<PAGE> 1
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): March 1, 2000
IMPSAT FIBER NETWORKS, INC.
IMPSAT S.A.
(Exact name of registrant as specified in its charter)
Delaware
Argentina
(State or other jurisdiction of incorporation)
52-1910372
333-12977 Not Applicable
(Commission File Number) (IRS Employer Identification Number)
Alferez Pareja 256 (1107)
Buenos Aires, Argentina
(Address of Principal Executive Offices)
(5411) 4300-4007
(Telephone Number, Including Area Code)
(Not Applicable)
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
IMPSAT Fiber Networks, Inc. made a public announcement on March 1,
2000 of its operating results for the fourth quarter and full year 1999. The
public announcement was made by means of a news release, the text of which is
set forth in Exhibit 99.1 hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following exhibits are filed as a part of this report:
EXHIBIT NO.
99.1 News release. Filed herewith.
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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.
IMPSAT FIBER NETWORKS, INC.
By /s/ Guillermo Jofre
---------------
Guillermo Jofre
Chief Financial Officer
IMPSAT S.A.
By /s/ Guillermo Jofre
---------------
Guillermo Jofre
Finance Manager
Date: March 1, 2000
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EXHIBIT INDEX
EXHIBIT NO.
99.1 News release. . Filed herewith.
<PAGE> 1
FOR IMMEDIATE RELEASE
For More Information Contact:
Guillermo Jofre, Chief Financial Officer
Gonzalo Alende Serra, Investor Relations
IMPSAT Fiber Networks, Inc.
Tel: 54.11.4300.4007 or
54.11.4363.3546
www.impsat.com [IMPSAT LOGO]
or
Joe Mileti / Robin Weinberg
Citigate Dewe Rogerson Inc.
Tel: 212.688.6840
IMPSAT FIBER NETWORKS ANNOUNCES RESULTS
FOR THE FOURTH QUARTER AND FULL YEAR 1999
1999 YEAR HIGHLIGHTS
- - Total net revenues grew by 9.8% despite a severe regional recession
- - Revenue growth was derived principally from Argentina, Venezuela and Brazil
- - Operating costs increased during 1999 principally due to the Company's
development and construction of its new Broadband Network in Argentina and
Brazil, increased leased capacity and tightening of provisioning policies
(March 1, 2000 - Buenos Aires, Argentina) - IMPSAT Fiber Networks, Inc.
("IMPSAT" or the "Company") (NASDAQ:IMPT), a leading provider of data
transmission and private telecommunications network services in Latin America
with an increasing emphasis on broadband transmission, today announced its
results for the fourth quarter and full year 1999. All figures are in U.S.
dollars.
FOURTH QUARTER AND FULL YEAR 1999 RESULTS
Overview
For the fourth quarter of 1999, the Company reported net revenues of $61.3
million, an increase of $3.1 million (or 5.4%), from the same period in 1998.
Net revenues for the full year 1999 totaled $228.5 million, an increase of $20.4
million (or 9.8%) from the prior year. Growth in net revenues was achieved
despite a significant economic recession throughout Latin America, especially in
the countries where most of IMPSAT's operations are currently deployed
(Argentina, Colombia, Venezuela). The recession in certain cases accelerated
pricing pressures existing in the Company's more mature markets.
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EBITDA for the fourth quarter of 1999 totaled $8.8 million compared to $19.6
million for the same period in 1998. For the full year 1999, EBITDA totaled
$33.9 million compared to $63.8 million for 1998. The decline in EBITDA resulted
from the effect of the regional recession on revenue growth, increasing costs
for leased telecommunication links capacity to address higher bandwidth demand,
additional operating expenses relating in part to the Company's growth plans,
and the tightening of its provisioning policies for doubtful accounts.
For the three-month period ended December 31, 1999, the Company reported a net
loss of $30.6 million, an increase of $20.0 million (or 189.3%) compared to the
same period in 1998. IMPSAT's net loss for the full year 1999 was $131.5
million, compared to $34.0 million for 1998. In addition to the items described
above, the Company's increased loss was due to a change in its depreciation
policy and the increase of $10.9 million in net interest expense due to higher
average outstanding indebtedness. On a pro forma basis after taking into account
the issuance of an aggregate of 14,350,000 shares of common stock in the
Company's initial public offering and simultaneous private placement to British
Telecommunications plc on February 4, 2000, IMPSAT's loss per share was $0.33
for the quarter of 1999 and $1.44 for the full year 1999, compared to a net loss
of $0.12 for the fourth quarter 1998 and $0.37 for the full year 1998.
Commenting on the results, Guillermo Jofre, the Company's Chief Financial
Officer said, "We are pleased with the performance of the Company during 1999.
We were able to continue the expansion of our business during a period of
significant recession throughout the Latin American region. In addition, the
progress made in the development of our fiber-optic and wireless Broadband
Network reinforces our confidence for the years ahead. The year 2000 began on a
very positive note with the successful completion of our initial public offering
and the completion of our funding plan for the continued build-out of our
pan-Latin American operations."
Revenues
The breakdown of IMPSAT's net revenues by business lines is summarized in the
following table:
<TABLE>
<CAPTION>
4Q 1999 4Q 1998 1999 1998
- --------------------------------------------------------------------------------------------
NET REVENUES
- --------------------------------------------------------------------------------------------
NETWORK SERVICES
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Terrestrial 8,886 8,315 33,638 32,861
Satellite 33,765 34,935 138,840 129,755
42,651 43,250 172,478 162,616
- --------------------------------------------------------------------------------------------
INTERNET SERVICES
- --------------------------------------------------------------------------------------------
Corporate 3,622 1,753 10,490 2,760
Wholesale 3,388 5,346 16,149 17,826
7,010 7,099 26,639 20,586
- --------------------------------------------------------------------------------------------
OTHER SERVICES 11,661 7,852 29,334 24,887
- --------------------------------------------------------------------------------------------
TOTAL NET REVENUES 61,322 58,201 228,451 208,089
- --------------------------------------------------------------------------------------------
</TABLE>
(All figures in thousands of US dollars)
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The breakdown of IMPSAT's full-year net revenues by business lines in main
locations is summarized in the following table:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
FULL-YEAR 1999
- --------------------------------------------------------------------------------------------------------------------------------
Eliminations and
Argentina Colombia Venezuela Brazil Other Adjustments Total
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET REVENUES
- --------------------------------------------------------------------------------------------------------------------------------
NETWORK SERVICES
- --------------------------------------------------------------------------------------------------------------------------------
Terrestrial 19,036 11,679 1,373 310 1,355 (115) 33,638
Satellite 64,511 39,241 18,396 4,226 19,541 (7,075) 138,840
83,547 50,920 19,769 4,536 20,896 (7,190) 172,478
- --------------------------------------------------------------------------------------------------------------------------------
INTERNET SERVICES
- --------------------------------------------------------------------------------------------------------------------------------
Corporate 3,593 862 1,432 808 7,398 (3,603) 10,490
Wholesale 5,537 2,017 59 895 7,645 (4) 16,149
9,130 2,879 1,491 1,703 15,043 (3,607) 26,639
- --------------------------------------------------------------------------------------------------------------------------------
OTHER SERVICES 17,532 7,248 1,972 2,329 4,923 (4,670) 29,334
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL NET REVENUES 110,209 61,047 23,232 8,568 40,862 (15,467) 228,451
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(All figures in thousands of US dollars)
Growth in revenues was mainly due to an increase in the number of customers. At
year-end, 1999, the Company had 1,745 customers; an increase of 2.2% (from
1,707) from the third quarter of 1999, and of 19.0% (from 1,467) compared to
December 31, 1998. Important new clients obtained in 1999 included America
Online and GTE in Argentina
Revenue figures for 1999 included $8.6 million from retail internet services in
Argentina and Brazil, which were sold to El Sitio, Inc. in the fourth quarter of
1999, and $ 2.0 million in retail internet services in Colombia which will be
transferred to El Sitio, Inc. in the first quarter of 2000. The transfer of
retail customers to El Sitio, Inc. followed IMPSAT's decision to focus on the
corporate and wholesale segments of the internet access market. Following these
transactions, IMPSAT entered into contracts with El Sitio in those countries to
provide it with telecommunication links to the U.S. Internet Backbone.
The increase in the Company's revenues was derived principally from Argentina,
Venezuela and Brazil. Although the Company's business in Argentina was affected
by the regional recession, total revenues increased by $9.7 million, or 9.6%
from the full year 1998, through an increase in services provided and customers
served. 1999 marked the first full year of operations in Brazil. The Company's
business in Colombia, its second oldest market, was adversely affected by the
severe economic recession experienced during 1999.
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Operating Expenses
Salaries and wages in the fourth quarter of 1999 increased by $0.3 million
(2.6%) compared to the same quarter of 1998. On a full-year basis, salaries and
wages totaled $46.2 million, an increase of $8.0 million, or 20.9%, from 1998.
During 1999 the number of employees grew to 1,107, an increase of 78 (or 7.6%)
from the headcount at the end of 1998. IMPSAT Brazil increased its number of
employees by 60 people, or 50.4%, during 1999 in connection with the Company's
development of operations in that country.
Selling, general & administrative expenses (SG&A) totaled $12.9 million for the
fourth quarter of 1999, compared to $11.3 million for the same period in 1998.
For the full year 1999, SG&A expenses totaled $ 43.4 million compared to $38.7
million in 1998. The increase in SG&A expenses is primarily attributable to
legal, tax and other services and to the administrative expenses incurred as a
result of the Company's expansion into new locations. During the fourth quarter
of 1999, the Company decided to reclassify its provision for doubtful accounts
under "Other Operating Expenses".
Leased links capacity costs totaled $44.8 million, an increase of 56.1% compared
to 1998, as customers' demand for bandwidth required the Company to lease
additional satellite and fiber optic capacity. Leased capacity costs in the
fourth quarter of 1999, which totaled $12.0 million, were also substantially
higher (59.1%) than in the corresponding period in 1998. The Company expects to
continue to incur these costs until it places its Broadband Network into
operation, scheduled for the end of 2000.
Other Operating Expenses for the fourth quarter of 1999 were $15.7 million, an
increase of $7.6 million (or 93.8%) when compared to the same period of 1998.
For the full year of 1999, Other Operating Expenses totaled $ 60.3 million, an
increase of 55.6% from the prior year. These Other Operating Expenses consist
primarily of contracted maintenance and installation services, selling
commissions, and the Company's provision for doubtful accounts. For the full
year 1999, provisions for doubtful accounts represented 51.9% of the increase in
Other Operating Expenses. At September 30, 1999, the Company changed its
provisioning policy to require the provisions of all amounts past due more than
180 days and made reserves of 100% of the Company's outstanding receivables due
from IBM de Argentina and ENCOTESA, which were subject to litigation. The
increased provision for these two clients totaled approximately $6.2 million. In
February, 2000, IMPSAT reached an agreement with IBM de Argentina for the
settlement of its receivables due from that company, by which IMPSAT will
receive approximately $2.0 million during the first four months of 2000,
representing a recovery of 90% of the amount reserved.
Depreciation and Amortization
Depreciation and Amortization expense for the fourth quarter of 1999 totaled
$42.0 million, an increase of $31.6 million (or 303.1%) compared to the same
period in 1998. For the full year 1999, the Company recorded depreciation and
amortization expenses of $130.1 million, an increase of $93.1 million (or
252.1%), compared to the full year 1998. The significant increase in
Depreciation and Amortization expense reflects the Company's decision at the end
of the third quarter of 1999 to change the depreciable life of some of the
Company's customers' premises telecommunication equipment from ten years to five
years in light of technological advances.
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Interest Expense and Other
For the three and twelve months ended December 31, 1999, net interest expense
totaled $13.6 million and $55.6 million, respectively, consisting of interest
expense of $16.2 million and interest income of $2.6 million for the three
months ended December 31, 1999 and interest expense of $63.2 million and
interest income of $7.6 million for the twelve months ended December 31, 1999.
Net interest expense for the corresponding quarterly period and full year 1998
was $ 14.5 million and $44.7 million, respectively.
The Company's results were positively affected by an extraordinary gain on the
sale of IMPSAT's retail Internet businesses in Argentina and Brazil in the
fourth quarter of 1999 to El Sitio, Inc. The Company recorded a gain of $13.7
million on these sales. As part of those transactions, the Company subscribed
for convertible preferred stock of El Sitio, Inc. that upon the latter's initial
public offering of common stock in December 1999 was automatically converted
into 15.4% of El Sitio's outstanding common stock.
OPERATING HIGHLIGHTS
IMPSAT had a total of 452 duct kilometers installed during the fourth quarter of
1999, principally in Argentina. At year-end 1999, the total number of duct
kilometers installed was 650. Total fiber route kilometers (including buried and
aerial) at December 31, 1999 were 922, all of which were in use.
As of February 15, 2000, total duct kilometers installed were 1,054 and fiber
route kilometers had increased to 1,917. The advancement in the deployment of
IMPSAT's Broadband Network is described in the following table:
<TABLE>
<CAPTION>
=================================== ======================================== =====================================
AT DECEMBER 31, 1999 AT FEBRUARY 15, 2000 TOTAL PROJECT
=================================== ======================================== =====================================
Duct Route Fiber Route Km. Duct Route Fiber route Km. Duct Route Fiber route Km.
Km. Km. Km.
- --------------------------------------------------------------------------------------------------------------------------------
LONG-HAUL
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Argentina 498 87 710 371 1,800 1,800
- --------------------------------------------------------------------------------------------------------------------------------
Brazil 3 0 18 0 1,500 1,500
- --------------------------------------------------------------------------------------------------------------------------------
Colombia 0 698 0 1,406 0 2,000
- --------------------------------------------------------------------------------------------------------------------------------
Chile 65 0 132 0 332 332
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 566 785 860 1,777 3,632 5,632
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
======================================= ======================================= =====================================
AT DECEMBER 31, 1999 AT FEBRUARY 15, 2000 TOTAL PROJECT
======================================= ======================================= =====================================
METRO-
BACKBONES
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Argentina 60 72 89 72 150 180
- --------------------------------------------------------------------------------------------------------------------------------
Brazil 89 65 105 68 500 500
- --------------------------------------------------------------------------------------------------------------------------------
Colombia 0 0 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------------
Chile 0 0 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------------------
Total metro
Backbones 149 137 194 140 650 680
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 715 922 1,054 1,917 4,282 6,312
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Does not include approximately 220 kilometers of our joint venture with Empresa
de Telefonos de Bogota
During the fourth quarter of 1999, IMPSAT established operating subsidiaries in
Peru and Chile, further extending the coverage of its Latin American operations.
RECENT EVENTS
On February 4, 2000, the Company successfully completed the initial public
offering of its common stock. The Company's shares are quoted on the Nasdaq
National Market System. The Company offered 11.5 million common shares at a
price of $17 per share. The lead manager was Morgan Stanley Dean Witter and the
co-managers were Goldman Sachs and Salomon Smith Barney. In conjunction with the
IPO, British Telecom invested $48.5 million in a private placement of 2.85
million shares. Total net proceeds to IMPSAT from the offering and the private
placement were approximately $228.8 million, $32.5 million of which were used to
redeem preferred stock.
On February 16, 2000, the Company sold $300,000,000 13 3/4% Senior Notes due
2005 pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended.
Proceeds from equity and debt offerings will be used for the Company's planned
capital expenditures, including the further build-out of IMPSAT's pan-Latin
American Broadband Network.
IMPSAT Fiber Networks, Inc. is a leading provider of Internet and private
network integrated data and voice telecommunications services in Latin America.
IMPSAT is building an extensive pan-Latin American high capacity Broadband
network using advanced technologies, including IP/ATM switching, DWDM, and
non-zero dispersion fiber optics. IMPSAT provides services to more than 1,700
national and multinational companies, government entities and wholesale services
to carriers, ISPs and other service providers throughout the region. The Company
currently has operations in Argentina, Colombia, Venezuela, Ecuador, Mexico,
Brazil and the United States.
- --------------------------------------------------------------------------------
6
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Statements made in this press release that state IMPSAT's intentions, beliefs,
expectations, or predictions for the future are forward-looking statements. It
is important to note that the company's actual results could differ materially
from those projected in such forward-looking statements. Information concerning
factors that could cause actual results to differ materially from those in the
forward-looking statements is contained in the company's filings with the U.S.
Securities and Exchange Commission (SEC). Copies of these filings may be
obtained by contacting IMPSAT or the SEC.
(Tables to Follow)
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IMPSAT FIBER NETWORKS
UNAUDITED CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
----------- --------------
<S> <C> <C>
Cash and cash equivalents 97,507 90,021
Accounts Receivable-net 52,176 46,974
Property Plant and Equipment-net 382,198 330,726
Total Assets 828,332 527,218
Total Debt 484,311 419,692
Total Long-term debt -net of current
portion 399,415 379,292
Minority interest 4,985 13,071
Redeemable preferred stock 149,035 135,018
Shareholders' equity (deficit) 15,341 (101,519)
</TABLE>
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IMPSAT FIBER NETWORKS
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
1Q 1999 2Q 1999 3Q 1999 4Q 1999 4Q 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET REVENUES $53,560 $57,658 $55,911 $61,322 $58,201 $228,451 $208,089
OPERATING EXPENSES
Salaries & Wages 10,815 11,377 12,030 11,952 11,655 46,174 38,198
Selling, General & Administrative 9,726 9,996 10,767 12,875 11,303 43,364 38,665
Leased Links 9,717 11,191 11,795 12,047 7,572 44,750 28,660
Depreciation & Amortization 10,915 12,414 64,761 41,981 10,409 130,071 36,946
Other Operating Expenses 10,758 12,637 21,196 15,687 8,068 60,278 38,750
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 51,931 57,615 120,549 94,542 49,007 324,637 181,219
EBITDA 12,544 12,457 122 8,767 19,603 33,885 63,816
Operating Profit (loss) 1,629 43 (64,638) (33,220) 9,194 (96,186) 26,870
Interest expense -net (14,360) (13,747) (13,867) (13,587) (14,455) (55,561) (44,698)
Net Foreign Exchange (loss) Income (6,212) (1,774) (1,514) 1,458 (138) (8,042) 675
Other (loss) income (481) (83) (151) 16,020 275 15,305 760
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE TAXES (19,424) (15,561) (80,170) (29,329) (5,124) (144,484) (16,393)
Taxes 2,143 1,874 14,935 1,781 (1,447) 20,733 (3,805)
NET LOSS ATTRIBUTABLE TO COMMON
SHAREHOLDERS $(20,497) $(17,450) $(63,028) $(30,568) $(10,564) $(131,543) $(33,987)
- ----------------------------------------------------------------------------------------------------------------------------------
PRO-FORMA LOSS PER SHARE (IN US$) $(0.33) $(0.12) $(1.44) $(0.37)
</TABLE>
9
