
($ in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
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2000 1999
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Assets:
<S> <C> <C>
Cash and cash equivalents $ 40,699 $ 103,288
Short-term investments available for sale 31,115 22,219
Receivables, net 156,511 168,731
Property and equipment, net 1,681,868 1,525,680
Other assets, net 165,144 200,703
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Total assets $ 2,075,337 2,020,621
======================================================================================
Liabilities and Stockholders' Deficit:
Accounts payable and accrued liabilities $ 305,446 $ 333,322
Capital leases 81,724 71,438
Debt 2,053,557 1,906,697
Other liabilities 50,908 33,705
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Total liabilities 2,491,635 2,345,162
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Redeemable preferred securities of subsidiaries 533,727 519,323
Stockholders' deficit:
Common stock 486 478
Additional paid-in capital 612,418 599,282
Accumulated deficit (1,565,258) (1,443,624)
Accumulated other comprehensive gain 2,329 -
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Total stockholders' deficit (950,025) (843,864)
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Total liabilities and stockholders' deficit $ 2,075,337 $ 2,020,621
======================================================================================
Diluted shares (in thousands) 58,464 50,217
</TABLE>
<PAGE>
ICG Press Release, 4/26/00, Page 8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
($ in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
- -------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C>
Net (loss) income (121,634) 106,712
Loss from discontinued operations - 111
Extraordinary (gain) loss on sales of operations 301 (193,029)
Adjustments to reconcile net (loss) income to net cash used by operating
activities:
Accretion and preferred dividends on preferred securities of subsidiaries 16,637 14,804
Noncash interest expense, net of capitalized interest 52,439 45,603
Depreciation and amortization 64,599 36,375
Loss (gain) transactions, net (6,720) (5,177)
Deferred compensation and contribution to 401(k) through issuance of
common stock 1,673 2,077
Changes in operating assets and liabilities, excluding the effects of
dispositions and noncash transactions (49,727) (55,381)
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Net cash used by operating activities (42,432) (47,905)
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Cash flows from investing activities:
Acquisition of property, equipment and other assets (141,299) (99,151)
Payments for construction of corporate headquarters (1,699) -
Proceeds from sales of assets, net of investment purchases and changes
in restricted cash 21,530 232,251
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Net cash (used) provided by investing activities (121,468) 133,100
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Cash flows from financing activities:
Proceeds from issuance of common stock 11,902 4,157
Proceeds from issuance of long-term debt 95,000 -
Principal payments on long-term debt, capital leases, and payments of
preferred dividends (5,497) (4,613)
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Net cash (used) provided by financing activities 101,405 (456)
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Net increase (decrease) in cash and cash equivalents (62,495) 84,739
Net cash used by discontinued operations (94) (3,356)
Cash and cash equivalents, beginning of period 103,288 210,307
- -------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 40,699 291,690
=============================================================================================================
Supplemental disclosure of cash flows information of continuing operations:
Cash paid for interest 7,132 1,835
=============================================================================================================
Supplemental schedule of noncash investing and financing activities of
continuing operations:
Acquisition of corporate headquarters assets through issuance of long-term
debt and conversion of security deposit - 33,719
=============================================================================================================
Assets acquired pursuant to IRU 57,494 -
Assets acquired under capital leases 14,415 3,760
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Total 71,909 3,760
=============================================================================================================
</TABLE>
