<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the year ended December 31, 1999
[ ] OR TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________________ to ____________________
Commission file number 333-62773
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below.
ITC/\DeltaCom, Inc. Employee Profit Sharing and 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
ITC/\DeltaCom, Inc.
1791 O.G. Skinner Drive
West Point, Georgia 31833
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
--------- ------------------------
<S> <C>
1 Consent of Arthur Andersen LLP, Independent Accountants. Filed
herewith.
</TABLE>
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
--------
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
ITC/\DeltaCom, Inc.
Employee Profit Sharing and 401(k) Plan
By: ITC/\DeltaCom, Inc. Employee Profit Sharing and
401(k) Plan Administrative Committee
(Plan Administrator)
Dated: June 28, 2000 By: /s/ J. Thomas Mullis
--------------------
J. Thomas Mullis
Authorized Signatory
<PAGE>
ITC/\DeltaCom, Inc.
Employee Profit Sharing and 401(k) Plan
Financial Statements and Schedule
as of December 31, 1999 and 1998
Together With Auditors' Report
<PAGE>
ITC/\DELTACOM, INC.
EMPLOYEE PROFIT SHARING AND 401(k) PLAN
FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 1999 AND 1998
TABLE OF CONTENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FINANCIAL STATEMENTS
Statements of Net Assets Available for Plan Benefits--December 31, 1999 and
1998
Statements of Changes in Net Assets Available for Plan Benefits for the
Years Ended December 31, 1999 and 1998
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
SCHEDULE SUPPORTING FINANCIAL STATEMENTS
Schedule I: Schedule H, Line 4i--Schedule of Assets Held for Investment
Purposes--December 31, 1999
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the ITC/\DeltaCom, Inc. Employee
Profit Sharing and 401(k) Plan Committee:
We have audited the accompanying statements of net assets available for plan
benefits of ITC/\DELTACOM, INC. EMPLOYEE PROFIT SHARING AND 401(k) Plan as of
December 31, 1999 and 1998 and the related statements of changes in net assets
available for plan benefits for the years then ended. These financial
statements and the schedule referred to below are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1999 and 1998 and the changes in its net assets available for
plan benefits for the years then ended in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for purposes of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by the Department of Labor Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Atlanta, Georgia
June 26, 2000
<PAGE>
ITC/\DELTACOM, INC.
EMPLOYEE PROFIT SHARING AND 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------ ------
ASSETS:
<S> <C> <C>
Investments $12,050,584 $6,316,997
Participant receivable 1,221 0
Cash 58,845 13,444
----------- ----------
Total assets 12,110,650 6,330,441
LIABILITIES:
Accounts payable 2,619 0
----------- ----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $12,108,031 $6,330,441
=========== ==========
</TABLE>
The accompany notes are an integral part of these statements.
<PAGE>
ITC/\DELTACOM, INC.
EMPLOYEE PROFIT SHARING AND 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------ -------
ADDITIONS:
Contributions:
<S> <C> <C>
Participant $ 1,858,587 $1,046,632
Employer 899,136 542,041
Rollovers 535,445 460,005
----------- ----------
Total contributions 3,293,168 2,048,678
----------- ----------
Investment income:
Net appreciation in fair market value of investments 2,885,561 419,342
Interest 5,466 4,462
----------- ----------
Total investment income 2,891,027 423,804
----------- ----------
Transfer in from DeltaCom Plan (Note 3) 0 3,316,170
----------- ----------
Total additions 6,184,195 5,788,652
DEDUCTIONS:
Benefits paid to participants (397,871) (455,002)
Premium payments on cash surrender policy (8,734) (9,701)
----------- ----------
NET INCREASE 5,777,590 5,323,949
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 6,330,441 1,006,492
----------- ----------
End of year $12,108,031 $6,330,441
=========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
ITC/\DELTACOM, INC.
EMPLOYEE PROFIT SHARING AND 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS AND SCHEDULE
DECEMBER 31, 1999 AND 1998
1. PLAN DESCRIPTION
The following description provides only general information related to the
ITC/\DeltaCom, Inc. Employee Profit Sharing and 401(k) Plan (the "Plan").
Participants should refer to the plan document for a more complete
description of the Plan's provisions.
General
The Plan is a defined contribution employee savings plan established
effective March 1, 1995 under the provisions of Section 401(a) of the
Internal Revenue Code ("IRC"), which includes a qualified cash or deferred
arrangement as described in Section 401(k) of the IRC. Effective January 1,
1998, the ITC/\DeltaCom, Inc. Profit Sharing and 401(k) Plan was amended and
restated as the Plan. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA"), as amended.
The Plan is administered by the ITC/\DeltaCom Employee Profit Sharing and
401(k) Plan Committee (the "Plan Administrator") and is sponsored by
ITC/\DeltaCom, Inc. (the "Company"). Nationwide Life Insurance Company
("Nationwide") and Frontier Trust serve as custodian and trustee of the
Plan, respectively. J. C. Bradford was appointed as custodian for the
company stock.
Effective January 1, 1999, the Company adopted Statement of Position ("SOP")
99-3, "Accounting for and Reporting of Certain Defined Contribution Plan
Investments and Other Disclosure Matters." SOP 99-3 establishes new
disclosure requirements for defined contribution plans.
Effective July 1, 1999, Interstate FiberNet, Inc., a wholly owned subsidiary
of the Company, purchased AvData Systems, Inc. As a result of this
acquisition, the former participants of the AvData Systems, Inc. Retirement
Plan became eligible to participate in the Plan effective July 1, 1999.
Eligibility
All employees of the Company who have completed six months of service, as
defined by the Plan, are eligible to participate in the Plan. Participation
may begin on the January 1, April 1, July 1, or October 1 coinciding with or
following the date on which the eligibility requirements are met.
Contributions
Participants may elect to contribute up to 15% of their compensation, as
defined by the Plan, subject to certain limitations under the IRC.
Participants may elect to change their deferral rate on a quarterly basis.
The Company provided for a matching contribution equal to 100% of the first
2% of salary deferred and 50% of the next 4% of salary deferred by each
participant for the years ended December 31, 1999 and 1998. The Company may
also elect to make a discretionary profit-sharing contribution, as
determined by the Company's board of directors, at the end of each plan
year. A participant must be an active employee on the last day of the plan
year and have completed 500 hours of service during the plan year to receive
a profit-sharing contribution. Profit-sharing contributions are allocated to
eligible participants based on relative compensation.
<PAGE>
Vesting
Participants are fully vested in their contributions and the earnings thereon.
Participants' rights to amounts contributed to the Plan by the Company vest over
a five-year period, as follows:
<TABLE>
<CAPTION>
Vested
Percentage
----------
<S> <C>
Years of service:
Less than two 0%
Two 40
Three 60
Four 80
Five 100
</TABLE>
Full credit was given to participants for service prior to plan inception. The
Plan provides that participants become 100% vested when they reach age 65 with
five years of service, become totally disabled, or in the event of death.
Forfeitures
At December 31, 1999 and 1998, forfeited nonvested accounts totaled $14,558 and
$43,114, respectively. These accounts will be used to reduce future employer
contributions. For the year ended December 31, 1999, the Company utilized
$46,785 in forfeitures to reduce employer contributions. Forfeited nonvested
balances are invested in the Nationwide Money Market account until utilized.
Benefits
Upon discontinuance of service due to termination of employment, retirement (age
65 with five years of service), early retirement (age 55 or older with five
years of service), death, or disability, a participant or his/her beneficiary
may elect to receive the value of the vested interest in his/her account. The
participant may elect to receive a lump-sum distribution or to roll over his/her
vested interest into a qualified plan.
In-service withdrawals are allowed upon reaching age 59 1/2 or for financial
hardship, as defined by the Plan.
Participant Accounts
Each participant account is credited with the participant's contributions,
related company matching, and discretionary profit-sharing contributions as well
as the participant's share of the Plan's investment income and related
administrative expenses. Allocations of income and expenses are based on the
proportion that each participant's account balance is to the total of all
participant account balances.
Investment Options
Plan participants may direct their contributions and any related earnings into
common stock of the Company or any of the following investment fund options
offered by Nationwide through (i) the Nationwide Qualified Plans Variable
Account, a separate account, and (ii) a guaranteed interest contract. Under the
terms of the Plan, employer matching and discretionary profit-sharing
contributions are invested in accordance with participants' elections for their
contributions. Changes in investment elections and transfers may be made on a
daily basis. A description of each investment option is provided below:
Fixed Fund
Nationwide Virtuoso I Fund--An interest contract guaranteed by
Nationwide. The rate of return is adjusted quarterly based on the five-
year Treasury note yield, less 1.2%.
<PAGE>
Bond Funds
Benham Short-Term Government Fund--The underlying assets of this fund are
shares of a mutual fund that invests primarily in obligations of the
United States government and its agencies with the objective of providing
current income.
Oppenheimer Bond Fund--The underlying assets of this fund are shares of a
mutual fund that invests in high-yield, fixed-income securities with the
primary objective of providing a high level of current income and a
secondary objective of capital growth.
Warburg Pincus Global Fixed-Income Fund--The underlying assets of this
fund are shares of a mutual fund that invests primarily in government and
corporate debt securities with the objective of maximum total return
consistent with prudent investment management.
Asset Allocation Funds
Fidelity Asset Manager Fund--The underlying assets of this fund are
shares of a mutual fund that invests in stocks, bonds, and short-term
instruments with the objective of achieving high total return with
reduced long-term risk.
Fidelity Puritan Fund--The underlying assets of this fund are shares of a
mutual fund that invests in common and preferred stocks as well as bonds
with the objective of achieving high income while preserving and
maintaining capital.
Fidelity Advisor High-Yield Fund T--The underlying assets of this fund
are shares of a mutual fund that invests primarily in income-producing
equity securities and high-yielding, fixed-income, and zero coupon
securities with the objective of high income and the potential for
capital gains.
Growth and Income Funds
Dreyfus S&P 500 Index Fund--The underlying assets of this fund are shares
of a mutual fund that invests primarily in equity securities with the
objective of producing results that correspond to the price and yield
performance of publicly traded common stocks in aggregate, as represented
by the Standard & Poor's 500 Composite Stock Price Index ("S&P 500").
Fidelity VIP Equity-Income Portfolio--The underlying assets of this fund
are shares of a mutual fund that invests primarily in income-producing
equity securities with the objective of achieving a return in excess of
the composite yield of the S&P 500.
Nationwide Fund D (New in 1999)--The underlying assets of this fund are
shares of a mutual fund that invests primarily in domestic common stocks
with the objectives of providing current income and achieving capital
appreciation.
Neuberger & Berman Guardian Fund--The underlying assets of this fund are
shares of a mutual fund that invests in stocks of established companies
considered to be undervalued with the objective of long-term capital
growth.
Growth Funds
Fidelity Magellan Fund--The underlying assets of this fund are shares of
a mutual fund that invests in foreign and domestic common stocks and
convertible securities as well as debt securities with the objective of
achieving capital appreciation.
Janus Fund (new in 1999)--The underlying assets of this fund are shares
of a mutual fund that invests primarily in common stocks of companies
with large market capitalizations with the objective of achieving long-
term capital growth.
<PAGE>
Janus Twenty Fund (new in 1999)--The underlying assets of this fund are
shares of a mutual fund that invests in stocks of companies with future
growth potential, which may not be currently recognized by the market,
with the objective of achieving capital appreciation while preserving
capital.
Morgan Stanley Real Estate Fund--The underlying assets of this fund are
shares of a mutual fund that invests in securities of companies operating
in the real estate industry. This fund may invest in equity securities,
convertible securities, nonconvertible preferred securities, and debt
securities with the primary goal of long-term capital growth.
Neuberger & Berman Partners Fund--The underlying assets of this fund are
shares of a mutual fund that invests primarily in common stocks with the
objective of capital growth.
International Equity Funds
Templeton Foreign Fund--The underlying assets of this fund are shares of
a mutual fund that invests in stock and debt obligations of companies and
governments outside the United States with the objective of achieving
capital growth.
Janus Worldwide Fund--The underlying assets of this fund are shares of a
mutual fund that invests in common stocks of domestic and foreign
companies with the objective of achieving long-term capital growth.
Aggressive Growth Funds
Oppenheimer Global Fund A--The underlying assets of this fund are shares
of a mutual fund that invests in stocks and convertible securities of
corporations with a global approach with the objective of achieving long-
term capital appreciation.
Twentieth Century Ultra Fund--The underlying assets of this fund are
shares of a mutual fund that invests in common stocks with perceived
better-than-average prospects for growth with the objective of achieving
long-term capital growth.
NSAT Small Company Fund--The underlying assets of this fund are shares of
a mutual fund that invests in equity securities of small capitalization
companies with the goal of long-term capital growth.
Company Stock
ITC/\DeltaCom Common Stock Fund--The underlying assets of this fund are
primarily shares of the Company's common stock held in the trustee's
name. The Company provides integrated telecommunications services to
mid-sized and major regional business in the southern United States.
The stated objectives of these funds are not necessarily indicators of actual
performance.
Loans to Participants
Effective October 1, 1999, the Plan was amended to allow participants to borrow
the lesser of $50,000 or 50% of their vested account balances, with a minimum
loan amount of $1,000. Loans are repayable through payroll deductions over
periods ranging up to five years. The interest rate is determined by the Plan
Administrator based on the prevailing market conditions and is fixed over the
life of the note.
<PAGE>
Plan Termination
Although the Company intends that the Plan be permanent, the Company
reserves the right to terminate the Plan subject to the provisions of ERISA
at any time. Upon termination of the Plan, participants will become fully
vested in their account balances.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accompanying financial statements are prepared on the accrual basis of
accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires the Plan's
management to use estimates and assumptions that affect the accompanying
financial statements and disclosures. Actual results could differ from those
estimates.
Investment Valuation
Investments in the Nationwide Qualified Plans Variable Account are stated at
fair value as determined by the custodian based on the values of the
underlying mutual funds. The Plan's Nationwide Virtuoso I Fund, a fully
benefit-responsive investment contract, is reported at contract value, which
approximates fair value, as of December 31, 1999 and 1998. Contract value
represents contributions made under the contract, plus earnings, less
participant withdrawals and administrative expenses. Nationwide maintains
the contributions in a general account. The account is credited with the
earnings on the underlying investments and is charged for participant
withdrawals and administrative expenses. The crediting interest rate was
4.7% and 3.7% at December 31, 1999 and 1998, respectively, and the yield was
4.1% for the years ended December 31, 1999 and 1998. Crediting interest
rates are reset quarterly based on the five-year Treasury note yield, less
1.2%. Investment in company stock is stated at market value, based upon
quoted market price. Participant loans are stated at contract value.
Net Appreciation (Depreciation) in Fair Market Value of Investments
The Plan presents in the statements of changes in net assets available for
plan benefits the net appreciation (depreciation) in the fair market value
of investments, which consist of the realized gains and losses and the
unrealized appreciation and depreciation on those investments.
Administrative Expenses
All administrative expenses of the Plan are paid by the Company, with the
exception of the asset management fee imputed on plan assets of the
Nationwide pooled separate account and the withdrawal fee charged on
withdrawals from the Nationwide Virtuoso I Fund.
3. MERGER OF DELTACOM, INC. 401(k) PROFIT SHARING PLAN
Effective January 1, 1998, the DeltaCom, Inc. 401(k) Profit Sharing Plan
(the "DeltaCom Plan") merged with and into the Plan. Accordingly, DeltaCom
Plan assets of approximately $3,316,000 became assets of the Plan, and
participants of the DeltaCom Plan became eligible to participate in the
Plan.
The DeltaCom Plan provided for an investment option that allowed
participants to purchase life insurance. The participants electing to
contribute to this investment option in the DeltaCom Plan have been allowed
to maintain the life insurance policies in the Plan; however, the life
insurance investment option is not available to any other participants.
<PAGE>
4. INVESTMENTS
The fair market values of individual investments that represent 5% or more
of the Plan's net assets as of December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Nationwide Life Insurance Company, Nationwide
Qualified Plans Variable Account, separate account $8,380,371 $4,586,602
ITC/\DeltaCom, Inc. common stock 3,362,321 1,563,806
</TABLE>
During the year ended December 31, 1999, the Plan's investments appreciated in
fair value as follows:
<TABLE>
<S> <C>
Separate account $1,545,927
Common stock 1,337,042
Money market account 2,592
----------
$2,885,561
</TABLE>
5. TAX STATUS
The Plan received a determination in a letter dated February 18, 2000 from
the Internal Revenue Service which states the Plan, as amended through July
27, 1999, is in compliance with Section 401(a) and applicable subsections of
Section 410(b) of the IRC as of that date. Therefore, the Plan Administrator
believes the Plan was qualified and the related trust was tax-exempt for the
years ended December 31, 1999 and 1998.
6. RECONCILIATION TO THE FORM 5500
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 1999:
<TABLE>
<S> <C>
Benefits paid to participants per the financial statements $397,871
Add amounts currently payable at December 31, 1999 18,911
----------
Benefits paid to participants per the Form 5500 $416,782
</TABLE>
Amounts currently payable to or for participants, dependents, and
beneficiaries are recorded on the Form 5500 for benefit claims that have
been processed and approved for payment prior to December 31, 1999 but not
yet paid as of that date.
7. SUBSEQUENT EVENT
The Company entered into a definitive merger agreement with Bay Data
Resources, Inc. effective May 1, 2000. At that date, participants of the Bay
Data Resources, Inc. Retirement Plan became immediately eligible to
participate in the Plan. Plan assets of the Bay Data Resources, Inc.
Retirement Plan will be transferred into the Plan as a result of this
merger.
<PAGE>
SCHEDULE 1
ITC/\DELTACOM, INC.
EMPLOYEE PROFIT SHARING AND 401(k) PLAN
SCHEDULE H, LINE 4i--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Identity of Issuer, Borrower, Description of Investment, Including Maturity Date, Current
Lessor, or Similar Party Rate of Interest, Collateral, and Par or Maturity Value Value
------------------------------------------- ------------------------------------------------------- ----------
<S> <C> <C> <C>
* NATIONWIDE LIFE INSURANCE COMPANY Guaranteed interest account, variable rate $ 142,906
Nationwide Qualified Plans Variable Account, separate account, 8,380,371
3,059,107 units
* ITC/\DELTACOM, INC. ITC/\DeltaCom, Inc. common stock, 121,713 shares 3,362,321
NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY Cash surrender value of life insurance policies 42,216
* THE PLAN Participant loans (average interest rate at 10.25%) 122,770
-----------
Total investments $12,050,584
</TABLE>
*Represents a party in interest.
The accompanying notes are an integral part of this schedule.