FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of: October 14, 1998
----------------
TRICOM, S.A.
(Translation of registrant's name into English)
AVENIDA LOPE DE VEGA NO. 95, SANTO DOMINGO, DOMINICAN REPUBLIC
(Address of principal executives offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
--------- -----------
Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also thereby furnishing
the information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
Yes No X
----------- ---------
If "Yes" is marked, indicate below the file number assigned
to the registrant in connection with Rule 12g3-2(b): 82-
--------
<PAGE>
FOR IMMEDIATE RELEASE -- FINAL
For Further Information Contact:
FOR FURTHER INFORMATION CONTACT:
Jaime Garcia Robin Weinberg
TRICOM, S. A. DEWE ROGERSON
Ph (809) 476-4054 Ph (212) 688-6840
e-mail: [email protected] e-mail: [email protected]
--------------------- --------------------------
TRICOM, S.A. REPORTS RECORD EARNINGS IN THIRD QUARTER 1998
(Santo Domingo, Dominican Republic, October 14, 1998) -- TRICOM,
S.A. (NYSE:TDR), today announced results of operations for the
third quarter ended September 30, 1998.
THIRD QUARTER OPERATING HIGHLIGHTS:
. Operating revenues totaled US$ 32.6 million for the third
quarter of 1998, a 33.4% increase over third quarter of 1997
revenues of US$ 24.5 million.
. Net earnings were US$ 5.2 million for the third quarter of
1998, or US$ 0.22 per share, compared to earnings before
extraordinary item of US$ 1.4 million, or US$ 0.08 per
share, for the third quarter of 1997.
. The Company had 71,647 local access lines in service at
September 30, 1998 compared to 34,995 at September 30, 1997.
. Cellular subscribers increased to 88,990 at September 30,
1998 compared to 30,129 at September 30, 1997.
. Operating margin increased to 23.5% in the third quarter of
1998 from 20.9% in the third quarter of 1997.
. EBITDA increased 60.8% to US$ 14.3 million for the third
quarter of 1998 from US$ 8.9 million for the third quarter
of 1997, with margins increasing to 43.7% in the third
quarter of 1998 from 36.2% in the third quarter of 1997.
For the nine months ended September 30, 1998, TRICOM reported
operating revenues of US$ 90.3 million, up 41.5% from operating
revenues of US$ 63.8 million for the first nine months of 1997
and net earnings of US$ 12.2 million for the first nine months of
1998 compared with earnings before extraordinary item of US$ 2.0
million for the first nine months of 1997. EBITDA for the first
nine months of 1998 totaled US$ 38.6 million compared to US$ 21.2
million for the same period of 1997. Earnings per share increased
to US$ 0.55 for the first nine months of 1998 as compared to
earnings per share before extraordinary item of US$ 0.12 for the
same period of 1997.
Arturo Pellerano, President and Chief Executive Officer of
TRICOM, stated, "The third quarter marked another record breaking
earnings period for TRICOM. We are extremely pleased with the
results which continue to reflect our growth in the local market
and our revenues derived from the international markets as well.
As we continue to increase our market penetration through
expanded marketing efforts and the employment of state-of-the-art
technology, we expect to see similar trends next quarter."
<PAGE>
OPERATING REVENUES for the third quarter of 1998 increased by
------------------
33.4% to US$ 32.6 million from US$ 24.5 million for the third
quarter of 1997. The Company attributes this growth to increased
revenues from local service, cellular, installations, as well as
international settlement revenues particularly from TRICOM USA's
international operations.
INTERNATIONAL SETTLEMENT REVENUES increased by 14.6% to US$ 13.2
---------------------------------
million for the third quarter of 1998 compared to US$ 11.5
million for the third quarter of 1997. This increase in
international revenues resulted from the growth of inbound
traffic volume from TRICOM USA, the Company's long distance
service provider in the United States. This increase was achieved
despite a 3.1% decrease in settlement rates to an average rate of
US$0.222 per minute for the third quarter of 1998 from US$0.229
per minute for the third quarter of 1997. Inbound minutes
increased by 18.1% to 51.4 million during the third quarter of
1998 from 43.5 million during the third quarter of 1997. The
number of inbound minutes generated by TRICOM USA increased by
69.0% to 30.8 million minutes from 18.2 million minutes for the
same period in 1997. For the first nine months of 1998, total
inbound minutes increased by 55.0% to 143.6 million compared to
92.7 million for the first nine months of 1997.
LOCAL SERVICE REVENUES increased by 77.6% to US$ 3.5
------------------------
million for the third quarter of 1998 from US$ 2.0 million for
the third quarter of 1997, reflecting the expansion of the
Company's local access network, combined with a higher average
monthly rate charged to customers. During the third quarter of
1998, the Company added 11,228 net local access lines compared to
6,553 net local access lines added during the same period of
1997. This represents the highest number of net line additions in
any quarter since TRICOM began installing local access lines in
1994. As of September 30, 1998, the Company had 71,647 local
access lines in service compared to 34,995 local access lines in
service at September 30, 1997, doubling its local access line
subscriber base.
CELLULAR REVENUES increased by 51.0% to US$ 5.4 million during
-----------------
the third quarter of 1998 compared to US$ 3.6 million for the
same period in 1997 primarily as a result of a higher average
subscriber base. The Company added 12,895 net cellular
subscribers during the third quarter of 1998 compared to 6,608
net cellular subscribers during the third quarter of 1997. The
number of cellular subscribers increased by 195.4% to 88,990 at
September 30, 1998 from 30,129 at September 30, 1997. Airtime
minutes increased 17.2% in the third quarter of 1998 to 24.5
million minutes from 20.9 million minutes in the third quarter of
1997. In addition, the average price per outgoing airtime minute
increased by 27% to US$ 0.26 in the third quarter of 1998 from
US$ 0.20 in the third quarter of 1997. The Company attributes the
substantial increase in cellular subscribers to its Amigo prepaid
cellular program introduced in the third quarter of 1997.
INSTALLATION REVENUES increased by 206.2% to US$ 3.8 million for
---------------------
the third quarter of 1998 from US$ 1.2 million for the third
quarter of 1997. This increase is a result of the continued
growth in the number of local access line installations and
cellular activations. During the third quarter of 1998, the
Company installed 12,706 gross local access lines and activated
26,191 cellular subscribers, compared to 7,919 gross local access
lines installed and 9,914 cellular subscribers activated during
the third quarter of 1997.
OPERATING COSTS increased 29.0% to US$ 25.0 million for the third
---------------
quarter of 1998 compared to US$ 19.3 million for the third
quarter of 1997. However, as a percentage of total operating
revenues, operating costs declined to 76.5% for the third quarter
of 1998 from 79.1% for the same period in the previous year. This
increase in operating costs was primarily attributable to
increases in general and administrative expenses, depreciation,
and expense in lieu of income taxes. General and administrative
expenses increased by 54.4% to US$ 10.0 million for the third
quarter of 1998 from US$ 6.5 million for the same period in 1997,
mainly as a result of higher personnel costs, reflecting an
increase in the number of employees, other expenses and sales
commissions. However, these increases were partially offset by a
<PAGE>
decline in satellite connections and carrier costs.
OPERATING INCOME, as a percentage of total operating revenues,
----------------
improved to 23.5% for the third quarter of 1998 compared to 20.9%
for the third quarter of 1997.
NET EARNINGS increased by US$ 9.3 million to US$ 5.2 million, or
------------
US$ 0.22 per share, for the third quarter of 1998 compared to a
loss of US$ 4.0 million, or a loss of US$ 0.24 per share, for the
third quarter of 1997. The loss in 1997 reflected a write-off of
US$ 5.5 million in the third quarter related to the retirement of
indebtedness with the proceeds of the Senior Notes. During the
third quarter of 1997, the Company had earnings before
extraordinary item of US$ 1.4 million, or US$ 0.08 per share. Net
earnings accounted for 16.1% of total operating revenues for the
1998 third quarter, while earnings before extraordinary item
accounted for 5.9% of total operating revenues for the 1997 third
quarter, evidencing the continued improvement of the Company's
profitability driven by its local access, cellular and
international businesses.
EBITDA increased by 60.8% to US$ 14.3 million for the third
------
quarter of 1998 from US$ 8.9 million for the third quarter of
1997, as a result of higher operating margins, reflecting the
Company's improved operating performance. In addition, as a
percentage of total operating revenues, EBITDA grew to 43.7% for
the third quarter of 1998 from 36.2% for the third quarter of
1997.
TRICOM is a full service telecommunications provider in the
Dominican Republic, and has long distance operations in the
United States and Puerto Rico. Since it began operations in 1992
as a low-cost international long distance service provider, the
Company has expanded its services to include basic local service,
national long distance, cellular, paging and Internet access.
* * *
The statements contained in this press release which are not
historical facts are forward-looking statements that involve
risks and uncertainties. Management cautions the reader that
these forward-looking statements are only predictions; actual
events or results may differ materially as a result of risks
facing the Company. Such risks include, but are not limited to
the following factors: competition; declining rates for
international long distance traffic; opposition to increased
rates for basic local service; the Company's significant capital
expenditure requirements and its need to finance such
expenditures; the inability of the Company to expand its local
access line network in a timely manner and within the amount
budgeted for such capital expenditure program; the inability of
the Company to manage effectively its rapid expansion; the
continued growth of the Dominican economy, demand for telephone
services in the Dominican Republic and moderation of inflation;
and the continuation of a favorable political and regulatory
environment in the Dominican Republic.
(Tables to follow)
<PAGE>
The following tables set forth comparative operating information
for the three- and nine-month periods ended September 30, 1997
and 1998.
-------------------------------------------------------------------
SUMMARY OF OPERATING
INFORMATION 3Q'97 3Q'98 VARIATION %
-------------------------------------------------------------------
Total lines in service
(at period end) 34,995 71,647 36,652 104.7%
Airtime minutes 20,911,737 24,499,345 3,587,608 17.2%
International long
distance minutes:
Inbound minutes 43,538,952 51,420,700 7,881,748 18.1%
Outbound minutes 5,533,817 5,829,141 295,324 5.3%
Domestic long distance
minutes 3,516,580 5,202,634 1,686,054 47.9%
Cellular subscribers
(at period end) 30,129 88,990 58,861 195.4%
Paging subscribers
(at period end) 27,443 28,652 1,209 4.4%
Number of employees
(at period end) 759 1,272
-------------------------------------------------------------------
-------------------------------------------------------------------
SUMMARY OF OPERATING
INFORMATION YTD'97 YTD'98 VARIATION %
-------------------------------------------------------------------
Total lines in service
(at period end) 34,995 71,647 36,652 104.7%
Airtime minutes 53,249,439 69,072,660 15,823,221 29.7%
International long
distance minutes:
Inbound minutes 92,668,471 143,643,553 50,975,082 55.0%
Outbound minutes 16,171,141 17,797,207 1,626,066 10.1%
Domestic long distance
minutes 8,927,399 14,318,142 5,390,743 60.4%
Cellular subscribers
(at period end) 30,129 88,990 58,861 195.4%
Paging subscriber
(at period end) 27,443 28,652 1,209 4.4%
Number of employees
(at period end) 759 1,272
-------------------------------------------------------------------
The following table sets forth the percentage contribution of
each category of revenues to total operating revenues and certain
items in the statement of operations expressed as a percentage of
total operating revenues for the three- and nine-month periods
ended September 30, 1997 and 1998.
-------------------------------------------------------------------
OPERATING REVENUES 3Q'97 3Q'98 YTD'97 YTD'98
-------------------------------------------------------------------
Toll 15.6% 13.7% 17.5% 14.8%
International
settlement 47.0% 40.4% 44.2% 40.6%
Local service 8.0% 10.7% 6.6% 10.2%
Cellular 14.7% 16.7% 14.1% 16.3%
Paging 5.3% 3.4% 5.9% 3.9%
Sale and lease of
equipment 4.2% 3.0% 6.9% 3.1%
Installations 5.0% 11.6% 4.6% 10.8%
Other 0.1% 0.6% 0.0% 0.3%
---------------------------------------------------------------------
Operating costs 79.1% 76.5% 83.7% 76.4%
Operating income 20.9% 23.5% 16.3% 23.6%
Interest expense, net -11.1% -7.0% -11.8% -8.9%
Earnings before
extraordinary item 5.9% 16.1% 3.1% 13.5%
Net earnings -16.4% 16.1% -5.4% 13.5%
EBITDA 36.2% 43.7% 33.2% 42.8%
---------------------------------------------------------------------
NOTE: Percentages do not add up to 100% due to rounding
<PAGE>
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN US$)
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1997 1998
ASSETS (AUDITED) (UNAUDITED)
Current assets:
Cash and cash
equivalents US$ 5,732,505 US$ 21,773,101
Accounts receivable:
Customers 5,612,123 4,786,892
Carriers 5,546,399 4,436,705
Related parties 625,248 243,750
Officers and
employees 200,294 241,050
Current portion of
long-term
accounts
receivable 281,382 23,579
Other 3,525,123 7,286,684
--------------- ---------------
15,790,569 17,018,661
Allowance for (668,827) (623,437)
doubtful accounts --------------- ---------------
Accounts
receivable, net 15,121,742 16,395,224
Current portion of pledged
securities 22,750,000 54,469,879
Inventories, net 5,633,477 11,266,706
Prepaid expenses 2,518,052 1,500,593
--------------- ---------------
Total current
assets 51,755,776 105,405,503
Long-term accounts
receivable 966,592 367,480
Unearned interest (204,576) (82,626)
--------------- ---------------
Long-term accounts
receivable, net 762,016 284,854
Investments:
Pledged securities 53,018,390 -
Others 1,796,521 2,006,654
--------------- ---------------
Total investments 54,814,911 2,006,654
--------------- ---------------
Property and
equipment, net 202,977,596 304,629,047
Other assets at
cost, less
accumulated
amortization 10,833,238 15,732,278
TOTAL ASSETS US$ 321,143,537 US$ 428,058,336
=============== ===============
<PAGE>
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN US$)
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1997 1998
LIABILITIES & (AUDITED) (UNAUDITED)
SHAREHOLDERS EQUITY
Current liabilities:
Short-term obligations US$ - US$ 158,326
Notes payable:
Borrowed funds-banks 5,905,005 7,791,342
Borrowed funds-
related parties 4,849,818 18,414,988
Bonds payable-short
term - -
Current portion of
long term debt -
Carifa Loan - 32,000,000
------------- -------------
10,754,823 58,206,330
Accounts payable:
Carriers 2,327,768 2,234,441
Suppliers 17,746,637 28,121,903
Related parties - -
Other 1,023,478 916,929
------------- -------------
21,097,883 31,273,273
Other liabilities 3,039,761 4,346,705
Accrued expenses 12,017,371 11,730,473
------------- -------------
Total current
liabilities 46,909,838 105,715,107
Reserve for severance
indemnities 140,641 25,870
Long-term debt:
Carifa Loan 32,000,000 -
Senior Notes 200,000,000 200,000,000
------------- -------------
Total liabilities 279,050,479 305,740,977
Shareholders equity:
Class A Common Stock at
par value RD$10:
Authorized 55,000,000
shares; 5,700,000
shares issued at
September 30, 1998 - 3,750,000
Class B Stock at par
value RD$10:
Authorized 22,517,095
shares at December 31,
1997 and 21,044,544
shares at September
30, 1998; 19,390,528
shares issued at
December 31, 1997 and
19,144,544 issued at
September 30, 1998 43,357,343 12,595,095
Paid-in-capital, excess
over par - 94,515,379
Legal reserve 600,233 600,233
Retained earnings
(deficit) 3,147,997 718,290
Period net income
(loss) (2,429,707) 12,162,119
Equity adjustment for
foreign currency
translation (2,023,757) (2,023,757)
------------- -------------
42,652,109 122,317,359
Less treasury stock at
cost, 245,985 shares (559,051) -
------------- -------------
42,093,058 122,317,359
TOTAL LIABILITIES &
SHAREHOLDERS EQUITY US$ 321,143,537 US$ 428,058,336
============= =============
<PAGE>
All share and per share data set forth below reflect the
reclassification of the Company's shares of Common Stock that
were outstanding prior to TRICOM's initial public offering of
American Depository Shares into shares of Class B Stock and give
effect to an approximate 3.3132-for-one stock split at that time.
The financial data set forth below at and for the nine months
ended September 30, 1998 are unaudited and are subject to normal
year-end adjustments. The results of operations for the nine
months ended September 30, 1998 are not necessarily indicative of
the results of operations to be expected for the entire year
ending December 31, 1998.
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN US$)
THREE MONTH PERIOD ENDED
SEPTEMBER 30,
-----------------------------
1997 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
OPERATING REVENUES
Toll US$ 3,808,391 US$ 4,465,767
International
settlement 11,501,513 13,177,167
Local service 1,962,228 3,484,598
Cellular 3,604,511 5,443,230
Paging 1,306,211 1,109,492
Sale and lease
of equipment 1,032,580 978,349
Installations 1,231,842 3,772,153
Other 12,566 205,150
---------- ----------
TOTAL OPERATING
REVENUES 24,459,842 32,635,906
OPERATING COSTS:
Satellite
connections and
carrier 8,288,489 7,604,076
Network
depreciation 1,550,418 3,086,136
Expense in lieu
of income taxes 1,675,232 2,575,250
General and
administrative
expenses 6,491,570 10,020,901
Depreciation
expense 519,435 914,829
Other 813,227 753,710
---------- ----------
TOTAL OPERATING
COSTS 19,338,371 24,954,902
OPERATING INCOME 5,121,471 7,681,004
OTHER INCOME
(EXPENSES):
Interest expense (3,512,436) (3,799,246)
Interest income 806,162 1,500,694
Foreign exchange
loss (301,297) (54,360)
Other (680,028) (83,732)
---------- ----------
TOTAL OTHER
EXPENSES (3,687,599) (2,436,644)
---------- ----------
EARNINGS BEFORE
EXTRAORDINARY
ITEM 1,433,872 5,244,360
EXTRAORDINARY
ITEM - EARLY
EXTINGUISHMENT
OF DEBT (5,452,995) -
NET EARNINGS US$ (4,019,123) US$ 5,244,360
========== ==========
EBITDA US$ 8,866,556 US$ 14,257,219
EARNINGS PER
SHARE BEFORE
EXTRAORDINARY
ITEM US$ 0.08 US$ 0.22
EARNINGS PER
SHARE US$ (0.24) US$ 0.22
NINE MONTH PERIOD ENDED
SEPTEMBER 30,
-----------------------------
1997 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
OPERATING REVENUES
Toll US$ 11,183,790 US$ 13,327,639
International
settlement 28,207,247 36,676,456
Local service 4,234,351 9,198,808
Cellular 9,023,020 14,734,640
Paging 3,795,893 3,556,468
Sale and lease
of equipment 4,418,355 2,798,781
Installations 2,949,077 9,780,712
Other 19,175 274,313
---------- ----------
TOTAL OPERATING
REVENUES 63,830,908 90,347,817
OPERATING COSTS:
Satellite
connections and
carrier 23,113,981 23,433,672
Network
depreciation 5,240,471 8,224,804
Expense in lieu
of income taxes 4,370,340 6,719,661
General and
administrative
expenses 16,771,059 25,945,424
Depreciation
expense 1,120,984 2,321,725
Other 2,778,063 2,341,223
---------- ----------
TOTAL OPERATING
COSTS 53,394,898 68,986,509
OPERATING INCOME 10,436,010 21,361,308
OTHER INCOME
(EXPENSES):
Interest expense (8,461,203) (12,041,255)
Interest income 958,557 3,943,125
Foreign exchange
loss (301,297) (139,197)
Other (642,467) (961,862)
---------- ----------
TOTAL OTHER
EXPENSES (8,446,410) (9,199,189)
---------- ----------
EARNINGS BEFORE
EXTRAORDINARY
ITEM 1,989,600 12,162,119
EXTRAORDINARY
ITEM - EARLY
EXTINGUISHMENT
OF DEBT (5,452,995) -
NET EARNINGS US$ (3,463,395) US$ 12,162,119
========== ==========
EBITDA US$ 21,167,805 US$ 38,627,498
EARNINGS PER
SHARE BEFORE
EXTRAORDINARY
ITEM US$ 0.12 US$ 0.55
EARNINGS PER
SHARE US$ (0.20) US$ 0.55
<PAGE>
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN US$)
NINE MONTH PERIOD ENDED
SEPTEMBER 30,
---------------------------------
1997 1998
(UNAUDITED) (UNAUDITED)
Cash flows from
operating activities:
Cash received from
customers US$ 73,485,762 US$ 88,211,099
Cash paid to
suppliers and
employees (49,819,350) (49,073,587)
Cash received from
(paid to) related
parties (159,114) 381,498
Interest paid (8,804,636) (12,163,205)
Interest received
on deposits 958,557 3,943,125
Expense in lieu of
income tax (4,370,340) (6,719,661)
Other income
(expenses), net (943,765) (1,101,061)
----------- -----------
Net cash provided
by (used in)
operating
activities 10,347,114 23,478,208
Cash flows from
investing activities:
Acquisition of
investments (54,342,649) -
Current portion of
investments (22,750,000) (31,719,879)
Cancellation of
investments - 52,808,258
Acquisition of
property and
equipment (47,402,725) (112,198,006)
----------- -----------
Net cash used in
investing
activities (124,495,374) (91,109,627)
Cash flows from
financing activities:
Borrowed funds
(paid to) from
banks (37,011,757) 2,044,663
Borrowed funds
from related
parties (18,569,576) 13,565,170
Short terms
obligations (2,235,955) -
Issuance
(redemption) of
short-term bonds (7,061,768) 32,000,000
High yield bond
issue 200,000,000 -
Long-term debt (28,000,000) (32,000,000)
Issuance of common
stock 20,000,000 68,062,182
----------- -----------
Net cash
provided by
financing
activities 127,120,944 83,672,015
Net increase (decrease)
in cash and cash
equivalents 12,972,684 16,040,596
Cash and cash
equivalents at
beginning of the
year 4,291,804 5,732,505
Cash and cash
equivalents at end
of period US$ 17,264,488 US$ 21,773,101
=========== ===========
<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.
TRICOM, S.A
Dated: October 15, 1998 By: /s/ Carl H. Carlson
--------------------------
Carl H. Carlson,
Executive Vice President
and Member of the
Office of the President
