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) July 28, 1998
-----------------
ICG COMMUNICATIONS, INC.
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(Exact name of registrant as specified in charter)
Delaware 1-11965 84-1342022
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(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
161 Inverness Drive West, Englewood, Colorado 80112
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(Address of principal executive offices)
ICG HOLDINGS (CANADA), INC.
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(Exact name of registrant as specified in charter)
Canada 1-11052 Not Applicable
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(State of Incorporation) Commission (IRS Employer
File Number) Identification No.)
1710-1177 West Hastings Street, Vancouver,
British Columbia V6E 2L3
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(Address of principal executive offices)
ICG HOLDINGS, INC.
----------------------------------------------------------------
(Exact name of registrant as specified in charter)
Colorado 33-96540 84-1158866
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
161 Inverness Drive West, Englewood, Colorado 80112
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(Address of principal executive offices)
ICG FUNDING, INC.
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(Exact name of registrant as specified in charter)
Delaware 333-40495-01 84-1434980
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(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
161 Inverness Drive West, Englewood, Colorado 80112
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(Address of principal executive offices)
Registrants' telephone numbers, including area codes (800) 414-5000
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N/A
-----------
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 5. OTHER EVENTS.
------ ------------
In a press release dated July 28, 1998, ICG
Communications, Inc., a Delaware corporation (the "Corporation"),
announced its earnings information and results of operations for
the Corporation's second quarter of 1998. A copy of the press
release is attached.
ITEM 7. EXHIBITS.
------ --------
(c) Exhibits
--------
99.1 Press Release, dated July 28, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrants have duly caused this report to be
signed on their behalf by the undersigned hereunto duly
authorized.
Dated: August 5, 1998 ICG COMMUNICATIONS, INC.
By: /s/ H. Don Teague
--------------------------
H. Don Teague
Executive Vice President,
General Counsel and
Secretary
ICG HOLDINGS (CANADA), INC.
By: /s/ H. Don Teague
---------------------------
H. Don Teague
Executive Vice President,
General Counsel and
Secretary
ICG HOLDINGS, INC.
By: /s/ H. Don Teague
---------------------------
H. Don Teague
Executive Vice President,
General Counsel and
Secretary
ICG FUNDING, INC.
By: /s/ H. Don Teague
---------------------------
H. Don Teague
Executive Vice President,
General Counsel and
Secretary
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
99.1 Press release, dated July 28, 1998
FOR IMMEDIATE RELEASE
For more information, contact:
Heathere Evans Steve Smith
Public Relations Manager Director of Investor Relations
303 414-5388 303 414-5350
[email protected] [email protected]
ICG COMMUNICATIONS, INC. REPORTS SECOND QUARTER 1998 RESULTS:
49 Percent Improvement in EBITDA
51,302 New Local Dial Tone Lines In Service
33 Percent Core Telecom Services' Gross Margin to Revenue Ratio
ENGLEWOOD, CO. (JULY 28, 1998) - ICG Communications, Inc.
(Nasdaq: ICGX) ("ICG") today reported that the second quarter of
1998 was the fourth consecutive quarter the company recorded
EBITDA (earnings before interest, taxes, depreciation and
amortization, and before nonrecurring charges) improvement, and
the biggest sequential increase since the company's peak EBITDA
deficit recorded last year. ICG's continued EBITDA improvement is
primarily related to increases in local dial tone lines in
service. At June 30, 1998, ICG had 237,458 local dial tone lines
in service, an increase of 51,302 lines compared to March 31,
1998. Ninety-three percent of the second quarter lines installed
were "on-switch."
For the three months ended June 30, 1998, the company's EBITDA
deficit improved $18.0 million, or 49 percent, when compared to
the same period last year. ICG's EBITDA deficit for the current
quarter was $18.5 million, compared to an EBITDA deficit of $36.5
million recorded for the second quarter of 1997.
ICG also announced that for the three months ended June 30, 1998,
its core telephone business unit's gross operating margin
(revenue less operating costs) increased to $20.9 million, or
32.6 percent of revenue, compared to a gross operating margin
deficit of $0.6 million or a negative 1.8 percent of revenue for
the same period in 1997. ICG's core telephone business is
represented by its Telecom Services segment, excluding revenue
derived from the company's majority owned subsidiary Zycom
Corporation ("Zycom").
-more-
ICG Communications, Inc. 161 Iverness Drive W.,
Englewood, Colorado 80112 (303) 414-5000
<PAGE>
ICG Netcom 2nd Quarter Results
page -2-
"It is exciting to see the execution of our core telephone
business strategy translate into measurable gains toward
profitability," said J. Shelby Bryan, ICG's president and chief
executive officer. "The continued execution of our competitive
local business strategy delivering competitive
telecommunications choices to our customers is fundamental to
reaching our goal of becoming EBITDA positive by the end of this
year."
TELECOM SERVICES (excluding Zycom):
($ in millions)
-----------------------------------------------------------------
THREE MONTHS
ENDED 6/30/98 3/31/98 12/31/97 9/30/97 6/30/97 3/31/97
-----------------------------------------------------------------
Revenue $64.2 58.5 47.7 36.5 34.4 30.7
Operating
costs (43.3) (45.7) (43.2) (35.2) (35.0) (33.9)
-----------------------------------------------------------------
Gross margin 20.9 12.8 4.5 1.3 (0.6) (3.2)
% of revenue 32.6% 21.9% 9.4% 3.6% (1.7%) (10.4%)
Lines in
service 237,458 186,156 141,035* 50,551 20,108 5,371
-----------------------------------------------------------------
* Includes 48,256 lines acquired.
ICG also reported that it sold 52,234 dial tone lines for the
three months ended June 30, 1998. ICG is marketing and selling
competitive local dial tone services in its primary markets:
California, Ohio, Colorado, its southeastern markets (Louisville,
KY; Nashville, TN; Birmingham, AL; Charlotte, NC; and Atlanta,
GA) and in Texas through its strategic alliance with CSW/ICG
ChoiceCom L. P.
REVENUE COMPONENTS:
For the three months ended June 30, 1998, ICG had total revenue
of $136.3 million, compared to $105.8 million for the second
quarter of 1997, an increase of 28.8 percent. Consolidated
revenue increased $10.6 million sequentially, compared to $125.7
million posted for the first quarter of 1998.
Total Telecom Services revenue (including Zycom) increased $28.2
million, or 68.4 percent, to $69.5 million for the current
quarter, compared to $41.2 million for the second quarter last
year;
-more-
ICG Communications, Inc. 161 Iverness Drive W.,
Englewood, Colorado 80112 (303) 414-5000
<PAGE>
ICG Netcom 2nd Quarter Results
page -3-
compared sequentially to the first quarter of 1998, this revenue
increased $4.7 million, or 7.3 percent. Local switched services
revenue for the three months ended June 30, 1998, was $29.5
million, an increase of $28.3 million compared to $1.2 million
recorded for the same period in 1997, and compared to $23.1
million recorded for the prior quarter. Long distance revenue
for the quarter ended June 30, 1998 was $5.8 million, an increase
of $0.7 million compared to $5.1 million recorded in the first
quarter of 1998. There is no comparable long distance revenue in
1997, as the company had not launched this service in the
corresponding quarter last year. Special access service
(dedicated transport) revenue was $17.5 million for the quarter
ended June 30, 1998, an increase of 29.9 percent or $4.0 million
over the same period last year.
Telecom Services' local, long distance, and special access
revenue, combined, were $52.8 million for the current quarter,
compared to $44.3 million for the first quarter of 1998, a 19.2
percent sequential increase.
Switched terminating access revenue decreased 42.2 percent,
generating $11.4 million for the three months ended June 30,
1998, compared to $19.7 million for the corresponding period in
1997. When compared sequentially to the first quarter of 1998,
switched terminating access revenue decreased 19.7 percent, or
$2.8 million, compared to $14.2 million reported for the three
months ended March 31, 1998. This decrease, as expected, was the
result of the company's recent initiatives to raise prices and
free up switch port capacity for higher margin dial tone product.
The company anticipates further reductions in revenue derived
from switched terminating access due to these initiatives.
The company's enhanced services (Zycom) revenue decreased $1.6
million to $5.2 million for the quarter ended June 30, 1998,
compared to $6.8 million reported for the same quarter in 1997.
Zycom provides enhanced telecommunications services and a full
range of inbound service bureau offerings through its
"800/877/888/900" platform located in Reno, Nevada.
-more-
ICG Communications, Inc. 161 Iverness Drive W.,
Englewood, Colorado 80112 (303) 414-5000
<PAGE>
ICG Netcom 2nd Quarter Results
page -4-
TELECOM SERVICES REVENUE COMPONENTS
($ IN MILLIONS)
------------------------------------------------------------
THREE MONTHS ENDED 6/30/98 6/30/97 PERCENT
------------------------------------------------------------
SWITCHED LOCAL $29,507 1,170 2,422.0%
------------------------------------------------------------
LONG DISTANCE 5,761 -- N/A
------------------------------------------------------------
SPECIAL ACCESS 17,543 13,501 29.9%
------------------------------------------------------------
SWITCHED TERMINATING ACCESS 11,404 19,743 (42.2%)
============================================================
CORE TELECOM REVENUE 64,215 34,414 86.6%
------------------------------------------------------------
ENHANCED (ZYCOM) 5,240 6,829 (23.3%)
------------------------------------------------------------
TOTAL TELECOM REVENUE 69,455 41,243 68.4%
------------------------------------------------------------
Netcom reported Internet services revenue of $40.4 million for
the three months ended June 30, 1998, compared to $41.0 million
reported for the same period last year. Netcom's higher margin
business segment, related to Web hosting and dedicated services,
recorded a revenue increase of $0.5 million to $8.0 million for
the current quarter, compared to $7.5 million recorded for the
three months ended March 31, 1998. This increase was directly
attributable to growth in customers for these two business
segments. Netcom provided Internet service to 18,638 business
customers at June 30, 1998, compared to 14,976 business customers
at March 31, 1998, a 24.5 percent sequential gain over the prior
quarter.
At the end of the second quarter 1998, Netcom provided Internet
services to 511,806 subscribers, compared to 527,800 subscribers
at the end of the first quarter of 1998. The decline in dial-up
subscribers accounted for a $0.6 million reduction in Netcom's
dial-up revenue which was $32.4 million for the second quarter of
1998, compared to $33.0 for the prior quarter. During the second
quarter Netcom began marketing initiatives intended to stabilize
and then grow its dial-up customer base.
-more-
ICG Communications, Inc. 161 Iverness Drive W.,
Englewood, Colorado 80112 (303) 414-5000
<PAGE>
ICG Netcom 2nd Quarter Results
page -5-
ICG's Network Services revenue decreased $0.8 million to $14.8
million for the second quarter of 1998, compared to $15.6 million
reported for the same quarter last year; however, when compared
sequentially to the first quarter of 1998, Network Services
revenue increased 29.1%, or $3.3 million.
The company's Satellite Services business produced record revenue
of $11.7 million for the quarter ended June 30, 1998, compared to
$7.9 million reported for the second quarter last year. ICG
recently announced an agreement to sell Satellite Services'
Nova-Net Communications, Inc., (VSAT) and MarineSat
Communications, Inc., (mobile satellite communications); these
two subsidiaries generated $3.3 million in revenue for the three
months ended June 30, 1998. Maritime Telecommunications Network,
Inc. ("MTN"), which provides satellite communications for cruise
ships, naval vessels and offshore platforms, remains an ICG
Satellite Services, Inc. subsidiary.
TOTAL OPERATING COSTS AND SG&A EXPENSES:
Total operating costs for the quarter ended June 30, 1998 were
$93.4 million, compared to $83.7 million recorded for the
corresponding quarter last year. The increase in these costs was
primarily attributable to the increase in local switched services
and the addition of network operating costs which include
engineering and operations personnel dedicated to the development
and launch of local exchange services. Additionally, Netcom
continued to experience increased transport costs due to
initiatives related to the conversion from an analog to a digital
based network, which produced certain duplicative costs during
the period of conversion.
Selling, general and administrative ("SG&A") expenses for the
three months ended June 30, 1998 were $61.4 million, compared to
$58.6 million reported for the same three-month period in 1997.
As a percentage of total revenue, the company's SG&A expenses for
the current reported quarter were 45.1 percent, compared to 48.6
percent for the prior quarter, and 55.4 percent for the second
quarter of 1997.
-more-
ICG Communications, Inc. 161 Iverness Drive W.,
Englewood, Colorado 80112 (303) 414-5000
<PAGE>
ICG Netcom 2nd Quarter Results
page -6-
ICG reclassified to SG&A expenses the amortization of Netcom's
deferred advertising costs, which historically were presented in
the company's depreciation and amortization expense, consistent
with Netcom's historical financial statements. Based on the
company's review of industry practice, and consultation with its
external auditors, ICG believes that the amortization of deferred
advertising costs is more appropriately included in S,G & A
expenses.
NET LOSSES:
Depreciation and amortization for the three months ended June 30,
1998 was $30.7 million, an increase of $11.7 million compared to
the same period in 1997. The increase in depreciation and
amortization expense is primarily attributable to increased
capital expenditures. Interest expense and interest income for
the three months ended June 30, 1998 were $42.0 million and $9.5
million, respectively.
ICG reported a net loss of $100.8 million for the three months
ended June 30, 1998, compared to a net loss of $86.7 million
recorded for the corresponding period in 1997. Loss per share for
the quarters ended June 30, 1998 and 1997 were $2.25 and $2.06,
respectively.
The net loss for the three months ended June 30, 1998 includes
$2.2 million in nonrecurring merger and restructuring expenses,
and $3.2 million in nonrecurring legal settlement costs
associated with Satellite Services' MTN subsidiary and Zycom.
RESOURCES AND CAPITAL EXPENDITURES:
ICG had $631.5 million in cash, cash equivalents and short-term
investments at June 30, 1998. The company's capital expenditures
for the three months and six months ended June 30, 1998 were
$95.9 million and $173.1 million, respectively.
OPERATIONS:
At June 30, 1998, the company was co-located in 45 central ILEC
offices, compared to 32 central
-more-
ICG Communications, Inc. 161 Iverness Drive W.,
Englewood, Colorado 80112 (303) 414-5000
<PAGE>
ICG Netcom 2nd Quarter Results
page -7-
offices at the end of 1997. At June 30, 1998, ICG had 3,812
operational fiber route miles (with another 430 miles under
construction), compared to 3,043 miles at December 31, 1997. ICG
had 35 operational switches at the end of the second quarter of
1998, of which 20 were voice switches and 15 were data switches.
The company also increased its buildings connected, reaching
4,398 buildings at the end of the current quarter.
ICG's Internet business unit, Netcom, had 511,806 total
subscribers at June 30, 1998, which generated an average monthly
revenue per subscriber of $25.87 for the three months ended June
30, 1998.
ABOUT ICG NETCOM:
ICG Netcom is the brand name for products and services from ICG
Communications, Inc. (NASDAQ: ICGX) and ICG's subsidiary, NETCOM
On-Line Communication Services, Inc. The combined entity is a
leading integrated communications provider (ICP) offering high-
quality telecommunications services. Headquartered in Englewood,
Colo., ICG has extensive switched fiber-optic networks and offers
local, long distance and enhanced telephony and data services in
California, Colorado, Ohio and parts of the southeastern United
States. The company provides Internet communication solutions,
connectivity and web site hosting to individuals and to small-
and medium-sized businesses through its subsidiary, NETCOM On-
Line Communication Services, Inc. ICG also is a leading designer
and installer of copper, fiber and wireless infrastructure for
buildings and campuses. At June 30, 1998, ICG had 3,089 full time
employees.
###
INFORMATION AND STATEMENTS CONTAINED IN THIS PRESS RELEASE
CONTAIN, EXPRESSED OR IMPLIED, FORWARD-LOOKING DISCLOSURES THAT
ARE BASED ON THE BELIEFS OF MANAGEMENT AS WELL AS ASSUMPTIONS
MADE BASED ON INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT.
THESE FORWARD-LOOKING STATEMENTS AND INFORMATION INVOLVE RISKS
AND UNCERTAINTY, INCLUDING, BUT NOT LIMITED TO, FUTURE DEMAND FOR
THE COMPANY'S SERVICES, GENERAL ECONOMIC CONDITIONS, GOVERNMENT
REGULATIONS, COMPETITION AND CUSTOMER STRATEGIES, CAPITAL
DEPLOYMENT, THE IMPACT OF PRICING AND OTHER RISKS AND
UNCERTAINTIES. SHOULD ONE OR MORE OF THESE RISKS MATERIALIZE, OR
SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY
VARY MATERIALLY FROM THOSE DESCRIBED HEREIN AS ANTICIPATED,
BELIEVED, ESTIMATED OR EXPECTED. THESE RISKS ARE DETAILED FROM
TIME TO TIME IN VARIOUS REPORTS FILED BY ICG WITH THE SEC,
INCLUDING FORM 10-K FILED BY ICG FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997, FORM 10-Q FILED FOR THE QUARTER ENDED MARCH
31, 1998, AND FORM 10-Q TO BE FILED FOR THE CURRENT QUARTER ENDED
JUNE 30, 1998.
Attachments: Key Operating Statistics
Consolidated Statements of Operations
Consolidated Balance Sheet
ICG Communications, Inc. 161 Iverness Drive W.,
Englewood, Colorado 80112 (303) 414-5000
<PAGE>
ICG Netcom 2nd Quarter Results
page -8-
KEY OPERATING STATISTICS
---------------------------------------------------------------------------
AS OF,
TELECOM JUNE 30, MARCH 31, DEC. 31, SEPT 30, JUNE 30, MARCH
SERVICES 1998 1998 1997 1997 1997 31, 1997
---------------------------------------------------------------------------
DIAL TONE LINES
IN SERVICE 237,458 186,156 141,035 50,551 20,108 5,371
---------------------------------------------------------------------------
FIBER ROUTE MILES
Operational 3,812 3,194 3,043 3,021 2,898 2,483
Under
construction 430 -- -- -- -- --
---------------------------------------------------------------------------
FIBER STRAND MILES
Operational 124,642 118,074 111,435 109,510 101,788 83,334
Under
construction 11,102 -- -- -- -- --
---------------------------------------------------------------------------
WIRELESS MILES 511 511 511 511 511 511
---------------------------------------------------------------------------
BUILDINGS CONNECTED *
On network 665 637 596 590 560 545
Hybrid 3,733 3,294 1,725 1,726 1,704 1,550
-----------------------------------------------------
Total
buildings
connected 4,398 3,931 2,321 2,316 2,264 2,095
--------------------------------------------------------------------------
CUSTOMER CIRCUITS
IN SERVICE
(VGEs) 1,250,479 1,171,801 1,111,697 1,006,916 917,656 816,238
--------------------------------------------------------------------------
SWITCHES
Voice 20 20 19 18 17 16
Data 15 15 15 15 15 10
-----------------------------------------------------
Total
switches 35 35 34 33 32 26
--------------------------------------------------------------------------
SWITCHED MINUTES
OF USE (MOU) (in
millions)** 516 639 660 788 742 682
--------------------------------------------------------------------------
INTERNET
SERVICES
--------------------------------------------------------------------------
WEB HOSTING/
DEDICATED SUBS 18,638 14,976 12,275 10,630 9,070 6,724
--------------------------------------------------------------------------
AVE. MO.
REVENUE PER
SUB $25.87 25.12 25.01 24.24 23.95 22.46
--------------------------------------------------------------------------
SATELLITE
SERVICES
--------------------------------------------------------------------------
VSATs 928 921 957 934 895 875
--------------------------------------------------------------------------
C-BAND
INSTALLATIONS 66 59 57 54 57 57
--------------------------------------------------------------------------
L-BAND
INSTALLATIONS 1,636 1,450 1,239 768 671 355
--------------------------------------------------------------------------
* Beginning in the first quarter of 1998, buildings connected represents
both dial tone and special access connectivity.
** Based on three-month periods.
ICG Communications, Inc. 161 Iverness Drive W.,
Englewood, Colorado 80112 (303) 414-5000
<PAGE>
ICG Netcom 2nd Quarter Results
page -9-
Press release attachment
[ICG Netcom logo]
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
($ in thousands except per share data)
Year-over-year comparison
---------------------------------
THREE MONTHS ENDED,
--------------------
Revenue 30-Jun-98 30-Jun-97 % Change
-------- --------- ----------
Telecom services
Switched local services $ 29,507 1,170 2422.0%
Long Distance 5,761 - NA
Switched terminating
access 11,404 19,743 (42.2%)
Special access 17,543 13,501 29.9%
------- -------
Core Telecom
revenue 64,215 34,414 86.6%
Enhanced (Zycom) 5,240 6,829 (23.3%)
------- -------
Total Telecom services 69,455 41,243 68.4%
Internet services (Netcom) 40,370 41,020 (1.6%)
Network services (FOTI) 14,759 15,640 (5.6%)
Satellite services 11,683 7,883 48.2%
------- -------
TOTAL REVENUE 136,267 105,786 28.8%
Operating costs
Telecom services (48,840) (42,444) 15.1%
Internet services (Netcom) (26,052) (23,957) 8.7%
Network services (FOTI) (12,590) (12,883) (2.3%)
Satellite services (5,869) (4,366) 34.4%
------- -------
Total operating costs (93,351) (83,650) 11.6%
Selling, general and
administrative (61,444) (58,636) 4.8%
------- -------
EBITDA (before
nonrecurring charges) (18,528) (36,500) (49.2%)
Depreciation and
amortization (30,663) (18,955) 61.8%
Net gain (loss) on disposal
of long-lived assets (137) 256 (153.5%)
Provision for impairment of
long-lived assets - - NA
Merger and restructuring
costs (2,185) (1,712) 27.6%
------- -------
Operating loss (51,513) (56,911) (9.5%)
Interest expense (41,991) (28,451) 47.6%
Interest income 9,499 7,778 22.1%
Other, net (3,224) (43) 7397.7%
------- -------
Loss before income taxes and
minority interest (87,229) (77,627) 12.4%
Income tax expense (12) (6) 100.0%
Minority interest & (13,595) (9,116) 49.1%
preferred dividends on -------
preferred securities of
subsidiaries
Net loss (100,836) (86,749) 16.2%
======= =======
Loss per share - basic and
diluted (2.25) (2.06) 9.2%
======= ========
Weighted average number of
shares outstanding - basic
and diluted 44,865 42,122
Sequential comparison
--------------------------------
THREE MONTHS ENDED,
--------------------
Revenue 30-Jun-98 31-Mar-98 % Change
--------- --------- ----------
Telecom services
Switched local services $ 29,507 23,062 27.9%
Long Distance 5,761 5,098 13.0%
Switched terminating
access 11,404 14,200 (19.7%)
Special access 17,543 16,127 8.8%
------- -------
Core Telecom
revenue 64,215 58,487 9.8%
Enhanced (Zycom) 5,240 6,255 (16.2%)
------- -------
Total Telecom services 69,455 64,742 7.3%
Internet services (Netcom) 40,370 40,534 (0.4%)
Network services (FOTI) 14,759 11,431 29.1%
Satellite services 11,683 8,949 30.6%
------- -------
TOTAL REVENUE 136,267 125,656 8.4%
Operating costs
Telecom services (48,840) (52,008) (6.1%)
Internet services (Netcom) (26,052) (25,654) 1.6%
Network services (FOTI) (12,590) (10,865) 15.9%
Satellite services (5,869) (4,992) 17.6%
------- -------
Total operating costs (93,351) (93,519) (0.2%)
Selling, general and (61,444) (61,058) 0.6%
administrative ------- -------
EBITDA (before
nonrecurring charges) (18,528) (28,921) (35.9%)
Depreciation and
amortization (30,663) (20,967) 46.2%
Net gain (loss) on disposal
of long-lived assets (137) (505) (72.9%)
Provision for impairment of
long-lived assets - (1,860) (100.0%)
Merger and restructuring
costs (2,185) (7,746) (71.8%)
------- -------
Operating loss (51,513) (59,999) (14.1%)
Interest expense (41,991) (34,884) 20.4%
Interest income 9,499 6,649 42.9%
Other, net (3,224) (316) 920.3%
------- -------
Loss before income taxes and
minority interest (87,229) (88,550) (1.5%)
Income tax expense (12) (13) (7.7%)
Minority interest &
preferred dividends on
preferred securities of
subsidiaries (13,595) (13,192) 3.1%
------- -------
Net loss (100,836) (101,755) (0.9%)
======= =======
Loss per share - basic and
diluted (2.25) (2.30) (2.2%)
======= =======
Weighted average number of
shares outstanding - basic
and diluted 44,865 44,311
ICG Netcom 2nd Quarter Results
page -10-
Press release attachment
[ICG Netcom logo]
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
($ in thousands except per share data)
SIX MONTHS ENDED,
--------------------
Revenue 30-Jun-98 30-Jun-97 % Change
--------- --------- ----------
Telecom services
Switched local services $ 52,569 1,170 4393.1%
Long Distance 10,859 - NA
Switched terminating
access 25,604 38,344 (33.2%)
Special access 33,670 25,580 31.6%
------- -------
Core Telecom
revenue 122,702 65,094 88.5%
Enhanced (Zycom) 11,495 14,429 (20.3%)
------- -------
Total Telecom services 134,197 79,523 68.8%
Internet services (Netcom) 80,904 80,025 1.1%
Network services (FOTI) 26,190 33,627 (22.1%)
Satellite services 20,632 14,666 40.7%
------- -------
TOTAL REVENUE 261,923 207,841 26.0%
Operating costs
Telecom services (100,848) (83,894) 20.2%
Internet services (Netcom) (51,706) (47,337) 9.2%
Network services (FOTI) (23,455) (27,418) (14.5%)
Satellite services (10,861) (7,953) 36.6%
------- -------
Total operating costs (186,870) (166,602) 12.2%
Selling, general and
administrative (122,502) (112,252) 9.1%
------- -------
EBITDA (before
nonrecurring charges) (47,449) (71,013) (33.2%)
Depreciation and
amortization (51,630) (35,681) 44.7%
Net gain (loss) on disposal
of long-lived assets (642) 897 (171.6%)
Provision for impairment of
long-lived assets (1,860) - NA
Merger and restructuring
costs (9,931) (1,712) 480.1%
------- -------
Operating loss (111,512) (107,509) 3.7%
Interest expense (76,875) (53,633) 43.3%
Interest income 16,148 13,876 16.4%
Other, net (3,540) (593) 497.0%
------- -------
Loss before income taxes and
minority interest (175,779) (147,859) 18.9%
Income tax expense (25) (13) 92.3%
Minority interest &
preferred dividends on
preferred securities of
subsidiaries (26,787) (14,869) 80.2%
------- -------
Net loss (202,591) (162,741) 24.5%
======= =======
Loss per share - basic and
diluted (4.54) (3.87) 17.3%
======= =======
Weighted average number of
shares outstanding - basic
and diluted 44,588 42,067
ICG Netcom 2nd Quarter Results
page -11-
Press release attachment
[ICG Netcom logo]
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
($ in thousands except per share data)
JUNE 30, DECEMBER 31,
ASSETS 1998 1997
------------ ---------- ------------
Cash, cash equivalents and $ 631,494 294,483
short-term investments
Receivables, net 106,534 81,118
Property and equipment 998,615 860,495
Accumulated depreciation (203,914) (155,383)
---------- ----------
Net property and
equipment 794,701 705,112
Goodwill, net 74,398 77,562
Deferred financing costs, net 38,481 23,196
Restricted cash 20,836 24,649
Deposits and other assets, net 66,188 48,391
---------- ----------
Total assets 1,732,632 1,254,511
========== ==========
LIABILITIES AND STOCKHOLDERS'
DEFICIT:
-------------------------------
Accounts payable and accrued
liabilities $ 145,897 120,354
Capital leases 72,762 78,617
Debt 1,513,740 892,352
---------- ----------
Total liabilities 1,732,399 1,091,323
---------- ----------
Redeemable preferred
securities of subsidiaries 442,437 420,171
Stockholders' deficit:
Common stock 747 749
Additional paid-in capital 550,989 533,541
Accumulated deficit (994,008) (791,417)
Accumulated other
comprehensive income 68 144
---------- ----------
Total stockholders'
deficit (442,204) (256,983)
---------- ----------
Total liabilities and
stockholders' deficit $ 1,732,632 1,254,511
========== ==========
