<PAGE>
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: NOVEMBER 15, 2000
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-_________
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TABLE OF CONTENTS
PAGE
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GENERAL INTRODUCTION...................................................... 1
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS............................................. 2
Consolidated Balance Sheet as of December 31, 1999 and
September 30, 2000 (unaudited)..................................... 2
Consolidated Statement of Operations for the Three and Nine months
period ended September 30, 1999 and 2000
(unaudited)......................................................... 4
Consolidated Statements of Cash Flows for the Nine months period
ended September 30, 1999 and 2000 (unaudited)....................... 5
Notes to Financial Statements........................................ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION........................................ 7
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....... 15
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS............................................... 16
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS....................... 17
ITEM 3. DEFAULTS UPON SENIOR SECURITIES................................. 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............. 17
ITEM 5. OTHER INFORMATION............................................... 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 20-f and form 6-K.................. 17
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GENERAL INTRODUCTION
UNLESS THE CONTEXT INDICATES OTHERWISE, ALL REFERENCES TO (I) THE "COMPANY"
OR "TRICOM" REFER TO TRICOM, S.A. AND ITS CONSOLIDATED SUBSIDIARIES AND THEIR
RESPECTIVE OPERATIONS, AND INCLUDE TRICOM'S PREDECESSORS, AND (II) "GFN" REFERS
TO GFN CORPORATION LTD. AND ITS DIRECT AND INDIRECT SUBSIDIARIES, OTHER THAN THE
COMPANY AND ITS SUBSIDIARIES, AND INCLUDE GFN'S PREDECESSORS.
FOLLOW-ON PUBLIC OFFERING OF COMMON STOCK
On April 11, 2000, the Company successfully completed a US$74.0 million
follow-on public offering of 4,000,000 American Depositary Shares ("ADS"), each
of which represents one share of the Company's Class A Common Stock, at a price
of $18.50 per ADS.
PRESENTATION OF CERTAIN FINANCIAL INFORMATION
The Company prepares its consolidated financial statements in conformity
with generally accepted accounting principles in the United States. The Company
adopted the United States dollar as its functional currency effective January 1,
1997.
In this Quarterly Report references to "$," "US$" or "U.S. dollars" are to
United States dollars, and references to "Dominican pesos" or "RD$" are to
Dominican pesos. This Quarterly Report contains translations of certain
Dominican peso amounts into U.S. dollars at specified rates solely for the
convenience of the reader. These translations should not be construed as
representations that the Dominican peso amounts actually represent such U.S.
dollar amounts or could be converted into U.S. dollars at the rate indicated.
The average of prices of one U.S. dollar quoted by certain private commercial
banks (the "Private Market Rate") as reported by Banco Central de la Republica
Dominicana (the "Central Bank") on September 30, 2000 was RD$16.52 = US$1.00,
the date of the most recent financial information included in this Quarterly
Report. The Federal Reserve Bank of New York does not report a noon buying rate
for Dominican pesos. On November 11, 2000, the Private Market Rate was RD$16.55
= US$1.00.
FORWARD-LOOKING STATEMENTS
The statements contained in this Quarterly Report, which are not historical
facts are forward-looking statements that involve risks and uncertainties.
Management cautions the reader that these forward-looking statements are only
predictions; actual events or results may differ materially as a result of risks
facing the Company. Such risks include, but are not limited to, the following
factors: competition; declining rates for international long distance traffic;
the Company's significant capital expenditure requirements and its need to
finance such expenditures; the inability of the Company to expand its local
access line network in a timely manner and within the amount budgeted for such
capital expenditure program; the inability of the Company to manage effectively
its local and regional expansion could affect profitability; the substantial
indebtedness could adversely affect the Company's ability to fund its planned
expansion; social, regulatory and economic conditions in the Dominican Republic
and other markets the Company has targeted for expansion..
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN US$)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 2000
---- ----
ASSETS (AUDITED) (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents US$ 13,459,566 US$ 51,484,116
Accounts receivable:
Customers 22,821,951 22,482,125
Carriers 6,467,016 7,606,618
Related parties 40,412 3,041,004
Officers and employees 415,702 531,697
Current portion of long term accounts receivable 66,369 --
Other 624,846 1,479,144
---------------- -----------------
30,436,296 35,140,588
Allowance for doubtful accounts (4,307,563) (1,819,406)
---------------- -----------------
Accounts receivable, net 26,128,733 33,321,183
Inventories, net 9,701,255 8,797,354
Prepaid expenses 6,637,067 3,858,819
Deferred income taxes 949,190 949,190
---------------- -----------------
Total current assets 56,875,811 98,410,661
---------------- -----------------
Long-term accounts receivable 22,619 --
Other investments 2,710,572 3,015,743
Property and equipment cost 511,109,186 652,282,260
Accumulated depreciation (56,063,995) (81,175,566)
---------------- -----------------
Property and equipment, net 455,045,191 571,106,694
Other assets at cost, net of amortization 16,824,267 17,826,079
---------------- -----------------
TOTAL ASSETS US$ 531,478,461 US$ 690,359,177
================ =================
</TABLE>
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<TABLE>
<CAPTION>
TRICOM, S.A.
CONSOLIDATED BALANCE SHEET (CONTINUED)
(IN US$) DECEMBER 31, SEPTEMBER 30,
1999 2000
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(AUDITED) (UNAUDITED)
<S> <C> <C>
LIABILITIES & SHAREHOLDERS EQUITY
Current liabilities:
Short-term obligations US$ -- US$ 4,099,696
Notes payable:
Borrowed funds-banks US$ 63,602,022 US$ 77,782,558
Borrowed funds-related parties 17,895,946 68,437,203
Current portion of long term debt 315,216 68,266
---------------- ----------------
81,813,184 146,288,027
---------------- ----------------
Current portion of capital leases 14,242,056 1,261,092
Accounts payable:
Carriers 2,987,379 8,313,085
Suppliers 12,043,787 31,855,621
Related parties 10,035,066 334,376
Other 329,309 195,043
---------------- ----------------
25,395,541 40,698,125
Other liabilities 3,789,707 5,038,105
Accrued expenses 15,293,910 12,050,380
---------------- ----------------
Total current liabilities 140,534,398 209,435,425
---------------- ----------------
Reserve for severance indemnities 31,414 3,631
Deferred income tax 631,159 631,159
Capital leases, excluding current portion 11,640,652 20,523,718
Long-term debt, excluding current portion 228,772,011 233,674,308
---------------- ----------------
Total liabilities 381,609,634 464,268,241
---------------- ----------------
Shareholders equity:
Class A Common Stock at par value RD$10: Authorized
55,000,000 shares; 5,700,000 shares issued at December 31,
1999 and 9,700,000 at September 30, 2000 3,750,000 6,210,025
Class B Stock at par value RD$10: Authorized 25,000,000
shares at December 31, 1999 and June 30, 2000; 19,144,544
issued at December 31, 1999 and September 30, 2000 12,595,095 12,595,095
Additional paid-in-capital, excess over par 94,288,852 159,291,845
Legal reserve -- 1,653,007
Retained earnings 41,258,637 48,364,721
Equity adjustment for foreign currency translation (2,023,757) (2,023,757)
---------------- ----------------
Shareholders equity, net 149,868,827 226,090,936
TOTAL LIABILITIES & ---------------- ----------------
SHAREHOLDERS EQUITY US$ 531,478,461 US$ 690,359,177
================ ================
</TABLE>
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TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN US$)
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED NINE MONTH PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------------------- ------------------------------------------
1999 2000 1999 2000
---- ---- ---- ----
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
OPERATING REVENUES:
<S> <C> <C> <C> <C>
Toll $ 6,209,343 $ 7,591,337 $ 16,534,758 $ 20,991,678
International settlement 15,474,674 22,010,363 43,827,586 58,968,569
Local service 9,386,068 14,554,969 23,032,640 39,081,148
Cellular 6,794,377 9,021,849 18,619,788 26,311,409
Paging 603,990 435,893 2,177,239 1,347,817
Sale and lease of equipment 1,414,386 726,822 3,840,287 4,334,056
Installations 4,355,060 2,603,804 11,759,006 10,874,368
Other 730,927 46,179 902,600 110,911
--------------- --------------- ---------------- ---------------
TOTAL OPERATING REVENUES 44,968,825 56,991,216 120,693,904 162,019,956
OPERATING COSTS:
Satellite connections and carriers 12,400,327 17,832,242 30,740,297 47,149,731
Network depreciation 3,893,875 7,516,749 11,321,525 20,392,169
Expense in lieu of income taxes 2,955,787 3,333,873 9,141,938 8,832,265
General and administrative expenses 10,975,171 15,767,355 33,094,383 45,846,378
Non-cash consulting expenses -- 163,425 -- 690,192
Depreciation expense 1,264,607 1,651,913 3,473,766 4,719,400
Other 1,229,318 859,458 3,591,584 3,303,372
--------------- --------------- ---------------- ---------------
TOTAL OPERATING COSTS 32,719,085 47,125,015 91,363,493 130,933,507
OPERATING INCOME 12,249,740 9,866,201 29,330,411 31,086,449
OTHER INCOME (EXPENSES):
Interest expense (5,676,590) (8,799,715) (14,308,610) (24,594,014)
Interest income 552,250 1,347,187 2,270,134 2,601,321
Foreign exchange gain (loss) (991,387) 232,790 (517,359) (102,439)
Other (418,353) (77,630) (1,271,223) (192,803)
--------------- --------------- ---------------- ---------------
TOTAL OTHER EXPENSES (6,534,080) (7,297,368) (13,827,058) (22,287,935)
--------------- --------------- ---------------- ---------------
EARNINGS BEFORE INCOME TAX 5,715,660 2,568,833 15,503,353 8,798,514
INCOME TAX -- DEFERRED CREDIT -- -- 56,203
--------------- --------------- ---------------- ---------------
NET EARNINGS $ 5,715,660 $ 2,568,833 $ 15,559,556 $ 8,798,514
=============== =============== ================ ===============
EBITDA $ 20,364,009 $ 22,532,161 $ 53,267,640 $ 65,720,475
=============== =============== ================ ===============
EARNINGS PER COMMON SHARE:
Basic and diluted $ 0.23 $ 0.09 $ 0.63 $ 0.32
=============== =============== ================ ===============
WEIGHTED AVG. NUMBER OF SHARES USED
IN CALCULATION:
Basic 24,844,544 28,844,544 24,844,544 27,355,493
=============== =============== ================ ===============
Diluted 24,844,544 28,968,364 24,844,544 27,530,733
=============== =============== ================ ===============
</TABLE>
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TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN US$)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1999 2000
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(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net earnings US$ 15,559,555 US$ 8,798,514
Adjustments to reconcile net earnings and net cash provided
by operating activities:
Allowance for doubtful accounts 1,575,484 4,751,135
Depreciation 14,795,291 25,111,571
Non-cash consulting expenses -- 690,192
Reserve for severance indemnities (31,783) (27,783)
Net changes in assets and liabilities:
Accounts payable 4,397,896 15,302,584
Accounts receivable (11,223,199) (12,009,953)
Accrued expenses (2,823,754) (3,282,953)
Inventories (1,295,319) 903,901
Long-term accounts receivable 57,011 88,988
Other assets (3,766,201) (1,001,811)
Other liabilities (3,260,240) 1,248,398
Prepaid expenses 494,969 2,778,248
-------------- ---------------
Total adjustments (1,079,845) 34,552,517
-------------- ---------------
Net cash provided by operating activities 14,479,710 43,351,031
============== ===============
Cash flows from investing activities:
Acquisition of property and equipment (109,042,986) (131,605,688)
Cancellation (Acquisition) of investments 52,866,826 (305,171)
-------------- ---------------
Net cash used in investing activities (56,176,160) (131,910,859)
-------------- ---------------
Cash flows from financing activities:
Borrowed funds (paid to) from banks 39,990,562 14,180,536
Borrowed funds (paid to) from related parties (1,460,973) 50,541,257
Capital lease payments -- (13,665,284)
Payments of Long-term debt (32,000,000) (246,950)
Issuance of common stock -- 66,772,826
Proceeds from issuance of long term debt 25,000,000 4,902,297
Short terms obligations -- 4,099,696
-------------- ---------------
Net cash provided by financing activities 31,529,589 126,584,378
-------------- ---------------
Net increase (decrease) in cash and cash equivalents (10,166,861) 38,024,550
Cash and cash equivalents at beginning of the period 15,377,410 13,459,566
-------------- ---------------
Cash and cash equivalents at end of period US$ 5,210,549 US$ 51,484,116
============== ===============
</TABLE>
TRICOM, S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(IN US$)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1999 2000
---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
SUPPLEMENTARY INFORMATION
Expenses in lieu of income tax paid (9,141,938) (8,832,265)
Interest paid (net of capitalization) (8,794,907) (8,373,657)
Capital lease obligation incurred - 9,567,386
=================== =====================
</TABLE>
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TRICOM, S.A. and Subsidiaries
Notes to Financial Statements
NOTE 1 - Basis of Presentation
The Company considers that all adjustments (all of which are normal
recurring accruals) necessary for a fair statement of financial position and
results of operations for these periods have been made; however, results for
such interim periods are subject to audit. Results for such interim periods are
not necessarily indicative of results for a full year.
NOTE 2 - Calculation of EBITDA
EBITDA consists of earnings (loss) before interest expense, income
taxes, depreciation and amortization. EBITDA is commonly used in the
telecommunications industry to analyze companies on the basis of operating
performance, leverage and liquidity. However, it does not purport to represent
cash generated or used by operating activities and should not be considered in
isolation or as a substitute for a measure of performance in accordance with
generally accepted accounting principles
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
COMPANY OVERVIEW
TRICOM is a leading integrated communications service provider in the
Dominican Republic. Through the only completely digital local access network in
the Dominican Republic, a cellular and PCS network covering 80% of the
population and our submarine fiber optic cable systems, we offer local, long
distance, mobile, Internet and broadband data transmission services. Through our
subsidiary, TRICOM USA, Inc., we own switching facilities in New York and Puerto
Rico, and are one of the few Latin American long distance carriers licensed in
the United States. With substantial investments in submarine fiber optic cables
providing us with the capability to do end to end transmission of voice and
data, we are positioned to take advantage of opportunities to expand into highly
attractive markets in Central America and the Caribbean.
SERVICE OFFERINGS
Our service offerings include:
o Local service;
o Mobile services;
o International long distance; and
o Broadband data transmission and Internet.
LOCAL SERVICE
We are a competitive local exchange carrier and had 141,117 local
access lines in service at September 30, 2000. Our local access network covers
areas with approximately 80% of the population of Santo Domingo, Santiago and
nine additional cities.
All of our basic telephone service customers have access to a range of
value-added services, including call forwarding, three-way calling, call
waiting, and voice mail applications. In addition to local service, we provide
direct-dialed, collect and operator-assisted international and domestic long
distance services and Internet access to our residential and corporate
customers.
We offer our customers broad flexibility in assembling customized
packages of services, which provide our customers with cost savings and enhanced
control over their consumption of telephone services. Customers may choose from
a menu of services, including domestic and international long distance services,
local service and value-added services. They also may bundle their local access
service with cellular or PCS, paging and Internet services. Service packages
permit customers to preset their monthly bills based upon, for example, local
service minutes as well as long distance minutes and specified destinations.
Customers are responsible for paying for usage levels in excess of preset
package amounts, at regular per minute rates. We believe that providing
customers with such budgeting capability increases consumer confidence in using
telecommunications services, consequently allowing for increased service
penetration, higher levels of customer satisfaction and lower incidence of
delinquent payments.
We have accelerated our local access network expansion program by
deploying a wireless local loop. The wireless local loop consists of receivers
that are installed at a customer's house, digital switches and a base station
transmitter. The receiver is connected by cable to a standard telephone jack
that connects to a standard telephone.
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The receiver is powered by the customer's home power supply and also contains a
battery that allows operation to continue for up to approximately 24 hours of
standby and eight hours of talk time in the event of a power outage. The
wireless local loop offers voice quality as clear as telephones connected by
wirelines.
MOBILE SERVICES
Our mobile network covers approximately 80% of the Dominican Republic's
population. We currently offer both cellular and PCS service. At September 30,
2000, we had 253,447 cellular and PCS subscribers representing approximately 49%
of the Dominican mobile telephony market, based on information available to us.
We attribute a substantial portion of our growth to our prepaid cellular and PCS
card, the Amigo card because it offers cellular and PCS service to individuals
who would not satisfy our current credit policies and because it appeals to
customers who prefer to budget their cellular and PCS telephone spending.
We have offered PCS service since April 1999. This technology provides
for added security and privacy compared with traditional analog systems, and it
also offers greater capacity. PCS customers are able to receive all of the
benefits related to a digital service, including digital messaging, caller ID
and voicemail. Our PCS network covers areas with approximately 65% of the
population in the Dominican Republic and is less extensive than our analog
network. We offer a dual-band service, allowing customers to use seamlessly
their mobile phones nationwide over both digital and analog networks.
We have entered into arrangements with major consumer electronics
retailers and a network of independent cellular and PCS dealers to offer our
cellular and PCS services in conjunction with their sale of handsets. We do not
subsidize or provide credit on the sale of cellular and PCS handsets.
We have provided paging services since April 1995. At September 30,
2000, we provided paging services to 22,485 subscribers, representing
approximately 18% of the Dominican paging market according to market information
available to us. In 1999 we stopped soliciting new paging subscribers. We
believe that the success of our prepaid cellular and PCS program has contributed
to the decline of paging as a significant part of our business because customers
have replaced paging services with prepaid cellular services.
INTERNATIONAL LONG DISTANCE
In the Dominican Republic, we provide international long distance
services to our local access, cellular and PCS customers. In addition, we offer
a prepaid calling card for international distance, the Efectiva card that can be
used from any telephone in the Dominican Republic. We operate telephone centers
that provide access to telephone services to individual customers who either do
not have telephone services in their own homes or who are attracted by the
competitive pricing of the telephone centers. The centers offer a wide range of
telephone services, in addition to long distance.
In the United States, our subsidiary TRICOM USA provides international
carrier services principally to resellers, which account for an increasing share
of international long distance traffic between the United States and the
Dominican Republic. Through our switching facilities in the United States, we
have been able to provide resellers with an alternate channel for sending
international long distance traffic. In addition, by controlling the origination
and termination of international long distance traffic between the United States
and the Dominican Republic, we believe that we are able to send and receive such
traffic at a lower cost to us than by exchanging traffic with traditional
international carriers.
Each year since the initiation of TRICOM USA's operations, we have
derived a greater percentage of international revenues from resellers. During
1999, resellers originated 42% of the international long distance minutes from
the United States to the Dominican Republic that we received. Minutes delivered
by resellers may fluctuate significantly. While we enter into agreements with
resellers, they are not required to provide to us any amount of traffic. The
price per minute charged by us to a reseller is negotiated as often as monthly.
During 1999, we received traffic from approximately 30 resellers.
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TRICOM USA also markets a number of prepaid cards to ethnic communities
in New York, New Jersey, New England, Connecticut and Florida and in Puerto
Rico. Each prepaid card is assigned a unique identification number and a face
value ranging from $2 to $20. The prepaid card's dollar balance is reduced by
the cost of each call. TRICOM USA sells the cards to distributors that resell
the cards to retail outlets.
BROADBAND DATA TRANSMISSION AND INTERNET
We provide broadband data transmission services to over 100 of the
largest business customers in the Dominican Republic, through several means of
delivery including fiber optic cable and digital wireless point-to-point radio
links. In addition, we provide some of these large customers with Internet
access, private networks and frame relay services. Through our integrated
services digital network or ISDN, we offer unified transmission of voice and
data over the same strand of fiber optic cable. We recently increased
transmission capacity to provide larger bandwidths.
In the Dominican Republic we are the second largest ISP. We provide
Internet connectivity to the residential and corporate markets through
traditional dial-up connections, as well as through dedicated lines, with speeds
ranging from 56 Kbps to 1.5 Mbps. In the near future, we expect to deploy our
xDSL and wireless broadband delivery solutions, which are currently in the final
stages of testing. Our PCS and paging services are now fully integrated with our
Internet service, offering email and digital messaging through our website,
www.tricom.net.
INFRASTRUCTURE SUPPLY AGREEMENT WITH MOTOROLA
On September 27, 2000 the Company announced that it had signed a
strategic infrastructure supply agreement with Motorola, Inc. to establish an
integrated digital wireless communication network based on IDEN(R), technology
in Central America. The initial purchase of infrastructure equipment will be
approximately $20 million. The Company expects to invest approximately $200
million in the whole project, for the purchase and deployment of
telecommunications related assets including mobile spectrum licenses,
communications and transmission equipment, cell sites, land and building
acquisition and improvements, during the next three years with the first stage
of deployment occurring in Panama.
The Motorola iDEN technology enables mobile professionals to use a
single, palm-size handset to instantly communicate with one or hundreds of
individuals through a two-way radio feature, make a digital wireless phone call,
receive text messages, access information from the Internet, send and receive
e-mail and connect to a notebook or handheld computer to serve as a wireless
modem, dependent on services available from the network operator. TRICOM will
target businesses in industries that require fast, efficient and reliable
integrated communications services. TRICOM's integrated digital wireless network
will be the first iDEN communication system in Central America, making TRICOM
the seventh wireless provider to adopt this technology in Latin America.
REVENUE RECOGNITION
We derive our operating revenues primarily from toll revenues,
international settlement revenues, cellular and PCS services, local services,
the sale and lease of equipment and installations. The components of each of
these services are as follows:
Toll revenues are amounts we receive from our customers in the
Dominican Republic for international and domestic long distance calls,
as well as interconnection charges received from Codetel, the incumbent
local service provider, for calls that originate in or transit its
network but terminate in our network. Toll revenues are generated by
residential and commercial customers, calling card users, cellular and
PCS subscribers and retail telephone centers, and large corporate
accounts. Toll revenues are recognized as they are billed to customers,
except for revenues from prepaid calling cards which are recognized as
the calling cards are used or expire.
International revenues represent amounts recognized by us for
termination of traffic from foreign telecommunications carriers to the
Dominican Republic either on our own network or on Codetel's
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network, including revenues derived from our U.S. based international
long distance pre-paid calling cards.
Local service revenues consist of monthly fees, local measured service
and local measured charges for value-added services, including call
forwarding, three-way calling, call waiting and voice mail, as well as
calls made to cellular users under the calling-party-pays system and
revenues from other miscellaneous local access services.
Cellular and PCS revenues represent fees received for mobile cellular
and PCS services, including interconnection charges for calls incoming
to our cellular and PCS subscribers from other companies' subscribers.
Cellular and PCS revenues do not include fees received for
international long distance calls generated by our cellular and PCS
subscribers. Cellular and PCS fees consist of fixed monthly fees, per
minute usage charges and additional charges for value-added services,
including call waiting, call forwarding, three-way calling and voice
mail, and for other miscellaneous cellular and PCS services.
Paging revenues consist of fixed monthly charges for nationwide service
and use of paging equipment and activation fees. Beginning in 1999, we
determined that paging will not play a major role in our future
marketing programs.
Revenues from the sale and lease of equipment consist of sales and
rental fees for customer premise equipment, including private branch
exchanges and key telephone systems, residential telephones, cellular
and PCS handsets and paging units. Since late 1996, we have only sold,
and not leased, equipment.
Installation revenues consist of fees we charge for installing local
access lines, private branch exchanges and key telephone systems as
well as fees for activating cellular handsets.
Other revenues consist of revenues that are not generated from our core
businesses, including commissions received for providing package
handling services for a courier and commissions received for collection
services for utility companies.
ADOPTION OF SAB-101
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements"
("SAB No. 101"). SAB No. 101 sets forth certain of the SEC staff's views on
applying generally accepted accounting principles to revenue recognition in
financial statements. The Company plans to adopt SAB No. 101 effective October
1, 2000. Although the Company has not determined the impact of the adoption on
its results of operations and financial position, the Company expects that this
change will not affect cash flows, but could cause the Company to recognize
installation revenues over a longer period. The Company currently recognizes
these revenues in the period when service is initiated.
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The following table sets forth the percentage contribution of each
category of revenues to total operating revenues for the period indicated:
<TABLE>
<CAPTION>
THREE MONTHS FIRST NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Toll............................................... 13.8% 13.3% 13.7% 13.0%
International ..................................... 34.4 38.6 36.3 36.4
Local service...................................... 20.9 25.5 19.1 24.1
Cellular and PCS................................... 15.1 15.8 15.4 16.2
Paging............................................. 1.3 0.8 1.8 0.8
Sale and lease of equipment........................ 3.1 1.3 3.2 2.7
Installations...................................... 9.7 4.6 9.7 6.7
Other.............................................. 1.6 0.1 0.7 0.1
----------------
Note: Percentages may not add up to 100% due to rounding.
</TABLE>
The following table sets forth certain items in the statements of
operations expressed as a percentage of total operating revenues for the period
indicated:
-11
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS FIRST NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating costs.................................... 72.8 82.7 75.7 80.8
Operating income................................... 27.2 17.3 24.3 19.2
Interest expense, net.............................. (12.4) (13.0) (10.0) (13.6)
Other income (expenses)............................ (14.5) (12.8) (11.5) (13.8)
Net earnings....................................... 12.7 4.5 12.8 5.4
EBITDA............................................. 45.3 39.5 44.1 40.6
</TABLE>
THREE AND FIRST NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THE SAME PERIOD
IN 1999
OPERATING REVENUES. Our total operating revenues increased 26.7% to US$57.0
million for the three-month period ended September 30, 2000 from US$45.0 million
for the three-month period ended September 30, 1999. Revenues increased 34.2% to
$162.0 million for the nine-month period ended September 30, 2000 from $120.7
million for the nine-month period ended September 30, 1999. This growth resulted
primarily from increases in revenues generated by the Company's international,
local service and wireless business segments.
TOLL. Toll revenues increased 22.3% to $7.6 million during the 2000 third
quarter from $6.2 million for the 1999 third quarter, and grew by 27.0% to $21.0
million during the first nine months of 2000 compared to $16.5 million during
the first nine months of 1999, as a result of higher domestic long distance and
outbound international traffic derived from the growth of our customer base.
Domestic long distance minutes increased by 41.0% to 12.0 million minutes during
the 2000 third quarter from 8.5 million minutes during the 1999 third quarter,
and grew by 50.1% to 33.6 million minutes during the first nine months of 2000
compared to 22.4 million during the first nine months of the of 1999. Outbound
international minutes increased by 6.8% to 8.4 million in the 2000 third quarter
from 7.9 million minutes during the 1999 third quarter, and grew by 12.0% to
24.1 million minutes in the first nine months of 2000 compared to 21.5 million
during the first nine months of 1999. The increases in domestic long distance
and outbound minutes resulted from higher traffic volume from our wireless and
local service customers.
INTERNATIONAL. The Company's 2000 third quarter international revenues grew
42.2% to $22.0 million from $15.5 million for the 1999 third quarter, while
revenues for the first nine months of 2000 increased to $59.0 million from $43.8
million for the first nine months of 1999, a 34.5% increase. This increase was
due principally to the growth of inbound traffic volume received from our U.S.
based international carrier, TRICOM USA. Inbound minutes increased by 90.3% to
152.3 million minutes in the 2000 third quarter from 80.0 million during the
1999 third quarter, and by 67.7% to 392.8 million minutes in the first nine
months of 2000 compared to 234.2 million minutes in the first nine months of
1999. TRICOM USA accounted for 74.4% of our total inbound minutes in the 2000
third quarter compared to 71.1% in the same period last year, and generated
67.6% of total inbound minutes during the first nine months of 2000 up from
55.1% over the first nine months of 1999.
LOCAL SERVICE. Local service revenues grew 55.1% to $14.6 million during
the 2000 third quarter from $9.4 million for the 1999 third quarter, and
increased by 69.7% during the first nine months of the year to $39.1 million
compared to $23.0 million during the first nine months of 1999. The continued
growth in the number of local lines in service resulted in increased local
service revenues for the period. Our local service subscriber base grew to
141,117 local access lines in service at September 30, 2000 compared to 113,115
local access lines in service at September 30, 1999.
CELLULAR AND PCS. Our cellular and PCS revenues rose 32.8% to $9.0 million
during the 2000 third quarter from $6.8 million for the 1999 third quarter, and
reached $26.3 million during the first nine months of 2000, up 41.3% over the
prior year. The growth in the Company's wireless operations' was the result of a
59.6% increase in subscribers. At September 30, 2000, we had 253,447 cellular
and PCS subscribers compared to 158,850 at September 30, 1999. As a result of a
higher average subscriber base, airtime minutes increased 20.3% to 41.6 million
in the 2000 third quarter from 34.6 million in the 1999 third quarter, and
increased by 31.4% during the first nine months of 2000 to 120.8 million minutes
during the first nine months of 2000 compared to 92.0 million during
-12-
<PAGE>
the first nine months of 1999. We attribute the substantial growth of our
subscriber base to the continued success of our prepaid cellular program.
PAGING. Paging revenues decreased 27.8% to $436,000 in the third quarter
from $604,000 in the 1999 third quarter, and declined by 38.1% to $1.3 million
during the first nine months of 2000 compared to $2.2 million during the first
nine months of 1999, primarily as a result of increased competition and the
Company's decision to focus on having new customers move away from paging
services and into prepaid cellular services. At September 30, 2000, we had
22,485 paging subscribers compared to 29,039 paging subscribers at September 30,
1999.
SALE AND LEASE OF EQUIPMENT. Revenues from the sale and lease of equipment
decreased 48.6% to $727,000 in the 2000 third quarter from $1.4 million in the
1999 third quarter, primarily as a result of lower sales of customer premise
equipment and cellular and PCS handsets. For the year, revenues from the sale
and lease of equipment increased by 12.9% to $4.3 million in the first nine
months of 2000 from $3.8 million during the same period last year.
INSTALLATIONS. Installation revenues decreased 40.2% to $2.6 million during
the third quarter from $4.4 million during the 1999 third quarter, and decreased
by 7.5% during the first nine months to $10.9 million compared to $11.8 million
during the first nine months of 1999. The decrease in installation revenues
during the third quarter was due to an aggressive promotional marketing strategy
including lowered subscriber activation fees for wireless service, designed to
capture a significant share of the wireless market growth in anticipation of the
entry of service of a new PCS provider. The Company added 82,518 combined gross
local access lines and cellular subscribers, the highest quarterly gross
subscriber additions to date.
OPERATING COSTS. Major components of operating costs are:
o carrier costs, which include amounts owed to foreign carriers
for the use of their networks for termination of outbound
traffic; interconnection costs, which are access charges paid
primarily to Codetel; and payments for international satellite
circuit leases;
o depreciation of network equipment and leased terminal
equipment, and non-network depreciation expense;
o expenses in lieu of income tax;
o general and administrative expenses, which include salaries
and other compensation to personnel, non-network depreciation,
maintenance expenses, marketing expenses and other related
costs; and
o non-cash consulting expenses
Third quarter 2000 operating costs increased to $47.1 million from $32.7
million for the prior year period. Operating costs for the first nine months of
2000 totaled $130.9 million compared to $91.3 million during the same period
last year. These results reflect increased carrier costs associated with higher
volumes of traffic; higher general and administrative expenses primarily from
increased commissions due to the growth of the Company's retail operations in
the U.S.; and higher network depreciation expenses resulting from the Company's
capital investment and growth programs. As a percentage of revenues, operating
costs increased to 80.8% during the first nine months of the year from 75.7%
during the same period last year.
SATELLITE CONNECTIONS AND CARRIER COSTS. Satellite connections and carrier
costs increased by 43.8% to $17.8 million in the 2000 third quarter from $12.4
million in the 1999 third quarter, and rose by 53.4% to $47.1 million in the
first nine months of 2000 compared to $30.7 million in the first nine months of
1999, primarily as a result of higher outbound carrier costs, as well as higher
interconnection costs as a result of a higher percentage of inbound traffic
terminating in the incumbents' network.
NETWORK DEPRECIATION AND DEPRECIATION EXPENSE. Network depreciation
increased 93.0% to $7.5 million in the 2000 third quarter from $3.9 million in
the 1999 third quarter, and grew by 80.1% to $20.4 million during the first nine
months of 2000 compared to $11.3 million during the first nine months of 1999,
as a result of the continued
-13-
<PAGE>
investments in the Company's local and international networks, including
telecommunications equipment and facilities. Depreciation expense grew 30.6% to
$1.7 million in the 2000 third quarter from $1.3 million in the 1999 third
quarter, and increased 35.9% to $4.7 million during the first nine months of
2000 from $3.4 million for the first nine months of 1999.
EXPENSE IN LIEU OF INCOME TAXES. We make payments to the Dominican
government in lieu of income tax equal to 10% of gross domestic revenues, after
deducting charges for access to the local network, plus 10% of net international
revenues. Expense in lieu of income taxes also includes a tax of 2% on
international settlement revenues collected. Expense in lieu of income taxes
during the 2000 third quarter increased by 12.8% to $3.3 million from $3.0
million during the third quarter of 1999, and declined by 3.4% to $8.3 million
during the first nine months from $9.1 million during the same period last year.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
43.7% to $15.8 million in the 2000 third quarter from $11.0 in the 1999 third
quarter, and reached $45.8 million during the first nine months of 2000, up
38.5% over the prior year. As a percentage of total operating revenues, general
and administrative expenses increased to 27.7% in the third quarter of
2000 compared to 24.4% in the third quarter of 1999, and increased to 28.3%
during the first nine months of 2000 year from 27.4% during the same period last
year. The increase in the amount of general administrative expenses was due
primarily to higher commissions from our rapidly growing U.S. prepaid card
operations and increased personnel costs due to a higher employee headcount. At
September 30, 2000, we had 1,633 employees compared to 1,517 employees at
September 30, 1999.
NON-CASH CONSULTING EXPENSES. On October 1999, the Company entered into an
agreement with a third party to provide investor relations services for a period
of two years. As part of the agreement, the Company granted warrants to purchase
300,000 Class A common shares of the Company. During the third quarter, the
Company recognized $163,000 in non-cash consulting expenses associated with this
contract.
OTHER COSTS. Other costs which consist of the cost of sale from local,
wireless and prepaid services decreased by 30.1% to $859,000 in the 2000 third
quarter, and decreased by 8.0% to $3.3 million during the first nine months of
the year, primarily as a result of higher costs related to the growth of the
Company's prepaid services.
OPERATING INCOME. Operating income decreased 19.5% to $9.8 million in the
2000 third quarter from $12.2 million in the 1999 third quarter, and reached
$31.1 million during the first nine months 2000 compared to $29.3 million during
the first nine months of 1999. Lower operating income during the third quarter
was primarily the result of the decrease in installation revenues, due to the
reduction in subscriber activation fees, together with increased carrier costs,
associated with higher than expected international traffic volume. Higher
depreciation and administrative expenses, related to the Company's local and
international expansion initiatives, also contributed to the decline. Operating
income as a percentage of total operating revenues decrease to 17.3% in the
third quarter of 2000 from 27.2% in the third quarter of 1999. For the first
nine months of 2000, operating income represented 19.2% of operating revenues,
down from 24.3% in the same period last year.
OTHER INCOME (EXPENSES). Other expenses increased to $7.3 million in the
2000 third quarter from $6.5 million in the third quarter of 1999, and grew to
$22.3 million during the first nine months of 2000 from $13.8 million during the
first nine months of last year. This increase reflects increased interest
expenses resulting from higher short-term bank borrowings and vendor financing
used to purchase network and telecommunications equipment. Third quarter
interest expense for 2000 was $8.8 million compared to $6.1 million a year ago.
For the first nine months of 2000, interest expense increased to $24.6 million
from $14.3 million.
NET EARNINGS. Net earnings decreased to $2.6 million in the third quarter
from $5.7 million in the third quarter of 1999, and declined to $8.8 million
during the first nine months compared to $15.5 million during the first nine
months of 1999. The decrease is primarily the result of operating margin
compression coupled with higher financial expenses resulting from higher
short-term indebtedness. On a per share basis, earnings decreased to $0.09 per
share in the third quarter from $0.23 per share in the third quarter of 1999.
For the first nine months, earnings per share totaled $0.32 compared to $0.63
during the first nine months of 1999.
EBITDA. Earnings before interest and other income and non-cash expenses,
taxes and depreciation and amortization increased by 10.6% to $22.5 million in
the 2000 third quarter from $20.4 million in the 1999 third
-14-
<PAGE>
quarter, and grew by 23.4% to $65.7 million during the first nine months of 2000
compared to $53.2 million during the first nine months of 1999.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $43.4 million for the nine
months ended September 30, 2000 and $14.5 million for the nine months ended
September 30, 1999. The increase in net cash provided by operating activities
was due primarily to the increase in depreciation and amortization and accounts
payables. We had net accounts receivables of $26.1 million and $33.3 million at
December 31, 1999 and September 30, 2000, respectively.
Net cash used in investing activities was $131.9 million during the nine
months ended September 30, 2000 compared to $56.2 million for the nine months
ended September 30, 1999. During the first nine months of 1999 and 2000, the
Company made capital investments of $109.0 million and $131.6 million,
respectively, for purchases of property and telecommunications equipment as part
of our local and international networks expansion strategy. During the first
nine months of the year, the Company expended US$141.2 million for capital
expenditures. We currently anticipate making capital expenditures of
approximately $186 million in 2000, a substantial majority of which will be in
the Dominican Republic, for increasing capacity and coverage in our local access
and mobile networks, expanding our international facilities to support increased
traffic volume, expanding our local network and other international expansion.
However, the amounts to be invested for these purposes will depend upon a number
of factors, including primarily the demand for our services.
Net cash provided by financing activities was $126.6 million during the
nine months ended September 30, 2000 and $31.5 million during the nine months
ended September 30, 1999. During the second quarter, the Company received
approximately $66.8 million in net proceeds from the issuance of 4,000,000 ADSs,
each of which represents one share of the Company's Class A common stock. The
Company contracted short-term and long-term borrowings from banks and related
parties of approximately $73.7 million during the first nine months of 2000
mostly related to the purchase of telecommunications equipment.
As of September 30, 2000, the Company had cash and cash equivalents of
$51.5 million, which includes the investment of net proceeds of the ADS
issuance. Current liabilities exceeded our current assets by $111.0 million due
to the increased short-term borrowings in the Dominican Republic with related
companies, local banks and international banks. Dominican banks lend on a
short-term basis in order to negotiate interest rates periodically should market
conditions change, without necessarily demanding the repayment of credit
facilities and in most cases renew the outstanding loans. It is our belief that
the existence of negative working capital does not affect adversely the
continuity of our business.
Our indebtedness was approximately $405.8 million at September 30, 2000, of
which $200.0 million was our senior notes due 2004, $54.2 million was in
long-term borrowings and capital leases, with maturities ranging from one to
seven years, and $151.6 million was short-term bank loans, telecommunications
equipment financings, trade financings and current portion of capital leases. At
September 30, 2000, our U.S. dollar borrowings (other than the 11 3/8% senior
notes due 2004) had interest rates ranging from 10% per annum to 13% per annum,
and our peso borrowings had interest rates ranging from 23% per annum to 26% per
annum. At September 30, 2000, our U.S. dollar borrowings (other than the 11 3/8%
senior notes due 2004) totaled $198.1 million and our peso borrowings totaled
$7.7 million.
We have U.S. dollar- and peso-denominated approved credit facilities,
which in the aggregate, permit us to borrow up to $277.7 million. At September
30, 2000, there was $205.8 million outstanding under these facilities. We had
approximately $71.9 million available for borrowing under these facilities, of
which the amount of US$36.0 million was under a facility with maturity of more
than 5 years.
At September 30, 2000, we had $89.9 million of short-term and long-term,
U.S. dollar and peso- denominated approved credit facilities with Dominican
banks and institutions and $187.8 million of U.S. dollar-denominated approved
credit facilities with international banks. In the past, we met a significant
portion of our funding requirements with short-term borrowings in Dominican
markets. Recently, the cost of peso-denominated short-term indebtedness in the
Dominican financial market has ranged from 28% per annum to 32% per annum.
Moreover,
-15-
<PAGE>
from time to time, the Dominican government has imposed limitations on loans by
Dominican banks in Dominican pesos in order to restrict the country's money
supply and curb inflation. This monetary policy has limited the sources of bank
financing and the amounts available to be borrowed from Dominican banks and has
increased the costs of such borrowing.
We will seek additional credit facilities with international banks to
refinance our short-term credit facilities. In January 2000, we obtained a
commitment from Export-Import Bank of the United States to provide credit
guarantees of up to $46.6 million. The credits will be disbursed by The
International Bank of Miami, N.A. to be used for purchases of communications
equipment and material from Motorola and other suppliers. Credits up to $36.0
million will be available for disbursement from August 9, 2000 until May 15,
2001 and will be repayable over a five-year period.
As we expand our operations into new areas we will be required to support
increased working capital and capital expenditure needs. We have satisfied our
working capital requirements and funded capital expenditures from cash generated
from operations, short-term and long-term borrowings, trade finance, vendor
financing and equity and debt issuances. We believe our cash generated by
operations; the proceeds of the recently completed equity issuance and the
availability of borrowings from of our credit facilities will be sufficient to
fund our currently planned capital expenditures. In the event additional funds
are required, we would be forced to obtain them through additional borrowings,
including if available, vendor financing, or through the public or private sale
of debt or equity securities. There can be no assurance that additional
financing will be available to us, or if available, that it can be obtained on
terms acceptable to us or within limitations that are contained in our current
or future financing arrangements. Failure to obtain additional financing could
result in the delay or abandonment of some of our development and expansion
plans and expenditures.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The following discussion about market risks to certain financial
instruments includes "forward-looking" statements that involve risks and
uncertainties. Actual results could differ materially from those projected in
the forward-looking statements. We are exposed to market risks from adverse
changes in interest rates and foreign exchange rates. We do not hold or issue
financial instruments for trading purposes.
INTEREST RATE RISK
Our interest expense is sensitive to changes in the general level of
interest rates in the United States and in the Dominican Republic. At September
30, 2000, we had outstanding $200.0 million aggregate principal amount of senior
notes. The senior notes bear interest at 11 3/8% per annum and mature in the
year 2004. The fair value of such senior notes was approximately $187 million
and $190 million at December 31, 1999 and September 30, 2000, respectively.
Our primary exposure to market risk for changes in interest rates relates
to our short-term borrowings from Dominican banks. At September 30, 2000, we had
$151.6 million and $54.2 million of short-term and long-term borrowings,
respectively, including trade finance and capital leases outstanding from
Dominican and international banks, mostly denominated in U.S. dollars. During
the third quarter of 2000, our short-term and long-term U.S. dollar denominated
borrowings bore interest at rates ranging from 10% per annum to 13% per annum.
During the third quarter of 2000, our short-term and long-term Dominican peso
denominated borrowings bore interest at rates
-16-
<PAGE>
ranging from 23% to 26% per annum. A 10% increase in the average rate for our
variable rate debt would have decreased our net income in the third quarter of
2000 by approximately $ 459,000.
FOREIGN EXCHANGE RISKS
We are subject to currency exchange risks. During the third quarter of
2000, we generated revenues of $59.0 million in U.S. dollars and $103.0 million
in Dominican pesos. In addition, at September 30, 2000, we had $198.1 million of
U.S. dollar-denominated debt outstanding, (excluding the $200.0 million
principal amount of the 11 3/8% senior notes due 2004).
Dominican foreign exchange regulations require us and other
telecommunications companies to convert all U.S. dollar revenues into Dominican
pesos at the official exchange rate, and to purchase US dollars at the private
market exchange rate. Although the official exchange rate now fluctuates and is
tied to the private market rate, the official exchange rate tends to be lower
than the private market rate. During the third quarter of 2000, the average
official exchange rate was RD$16.16 per $1.00 while the average private market
rate was RD$16.43 per $1.00.
Our functional currency is the U.S. dollar and, as a result, we must
translate the value of Dominican peso-denominated assets into U.S. dollars when
compiling our financial statements. This translation can create foreign exchange
gains or losses depending upon fluctuations in the relative value of the
Dominican peso against the U.S. dollar. During the third quarter of 2000, we
recognized an approximate $233,000 foreign exchange gain. If the Dominican peso
had devalued by an additional 10% against the U.S. dollar on average in the
third quarter of 2000, then we would have realized a foreign exchange gain of
approximately $23,000.
-17-
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In August 1999, a Dominican company, DCS International S.A., and two individual
plaintiffs whom the Borrower believes are officers or employees of DCS, sued the
Borrower in Dominican courts for alleged losses and damages of up to
approximately RD$200 million (US$12 million) resulting from the imprisonment of
two of the individuals for 15 days. The plaintiffs alleged that their
imprisonment was the result of an investigation by the local district attorney
and the police that the Borrower instigated following an irregular increase in
telephonic traffic at certain telephone numbers. The Borrower requested that the
court dismiss the action because of lack of jurisdiction. The court granted
Borrower's motion to dismiss and assessed the costs of the proceedings against
the plaintiffs. The plaintiffs resubmitted the action before the proper court
within one month from the date of the notification of the ruling. At the request
of the plaintiffs, the court of competent jurisdiction set the date of the
hearing to try the merits of the case for May 10, 2000.
On May 10, 2000, the plaintiffs requested that the court order document
production. The Borrower did not oppose to this request and asked that document
production be reciprocal. The court ordered the document production to be
reciprocal. Subsequently, the Borrower requested and obtained that the court set
the date of the next hearing for June 29, 2000. At this hearing, the plaintiffs
requested an extension of the previous document production. The Borrower again
requested and obtained the court to set the date of a next hearing for July 26,
2000. During the hearing held on July 26, 2000 the plaintiffs alleged that they
had made a late document production and requested another extension. The
plaintiffs improperly summoned the Borrower to appear before court on August 10,
2000. However, the hearing was not held on said date. The Borrower obtained that
the court set the date of the next hearing for August 24, 2000.
At the hearing held on August 24, 2000 both the plaintiffs and the Borrower
presented their respective conclusions. The case is pending decision from the
Judge of the Civil and Commercial Chamber of the Third Circumscription of the
Court of First Instance of the National District of Santo Domingo. The Borrower
believes, after consulting with legal counsel in this action, that the matter
will not have a material adverse effect on its results of operations and
financial position. There are no other legal proceedings to which the Borrower
is a party, other than ordinary routine litigation incidental to its business,
which is not otherwise material to its business or financial condition.
-18-
<PAGE>
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 20-F AND FORM 6-K
(a) Exhibits.
None.
(b) Reports on Form 20-F. The Company filed with the Securities
and Exchange Commission a Report on Form 20-F on May 1, 2000
reporting the Company's results of operations for the year
ended December 31, 1999.
(c) Reports on Form 6-K. The Company filed with the Securities and
Exchange Commission Reports on Form 6-K on August 14, 2000
reporting the Company's results of operations for the three
months ended June 30, 2000.
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<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: November 15, 2000 By: /s/ Carl Carlson
-------------------------
Carl Carlson
Executive Vice President
and Member of the
Office of the President
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