UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-24521
------------------------------------------------------------
CORECOMM LIMITED
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Bermuda Not Applicable
- ------------------------------------ ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
of incorporation or organization)
Cedar House Secretary CoreComm Limited
41 Cedar Avenue 110 East 59th Street
Hamilton, HM 12, Bermuda New York, NY 10022
(441) 295-2244 (212) 906-8485
- --------------------------------------------------------------------------------
(Address, including zip code, and (Name, address, including zip code,
telephone number, including area and telephone number, including
code of Registrant's principal area code of agent for service)
executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of shares outstanding of the issuer's common stock as of March 31,
1999 was 13,239,699.
<PAGE>
CoreComm Limited and Subsidiaries
Index
PART I. FINANCIAL INFORMATION Page
- ------ --------------------- ----
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1999 and December 31, 1998 ............................ 2
Condensed Consolidated Statements of Operations -
Three months ended March 31, 1999 and March 31, 1998 ............ 3
Condensed Consolidated Statement of Shareholders' Equity -
Three months ended March 31, 1999 ............................... 4
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1999 and March 31, 1998............. 5
Notes to Condensed Consolidated Financial Statements ............ 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition .............................. 10
Item 3. Quantitative and Qualitative Disclosure about Market Risk ....... 14
PART II. OTHER INFORMATION
- ------- -----------------
Item 6. Exhibits and Reports on Form 8-K ................................ 15
SIGNATURES................................................................ 16
- ----------
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CoreComm Limited and Subsidiaries
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-----------------------------------------
(Unaudited) (See Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 37,838,000 $ 26,161,000
Marketable securities 87,471,000 110,718,000
Accounts receivable-trade, less allowance for doubtful
accounts of $753,000 (1999) and $742,000 (1998) 1,724,000 1,125,000
Due from affiliates 2,780,000 1,954,000
Inventory 203,000 150,000
Other 1,052,000 519,000
-----------------------------------
Total current assets 131,068,000 140,627,000
Fixed assets, net 5,282,000 3,582,000
Goodwill, net of accumulated amortization of
$375,000 (1999) and $230,000 (1998) 3,916,000 4,028,000
LMDS license costs 25,366,000 25,366,000
Other, net of accumulated amortization of $7,000 (1999)
and $1,000 (1998) 5,440,000 2,923,000
-----------------------------------
$ 171,072,000 $ 176,526,000
===================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,093,000 $ 1,937,000
Accrued expenses 4,574,000 4,247,000
Current portion of note payable and capital
lease obligations 170,000 133,000
Deferred revenue 466,000 411,000
-----------------------------------
Total current liabilities 7,303,000 6,728,000
Note payable 252,000 283,000
Capital lease obligations 204,000 218,000
Commitments and contingent liabilities
Shareholders' equity:
Series preferred stock - $.01 par value, authorized
1,000,000 shares; issued and outstanding none - -
Common stock - $.01 par value; authorized 75,000,000
shares; issued and outstanding 13,240,000 (1999)
and 13,199,000 (1998) shares 132,000 132,000
Additional paid-in capital 185,958,000 185,420,000
(Deficit) (22,777,000) (16,255,000)
-----------------------------------
163,313,000 169,297,000
-----------------------------------
$ 171,072,000 $176,526,000
===================================
</TABLE>
Note: The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date.
See accompanying notes.
2
<PAGE>
CoreComm Limited and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
The Predecessor
(OCOM)
Three Months Three Months
Ended Ended
March 31, March 31,
1999 1998
--------------------------------------
<S> <C> <C>
REVENUES $ 3,596,000 $ 853,000
COSTS AND EXPENSES
Operating 2,848,000 435,000
Selling, general and administrative 5,784,000 1,766,000
Corporate 2,292,000 -
Depreciation 428,000 142,000
Amortization 151,000 2,000
--------------------------------
11,503,000 2,345,000
--------------------------------
Operating (loss) (7,907,000) (1,492,000)
OTHER INCOME (EXPENSE)
Interest income and other, net 1,564,000 -
Interest expense (14,000) -
--------------------------------
(Loss) before income tax provision (6,357,000) (1,492,000)
Income tax provision (165,000) -
--------------------------------
Net (loss) $ (6,522,000) $ (1,492,000)
================================
Basic and diluted net (loss) per share $ (.49) $(.11)
================================
Weighted average shares 13,212,000 13,182,000
================================
</TABLE>
See accompanying notes.
3
<PAGE>
CoreComm Limited and Subsidiaries
Condensed Consolidated Statement of Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
--------------------------- Paid-In
Shares Par Capital (Deficit)
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1998 13,199,000 $ 132,000 $ 185,420,000 $ (16,255,000)
Exercise of stock options 41,000 538,000
Net (loss) for the three months ended
March 31, 1999 (6,522,000)
--------------------------------------------------------------
Balance, March 31, 1999 13,240,000 $ 132,000 $ 185,958,000 $ (22,777,000)
==============================================================
</TABLE>
See accompanying notes.
4
<PAGE>
CoreComm Limited and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
The Predecessor
(OCOM)
Three Months
Three Months Ended Ended
March 31, March 31,
1999 1998
-------------------- ------------------
<S> <C> <C>
Net cash (used in) operating activities $ (9,039,000) $ (2,130,000)
INVESTING ACTIVITIES
Purchase of fixed assets (2,154,000) (234,000)
Increase in other assets (1,806,000) -
Purchase of marketable securities (45,492,000) -
Proceeds from sale of marketable securities 69,643,000 -
------------- ------------
Net cash provided by (used in) investing activities 20,191,000 (234,000)
FINANCING ACTIVITIES
Capital contributions - 2,364,000
Principal payments of capital lease obligations (13,000) -
Proceeds from exercise of stock options 538,000 -
------------- ------------
Net cash provided by financing activities 525,000 2,364,000
------------- ------------
Increase in cash and cash equivalents 11,677,000 -
Cash and cash equivalents at beginning of period 26,161,000 -
------------- ------------
Cash and cash equivalents at end of period $ 37,838,000 $ -
============= ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest $ 8,000 $ -
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
Liabilities incurred to acquire fixed assets $ 148,000 $ -
</TABLE>
See accompanying notes.
5
<PAGE>
Corecomm Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X . Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1998.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is required to be adopted in fiscal years
beginning after June 15, 1999. Management does not anticipate that the adoption
of this standard will have a significant effect on earnings or the financial
position of the Company.
The shares issuable upon the exercise of stock options and warrants are excluded
from the calculation of net (loss) per share as their effect would be
antidilutive.
NOTE 2. ORGANIZATION AND BUSINESS
CoreComm Limited (the "Company"), formerly a wholly-owned subsidiary of Cellular
Communications of Puerto Rico, Inc. ("CCPR"), was formed in March 1998
(operations commenced in April 1998) in order to succeed to the businesses and
assets that were operated by OCOM Corporation and as an appropriate vehicle to
pursue new telecommunications opportunities outside of Puerto Rico and the U.S.
Virgin Islands. On June 1, 1998, CCPR acquired certain operating assets and
related liabilities from OCOM Corporation Telecoms Division ("OCOM"). OCOM is
the predecessor business to the Company. In September 1998, CCPR made a cash
contribution to the Company of $150,000,000 and distributed 100% of the
outstanding shares of the Company on a one-for-one basis to CCPR's shareholders.
6
<PAGE>
Corecomm Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)
(Unaudited)
NOTE 3. ACQUISITIONS
In April and June 1998, CCPR acquired the stock of Digicom, Inc. and certain
operating assets and related liabilities of JeffRand Corp. (known as the
Wireless Outlet) and OCOM Corporation. CCPR contributed these businesses to the
Company. These acquisitions were accounted for as purchases by CCPR, and,
accordingly, the net assets and results of operations of the acquired businesses
have been included in the consolidated financial statements from the dates of
acquisition. The contribution of the assets from CCPR to the Company was
accounted for at historical cost in a manner consistent with a transfer of
entities under common control which is similar to that used in a "pooling of
interests". The Company's financial statements include the results of the
contributed companies for all periods owned by CCPR. In November 1998, a
wholly-owned subsidiary of the Company acquired substantially all of the assets
and certain liabilities of Stratos Internet Group, Inc. ("Stratos"), an Internet
Service Provider in the Cleveland-Akron, Ohio area. This acquisition has been
accounted for as a purchase, and, accordingly, the net assets and results of
operations of Stratos have been included in the consolidated financial
statements from the date of acquistion.
The pro forma unaudited consolidated results of operations for the three months
ended March 31, 1998 assuming consummation of the completed acquisitions and
receipt of the capital contributions from CCPR as of January 1, 1998 are as
follows. The pro forma net (loss) and basic and diluted net (loss) per share do
not give effect to interest income that may have been earned had the
$150,000,000 cash capital contribution from CCPR been made on January 1, 1998.
Total revenue .............................. $ 2,519,000
Net (loss) ................................. (2,146,000)
Basic and diluted net (loss) per share ..... (.16)
In February 1999, the Company entered into an agreement to acquire MegsINet,
Inc., a national Internet network and regional telecommunications provider. The
Company will purchase 100% of MegsINet's stock for a total consideration of
approximately $16.75 million in cash plus approximately 1.4 million shares of
the Company's common stock. This transaction is subject to certain conditions.
Also in February 1999, the Company entered into an agreement to acquire certain
assets of USN Communications, Inc., a CLEC reseller. The Company will purchase
the assets for an upfront payment of approximately $27 million, warrants to
purchase 250,000 shares of CoreComm common stock at a price of $30 per share and
100,000 shares at a price of $50 per share and a contingent payment based on
future results, that caps the total cash consideration at $85 million. Closing
of this transaction is subject to regulatory approvals and other matters.
7
<PAGE>
Corecomm Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)
(Unaudited)
NOTE 4. FIXED ASSETS
Fixed assets consist of:
March 31, December 31,
1999 1998
-------------------------------
(unaudited)
Operating equipment $ 1,237,000 $ 720,000
Computer hardware and software 3,088,000 2,450,000
Other equipment 1,769,000 987,000
Construction in progress 197,000 5,000
------------------------------
6,291,000 4,162,000
Accumulated depreciation (1,009,000) (580,000)
------------------------------
$ 5,282,000 $ 3,582,000
==============================
NOTE 5. ACCRUED EXPENSES
Accrued expenses consists of:
March 31, December 31,
1999 1998
-------------------------------
(unaudited)
Payroll and related $ 1,441,000 $ 1,263,000
Professional fees 442,000 527,000
Taxes, including income taxes 1,006,000 1,246,000
Other 1,685,000 1,211,000
------------------------------
$ 4,574,000 $ 4,247,000
==============================
NOTE 6. RELATED PARTY TRANSACTIONS
OCOM provided, and now a subsidiary of the Company provides, billing and
software development services to subsidiaries of CCPR and subsidiaries of NTL
Incorporated ("NTL"). Certain officers and directors of the Company are officers
and directors of CCPR and NTL. Beginning in 1997, the Company charged amounts in
excess of its costs to provide these services. General and administrative
expenses were reduced by $193,000 and $82,000 in the three months ended March
31, 1999 and 1998, respectively, as a result of these charges.
At March 31, 1998, due from affiliates included $130,000 due from CCPR and
$2,650,000 due from NTL. At December 31, 1998, due from affiliates included
$128,000 due from CCPR and $1,826,000 due from NTL.
8
<PAGE>
Corecomm Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements (continued)
(Unaudited)
NOTE 7. COMMITMENTS AND CONTINGENT LIABILITIES
As of March 31, 1999, the Company had purchase commitments of $3,500,000
outstanding.
The Company is involved in various disputes, arising in the ordinary course of
its business, which may result in pending or threatened litigation. None of
these matters are expected to have a material adverse effect on the Company's
financial position, results of operations or cash flows.
9
<PAGE>
CoreComm Limited and Subsidiaries
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following discussion of the results of operations of the Company includes a
comparison to the results of operations of OCOM, the predecessor business to the
Company. The Company was formed in March 1998 and did not have any prior
operations. Since OCOM represents a significant portion of the Company's current
business, the comparison with OCOM's historical operating results gives the
reader a basis to evaluate the Company's present business. However, the
historical results of OCOM may not be indicative of the Company's future
results. OCOM's primary historical business is its cellular long distance resale
business that has been and currently is a highly competitive segment of the long
distance telephone market. OCOM and now CoreComm have diversified into other
telecommunications resale businesses.
Three Months Ended March 31, 1999 and 1998
- ------------------------------------------
The increase in revenues to $3,596,000 from $853,000 is primarily due to
acquisitions in 1998, which accounted for $2,316,000 of the increase. OCOM's
revenues increased to $1,280,000 from $853,000 as a result of an increase in
CLEC revenues, offset by the decline in cellular long distance revenue as a
result of customers switching to other long distance providers. The Company
expects this trend in its cellular long distance revenue to continue.
Operating costs increased to $2,848,000 from $435,000 primarily due to
acquisitions in 1998, which accounted for $1,614,000 of the increase. Operating
costs as a percentage of revenues increased to 79% from 51%. This increase is
the result of the increased proportion of CLEC business, which has higher
associated operating costs compared to cellular long distance.
Selling, general and administrative expenses increased to $5,784,000 from
$1,766,000 as a result of increased selling and marketing costs and increased
customer service costs. These costs are expected to increase in the foreseeable
future.
Corporate expenses include the costs of the Company's officers and headquarters
staff, the costs of operating the headquarters and costs incurred for strategic
planning and evaluation of business opportunities. There were no corporate
expenses in the three months ended March 31, 1998 because the Company did not
commence operations until April 1, 1998.
Depreciation expense increased to $428,000 from $142,000 as a result of an
increase in fixed assets, primarily computer hardware and software.
Amortization expense increased to $151,000 from $2,000 due to the amortization
of goodwill from the acquisitions in 1998.
Interest income and other, net, increased to income of $1,564,000 from zero
primarily due to $1,550,000 of interest income on the Company's cash, cash
equivalents and marketable securities.
Interest expense increased to $14,000 from zero due to interest on the note
payable and capital leases.
The income tax provision of $165,000 in 1999 is for state and local income tax.
10
<PAGE>
CoreComm Limited and Subsidiaries
LIQUIDITY AND CAPITAL RESOURCES
The Company will require significant resources to fund the construction of its
facilities based network, develop and expand its existing businesses and
licenses, acquire or develop additional telecommunications-related business, and
fund near term operating losses.
The Company intends to significantly expand its telecommunications
infrastructure in the United States over the next several years. CoreComm, as
well as its completed and pending acquired companies, have already begun the
process of installing switches, Internet points-of-presence, and other
telecommunications facilities in Ohio as well as other states. The anticipated
amount of such expenditures have yet to be determined, and will be related to
the speed and location of equipment deployment, as well as the mix of resold vs.
facilities-based services.
The Company's businesses will also consume capital to acquire new customers and
to finance the working capital required to support these new customers. These
businesses will also require additional billing, customer service and other
back-office infrastructure. These capabilities can be expanded in-house or can
be outsourced to reduce up-front capital requirements. To date, the Company's
strategy has been to utilize the expertise developed by its management to
develop in-house billing and back-office capabilities.
In February 1999, CoreComm entered into agreements to acquire MegsINet and
certain assets of USN. Approximately $16.75 million in cash will be required to
complete the acquisition of MegsINet and approximately $27 million in cash (plus
a potential contingent payment to be paid in 2000 that caps the total cash
consideration at $85 million) will be required to complete the acquisition of
the USN assets. In addition, the Company will require significant capital to
fund the expansion and operations related to those acquisitions, if consummated.
In the future, the Company plans to make further appropriate acquisitions which
may require significant capital expenditures.
The amount of capital required to construct the LMDS systems is unknown at this
time, but is likely to be several times the cost of the licenses. In addition to
up-front network construction costs, a significant ongoing capital requirement
will be the cost to acquire customer premise equipment to receive and transmit
LMDS signals. The network and customer premise equipment costs are unknown
because a de facto standard has yet to emerge among the LMDS auction winners and
because insufficient orders have been placed with manufacturers who determine
likely prices for equipment. As license holders choose equipment manufacturers
and one or more equipment standard emerges, prices will become more easily
quantifiable.
The Company intends to fund its near term capital expenses, operating losses and
working capital requirements with cash, cash equivalents and marketable
securities on hand of $125 million at March 31, 1999. The funds on hand are
primarily the result of the $150 million cash capital contribution from CCPR in
connection with the spin-off. Longer term, it is likely that the Company will be
required to raise additional debt and/or equity financing to fully implement its
goals.
11
<PAGE>
CoreComm Limited and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash used in operating activities increased to $9,039,000 from $2,130,000
primarily due to the increase in the net loss to $6,522,000 from $1,492,000. The
net loss increased as a result of acquisitions and an increase in selling and
marketing costs and customer service expenses. Cash used in operating activities
is expected to continue to increase for the same reasons.
Cash used to purchase fixed assets increased to $2,154,000 from $234,000 due to
acquisitions and as a result of an increase in computer hardware and software
purchases. The Company continues to expand its in-house billing capabilities and
requires additional hardware for additional personnel. The increase in other
assets of $1,806,000 relates to payments in connection with the pending
acquisitions of MegsINet and USN.
YEAR 2000
We have a comprehensive Year 2000 project designed to identify and assess the
risks associated with our information systems, operations and infrastructure,
suppliers, and customers that are not Year 2000 compliant, and to develop,
implement and test remediation and contingency plans to mitigate these risks.
The project comprises four phases: (1) identification of risks, (2) assessment
of risks, (3) development of remediation and contingency plans and (4)
implementation and testing.
Our assessment is primarily focused on both our information technology ("IT")
systems, in particular our billing, provisioning and customer service systems,
and the readiness of the significant facilities-based carriers that we depend
upon for our resale services. Our leased office space and other non-IT equipment
which may have embedded technology that may be affected by the year 2000 problem
is being separately assessed.
- We have completed the assessment of our financial IT systems, which
will require upgrades from vendors at nominal additional cost. The
upgrades will be placed into service by June 1999.
- Our evaluation of the billing, provisioning and customer service IT
systems has progressed from assessments to renovation and validation.
We expect to incur nominal costs to complete the renovation and
validation of these systems since they are new systems that were
designed to be year 2000 ready. We expect to complete these tasks by
September 1999. We have engaged a consulting firm to assist us in this
process.
- Most of our IT hardware is currently year 2000 ready. Primarily all of
the cost of upgrades and purchases of hardware and data communications
equipment to complete the implementation of year 2000 readiness is
part of our planned growth and upgrade capital expenditures in 1999
and is not expected to be significantly different than expenditures in
previous years. We expect to complete these upgrades by September
1999.
12
<PAGE>
CoreComm Limited and Subsidiaries
- Our evaluation of the readiness of our significant vendors is still in
process. We have requested information from these vendors in order to
determine the extent to which we may be vulnerable to their failure to
correct their own year 2000 problems. We have received responses from
approximately 45% of these vendors through May 8, 1999. However, we
believe that all of the facilities-based vendors that we rely upon for
wholesale service, including billing data and for Internet
connections, are telephone companies that are required to report their
year 2000 readiness to state public utility commissions. We anticipate
that such reporting will assist us in our evaluation of their
readiness. Approximately 75% of the vendors who have not yet responded
to our inquiries are telephone companies and other public utilities.
- We currently believe the most reasonably likely worst case scenario
with respect to the Year 2000 is the failure of one or more of our
significant facilities-based vendors, including utilities, to be ready
for the year 2000. This could cause a temporary interruption in our
provision of service to customers or in our ability to bill our
customers, or both. Either or both could have a material adverse
effect on our operations, although it is not possible at this time to
quantify the amount of revenues and gross profit that might be lost,
or the costs that could be incurred. Our contingency plan to address
some of these risks involve switching customers to another wholesale
provider, which would require time to implement and may be constrained
due to capacity and/or training limitations.
As the Year 2000 project continues, we may discover additional problems, may not
be able to develop, implement or test remediation or contingency plans, or may
find that the costs of these activities exceed current expectations. In many
cases, we are relying on assurances from suppliers that new and upgraded
information systems and other products will be Year 2000 ready. We plan to test
such third-party systems and products. However, we cannot be sure that our tests
will be adequate or that, if problems are identified, they will be addressed by
the supplier in a timely and satisfactory way.
Because we use a variety of information systems and have additional systems
embedded in our operations and infrastructure, we cannot be sure that all of our
systems will work together in a Year 2000-ready fashion. Furthermore, we cannot
be sure that we will not suffer business interruptions, either because of our
own Year 2000 problems or those of third-parties upon whom we rely on for
services. We are continuing to evaluate our Year 2000-related risks and
corrective actions. However, the risks associated with the Year 2000 problem are
pervasive and complex; they can be difficult to identify and address, and can
result in material adverse consequences to the Company. Even if we, in a timely
manner, complete all of our assessments, identify and test remediation plans
believed to be adequate, and develop contingency plans believed to be adequate,
some problems may not be identified or corrected in time to prevent material
adverse consequences to the Company.
13
<PAGE>
CoreComm Limited and Subsidiaries
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements contained herein constitute "forward-looking statements" as
that term is defined under the Private Securities Litigation Reform Act of 1995.
When used herein, the words, "believe," "anticipate," "should," "intend,"
"plan," "will," "expects," "estimates," "projects," "positioned," "strategy,"
and similar expressions identify such forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from those
contemplated, projected, forecasted, estimated or budgeted, whether expressed or
implied, by such forward-looking statements. Such factors include the following:
general economic and business conditions in Ohio and other portions of the
United States, industry trends, the Company's ability to continue to design and
build its network, install facilities, obtain and maintain any required
government licenses or approvals and finance construction and development, all
in a timely manner, at reasonable costs and on satisfactory terms and
conditions, as well as assumptions about customer acceptance, churn rates,
overall market penetration and competition from providers of alternative
services, the impact of new business opportunities requiring significant
up-front investment, Year 2000 readiness and availability, terms and deployment
of capital.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There have been no material changes in the reported market risks since the end
of the most recent fiscal year.
14
<PAGE>
CoreComm Limited and Subsidiaries
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
27. Financial Data Schedule
(b) Reports on Form 8-K.
During the quarter ended March 31, 1999, the Company filed a current
report on Form 8-K, dated February 17, 1999, reporting under Item 5,
Other Events, (a) the formation of the first "Smart Local Exchange
Carrier" (Smart LEC) strategy in the U.S., and the signing of a
definitive agreement to acquire MegsINet, Inc. and (b) that it had
entered into a definitive agreement to acquire certain assets of USN
Communications, Inc.
No financial statements were filed with this report.
15
<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.
CORECOMM LIMITED
Date: May 11, 1999 By: /s/ J. Barclay Knapp
-------------------------
J. Barclay Knapp
President, Chief Executive Officer and
Chief Financial Officer
Date: May 11, 1999 By: /s/ Gregg Gorelick
--------------------------
Gregg Gorelick
Vice President-Controller and Treasurer
(Principal Accounting Officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 37,838,000
<SECURITIES> 87,471,000
<RECEIVABLES> 2,477,000
<ALLOWANCES> (753,000)
<INVENTORY> 203,000
<CURRENT-ASSETS> 1,052,000
<PP&E> 6,291,000
<DEPRECIATION> (1,009,000)
<TOTAL-ASSETS> 171,072,000
<CURRENT-LIABILITIES> 7,303,000
<BONDS> 0
0
0
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<INCOME-PRETAX> (6,357,000)
<INCOME-TAX> 165,000
<INCOME-CONTINUING> (6,522,000)
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<NET-INCOME> (6,522,000)
<EPS-PRIMARY> (.49)
<EPS-DILUTED> (.49)
</TABLE>
