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 March 31, 2000.
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 May 9, 2000 was as follows:
Common Stock, Class A 38,123,727
Common Stock, Class B 21,260,610
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
As of March 31, 2000 (unaudited) and December 31, 1999 3
Unaudited Condensed Consolidated Statements of Operations -
for the three months ended March 31, 2000 and 1999 4
Unaudited Condensed Consolidated Statements of Cash Flows -
for the three months ended March 31, 2000 and 1999 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Item 3. Quantitative and Qualitative Disclosure About Market Risk 13
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES
EXHIBIT INDEX
<PAGE>
TELIGENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2000 1999
------------- -------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 144,782 $ 440,293
Short-term investments 141,152 116,610
Accounts receivable, net of allowance
for doubtful accounts of $5,219 and
$2,503, respectively 16,683 12,673
Prepaid expenses and other current assets 17,156 17,914
Restricted cash and investments 38,700 38,224
------------ -----------
Total current assets 358,473 625,714
Property and equipment, net of accumulated
depreciation of $73,392 and $56,404,
respectively 476,134 402,989
Intangible assets, net of accumulated
amortization of $19,422 and $15,979,
respectively 102,716 96,426
Other assets 32,970 6,714
------------ -----------
Total assets $ 970,293 $1,131,843
============ ===========
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 51,823 $ 46,994
Accrued trade liabilities 155,917 192,145
Accrued interest and other 42,832 43,869
----------- -----------
Total current liabilities 250,572 283,008
Long-term debt 817,554 808,799
Other noncurrent liabilities 3,427 3,165
Series A preferred stock 489,073 478,788
Commitments and contingencies
Stockholders' deficit:
Common stock 553 547
Additional paid-in capital 526,938 519,607
Accumulated deficit (1,117,824) (962,071)
------------ -----------
Total stockholders' deficit (590,333) (441,917)
------------ -----------
Total liabilities and stockholders' deficit $ 970,293 $1,131,843
=========== ===========
See notes to condensed consolidated financial statements
<PAGE>
TELIGENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
Three months ended March 31,
----------------------------
2000 1999
---------- ----------
Revenues:
Communications and integration services $ 23,064 $ 1,523
Costs and expenses:
Cost of services 77,360 34,519
Sales, general and administrative 56,569 45,276
Stock-based and other noncash compensation 7,821 7,864
Depreciation and amortization 19,129 7,396
---------- ----------
Total costs and expenses 160,879 95,055
---------- ----------
Loss from operations (137,815) (93,532)
Interest and other income 7,077 5,181
Interest expense (25,015) (19,761)
---------- ----------
Net loss (155,753) (108,112)
Accrued preferred stock dividends and
amortization of issuance costs (10,284) -
----------- -----------
Net loss applicable to common stockholders $ (166,037) $ (108,112)
=========== ===========
Basic and diluted net loss per common share $ (3.02) $ (2.05)
=========== ===========
Weighted average common shares outstanding 55,023 52,675
=========== ===========
See notes to condensed consolidated financial statements
<PAGE>
TELIGENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three months ended March 31,
----------------------------
2000 1999
------------ ----------
Cash flows from operating activities:
Net loss $(155,753) $(108,112)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 19,129 7,396
Accretion of senior discount notes
and other amortization 9,760 8,883
Stock-based and other noncash compensation 7,821 7,864
Other (212) (486)
Changes in current assets and current
liabilities, net of acquisition:
Accounts receivable (2,391) (347)
Prepaid expenses and other current assets 2,147 (7,048)
Accounts payable (959) (1,199)
Accrued trade liabilities 189 3,608
Accrued interest and other (485) 4,398
---------- ----------
Net cash used in operating activities (120,754) (85,043)
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment (125,671) (31,546)
Purchases of short-term investments (53,373) -
Sales of short-term investments 28,831 -
Spectrum auction deposit (24,408) -
Advances to joint ventures (5,387) -
Cash paid for acquisitions, net of cash acquired (732) -
Restricted cash and investments (476) (5,958)
Other investing activities 1,395 -
---------- ----------
Net cash used in investing activities (179,821) (37,504)
---------- ----------
Cash flows from financing activities:
Proceeds from exercise of stock options 5,710 769
Debt financing costs (646) (31)
---------- ----------
Net cash provided by financing activities 5,064 738
---------- ----------
Net decrease in cash and equivalents (295,511) (121,809)
Cash and cash equivalents, beginning of period 440,293 416,247
---------- ----------
Cash and cash equivalents, end of period $ 144,782 $ 294,438
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 16,382 $ 11,136
========== ==========
Accrued preferred stock dividends to be paid in
kind and amortization of issuance costs $ 10,284 $ -
========== ==========
See notes to condensed consolidated financial statements
<PAGE>
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 business customers local and
long-distance, high-speed data and dedicated Internet access services over the
Company's digital SmartWave(TM) local networks and also provides network
integration services. The Company's SmartWave(TM) local networks integrate
advanced fixed wireless technologies with traditional broadband wireline
technology. The Company has initiated commercial service using its SmartWave(TM)
networks in 40 markets across the United States.
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, 1999
filed with the SEC. The results of operations for the three months ending March
31, 2000 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 three months ended March 31, 2000 and 1999, the Company
incurred capital expenditures of $90.1 million and $56.7 million, respectively,
of which $14.4 million and $25.2 million, respectively, was accrued and unpaid,
and is not reflected in the accompanying condensed consolidated statements of
cash flows. During the three months ended March 31, 2000, the Company paid $50.0
million to one vendor for capital expenditures that had been accrued in prior
periods.
<PAGE>
TELIGENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
4. Convertible Redeemable Preferred Stock
The Company has authorized 10,000,000 shares of preferred stock, par
value $.01 per share, liquidation preference of $1,000 per share, of which
509,370 shares and 500,000 shares are issued and outstanding at March 31, 2000
and December 31, 1999, respectively.
5. Capital Stock
The Company has authorized two classes of common stock, the Company's
Class A Common Stock and Class B Common Stock, as defined below. The rights of
the two classes of common stock are substantially identical, except that until
the number of shares held by holders of the respective series of Class B Common
Stock fall below certain thresholds, such holders will have the right to elect
two directors to the Company's Board of Directors. As a result of Liberty Media
Corporation's ("Liberty Media") acquisition of The Associated Group, Inc. on
January 14, 2000, all of the shares of Series B-1 Common Stock (defined below)
were converted into 21,436,689 shares of Class A Common Stock. Liberty Media has
the right to elect three directors pursuant to the terms of a Stockholders
Agreement, dated as of January 13, 2000, by and among Alex J. Mandl, Liberty
Media Corporation, Telcom-DTS Investors, L.L.C. and Microwave Services, Inc.
(the "Stockholders Agreement"). Telcom Ventures also has the right to elect an
additional director pursuant to the terms of the Stockholders Agreement.
The number of shares authorized, issued and outstanding at March 31,
2000 and December 31, 1999, for each class of stock is summarized below:
Shares Issued
and Outstanding
------------------------------
Par Shares March 31, December 31,
Class Value Authorized 2000 1999
- ---------- ----- ----------- ---------- ----------
A $.01 200,000,000 33,061,261 10,281,667
Series B-1 .01 30,000,000 - 21,436,689
Series B-2 .01 25,000,000 16,477,210 17,206,210
Series B-3 .01 10,000,000 5,783,400 5,783,400
<PAGE>
TELIGENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
6. Other Transactions
On February 17, 2000, the Company acquired a network equipment
integrator (the "First Quarter Transaction"). The purchase price of the First
Quarter Transaction consisted of 39,131 shares of Class A Common Stock valued at
$3.2 million, and cash payments totaling $0.8 million. Earnout provisions could
result in cash payments and the issuance of additional shares of Class A Common
Stock totaling $6.0 million based on the market price of the Company's Class A
Common Stock when specific earn-out conditions are met over the next three years
if certain revenue and other benchmarks are achieved. The First Quarter
Transaction was accounted for as a purchase with the majority of the purchase
price being assigned to acquired intangibles.
In February 2000, the Company and two of its major shareholders
entered into agreements to make investments in ICG Communications, Inc. A
subsidiary of Teligent will acquire nearly three million shares of ICG stock in
exchange for one million shares of Teligent common stock in an all
stock-transaction (the "ICG Transaction"). The closing of the ICG Transaction,
which is expected to occur during the second quarter of 2000, is subject to
shareholder approval at the Company's annual meeting of shareholders to be held
on May 25, 2000, and satisfaction of other closing conditions.
7. Subsequent Events
In April 2000, the Company completed an underwritten offering of
4,000,000 shares of Class A Common Stock at a price of $50 per share, from which
the Company raised approximately $190.7 million of net proceeds, after deducting
approximately $9.3 million of offering expenses. In addition, one of the
Company's stockholders sold 1,000,000 shares of Class A Common Stock, at a price
of $50 per share. The Company received no proceeds from the selling
stockholder's transaction.
<PAGE>
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 1999
Annual Report on Form 10-K for the fiscal year ended December 31, 1999. The
words "anticipate," "believe," "estimate," "expect," "plan," "intend" and
similar expressions, as they relate to the Company, are intended to identify
forward-looking statements. Such statements reflect our current views with
respect to future events and involve known and unknown risks, uncertainties and
other factors. The Company cannot be sure that any of its expectations will be
realized. Factors that may cause actual results, performance or achievements of
the Company, or industry results, to differ materially from those contemplated
by such forward-looking statements, include, without limitation: (1) the
Company's ability to meet its existing debt service obligations and the
availability of additional funds to pursue the Company's business plan; (2) the
Company's pace of entry into new domestic and international market areas and the
ability to secure building access; (3) the Company's success in obtaining
spectrum licenses in international markets and the ability of the Company to
negotiate definitive agreements with its international joint venture partners;
(4) the time and expense required to build the Company's planned network; (5)
the Company's ability to integrate and maintain internal management, technical
information and accounting systems; (6) the Company's ability to hire and retain
qualified personnel to operate its business; (7) the impact of changes in
telecommunication laws and regulations; (8) the Company's success in gaining
regulatory approval for its products and services, when required; (9) the
Company's ability to successfully interconnect with the incumbent carriers; (10)
the timely supply of necessary equipment; (11) the Company's ability to adjust
to rapid changes in technology and to prevent misappropriation of its
technology; (12) the intensity of competition in the markets in which we provide
service and the Company's ability to attract and retain a sufficient number of
revenue-generating customers in such markets; and (13) general economic
conditions and the condition of the financial markets, particularly within the
communications and technology sectors which have historically been more volatile
than the markets generally. 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, 1999, included in our Annual Report on Form 10-K.
<PAGE>
Overview
Teligent offers business customers local, long distance, high-speed
data and dedicated Internet services over our digital SmartWave(TM) local
networks and also provides network integration services. Our SmartWave(TM) local
networks integrate fixed 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 40 market areas that comprise more than 580 cities and towns with a combined
population of more than 100 million people.
Our losses, as well as our negative operating cash flow, have been
significant to date, and we expect both to continue for several years until we
develop a customer base that will generate sufficient revenues to fund operating
expenses. After we initiate service in most of our market areas, we expect to
have positive operating margins over time by increasing the number of customers
and selling them additional capacity or services without significantly
increasing related capital expenditures, costs of building access rights and
other operating costs. Our ability to generate positive cash flow will depend in
part on the extent of capital expenditures in current and new market areas,
including international expansion, 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.
Results of Operations
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
We generated revenue from providing communications and integration
services of $23.1 million for the three months ended March 31, 2000, compared to
$1.5 million for the corresponding period in 1999. The increase in revenues is
reflective of, among other things, the growth in our customer base and expansion
into new markets during 1999.
Cost of services, consisting primarily of personnel-related costs,
telecommunications expenses and site rent and site acquisition expenses related
to network operations, totaled $77.4 million for the three months ended March
31, 2000, compared to $34.5 million for the corresponding period in 1999. This
increase reflects the growth and development of our network operations to serve
40 major market areas and the increased number of employees from 1999 to 2000.
We expect that our cost of services will continue to increase in accordance with
our growth strategy.
Sales, general and administrative expenses, consisting primarily of
personnel-related costs, were $56.6 million for the three months ended March 31,
2000, compared to $45.3 million for the corresponding period in 1999. This
increase primarily results from higher compensation and other personnel costs
incurred during 2000 due to the increased number of employees required to drive
our future growth.
Stock-based and other noncash compensation expense was $7.8 million for
the three months ended March 31, 2000, compared to $7.9 million for the
corresponding period in 1999.
<PAGE>
Depreciation and amortization expense was $19.1 million for the three
months ended March 31, 2000, compared to $7.4 million for the corresponding
period in 1999. This increase is due to higher capital expenditures in 1999 and
2000 and the amortization of acquired intangibles associated with acquisitions.
We expect depreciation and amortization expense to increase in future quarters
as we further implement our growth strategy.
Interest and other income was $7.1 million for the three months ended
March 31, 2000, compared to $5.2 million for the corresponding period in 1999.
This increase is due to higher average cash and cash equivalent balances in 2000
as a result of the proceeds received from the Series A Preferred Stock offering.
Interest expense was $25.0 million for the three months ended March 31,
2000, compared to $19.8 million for the corresponding period in 1999. This
increase is due to higher long-term debt balances resulting from borrowings made
against the Credit Facility during 1999 and the amortization of credit facility
fees and interest incurred on the 11 1/2% Series B Discount Notes due 2008
issued in February 1998.
Liquidity and Capital Resources
Historical Cash Flows
At March 31, 2000, we had working capital of $107.9 million that
includes unrestricted cash and cash equivalents of $144.8 million, compared to
working capital of $342.7 million including unrestricted cash and cash
equivalents of $440.3 million at December 31, 1999. The decrease in working
capital is primarily a result of lower cash and cash equivalent levels due to
increased operating costs and capital expenditures as we implement our growth
strategy. We will need a significant amount of cash to build our networks, both
domestically and internationally, market our services and cover operating
expenditures. Although we anticipate our existing cash and cash equivalents on
hand, together with the credit facilities and proceeds from the April 2000
offering of Class A Common 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 facilities, financing under our existing shelf
registration statement 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 $1,131.8 million at December 31, 1999
to $970.3 million at March 31, 2000, as lower cash and cash equivalent balances
were partially offset by higher short-term investment and property and equipment
balances. Property and equipment, net of accumulated depreciation, was $476.1
million at March 31, 2000 compared to $403.0 million at December 31, 1999. This
increase was due to capital expenditures related to the growth and development
of our network operations.
We used cash in operations of $120.8 million for the three months ended
March 31, 2000, due to the operating loss for the period and the decrease in
accrued trade liabilities, partially offset by depreciation and amortization and
stock-based and other noncash compensation. For the same period in 1999, we used
cash in operations of $85.0 million, due primarily to the operating loss for the
period offset primarily by stock-based and other noncash compensation.
<PAGE>
We used $179.8 million of cash in investing activities for the three
months ended March 31, 2000, primarily relating to the purchase of property and
equipment, the deposit of funds for spectrum auctions and licensing acquisition
costs and the purchase of short-term investments. For the same period in 1999,
we used $37.5 million for the purchase of property and equipment and the
purchase of certificates of deposit used to secure letters of credit.
Cash flows provided by financing activities for the three months ended
March 31, 2000 were $5.1 million, consisting primarily of proceeds from the
exercise of employee stock options. For the same period in 1999, cash flows from
financing activities were $0.7 million consisting primarily of net proceeds from
the exercise of employee stock options.
Recent Developments
ICG Transaction
In February 2000, the Company and two of its major shareholders entered
into agreements to make investments in ICG Communications, Inc. A subsidiary of
Teligent will acquire nearly three million shares of ICG stock in exchange for
one million shares of Teligent common stock in an all stock-transaction. The
closing of the ICG Transaction, which is expected to occur during the second
quarter of 2000, is subject to shareholder approval at the Company's annual
meeting of shareholders to be held on May 25, 2000, and satisfaction of other
closing conditions.
Common Stock Offering
In April 2000, the Company completed an underwritten offering of
4,000,000 shares of Class A Common Stock at a price of $50 per share, from which
the Company raised approximately $190.7 million of net proceeds, after deducting
approximately $9.3 million of offering expenses. In addition, one of the
Company's stockholders sold 1,000,000 shares of Class A Common Stock, at a price
of $50 per share. The Company received no proceeds from the selling
stockholder's transaction.
Network Services Agreement with Level 3 Communications Inc. ("Level 3")
On May 9, 2000, the Company announced a comprehensive network services
agreement with Level 3. Under the agreement, the Company will leverage Level 3's
domestic fiber infrastructure to connect the Company's markets and also to
enhance the Company's reach of its local broadband networks within markets.
<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 March 31, 2000, 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.
The Company also maintains securities with an original maturity of
greater than 90 days, but less than one year. These securities are classified as
"available for sale". An immediate increase or decrease in interest rates could
have a material impact on the fair value of these financial instruments or on
our short-term investment portfolio.
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.
<PAGE>
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On February 17, 2000, the Company issued an aggregate of 39,131 shares
of Class A Common Stock in connection with the acquisition of a network
equipment integrator. Such shares were issued to various individuals in exchange
for the outstanding capital shares of the target company. In addition, the
Company may issue additional shares of its Class A Common Stock, valued at $6.0
million in the aggregate, to the same individuals through February 28, 2003,
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 First Quarter Transaction were issued pursuant to an exemption
from the registration requirements of 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 company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Teligent, Inc. Financial Data Schedule
(99.1) Teligent, Inc. Press Release dated May 10, 2000
(b) Reports on Form 8-K
Item Financial
Date of Report Reported Statements Filed
-------------- -------- ----------------
January 18, 2000 Item 1 - None
Changes in
Control of
Registrant
<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: May 12, 2000 By: /s/ Cindy L. Tallent
---------------------------
Cindy L. Tallent
Acting Chief Financial Officer
and Treasurer, Senior Vice
President and Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
27 Financial Data Schedule for the three months ended March 31, 2000.
99.1 Press release of Teligent, Inc. dated May 10, 2000.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial data information extracted from
the condensed consolidated balance sheet for the period ended March 31, 2000 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 144,782
<SECURITIES> 141,152
<RECEIVABLES> 21,902
<ALLOWANCES> 5,219
<INVENTORY> 0
<CURRENT-ASSETS> 358,473
<PP&E> 549,526
<DEPRECIATION> 73,392
<TOTAL-ASSETS> 970,293
<CURRENT-LIABILITIES> 250,572
<BONDS> 817,554
489,073
0
<COMMON> 553
<OTHER-SE> (590,886)
<TOTAL-LIABILITY-AND-EQUITY> 970,293
<SALES> 0
<TOTAL-REVENUES> 23,064
<CGS> 0
<TOTAL-COSTS> 77,360
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,015
<INCOME-PRETAX> (155,753)
<INCOME-TAX> 0
<INCOME-CONTINUING> (155,753)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (155,753)
<EPS-BASIC> (3.02)
<EPS-DILUTED> (3.02)
</TABLE>
EXHIBIT 99.1
CONTACTS: FOR IMMEDIATE RELEASE
Media Investors
Robert W. Stewart Mike Kraft
Voice: 703-762-5175 Voice: 703-762-5359
Pager: 888-996-8478 Pager: 800.981.5994
[email protected] [email protected]
Teligent reports $23m in first quarter revenue;
completes core Internet infrastructure
Revenue up 50 percent from fourth quarter; 1,400 percent year over year
VIENNA, VA., May 9, 2000 - Teligent, a global leader in broadband
communications, today reported revenue of $23.1 million for the quarter ending
March 31, a 50 percent increase over the $15.5 million in revenue for the fourth
quarter of 1999 and a 1,400 percent gain year-over-year.
The company also announced that it has completed construction of its core
Internet infrastructure, with major data centers up and running in Washington,
DC and Chicago. A third data center in the San Francisco Bay Area is scheduled
to go on-line in the coming weeks.
Teligent-owned Internet facilities today are carrying data traffic for the
company's newest Internet customers and hosting more than 500 Internet domains.
In addition, the company has begun the migration of existing customers to the
new infrastructure. To date, Teligent has deployed more than 135 data switches
and routers in its local broadband communications networks, which are
operational in 40 markets throughout the country.
Teligent's recently announced network agreement with Level 3 Communications,
Inc., which gives the company access to national and metropolitan fiber optic
facilities, will further enhance Teligent's end-to-end, facilities-based
Internet architecture.
"Teligent achieved broad-based success during the first quarter," said Chairman
and Chief Executive Officer Alex J. Mandl. "We grew revenue 50 percent quarter
over quarter and more than 13-fold year over year. We announced major
international progress, either spectrum wins or new partnerships, in Hong Kong,
Germany, France, Spain and Argentina.
"We grew our customer base by 20 percent, increased our line count by more than
25 percent and connected more than 600 new, on-net buildings to our local
networks," Mandl added.
"In addition, we grew local lines by 60 percent and increased data sales by 80
percent," Mandl said. "With the completion of our core Internet infrastructure,
Teligent will take full advantage of the opportunities offered by the burgeoning
data marketplace."
Teligent ended the first quarter with 17,647 customers, up nearly 20 percent
from the customer base at the end of the fourth quarter.
The company added 58,000 new lines during the quarter, bringing total lines to
more than 286,000. Teligent provisioned 20,000 new local lines, a 60 percent
increase over the number of local lines provisioned at the end of 1999.
During the quarter, Teligent increased by 25 percent the number of buildings
connected to its local, SmartWave(TM) communications networks, bringing the
total number of on-net buildings to 3,104. Of that total, about half were
equipped with wireless installations.
In the first three months of the year, Teligent added more than 1,100 buildings
to its portfolio of real estate under lease or option, raising the number of
buildings to which Teligent has access rights by 15 percent, to 8,693.
The Teligent sales force stood at 547 reps at the end of the first quarter, up
65 percent from the first quarter of 1999. Measured in full time equivalent reps
with a minimum of three months' experience, the sales force grew to 408 from 127
during the same year-over-year period.
The number of new customers taking data services grew by 80 percent over the
fourth quarter. Nearly 50 percent of new customers took local service, 90
percent took long distance and nearly half took a bundle of services. Data sales
per new customer, measured in dollars, rose 20 percent over the fourth quarter.
"The growth of our data sales reflects our continuing commitment to extend our
services past the customer's telco closet and Internet firewall so that we can
deliver bandwidth straight to the desktop - and the laptop," said Teligent
President and Chief Operating Officer Buddy Pickle.
"With the completion of our first two data centers, and the addition of national
fiber capacity to our portfolio, we now have in place the tools we need launch
full-scale, end-to-end Internet services over our own national data network,"
Pickle said.
"We built each of our 40 local SmartWave networks on an ATM platform so we can
handle data and voice with equal agility. The addition of two new national data
centers and a national fiber backbone means we can provide our customers with a
much wider range of service at a much lower cost with much greater control over
quality."
Pickle also noted Teligent's recent announcement that it has developed, in
conjunction with San Diego-based REMEC, a new device that will significantly
expand the reach of its local fixed wireless networks. "The addition of the
active antenna repeater to our toolbox means we will be able to reach
approximately 30 percent more buildings with our Teligent base stations, at a
very minimal cost," Pickle said.
Teligent reported a net loss of $156 million for the first quarter, compared to
$154 million for the fourth quarter of 1999. Capital expenditures for the first
quarter were $90 million, compared to $124 million in the fourth quarter. As of
March 31, the company reported available cash and short-term investments of $286
million and total assets of $970 million, compared to $557 million and $1.1
billion, respectively, at year-end 1999.
"With $191 million in net proceeds from the secondary offering we concluded
early last month, coupled with our remaining credit facility, Teligent continues
to be funded well above the one billion dollar mark," said Acting Chief
Financial Officer Cindy Tallent. "We have the liquidity and the flexibility we
need to continue building our growing business."
During the quarter, Teligent made significant progress on the international
front, making the following announcements:
o A partnership in Germany with Mannesmann Arcor, the telecommunications
subsidiary of industrial giant Mannesmann AG. By utilizing Teligent's
German licenses in the 26 GHz band and Mannesmann Arcor's licenses in the
26 GHz and 3.5 GHz bands, the joint venture will have access to
approximately 40 percent of German businesses. The partnership intends to
leverage Mannesmann Arcor's 4,200-mile fiber optic backbone as it builds
out its fixed wireless networks.
o A spectrum award in Hong Kong to a joint venture with HKNet Co. Ltd., one
of the largest Internet service providers in Hong Kong, and CCT Telecom
Holdings, Ltd., an integrated communications company with operations in
Hong Kong and China. The joint venture was awarded a market-wide spectrum
license to offer communications services to businesses and residences
throughout Hong Kong.
o A spectrum award in Spain with Teligent's Spanish partner, competitive
communications company Jazztel, which is building state-of-the art backbone
and local fiber optic networks in major markets throughout Spain. The
Teligent-Jazztel partnership has been awarded one of three national
licenses to provide communications services throughout Spain using the 26
GHz band.
o A partnership in Argentina with Telcom Ventures, a U.S.-based wireless
pioneer that has licenses to build fixed wireless networks in the 24-25 GHz
band in Argentina's major markets, including Buenos Aires. The licenses
cover approximately 60 percent of Argentina's businesses.
o A partnership in France with LD COM, the telecommunications arm of the $20-
billion Louis Dreyfus Group, and Artemis, a global investment holdings
company. One of France's best-known communications brands, LD COM has built
a fiber backbone covering much of the country. The joint venture has
applied for licenses in the 24.5 - 26.5GHz band to serve businesses in the
major French markets.
About Teligent's broadband networks
Teligent's local communications networks represent the integration of the latest
advances in high-frequency microwave technology with traditional broadband
wireline equipment. Together these technologies enable Teligent to increase its
local network efficiency and significantly lower network costs.
Teligent delivers fixed wireless services by installing small antennas on the
roofs of customer buildings. When a customer makes a telephone call or accesses
the Internet, the voice, data or video signals travel over the building's
internal wiring to the rooftop antenna. These signals are then digitized and
transmitted to a "base station" antenna on another building, usually less than
three miles away.
Each base station antenna gathers signals from a cluster of surrounding customer
buildings, aggregates the signals and then routes them to a broadband switching
center. At the switching center, ATM (Asynchronous Transfer Mode) switches and
data routers distribute the traffic to other networks, such as public
circuit-switched voice networks, packet-switched Internet and private data
networks.
About Teligent
Based in Vienna, Virginia, Teligent, Inc. (NASDAQ: TGNT) is a global leader in
broadband communications offering business customers local, long distance,
high-speed data and dedicated Internet services over its digital SmartWave(TM)
local networks in 40 major markets throughout the United States. The company is
working with international partners to extend its reach into Europe, Asia and
Latin America. Teligent's offerings of regulated services are subject to all
applicable regulatory and tariff approvals.
For more information, visit the Teligent website at: www.teligent.com
----------------
Teligent and SmartWave are the exclusive 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.
TELIGENT, INC.
Financial Highlights
(amounts in thousands, except per share, share amounts, and number of employees)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------------------------
March 31, 2000 December 31, 1999(1) March 31, 1999 (1)
-------------- -------------------- ------------------
<S> <C> <C> <C>
Revenues:
Communications services $ 23,064 $ 15,499 $ 1,523
Costs and expenses:
Cost of services 77,360 73,112 34,519
Sales, general and
administrative expenses 56,569 52,862 45,276
Stock-based and other
non-cash compensation 7,821 7,820 7,864
Depreciation and
amortization expense 19,129 15,439 7,396
---------- ---------------- -----------
Total costs and
expenses 160,879 149,233 95,055
---------- ---------------- -----------
Loss from operations (137,815) (133,734) (93,532)
Interest income and other 7,077 4,470 5,181
Interest expense (25,015) (24,424) (19,761)
----------- ---------------- -----------
Net loss (155,753) (153,688) (108,112)
----------- ---------------- -----------
Accrued preferred stock
dividends and accretion
of issuance costs (10,284) (2,906) -
---------- ----------------- -----------
Net loss applicable to
common shareholders $ (166,037) $ (156,594) $ (108,112)
============ ================ =============
Basic and diluted net
loss per common share $ (3.02) $ (2.89) $ (2.05)
============ ================ =============
Weighted average common
shares outstanding 55,022,514 54,253,722 52,674,601
<PAGE>
Selected Financial and Other Data:
<CAPTION>
Three Months Ended
---------------------------------------------------------
March 31, 2000 December 31, 1999(1) March 31, 1999 (1)
-------------- -------------------- ------------------
<S> <C> <C> <C>
EBITDA (2) $ (110,865) $ (110,475) $ (78,272)
Cash used in operations $ (120,754) (86,602) (85,043)
Total capital expenditures 90,133 124,393 56,703
<CAPTION>
March 31, 2000 December 31, 1999(1)
-------------- --------------------
<S> <C> <C>
Cash and cash equivalents $ 285,934 $ 556,903
Total assets 970,293 1,131,843
Total stockholder's (deficit) equity (590,333) (441,917)
Number of employees 2,879 2,822
</TABLE>
(1)Certain amounts in prior year financial statements have been
reclassified to conform to the current year's presentation. EBITDA (earnings
before interest, taxes, depreciation and amortization) excludes charges for
stock-based and other non-cash compensation
