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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT:
(Date of earliest event reported) (March 30, 2000)
LOGIX COMMUNICATIONS ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
OKLAHOMA 333-58693 73-1533356
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
3555 N.W. 58th Street
Tenth Floor
Oklahoma City, Oklahoma 73114
(Address of principal executive offices) (Zip Code)
(405) 516-8400
(Registrant's telephone number, including area code)
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
Loigix Communications Enterprises, Inc. (the "Company") wishes to report
certain information with respect to 1999 year end results; issuance of
Preferred Stock; and a change in executive officers. The Company's press
releases announcing the aforementioned events, all dated March 30, 2000, are
attached hereto as Exhibits 99.1 through 99.3 and are incorporated herein by
reference in their entirety.
(C) Exhibits
The following exhibits are filed as a part of this report:
Exhibit
No. Description Method of Filing
------- ----------- ----------------
99.1 Press release announcing 1999 year end Filed herein
results.
99.2 Press release announcing issuance of Filed herein
Preferred Stock.
99.3 Press release announcing new Chief Filed herein
Financial Officer.
SIGNATURE
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 hereunto duly authorized.
Date: March 31, 2000 Logix Communications Enterprises, Inc.
(Registrant)
By /s/ ALBERT H. PHARIS, JR.
-------------------------
Albert H. Pharis, Jr.
Chief Executive Officer
EXHIBIT INDEX
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
99.1 Press release announcing 1999 year end Filed herein
results.
99.2 Press release announcing issuance of Filed herein
Preferred Stock.
99.3 Press release announcing new Chief Filed herein
Financial Officer.
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FOR IMMEDIATE RELEASE
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Contact: Brian W. Boone
Treasurer/Investor Relations
(405) 516-8164
LOGIX COMMUNICATIONS ENTERPRISES, INC.
REPORTS 1999 OPERATING RESULTS
OKLAHOMA CITY, OK - MARCH 30, 2000 - Logix Communications Enterprises, Inc.
today reported financial results for the year ended and quarter ended
December 31, 1999.
Consolidated revenues for the year ended December 31, 1999 were $113.3
million, an increase of $45.6 million, or 67.3%, from $67.7 million in 1998.
On a pro forma1 basis, consolidated revenues for 1999 were $113.3 million, an
increase of $8.4 million, or 8.0%, from $104.9 million for 1998. Consolidated
revenues for the fourth quarter 1999 increased to $27.9 million, a 1%
increase from $27.5 million in the fourth quarter of 1998.
Revenue related to the integrated communications provider (ICP) segment was
$97.6 million for the year ended December 31, 1999, or an 87.4% increase from
$52.1 million in 1998. Approximately $37.1 million of the growth was the
result of acquisitions. The ICP segment provides competitive
telecommunication services primarily to small and medium-sized business
customers. Revenue related to the incumbent local exchange carrier (ILEC)
segment was $15.6 million for each of the years ended December 31, 1999 and
1998. The ILEC segment continues to show stability through steady access line
growth, offset by a slight decrease in support revenue. The ILEC segment
provides regulated wireline telephone services primarily to rural residential
customers.
Earnings before interest expense, income taxes, depreciation and
amortization, other income and changes in accounting principles (EBITDA) was
a deficit of $37.7 million in 1999 compared to an EBITDA deficit of $7.7
million on a historical basis, and deficit of $4.2 million on a pro forma
basis in the same period of 1998, respectively. The fourth quarter of 1999
also reflected an EBITDA deficit of $14.9 million compared to a $4.8 million
EBITDA deficit for the comparable period of 1998.
"Our company's 1999 results reflect an effort to transition from a resale
strategy to a facilities-based strategy," said Albert H. Pharis, Jr., chief
executive officer of Logix. "Our focus in 2000 will concentrate on efforts to
realign ourselves with core product offerings, drive costs out of the network
and ensure we deliver the highest quality services possible."
- --------
(1) Pro forma information reflects the result of the Company's operations
including American Telco, Inc., SysComm Design, Inc. and Zenex
Communications, Inc. as if the acquisitions had occurred at the beginning
of the period.
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OPERATIONAL HIGHLIGHTS:
In October 1999, Logix opened new sales offices in Springfield, Mo., St.
Louis, Mo., Kansas City, Mo. and Little Rock, Ark. During 1999, Logix
launched several new product sets including the Direct T-SM- Companion,
offering larger customers the flexibility of voice, data and customer premise
equipment as a bundled set, as well as the Small Business Suite, offering
small businesses local and long distance services combined with an impressive
package of calling features. In addition, the company installed Nortel
DMS-500 switches in Austin, Texas, Dallas, Texas and Houston, Texas, a Nortel
DMS-100 switch in San Antonio, Texas, Tulsa, Okla. and a Nortel DMS-10 switch
in Amarillo, Texas. As a result of the extensive network Logix deployed
during 1999, the Company significantly reduced the percentage of resale net
access line additions in the first quarter of 1999 and achieved 100%
facilities-based net access line additions during the remainder of 1999.
Also in 1999, Logix's ILEC segment completed an upgrade of the ILEC network
to new digital switching equipment. The new switching platform is supported
by Logix's Nortel DMS-500 switch in Oklahoma City. As a result of these
changes, several Nortel DMS-10 switches were decommissioned in the fourth
quarter of 1999.
FINANCING ACTIVITY:
On March 16, 2000, the company received $30 million in additional funding
from Dobson CC Limited Partnership, the controlling shareholder of Logix. The
funds received from this financing were used to repay $10 million of the
company's $50 million bank facility and to fund operations.
On March 30, 2000, the Company issued 90,000 shares of 15% Class A Preferred
Stock to Dobson CC Limited Partnership manditorily redeemable in 2010 for
$1,000 per share. The net proceeds from the preferred stock were used to
fully repay the company's $50 million bank facility and to convert the amount
outstanding under the Dobson CC Limited Partnership credit facility to
preferred stock.
LOGIX SEGMENT DISTRIBUTION:
On January 24, 2000, Dobson Communications Corporations distributed Logix's
stock to certain of Dobson Communications' shareholders. The spin-off
completes a plan to separate Dobson's wireline and wireless business
segments. The spin-off allows each entity to pursue its own strategic
objectives on an individual basis while continuing to provide quality service
to its customers. Logix has its own management team and is operated and
financed independently from Dobson.
2
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SENIOR MANAGEMENT ADDITIONS:
In October 1999, Albert H. Pharis, Jr. joined Logix as chief executive
officer. Pharis previously served as president, chief executive officer and
director of Sygnet Wireless, Inc. from 1985 to 1998. He has been a member of
Logix's board of directors since December 1998.
In March 2000, Matthew L. Asmus was promoted to executive vice president and
chief operating officer. Asmus recently served as senior vice president of
operations and vice president of services. Prior to joining Logix, Asmus
worked for American Telco, Inc. from 1991 to 1998. He was responsible for
field service operations, dedicated access services, operator services and
carrier access billing. Asmus holds a bachelor's degree in business
administration from Sam Houston University. Asmus replaces William J.
Hoffman, Jr. who ceased to be an employee in March 2000.
In March 2000, Craig T. Sheetz joined Logix as executive vice president and
chief financial officer. Sheetz served as executive vice president and chief
operating officer of Dobson Communications Corporation since 1998. Sheetz
previously served as vice president, chief financial officer and treasurer of
Sygnet Wireless, Inc. from 1990 to 1998. Sheetz holds a bachelor's of arts
degree from Albion College and a Master's degree in business administration
from the University of Rochester. Sheetz replaces Geoffrey M. Boyd who ceased
to be an employee in March 2000.
FINANCIAL HIGHLIGHTS:
The following annual and quarterly highlight information provided on a pro
forma basis reflects the results of the company's operations as if the
American Telco, Inc., SysComm Design, Inc. and Zenex Communications
acquisitions had occurred on January 1, 1998.
<TABLE>
<CAPTION>
ACTUAL ACTUAL PRO FORMA
FOR THE QUARTER ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
--------------------- -------------------- ------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
($ in thousands)
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ICP Revenue $ 23,793 $23,489 $ 97,644 $52,099 $ 97,644 $ 89,300
ILEC Revenue 4,133 4,038 15,642 15,604 15,642 15,604
-------- ------- -------- ------- -------- --------
Total Revenue 27,926 27,527 113,286 67,703 113,286 104,904
EBITDA (14,893) (4,787) (37,671) (7,715) (37,671) (4,152)
</TABLE>
3
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<TABLE>
PRO FORMA QUARTERLY INFORMATION
FOR THE QUARTER ENDED:
<CAPTION>
12/31/98(A) 3/31/99 6/30/99 9/30/99 12/31/99
----------- ------- ------- ------- --------
($ in thousands)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue
ICP Revenue $ 24,345 $ 24,552 $ 24,716 $ 24,583 $ 23,793
ILEC Revenue 4,038 4,002 3,471 4,036 4,133
-------- -------- -------- -------- --------
Total Revenue 28,383 28,554 28,187 28,619 27,926
Costs & Expenses
ICP Cost of Service and Equipment $ 18,988 $ 20,085 $ 21,001 $ 23,006 $ 21,238
ILEC Cost of Service 651 210 251 324 1,465
-------- -------- -------- -------- --------
Total Cost of Service $ 19,639 $ 20,295 $ 21,252 $ 23,330 $ 22,703
Selling, General & Admin. 14,630 13,299 14,166 15,796 20,116
-------- -------- -------- -------- --------
Total Costs & Expenses $ 34,269 $ 33,594 $ 35,418 $ 39,126 $ 42,819
-------- -------- -------- -------- --------
EBITDA
ICP EBITDA $ (8,225) $ (7,941) $ (9,335) $(13,069) $(16,304)
ILEC EBITDA 2,339 2,901 2,104 2,562 1,411
-------- -------- -------- -------- --------
Total EBITDA $ (5,886) $ (5,040) $ (7,231) $(10,507) $(14,893)
======== ======== ======== ======== ========
Gross Margin(B) 30.8% 28.9% 24.6% 18.5% 18.7%
Access Lines(C)
Facilities-based 20,249 25,339 30,097 49,362 65,094
Resale 32,016 32,481 32,015 18,620 15,072
-------- -------- -------- -------- --------
Total Access Lines 52,265 57,820 62,112 67,982 80,166
Access Line Net Additions
Facilities-based 2,446 5,090 6,676 17,347 15,732
Resale 5,437 465 (2,384) (11,477) (3,548)
-------- -------- -------- -------- --------
Total Net Additions 7,883 5,555 4,292 5,870 12,184
Percentage of Net Additions
Facilities-based 31.0% 91.6% 100.0% 100.0% 100.0%
Resale 69.0% 8.4% - - -
Voice Switches(D) 38 40 44 43 47(E)
ATM Switches(D) 14 17 24 26 26
Central Office Co-Locates 3 22 29 31 31
Fiber Route Miles 819 819 836 836 836
Fiber Miles 21,186 21,186 21,522 21,522 21,522
Gross PP&E $127,238 $137,138 $154,937 $164,753 $172,314
</TABLE>
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(A) Certain prior year numbers have been conformed to current year presentation.
(B) Gross margin is calculated as total revenue less total cost of service
divided by total revenue.
(C) Access Lines is defined as actual DSO equivalents provisioned (no credit
given to unused trunk capacity).
(D) Represents voice or ATM switches installed and in services.
(E) Includes nine Nortel DMS-10 switches decommissioned in the fourth quarter
of 1999.
4
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Logix will host a conference call on Friday, March 31, at 11 a.m. Eastern
Standard Time to discuss the company's 1999 results. To participate in this
conference, call (888) 868-9080, Confirmation Code- Logix. A replay will be
available immediately after the original call through 5 p.m. Eastern Standard
Time on April 7 by calling (888) 695-7640, Confirmation Code- Logix.
The company's 1999 Annual Report on Form 10-K will be available, without
charge, to investors, security analysts, and other members of the investment
community. Please contact Brian W. Boone, Treasurer/Investor Relations, at
(405) 516-8164 for further information.
Logix Communications is an integrated provider of information technology and
telecommunications services to businesses throughout the southwest. Logix
provides a comprehensive range of voice services, advanced data services,
Internet services and customer premise equipment. Logix news and information
are available at www.logixcom.com.
THE INFORMATION IN THIS RELEASE INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS
THAT ARE BASED UPON ASSUMPTIONS THAT IN THE FUTURE MAY PROVE NOT TO HAVE BEEN
ACCURATE. THOSE STATEMENTS, AND THE COMPANY'S BUSINESS AND PROSPECTS, ARE
SUBJECT TO A NUMBER OF RISKS INCLUDING FUNDING THE SUBSTANTIAL OPERATING AND
CAPITAL EXPENDITURE REQUIREMENTS OF THE BUSINESS, COMPETITION, GOVERNMENT
REGULATION AND THE ABILITY OF THE COMPANY TO IMPLEMENT AND CONTINUE ITS
BUSINESS STRATEGY. THESE AND OTHER RISKS ARE DESCRIBED IN THE COMPANY'S
DOCUMENTS AND REPORTS THAT ARE AVAILABLE FROM THE SECURITIES AND EXCHANGE
COMMISSION.
5
<PAGE>
FOR IMMEDIATE RELEASE
CONTACT:
- --------
Brian W. Boone
Treasurer/Investor Relations
(405) 516-8400
LOGIX COMMUNICATIONS ENTERPRISES, INC.
ANNOUNCES ISSUANCE OF PREFERRED STOCK
OKLAHOMA CITY - March 30, 2000 - Logix Communications Enterprises, Inc., an
integrated communications provider, today announced the completion of a
private placement and issuance of 90,000 shares of 15% Class A Preferred
Stock to Dobson CC Limited Partnership, the controlling shareholder of Logix.
Dividends on the preferred stock are payable in additional shares of
preferred stock or cash at the discretion of Logix. The preferred stock is
junior to the company's senior notes and is manditorily redeemable in 2010
for $1,000 per share plus unpaid dividends. Of the $90 million preferred
stock issuance, $40 million was in the form of a cash investment which was
used to fully repay and retire the Company's subsidiary's bank facility and
$50 million was in the form of converting the company's $50 million Dobson CC
Limited Partnership credit facility to 15% Class A Preferred Stock.
"The issuance of the preferred stock improves our capital structure and
demonstrates our commitment to the bondholders who provided significant
funding for Logix. This financing continues to show the strong support Logix
has from its shareholders," said Albert H. Pharis, Jr., chief executive
officer. "By these actions, we will reduce our annual cash interest expense
by $6 million."
Logix Communications is an integrated provider of information technology and
telecommunications services to businesses throughout the southwest. Logix
provides a comprehensive range of voice services, advanced data services,
Internet services and customer premise equipment. Logix news and information
are available at www.logixcom.com.
THE INFORMATION CONTAINED IN THIS NEWS RELEASE INCLUDES CERTAIN
FORWARD-LOOKING STATEMENTS THAT ARE BASED UPON ASSUMPTIONS THAT IN THE FUTURE
MAY PROVE NOT TO HAVE BEEN ACCURATE. THOSE STATEMENTS, AND THE BUSINESS AND
PROSPECTS OF LOGIX ARE SUBJECT TO A NUMBER OF RISKS INCLUDING SUBSTANTIAL
CAPITAL EXPENDITURES REQUIRED TO FUND ITS OPERATIONS AND ITS ABILITY TO
IMPLEMENT AND CONTINUE ITS EXISTING AND NEW BUSINESS STRATEGIES. THESE AND
OTHER RISKS ARE DESCRIBED IN DOCUMENTS AND REPORTS OF LOGIX THAT ARE
AVAILABLE FROM THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
FOR IMMEDIATE RELEASE
CONTACT:
- --------
Brian W. Boone
Treasurer/Investor Relations
(405) 516-8400
LOGIX COMMUNICATIONS ENTERPRISES, INC.
NAMES CRAIG T. SHEETZ AS CHIEF FINANCIAL OFFICER
OKLAHOMA CITY - March 30, 2000 - Logix Communications Enterprises,
Inc., an integrated communications provider, announced Craig T. Sheetz as
executive vice president and chief financial officer. Sheetz succeeds
Geoffrey M. Boyd who left the company earlier this month. Sheetz brings more
than 15 years of finance experience in communications companies. Prior to
joining Logix, Sheetz was the executive vice president and chief operating
officer of Dobson Communications Corporation. Prior to his employment with
Dobson, Sheetz was the chief financial officer for Sygnet Wireless, Inc.,
which was acquired by Dobson Communications Corporation in December 1998.
"Craig's knowledge and experience as a chief financial officer is a
tremendous benefit to Logix and their management team," said Everett R.
Dobson, chairman of the board for both Dobson Communications Corporation and
Logix.
"We are pleased to have Craig join our Logix management team," said
Albert H. Pharis, Jr., chief executive officer. "Craig and I had a strong
working relationship at Sygnet that produced successful results, and we
expect to do the same for Logix."
Logix Communications is an integrated provider of information
technology and telecommunications services to businesses throughout the
southwest. Logix provides a comprehensive range of voice services, advanced
data services, Internet services and customer premise equipment. Logix news
and information are available at www.logixcom.com.
THE INFORMATION CONTAINED IN THIS NEWS RELEASE INCLUDES CERTAIN
FORWARD-LOOKING STATEMENTS THAT ARE BASED UPON ASSUMPTIONS THAT IN THE FUTURE
MAY PROVE NOT TO HAVE BEEN ACCURATE. THOSE STATEMENTS, AND THE BUSINESS AND
PROSPECTS OF LOGIX ARE SUBJECT TO A NUMBER OF RISKS INCLUDING FUNDING THE
SUBSTANTIAL OPERATING AND CAPITAL EXPENDITURE REQUIREMENTS OF THE BUSINESS.
THESE AND OTHER RISKS ARE DESCRIBED IN DOCUMENTS AND REPORTS OF LOGIX THAT
ARE AVAILABLE FROM THE SECURITIES AND EXCHANGE COMMISSION.
