UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
X TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Commission File Number 333-40495)
ICG FUNDING, LLC
(Exact name of registrant as specified in its charter)
Delaware 84-1434980
(State or other jurisdiction (I.R.S. Employer Identification No.)
of organization)
161 Inverness Drive West
Englewood, Colorado 80112
(888) 424-1144 or (303) 414-5000
(Address of principal executive offices and registrant's
telephone numbers, including area codes)
ICG Funding, LLC has no securities registered pursuant to Sections 12(b) or
12(g) of the Act.
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. [X]Yes [ ]No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
All of the issued and outstanding common securities of ICG Funding, LLC are
owned by ICG Communications, Inc.
<PAGE>
TABLE OF CONTENTS
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . 3
Overview . . . . . . . . . . . . . . . . . . . . . . . . . 3
Key Transactions During Fiscal 1998 . . . . . . . . . . . 3
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . 4
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . 4
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . 4
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SECURITYHOLDER MATTERS. . . . . . . . . . . . . . . . . 5
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . 6
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . 7
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK . . . . . . . . . . . . . . . . . . . . . . . . . 12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . 12
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL
DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . 12
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT . . . . 13
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . 13
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . 13
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . 13
PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . 14
Financial Statements. . . . . . . . . . . . . . . . . . . . 14
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . 15
Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . 15
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . F-1
2
<PAGE>
PART I
ITEM 1. BUSINESS
Overview
ICG Funding, LLC (the "Company") is a special purpose limited liability
company formed on September 17, 1997 under the laws of the State of Delaware.
The Company's principal executive offices are located at 161 Inverness Drive
West, Englewood, Colorado 80112.
Pursuant to the terms of the Limited Liability Company Agreement of the
Company, as amended and restated, dated as of September 23, 1997 (the "LLC
Agreement"), the Company was formed solely for the purposes of: (i) issuing
common and preferred interests in the Company; (ii) using at least 85% of the
net proceeds of such issuances and related capital contributions (the "Net
Proceeds") to purchase shares of preferred stock of ICG Communications, Inc.
("ICG") ("ICG Preferred Stock") in a private placement; (iii) investing a
portion of the remaining Net Proceeds in U.S. Treasury securities, to be held in
escrow in an amount sufficient to fund the cash payments of the first thirteen
quarterly dividends on the Company's preferred interests (the "Redeemable
Preferred Securities"); and (iv) purchasing U.S. Treasury securities pending the
purchase of shares of ICG Preferred Stock. Unless previously dissolved, the
Company's term will continue until December 31, 2050.
ICG is the sole common member of the Company. ICG is also the manager of
the Company pursuant to the LLC Agreement and as such, manages the business and
affairs of the Company. ICG does not receive any compensation for performing
such management services. Additionally, all of the Company's administrative
expenses, which are insignificant, are paid by ICG.
The Company does not manufacture or sell any products, does not provide any
services to any party and does not intend to enter into any business, other than
complying with its obligations under the Redeemable Preferred Securities and
effecting the purposes as set forth in the LLC Agreement. The Company does not
have any employees.
For financial information about the Company, see the financial statements
included in response to Items 6 and 8 of Part II of this Annual Report on Form
10-K.
Key Transactions During Fiscal 1998
On February 13, 1998, ICG made a capital contribution of 126,750 shares of
common stock of ICG, $0.01 par value ("ICG Common Stock"), to the Company.
Immediately thereafter, the Company sold the contributed shares to unrelated
third parties for proceeds of approximately $3.4 million. The Company recorded
the contribution of the ICG Common Stock as additional paid-in capital at the
then fair market value and, consequently, no gain or loss was recorded by the
Company on the subsequent sale of those shares.
3
<PAGE>
Also on February 13, 1998, the Company used the remaining proceeds from the
private placement of the Redeemable Preferred Securities, which were not
restricted for the payment of cash dividends, along with the proceeds from the
sale of the contributed ICG Common Stock to purchase approximately $112.4
million of ICG Preferred Stock. The ICG Preferred Stock pays dividends each
February 15, May 15, August 15 and November 15 in additional shares of ICG
Preferred Stock through November 15, 2000. Subsequent to November 15, 2000,
dividends on the ICG Preferred Stock are payable in cash or shares of ICG Common
Stock, at the option of ICG. The ICG Preferred Stock is exchangeable, at the
option of the Company, at any time prior to November 15, 2009 into shares of ICG
Common Stock at an exchange rate based on the exchange rate of the Redeemable
Preferred Securities. The ICG Preferred Stock is subject to mandatory redemption
on November 15, 2009.
ITEM 2. PROPERTIES
At December 31, 1998, the Company's property consisted of: (i) U.S.
Treasury securities in the amount of approximately $16.9 million held in escrow
to pay quarterly cash dividends on the Redeemable Preferred Securities; and (ii)
a receivable for preferred dividends earned on the ICG Preferred Stock of
approximately $0.9 million. The Company does not own any real or tangible
property.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Effective October 19, 1998, ICG, Sole Common Member and Manager of the
Company, caused the Company to declare a cash dividend in the amount of $0.47
per Redeemable Preferred Security to holders of record at the close of business
on November 1, 1998, which was paid on November 15, 1998.
4
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SECURITYHOLDER MATTERS
To date, the one issued and outstanding common security of the Company is
held by ICG. There exists no established public trading market for the Company's
common securities ("Common Securities"). ICG purchased one share of Common
Securities on September 17, 1997 in a private placement pursuant to Section 4(2)
of the Securities Act of 1933, as amended (the "1933 Act"). No underwriters were
involved in the placement and the Company did not offer to or solicit offers
from any other parties to purchase the Common Securities. Since the formation of
the Company and ICG's initial capital investment for the Common Securities,
there have been no sales or transfers of Common Securities of the Company. No
cash dividends have been declared on the Common Securities of the Company.
On September 24 and October 3, 1997, the Company completed a private
placement of 2,645,000 shares of Exchangeable Limited Liability Company
Preferred Securities Mandatorily Redeemable 2009 (the "Redeemable Preferred
Securities") for an aggregate gross cash offering price of $132.25 million. All
of the Redeemable Preferred Securities were sold to Morgan Stanley Dean Witter
and Deutsche Morgan Grenfell (collectively, the "Placement Agents") pursuant to
Section 4(2) of the 1933 Act in a negotiated, private placement. For a
discussion of the use of proceeds from the offering, see "Business."
The Placement Agents thereafter resold the Redeemable Preferred Securities
pursuant to Rule 144A promulgated under the 1933 Act to Qualified Institutional
Buyers (as that term is defined in Rule 144A) and Institutional Accredited
Investors. Each purchaser of the Redeemable Preferred Securities from the
Placement Agents made certain representations and warranties to the Placement
Agents that they were qualified to purchase the unregistered Redeemable
Preferred Securities. The Company did not receive any of the proceeds from the
resale of the Redeemable Preferred Securities by the Placement Agents.
The Redeemable Preferred Securities are mandatorily redeemable by the
Company on November 15, 2009 at the liquidation preference of $50.00 per
security, plus accrued and unpaid dividends. Dividends on the Redeemable
Preferred Securities are cumulative at the rate of 6 3/4% per annum and are
payable in cash through November 15, 2000 and, thereafter, in cash or shares of
ICG Common Stock, at the option of the Company. The Redeemable Preferred
Securities are exchangeable, at the option of the holder, into ICG Common Stock
at an exchange price of $24.025 per share, subject to adjustment. The Company
may, at its option, redeem the Redeemable Preferred Securities at any time on or
after November 18, 2000. Prior to that time, the Company may redeem the
Redeemable Preferred Securities if the current market value of ICG Common Stock
equals or exceeds the exchange price, for at least 20 days of any consecutive
30-day trading period, by 160% prior to November 15, 1999 and by 150% from
November 16, 1999 through November 15, 2000.
Effective January 10, 1998, all of the shares of the Redeemable Preferred
Securities and the ICG Common Stock issuable upon exchange of such securities
were registered for resale under the 1933 Act.
5
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data for the period from September 17, 1997
(inception) to December 31, 1997 and fiscal year ended December 31, 1998 has
been derived from and should be read in conjunction with the audited financial
statements of the Company and the notes thereto included elsewhere in this
Annual Report. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
<TABLE>
<CAPTION>
Period from
September 17, 1997 Fiscal Year
(inception) Ended
to December 31, December 31,
1997 1998
-------------------- --------------------
(in thousands)
<S> <C> <C>
Statement of Operations Data:
Interest income, net $ 1,949 1,908
Dividend income -- 5,969
--------- ---------
Net income 1,949 7,877
--------- ---------
Preferred dividends on redeemable preferred securities,
including accretion of offering costs (2,460) (9,314)
========= =========
Net loss available to common member $ (511) (1,437)
========= =========
Other Data:
Net cash provided by operating activities $ 1,949 1,908
Net cash (used in) provided by investing activities (132,959) 3,634
Net cash provided by (used in) financing activities 131,010 (5,542)
</TABLE>
<TABLE>
<CAPTION>
At December 31,
------------------------------------------------
1997 1998
--------------------- --------------------
(in thousands)
<S> <C> <C>
Balance Sheet Data:
Short-term investments available for sale $ 108,310 --
Dividends receivable -- 875
Restricted cash 24,649 16,912
Investment in ICG Preferred Stock -- 117,507
Total assets 132,959 135,294
Dividends payable 1,116 1,116
Due to ICG 4,699 4,699
Redeemable preferred securities 127,655 128,042
Member's (deficit) equity (511) 1,437
</TABLE>
6
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion includes certain forward-looking statements which
are affected by important factors including, but not limited to, market
conditions affecting the price of ICG Common Stock, redemption of the Redeemable
Preferred Securities by ICG, exchange into ICG Common Stock by the Redeemable
Preferred Securityholders, the declaration and payment of preferred stock
dividends to the Company by ICG and the ability of ICG to pay the administrative
expenses of the Company, that could cause actual results to differ materially
from the forward-looking statements. The results for the period from September
17, 1997 (inception) to December 31, 1997 and the fiscal year ended December 31,
1998 have been derived from the Company's audited financial statements included
elsewhere herein.
Company Overview and Description of Significant Transactions
The Company was formed on September 17, 1997 as a special purpose limited
liability company existing for the exclusive purposes of: (i) issuing common and
preferred interests in the Company; (ii) using at least 85% of the Net Proceeds
of such issuances and related capital contributions to purchase shares of ICG
Preferred Stock in a private placement; (iii) investing a portion of the
remaining Net Proceeds in U.S. Treasury securities, to be held in escrow in an
amount sufficient to fund the cash payments of the first thirteen quarterly
dividends on the Company's Redeemable Preferred Securities; and (iv) purchasing
U.S. Treasury securities pending the purchase of shares of ICG Preferred Stock.
On September 24 and October 3, 1997, the Company completed a private
placement of 6 3/4% Exchangeable Limited Liability Company Preferred Securities
Mandatorily Redeemable 2009 for gross proceeds of $132.25 million. Net proceeds
from the private placement, after offering costs of approximately $4.7 million
advanced by ICG, were approximately $127.6 million. Restricted cash at December
31, 1998 of $16.9 million consists of the proceeds from the private placement
which are designated for the payment of cash dividends on the Redeemable
Preferred Securities through November 15, 2000.
The Redeemable Preferred Securities consist of 2,645,000 exchangeable
preferred securities of the Company that bear a cumulative dividend at the rate
of 6 3/4% per annum. The dividend is paid quarterly in arrears each February 15,
May 15, August 15 and November 15, and commenced November 15, 1997. The dividend
is payable in cash through November 15, 2000 and, thereafter, in cash or shares
of ICG Common Stock, at the option of the Company. The Redeemable Preferred
Securities are exchangeable, at the option of the holder, at any time prior to
November 15, 2009 into shares of ICG Common Stock at a rate of 2.0812 shares of
ICG Common Stock per preferred security, or $24.025 per share, subject to
adjustment. The Company may, at its option, redeem the Redeemable Preferred
Securities at any time on or after November 18, 2000. Prior to that time, the
Company may redeem the Redeemable Preferred Securities if the current market
value of ICG Common Stock equals or exceeds the exchange price, for at least 20
days of any consecutive 30-day trading period, by 160% prior to November 15,
1999 and by 150% from November 16, 1999 through November 15, 2000. The
Redeemable Preferred Securities are subject to mandatory redemption on November
15, 2009.
7
<PAGE>
On February 13, 1998, ICG made a capital contribution of 126,750 shares of
ICG Common Stock to the Company. Immediately thereafter, the Company sold the
contributed shares to unrelated third parties for proceeds of approximately $3.4
million. The Company recorded the contribution of the ICG Common Stock as
additional paid-in capital at the then fair market value and, consequently, no
gain or loss was recorded by the Company on the subsequent sale of those shares.
Also, on February 13, 1998, the Company used the remaining proceeds from
the private placement of the Redeemable Preferred Securities, which were not
restricted for the payment of cash dividends, along with the proceeds from the
sale of the contributed ICG Common Stock to purchase approximately $112.4
million of ICG Preferred Stock which pays dividends each February 15, May 15,
August 15 and November 15 in additional shares of ICG Preferred Stock through
November 15, 2000. Subsequent to November 15, 2000, dividends on the ICG
Preferred Stock are payable in cash or shares of ICG Common Stock, at the option
of ICG. The ICG Preferred Stock is exchangeable, at the option of the Company,
at any time prior to November 15, 2009 into shares of ICG Common Stock at an
exchange rate based on the exchange rate of the Redeemable Preferred Securities.
The ICG Preferred Stock is subject to mandatory redemption on November 15, 2009.
Results of Operations
The following table presents the components of the Company's net income and
net loss available to common member for the period from September 17, 1997
(inception) to December 31, 1997 and fiscal year ended December 31, 1998.
Period from
September 17, 1997
(inception) Fiscal Year
to December 31, Ended December 31,
1997 1998
--------------- ------------------
(in thousands)
Statement of Operations Data:
Interest Income, net $ 1,949 1,908
Dividend income -- 5,969
--------- ---------
Net income 1,949 7,877
--------- ---------
Preferred dividends on redeemable
preferred securities, including
accretion of offering costs (2,460) (9,314)
--------- ---------
Net loss available to common
member (511) (1,437)
========= =========
Other Data:
Net cash provided by operating
activities $ 1,949 1,908
Net cash (used in) provided by
investing activities (132,959) 3,634
Net cash provided by (used in)
financing activities 131,010 (5,542)
8
<PAGE>
Fiscal Year Ended December 31, 1998 Compared to the Period from
September 17, 1997 (inception) to December 31, 1997
Interest income, net. Interest income, net was $1.9 million for both the
fiscal year ended December 31, 1998 and the period from September 17, 1997
(inception) through December 31, 1997 and consists of income earned on invested
cash proceeds from the issuance of the Redeemable Preferred Securities in
September and October 1997. Interest income, net has and will continue to
decrease each period through November 15, 2000 due to the decrease in average
balances held in short-term investments as restricted cash balances are used to
pay cash dividends on the Redeemable Preferred Securities. On November, 15,
2000, the Company's restricted cash balances will be depleted.
Dividend income. Dividend income of $6.0 million for the fiscal year ended
December 31, 1998 consists of preferred dividends earned on the ICG Preferred
Stock from February 13, 1998 through December 31, 1998, which dividends were
paid with additional shares of ICG Preferred Stock.
Net income. The Company's net income of $7.9 million and $1.9 million for
the fiscal year ended December 31, 1998 and the period from September 17, 1997
(inception) through December 31, 1997, respectively, consists of interest
income, net, and dividend income, as noted above.
Preferred dividends on redeemable preferred securities, including accretion
of offering costs. Preferred dividends on redeemable preferred securities,
including accretion of offering costs was $9.3 million for the fiscal year ended
December 31, 1998 and includes approximately $8.9 million of preferred security
dividends paid and accrued during the fiscal year ended December 31, 1998 and
the accretion of offering costs from the private placement of the Redeemable
Preferred Securities of approximately $0.4 million for the fiscal year ended
December 31, 1998. Preferred dividends on redeemable preferred securities,
including accretion of offering costs was $2.5 million for the period from
September 17, 1997 (inception) to December 31, 1997 and includes approximately
$1.3 million of preferred security dividends paid on November 15, 1997, the
accrual of the preferred security dividends for the period from November 16,
1997 through December 31, 1997 of approximately $1.1 million and the accretion
of offering costs from the private placement of the Redeemable Preferred
Securities of approximately $0.1 million.
Net loss available to common member. Net loss available to common member of
$1.4 million and $0.5 million for the fiscal year ended December 31, 1998 and
the period from September 17, 1997 (inception) to December 31, 1997,
respectively, is a result of preferred dividends on redeemable preferred
securities, offset by net income, as noted above.
Quarterly Results
The following table presents selected unaudited operating results for
three-month quarterly periods, beginning with the inception of the Company at
September 17, 1997 and through December 31, 1998. The Company believes that the
amounts stated below present fairly the quarterly results when read in
conjunction with the Company's audited financial statements and related notes
included elsewhere in this Annual Report. Results of operations are not
necessarily indicative of results of operations for a full year or predictive of
future periods.
9
<PAGE>
<TABLE>
<CAPTION>
September 17,
1997 Three Months Ended
(inception) to ---------------------------------------------------------------------
September 30, Dec. 31, Mar. 31, June 30, Sept. 30, Dec. 31,
1997 1997 1998 1998 1998 1998
--------- --------- --------- --------- --------- ---------
(in thousands)
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Interest income, net $ 120 1,829 1,056 312 285 255
Dividend income -- -- 837 1,685 1,711 1,736
--------- --------- --------- --------- --------- ---------
Net income 120 1,829 1,893 1,997 1,996 1,991
--------- --------- --------- --------- --------- ---------
Preferred dividends on redeemable
preferred securities, including
accretion of offering costs (129) (2,331) (2,327) (2,329) (2,328) (2,330)
========= ========= ========= ========= ========= =========
Net loss available to common
member $ (9) (502) (434) (332) (332) (339)
========= ========= ========= ========= ========= =========
Other Data:
Net cash provided by operating
activities $ 120 1,829 1,056 312 285 255
Net cash (used in) provided by
investing activities (115,120) (17,839) (2,209) 1,920 1,946 1,977
Net cash provided by (used in)
financing activities 115,000 16,010 1,153 (2,232) (2,231) (2,232)
</TABLE>
Liquidity and Capital Resources
The Company's operations consist entirely of effecting the transactions
required by the terms of the Redeemable Preferred Securities issued in September
and October 1997. To date, the Company's operations have been funded through the
proceeds from the issuance of the Redeemable Preferred Securities and the sale
of ICG Common Stock which was contributed to the Company by ICG. As of December
31, 1998, the Company has assets of approximately $135.3 million which consist
of the Company's investment in ICG Preferred Stock of approximately $117.5
million, restricted cash invested in U.S. Treasury securities of approximately
$16.9 million for the payment of cash dividends through November 15, 2000 on the
Redeemable Preferred Securities and a receivable for preferred dividends earned
on the ICG Preferred Stock of approximately $0.9 million. The Company's
liabilities at December 31, 1998 include approximately $1.1 million in preferred
dividends accrued on the Redeemable Preferred Securities and approximately $4.7
million due to ICG for advances for the offering costs associated with the
issuance of the Redeemable Preferred Securities.
The Company is dependent upon ICG to declare and pay preferred dividends on
the ICG Preferred Stock in order to pay dividends on, and the redemption price
of, the Redeemable Preferred Securities. ICG is a Delaware corporation that
files annual, quarterly and current reports with the Securities and Exchange
Commission. Its Commission File Number is 1-11965.
10
<PAGE>
Net Cash Provided By Operating Activities
Net cash provided by operating activities was approximately $1.9 million
for the period from September 17, 1997 (inception) to December 31, 1997 and
fiscal year ended December 31, 1998 and consists of interest income earned on
restricted cash invested in U.S. Treasury securities.
Net Cash (Used In) Provided By Investing Activities
The Company's investing activities used approximately $133.0 million for
the period from September 17, 1997 (inception) to December 31, 1997 and provided
approximately $3.6 million for the fiscal year ended December 31, 1998. Net cash
used in investing activities for the period from September 17, 1997 (inception)
to December 31, 1998 consists of the establishment of restricted cash balances
for cash dividends payable through November 15, 2000 on the Redeemable Preferred
Securities and also consists of the purchase of short-term investments. Net cash
provided by investing activities for the fiscal year ended December 31, 1998
consists of the purchase of the ICG Preferred Stock for approximately $112.4
million, offset by the proceeds from the sale of U.S. Treasury securities of
approximately $108.3 million and the decrease in restricted cash of
approximately $7.7 million.
Net Cash Provided By (Used In) Financing Activities
Financing activities provided approximately $131.0 million for the period
from September 17, 1997 (inception) to December 31, 1997 and used approximately
$5.5 million for the fiscal year ended December 31, 1998. Net cash provided by
financing activities for the period from September 17, 1997 (inception) to
December 31, 1997 includes the net proceeds from the issuance of the Redeemable
Preferred Securities of approximately $127.6 million and approximately $4.7
million advanced from ICG for the offering costs associated with the issuance of
the Redeemable Preferred Securities, offset by payments of cash dividends on the
Redeemable Preferred Securities of approximately $1.3 million. Net cash used in
financing activities for the fiscal year ended December 31, 1998 includes the
payments of cash dividends on the Redeemable Preferred Securities of
approximately $8.9 million, offset by the proceeds from the sale of the
contributed ICG Common Stock of $3.4 million. The Company expects cash used by
financing activities in future periods to include only payments of cash
dividends on, and the redemption price of, the Redeemable Preferred Securities.
Cash Commitments
The Redeemable Preferred Securities require payments of dividends to be
made in cash and are being paid on a current basis through November 15, 2000. At
December 31, 1998, the Company has cash dividend obligations on the Redeemable
Preferred Securities of approximately $8.9 million in both 1999 and 2000. The
Redeemable Preferred Securities have a liquidation preference of $50 per
security, plus accrued and unpaid dividends, and are mandatorily redeemable in
2009. The Company's management believes it has sufficient resources to meet
these future cash requirements.
11
<PAGE>
Year 2000 Compliance
As a wholly owned subsidiary of ICG, the Company's Year 2000 compliance
plan is embedded within ICG's Year 2000 compliance plan for its consolidated
operations. It is not practicable for ICG to address the state of Year 2000
readiness, compliance costs, risks or contingency plans of the Company, or for
any other legal entity on a stand-alone basis, as ICG's plan was designed to
resolve Year 2000 compliance issues for all entities combined, which is the most
cost-effective manner. Moreover, as a result of the Company's and ICG's shared
management and administrative personnel and the Company's dependence upon the
successful operations of ICG in order that ICG's Board of Directors will
continue to declare and pay dividends on the ICG Preferred Stock, evaluating the
Company's plan for Year 2000 compliance on a stand-alone basis is not
meaningful. ICG is a Delaware corporation that files annual, quarterly and
current reports with the Securities and Exchange Commission. Its Commission File
Number is 1-11965.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's restricted cash balances are invested in fixed income U.S.
Treasury securities having staggered maturities matching the dividend payment
dates of the Redeemable Preferred Securities. Accordingly, changes in market
interest rates have no effect on the Company's liquidity, financial condition or
results of operations.
At December 31, 1998, the Company had $117.5 million of ICG Preferred
Stock, which is exchangeable into shares of ICG Common Stock, at an exchange
rate based on the exchange rate of the Redeemable Preferred Securities. There
exists no established public trading market for the ICG Preferred Stock. The
risk of changes in the fair market value of the underlying ICG Common Stock,
which is listed and trades on the Nasdaq National Market, is eliminated by the
adjustable rate of exchange of shares of ICG Preferred Stock. The ICG Preferred
Stock pays dividends in cash or additional shares of ICG Preferred Stock
sufficient to meet the dividend requirements on the Redeemable Preferred
Securities. Although changes in the fair market value of ICG Common Stock have
no effect on the Company's financial condition or results of operations, such
changes may influence the Company's decision to redeem the Redeemable Preferred
Securities or a Redeemable Preferred Security holder's decision to exchange
those securities for ICG Common Stock.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Company appear on page F-1 of this Annual
Report. Selected quarterly financial data required under this Item is included
under Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
12
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The Company has no directors or executive officers. Its business affairs
are managed by ICG, as the manager of the Company, pursuant to the LLC
Agreement. ICG is a Delaware corporation that files annual, quarterly and
current reports with the Securities and Exchange Commission. Its Commission File
Number is 1-11965.
ITEM 11. EXECUTIVE COMPENSATION
The Company has no executive officers. It business affairs are managed by
ICG, as the manager of the Company, pursuant to the LLC Agreement. ICG does not
receive any fees or compensation as manager of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Ownership of Class
- -------------- ------------------------ ----------------------- --------
Common ICG Communications, Inc. 1 Common Security
Securities 161 Inverness Drive West owned beneficially 100%
Englewood, Colorado 80112 with sole voting power
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 13, 1998, ICG made a capital contribution of 126,750 shares of
ICG Common Stock to the Company. Immediately thereafter, the Company sold the
contributed shares to unrelated third parties for proceeds of approximately $3.4
million. The Company recorded the contribution of the ICG Common Stock as
additional paid-in capital at the then fair market value and, consequently, no
gain or loss was recorded by the Company on the subsequent sale of those shares.
Also on February 13, 1998, the Company used the remaining proceeds from the
private placement of the Redeemable Preferred Securities, which were not
restricted for the payment of cash dividends, along with the proceeds from the
sale of the contributed ICG Common Stock to purchase approximately $112.4
million of ICG Preferred Stock.
All of the Company's administrative expenses, which are insignificant, are
paid by ICG. Additionally, ICG advanced approximately $4.7 million to the
Company during the period from September 17, 1997 (inception) through December
31, 1997 for the offering costs associated with the issuance of the Redeemable
Preferred Securities.
13
<PAGE>
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(A) (1) Financial Statements. The following financial statements are
included in Item 8 of Part II:
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . F-2
Balance Sheets, December 31, 1997 and 1998 . . . . . . . . . F-3
Statements of Operations, Period from September 17, 1997
(inception) to December 31, 1997 and Fiscal Year Ended
December 31, 1998. . . . . . . . . . . . . . . . . . . . . F-4
Statements of Member's (Deficit) Equity, Period from
September 17, 1997 (inception)to December 31, 1997 and
Fiscal Year Ended December 31, 1998 . . . . . . . . . . . F-5
Statements of Cash Flows, Period from September 17, 1997
(inception) to December 31, 1997 and Fiscal Year Ended
December 31, 1998 . . . . . . . . . . . . . . . . . . . . F-6
Notes to Financial Statements, December 31, 1997 and 1998. . F-7
(2) Financial Statement Schedule.
Not Applicable.
(3) List of Exhibits.
(3) Corporate Organization.
3.1: Certificate of Formation of ICG Funding, LLC filed September
17, 1997 with the Secretary of State of the State of
Delaware [Incorporated by reference to Exhibit 4.3 to
Registration Statement on Form S-3, File Number 333-40495].
3.2: Amended and Restated Limited Liability Company Agreement of
ICG Funding, LLC, dated September 23, 1997 [Incorporated by
reference to Exhibit 4.4 to Registration Statement on Form
S-3, File Number 333-40495].
(4) Instruments Defining the Rights of Security Holders, Including
Indentures.
4.1: Registration Rights Agreement, dated September 24, 1997,
among ICG Communications, Inc., ICG Funding, LLC, Morgan
Stanley & Co. Incorporated and Deutsche Morgan Grenfell,
Inc. with respect to the 6 3/4 % Exchangeable Limited
Liability Company Preferred Securities [Incorporated by
reference to Exhibit 4.5 to Registration Statement on Form
S-3, File Number 333-40495].
14
<PAGE>
4.2: Guarantee Agreement, dated September 24, 1997, between ICG
Communications, Inc. and ICG Funding, LLC [Incorporated by
reference to Exhibit 4.6 to Registration Statement on Form
S-3, File Number 333-40495].
4.3: Written Action of the Manager of ICG Funding, LLC, dated as
of September 24, 1997, with respect to the terms of the 6
3/4% Exchangeable Limited Liability Company Preferred
Securities [Incorporated by reference to Exhibit 4.8 to
Registration Statement on Form S-3, File Number 333-40495].
4.4: Escrow and Security Agreement, dated September 24, 1997,
among ICG Communications Inc., ICG Funding, LLC and Norwest
Bank Colorado, National Association [Incorporated by
reference to Exhibit 4.7 to Registration Statement on Form
S-3, File Number 333-40495].
(10) Material Contracts.
10.1:Certificate of Designation, Rights and Preferences of the
Preferred Stock Mandatorily Redeemable 2009 of ICG
Communications, Inc., filed with the Secretary of State of
the State of Delaware on September 25, 1997 [Incorporated by
reference to Exhibit 4.9 to Registration Statement on Form
S-3, File Number 333-40495].
(23) Consent.
23.1: Consent of Independent Auditors.
(27) Financial Data Schedule.
27.1:Financial Data Schedule of ICG Funding, LLC for the Fiscal
Year Ended December 31, 1998.
(B) Reports on Form 8-K.
None.
(C) Exhibits. The exhibits required by this Item are listed under Item
14(A)(3).
15
<PAGE>
FINANCIAL STATEMENTS
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . F-2
Balance Sheets, December 31, 1997 and 1998 . . . . . . . . . . . . . F-3
Statements of Operations, Period from September 17, 1997 (inception)
to December 31, 1997 and Fiscal Year Ended December 31, 1998 . . . F-4
Statements of Member's (Deficit) Equity, Period from September 17,
1997 (inception) to December 31, 1997 and Fiscal Year Ended
December 31, 1998. . . . . . . . . . . . . . . . . . . . . . . . . F-5
Statements of Cash Flows, Period from September 17, 1997 (inception)
to December 31, 1997 and Fiscal Year Ended December 31, 1998 . . . F-6
Notes to Financial Statements, December 31, 1997 and 1998. . . . . . F-7
F - 1
<PAGE>
Independent Auditors' Report
The Common Member and Manager
ICG Funding, LLC:
We have audited the accompanying balance sheets of ICG Funding, LLC as of
December 31, 1997 and 1998 and the related statements of operations, member's
(deficit) equity, and cash flows for the period from September 17, 1997
(inception) to December 31, 1997 and for the fiscal year ended December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ICG Funding, LLC as of December
31, 1997 and 1998, and the results of its operations and its cash flows for the
period from September 17, 1997 (inception) to December 31, 1997 and for the
fiscal year ended December 31, 1998, in conformity with generally accepted
accounting principles.
KPMG LLP
Denver, Colorado
February 15, 1999
F - 2
<PAGE>
ICG FUNDING, LLC
Balance Sheets
December 31, 1997 and 1998
- -------------------------------------------------------------------------------
December 31,
----------------------
1997 1998
--------- ---------
(in thousands)
Assets
Current assets:
Short-term investments available for sale $ 108,310 -
Dividends receivable - 875
Restricted cash (note 3) 8,693 8,693
--------- ---------
Total current assets 117,003 9,568
--------- ---------
Investment in ICG Preferred Stock (note 4) -- 117,507
Restricted cash (note 3) 15,956 8,219
--------- ---------
Total assets $ 132,959 135,294
========= =========
Liabilities and Member's (Deficit) Equity
Current liability - dividends payable $ 1,116 1,116
Due to ICG (note 3) 4,699 4,699
--------- ---------
Total liabilities 5,815 5,815
--------- ---------
Redeemable preferred securities ($133.4
million liquidation value at December31,
1997 and 1998) (note 3) 127,655 128,042
Member's (deficit) equity:
Additional paid-in capital (note 4) -- 3,385
Accumulated deficit (511) (1,948)
--------- ---------
Total member's (deficit) equity (511) 1,437
--------- ---------
Commitments and contingencies (notes 3 and 4)
Total liabilities and member's (deficit) equity $ 132,959 135,294
========= =========
See accompanying notes to financial statements.
F - 3
<PAGE>
ICG FUNDING, LLC
Statements of Operations
Period from September 17, 1997 (inception) to December 31, 1997
and Fiscal Year Ended December 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from September Fiscal year
17, 1997 (inception) to ended
December 31, 1997 December 31, 1998
-------------------------- --------------------------
(in thousands)
<S> <C> <C>
Interest income, net $ 1,949 1,908
Dividend income - 5,969
-------------------------- --------------------------
Net income $ 1,949 7,877
-------------------------- --------------------------
Preferred dividends on redeemable preferred securities, including
accretion of offering costs (note 3) (2,460) (9,314)
-------------------------- --------------------------
Net loss available to common member $ (511) (1,437)
========================== ==========================
</TABLE>
See accompanying notes to financial statements.
F - 4
<PAGE>
ICG FUNDING, LLC
Statements of Member's (Deficit) Equity
Period from September 17, 1997 (inception) to December 31, 1997
and Fiscal Year Ended December 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Additional Accumulated Total member's
paid-in capital deficit (deficit) equity
---------------------- ---------------------- ----------------------
(in thousands)
<S> <C> <C> <C>
Balances at September 17, 1997 (inception) $ - - -
Net income - 1,949 1,949
Preferred dividends on redeemable preferred
securities, including accretion of offering costs - (2,460) (2,460)
---------------------- ---------------------- ----------------------
Balances at December 31, 1997 - (511) (511)
Contribution of ICG Common Stock 3,385 - 3,385
Net income - 7,877 7,877
Preferred dividends on redeemable preferred
securities, including accretion of offering
costs - (9,314) (9,314)
---------------------- ---------------------- ----------------------
Balances at December 31, 1998 $ 3,385 (1,948) 1,437
====================== ====================== ======================
</TABLE>
See accompanying notes to financial statements.
F - 5
<PAGE>
ICG FUNDING, LLC
Statements of Cash Flows
Period from September 17, 1997 (inception) to December 31, 1997
and Fiscal Year Ended December 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
September 17, 1997
(inception) to Fiscal year ended
December 31, 1997 December 31, 1998
------------------------- --------------------------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,949 7,877
Adjustment to reconcile net income to net cash
provided by operating activities:
Non-cash preferred dividends earned on ICG
Preferred Stock - (5,969)
------------------------- --------------------------
Net cash provided by operating activities 1,949 1,908
------------------------- --------------------------
Cash flows from investing activities:
(Purchase) sale of short-term investments (108,310) 108,310
Purchase of ICG Preferred Stock - (112,413)
(Increase) decrease in restricted cash (24,649) 7,737
------------------------- --------------------------
Net cash (used in) provided by investing activities (132,959) 3,634
------------------------- --------------------------
Cash flows from financing activities:
Net proceeds from issuance of redeemable preferred
securities 127,551 -
Advances from ICG 4,699 -
Proceeds from sale of ICG Common Stock - 3,385
Payment of preferred dividends on redeemable preferred
securities (1,240) (8,927)
------------------------- --------------------------
Net cash provided by (used in) financing
activities 131,010 (5,542)
------------------------- --------------------------
Cash and cash equivalents at December 31, 1997 and 1998 $ - -
========================= ==========================
</TABLE>
See accompanying notes to financial statements.
F - 6
<PAGE>
ICG FUNDING, LLC
Notes to Financial Statements
December 31, 1997 and 1998
- ----------------------------------------------------------------------------
(1) Organization and Nature of Business
ICG Funding, LLC, a Delaware limited liability company (the "Company"), was
formed on September 17, 1997 as a special purpose limited liability company
existing for the exclusive purposes of: (i) issuing common and preferred
interests in the Company; (ii) using at least 85% of the net proceeds of
such issuances and related capital contributions (the "Net Proceeds") to
purchase shares of preferred stock of ICG Communications, Inc. ("ICG")
("ICG Preferred Stock") in a private placement; (iii) investing a portion
of the remaining Net Proceeds in U.S. Treasury securities, to be held in
escrow in an amount sufficient to fund the cash payments of the first
thirteen quarterly dividends on the Company's preferred interests (the
"Redeemable Preferred Securities"); and (iv) purchasing U.S. Treasury
securities pending the purchase of shares of ICG Preferred Stock. Unless
previously dissolved, the Company's term will continue until December 31,
2050.
ICG is the sole common member of the Company. The business and affairs of
the Company are conducted by ICG and ICG pays all of the Company's
administrative expenses, which are insignificant.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles.
(b) Short-term Investments Available for Sale
The Company invested the net proceeds from the private placement of
the Redeemable Preferred Securities in high grade short-term
investments which consisted entirely of U.S. Treasury securities. All
short-term investments were considered to be available for sale and
matured on February 13, 1998. At December 31, 1997, the Company
carried short-term investments at cost, which approximated fair value.
F - 7
<PAGE>
ICG FUNDING, LLC
Notes to Financial Statements, Continued
- ----------------------------------------------------------------------------
(2) Summary of Significant Accounting Policies (continued)
(c) Investment in ICG Preferred Stock
The Company carries its investment in ICG Preferred Stock at cost plus
dividends received. Income from dividends on the ICG Preferred Stock
is recorded in the Company's statement of operations when earned.
(d) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
income and loss during the reporting period. Actual results could
differ from those estimates.
(e) Income Taxes
The Company is a U.S. limited liability company which is treated as a
partnership for U.S. federal and state income tax purposes.
Accordingly, the Company is not subject to U.S. federal and state
income taxes. The Company's results of operations are allocated and
included in the individual income tax returns of the securityholders.
(f) Net Loss Per Share
The Company's one issued and outstanding common limited liability
company security is owned directly by ICG. Accordingly, the Company
does not present net loss per share in its financial statements as
such disclosure is not considered to be meaningful.
(3) Redeemable Preferred Securities
On September 24 and October 3, 1997, the Company completed a private
placement of 6 3/4% Exchangeable Limited Liability Company Preferred
Securities Mandatorily Redeemable 2009 (the "Redeemable Preferred
Securities") for gross proceeds of $132.25 million. Net proceeds from the
private placement, after offering costs of approximately $4.7 million
advanced by ICG, were approximately $127.6 million. Restricted cash at
December 31, 1998 of $16.9 million consists of the proceeds from the
private placement
F - 8
<PAGE>
ICG FUNDING, LLC
Notes to Financial Statements, Continued
- ----------------------------------------------------------------------------
(3) Redeemable Preferred Securities (continued)
which are designated for the payment of cash dividends on the Redeemable
Preferred Securities through November 15, 2000.
The Redeemable Preferred Securities consist of 2,645,000 exchangeable
preferred securities of the Company that bear a cumulative dividend at the
rate of 6 3/4% per annum. The dividend is paid quarterly in arrears each
February 15, May 15, August 15 and November 15, and commenced November 15,
1997. The dividend is payable in cash through November 15, 2000 and,
thereafter, in cash or shares of common stock of ICG ("ICG Common Stock"),
at the option of the Company. The Redeemable Preferred Securities are
exchangeable, at the option of the holder, at any time prior to November
15, 2009 into shares of ICG Common Stock at a rate of 2.0812 shares of ICG
Common Stock per preferred security, or $24.025 per share, subject to
adjustment. The Company may, at its option, redeem the Redeemable Preferred
Securities at any time on or after November 18, 2000. Prior to that time,
the Company may redeem the Redeemable Preferred Securities if the current
market value of ICG Common Stock equals or exceeds the exchange price, for
at least 20 days of any consecutive 30-day trading period, by 160% prior to
November 15, 1999 and by 150% from November 16, 1999 through November 15,
2000. The Redeemable Preferred Securities are subject to mandatory
redemption on November 15, 2009.
Included in preferred dividends on redeemable preferred securities is
approximately $0.1 million and $0.4 million for the period from September
17, 1997 (inception) to December 31, 1997 and the fiscal year ended
December 31, 1998, respectively, associated with the accretion of offering
costs from the private placement of the Redeemable Preferred Securities.
(4) Contribution and Sale of ICG Common Stock and Purchase of ICG Preferred
Stock
On February 13, 1998, ICG made a capital contribution of 126,750 shares of
ICG Common Stock to the Company. Immediately thereafter, the Company sold
the contributed shares to unrelated third parties for proceeds of
approximately $3.4 million. The Company recorded the contribution of the
ICG Common Stock as additional paid-in capital at the then fair market
value and, consequently, no gain or loss was recorded by the Company on the
subsequent sale of those shares.
F - 9
<PAGE>
ICG FUNDING, LLC
Notes to Financial Statements, Continued
- ----------------------------------------------------------------------------
(4) Contribution and Sale of ICG Common Stock and Purchase of ICG Preferred
Stock (continued)
Also on February 13, 1998, the Company used the remaining proceeds from the
private placement of the Redeemable Preferred Securities, which were not
restricted for the payment of cash dividends, along with the proceeds from
the sale of the contributed ICG Common Stock to purchase approximately
$112.4 million of ICG Communications, Inc. Preferred Stock ("ICG Preferred
Stock") which pays dividends each February 15, May 15, August 15 and
November 15 in additional shares of ICG Preferred Stock through November
15, 2000. Subsequent to November 15, 2000, dividends on the ICG Preferred
Stock are payable in cash or shares of ICG Common Stock, at the option of
ICG. The ICG Preferred Stock is exchangeable, at the option of the Company,
at any time prior to November 15, 2009 into shares of ICG Common Stock at
an exchange rate based on the exchange rate of the Redeemable Preferred
Securities. The ICG Preferred Stock is subject to mandatory redemption on
November 15, 2009.
F - 10
<PAGE>
INDEX TO EXHIBITS
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
<PAGE>
EXHIBITS
23.1: Consent of Independent Auditors.
27.1:Financial Data Schedule of ICG Funding, LLC for the Fiscal Year Ended
December 31, 1998.
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors.
<PAGE>
Consent of Independent Auditors
The Common Member and Manager
ICG Funding, LLC:
We consent to incorporation by reference in the registration statements Nos.
333-40495 and 333-40495-01 on Form S-3 of ICG Funding, LLC of our report
dated February 15, 1999, relating to the consolidated balance sheets of ICG
Funding, LLC as of December 31, 1997 and 1998, and the related statements of
operations, member's (deficit) equity, and cash flows for the period from
September 17, 1997 (inception) to December 31, 1997 and for the fiscal year
ended December 31, 1998, which report appears in the December 31, 1998 Annual
Report on Form 10-K of ICG Funding, LLC.
KPMG LLP
Denver, Colorado
February 24, 1999
<PAGE>
EXHIBIT 27.1
Financial Data Schedule of ICG Funding, LLC for the Fiscal Year Ended
December 31, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
ICG Funding, LLC
By: ICG Communications, Inc.
Common Member and Manager
By: /s/ Harry R. Herbst
---------------------------------------------
Harry R. Herbst
Executive Vice President and Chief
Financial Officer (Principal Financial
Officer)
Date: February 25, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ICG FUNDING, LLC FOR THE FISCAL YEAR ENDED DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 16,912
<SECURITIES> 0 <F1>
<RECEIVABLES> 0 <F1>
<ALLOWANCES> 0 <F1>
<INVENTORY> 0 <F1>
<CURRENT-ASSETS> 9,568
<PP&E> 0 <F1>
<DEPRECIATION> 0 <F1>
<TOTAL-ASSETS> 135,294
<CURRENT-LIABILITIES> 1,116
<BONDS> 4,699
128,042
0 <F1>
<COMMON> 0 <F1>
<OTHER-SE> 1,437
<TOTAL-LIABILITY-AND-EQUITY> 135,294
<SALES> 0 <F1>
<TOTAL-REVENUES> 0 <F1>
<CGS> 0 <F1>
<TOTAL-COSTS> 0 <F1>
<OTHER-EXPENSES> 0 <F1>
<LOSS-PROVISION> 0 <F1>
<INTEREST-EXPENSE> (1,908)
<INCOME-PRETAX> 7,877
<INCOME-TAX> 0 <F1>
<INCOME-CONTINUING> 7,877
<DISCONTINUED> 0 <F1>
<EXTRAORDINARY> 0 <F1>
<CHANGES> 0 <F1>
<NET-INCOME> 7,877
<EPS-PRIMARY> 0 <F1>
<EPS-DILUTED> 0 <F1>
<FN>
<F1>THIS VALUE IS NOT APPLICABLE
</FN>
</TABLE>
