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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 12b-25
Commission File Number 0-29782
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NOTIFICATION OF LATE FILING
(Check One):[x]Form 10-K [ ]Form 11-K [ ]Form 20-F [ ]Form 10-Q [ ]Form N-SAR
For Period Ended: December 31, 1998
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[ ] 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:
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READ ATTACHED INSTRUCTION SHEET BEFORE PREPARING FORM. PLEASE PRINT OR TYPE.
Nothing in the 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:
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PART I - REGISTRANT INFORMATION
World Access, Inc.
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Full name of registrant
Waxs Inc.
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Former name if applicable
945 E. Paces Ferry Road, Suite 2200
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Address of principal executive office (STREET AND NUMBER)
Atlanta, GA. 30326
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City, state and zip code
PART II - RULES 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, Form N-SAR, or portion thereof
will be filed on or before the 15th calendar 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
[x] (c) The accountant's statement or other exhibit required by Rule
12b-25(c) has been attached if applicable.
PART III - NARRATIVE
State below in reasonable detail the reasons why the Form 10-K, 11-K, 20-F,
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.)
During the week preceding March 31, 1999, the date upon which the Form 10-K
for World Access, Inc. (the "Company") as of and for the year ended December 31,
1998 was due to be filed, the Company informed PricewaterhouseCoopers LLP, its
former independent accountants that it intended to reflect discontinued
operations disclosure in its financial statements originally reported on by
such former independent accountants as of December 31, 1997 and for each of the
years ended December 31, 1997 and 1996 and that management of the Company wanted
its former independent accountants to extend its report on the 1997 and 1996
financial statements to cover such discontinued operations information.
Management of the Company determined that the measurement date for such
discontinued operations occurred during the year ended December 31, 1998. In
order to afford the Company's former independent accountants adequate time in
which to perform the requisite procedures with respect to such discontinued
operations, the Company respectfully requests a 15-day extension of time in
which to file its Form 10-K as of and for the year ended December 31, 1998.
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PART IV - OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
Martin D. Kidder 404 231-2025
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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.
The Company's 1998 financial results were significantly changed from
the comparable periods in 1997. Please refer to the following exhibit
which presents the Company's 1998 financial position and results of
operations.
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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 April 1, 1999 By /s/ Martin D. Kidder
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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 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, DC 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 amendment 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 or apply for an adjustment in filing date
pursuant to Rule 13(b) of Regulation S-T.
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[LOGO] WORLD ACCESS, INC.(TM)
WORLD ACCESS REPORTS RECORD FINANCIAL RESULTS FOR 1998
ATLANTA, GEORGIA - February 11, 1999 - World Access, Inc. (Nasdaq: WAXS)
announced today that its total sales from continuing operations in 1998 were
$152.1 million, a $103.5 million or 213% increase over the $48.6 million in
total sales from continuing operations for 1997. Excluding special charges,
which were primarily related to the Company's four acquisitions during 1998,
pre-tax income from continuing operations was approximately $27.8 million versus
$13.1 million in 1997 and net income was $.59 per diluted share versus $.45 per
diluted share in 1997. Including special charges and the results of discontinued
operations, the Company reported net losses of $84.6 million or ($3.12) per
share and $119.9 million or ($5.43) per share for the three and twelve months
ended December 31, 1998.
As a result of the Company's recent announcement that it has engaged an
investment banking firm to assist in the sale of all its non-core businesses,
the Company is now reporting its financial results for continuing operations
separately. The financial results for non-core businesses, which consist of the
resale of Nortel and other OEM wireline switching equipment, third party repair
of telecom equipment and pay telephone refurbishment, are being reported as
discontinued operations. Trade sales for these businesses for the three and
twelve months ended December 31, 1998 were approximately $16.0 million and $59.0
million, respectively.
John D. Phillips, President and Chief Executive Officer, said, "Excluding the
one-time charges, World Access enjoyed a record year in 1998 for both trade
sales and earnings per share. The Company began 1998 with an annual revenue base
of approximately $50.0 million from proprietary products and services. With our
recent acquisitions, we believe that the Company is now poised to generate more
than $725 million in revenues from its core operations during 1999. The Company
enters 1999 with a solid cash position, a strong balance sheet, a streamlined
organization structure and a management team motivated to efficiently pursue
continued sales and earnings growth."
"During the fourth quarter of 1998, we completed three significant acquisitions
that have positioned World Access to provide its customers with a unique,
comprehensive and value-added telecommunications network solution incorporating
both international carrier services and the proprietary equipment required to
switch and transport related local and long distance traffic. Our management
team is now completely focused on the integration of these core businesses and
the realization of the tremendous synergies that
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are now available to the Company as a result of these acquisitions and the
aggressive build-out of equipment and service infrastructure projected for the
global telecommunications markets. We have taken decisive action in the last 60
days to implement the restructuring initiatives necessary to ensure these
synergies are realized in 1999."
The Company recorded approximately $92.6 million in special charges for
continuing operations during the fourth quarter of 1998, including $50.3 million
of in-process research and development costs related to the November 1998 merger
with Telco Systems, Inc. ("Telco"), $6.2 million of impaired goodwill related to
the Company's Westec and Sunrise operations, and $36.1 million of costs
associated with facilities consolidation, the outsourcing of manufacturing
requirements, product rationalization and other strategic initiatives undertaken
to integrate the Company's fourth quarter 1998 acquisitions of Telco, NACT
Telecommunications, Inc. ("NACT") and Resurgens Communications Group.
The Company had originally projected that fourth quarter charges for in-process
research and development costs related to the NACT and Telco acquisitions would
be in excess of $90.0 million. These calculations were completed in October 1998
and were based on established industry practice, current interpretations of
generally accepted accounting principles and independent third party studies.
The projected charges were reviewed in detail by the Company's independent
accountants and the Securities and Exchange Commission ("SEC") prior to the
approval and mailing of NACT and Telco proxy materials. Recently, the SEC has
expressed views on the valuation of in-process research and development that
differ from prior industry practice. These new views have dramatically reduced
the valuations of in-process research and development and have been the subject
of considerable criticism from U.S. industry, particularly technology companies.
After considerable discussion with the SEC and its independent accountants, the
Company elected to modify its valuation methods to meet current SEC
interpretations rather than risk the possibility of restating financial results
in the future. Additional goodwill amortization expense caused by the above and
related intangible asset valuation issues impacted fourth quarter 1998 earnings
by $.02 per share and will impact 1999 earnings by approximately $.16 per share.
Special charges in the fourth quarter also included costs associated with the
consolidation and integration of the Company's wireless radio business in
Wilmington, Massachusetts into Telco's operations in Norwood, Massachusetts, the
pending sale of the Company's internal manufacturing operations in Alpharetta,
Georgia to an established electronics contract manufacturer, severance benefits
related to reductions in work force and other restructuring activities. In line
with our recent decision to integrate the Class 5 functionality of the CDX
switch and the Class 4 functionality of NACT's STX switch into a next generation
technology platform, reserves for potential doubtful accounts and potential
inventory obsolescence were established to minimize the Company's balance sheet
exposure related to the CDX switch, a relatively new international product.
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Mr. Phillips, added, "The restructuring initiatives undertaken have been
designed to simplify the Company's organization structure, redeploy capital tied
up with internal manufacturing, leverage its customer base and reduce operating
costs. Instead of a large number of small divisions, the Equipment Group is now
structured whereby all of the Company's switching products are managed and
supported by NACT's team based in Provo, Utah and all transport and access
products are managed and supported by Telco's team based in Norwood,
Massachusetts. The Company's wireless radios complement Telco's product line
extremely well and will now be sold through Telco's proven sales force and
distribution channels. Selling the Company's manufacturing operations in place
to an experienced, full service contract manufacturer eliminates the Company's
need to invest significant capital in facilities, equipment and inventories and
reduces the risk of operating losses during periods of low production. U.S.
Assemblies, Inc. is expected to purchase these operations and hire all of World
Access' manufacturing employees on or about March 1, 1999. Telco partnered with
U.S Assemblies in a similar program in 1997 that has been extremely successful
in increasing customer satisfaction, reducing product costs, improving product
quality and generating free cash flow."
World Access, Inc. provides international long distance voice and data services
and proprietary network equipment to the global telecommunications markets. The
World Access Telecommunications Group provides wholesale international long
distance service to over 200 foreign countries through a combination of its own
international network facilities, various international termination
relationships and resale arrangements with other international long distance
service providers. The World Access Equipment Group develops, manufactures and
markets digital switches, billing and network telemanagement systems, cellular
base stations, fixed wireless local loop systems, intelligent multiplexers,
digital microwave radio systems and other telecommunications network products.
EXCEPT FOR ANY HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS PRESS RELEASE CONTAIN FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES WHICH ARE DESCRIBED IN THE COMPANY'S
SEC REPORTS, INCLUDING THE COMPANY'S ANNUAL REPORT ON FORM 10-K, AS
AMENDED, FOR THE YEAR ENDED DECEMBER 31, 1997, THE COMPANY'S QUARTERLY
REPORTS ON FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1998, JUNE
30, 1998, AND SEPTEMBER 30, 1998, AND THE COMPANY'S REGISTRATION
STATEMENT ON FORM S-3 (NO. 333-43497).
WORLD ACCESS CONTACT: NANCY L. DE JONGE
(404-231-2025) DIRECTOR OF INVESTOR RELATIONS
http://www.waxs.com
(Tables Follow)
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WORLD ACCESS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
QUARTER ENDED DECEMBER 31 YEAR ENDED DECEMBER 31
------------------------------- --------------------------------
1998 1997 1998 1997
------------ ------------ ------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Equipment sales $ 46,687,303 $ 13,035,171 $ 138,989,934 $ 48,614,439
Carrier service revenues 11,250,427 -- 13,142,888 --
------------ ------------ ------------- ------------
Total sales 57,937,730 13,035,171 152,132,822 48,614,439
Cost of equipment sales 27,019,696 7,967,485 74,307,335 27,527,416
Write-down of inventories 8,812,000 -- 9,272,000 --
Cost of carrier services 10,777,134 -- 12,522,279 --
------------ ------------ ------------- ------------
Total cost of sales 46,608,830 7,967,485 96,101,614 27,527,416
------------ ------------ ------------- ------------
Gross profit 11,328,900 5,067,686 56,031,208 21,087,023
Engineering and development 2,586,524 456,063 6,842,155 1,647,192
Selling, general and administrative 8,491,059 1,576,749 19,984,367 6,565,151
Amortization of goodwill 1,852,203 384,104 4,254,725 1,109,693
In-process research and development 50,300,000 -- 100,300,000 --
Goodwill impairment 6,200,000 -- 6,200,000 --
Provision for doubtful accounts 10,922,432 -- 11,332,448 48,736
Restructuring and other charges 16,650,000 -- 17,240,000 --
------------ ------------ ------------- ------------
Operating income (loss) (85,673,318) 2,650,770 (110,122,487) 11,716,251
Interest and other income 591,366 1,669,610 3,418,672 2,465,661
Interest expense (2,231,505) (1,228,842) (6,831,327) (1,040,303)
------------ ------------ ------------- ------------
Income (loss) from continuing operations
before income taxes and minority interests (87,313,457) 3,091,538 (113,535,142) 13,141,609
Income taxes (10,765,249) 1,119,000 (1,387,000) 4,791,227
------------ ------------ ------------- ------------
Income (loss) from continuing operations
before minority interests (76,548,208) 1,972,538 (112,148,142) 8,350,382
Minority interests in earnings (loss) of subsidiary (126,088) -- 2,496,826 --
------------ ------------ ------------- ------------
Net income (loss) from continuing operations (76,422,120) 1,972,538 (114,644,968) 8,350,382
Net income (loss) from discontinued operations (4,678,975) 750,024 (1,757,161) 4,783,721
Write-down of discontinued operations to
net realizable value (3,500,000) -- (3,500,000) --
------------ ------------ ------------- ------------
Net income (loss) $(84,601,095) $ 2,722,562 $(119,902,129) $ 13,134,103
============ ============ ============= ============
Net income (loss) per common share:
Basic:
Continuing operations before special charges $ .08 $ .11 $ .59 $ .48
Special charges (2.90) -- (5.78) --
Discontinued operations (.30) .04 (.24) .28
------------ ------------ ------------- ------------
Net income (loss) $ (3.12) $ .15 $ (5.43) $ .76
============ ============ ============= ============
Diluted:
Continuing operations before special charges(1) $ .08 $ .10 $ .59 $ .45
Special charges (2.90) -- (5.78) --
Discontinued operations (.30) .04 (.24) .25
------------ ------------ ------------- ------------
Net income (loss) $ (3.12) $ .14 $ (5.43) $ .70
============ ============ ============= ============
Weighted average shares outstanding:
Basic 27,123,430 18,180,059 22,072,793 17,242,405
============ ============ ============= ============
Diluted 27,123,430 19,496,701 22,072,793 18,707,781
============ ============ ============= ============
</TABLE>
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(1) RECONCILIATION OF NET INCOME FROM CONTINUING
OPERATIONS:
<TABLE>
<CAPTION>
QUARTER ENDED DECEMBER 31 YEAR ENDED DECEMBER 31
------------------------------ -------------------------------
1998 1997 1998 1997
------------ ----------- ------------- -----------
<S> <C> <C> <C> <C>
Net income (loss) from continuing operations $(76,422,120) $ 1,972,538 $(114,644,968) $ 8,350,382
Write-down of inventories (a) 5,400,000 -- 5,600,000 --
In-process research and development 50,300,000 -- 100,300,000 --
Goodwill impairment 6,200,000 -- 6,200,000 --
Provision for doubtful accounts (b) 6,500,000 -- 5,100,000 --
Restructuring and other charges (a) 10,200,000 -- 10,500,000 --
------------ ----------- ------------- -----------
Net income from continuing operations before
special charges $ 2,177,880 $ 1,972,538 $ 13,055,032 $ 8,350,382
============ =========== ============= ===========
Diluted shares outstanding 27,123,430 19,496,701 22,072,793 18,707,781
============ =========== ============= ===========
Per diluted share $ .08 $ .10 $ .59 $ .45
============ =========== ============= ===========
</TABLE>
(a) Tax effected at 39%.
(b) Add back expense unrelated to fourth quarter or 1998 sales, tax effected
at 39%.
CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and equivalents $ 55,176,932 $118,065,045
Accounts receivable 71,035,102 20,263,971
Inventories 48,590,656 22,426,918
Deferred taxes 26,684,987 1,088,883
Other current assets 27,790,646 9,834,840
------------ ------------
Total Current Assets 229,278,323 171,679,657
Property and equipment 70,387,140 6,064,585
Goodwill and other intangibles 287,444,696 32,513,987
Other assets 30,938,263 15,024,512
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Total Assets $618,048,422 $225,282,741
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt $ 13,826,490 $ 81,739
Accounts payable 36,417,880 9,339,588
Other accrued liabilities 59,869,741 8,508,698
------------ ------------
Total Current Liabilities 110,114,111 17,930,025
Long-term debt 145,664,951 115,263,984
Noncurrent liabilities 1,050,863 333,802
------------ ------------
Total Liabilities 256,829,925 133,527,811
------------ ------------
Stockholders' equity 361,218,497 91,754,930
------------ ------------
Total Liabilities and Stockholders' Equity $618,048,422 $225,282,741
============ ============
</TABLE>
# # #
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Exhibit 2
April 1, 1999
Martin D. Kidder
V.P. and Controller
World Access, Inc.,
945 East Paces Ferry Road
Suite 2200
Atlanta, GA 30326
Dear Mr. Kidder:
We are in agreement with the comments under Part III of this Form 12b-25 with
respect to the reasons why we are unable to furnish our report on the financial
statements of World Access, Inc. as of December 31, 1997 and for each of the
years ended December 31, 1997 and 1996 on or before the date the Form 10-K of
World Access, Inc. for the year ended December 31, 1998 was required to be
filed.
Yours very truly,
PricewaterhouseCoopers LLP
