SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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 2, 2000
RSL Communications, Ltd.
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(Exact name of Registrant as specified in its charter)
Bermuda 333-25749 N/A
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification Number)
Clarendon House
Church Street
Hamilton HM CX Bermuda
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(Address of principal executive offices)
(441) 295-2832
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(Registrant's telephone number)
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ITEM 5. OTHER EVENTS
In a press release dated May 2, 2000, RSL Communications, Ltd., a Bermuda
corporation (the "Company"), announced the initial public offering of its
Australian subsidiary.
In addition, in press releases dated May 4, 2000, the Company announced its
first quarter 2000 financial results and an alliance with SEAT which provides
the Company with the opportunity to sell its Telegate investment. The press
release regarding first quarter 2000 financial results did not include certain
financial statements, related footnotes and certain other financial information
that will be filed with the Securities and Exchange Commission as part of the
Company's Quarterly Report on Form 10-Q.
A copy of the press releases are attached hereto as exhibits 99.1, 99.2 and
99.3, respectively and are incorporated herein by reference.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
99.1 Press release dated May 2, 2000.
99.2 Press release dated May 4, 2000.
99.3 Press release dated May 4, 2000.
<PAGE>
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.
RSL COMMUNICATIONS, LTD.
Date: May 11, 2000 By /s/ Avery S. Fischer
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Name: Avery S. Fischer
Title: Vice President of Legal Affairs
and General Counsel
<PAGE>
Exhibit Index
99.1 Press Release dated May 2, 2000.
99.2 Press Release dated May 4, 2000.
99.3 Press release dated May 4, 2000.
EXHIBIT 99.1
Tuesday May 2, 7:59 am Eastern Time
Company Press Release
SOURCE: RSL Communications, Ltd.
RSL COM Announces 100 Percent IPO for Australian Operations
HAMILTON, Bermuda and NEW YORK, May 2 /PRNewswire/ -- RSL Communications, Ltd.
(Nasdaq: RSLC - news) today announced the launch of an initial public offering
of its Australian subsidiary and its intention to divest 100 percent of its
interest in these operations as part of the IPO. Subject to market conditions
and the determination of the final price, RSL COM expects to receive gross
proceeds of between AUD $285 to $360 million, based on the indicative price
range.
Itzhak Fisher, President and Chief Executive Officer of RSL COM, said, "We have
decided to sell our Australian business to realize the considerable value built
up since it commenced operations more than three years ago. This is in keeping
with our focus on our core markets in Europe and North America, as we have
previously indicated. The proceeds of the public offering will be used to
enhance our business in these regions and to reduce debt."
RSL COM Australia has changed its name to ComVergent Telecommunications Limited.
ComVergent has filed a prospectus with the Australian Securities and Investment
Commission (ASIC) and expects to seek a listing on the Australian Stock Exchange
(ASX) next month. The shares will not be registered with the US Securities and
Exchange Commission, sold in the United States or listed on any US stock
exchange.
RSL Communications, Ltd. is a facilities based communications company that
provides a broad range of data/Internet, voice and value-added product and
service solutions primarily to small and medium sized businesses and residential
customers in selected markets around the globe. Through our subsidiary,
deltathree.com, we also own and operate a privately managed Internet Protocol
(IP) telephony network with 46 points of presence in 29 countries around the
world. For additional information on RSL Communications, Ltd. visit the website
at http://www.rslcom.com .
SOURCE: RSL Communications, Ltd.
EXHIBIT 99.2
Thursday May 4, 7:29 am Eastern Time
Company Press Release
SOURCE: RSL Communications, Ltd.
RSL Communications, Ltd. Reports First Quarter 2000 Results
Record European Revenues - Data Revenues Up 52% Sequentially - Customer Base Up
11% Sequentially - Announced Sales of Non-Core Assets Expected to Generate
Proceeds in Excess of $500 Million
HAMILTON, Bermuda and NEW YORK, May 4 /PRNewswire/ -- RSL Communications, Ltd.
(Nasdaq: RSLC - news), a premier global integrated communications provider
focused on data/Internet and voice services, today announced first quarter 2000
results with revenues of $375.9 million, up 10.5% over first quarter 1999.
Currency fluctuations negatively impacted reported revenues by approximately $21
million versus first quarter 1999 ($9 million versus fourth quarter 1999).
Normalized EBITDA(a) was $1.3 million versus negative EBITDA of ($7.9) million a
year ago, a $9.2 million improvement. EBITDA was $5 million below expectations
primarily due to the accelerated expansion by telegate, an international
directory assistance provider in Germany, into new markets. Net loss per share
for the quarter was $1.51.
Itzhak Fisher, President and Chief Executive Officer of RSL COM said, "I am very
pleased with the progress we made in the first quarter. We generated record
European revenues, rapidly grew data/Internet products and increased the number
of end-user customers, all while continuing to achieve positive EBITDA. We are
aggressively executing our plan to monetize non-core assets to improve our
financial strength and fund key growth areas. This week we made major
announcements in this area. We have entered today into an alliance with SEAT
which provides the opportunity to sell our telegate investment. Earlier this
week, we launched an initial public offering of 100% of our Australian
subsidiary. We expect these two actions to raise in excess of $500 million in
cash."
Donald R. Shassian, Chief Operating Officer of RSL COM commented: "Our customer
base continues its robust growth as we serve 46.8% more customers than one year
ago and 10.7% more than the end of last year. Our implementation of a broader
product portfolio is clearly beginning to present results. We now offer data and
Internet services in Australia, Austria, Canada, Finland, Germany, Switzerland,
UK and the US. In fact, our data revenue grew 51.6% over last quarter and stands
at $55 million on an annualized basis, excluding our two recently acquired UK
data/Internet acquisitions which are expected to close in the second quarter."
First Quarter 2000 Results
Consolidated revenues for the first quarter 2000 were $375.9 million, compared
to $340.3 million for the first quarter 1999 and $393.0 million for the fourth
quarter 1999.
Revenues from operations in Europe, RSL COM's largest market segment, were
$222.1 million in the first quarter 2000, an increase of 46.0% over the first
quarter of 1999, and an increase of 1.4% over the fourth quarter of 1999. After
giving effect to foreign exchange fluctuations, first quarter 2000 revenues in
Europe were up 59.6% over the first quarter of 1999 and were up 5.3% over the
fourth quarter 1999. Revenues from operations in North America were $99.5
million in the first quarter 2000, compared to $148.4 million in the first
quarter 1999, and $120.2 million in the fourth quarter 1999. The North America
revenue decline is consistent with the Company's 1999 decision to de-emphasize
certain marginally profitable wholesale and prepaid card products in the USA.
Revenues from Asia/Pacific and Latin America operations were $52.5 million in
the first quarter 2000, compared to $39.3 million in the first quarter 1999, an
increase of 33.6% and essentially flat compared to fourth quarter 1999. After
giving effect to foreign exchange fluctuations, Asia/Pacific and Latin America
revenues were up 2.2% over the fourth quarter of 1999.
Operations in Europe contributed 59.1% of consolidated revenues in the first
quarter 2000 compared to 44.7% in the first quarter 1999 and 55.7% in the fourth
quarter 1999 as RSL COM executes its strategy to focus on the higher growth and
higher margin European market. Revenues from operations in North America were
26.5% of consolidated revenues in the first quarter 2000 versus 43.6% in the
first quarter 1999 and 30.6% in the fourth quarter 1999. Revenues from
Asia/Pacific and Latin America operations were 14.0% of consolidated revenues in
the first quarter 2000 versus 11.6% in the first quarter 1999 and 13.4% in
fourth quarter 1999. deltathree.com's revenues represent the balance.
Cost of services in the first quarter 2000 was $261.4 million, an increase of
4.4% from $250.4 million in the first quarter 1999, but were down from $269.3
million in the fourth quarter 1999.
The gross margin percentage(b) (excluding deltathree.com) was 30.4% in the first
quarter 2000, compared to a normalized 26.4% in the first quarter 1999 and 31.4%
in the fourth quarter 1999. RSL COM's European operations reported a gross
margin of 32.5% in the first quarter 2000, compared to 34.7% in the first
quarter 1999, and 36.5% in the fourth quarter 1999. European gross margins
declined primarily due to higher costs resulting from increased traffic
temporarily routed off net. This traffic will be carried over our Pan European
and national networks as they become operational throughout this year. The
seasonal receipt of annual mobile rebates from the underlying carriers in the
fourth quarter also contributed to this decline. RSL COM's North American gross
margin percentage was 22.3% in the first quarter 2000, up from 19.0% in the
first quarter 1999 and 20.4% in the fourth quarter 1999. Consolidated selling,
general and administrative expense was $119.7 million in the first quarter 2000,
compared to $124.4 million in the fourth quarter 1999, a decrease of $4.7
million. SG&A expense as a percent of revenue, excluding deltathree.com, was
30.0% in the first quarter 2000 which was flat compared to the fourth quarter
1999.
The company recorded non-cash compensation expense of $3.1 million in the first
quarter 2000 relating to stock incentive awards previously granted to employees,
primarily at deltathree.com.
Normalized EBITDA for the first quarter 2000 was $1.3 million, which increased
$9.2 million from $(7.9) million a year ago. Normalized EBITDA in the fourth
quarter of 1999 was $5.3 million. The sequential normalized EBITDA decline was
primarily due to telegate's accelerated expansion into new markets, the
aforementioned pressures on European gross margins, and the absence of billing
revenues as a result of the anticipated acquisition in the second quarter 2000
of two independent distributors in Spain.
Net loss in the first quarter 2000 was $85.2 million, compared to a loss of
$57.0 million in the first quarter 1999 and a net loss of $109.5 million in the
fourth quarter last year. Net loss per share was $1.51 for the first quarter
2000.
<PAGE>
This release may contain forward-looking statements within the meaning of the
"Safe Harbor" provisions of the Private Securities Litigation Reform Act of
1995. These statements are based on management's current expectations or beliefs
and are subject to a number of risks and uncertainties that could cause actual
results to differ materially from those set forth in such statements. Factors
which may affect actual results ("Cautionary Statements") include, but are not
limited to, the Company's entering into newly opened markets, the integration of
acquisitions and new operations, substantial capital requirements, general
economic factors, the impact of rapid industry changes, increased competition,
pricing pressures, government regulation, the availability of transmission
facilities, reliance on sophisticated information systems, risks associated with
year 2000 compliance, devaluation and currency risks, as well as other risks
referenced from time to time in the Company's filings with the Securities and
Exchange Commission. For a detailed discussion of these and other Cautionary
Statements, please refer to the Company's filings with the SEC, including in the
first paragraph of the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" section of the Company's Form 10-K for the
fiscal year ended December 31, 1999 and in the "Risk Factors" section of the
Company's registration statement on Form S-4 filed with the Securities and
Exchange Commission in November 1999. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by such Cautionary Statements.
The Company 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.
This release is available on the RSL COM website at http://www.rslcom.com.
RSL Communications Ltd.
Consolidated Statements of Operations
(In Thousands, except per share data)
Unaudited
Three Months Ended
March 31,
2000 1999 % Change
Revenues $375,883 $340,281 10%
Operating costs and expenses:
Cost of services (261,366) (250,391) 4%
Selling, general and
administrative expenses (119,661) (97,842) 22%
Non-cash compensation expense (3,055) --
Depreciation and amortization (49,252) (37,079) 33%
Operating costs and expenses (433,334) (385,312) 12%
Loss from operations (57,451) (45,031) 28%
Interest income 4,874 6,055 -20%
Interest expense (38,559) (28,998) 33%
Other (expense) income -- net (392) 115 N/A
Foreign exchange transaction
gain 5,049 9,688 -48%
Minority interest 3,332 1,431 N/A
Loss in equity interest of
unconsolidated subsidiaries (1,927) (224) N/A
Income taxes (169) -- N/A
Net loss $(85,243) $(56,964) 50%
Net loss per share of common
stock $(1.51) $(1.08) 40%
Weighted average number of
shares of common stock
outstanding 56,555 52,930 7%
EBITDA (a) $1,285 $(7,919) N/A
<PAGE>
RSL Communications Ltd.
Supplemental Data
Unaudited
Three Months Ended
March 31,
2000 1999 % Change
Revenue: (in thousands)
North America
-- Fixed Wire / Data $47,059 $59,074 -20%
-- Mobile 19 -- N/A
-- Carrier / Card 52,389 89,346 -41%
99,467 148,420 -33%
Europe
-- Fixed Wire / Data 86,840 60,775 43%
-- Mobile 91,993 66,042 39%
-- Carrier / Card 43,243 25,294 71%
222,076 152,111 46%
Asia / Pacific and
Latin America
-- Fixed Wire / Data 25,267 20,038 26%
-- Mobile 25,257 16,663 52%
-- Carrier / Card 2,004 2,606 -23%
52,528 39,307 34%
deltathree.com(c) 1,812 443 N/A
Consolidated revenues
per minute(d) $0.13 $0.19 -31%
Billable Voice Minutes
(in thousands):
North American 744,185 758,101 -2%
European
-- fixed wire 765,192 372,604 N/A
-- mobile 191,412 104,210 N/A
Asia and Other
-- fixed wire 88,425 57,393 54%
-- mobile 40,216 25,622 57%
deltathree.com 28,365 2,467 N/A
Customers as of
March 31, 2000 Business Residential Mobile
North American 89,481 40,523 --
European 70,526 225,456 475,829
Asia and Other 10,071 135,680 127,759
170,078 401,659 603,588
(a) EBITDA, as used herein, consists of loss from operations before
depreciation and amortization. EBITDA has also been normalized to exclude
non-cash compensation expense and to exclude the EBITDA loss of
deltathree.com, the Company's publicly held internet telephony unit.
(b) Gross margin percentage is defined as revenues less cost of services
divided by revenues.
(c) Excludes services provided to other RSL COM operating companies of $4.8
million for the first quarter 2000 and $1.6 million for the first quarter
of 1999.
(d) Consolidated revenue per minute consists of consolidated revenues less:
revenues derived from equipment sales, revenues generated from directory
assistance and mobile and data services, divided by total billable minutes
excluding minutes generated from the Company's mobile and data services.
SOURCE: RSL Communications, Ltd.
EXHIBIT 99.3
Thursday May 4, 7:16 am Eastern Time
Company Press Release
SOURCE: RSL Communications, Ltd.
RSL COM Enters Alliance With Italy's SEAT; Includes Option to Sell Telegate for
Between E415 and E525 Million
HAMILTON, Bermuda, and NEW YORK, May 4 /PRNewswire/ -- RSL Communications, Ltd.
(Nasdaq: RSLC - news) today announced the formation of an alliance with Seat
Pagine Gialle Spa. (SEAT), Italy's publisher of telephony directories and
leading Internet player. As part of the deal, RSL COM and SEAT entered into a
joint venture agreement which also provides that, upon termination of the
alliance with SEAT, RSL COM will have the right to sell to SEAT, and SEAT will
have the right to purchase from RSL COM, all of RSL COM's equity interest in
telegate AG (telegate) for consideration with a value of a minimum of
approximately 415 and a maximum of 525 million Euros. The amount of
consideration will be determined based on the average value of a telegate share
during a predetermined reference period. The transaction is subject to customary
closing conditions. telegate is one of the leading directory services companies
in Germany. RSL COM acquired its stake in telegate in July 1998 for
approximately US$33 million through its relationship with Metro Holding AG, the
management company for Metro AG, the largest retailer in Europe. Under the joint
venture agreement, RSL COM will provide SEAT with various Internet/data
communications services on a non-exclusive basis for the European and United
States expansion of telegate.
"We are very excited about the prospects of a strategic partnership with SEAT.
There are many areas in which both RSL COM and SEAT can support one another as
we together can continue to take advantage of the significant opportunities in
Europe" said Itzhak Fisher, President and CEO of RSL COM. "The timely investment
in telegate we made only two years ago has been a tremendous success for RSL
COM. The option to sell telegate to SEAT demonstrates our potential to monetize
non-core assets that have grown significantly in value and will enable us to
significantly accelerate and continue to implement our long term focused
strategy -- to continue to grow our business profitably, expand our network to
improve our cost structure and extend our broadband capabilities," Fisher
continued. "We are expanding our data and Internet product portfolio, pursuing a
last mile strategy in appropriate, selected markets and focusing our business on
core European and North American markets."
Seat Pagine Gialle (formerly a division of Stet, now Telecom Italia Spa) is the
publisher and printer of the Italian Yellow Pages, White Pages and many other
directories. The company has developed during the last years a complete offer of
on-line products and services, such as PG-online, which starting from a complete
on-line listing of all of the Italian businesses provides turn-key solutions
(including web publishing and web hosting) for SMEs. The company also owns the
portal Virgillio, the leader in the Italian consumer market. Earlier this year,
SEAT initiated a merger process with Tin.it, previously the Telecom Italia
Internet service provider leader in Italy with over 2.5 million subscribers. The
integration, expected to end by August 2000, will lead to a new entity with a
market capitalization exceeding 50 billion Euros.
RSL Communications, Ltd., is a facilities based communications company that
provides a broad range of data/Internet, voice and value-added product and
service solutions primarily to small and medium sized businesses and residential
customers in selected markets around the globe. Through our subsidiary,
deltathree.com, RSL COM also owns and operates a privately managed Internet
Protocol (IP) telephony network with 46 points of presence in 29 countries
around the world. RSL COM is headquartered in Hamilton, Bermuda with executive
offices in New York City. The web address is http://www.rslcom.com . This press
release contains forward-looking statements within the meaning of the "Safe
Harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These statements are based on management's current expectations or beliefs and
are subject to a number of risks and uncertainties that could cause actual
results to differ materially from those set forth in the forward looking
statements. For a detailed discussion of these cautionary statements, risk
factors and uncertainties please refer to the Company's filings with the
Securities and Exchange Commission.
SOURCE: RSL Communications, Ltd.
