SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): February 10, 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)
<PAGE>
ITEM 5. OTHER EVENTS
On February 10, 2000, deltathree.com, Inc., a subsidiary of the Registrant,
issued a press release regarding its fourth quarter 1999 financial results. The
press release 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 deltathree.com's Annual Report on Form 10-K.
A copy of the press release is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
99.1 Press release dated February 10, 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: February 10, 2000 By /s/ Avery S. Fischer
--------------------------------
Name: Avery S. Fischer
Title: Vice President of Legal Affairs
and General Counsel
<PAGE>
Exhibit Index
99.1 Press Release dated February 10, 2000.
EXHIBIT 99.1
Thursday February 10, 4:15 pm Eastern Time
Company Press Release
deltathree.com Reports Fourth Quarter 1999 Revenues Up 135 Percent
Internet Telephony Subscriber Base Increased 42 Percent To 1.7 Million
Subscribers
NEW YORK--(BUSINESS WIRE)--Feb. 10, 2000--deltathree.com, Inc. (NASDAQ:DDDC -
news), a global provider of IP telephony services and other enhanced, web-based
communications services to individuals and businesses worldwide, today announced
results for the fourth quarter and year ending December 31, 1999. deltathree.com
recorded fourth quarter revenues of $4.6 million, representing a gain of $2.7
million or a 135 percent increase over the corresponding quarter in 1998. Total
revenues for year ended December 31, 1999 increased to $11.1 million, a rise of
$5.4 million or a 96 percent increase from the year ended December 31, 1998.
Excluding non-cash compensation costs of $10.2 million and $103,000, net loss
was $6.1 million or ($0.26) per fully diluted share compared to a net loss of
$2.4 million or ($0.12) per fully diluted share for the fourth quarter ended
December 31st, 1999 and 1998, respectively. Net loss for the quarter was $16.3
million, or ($0.71) per share, compared to a net loss of $2.5 million or ($0.13)
per share in the fourth quarter of 1998. The net loss for 1999 was $33.8
million, or ($1.65) per share, compared with a net loss of $7.1 million or
($0.37) a share for 1998.
Highlights for the quarter include:
- -- Subscriber base increased 42 percent in Q4 to approximately 1.7 million.
- -- Telephony minutes increased 81 percent in Q4 to 20.3 million minutes.
- -- Revenues increased 135 percent in Q4 to $4.6 million.
- -- DDDC initial public offering raised $96,255,000 in new capital.
- -- Global marketing relationship with Yahoo!
The deltathree.com subscriber base grew by approximately 42 percent during the
fourth quarter of 1999 as total subscribers jumped to nearly 1.7 million at year
end, up from roughly 1.2 million subscribers at the end the third quarter of
1999. Telephony minutes carried over the deltathree.com network during the
fourth quarter rose 81 percent or 9.1 million minutes to total 20.3 million
minutes in the fourth quarter, compared with 11.2 million minutes on the
deltathree.com network during the fourth of 1998. In the sequential third
quarter 1999 to fourth quarter 1999 comparison, total network minutes increased
39 percent or 5.7 million minutes. For the full year 1999, deltathree.com
carried over 61.8 million minutes of telephony traffic, an increase of 131
percent compared with 26.8 million minutes of telephony traffic carried in 1998.
Eli Wurtman, Chairman and Co-Founder of deltathree.com stated, "deltathree.com
experienced broad based growth during the fourth quarter of 1999. From our
growing list of subscribers, to rising revenues, to new distribution channels we
executed on our strategy of broadening the market for Internet telephony and web
based communication services. We will continue to actively position
deltathree.com as a premier provider of global IP telephony services across the
ever expanding broadband infrastructure. deltathree.com leverages the cost
efficiencies, convenience and scalability of the Internet for our subscribers to
help them save as much as 90 percent on traditional international long distance
call charges. Proceeds from our recently completed IPO will enable
deltathree.com to provide our growing base of subscribers expanded worldwide
infrastructure, new distribution channels as well as fuel additional marketing
and technological initiatives. The February 7th acquisition of YourDay.com
reflects our vision of strategically building out our business model with
complementary products and services." In November of 1999, deltathree.com
successfully sold 6,900,000 shares of common stock in the Company's initial
public offering at a price of $15.00 per share through a syndicate of
underwriters led by Lehman Brothers, Merrill Lynch, U.S. Bancorp Piper Jaffray,
Lazard Freres and Fidelity Capital Markets. Excluding IPO expenses,
deltathree.com received net proceeds from the offering of $96,255,000, including
a 900,000 share over-allotment option that was exercised by Lehman Brothers,
lead underwriter for the Company.
With the proceeds of the IPO, deltathree.com is expanding its IP network and
telephony services through strategic acquisitions, alliances and internal
product development. On February 7th, deltathree.com announced it's first
acquisition as a public company with the purchase of YourDay.com, a subsidiary
of SenseNet, Inc. YourDay.com is a leading online calendar and scheduling system
provider that can access through the Internet, telephones and PDA's. Subject to
customary closing conditions, the deal is expected to close before February
28th, 2000. deltathree.com expects to integrate the YourDay.com
<PAGE>
products and services to allow deltathree.com subscribers to centralize their
communications and scheduling needs. During the fourth quarter of 1999,
deltathree.com launched Click IT, a voice enabling e-commerce service that
allows deltathree.com e-commerce business customers to offer real-time voice
interaction with their customers over the Internet. Click IT allows Internet
shoppers to "click through" to a live customer service representative to discuss
their purchase while continuing to shop online. The Click IT product can also be
integrated into a wide range of Internet based communications products and
services. Additionally, Click IT enabled sites serve as a distribution channel
for finding and acquiring new IP telephony customers as they discover the
benefits of deltathree.com's IP telephony technology.
In December of 1999, deltathree.com announced a global marketing agreement with
Yahoo! Inc. (Nasdaq: YHOO - news) to promote deltathree.com's Internet
communication services. The agreement provides for deltathree.com text links and
banner advertisements within the Yahoo! network of global Internet properties as
well as integrating deltathree.com Internet telephony services into Yahoo! Phone
Booth. With over 105 million Yahoo! users worldwide, the agreement enables
Yahoo! Phone Booth, Yahoo! Yellow Pages and Yahoo! Address Book users to
initiate calls directly over the Internet through the deltathree.com network
with the simple click of a mouse.
deltathree.com worked aggressively towards increasing it's network capacity
during the fourth quarter of 1999, including tripling it's bandwidth between the
US and Europe. The Company has also increased its peering relationships with
leading Internet backbone providers in the US and Europe. The Company has also
extended its worldwide points of presence to include China, the Netherlands,
Spain, Hungary, Czech Republic and Malaysia.
About deltathree.com
deltathree.com is a global provider of IP telephony services and other enhanced,
web-based communications services to individuals and businesses worldwide and is
a subsidiary of RSL Communications, Ltd. (NASDAQ: RSLC - news). The Company's
interactive communications portal, www.deltathree.com, is a single on-line
source for the communications needs of users anywhere in the world. By combining
user-friendly, web-based access with the advanced functionality of our
privately-managed, global IP telephony network, we offer our users a
comprehensive solution for high-quality, low-cost IP communications services.
Such services currently include: PC-to-phone; D3 Box, a unified messaging
service; Click IT, an e-commerce tool; Phone-to-phone; and Global roaming for
accessing the deltathree.com network from locations throughout the world. For
more information about deltathree.com please visit our corporate Website at
http://www.deltathree.com.
deltathree.com has included in this press release certain "forward looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 concerning deltathree.com's business, operations and financial
condition. Such statements include the Company's plans to increase it capacity
and improve the quality of Internet telephony. In addition, the words or phrases
"could", "expects", "anticipates", "objective", "may affect", "may depend",
"believes", "estimates", "projects" and similar words and phrases are also
intended to identify such forward-looking statements. Actual results could
differ materially from those projected in the Company's forward-looking
statements due to numerous known and unknown risks and uncertainties, including,
among other factors, unanticipated technological difficulties, the volatile and
competitive environment for Internet telephony, changes in domestic and foreign
economic, market and regulatory conditions, the inherent uncertainty of
financial estimates and projections, and other considerations described as "Risk
Factors" in the Company's filings with the SEC. All such forward-looking
statements are current only as of the date on which such statements were made.
deltathree.com does not undertake any obligation to publicly update any
forward-looking statement to reflect events or circumstances after the date on
which any such statement is made or to reflect the occurrence of unanticipated
events.
deltathree.com
Condensed Consolidated Statement of Operations
<TABLE>
<CAPTION>
Quarter Ended Year Ended
December 31, December 31,
(unaudited)
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues:
Affiliates $ 3,353,696 $ 1,411,565 $ 7,430,974 $ 3,896,106
Non-affiliates 1,266,539 557,617 3,621,615 1,741,941
------------ ------------ ------------ ------------
Total revenues: 4,620,235 1,969,182 11,052,589 5,638,047
------------ ------------ ------------ ------------
Costs and operating
expenses:
Cost of revenues 4,165,210 1,940,430 9,722,717 4,580,440
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Research and
development 487,293 176,191 1,207,625 608,926
Selling and
marketing 4,316,237 828,150 7,403,573 2,431,371
General and
administrative 719,605 781,586 2,732,725 1,761,539
Non-cash
compensation 10,189,553 102,615 19,115,773 742,780
Depreciation and
amortization 1,080,596 855,992 3,767,551 2,671,268
------------ ------------ ------------ ------------
Total costs and
operating
expenses: 20,958,464 4,684,964 43,949,964 12,796,324
------------ ------------ ------------ ------------
Loss from
operations (16,338,259) (2,715,782) (32,897,375) (7,158,277)
Interest Income
(expense), net 41,300 (40,385) (873,601) (186,295)
Minority interest -- 223,601 -- 223,601
------------ ------------ ------------ ------------
Net loss $(16,296,959) $ (2,532,566) $(33,770,976) $ (7,120,971)
============ ============ ============ ============
Net loss per
share - basic
and diluted $ (0.71) $ (0.13) $ (1.65) $ (0.37)
============ ============ ============ ============
Weighted average
shares outstanding
basic and
diluted 23,053,215 19,569,459 20,418,457 19,253,855
============ ============ ============ ============
</TABLE>
deltathree.com
Condensed Consolidated Balance Sheet
Year Ended
December 31,
1999 1998
Current Assets:
Cash and cash equivalents $ 89,956,879 $ 1,356,562
Short-term investments 11,275,915 --
Accounts receivable, net 902,811 543,335
Due from affiliates 1,759,997 2,191,903
Prepaid expenses and other current assets 2,940,676 620,676
------------- -------------
Total current assets 106,836,278 4,712,476
Property and equipment, net 9,499,533 8,269,423
------------- -------------
Goodwill, net 9,456,612 12,488,125
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<PAGE>
Deposits and other 1,039,887 205,497
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Total assets: $ 126,832,310 $ 25,675,521
============= =============
Current liabilities:
Accounts payable $ 2,580,143 $ 4,301,763
Due to affiliates 625,783 1,403,163
Deferred revenues 538,376 1,610,081
Other current liabilities 5,548,771 629,096
------------- -------------
Total current liabilities 9,293,073 7,944,103
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Long-term liabilities:
Long-term debt due to affiliates 14,751,628 5,106,602
Other 208,454 254,646
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Total long-term liabilities 14,960,082 5,361,248
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Total liabilities 24,253,155 13,305,351
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Stockholders equity:
Class A common stock 8,918 --
Class B common stock 19,569 19,569
Additional paid-in capital 157,890,969 23,083,638
Receivable for capital stock (1,231,969) --
Deferred compensation (10,670,201) (1,065,882)
Accumulated deficit (43,438,131) (9,667,155)
------------- -------------
Total stockholder's equity 102,579,155 12,370,170
------------- -------------
Total liabilities and
stockholder's equity $ 126,832,310 $ 25,675,521
============= =============
Contact:
deltathree.com
Mr. Mark Hirschhorn
Vice President & Chief Financial Officer
Phone: (212) 588-3670
or
Thomson Financial Investor Relations
Mr. Erik Knettel
Phone: (212) 701-1963
or
Media:
Clifford Public Relations
Mr. Josh Epstein
Phone: (212) 358-0800
