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SEC FILE NUMBER
333-64717
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CUSIP NUMBER
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 12B-25
NOTIFICATION OF LATE FILING
(Check One): [X] Form 10-K [] Form 20-F [] Form 11-K [] Form 10-Q [] Form N-SAR
For Period Ended: December 31, 1999
[] Transition Report on Form 10-K
[] Transition Report on Form 20-F
[] Transition Report on Form 11-K
[] Transition Report on Form 10-Q
[] Transition Report on Form N-SAR
For the Transition Period Ended:
Read Instruction (on back page) Before Preparing Form.
Please Print or Type.
NOTHING IN THIS FORM SHALL BE CONSTRUED TO IMPLY THAT THE
COMMISSION HAS VERIFIED ANY INFORMATION CONTAINED HEREIN.
If the notification relates to a portion of the filing checked above, identify
the item(s) to which the notification relates:
PART I -- REGISTRANT INFORMATION
US Xchange, L.L.C.
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Full Name of Registrant
N/A
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Former Name if Applicable
20 Monroe Avenue NW, Suite 450
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Address of Principal Executive Office (Street and Number)
Grand Rapids, Michigan 49503
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City, State and Zip Code
PART II -- RULE 12B-25 (B) AND (C)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate.)
(a) The reasons described in reasonable detail in Part III of
this form could not be eliminated without unreasonable
effort or expense;
(b) The subject annual report, semi-annual report, transition
report on Form 10-K, 20-F, 11-K or Form N-SAR, or portion
thereof will be filed on or before the fifteenth calendar
[X] day following the prescribed due date; or the subject
quarterly report or transition report on Form 10-Q, or
portion thereof will be filed on or before the fifth
calendar day following the prescribed due date; and
(c) The accountant's statement or other exhibit required by
Rule 12b-25(c) has been attached if applicable.
PART III -- NARRATIVE
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State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q,
N-SAR or the transition report or portion thereof, could not be filed within the
prescribed time period. (Attach extra sheets if needed.)
Please see Attachment A.
PART IV -- OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
J. Joseph Miglore (616) 988-7000
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or
15(d) of the Securities Exchange Act of 1934 or Section 30
of the Investment Company Act of 1940 during the preceding
12 months or for such shorter period that the registrant was
required to file such report(s) been filed? If the answer is
no, identify report(s). [X] Yes [ ] No
(3) Is it anticipated that any significant change in results of
operations from the corresponding period for the last fiscal
year will be reflected by the earnings statements to be
included in the subject report or portion thereof? [X] Yes [ ] No
If so: attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a
reasonable estimate of the results cannot be made. PLEASE SEE ATTACHMENT B.
US XCHANGE, L.L.C.
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(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
Date March 29, 2000 By /s/ J. J. Miglore
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J. J. Miglore, Executive Vice President of
Finance and Chief Financial Officer
INSTRUCTION: The form may be signed by an executive officer of the registrant or
by any other duly authorized representative. The name and title of the person
signing the form shall be typed or printed beneath the signature. If the
statement is signed on behalf of the registrant by an authorized representative
(other than an executive officer), evidence of the representative's authority to
sign on behalf of the registrant shall be filed with the form.
ATTENTION
INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE
FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).
GENERAL INSTRUCTIONS
1. This form is required by Rule 12B-25 (17 CFR 240.12b-25) of the General
Rules and Regulations under the Securities Exchange Act of 1934.
2. One signed original and four conformed copies of this form and amendments
thereto must be completed and filed with the Securities and Exchange
Commission, Washington D.C. 20549, in accordance with Rule 0-3 of the
General Rules and Regulations under the Act. The information contained in
or filed with the form will be made a matter of public record in the
Commission files.
3. A manually signed copy of the form and amendments thereto shall be filed
with each national securities exchange on which any class of securities of
the registrant is registered.
4. Amendments to the notifications must also be filed on Form 12b-25 but need
not restate information that has been correctly furnished. The form shall
be clearly identified as an amended notification.
5. Electronic Filers. This form shall not be used by electronic filers unable
to timely file a report solely due to electronic difficulties. Filers
unable to submit a report within the time period prescribed due to
difficulties in electronic filing should comply with either Rule 201 or
Rule 202 of Regulation S-T (ss. 232.201 or ss. 232.202 of this chapter) or
apply for an adjustment in filing date pursuant to Rule 13(b) of Regulation
S-T (ss. 232.13(b) of this chapter).
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ATTACHMENT A
The Company is in negotiations with General Electric Capital
Corporation, the Administrative Agent under its Loan and Security
Agreement dated as of April 29, 1999, as amended by Amendment No. 1 dated
as of February 9, 2000, to amend certain financial covenants in order to
ensure that the Company is in compliance with such covenants. These
covenants are measured on a quarterly basis. The next measurement date is
March 31, 2000. Resources and personnel at the Company which would
otherwise have been utilized for preparing the Company's Annual Report on
Form 10-K were diverted to these negotiations with the Administrative
Agent and other interested third parties. Notwithstanding the Company's
efforts to complete this process to permit filing of the annual report on
Form 10-K within the prescribed period, the Company has been unable to do
so. The Company expects to complete these negotiations and to file its
Annual Report on Form 10-K for the fiscal year ended December 31, 1999
prior to the end of the extension period.
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ATTACHMENT B
Our revenues increased 377% to $26.4 million in 1999 from $7 million in
1998. The increase is attributable to both our expansion into one additional
market, Grand Rapids, Michigan, in 1999 and to the continued growth in our
customer base and their use of our services in all of our markets. Revenues
derived from our facilities-based switched operations grew to $10.2 million in
1999 compared to $559,000 in 1998. This increase was due to fourteen switches
being commercially operational during all or a portion of 1999 compared to only
six switches being in service during 1998 and to the continued conversion of
resale customers onto our own switches in all of our facilities-based markets.
During 1999 we installed approximately 30,000 total local access lines compared
to 21,000 in 1998. At December 31, 1999, we had approximately 53,000 installed
local access lines in service, of which approximately 60% were served by our own
facilities.
Cost of communication services increased to $37.9 million in 1999, or 143%
of revenues, from $16.3 million, or 233% of revenues, in 1998. The increase of
233% related primarily to the costs of leased telecommunications facilities and
our own network operating costs in connection with the expansion of our customer
base in all of our markets.
Selling, general and administrative expenses grew to $40.1 million in 1999,
or 152% of revenues, compared to $28.7 million in 1998, or 409% of revenues.
This increase of 40% was primarily due to the increase in employees during the
first three quarters of 1999 and the other costs associated with the expansion
of our services in our existing markets.
Depreciation and amortization expenses increased to $13.2 million in 1999
from $3.3 million in 1998 primarily due to the placement in service of
additional telecommunications network assets, including switches, fiber optic
networks, and related equipment. Depreciation expense is expected to increase as
a result of continuing capital expenditures related to the expansion of our
networks and operations.
Gross interest expense increased $17.4 million to $33.5 million in 1999 from
$16.1 million in 1998 due primarily to the Company's increased average
outstanding indebtedness during the current year over the comparable prior year.
Interest expense will increase in future periods in conjunction with additional
borrowings under the subordinated secured line of credit from Ronald H.
VanderPol, our Co-Chairman. Interest costs of $4 million in 1999 and $2.3
million in 1998 were capitalized as part of the construction costs of its
networks.
Interest income is derived primarily from earnings on excess cash and the
U. S. government securities that were purchased from the net proceeds on the
sale of the 15% Senior Notes and used to fund our first six scheduled interest
payments on such Notes. The decrease in interest income for 1999 from 1998 is
expected to continue in future periods as the U. S. government securities are
liquidated in conjunction with the payment of the semi-annual interest payments
on the 15% Senior Notes.
Net loss increased to $90.4 million in 1999 from $50.6 million in 1998. The
increase in the 1999 losses is attributable to the significant expenditures we
incurred before the realization of revenues, due to the expansion of our network
operations, the added depreciation expense relating to the expansion of our
networks and the increased interest expense on our indebtedness to fund our
network development and operations.
The outcome of the current negotiations referred to on Attachment A, if
completed, will materially affect the information to be set forth in
Management's Discussion and Analysis of Financial Condition and Results of
Operation to be included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999. Such conclusion would also affect certain
information to be set forth in
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the consolidated financial statements that will be included with such Annual
Report on Form 10-K. Please see the Company's unaudited results of operations
below.
US XCHANGE, L.L.C.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998
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<S> <C> <C>
REVENUES.............................................. $ 26,429,789 $ 7,015,310
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COSTS AND EXPENSES
Cost of communication services (excluding depreciation
and amortization, shown separately below)............. 37,886,703 16,338,583
Selling, general and administrative................. 40,114,626 28,679,670
Depreciation and amortization....................... 13,190,549 3,257,055
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TOTAL COSTS AND EXPENSES......................... 91,191,878 48,275,308
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Loss from operations................................ (64,672,089) (41,259,998)
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INTEREST EXPENSE...................................... (29,537,206) (13,838,996)
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INTEREST INCOME....................................... 3,944,625 4,476,061
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NET LOSS.......................................... $ (90,354,670) $ (50,622,933)
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</TABLE>
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