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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): November 29, 1999
ITC/\DELTACOM, INC.
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(Exact Name of Registrant as Specified in Charter)
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<S> <C> <C>
Delaware 0-23253 58-2301135
(State or Other Jurisdiction of (Commission File Number) (IRS Employer Identification No.)
Incorporation)
1791 O.G. Skinner Drive
West Point, Georgia 31833
(Address of Principal Executive Offices (ZIP Code)
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Registrant's telephone number, including area code: (706) 385-8000
Not applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On November 29, 1999, ITC/\DeltaCom, Inc. issued a press release
revising certain earnings estimates for the fourth quarter of 1999. Attached as
Exhibit 99 to this Current Report on Form 8-K is the text of the November 29,
1999 press release, which is incorporated by reference in this Item 5.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99. Press Release, dated November 29, 1999.
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SIGNATURE
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.
ITC/\DELTACOM, INC.
Date: November 30, 1999 /s/ J. Thomas Mullis
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J. Thomas Mullis
Senior Vice President--General Counsel,
Secretary
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Exhibit 99
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FOR IMMEDIATE RELEASE Contact: Douglas A. Shumate
Senior Vice President
Chief Financial Officer
706-385-8189
[email protected]
ITC/\DELTACOM REVISES FOURTH QUARTER ESTIMATES
WEST POINT, Ga. (November 29, 1999) -- ITC/\DeltaCom (Nasdaq/NM:ITCD) today
announced that, based on its preliminary assessment of its fourth quarter 1999
performance, the Company expects quarterly revenue, EBITDA, as adjusted, and net
income to fall slightly below the range of analysts' published estimates. The
Company's new estimates for the quarter include a range of $68 - $69 million for
fourth quarter revenue, $8.0 - $8.5 million for EBITDA, as adjusted, and fourth
quarter earnings of ($0.26) - ($0.27) per share. Previous Company guidance for
fourth quarter 1999 for revenue were $70 - $71.5 million, for EBITDA, as
adjusted, were in excess of $9.2 million, and for earnings were ($0.25) per
share. The foregoing estimates do not reflect certain reciprocal compensation
revenues billed to BellSouth related to the Company's termination of Internet
traffic which remain unpaid. Any legal proceedings relating to BellSouth's
payment of such reciprocal compensation which are resolved in the Company's
favor could have a significant positive impact on the company's reported
results.
The Company does not currently expect that these reductions in fourth
quarter 1999 estimates will affect guidance from the Company to analysts for
ITC/\DeltaCom's results for the year 2000. Such published analysts' estimates
are that the company's annual revenues will be approximately $360 million and
that the company's EBITDA, as adjusted, will be approximately $60 million.
The reduction in the fourth quarter revenue and EBITDA, as adjusted,
estimates are directly related to an expected shortfall in Carriers' Carrier and
Internet service provider ("ISP") revenues. While sales results remain very
strong in both segments, revenue has lagged in each as a result of unexpected
delays in network availability, and delays in customer implementation of
available network capacity.
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Vendor equipment delivery delays have slowed progress on a number of
overbuilds in the Company's aggressive fiber network expansion effort. Routes
with anticipated cut-over dates in mid-November are still awaiting equipment
delivery. Carriers' Carrier net revenue backlog, as of October 30, 1999, equals
$800,000 per month.
ISP installations have slowed as a result of the Company's decision to
implement new next-generation switching throughout the network. These switches,
which will provide lower cost and higher availability of switch ports for ISP
traffic, are coming into service today, slightly behind the original
implementation schedule. These switch delays were also affected by the longer
installation intervals on the fiber network overbuilds, since some of the
network in line for installation is required for the backhaul of ISP traffic.
Despite these installation delays, the Company currently expects to
meet its goal of over 100,000 local lines in service by year-end 1999.
Implementation of commercial customer local services and ISP services not
affected by previously mentioned delays remains on schedule.
"During the last several quarters, we have undertaken several
significant growth initiatives to create a regional IP-based network as well as
significant geographic expansion into Texas and Tennessee," said Douglas A.
Shumate, senior vice president and chief financial officer of ITC/\DeltaCom. "We
had previously expected the strong growth in our Carriers' Carrier and ISP
product lines to more than offset the start-up costs of these new initiatives,
even in a seasonally impacted fourth quarter. With temporary delays in these two
revenue streams, we now expect consistent EBITDA, as adjusted, with that of the
third quarter of 1999. Furthermore, we currently expect the first quarter of
2000 and thereafter to demonstrate the anticipated positive momentum in EBITDA,
as adjusted, as these revenue delays are eliminated and our expansion
initiatives begin contributing to our revenue growth."
"While we are disappointed that these delays have occurred, I want to
amplify that we believe that these delays are temporary in nature and in no way
dampen our enthusiasm for the long-haul and ISP business segments," said Andrew
Walker, vice-chairman and chief executive officer of ITC/\DeltaCom. "We are
experiencing demand for interconnection and bandwidth services that substantiate
our outlook for 2000. This short term issue should not reflect on our commitment
and ability to satisfy these market requirements."
In addition to the growing demand for Carriers' Carrier capacity on the
network, the Company continues to enjoy widespread acceptance of its
communications service bundle among the commercial customer prospect base and
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is responding to heavy demand from ISP customers for megahub access services in
the South.
ITC/\DeltaCom, headquartered in West Point, Georgia, provides integrated
telecommunications services to mid-sized and major businesses in the southern
United States and is a leading regional provider of wholesale long-haul services
to other communications companies. ITC/\DeltaCom's business communication
services include local exchange service, long distance, enhanced data, Internet
and operator services, and the sale and maintenance of customer premise
equipment. The Company operates 31 branch locations in eight states and its
10-state, approximately 8,250-mile fiber optic network, reaches over 90 points
of presence. ITC/\DeltaCom has interconnection agreements with BellSouth, GTE,
Sprint and SBC Communications for resale and access to unbundled network
elements, and is a certified Competitive Local Exchange Carrier (CLEC) in all
nine BellSouth states, Arkansas and Texas.
Statements contained in this news release regarding expected financial
results and other planned events are forward-looking statements that involve
risk and uncertainties. Actual future events or results may differ materially
from these statements. Readers are referred to the documents filed by
ITC/\DeltaCom with the Securities and Exchange Commission, specifically the most
recent filings which identify important risk factors that could cause actual
results to differ from those contained in the forward- looking statements,
including potential fluctuations in quarterly results, dependence on new product
development, rapid technological and market change, risks related to future
growth and rapid expansion, volatility of stock prices, and risks related to the
year 2000. These and other applicable risks are summarized under the caption
"Risk Factors" in the company's Annual Report on Form 10-K for the year ended
December 31, 1998.
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