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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30,1999.
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 000-23387
TELIGENT, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 54-1866562
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
8065 LEESBURG PIKE
SUITE 400
VIENNA, VIRGINIA 22182
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 703.762.5100
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes [X] No [_].
The number of shares outstanding of each of the registrant's classes
of common stock as of November 8, 1999 was as follows:
Common Stock, Class A 9,685,232
Common Stock, Class B 44,426,299
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
As of September 30, 1999 (unaudited) and December 31, 1998 3
Unaudited Condensed Consolidated Statements of Operations for
the three and nine months ended September 30, 1999 and 1998 4
Unaudited Condensed Consolidated Statements of Cash Flows -
for the nine months ended September 30, 1999 and 1998 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
Item 3. Quantitative and Qualitative Disclosure About Market Risk 16
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES
EXHIBIT INDEX
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TELIGENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
<TABLE>
SEPTEMBER 30, DECEMBER 31,
1999 1998
-------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 227,465 $ 416,247
Accounts receivable, net 9,317 1,191
Prepaid expenses and other current assets 15,524 6,964
Restricted cash and investments 38,200 32,184
-------------- -------------
Total current assets 290,506 456,586
Property and equipment, net of accumulated
depreciation of $43,209 and $16,544,
respectively 291,791 180,726
Restricted cash and investments 16,754 33,117
Intangible assets, net of accumulated
amortization of $13,090 and $6,776,
respectively 95,166 83,857
Other assets 7,399 9,148
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Total assets $ 701,616 $ 763,434
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 155,640 $ 135,158
Accrued interest and other 43,174 19,020
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Total current liabilities 198,814 154,178
Long-term debt 800,287 576,058
Other noncurrent liabilities 2,897 2,145
Stockholders' equity (deficit):
Common stock 542 526
Additional paid-in capital 507,459 463,685
Accumulated deficit (808,383) (433,158)
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Total stockholders' equity (deficit) (300,382) 31,053
-------------- -------------
Total liabilities and stockholders'
equity (deficit) $ 701,616 $ 763,434
============== =============
</TABLE>
See notes to condensed consolidated financial statements
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TELIGENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Communications services $ 10,320 $ 240 $ 15,805 $ 480
Costs and expenses:
Cost of services 57,123 24,657 135,373 49,945
Sales, general and administrative 56,545 32,399 151,779 75,311
Stock-based and other noncash
compensation 7,830 7,998 23,631 24,141
Depreciation and amortization 12,821 3,389 30,304 7,042
---------- ---------- ---------- ----------
Total costs and expenses 134,319 68,443 341,087 156,439
---------- ---------- ---------- ----------
Loss from operations (123,999) (68,203) (325,282) (155,959)
Interest and other income 4,607 8,971 13,980 27,029
Interest expense (24,248) (19,314) (63,923) (47,310)
---------- ---------- ---------- ----------
Net loss $(143,640) $(78,546) $(375,225) $(176,240)
========== ========== ========== ==========
Basic and diluted net loss per
share $ (2.66) $ (1.49) $ (7.06) $ (3.35)
========== ========== ========== ==========
Weighted average Class A and Class B
common shares outstanding 54,013,338 52,593,191 53,177,175 52,589,921
========== ========== ========== ==========
</TABLE>
See notes to condensed consolidated financial statements
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TELIGENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
Nine months ended
September 30,
------------------------------
1999 1998
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<S> <C> <C>
Cash flows from operating activities:
Net loss $ (375,225) $ (176,240)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 30,304 7,042
Accretion of senior discount notes and other
amortization 27,196 19,185
Stock-based and other noncash compensation 23,631 24,141
Other (496) (288)
Changes in current assets and current
liabilities, net of acquisitions:
Accounts receivable (7,104) (252)
Prepaid expenses and other current assets (8,409) (161)
Accounts payable (20,133) 19,465
Accrued interest and other 22,934 23,986
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Net cash used in operating activities (307,302) (83,122)
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Cash flows from investing activities:
Purchase of property and equipment (98,773) (69,059)
Restricted cash and investments 10,347 13,481
Cash paid for acquisitions, net of
cash acquired (2,498) -
Other investing activities 142 -
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Net cash used in investing activities (90,782) (55,578)
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Cash flows from financing activities:
Borrowings of long-term debt 200,000 250,703
Proceeds from exercise of common stock options 9,991 113
Debt financing costs (689) (27,539)
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Net cash provided by
financing activities 209,302 223,277
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Net (decrease) increase in cash and equivalents (188,782) 84,577
Cash and cash equivalents, beginning of period 416,247 424,901
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Cash and cash equivalents, end of period $ 227,465 $ 509,478
============= =============
</TABLE>
See notes to condensed consolidated financial statements
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TELIGENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. THE COMPANY
Teligent, Inc. ("Teligent" or the "Company") is a full-service,
facilities-based communications company offering small and medium-sized business
customers local, long-distance, high-speed data and dedicated Internet services
over its digital SmartWave(TM) local networks. The SmartWave(TM) local networks
integrate point-to-point and point-to-multipoint wireless technologies with
traditional broadband wireline technology.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
---------------------
The Company in accordance with the rules and regulations of the
Securities and Exchange Commission ("SEC") has prepared the unaudited condensed
consolidated financial statements included herein. In the opinion of the
Company's management, all adjustments and reclassifications of a normal and
recurring nature necessary to present fairly the financial position, results of
operations and cash flows for the periods presented have been made. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles ("GAAP")
have been condensed or omitted pursuant to SEC rules and regulations. These
condensed consolidated unaudited financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the period ending December 31, 1998
filed with the SEC. The results of operations for the three months and nine
months ending September 30, 1999 are not necessarily indicative of the results
that may be expected for the full year.
CONSOLIDATION
-------------
The condensed consolidated financial statements include the accounts of
the Company and its subsidiaries after elimination of all significant
intercompany transactions.
RECLASSIFICATIONS
-----------------
Certain amounts in the prior periods' financial statements have been
reclassified to conform to the current year's presentation.
3. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
INVESTING ACTIVITIES
During the nine months ended September 30, 1999 and 1998, the Company
incurred capital expenditures of $137.7 million and $111.1 million,
respectively, of which $38.9 million and $42.1 million, respectively, was
accrued and unpaid, and is not reflected in the accompanying condensed
consolidated statements of cash flows.
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TELIGENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. OTHER TRANSACTIONS
During the third quarter of 1999, the Company acquired two
communications companies (the "Transactions"). The purchase price of the
Transactions consisted of 230,627 shares of the Company's Class A common stock,
par value $.01 ("Class A Common Stock") valued at $13.2 million, cash payments
totaling $2.6 million and earnout provisions which could result in the issuance
of up to an additional 285,562 shares of common stock over the next three years,
if certain revenue and other benchmarks are achieved. The Transactions were
accounted for as purchases, with the majority of the purchase price being
assigned to goodwill, which will be amortized over 5 years.
5. LONG-TERM DEBT
On July 2, 1998, the Company entered into a credit agreement with
certain lenders (the "Bank Credit Agreement"), providing for facilities up to an
aggregate of $800 million (the "Credit Facility"). As of September 30, 1999, we
had a $200 million outstanding loan balance under the Credit Facility, which
incurs interest based on a floating rate tied to the prevailing London Interbank
Offered Rate ("LIBOR") or an alternative base rate, and adjusts based on the
attainment of certain key revenue and leverage benchmarks.
6. SUBSEQUENT EVENT
The Company entered into a stock purchase agreement, dated as of
November 4, 1999, to issue 500,000 shares of its Series A Convertible Preferred
Stock, liquidation preference $1,000 per share, par value $.01, (the "Preferred
Stock"), to an investor group led by Microsoft Corporation ("Microsoft") and
Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse"), for gross proceeds of
$500 million (the "Preferred Stock Transaction"). Other investors include Chase
Capital Partners, DB Capital Partners and Olympus Partners (collectively with
Microsoft and Hicks Muse, the "Purchasers").
The Preferred Stock has an annual dividend rate of 7 3/4% payable
quarterly. Dividends must be paid in additional shares of Preferred Stock for
the first five years following the closing of the Preferred Stock Transaction,
and may be paid in either cash or additional shares of Preferred Stock, at the
option of the Company, thereafter. The Preferred Stock is convertible into
Class A Common Stock by the Purchasers at any time, but may be called by the
Company after five years and, if still outstanding, must be redeemed in 2014.
The closing of the Preferred Stock Transaction is subject to expiration
or other termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, and satisfaction of other customary closing conditions.
The Preferred Stock Transaction is expected to close during the fourth quarter
of 1999.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
EXCEPT FOR ANY HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS QUARTERLY REPORT ON FORM 10-Q CONTAIN CERTAIN "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF SECTION 21E OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995, AND SHOULD BE READ IN CONJUNCTION WITH OUR 1998
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS INCLUDING, WITHOUT LIMITATION, ECONOMIC, KEY EMPLOYEE, VENDOR,
COMPETITIVE, GOVERNMENTAL, REGULATORY AND TECHNOLOGICAL FACTORS AFFECTING OUR
GROWTH, OPERATIONS, MARKETS, PRODUCTS, SERVICES, LICENSES AND OTHER FACTORS
DISCUSSED IN OUR OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
THESE FACTORS MAY CAUSE OUR ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS, OR
INDUSTRY RESULTS, TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. GIVEN THESE UNCERTAINTIES, PROSPECTIVE INVESTORS ARE CAUTIONED NOT
TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS.
THE FORWARD-LOOKING STATEMENTS ARE INCLUDED IN, WITHOUT LIMITATION,
"OVERVIEW", "RESULTS OF OPERATIONS" AND "LIQUIDITY AND CAPITAL RESOURCES." IN
THE PREPARATION OF OUR FINANCIAL STATEMENTS, WE ALSO MAKE VARIOUS ESTIMATES AND
ASSUMPTIONS THAT ARE FORWARD-LOOKING STATEMENTS.
IN THIS QUARTERLY REPORT ON FORM 10-Q, WE REFER TO TELIGENT, INC., A
DELAWARE CORPORATION, AS "TELIGENT," THE "COMPANY," "WE," "US," AND "OUR." WHERE
APPLICABLE, SUCH REFERENCES REFER TO TELIGENT'S LIMITED LIABILITY COMPANY
PREDECESSOR.
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONNECTION WITH THE ATTACHED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO, AND WITH OUR
AUDITED FINANCIAL STATEMENTS AND NOTES THERETO AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1998, INCLUDED IN OUR ANNUAL REPORT ON FORM 10-K.
OVERVIEW
- --------
Teligent offers small and medium-sized business customers local, long
distance, high-speed data and dedicated Internet services over our digital
SmartWave(TM) local networks. Our SmartWave(TM) local networks integrate
point-to-point and point-to-multipoint wireless technologies with traditional
broadband wireline technology. By integrating these technologies, we believe we
are able to increase local network efficiency and significantly lower network
costs. We are currently offering commercial service using our SmartWave(TM)
local networks in 34 of the nation's largest markets, comprising more than 522
cities and towns with a combined population of more than 93 million.
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Our losses, as well as our negative operating cash flow, have been
significant to date, and we expect both to continue until we develop a customer
base that will generate sufficient revenues to fund operating expenses. After we
initiate service in most of our markets, we expect to have positive operating
margins over time by increasing the number of customers and selling them
additional capacity without significantly increasing related capital
expenditures, costs of building access rights and other operating costs. We
expect that throughout the remainder of 1999, operating and net losses and
negative operating cash flow will increase over 1998 as we complete our first
full year of providing commercial service. Our ability to generate positive cash
flow will depend in part on the extent of capital expenditures in current and
new markets, competition in our current market areas and any potential adverse
regulatory developments. Various financing sources will be required to fund our
growth as well as cover our expected losses from operations. There can be no
assurance that such funding will be available, or available on terms acceptable
to us. See "Liquidity and Capital Resources."
YEAR 2000
- ---------
An issue affecting Teligent and other companies is whether computer
systems and applications will recognize and process date data for the Year 2000
and beyond. The "Year 2000 issue" arises primarily because many computer
programs were written using two, rather than four, digits to identify the
applicable year. As a result, date-sensitive computer programs may recognize a
two-digit code for a year in the next century as one related to this century.
For example, "00," entered in a date field for the Year 2000 may be interpreted
as the Year 1900, resulting in system failures or miscalculations and disruption
of operations.
We use the term "Year 2000 ready" to describe the status of our
systems, applications, and services. To be considered Year 2000 ready, the
system, application, or service must undergo certain inventory, assessment,
testing/remediation, and/or implementation processes and, to the extent
applicable, be able to read, compute, store, process, display, and print
calendar dates falling before, on, and after December 31, 1999, without material
interruption or degradation of performance, provided that all other products
(for example, hardware, software, and firmware) used in combination with the
system, application, or service are Year 2000 ready.
Our first priority in our Year 2000 effort is to protect
mission-critical operations from material service interruptions that could occur
as a result of the Year 2000 transition. Teligent defines mission-critical
operations as those systems and applications that are vital to the provision of
voice, video and data switching, processing and transport services to our
customers. To that end, in September 1998, management presented a report to the
Audit Committee outlining issues and areas that management felt should be
considered in connection with our preparation of a Year 2000 plan. Around that
same time, we appointed a Year 2000 committee to lead the Company-wide effort to
assess the scope of our risks and ensure our applications will function
properly. Our Year 2000 committee consists of senior executives and other key
personnel charged with the responsibility of directing Teligent's Year 2000
activities and facilitating timely resolution of issues, obstacles and decisions
relating to the Year 2000 effort.
Our approach to addressing the Year 2000 challenge is consistent with
industry practice and is organized into four key phases:
o Inventory -- identify related data for any element within the Teligent
enterprise that may be impacted by the Year 2000 date change;
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o Assessment -- analyze our Year 2000 exposure based on available
information and determine risks to Teligent's business continuity. Risk is
a factor of the likelihood of Year 2000 problems occurring and the impact
of such occurrences on Teligent;
o Test & Remediate -- validate the assessment, determine remediation
approach, and take remediation action if we deem it necessary and
appropriate. Remediation may entail repair, replacement, manual
work-arounds, or, in some cases, no action. In this phase we will develop
mitigation and contingency plans for mission critical aspects of our
business; and
o Implement -- place mitigation and contingency plans into effect in order
of priority based on mission criticality, and, where necessary, validate
remediation action.
Based on our efforts to date, Teligent believes its mission-critical
operations are "Year 2000 ready." Our efforts have included the deployment of
specific Year 2000 ready systems, applications or services, or the development
of alternative business processes designed to ensure that mission-critical
operations satisfy our Year 2000 readiness criteria. Given the continued growth
and complexity of Teligent's network, our efforts will continue through and
beyond the end of 1999, including additional testing, monitoring, and planning.
Teligent continues to rely on representations by third parties relating to the
Year 2000 readiness of their products. Teligent issues a detailed status report
relating to its progress which is made available to customers and others through
its web site -- http://www.teligent.com.
Generally, we contractually require our key vendors and suppliers to
guarantee in writing that they are Year 2000 ready. The majority of our
mission-critical systems have been acquired from third party vendors. We have
identified certain key vendors and contacted those vendors to discuss the
readiness of their respective products. These discussions are ongoing. In the
event that a vendor or supplier is not able to provide satisfactory Year 2000
assurances, we will monitor the vendor's progress in this area and, if
appropriate, may arrange to have available an alternate vendor or supplier who
can give such assurances. Similar to other telecommunications providers, our
products and services are also dependent upon other service and
telecommunications providers. With respect to those providers with which our
systems interface and exchange data, we are continuing discussions regarding
their Year 2000 readiness.
We have not determined the exact total costs and expenses we expect to
incur relating to preparation of our systems for the Year 2000. The principal
cost identified to date is our retention of external consultants together with
the cost of internal resources, both dedicated to Year 2000 program management,
inventory, and assessment efforts, which costs are estimated to be less than $5
million. Based on current assessments and compliance plans, we do not expect
that the Year 2000 issue, including the cost of making our mission critical
systems and applications Year 2000 ready, will have a material adverse effect on
our business operations, consolidated financial condition, cash flows and
results of operations.
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Despite our efforts to address the Year 2000 impact on operations, we
may not be able to fully identify such impact or resolve it without disruption
to our business and without incurring significant expense. If appropriate
modifications are not made on a timely basis by our vendors or by other
providers on which we depend, or if our actual costs or timing for our Year 2000
readiness differ materially from our present estimates, Teligent's operations
and financial results could be significantly adversely affected. In particular,
there can be no assurance that the systems of other parties upon which our
business relies will be ready on a timely basis.
Our contingency plans are designed to minimize the disruptions or other
adverse effects resulting from Year 2000 incompatibilities with respect to
mission-critical systems. Our contingency plans contemplate an assessment of all
our critical internal information technology systems and our internal
operational systems that use computer-based controls. In addition, we are
assessing any critical disruptions due to Year 2000-related failures that are
external to Teligent. These processes will begin January 1, 2000, and will
continue as long as circumstances require.
Our contingency plans include the creation of teams that will be
prepared to respond immediately and as necessary to critical Year 2000 problems
as soon as they become known. The composition of teams that are assigned to deal
with such problems will vary according to the nature, significance, and location
of the problem. We are also developing our plans with respect to possible
occurrences immediately before, during and after the millennium transition.
RESULTS OF OPERATIONS
- ---------------------
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE AND NINE MONTHS
- --------------------------------------------------------------------------------
ENDED SEPTEMBER 30, 1998
- ------------------------
We generated revenue from providing communications and related
services of $10.3 million and $15.8 million for the three and nine months ended
September 30, 1999, respectively, compared to $240,000 and $480,000 for the
corresponding periods in 1998. The increases in revenues are reflective of,
among other things, the growth in our customer base, continued expansion into
new markets during 1999 and revenue attributable to the Transactions. We provide
dedicated Internet services, among other services, over our digital networks.
Revenues from one Internet service customer represented $1.5 million, or
approximately 14%, of our revenues for the quarter ended September 30, 1999.
Cost of services, consisting primarily of personnel-related costs,
telecommunications expenses and site rent and site acquisition expenses related
to network operations, was $57.1 million and $135.4 million for the three and
nine months ended September 30, 1999, respectively, compared to $24.7 million
and $49.9 million for the corresponding periods in 1998. These increases reflect
the growth and development of our network operations and the increased number of
employees from 1998 to 1999. We expect that our cost of services will continue
to increase in accordance with our growth strategy.
Sales, general and administrative expenses were $56.5 million and $151.8
million for the three and nine months ended September 30, 1999, respectively,
compared to $32.4 million and $75.3 million for the corresponding periods in
1998. These increases are due to increased personnel-related costs related to
the increase in revenue growth and our increased number of employees required to
drive our future growth. Increased marketing and advertising expenses also
contributed to these increases.
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Depreciation and amortization expense was $12.8 million and $30.3
million for the three and nine months ended September 30, 1999, respectively,
compared to $3.4 million and $7.0 million for the corresponding periods in 1998.
These increases are due to higher capital expenditures related to the growth and
development of our network operations and the amortization of goodwill
associated with the Transactions. We expect depreciation expense to
increase in future quarters as we implement our growth strategy.
Interest and other income was $4.6 million and $14.0 million for the
three and nine months ended September 30, 1999, respectively, compared to $9.0
million and $27.0 million for the corresponding periods in 1998. These decreases
are due to lower average cash and cash equivalent balances in 1999 as a result
of the increased cost of operations.
Interest expense was $24.2 million and $63.9 million for the three and
nine months ended September 30, 1999, respectively, compared to $19.3 million
and $47.3 million for the corresponding periods in 1998. These increases are due
to higher long-term debt balances resulting from borrowings made against the
Credit Facility during 1999, the amortization of credit facility fees and
interest incurred on the 11 1/2% Series B Discount Notes due 2008, issued in
February 1998.
We expect to generate significant operating and net losses for the next
several years.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
SHELF REGISTRATION STATEMENT
- ----------------------------
We filed a Universal Shelf Registration Statement with the SEC on July 11,
1999, which was declared effective on July 22, 1999 (the "Registration
Statement"), to raise up to $1 billion by offering securities that may be
comprised of any combination of common stock, preferred stock, debt securities
or depositary shares. The Registration Statement permits us to periodically
offer such securities in amounts, prices, and terms to be determined when the
securities are issued.
We plan to use the net proceeds of any offering of these securities for
working capital, capital expenditures, operating losses and other general
corporate purposes in connection with the implementation of our business plan,
including acquisitions. Two million shares of Class A Common Stock registered
under the Registration Statement may be offered by a selling shareholder. We
will not receive any proceeds from the sale of Class A Common Stock that may be
offered by the selling shareholder.
CREDIT FACILITY
- ---------------
On July 2, 1998, we entered into the Bank Credit Agreement providing
for credit facilities up to an aggregate of $800 million. The Credit Facility
will primarily be used for the purchase of telecommunications equipment,
software and services and is also available for working capital and general
corporate purposes. Availability of funds under the Credit Facility is subject
to certain conditions as defined in the Bank Credit Agreement. As of September
30, 1999, we had a $200 million outstanding loan balance under the Credit
Facility, which incurs interest at a floating rate tied to LIBOR or an
alternative base rate. We may make additional draw-downs if required later in
the year.
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HISTORICAL CASH FLOWS
- ---------------------
At September 30, 1999, we had working capital of $91.7 million that
includes unrestricted cash and cash equivalents of $227.5 million, compared to
working capital of $302.4 million and cash of $416.2 million at December 31,
1998. The decrease in working capital is primarily a result of lower cash and
cash equivalent levels and an increase in accounts payable to vendors as we
implement our growth strategy. We will need a significant amount of cash to
build our networks, market our services and cover operating expenditures.
Although we anticipate our existing cash and cash equivalents on hand, together
with the Credit Facility and proceeds anticipated to be received from the
issuance of the Preferred Stock, will provide sufficient funds to carry out our
current business plan into the year 2001, our management continually evaluates
potential financing options. We also expect that current and future expansion
and acquisitions will be financed from funds generated from operations,
borrowings under the Credit Facility, financing under the Registration
Statement, financing from the issuance of the Preferred Stock and potential
additional financings. However, there can be no assurance that we will be able
to obtain additional financing, or financing on terms acceptable to us.
Our total assets decreased from $763.4 million at December 31, 1998 to
$701.6 million at September 30, 1999, as lower cash and cash equivalent balances
were partially offset by higher property and equipment balances. Property and
equipment, net of accumulated depreciation, was $291.8 million at September 30,
1999 compared to $180.7 million at December 31, 1998. This increase was due to
capital expenditures related to the growth and development of our network
operations.
We used cash in operations of $307.3 million for the nine months ended
September 30, 1999, due primarily to the operating loss for the period, which
was partially offset by depreciation and amortization, stock based and other
noncash compensation, and other charges. For the same period in 1998, we used
cash in operations of $83.1 million, due primarily to the operating loss for the
period offset primarily by stock-based and other noncash compensation.
We used cash in investing activities of $90.8 million for the nine
months ended September 30, 1999 relating primarily to the purchase of property
and equipment compared to $55.6 million for the same period in 1998.
Cash flows provided by financing activities for the nine months ended
September 30, 1999 were $209.3 million, consisting primarily of proceeds from a
$200 million draw-down of the Credit Facility in the second quarter of 1999 and
the exercise of Class A Common Stock options. For the same period in 1998, cash
flows from financing activities were $223.3 million consisting primarily of net
proceeds from the offering of the 11 1/2% Series B Discount Notes due 2008,
after costs of $7.6 million.
RECENT DEVELOPMENTS
- -------------------
AGREEMENT TO ISSUE CONVERTIBLE PREFERRED STOCK
- ----------------------------------------------
The Company entered into a stock purchase agreement, dated as of
November 4, 1999, to issue 500,000 shares of Preferred Stock to an investor
group led by Microsoft and Hicks Muse for gross proceeds of $500 million. Other
investors include Chase Capital Partners, DB Capital Partners and Olympus
Partners.
- 13 -
<PAGE>
The Preferred Stock has an annual dividend rate of 7 3/4% payable
quarterly. Dividends must be paid in additional shares of Preferred Stock for
the first five years following the closing of the Preferred Stock Transaction,
and may be paid in either cash or additional shares of Preferred Stock, at the
option of the Company, thereafter. The Preferred Stock is convertible into Class
A Common Stock by the Purchasers at any time, but may be called by the Company
after five years and, if still outstanding, must be redeemed in 2014. The
holders of the Preferred Stock will have voting rights equal to the rights held
by holders of Class A Common Stock. In addition, Hicks Muse will be entitled to
nominate a member to the Company's Board of Directors upon the closing of the
Preferred Stock Transaction.
The closing of the Preferred Stock Transaction is subject to expiration or
other termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, and satisfaction of other customary closing conditions.
The Preferred Stock Transaction is expected to close during the fourth quarter
of 1999.
ACQUISITION OF THE ASSOCIATED GROUP, INC.
- -----------------------------------------
On June 1, 1999, Liberty Media Corporation ("Liberty Media") and The
Associated Group, Inc. ("Associated") announced that they had signed a
definitive merger agreement pursuant to which Liberty Media will acquire
Associated in a stock-for-stock merger (the "Associated Acquisition"). Liberty
Media, which holds most of the assets included in the Liberty Media Group, is an
indirect wholly owned subsidiary of AT&T Corp. ("AT&T"); however, the assets and
businesses of Liberty Media Group are operated by its current management, which
is different from that of AT&T.
Upon completion of the Associated Acquisition, Liberty Media would
acquire through its ownership of Associated, Associated's interest in Teligent,
representing approximately 41% (as of September 1, 1999) of the total issued and
outstanding shares of Teligent common stock as of September 1, 1999. Upon
consummation of the Associated Acquisition, Telcom DTS Investors, L.L.C.
("Telcom"), the owner of all of the Series B-2 common stock, would, depending
upon Telcom's level of stock ownership and control of Telcom by certain
individuals at that time, have the right pursuant to an agreement with
Associated to require Associated to convert all of its Series B-1 common stock
into Class A Common Stock and to cause that number of the Series B-1 Directors
designated by Associated to resign from Teligent's board of directors so that
the Series B-1 Directors will no longer constitute a majority of the Teligent
directors. Associated has further agreed with Telcom that if Associated is
required to convert its Series B-1 common stock, then it will cause its
designees on Teligent's board of directors to cause Teligent's board of
directors to convene a meeting of Teligent's stockholders.
An agreement entered into in connection with the Associated Acquisition
provides that, immediately prior to the effective date of the Associated
Acquisition, Associated will replace two of the existing Series B-1 Directors
with designees of Liberty Media. In addition, Associated has indicated that,
upon consummation of the Associated Acquisition, at least one of the then
remaining Series B-1 Directors will resign.
- 14 -
<PAGE>
However, upon a conversion of all of the Series B-1 common stock into
Class A Common Stock, there will be no shares of Series B-1 common stock
outstanding. As a result, if all of the Series B-1 shares are so converted, on a
going forward basis, neither Associated nor Liberty will have the special right
currently held by Associated under Teligent's certificate of incorporation to
elect directors of Teligent (except for the right to vote generally for Teligent
directors together with other holders of Class A Common Stock).
Pursuant to the terms of the Associated Acquisition, Associated has
agreed with certain limited exceptions, not to sell any of its Teligent common
stock or to vote or execute a written consent or proxy with respect to its
Teligent common stock in favor of any acquisition of a 25% or greater equity
interest in Teligent. The Associated Acquisition merger agreement does not
prohibit the Series B-1 Directors from properly discharging their fiduciary
duties in their capacity as directors of Teligent.
The Associated Acquisition is subject to the approval of the
stockholders of Associated, clearance from various governmental authorities,
including the Federal Communications Commission, and satisfaction of the other
conditions set forth in the merger agreement. According to Associated, depending
upon the timing of the foregoing, the Associated Acquisition is currently
expected to close in early 2000.
- 15 -
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------- ----------------------------------------------------------
We have certain exposure to financial market risks, including changes
in interest rates and other relevant market prices. Specifically, an increase or
decrease in interest rates would affect interest costs relating to our Credit
Facility. At September 30, 1999, we had an outstanding loan balance of $200
million under the Credit Facility, which incurs interest at a floating rate tied
to a LIBOR or an alternate base rate. The outstanding balance under the Credit
Facility represents approximately 25% of our outstanding long-term debt.
Changes in interest rates do not have a direct impact on interest
expense relating to our remaining fixed rate long-term debt, although the fair
market value of our fixed rate debt is sensitive to changes in interest rates.
If market rates declined, our interest payments could exceed those based on the
current market rate. We currently do not use interest rate derivative
instruments to manage our exposure to interest rate changes, but may do so in
the future.
- 16 -
<PAGE>
PART II OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
During the third quarter, the Company issued an aggregate of 230,627
shares of Class A Common Stock in connection with the Transactions. Such shares
were issued to various individuals in exchange for the outstanding capital
shares of the target companies. In addition, the Company may issue an additional
285,562 shares in the aggregate to the same group of individuals over the next
three years pursuant to earnout provisions to which such individuals are
entitled if certain revenue and other benchmarks are achieved. All shares of
Class A Common Stock issued in the Transactions were issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), under Section 4(2) of the 1933 Act. These sales were
made without general solicitation or advertising. The Company has not received
and will not receive any proceeds from the sale of these shares of Class A
Common Stock other than the assets and liabilities of the acquired companies.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
(27) Teligent, Inc. Financial Data Schedule
(99.1) Teligent, Inc. Press Release dated November 5, 1999
(99.2) Teligent, Inc. Press Release dated November 9, 1999
(B) REPORTS ON FORM 8-K
None.
- 17 -
<PAGE>
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 thereunto duly authorized.
TELIGENT, INC.
(Registrant)
DATE: November 12, 1999 BY: /S/ Abraham L. Morris
-----------------------------------------
Abraham L. Morris
Senior Vice President, Chief Financial
Officer and Treasurer (Principal
Financial Officer)
DATE: November 12, 1999 BY: /S/ Cindy L. Tallent
-----------------------------------------
Cindy L. Tallent
Senior Vice President and Controller
(Principal Accounting Officer)
- 18 -
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
27 Financial Data Schedule for the nine months ended
September 30, 1999.
99.1 Press release of Teligent, Inc. dated November 5, 1999
99.2 Press release of Teligent, Inc. dated November 9, 1999.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial data information extracted from the
condensed consolidated balance sheet for the period ended September 30, 1999 and
the condensed consolidated statement of operations for the nine months then
ended, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 227,465
<SECURITIES> 0
<RECEIVABLES> 9,317
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,524
<PP&E> 335,000
<DEPRECIATION> 43,209
<TOTAL-ASSETS> 701,616
<CURRENT-LIABILITIES> 198,814
<BONDS> 800,287
0
0
<COMMON> 542
<OTHER-SE> (300,924)
<TOTAL-LIABILITY-AND-EQUITY> 701,616
<SALES> 0
<TOTAL-REVENUES> 15,805
<CGS> 0
<TOTAL-COSTS> 135,373
<OTHER-EXPENSES> 30,304
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63,923
<INCOME-PRETAX> (375,225)
<INCOME-TAX> 0
<INCOME-CONTINUING> (375,225)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (375,225)
<EPS-BASIC> (7.06)
<EPS-DILUTED> (7.06)
</TABLE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACTS:
MEDIA INVESTORS
Robert W. Stewart Michael S. Kraft
703-762-5175 703-762-5359
888-894-7812 800-981-5994
TELIGENT RAISES $500 MILLION IN NEW CAPITAL; INVESTOR GROUP LED BY MICROSOFT,
HICKS MUSE
VIENNA, VA., November 5, 1999 - Teligent, an integrated communications
company, today announced that it has raised $500 million in new capital to
expand the company's buildout of local broadband networks across the country and
around the world. The investor group is led by Microsoft Corporation, the
world's leading software company, and private equity firm Hicks, Muse, Tate &
Furst Incorporated. Other investors include Chase Capital Partners, DB Capital
Partners and Olympus Partners.
Microsoft and Hicks Muse each will invest $200 million in Teligent
Convertible Preferred Stock due 2014 (the "Preferred Stock"). The conversion
price of $57.50 per share represents a 28 percent premium over the previous
five-day average closing price on the date the agreement was reached.
At closing, the private equity group will own approximately 14 percent of
Teligent's outstanding common stock on an as-converted basis. Hicks Muse will
nominate Tom Hicks, Chairman and Chief Executive Officer of Hicks Muse, to
become a member of Teligent's Board of Directors.
"This investment represents a very strong endorsement of Teligent, our
strategy and our management team," said Teligent Chairman and Chief Executive
Officer Alex J. Mandl. "This new capital will provide funding for Teligent's
core business initiatives into 2001 and our initial expansion into international
markets. In addition, we expect to work closely with Microsoft as we expand our
data and Internet initiatives," Mandl added.
The investment will speed deployment of advanced, digital broadband
communications networks, Mandl said. Teligent's local networks use fixed
wireless equipment in conjunction with other broadband technology to deliver
voice and data services to customers at speeds significantly faster than
permitted by traditional copper wire.
"Teligent has made tremendous strides since the company launched service in
its first markets just one year ago," said Hicks Muse Partner Michael J. Levitt.
"We are very excited about working with Alex and his exceptional management
team, and we believe that this new partnership will enable Teligent to build on
the impressive momentum it already has established," Levitt added.
"Teligent and Microsoft share a vision of creating new broadband pathways
to deliver digital information with greater speed and efficiency," said
Microsoft Senior Vice President and Chief Financial Officer Gregory B. Maffei.
"Working together, we aim to make it easier for business customers everywhere to
communicate, collaborate and compute."
Microsoft, Hicks Muse, Chase Capital, DB Capital and Olympus are among the
most prominent investors in the fast-growing telecommunications and media
industries. Together, they have been involved in dozens of highly successful
communications-related transactions. Chase Securities, Inc., initiated and acted
as agent on this transaction.
<PAGE>
The terms of the security specify an annual dividend rate of 7 3/4 percent
payable quarterly. The investors may convert the Convertible Preferred Stock to
common stock at any time, and Teligent may call the security for redemption
after five years.
Based in Vienna, Va., Teligent, Inc. (NASDAQ: TGNT) is a full-service,
integrated communications company that is offering small and medium-sized
business customers local, long distance, high-speed data and dedicated Internet
services over its digital SmartWave(TM) local networks in 34 major markets
throughout the United States. Teligent's offerings of regulated services are
subject to tariff approval.
Since its formation in 1989, Hicks, Muse, Tate & Furst Incorporated has
completed or currently has pending more than 300 transactions with an aggregate
capital value in excess of $37 billion. Hicks Muse is the leading global media
and telecommunications investment firm with over $2.5 billion of invested equity
in those sectors. Headquartered in Dallas, the firm also has offices in New
York, London, Mexico City and Buenos Aires.
Chase Capital Partners, an affiliate of The Chase Manhattan Corporation, is
a global private equity organization with approximately $10 billion under
management, including over $1 billion committed to the media &
telecommunications industry. DB Capital Partners, Inc., an affiliate of Deutsche
Bank AG, is a global private equity organization that has invested over $1
billion in more than 100 transactions since 1996. Founded in 1988, Olympus
Partners is a private equity investment firm based in Stamford, Connecticut with
over $1 billion under management.
FOR MORE INFORMATION, VISIT THE TELIGENT WEBSITE AT: WWW.TELIGENT.COM
TELIGENT AND SMARTWAVE ARE TRADEMARKS OF TELIGENT, INC.
EXCEPT FOR ANY HISTORICAL INFORMATION, THE MATTERS DISCUSSED IN THIS PRESS
RELEASE CONTAIN FORWARD-LOOKING STATEMENTS THAT REFLECT THE COMPANY'S CURRENT
VIEWS REGARDING FUTURE EVENTS. THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS
AND UNCERTAINTIES THAT COULD AFFECT THE COMPANY'S GROWTH, OPERATIONS, MARKETS,
PRODUCTS AND SERVICES. THE COMPANY CANNOT BE SURE THAT ANY OF ITS EXPECTATIONS
WILL BE REALIZED. FACTORS THAT MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENT TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY ITS FORWARD LOOKING
STATEMENTS INCLUDE, WITHOUT LIMITATION: 1) THE COMPANY'S PACE OF ENTRY INTO NEW
MARKETS; 2) THE TIME AND EXPENSE REQUIRED TO BUILD THE COMPANY'S PLANNED NETWORK
AND ISP INFRASTRUCTURE; 3) REGULATORY APPROVALS AND THE IMPACT OF CHANGES IN
TELECOMMUNICATIONS LAWS AND REGULATIONS; 4) GENERAL ECONOMIC AND COMPETITIVE
CONDITIONS; 5) TECHNOLOGICAL DEVELOPMENTS; 6) OTHER FACTORS DISCUSSED IN THE
COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
CONTACTS:
MEDIA INVESTORS
Robert W. Stewart Michael S. Kraft
703-762-5175 703-762-5359
888-894-7812 800-981-5994
TELIGENT REPORTS THIRD QUARTER REVENUE OF $10.3M; TOPS 1999
TARGET OF 75,000 INSTALLED LINES
VIENNA, VA., November 9, 1999 - Teligent, an integrated communications
company, today reported revenue of more than $10.3 million for the three months
ending September 30, up 160 percent from the $4 million in revenue recorded in
the second quarter of 1999.
The company also said that it beat by three months its target of installing
75,000 customer lines by year-end. Teligent installed nearly 40,000 new customer
lines in the third quarter, bringing the cumulative number of lines installed to
more than 76,000 as of September 30.
Launching its first ten markets just one year ago, Teligent today offers
local, long distance and high-speed Internet services in 34 markets throughout
the United States. The company last week announced that it has raised $500
million in new capital from an investment group led by Microsoft Corporation and
Hicks, Muse, Tate & Furst Incorporated, enabling Teligent to finance its core
operations into 2001 and begin an international expansion.
CUSTOMER BASE GROWS 110 PERCENT
Teligent ended the third quarter with more than 7,500 customers, up more
than 110 percent from the customer base at the end of the second quarter. During
the third quarter, the company increased by 40 percent the number of buildings
connected to its local SmartWave(R) communications networks, bringing the total
number of "on-net" buildings to 2,124.
Teligent added more than 1,500 buildings to its portfolio of properties
under lease or option, raising the total number of leased or optioned buildings
by 35 percent to 5,765, as of September 30. The company grew to 2,625 employees,
up 17 percent from the second quarter. During the third quarter, Teligent also
expanded its profile internationally, winning the rights to fixed wireless radio
spectrum in 36 markets in Germany.
"The past few months have been very exciting for Teligent," said Chairman
and Chief Executive Officer Alex J. Mandl. "We rapidly expanded our SmartWave(R)
voice and data networks throughout the United States, adding thousands of new
customers, lines and buildings. And we began our international expansion in
earnest, winning spectrum in Germany and laying the groundwork in other
countries.
"We're very pleased by the decision by Microsoft, Hicks Muse, Chase Capital
Partners, DB Capital Partners and Olympus Partners to invest $500 million in
Teligent. This new investment represents a strong endorsement of our strategy,
our technology, our team and our ability to execute in this very competitive
marketplace. With this additional capital, our business operations are funded
into 2001," Mandl added.
<PAGE>
During the third quarter, Teligent launched local and long distance voice
services and high-speed data services in three additional markets - Phoenix,
Detroit, Indianapolis - bringing to 31 the number of markets in service on
September 30. The company launched three more markets - Charlotte, Nashville and
Portland, Ore. - last month. Together, the 34 markets in which Teligent now
offers service include the nation's largest business centers and comprise more
than 520 cities and towns with a combined population of 93 million. By year-end,
the company expects to offer service in 40 markets with a combined population of
100 million.
Teligent's continuing expansion and investment in the construction of its
local communications networks resulted in a net loss of $144 million for the
third quarter compared to $123 million for the second quarter. Capital
expenditures for the third quarter were $46 million, up from $35 million in the
second quarter. As of September 30, the company reported available cash and cash
equivalents of $227 million, compared with $386 million as of June 30.
RAPID NETWORK BUILDOUT
"We're building our own network facilities at a rate that is virtually
unprecedented for a new communications company that has been offering service
for just one year," said Teligent Senior Vice President and Chief Financial
Officer Abraham L. Morris.
The strong results the company posted on installing lines, adding customers
and leasing buildings were mirrored by robust sales growth, said Teligent
President and Chief Operating Officer Kirby G. Pickle, Jr.
Sales, measured in dollars, were up nearly 50 percent over the second
quarter. More than half of Teligent's new customers ordered local service, and
more than 40 percent requested a bundle that includes some combination of local,
long distance and data services. Sales productivity continued to improve, Pickle
added, as sales dollars per representative per month climbed 15 percent in the
third quarter compared with the second quarter.
"Teligent's core message of bigger bandwidth and higher savings for small
and mid-sized businesses remains very attractive to customers," Pickle said.
"Ramping to 75,000 installed lines in just a year affords us a great
opportunity to sell more services to more customers as we move into next year.
We met our 1999 line target a full quarter ahead of schedule, and I'm very
confident we'll meet or exceed our 1999 targets for 10,000 customers, 6,000
buildings with leases or options and 3,000 `on-net' buildings," Pickle said.
"Our strong performance on sales, line installation, customer activation and
building leasing demonstrate that we are successfully scaling our business to
meet the challenges that we face as a very fast-growing company," Pickle added.
"These results underscore our success in shortening the provisioning process as
we continue to fine-tune our technology."
In the third quarter, the number of "on-net" buildings with fixed wireless
installations - both point-to-point and point-to-multipoint - increased to 915.
The number of buildings with wireline installations grew to 1,209, bringing the
total number of "on-net" buildings to 2,124.
INTEGRATED NETWORK ARCHITECTURE
Teligent's local communications networks represent the marriage of the
latest advances in high-frequency microwave technology with traditional
broadband wireline equipment. The integration of these technologies enables
Teligent to increase its local network efficiency and significantly lower
network costs.
<PAGE>
Teligent delivers its fixed wireless service by installing small antennas on
roofs of customer buildings. When a customer picks up a telephone, accesses the
Internet or activates a videoconference, the signal travels over inside wiring
to Teligent's indoor electronics cabinet and from there to the rooftop antenna.
The antenna then relays the voice, data or video signals, which are carried over
an ATM platform, to a Teligent base station antenna.
The base station gathers signals from a cluster of surrounding customer
buildings, aggregates the signals and then routes them to a Teligent broadband
switching center. At the switching center, Teligent uses ATM switches and data
routers along with Nortel DMS switches to hand off the traffic to other networks
- - the public circuit-switched voice network, the packet-switched Internet, and
private data networks.
Based in Vienna, Va., Teligent, Inc. (NASDAQ: TGNT) is a full-service,
integrated communications company that is offering small and medium-sized
business customers local, long distance, high-speed data and dedicated Internet
services over its digital SmartWave(R) local networks in 34 major markets.
FOR MORE INFORMATION, VISIT THE TELIGENT WEBSITE AT: WWW.TELIGENT.COM
TELIGENT AND SMARTWAVE ARE TRADEMARKS OF TELIGENT, INC.
EXCEPT FOR ANY HISTORICAL INFORMATION, THE MATTERS DISCUSSED IN THIS PRESS
RELEASE CONTAIN FORWARD-LOOKING STATEMENTS THAT REFLECT THE COMPANY'S CURRENT
VIEWS REGARDING FUTURE EVENTS. THESE FORWARD-LOOKING STATEMENTS INVOLVE RISKS
AND UNCERTAINTIES THAT COULD AFFECT THE COMPANY'S GROWTH, OPERATIONS, MARKETS,
PRODUCTS AND SERVICES. THE COMPANY CANNOT BE SURE THAT ANY OF ITS EXPECTATIONS
WILL BE REALIZED. FACTORS THAT MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENT TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY ITS FORWARD LOOKING
STATEMENTS INCLUDE, WITHOUT LIMITATION: 1) THE COMPANY'S PACE OF ENTRY INTO NEW
MARKETS; 2) THE TIME AND EXPENSE REQUIRED TO BUILD THE COMPANY'S PLANNED NETWORK
AND ISP INFRASTRUCTURE; 3) THE IMPACT OF CHANGES IN TELECOMMUNICATIONS LAWS AND
REGULATIONS; 4) GENERAL ECONOMIC AND COMPETITIVE CONDITIONS; 5) TECHNOLOGICAL
DEVELOPMENTS; 6) OTHER FACTORS DISCUSSED IN THE COMPANY'S FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION.
FINANCIAL TABLES FOLLOW
<PAGE>
TELIGENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE, SHARE AMOUNTS, AND NUMBER OF EMPLOYEES)
(Unaudited)
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 (1) 1999 1998 (1)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Communications services $ 10,320 $ 240 $ 15,805 $ 480
COSTS AND EXPENSES:
Cost of services 57,123 24,657 135,373 49,945
Sales, general and administrative
expenses 56,545 32,399 151,779 75,311
Stock-based and other noncash
compensation 7,830 7,998 23,631 24,141
Depreciation and amortization expense 12,821 3,389 30,304 7,042
---------- ---------- ---------- ----------
Total costs and expenses 134,319 68,443 341,087 156,439
---------- ---------- ---------- ----------
Loss from operations (123,999) (68,203) (325,282) (155,959)
Interest income and other 4,607 8,971 13,980 27,029
Interest expense (24,248) (19,314) (63,923) (47,310)
---------- ---------- ---------- ----------
Net loss before provision for
income taxes (143,640) (78,546) (375,225) (176,240)
---------- ---------- ---------- ----------
Provision for income taxes - - - -
---------- ---------- ---------- ----------
Net loss $(143,640) $(78,546) $(375,225) $(176,240)
========== ========== ========== ==========
Net loss per share $ (2.66) $ (1.49) $ (7.06) $ (3.35)
========== ========== ========== ==========
Weighted average common shares
outstanding 54,013,338 52,593,191 53,177,175 52,589,921
SELECTED FINANCIAL AND OTHER DATA:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 (1) 1999 1998 (1)
---------- ---------- ---------- ----------
EBITDA (2) $(103,348) $ (56,817) $(271,347) $(124,776)
Cash used in operations (123,890) (29,138) (307,302) (83,122)
Total capital expenditures 46,255 45,778 137,730 111,149
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 (1)
------------------ ----------------------
Cash and cash equivalents $ 227,465 $ 509,478
Total assets 701,616 797,385
Total stockholder's (deficit) equity (300,382) 120,543
Number of employees 2,625 1,133
</TABLE>
(1) Certain amounts in prior year financial statements have been reclassified to
conform to the current year's presentation.
(2) EBITDA (earnings before interest, taxes, depreciation and amortization)
excludes charges for stock-based and other non-cash compensation
