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:
August 2, 1999
--------------
(Date of earliest event reported)
Electric Lightwave, Inc.
-------------------------------------------------
(Exact name of Registrant as specified in charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 0-23393 93-1035711
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4400 NE 77th Avenue, Vancouver, WA 98662
- ------------------------------------------------------ --------
(Address of principal executive offices) (Zip Code)
(360)816-3000
---------------
(Registrant's telephone number, including area code)
No change since last report
---------------------------
(Former name or address, if changed since last report)
</TABLE>
<PAGE>
Item 5. Other Events.
- --------------------------------------------------------------------------------
This report is being filed to make available the following press release dated
August 2, 1999.
NEWS RELEASE
Contacts:
Investors and analysts: Media:
Fletcher Chamberlin Jack Hardy
(360) 816-3996 (360) 816-3602
[email protected] [email protected]
ELECTRIC LIGHTWAVE'S RAPID GROWTH CONTINUES
* Revenue increases 21% from 1999 first quarter, 115% from 1998 second
quarter
* EBITDA loss and net loss decline from 1999 first quarter
* Local access line equivalents increase 123% from prior year, 23% from
prior quarter
Vancouver, WA - August 2, 1999 - Electric Lightwave, Inc. (NASDAQ:ELIX), a
leading facilities-based integrated communications provider, today announced
continued rapid revenue growth and a decline in losses for the quarter ended
June 30, 1999.
Revenues for the latest quarter were $46.1 million, or more than double the
revenues of $21.4 million in the second quarter of 1998 and 21% above first
quarter 1999 revenues of $38.2 million. The company's loss before interest,
taxes, depreciation and amortization (EBITDA loss), excluding operating lease
expense, was $15.2 million in the second quarter this year, compared with $21.3
million in the first quarter of 1999 and $10.9 million in the second quarter a
year ago. The net loss in the 1999 second quarter was $33.2 million or $0.67 per
share, compared with a net loss of $35.0 million or $0.70 per share in the first
quarter of 1999 and $14.8 million or $0.30 per share in the prior year's second
quarter.
"Our rapid revenue growth continued in the quarter, and we have passed the
inflection point in our quarterly EBITDA losses," said Dave Sharkey, president
of Electric Lightwave. "In addition to reporting normalized sequential revenue
growth of 20% or better for the fourth straight quarter, we saw a number of very
positive trends in the make-up of our total revenue. Internet access revenue, an
important part of our Data Services revenue, was up 31% sequentially and 151%
compared with last year. Local telephone service revenue, excluding reciprocal
compensation, was up 37% sequentially and 131% year-over-year. Network services
revenue was up 25% sequentially and 55% compared with last year, reflecting
solid demand from large data customers and the expansion of our wholesale sales
organization in the last year. All of these components are based on execution of
our plan to drive growth by aggressively pursuing both the expanding data and
Internet markets and the local telephone business where we have extensive
networks."
Commenting on the company's operating performance, Sharkey added, "The
significant EBITDA improvement from the first quarter is a product of both
improved gross margins and higher productivity in our operations. The gross
margin in the second quarter (defined as revenues minus network access expenses)
was 49%, compared with 34% in the first quarter this year. Operations and
selling, general and administrative expenses grew by 9% from the first quarter,
while revenues were up 21%. This planned productivity gain is the result of
significant investments in our systems, sales force and infrastructure last
year. During the quarter we implemented the third version of our integrated,
automated back-office system, and further enhancements are planned later this
year. We expect further gains from this industry-leading system through the rest
of 1999 and beyond."
For the six months ended June 30, 1999, Electric Lightwave's revenues were $84.3
million, or 103% above the first six months of 1998. The EBITDA loss, excluding
operating lease expense, for the first half of 1999 was $36.6 million, compared
to $19.3 million a year ago. The net loss for the first half of 1999 was $68.2
million or $1.37 per share, compared with a net loss of $26.7 million or $0.54
per share (before the cumulative effect of a change in an accounting principle)
a year earlier.
Access line equivalents at the end of the second quarter were 121,516, an
increase of 22,510 lines during the second quarter. The quarter-end total is 23%
over the end of the 1999 first quarter and 123% above the total for the end of
the 1998 second quarter. The company continued to have over 99% of its access
line equivalents on-switch and had approximately 17,359 access line equivalents
per voice switch. At the end of the first quarter, it had 4.6 gigabits per
second of Internet capacity in its network, an increase of 48% over the total at
the end of 1998. The company had also sold 4.3 gigabits per second of frame
relay and asynchronous transfer mode (ATM) capacity at the end of the quarter,
an increase of 72% from the end of 1998. Data and Internet-related revenue
continued to make up over 50% of the Company's revenue in the latest quarter,
including significant portions of its Local Telephone and Network Services as
well as its Data Services.
"For the rest of the year we plan to continue solid revenue growth, improving
gross margins and further productivity gains," concluded Sharkey. "With our
expanded sales force, high-quality network and state-of-the-art systems, we are
well-positioned to take advantage of the numerous opportunities in our markets."
Electric Lightwave, Inc. is a leading integrated communications provider of
enhanced data services, frame relay, ATM and Internet access solutions to
bandwidth intensive businesses and the growing e-commerce market. The company
offers long distance, data and prepaid services nationwide. As a full-service
provider, the company offers local, long distance, videoconferencing and
high-speed broadband transport via an expanding fiber optic network that
interconnects major markets in the West. Headquartered in Vancouver, Washington,
Electric Lightwave is on the World Wide Web at www.eli.net. The company is 82%
owned by Citizens Utilities (NYSE:CZN, CZNPr).
This press release contains forward-looking statements that are subject to risks
and uncertainties which could cause actual results to differ materially from
those expressed or implied in the statements. All forward-looking statements are
only predictions or statements of current plans, which are constantly under
review by Electric Lightwave (the Company). All forward-looking statements may
differ from actual future results due to, but not limited to, changes in the
local and overall economy, the nature and pace of technological changes, the
number and effectiveness of competitors in the Company's markets, success in
overall strategy, changes in legal and regulatory policy, relations with
Incumbent Local Exchange Carriers (ILECs) and their ability to provide delivery
of services including interoffice trunking, implementation of back office
service delivery systems, maintenance of exclusive use of fiber on
performance-based leases, the Company's ability to identify future markets and
successfully expand existing ones and the mix of products and services offered
in the Company's target markets. Readers should consider these important factors
in evaluating any statement contained herein and/or made by the Company or on
its behalf. The Company has no obligation to update or revise forward-looking
statements to reflect the occurrence of future events or circumstances.
(tables follow)
Electric Lightwave, Inc.
Statements of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
6/30/1999 3/31/1999 6/30/1998
---------- --------- ---------
Revenues:
<S> <C> <C> <C>
Network Services .................. $ 12,983 $ 10,424 $ 8,371
Local Telephone Services .......... 18,600 14,308 7,769
Long Distance Services ............ 9,245 8,530 1,899
Data Services ..................... 5,267 4,954 3,404
-------- -------- --------
Total Revenues .......... 46,095 38,216 21,443
-------- -------- --------
Operating Expenses:
Network Access .................... 23,702 25,224 9,860
Operations ........................ 9,633 9,034 6,528
Selling, General and Administrative 29,447 26,767 17,588
Depreciation and Amortization ..... 8,150 6,994 3,780
-------- -------- --------
Total Operating Expenses 70,932 68,019 37,756
-------- -------- --------
Loss from Operations ................... (24,837) (29,803) (16,313)
Interest Expense and Other ............. 8,068 4,779 1,467
-------- -------- --------
Net Loss Before Income Taxes ...... (32,905) (34,582) (17,780)
Income Tax Expense (Benefit) ........... 300 370 (3,022)
-------- -------- --------
Net Loss .......................... $(33,205) $(34,952) $(14,758)
======== ======== ========
EBITDA * .......................... $(15,226) $(21,332) $(10,894)
======== ======== ========
Weighted average shares outstanding .... 49,822 49,801 49,694
Net Loss Per Common Share:
Basic $ (0.67) $ (0.70) $ (0.30)
Diluted $ (0.67) $ (0.70) $ (0.30)
*Excludes operating lease expenses of $1,461, $1,477 and $1,639 for the three
months ended June 30, 1999, March 31, 1999 and June 30, 1998, respectively.
</TABLE>
Electric Lightwave, Inc.
Statements of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
Six Months Ended
6/30/1999 6/30/1998
--------- ---------
Revenues:
<S> <C> <C>
Network Services ............................. $ 23,407 $ 17,478
Local Telephone Services ..................... 32,908 13,793
Long Distance Services ....................... 17,775 3,721
Data Services ................................ 10,221 6,508
-------- --------
Total Revenues ..................... 84,311 41,500
-------- --------
Operating Expenses
Network Access ............................... 48,926 19,072
Operations ................................... 18,667 11,774
Selling, General and Administrative .......... 56,214 32,963
Depreciation and Amortization ................ 15,144 7,664
-------- --------
Total Operating Expenses ........... 138,951 71,473
-------- --------
Loss from Operations .............................. (54,640) (29,973)
Interest Expense and Other ........................ 12,847 2,211
-------- --------
Net Loss Before Income Taxes and
Cumulative Effect of Change in
Accounting Principle ........................ (67,487) (32,184)
Income Tax Expense (Benefit) ...................... 670 (5,471)
-------- --------
Net Loss Before Cumulative Effect
of a Change in Accounting Principle ......... (68,157) (26,713)
Cumulative Effect of Change in Accounting Principle -- 2,817
-------- --------
Net Loss ..................................... $(68,157) $(29,530)
======== ========
EBITDA * ..................................... $(36,558) $(19,349)
========= =========
Weighted average shares outstanding 49,812 49,690
Net Loss Before Cumulative Effect of Change in
Accounting Principle per Common Share:
Basic $ (1.37) $ (0.54)
Diluted $ (1.37) $ (0.54)
Net Loss Per Common Share:
Basic $ (1.37) $ (0.59)
Diluted $ (1.37) $ (0.59)
*Excludes operating lease expenses of $2,938 and $2,960 for the six months ended
June 30, 1999 and June 30, 1998, respectively.
</TABLE>
<PAGE>
Electric Lightwave, Inc.
Selected Financial & Operating Data
(In thousands except selected operating data)
<TABLE>
<CAPTION>
6/30/1999 3/31/1999 6/30/1998
---------- -------- ---------
Selected Financial Data
<S> <C> <C> <C>
Property, Plant & Equipment - Owned $ 693,449 $ 585,533 $ 396,080
Property, Plant & Equipment - Leased $ 108,541 $ 108,541 $ 108,541
--------- --------- ---------
Total ................. $ 801,990 $ 694,074 $ 504,621
Selected Operating Data
Markets ............................ 25 23 9
Route Miles ........................ 3,128 3,098 2,656
Fiber Miles ........................ 192,213 181,816 153,002
Buildings Connected ................ 795 783 682
Switches and Routers:
Internet Routers .......... 42 36 18
ATM Switches .............. 22 21 9
Frame Relay Switches ...... 31 29 22
Voice Switches ............ 7 7 7
Access Line Equivalents ............ 121,516 99,006 54,490
Access Line Equivalents/Switch ..... 17,359 14,144 7,784
% on Switch ........................ 99% 99% 98%
Employees .......................... 1,233 1,200 841
Customers .......................... 1,961 1,843 1,330
</TABLE>
SIGNATURES
----------------
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.
Electric Lightwave, Inc.
------------------------
Registrant
By: /s/ Kerry D. Rea
_____________________________
Vice President and Controller
Date: August 3, 1999
