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:
October 29, 1999
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(Date of earliest event reported)
Electric Lightwave, Inc.
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(Exact name of Registrant as specified in charter)
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<CAPTION>
<S> <C> <C>
Delaware 0-23393 93-1035711
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4400 NE 77th Avenue, Vancouver, WA 98662
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(Address of principal executive offices) (Zip Code)
(360)816-3000
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(Registrant's telephone number, including area code)
No change since last report
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(Former name or address, if changed since last report)
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Item 5. Other Events.
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This report is being filed to make available the following press release dated
October 29, 1999.
News Release
Contacts:
Investors and analysts: Media:
Fletcher Chamberlin Jack Hardy
(360) 816-3996 (360) 816-3602 voice
[email protected] [email protected]
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ELECTRIC LIGHTWAVE REPORTS CONTINUED GROWTH
AND IMPROVED MARGINS
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* Revenue increases 89% from 1998 third quarter
* EBITDA loss and net loss decline from 1999 second quarter
* Gross margins improve significantly
Vancouver, WA - October 29, 1999 - Electric Lightwave, Inc. (NASDAQ:ELIX), a
leading facilities-based integrated communications provider, today announced
results for the third quarter. Revenue growth remained strong, even after the
effect of the company's previously announced decision to stop offering prepaid
telephone card products. Margins improved significantly, and the company's
EBITDA loss was less than half the prior quarter's level.
Revenues for the quarter ended September 30, 1999 were $48.6 million, or 89%
above revenues of $25.7 million in the third quarter of 1998 and 5% above second
quarter 1999 revenues of $46.1 million. The company's loss before interest,
taxes, depreciation and amortization (EBITDA loss), excluding operating lease
expense, was $7.4 million in the third quarter this year, compared with $15.2
million in the second quarter of 1999 and $13.5 million in the third quarter a
year ago. The net loss in the 1999 third quarter was $30.4 million or $0.61 per
share, compared with a net loss of $33.2 million or $0.67 per share in the
second quarter of 1999 and $18.4 million or $0.37 per share in the prior year's
third quarter.
"Rapid revenue growth in our core businesses continued in the quarter, and we
significantly reduced our quarterly EBITDA losses," said Dave Sharkey, president
of Electric Lightwave. "Core revenue, including data services, network services
and local telephone service without reciprocal compensation, grew 17% compared
with the second quarter and 79% compared with the same quarter last year. Data
Services revenue, which includes Internet access revenue, was up 42%
sequentially and 79% compared with last year. Local telephone service revenue,
excluding reciprocal compensation, was up 16% sequentially and 114%
year-over-year. These key parts of our revenue growth are due to execution of
our plan to drive growth by aggressively pursuing both the expanding data and
Internet markets and the local telephone business in the West, where we have
extensive fiber optic networks."
Commenting on the company's operating performance, Sharkey added, "The
significant EBITDA improvement from the prior quarter continues a trend that
started in the second quarter. It is a product of both improved gross margins
and ongoing productivity gains in our operations. The gross margin in the third
quarter (defined as revenues minus network access expenses) was 70%, compared
with 49% in the second quarter this year and 52% in last year's third quarter.
This major improvement is a result of our focus on building on-net business for
our extensive networks, our previously-announced decision to exit lower-margin
businesses and one-time adjustments in charges from other carriers. Operations
and selling, general and administrative expenses grew by 9% from the second
quarter, while core revenues were up 17%."
For the nine months ended September 30, 1999, Electric Lightwave's revenues were
$132.9 million, or 98% above the first nine months of 1998. The EBITDA loss,
excluding operating lease expense, for the first nine months of 1999 was $43.9
million, compared to $33.0 million a year ago. The net loss for the first nine
months of 1999 was $98.5 million or $1.98 per share, compared with a net loss of
$47.9 million or $0.91 per share (before the cumulative effect of a change in an
accounting principle) a year earlier.
Access line equivalents at the end of the third quarter were 142,433, an
increase of 20,917 lines, or 17%, during the quarter.
"We are executing on our strategy and delivering value to our customers today,"
concluded Sharkey, "and our success is demonstrated by continued growth in
revenue and improvements in margins. We plan to leverage our investments in
network, systems and people for further improvements in financial performance."
Electric Lightwave, Inc. is a leading integrated communications provider serving
communications-intensive businesses and the growing e-commerce market. The
company has a national data backbone and an expanding fiber optic network that
interconnects major markets in the West. As a full-service provider, the company
offers local and long distance telephone service, as well as high-speed
broadband transport and enhanced data services, frame relay, ATM and Internet
access solutions. 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.
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Electric Lightwave, Inc.
Statements of Operations
(in thousands, except per share data)
Three Months Ended
9/30/99 6/30/99 9/30/98
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<S> <C> <C> <C>
Revenues:
Network Services ...................... $ 14,024 $ 12,983 $ 9,009
Local Telephone Services .............. 22,313 18,600 9,987
Long Distance Services ................ 4,812 9,245 2,512
Data Services ......................... 7,453 5,267 4,156
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Total Revenues .................. 48,602 46,095 25,664
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Operating Expenses:
Network Access ........................ 14,719 23,702 12,317
Operations ............................ 10,732 9,633 7,308
Selling, General and Administrative ... 32,017 29,447 21,243
Depreciation and Amortization ......... 9,807 8,150 4,090
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Total Operating Expenses ........ 67,275 70,932 44,958
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Loss from Operations .................. (18,673) (24,837) (19,294)
Interest Expense and Other ................. 11,424 8,068 2,742
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Net Loss Before Income Taxes .......... (30,097) (32,905) (22,036)
Income Tax Expense (Benefit) ............... 277 300 (3,631)
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Net Loss .............................. $(30,374) $(33,205) $(18,405)
======== ======== ========
EBITDA* ............................... $ (7,361) $(15,226) $(13,533)
======== ======== ========
Weighted Average Shares Outstanding ........ 49,915 49,822 49,711
Net Loss Per Common Share:
Basic ................................. $ (0.61) $ (0.67) $ (0.37)
Diluted ............................... $ (0.61) $ (0.67) $ (0.37)
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* Excludes operating lease expenses of $1,505, $1,461, and $1,671 for the three
months ended September 30, 1999, June 30, 1999 and September 30, 1998,
respectively.
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<CAPTION>
Electric Lightwave, Inc.
Statements of Operations
(in thousands, except per share data)
Nine Months Ended
9/30/99 9/30/98
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<S> <C> <C>
Revenues:
Network Services ............................ $ 37,431 $ 26,487
Local Telephone Services .................... 55,221 23,780
Long Distance Services ...................... 22,587 6,233
Data Services ............................... 17,674 10,664
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Total Revenues ........................ 132,913 67,164
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Operating Expenses:
Network Access .............................. 63,645 31,389
Operations .................................. 29,399 19,082
Selling, General and Administrative ......... 88,231 54,206
Depreciation and Amortization ............... 24,951 11,754
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Total Operating Expenses .............. 206,226 116,431
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Loss from Operations ........................ (73,313) (49,267)
Interest Expense and Other ....................... 24,271 4,953
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Net Loss Before Income Taxes and
Cumulative Effect of Change in
Accounting Principle ...................... (97,584) (54,220)
Income Tax Expense (Benefit) ..................... 947 (9,102)
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Net Loss Before Cumulative Effect
Of Change in Accounting Principle ......... (98,531) (45,118)
Cumulative Effect of Change in Accounting
Principle (Net of $577 income tax benefit) ..... -- 2,817
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Net Loss .................................... $ (98,531) $ (47,935)
========= =========
EBITDA* ..................................... $ (43,919) $ (32,882)
========= =========
Weighted Average Shares Outstanding .............. 49,846 49,697
Net Loss Per Share Before Cumulative Effect
Of Change in Accounting Principle:
Basic ....................................... $ (1.98) $ (0.91)
Diluted ..................................... $ (1.98) $ (0.91)
Net Loss Per Common Share
Basic ....................................... $ (1.98) $ (0.96)
Diluted ..................................... $ (1.98) $ (0.96)
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* Excludes operating lease expenses of $4,443 and $4,631 for the nine months
ended September 30, 1999 and September 30, 1998, respectively.
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<CAPTION>
Electric Lightwave, Inc.
Selected Financial and Operating Data
(In thousands except selected operating data)
9/30/99 6/30/99 9/30/98
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Selected Financial Data
<S> <C> <C> <C>
Property Plant & Equipment - Owned ...... $723,141 $693,449 $462,844
Property Plant & Equipment - Leased ..... 108,541 108,541 108,541
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Total .............................. $831,682 $801,990 $571,385
Selected Operating Data
Markets ................................. 26 25 9
Route Miles ............................. 4,047 3,128 2,782
Fiber Miles ............................. 214,656 192,213 156,949
Buildings Connected On-Net .............. 808 795 711
Switches and Routers:
Internet Routers ................... 42 42 21
ATM Switches ....................... 22 22 10
Frame Relay Switches ............... 31 31 22
Voice .............................. 7 7 7
Access Line Equivalents ................. 142,433 121,516 62,657
Access Line Equivalents/Voice Switch .... 20,348 17,359 8,951
% on switch ............................. 97% 99% 99%
Employees ............................... 1,172 1,233 1,010
Customers ............................... 2,102 1,961 1,475
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SIGNATURES
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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.
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Registrant
By: /s/ Kerry D. Rea
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Vice President and Controller
Date: October 29, 1999
