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 June 30, 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 August 4, 2000 was as follows:
Common Stock, Class A 40,254,238
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 June 30, 2000 (unaudited) and December 31, 1999 3
Unaudited Condensed Consolidated Statements of Operations -
for the three and six months ended June 30, 2000 and 1999 4
Unaudited Condensed Consolidated Statements of Cash Flows -
for the six months ended June 30, 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 14
PART II.OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURES
EXHIBIT INDEX
<PAGE>
TELIGENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- ------------
Assets (Unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 160,430 $ 440,293
Short-term investments 130,111 116,610
Accounts receivable, net of allowance
for doubtful accounts of $6,563 and
$2,503, respectively 26,065 12,673
Prepaid expenses and other current assets 27,743 17,914
Restricted cash and investments 21,848 38,224
------------- -----------
Total current assets 366,197 625,714
Property and equipment, net of accumulated
depreciation of $91,325 and $56,404,
respectively 543,268 402,989
Intangible assets, net of accumulated
amortization of $22,552 and $15,979,
respectively 117,859 96,418
International joint ventures and other assets 32,884 6,722
------------- -----------
Total assets $ 1,060,208 $1,131,843
============= ===========
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 60,484 $ 46,994
Accrued trade liabilities 173,952 192,145
Accrued expenses 44,813 43,869
------------- -----------
Total current liabilities 279,249 283,008
Long-term debt 826,612 808,799
Other noncurrent liabilities 3,693 3,165
Series A preferred stock 499,344 478,788
Commitments and contingencies
Stockholders' deficit:
Common stock 600 547
Additional paid-in capital 732,655 519,607
Accumulated deficit (1,281,945) (962,071)
------------- -----------
Total stockholders' deficit (548,690) (441,917)
------------- -----------
Total liabilities and stockholders' deficit $ 1,060,208 1,131,843
============= ===========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
TELIGENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------- ---------------------
2000 1999 2000 1999
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Communications services $ 32,264 $ 3,961 $ 55,328 $ 5,484
Costs and expenses:
Cost of services 86,394 43,638 163,442 77,942
Sales, general and administrative 59,755 50,051 116,636 95,542
Stock-based and other noncash
compensation 8,250 7,937 16,071 15,801
Depreciation and amortization 24,020 10,087 43,149 17,483
----------- ---------- ---------- ----------
Total costs and expenses 178,419 111,713 339,298 206,768
----------- ---------- ---------- ----------
Loss from operations (146,155) (107,752) (283,970) (201,284)
Interest and other income 7,236 4,193 14,313 9,373
Interest expense (25,202) (19,913) (50,217) (39,675)
----------- ---------- ---------- ----------
Net loss (164,121) (123,472) (319,874) (231,586)
Accrued preferred stock
dividends and amortization of
issuance costs (10,335) - (20,619) -
----------- ---------- ---------- ----------
Net loss applicable to common
stockholders $ (174,456)$ (123,472)$ (340,493)$ (231,586)
=========== ========== ========== ==========
Basic and diluted net loss per
common share $ (2.94)$ (2.34)$ (5.95)$ (4.39)
=========== ========== ========== ==========
Weighted average common shares
outstanding 59,362 52,828 57,199 52,752
=========== ========== ========== ==========
</TABLE>
See notes to condensed consolidated financial statements
<PAGE>
TELIGENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------------
2000 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(319,874) $(231,586)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 43,149 17,483
Accretion of senior discount notes
and other amortization 19,660 17,921
Stock-based and other noncash compensation 16,071 15,801
Other (128) 978
Changes in current assets and current
liabilities, net of acquisitions:
Accounts receivable (7,217) (2,664)
Prepaid expenses and other current assets (8,058) (5,356)
Accounts payable 4,477 (920)
Accrued trade liabilities 1,598 7,329
Accrued expenses (4,460) (2,398)
----------- ---------
Net cash used in operating activities (254,782) (183,412)
----------- ---------
Cash flows from investing activities:
Purchase of property and equipment (194,992) (61,257)
Purchase of short-term investments (82,792) (64,343)
Sales of short-term investments 69,334 3,343
Advances to international joint ventures (8,218) -
Cash paid for acquisitions, net of cash acquired (3,849) -
Restricted cash and investments (2,306) 11,052
Other investing activities 824 -
----------- ---------
Net cash used in investing activities (221,999) (111,205)
----------- ---------
Cash flows from financing activities:
Proceeds from common stock offering 190,487 -
Proceeds from exercise of stock options 6,471 3,987
Debt financing costs (40) (529)
Proceeds from long-term debt - 200,000
----------- ---------
Net cash provided by financing activities 196,918 203,458
----------- ---------
Net decrease in cash and equivalents (279,863) (91,159)
Cash and cash equivalents, beginning of period 440,293 416,247
------------ ---------
Cash and cash equivalents, end of period $ 160,430 $ 325,088
============ =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 50,311 $ 31,183
============ =========
Accrued preferred stock dividends and
amortization of issuance costs $ 20,619 $ -
============ =========
</TABLE>
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. As of June 30, 2000, the Company has initiated commercial service
using its SmartWave(TM) networks in 41 markets across the United States.
The Company has established international joint ventures with local
partners in foreign countries. These joint ventures have acquired fixed wireless
spectrum licenses and are in the process of building and operating wireless
connection facilities in foreign countries.
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 ended December 31, 1999
filed with the SEC. The results of operations for the three and six months
ended June 30, 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.
Other Comprehensive Income
For the three and six months ended June 30, 2000 and 1999, the
Company's comprehensive loss approximates its net loss.
Reclassifications
Certain amounts in prior period financial statements have been
reclassified to conform to the current period presentation.
<PAGE>
TELIGENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
3. Supplemental Disclosure of Cash Flow Information
Investing Activities
During the six months ended June 30, 2000 and 1999, the Company
incurred capital expenditures of $175.2 million and $91.5 million, respectively,
of which $30.2 million and $30.3 million, respectively, was accrued and unpaid,
and is not reflected in the accompanying condensed consolidated statements of
cash flows. During the six months ended June 30, 2000, the Company paid $50.0
million to one vendor for capital expenditures that had been accrued in prior
periods.
4. Convertible Redeemable Preferred Stock
The Company has authorized 10,000,000 shares of preferred stock, of
which 519,228 shares and 500,000 shares of its 7 3/4% Series A cumulative
convertible preferred stock, liquidation preference of $1,000 per share, par
value $.01 per share ("Series A Preferred Stock"), were issued and outstanding
at June 30, 2000 and December 31, 1999, respectively.
The Series A Preferred Stock is convertible into the Company's Class A
common stock, par value $.01 per share ("Class A Common Stock"), by the holders
at any time, but may be called by the Company after five years unless converted
to Class A Common Stock. Outstanding shares of Series A Preferred Stock, if any,
must be redeemed in 2014 at a redemption price payable in cash equal to 100% of
the then effective liquidation preference plus accrued and unpaid dividends.
5. Capital Stock
The Company has authorized two classes of common stock, Class A Common
Stock and Class B common stock, par value $.01 per share ("Class B Common
Stock"), consisting of three series, Class B Series 1 common stock ("Series
B-1"), Class B Series 2 common stock ("Series B-2") and Class B Series 3 common
stock ("Series B-3"). The number of shares authorized, issued and outstanding at
June 30, 2000 and December 31, 1999, for each class of common stock is
summarized below:
June 30, December 31,
2000 1999
----------------------------- ----------------------------
Par Shares Shares Issued Shares Shares Issued
Class Value Authorized and Outstanding Authorized and Outstanding
---------- ----- ----------- --------------- ----------- ---------------
A $.01 500,000,000 38,754,201 200,000,000 10,281,667
Series B-1 .01 - - 30,000,000 21,436,689
Series B-2 .01 50,000,000 15,477,210 25,000,000 17,206,210
Series B-3 .01 20,000,000 5,783,400 10,000,000 5,783,400
In January 2000, as a result of Liberty Media Corporation's acquisition
of The Associated Group, Inc., all of the outstanding shares of Class B Series 1
common stock owned by The Associated Group, Inc. were converted into 21,436,689
shares of Class A Common Stock.
<PAGE>
TELIGENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
On May 25, 2000 the Company's shareholders approved an amendment to the
Company's certificate of incorporation increasing the total number of authorized
shares of Class A Common Stock to 500,000,000, eliminating the Series B-1 common
stock and increasing the number of authorized shares of Series B-2 common stock
to 50,000,000 and Series B-3 common stock to 20,000,000. As of June 30, 2000,
the Company filed an amendment to the certificate of incorporation with the
Secretary of State of the State of Delaware as approved by the Company's
shareholders, reflecting the amendments.
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 $190.5 million of net proceeds, after deducting
approximately $9.5 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, of which the Company received no proceeds.
6. Other Transactions
During the six months ended June 30, 2000, the Company acquired a
network equipment integrator and two telephone interconnect sales and service
businesses (the "2000 Transactions"). The combined purchase price of the 2000
Transactions consisted of 663,343 shares of Class A Common Stock valued at $21.8
million at the time of issuance, and cash payments totaling $5.0 million. If
specific earnout provisions, consisting of certain revenue and other benchmark
targets, are met over the next three years, the Company would be obligated to
make up to $1 million of additional cash payments and issue additional shares of
Class A Common Stock totaling up to $10.0 million. The 2000 Transactions were
accounted for as purchases with the majority of the purchase prices being
assigned to acquired intangibles.
On May 9, 2000, the Company announced a comprehensive network services
agreement (the "Network Services Agreement") with Level 3 Communications, Inc.
("Level 3"). Under the Network Services Agreement, the Company will use Level
3's domestic fiber infrastructure to connect the Company's markets and also to
enhance the reach of the Company's local broadband networks within its markets.
7. Subsequent Event
On July 6, 2000, the Company closed an investment in ICG Communications,
Inc. ("ICG"), whereby a subsidiary of the Company acquired 2,996,076 shares of
ICG common stock in exchange for one million shares of Class A Common Stock (the
"ICG Transaction"). The ICG Transaction was approved by shareholders at the
annual meeting held on May 25, 2000. The value of Teligent's investment in ICG
as of the closing date was $62.0 million.
On August 1, 2000, the Company made an additional $350 million draw on
its existing credit facilities. The outstanding loan balance is $550 million
inclusive of this drawdown.
<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. 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 42 market areas that comprise more
than 591 cities and towns with a combined population of more than 102 million
people. We have also established international joint ventures with local
partners in foreign countries. Certain joint ventures have acquired fixed
wireless spectrum licenses and are in the process of building and operating
wireless connection facilities in foreign countries.
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 and Six Months Ended June 30, 2000 Compared to Three and Six Months Ended
June 30, 1999
Teligent's revenues increased by $28.3 million to $32.3 million for
the three months ended June 30, 2000 from $4.0 million for the corresponding
period from 1999 and increased by $49.8 million to $55.3 million for the six
months ended June 30, 2000 from $5.5 million for the corresponding period from
1999. These increases are due to revenue attributable to acquisitions, growth in
our customer base and continued expansion into new markets. As of June 30, 2000,
Teligent served approximately 26,000 customers, compared to approximately 4,000
customers at June 30, 1999. Our revenues are comprised of the following (amounts
in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Local $ 7,140 $ 604 $12,125 $ 784
Long distance 16,527 2,730 29,753 3,766
Data and Integration 8,597 627 13,450 934
------------- ------------- ------------- -------------
Total revenue $32,264 $ 3,961 $55,328 $5,484
============= ============= ============= =============
</TABLE>
<PAGE>
o Local service revenues increased by $6.5 million and $11.3 million
for the three and six month periods ended June 30, 2000,
respectively, compared to the corresponding periods from 1999.
These increases are primarily due to the installation of customer
lines and growth in our customer base, revenue attributable to
acquisitions and continued expansion into new markets.
o Long distance service revenues increased by $13.8 million and
$26.0 million for the three and six month periods ended June 30,
2000, respectively, compared to the corresponding periods from
1999. These increases are a result of revenue attributable to
acquisitions, internal growth in our customer base and continued
expansion into new markets.
o Data and integration service revenues increased by $8.0 million
and $12.5 million for the three and six month periods ended June
30, 2000, respectively, compared to the corresponding periods from
1999. This growth is attributable to acquisitions of companies
that provide data and integration services and internal growth
during 2000.
Cost of services, consisting primarily of telecommunications expenses,
site acquisition and rent expenses and personnel costs, totaled $86.4 million
and $163.4 million for the three and six months ended June 30, 2000,
respectively, compared to $43.6 million and $77.9 million for the corresponding
periods in 1999. These increases are primarily due to the costs of provisioning
higher volumes of telecommunications and data traffic over our networks and the
increased number of market areas to which we initiated service during these
periods. 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 $59.8 million and $116.6 million for the three and
six months ended June 30, 2000, respectively, compared to $50.1 million and
$95.5 million for the corresponding period in 1999. These increases are
primarily attributable to the hiring of additional employees in support of our
anticipated future growth. Additionally, we experienced increases in office rent
related to our continued expansion into new markets.
Stock-based and other noncash compensation expense was $8.3 million and
$16.1 million for the three and six months ended June 30, 2000, respectively,
compared to $7.9 million and $15.8 million for the corresponding periods in
1999. These expenses relate to compensation earned by employees and executives
that are recognized over specified vesting periods.
Depreciation and amortization expense was $24.0 million and $43.1
million for the three and six months ended June 30, 2000, respectively, compared
to $10.1 million and $17.5 million for the corresponding periods in 1999. These
increases are due to significant capital expenditures made during 1999 and 2000
and the amortization of acquired intangibles. We expect depreciation expense to
increase as we continue to build our networks through the installation of
additional telecommunications equipment and data centers.
<PAGE>
Interest and other income was $7.2 million and $14.3 million for the
three and six months ended June 30, 2000, respectively, compared to $4.2 million
and $9.4 million for the corresponding periods in 1999. These increases are due
to higher average cash and cash equivalent balances in 2000 resulting from the
proceeds received from the November 1999 offering of Series A Preferred Stock
and the April 2000 common stock offering. Additionally, we received $1.3 million
from a copyright infringement settlement that was completed during the second
quarter of 2000.
Interest expense was $25.2 million and $50.2 million for the three and
six months ended June 30, 2000, respectively, compared to $19.9 million and
$39.7 million for the corresponding period in 1999. These increases are due to
higher long-term debt balances resulting from borrowings made against Teligent's
existing credit facilities 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 June 30, 2000, we had working capital of $86.9 million that includes
unrestricted cash and cash equivalents of $160.4 million, compared to working
capital of $342.7 million that includes unrestricted cash and cash equivalents
of $440.3 million at December 31, 1999. The decrease in working capital is a
result of lower cash and cash equivalent levels due to increased operating costs
and capital expenditures as we continue to expand our service to new markets and
to provide service to new customers within existing markets. We will need a
significant amount of cash to continue 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 and
short-term investments together with the credit facilities will provide
sufficient funds to carry out our current business plan into early 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 $1,060.2 million at June 30, 2000, as lower cash and cash equivalent balances
were partially offset by higher short-term investment and property and equipment
balances and advances to international joint ventures, including funding of
performance bonds and other costs of the joint ventures. Property and equipment,
net of accumulated depreciation, was $543.3 million at June 30, 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,
partially offset by increased accumulated depreciation.
We used cash in operations of $254.8 million for the six months ended
June 30, 2000, consisting primarily of the operating loss for the period,
partially offset by depreciation, amortization and stock-based and other noncash
compensation. For the same period in 1999, we used cash in operations of $183.4
million, due primarily to the operating loss for the period partially offset by
stock-based and other noncash compensation, depreciation, amortization and other
charges.
<PAGE>
We used $222.0 million of cash in investing activities for the six
months ended June 30, 2000, primarily relating to the purchase of property,
equipment and short-term investments and advances to international joint
ventures. For the same period in 1999, we used $111.2 million primarily for the
purchase of property and equipment and short-term investments.
Cash flows provided by financing activities for the six months ended
June 30, 2000 were $196.9 million, consisting primarily of proceeds from the
common stock offering held in April 2000 and the exercise of employee stock
options. For the same period in 1999, cash flows from financing activities were
$203.5 million consisting primarily of net proceeds from a $200 million drawdown
of our credit facility and the exercise of employee stock options.
<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
facilities. At June 30, 2000, we had an outstanding loan balance of $200 million
under our credit facilities, which incurs interest at a floating rate tied to a
LIBOR or an alternate base rate. The outstanding balance under our credit
facilities represents approximately 25% of our outstanding long-term debt.
During August 2000, we made an additional $350 million draw on our credit
facilities, resulting in a $550 million outstanding loan balance.
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
During the second quarter, the Company issued an aggregate of 663,343
shares of Class A Common Stock in connection with the acquisition of two
telephone interconnect sales and service businesses. Such shares were issued to
various individuals in exchange for the outstanding capital shares of the target
companies. All shares of Class A Common Stock issued in this transaction were
issued pursuant to an exemption from the registration requirements of the
Securities Act of 1933 Act, under Section 4(2) of the 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 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on May 25, 2000.
Following are descriptions of the matters voted on and the results of such
meeting:
Number of Shares
----------------
Matters Voted On For Withheld
--- --------
1. Election of Directors:
Alex J. Mandl 63,298,445 63,976
David J. Berkman 63,298,445 63,976
Gary Howard 63,291,445 70,976
Neera Singh 63,298,445 63,976
Carl Vogel 63,298,445 63,976
Broker
For Against Abstain Non-Vote
--- ------- ------- --------
2. Approval of an amendment
to the 1997 Stock Incentive
Plan to increase the
number of shares of Class A
Common Stock reserved for
issuance thereunder
by 5,000,000 shares. 56,448,418 2,993,862 26,093 3,894,048
3. Approval of an amendment to
increase the number of
authorized shares of
Class A Common Stock from
200,000,000 to 500,000,000. 61,650,046 1,689,183 23,192 -
<PAGE>
4. Approval of an amendment to
eliminate the Class B-Series 1
Common Stock and to increase the
number of authorized shares of
Class B-Series 2 Common Stock
from 25,000,000 to 50,000,000
and Class B-Series 3 Common
Stock from 10,000,000 to
20,000,000. 61,752,057 1,558,263 52,101 -
5. Approval of the sale by a
subsidiary of 1,000,000 shares
of Class A Common Stock to a
subsidiary of ICG Communications,
Inc. in exchange for 2,996,076
shares of ICG Communications,
Inc. common stock. 37,717,675 293,879 20,130 3,894,048
6. Proposal to ratify the appointment
of Ernst and Young LLP as the
Company'sindependent auditors for
the year ended December 31, 2000. 63,311,984 30,059 20,378 -
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3.1) Certificate of Incorporation of Registrant, as
amended and currently in effect
(10.1) Promissory Note, dated May 5, 2000 by Hamid Akhavan
to Teligent Services, Inc.
(27) Teligent, Inc. Financial Data Schedule
(99.1) Teligent, Inc. Press Release dated August 8, 2000
(b) Reports on Form 8-K
Item
Date of Report Reported Financial Statements Filed
-------------- -------- --------------------------
April 7, 2000 Item 7 - None
Financial Statements,
Pro Forma Financial
Information and Exhibits
<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: August 11, 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
3.1 Certificate of Incorporation of Registrant, as amended and
currently in effect
10.1 Promissory Note, dated May 5, 2000 by Hamid Akhavan to
Teligent Services, Inc.
27 Financial Data Schedule for the six months ended June 30,
2000.
99.1 Press release of Teligent, Inc. dated August 8, 2000.
