<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
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 September 30, 1999
Or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _____ to _______
Commission File Number 000-25015
WORLDPORT COMMUNICATIONS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-1127336
- ------------------------------------------------ ------------------------
(State or other jurisdiction of incorporation or (IRS Employer ID Number)
organization)
1825 Barrett Lakes Blvd.
Suite 100, Kennesaw, Georgia 30144
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(770) 792-8735
Registrant's telephone number, including area code
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 [ ]
As of November 8, 1999, the Registrant had 27,547,092 shares of Common Stock par
value $0.0001 outstanding.
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WORLDPORT COMMUNICATIONS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 1999 (unaudited) and December 31, 1998 ............................... 3
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30,
1999 and 1998 (unaudited) .......................................................... 4
Condensed Consolidated Statements of Comprehensive Income
For the Three and Nine Months Ended September 30,
1999 and 1998 (unaudited) .......................................................... 5
Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1999 and 1998 (unaudited) .......................... 6
Notes to Condensed Consolidated Financial Statements (unaudited) ................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ...................................... 12
SIGNATURE
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -------------
ASSETS (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ....................................................... $ 1,068 $ 9,015
Accounts receivable, net of allowance for doubtful accounts
of $280 and $1,054, respectively ............................................. 1,683 11,765
Receivable from related party ................................................... -- 32,500
Prepaid expenses and other current assets ....................................... 163 3,021
Total current assets .................................................... 2,914 56,301
PROPERTY AND EQUIPMENT, net ..................................................... 901 91,226
OTHER ASSETS:
Goodwill, net ............................................................. -- 43,190
Other intangibles, net .................................................... -- 21,851
Net assets held for sale .................................................. 104,985 --
Other assets, net ......................................................... 198 7,887
--------- ---------
TOTAL ASSETS ................................................. $ 108,998 $ 220,455
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................................................... $ 8,755 $ 25,335
Accrued expenses ............................................................... 8,066 19,302
Current portion of obligations under capital leases ............................ 1,674 2,631
Other current liabilities ...................................................... 193 1,952
Interim loan facility .......................................................... 134,934 110,926
Total current liabilities ............................................... 153,622 160,146
Long-term obligations under capital leases, net of current portion .................. 6,051 17,539
Note payable, net of current portion ................................................ -- 12,028
Other long-term liabilities ......................................................... 19 11,375
Total liabilities ...................................................... 159,692 201,088
MINORITY INTEREST ................................................................... -- 1,845
COMMITMENTS AND CONTINGENCIES (Note 3): ............................................. -- --
STOCKHOLDERS' (DEFICIT) EQUITY:
Undesignated preferred stock, $0.0001 par value, 4,800,000 shares
authorized, no shares issued and outstanding ............................... -- --
Series A convertible preferred stock, $0.0001 par value, 750,000 shares
authorized, 0 and 493,889 shares issued and outstanding in
1999 and 1998, respectively ................................................. -- --
Series B convertible preferred stock, $0.0001 par value, 3,000,000 shares
authorized, 1,112,852 and 2,931,613 shares issued and outstanding in
1999 and 1998, respectively ................................................. -- --
Series C convertible preferred stock, $0.0001 par value, 1,450,000 shares
authorized, 1,416,030 and 1,132,824 shares issued and outstanding in
1999 and 1998, respectively ................................................. -- --
Series D convertible preferred stock, $0.0001 par value, 650,000 shares
authorized, 316,921 and 0 shares issued and outstanding in
1999 and 1998, respectively .................................................. -- --
Series E convertible preferred stock, $0.0001 par value, 145,000 shares
authorized, 141,603 and 0 shares issued and outstanding in
1999 and 1998, respectively .................................................. -- --
Common stock, $0.0001 par value, 65,000,000 shares authorized,
27,127,391 and 18,228,916 shares issued and outstanding in
1999 and 1998, respectively ................................................. 3 2
Warrants ....................................................................... 29,054 28,263
Additional paid-in capital ..................................................... 100,757 77,414
Unearned compensation expense .................................................. (365) (750)
Cumulative translation adjustment .............................................. (4,827) (6,747)
Accumulated deficit ............................................................ (175,316) (80,660)
Total stockholders' (deficit) equity ............................ (50,694) 17,522
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY ............ $ 108,998 $ 220,455
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES .............................................. $ 22,467 $ 11,746 $ 65,263 $ 14,410
COST OF SERVICES ...................................... 14,124 8,473 44,860 10,980
-------- -------- -------- --------
Gross margin ..................................... 8,343 3,273 20,403 3,430
OPERATING EXPENSES:
Selling, general and administrative expenses ..... 15,836 14,097 41,459 20,349
Depreciation and amortization .................... 6,096 4,281 17,127 5,778
Asset impairment ................................. 12,842 -- 12,842 --
-------- -------- -------- --------
Operating loss ................................... (26,431) (15,105) (51,025) (22,697)
OTHER EXPENSE:
Interest expense, net ............................ (9,666) (9,360) (44,190) (10,202)
Other expense, net ............................... (230) -- (1,286) --
-------- -------- -------- --------
LOSS BEFORE MINORITY INTEREST AND INCOME
TAXES ............................................... (36,327) (24,465) (96,501) (32,899)
MINORITY INTEREST ..................................... -- -- 1,845 --
-------- -------- -------- --------
LOSS BEFORE INCOME TAXES .............................. (36,327) (24,465) (94,656) (32,899)
INCOME TAX PROVISION .................................. -- -- -- --
-------- -------- -------- --------
NET LOSS .............................................. $(36,327) $(24,465) $(94,656) $(32,899)
======== ======== ======== ========
NET LOSS PER SHARE, BASIC AND DILUTED ................. $ ( 1.51) $ (1.38) $ (4.26) $ (1.95)
======== ======== ======== ========
SHARES USED IN NET LOSS PER SHARE
CALCULATION, BASIC AND DILUTED..................... 24,039 17,702 22,237 16,841
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
----------- -------- -------- --------
<S> <C> <C> <C> <C>
Net loss .............................................. $ (36,327) $(24,465) $(94,656) $(32,899)
Other comprehensive income, net of tax:
Foreign currency translation adjustments ......... (1,432) -- 1,920 --
----------- -------- -------- --------
Comprehensive loss .................................... $ (37,759) $(24,465) $(92,735) $(32,899)
=========== ======== ======== --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1999 1998
----- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (94,656) $ (32,899)
Adjustments to reconcile net loss to net cash
used in operating activities -
Depreciation and amortization 17,127 5,778
Asset impairment 12,842 --
Non-cash interest expense 39,027 3,882
Non-cash compensation expense 385 1,419
Minority interest (1,845) --
Change in accounts receivable (6,385) (2,194)
Change in prepaid expenses and other assets (3,394) (1,485)
Other 1,927 --
Change in accounts payable, accrued expenses and other liabilities 95 12,985
--------- ---------
Net cash used in operating activities (34,879) (12,514)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid in connection with acquisitions, net of cash acquired -- (113,891)
Deposits paid in conjunction with new business alliances -- (1,238)
Capital expenditures (16,228) (7,614)
--------- ---------
Net cash used in investing activities (16,228) (122,743)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from interim financing -- 120,000
Principal payments on note payable - related party (150) (365)
Principal payments on short-term debt (192) --
Principal payments on obligations under capital leases (5,696) (722)
Proceeds from exercise of stock options 1,798 --
Proceeds from issuance of common stock, net of offering expenses 6 900
Proceeds from issuance of preferred stock, net of offering expenses 47,500 12,777
--------- ---------
Net cash provided by financing activities 43,266 132,590
Effect of exchange rate changes on cash and cash equivalents 165 4,904
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,676) 2,237
CASH AND CASH EQUIVALENTS, beginning of the period 9,015 179
--------- ---------
CASH AND CASH EQUIVALENTS, end of the period $ 1,339 $ 2,416
========= =========
CASH PAID DURING THE PERIOD FOR INTEREST $ 2,263 $ 491
========= =========
CASH PAID DURING THE PERIOD FOR INCOME TAXES $ -- $ --
========= =========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Conversion of notes payable - related parties and accrued interest for
230,627 shares of Series B preferred stock $ -- $ 1,236
========= =========
Issuance of 250,000 shares of Series B preferred stock for notes receivable $ -- $ 1,017
========= =========
Acquisition of assets under capital lease and other financing facilities $ 38,241 $ 4,320
========= =========
Issuance of warrants in connection with Interim Loan $ 4,797 $ --
========= =========
Conversion of obligation for 316,921 shares of Series D Preferred Stock $ 1,030
=========
Stock issued in ICX and IIC acquisition $ -- $ 8,326
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
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WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Basis of Presentation
WorldPort Communications, Inc. (together with its subsidiaries, the
"Company"), previously known as Sage Resources, Inc., was organized as
a Colorado corporation on January 6, 1989, to evaluate, structure and
complete mergers with, or acquisitions of other entities. In October
1996, the Company changed its domicile to Delaware and changed to its
current name. The Company is a facilities-based global
telecommunications carrier offering voice, data and other
telecommunications services to carriers, internet service providers
("ISPs"), medium and large corporations and distributors and resellers.
The accompanying condensed consolidated financial statements have been
prepared by the Company without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in this Form 10-Q pursuant to
such rules and regulations; however, management believes that the
disclosures herein are adequate to make the information presented not
misleading. The financial statements and notes thereto included in this
Form 10-Q should be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1998.
In the opinion of the Company's management, the accompanying condensed
consolidated financial statements contain all adjustments necessary to
present fairly the Company's financial position as of September 30,
1999, and the results of operations for the three and nine months ended
September 30, 1999 and 1998 and cash flows for the nine months ended
September 30, 1999 and 1998. The results of operations for the three
and nine months ended September 30, 1999 and 1998 are not necessarily
indicative of the operating results for the full year.
Financial Condition
The Company is subject to various risks in connection with the
operation of its business including, among other things, (i) an
inability to repay the Interim Loan Facility due November 18, 1999,
(ii) changes in external competitive market factors, (iii) termination
of certain operating agreements or inability to enter into additional
operating agreements, (iv) inability to satisfy anticipated working
capital or other cash requirements, (v) changes in or developments
under domestic or foreign laws, regulations, licensing requirements or
telecommunications standards, (vi) changes in the availability of
transmission facilities, (vii) changes in the Company's business
strategy or an inability to execute its strategy due to unanticipated
changes in the market, (viii) various competitive factors that may
prevent the Company from competing successfully in the marketplace, and
(ix) the Company's lack of liquidity and its ability to raise
additional capital. The Company has incurred losses since inception,
expects to continue to incur operating losses in the near future, and
has an accumulated deficit of approximately $175.3 million as of
September 30, 1999 as well as a working capital deficit of
approximately $150.1 million. Funding of the Company's working capital
deficit, current and future operating losses and investment in
additional telecommunications assets will require substantial
continuing capital investment. The Company's strategy has been to fund
these cash requirements through debt facilities and additional equity
financing. The Company is also seeking to finance its cash requirements
through the sale of some or all of its present operating assets. On
November 11, 1999, the Company entered into a series of agreements for
the purchase by Energis p/l ("Energis") of 100% of WorldPort
Communications Europe Holdings, B.V. ("WorldPort Communications
Europe") for an estimated aggregate value of $570 million. The Company
owns 85% of the outstanding capital stock of WorldPort Communications
Europe which is the parent of EnerTel. As part of the transaction the
Company is selling to Energis certain additional assets, including its
switch operations in London and New York. It is expected that this sale
will be consummated by the end of the first quarter of the year 2000.
Following the repayment of the Company's outstanding indebtedness
(including the Interim Loan) and accounts payable, the assumption by
Energis of certain contractual obligations of the Company and the
payment of applicable taxes and transaction costs, the Company expects
to receive between $200 to $215 million of net cash proceeds from this
sale. It is expected that the Company will consider a new strategic
focus following this sale utilizing the remaining net proceeds.
7
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The Company's Interim Loan facility, which originally matured on June
23, 1999 and has been extended until November 18, 1999, is secured by a
lien on substantially all of the Company's assets and certain of its
subsidiaries and a pledge of the capital stock of certain of the
Company's subsidiaries. It is contemplated that the proceeds from the
sale of EnerTel will be used to repay the Interim Loan. In the event
that the Interim Loan is not repaid by its current maturity date (or
any further extended maturity date, as the case may be), the Interim
Loan holders have an agreement with the Company and certain of the
Company's stockholders pursuant to which the Company and such
stockholders will be obligated to support and use their respective best
efforts to achieve any transaction or series of transactions involving
the sale of all or any part of the Company or any subsidiary or any of
their assets which is proposed by the Interim Loan holders.
Although the Company has been able to arrange debt facilities or equity
financing to date, there can be no assurance that sufficient debt or
equity financing will continue to be available in the future or that it
will be available on terms acceptable to the Company. Failure to
complete the sale of EnerTel or failure to obtain sufficient capital
will materially affect the Company's operations. As a result of the
aforementioned factors and related uncertainties, there is substantial
doubt about the Company's ability to continue as a going concern.
In August 1999, the Company announced that it was closing its U.S.
carrier operations and initiated the process of disposing of certain
assets and subsidiaries, including Telenational Communications, Inc.
("TNC") and International InterConnect, Inc. ("IIC"). The Company is
currently negotiating the sale of these operations, but to date does
not have any definitive sale arrangements. The Company has taken an
asset impairment charge of approximately $5.4 million, $6.5 million and
$1 million in connection with the pending sale of TNC, IIC and other
U.S. based assets, respectively, to write the net investments down to
their anticipated net realizable value. Additionally, the balance sheet
accounts of EnerTel, TNC and IIC have been collapsed in the
accompanying financial statements, and are reflected as net assets held
for sale in "Other Assets". The following table summarizes the net
assets prior to collapsing the balance sheet accounts and the net
realizable asset write-down (in thousands):
<TABLE>
<CAPTION>
TNC IIC Other EnerTel Total
------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C>
Working capital $ 791 $ 504 $ -- $ (15,501) $ (14,206)
Property, plant & equipment 939 487 3,954 110,860 116,240
Other assets -- 144 -- 14,842 14,986
Non current liabilities (64) (2,853) -- (56,120) (59,037)
Intangible assets 5,050 8,524 -- 46,270 59,844
Impairment loss (5,366) (6,476) (1,000) -- (12,842)
------- ------- ------- --------- ---------
Net assets held for sale $ 1,350 $ 330 $ 2,954 $ 100,351 $ 104,985
</TABLE>
Consolidation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Loss per Share
For all periods presented, basic and diluted earnings per share are the
same as any dilutive securities had an antidilutive effect on earnings
per share.
(2) SEGMENT DISCLOSURES
In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information. SFAS No. 131 requires the
reporting of profit and loss, specific revenue and expense items and
assets for reportable segments. It also requires the reconciliation of
total segment revenues, total
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segment profit or loss, total segment assets, and other amounts
disclosed for segments to the corresponding amounts in the general
purpose financial statements. The Company adopted SFAS No. 131 during
the year ended December 31, 1998.
The Company views itself as participating in one business segment -
facilities-based global telecommunications. Its operations can be
viewed as European and North American. Intersegment revenues are not
material. Financial data by geographic area for the three months ended
September 30, 1999 and 1998, and the nine months ended September 30,
1999 are as follows (in thousands):
Three months ended September 30, 1999:
<TABLE>
<CAPTION>
European North American (1) Total
-------- ------------------ -----
<S> <C> <C> <C>
Revenues $16,639 $ 5,828 $22,467
Depreciation and amortization 4,089 2,007 6,096
Operating loss (3,585) (22,846) (26,431)
Interest expense, net (8,843) (823) (9,666)
Net loss (12,427) (23,900) (36,327)
</TABLE>
Three months ended September 30, 1998:
<TABLE>
<CAPTION>
European North American (1) Total
-------- ------------------ -----
<S> <C> <C> <C>
Revenues $ 8,003 $ 3,743 $11,746
Depreciation and amortization 3,371 910 4,281
Operating loss (8,608) (6,497) (15,105)
Interest expense, net (9,435) 75 (9,360)
Net loss (18,044) (6,421) (24,465)
</TABLE>
Nine months ended September 30, 1999:
<TABLE>
<CAPTION>
European North American (1) Total
-------- ------------------ -----
<S> <C> <C> <C>
Revenues $49,320 $15,943 $65,263
Depreciation and amortization 12,389 4,738 17,127
Operating loss (12,544) (38,481) (51,025)
Interest expense, net (42,279) (1,911) (44,190)
Net loss (52,974) (41,682) (94,656)
</TABLE>
(1) Includes all corporate overhead costs.
The Company acquired its European operations in June 1998. Prior to
that, all of its operations were North American based.
The Company is in the process of selling certain assets and
subsidiaries. Accordingly, at September 30, 1999 the balance sheet
accounts of these assets and subsidiaries have been collapsed into net
assets held for sale (see footnote 1 for additional information).
(3) COMMITMENTS AND CONTINGENCIES
Interim Loan Facility
To finance the EnerTel acquisition, the Company entered into a $120
million Interim Loan facility with a consortium of lenders effective
June 23, 1998, the terms of which also included the issuance of
warrants.
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<PAGE> 10
The Interim Loan, which originally matured on June 23, 1999 and has
been extended until November 18, 1999, includes certain negative and
affirmative covenants and is secured by a lien on substantially all of
the assets of the Company and certain of its subsidiaries and a pledge
of the capital stock of certain of the Company's subsidiaries. In order
to secure the extension until November 18, 1999, the Company has agreed
to pay the Lenders an amendment fee of $600,000 at the maturity date.
The amendment fee has been recorded as interest expense in the
accompanying financial statements. The Interim Loan bears interest at
LIBOR (as defined in the credit agreement related to the Interim Loan)
plus 6% per annum (13.5% at September 30, 1999) increasing by 0.5% per
annum at the end of each period of three consecutive months after June
23, 1998; provided, that such interest rate shall not exceed 16% per
annum if paid in cash or 18% per annum if capitalized. As of September
30, 1999, the Interim Loan holders, in aggregate, have received
warrants exercisable for 4,069,904 shares of Common Stock at a price
per share of $0.01. In addition to the warrants which the Interim Loan
holders had received as of September 30, 1999, such holders are
entitled to receive additional warrants on the date the Interim Loan is
repaid in full, so that all warrants issued to such holders represent
11% of the Company's fully-diluted outstanding Common Stock on the date
of such repayment. As of September 30, 1999, the warrants issued and to
be issued in connection with the Interim Loan were valued at an
aggregate of approximately $29.1 million. It is contemplated that the
proceeds from the sale of EnerTel will be used to repay the Interim
Loan.
Capacity Commitments
The Company has entered into agreements with a vendor for the purchase
of STM-1's of capacity on the AC-1 cable system or STM-1 level capacity
on additional undersea and terrestrial cable systems under development
by this vendor. In 1998, the Company made a deposit of $2 million with
this vendor which will be applied against the Company's aggregate $66
million purchase commitment over the next 3 years under this agreement.
In 1999, the Company purchased undersea cable capacity from the vendor
by converting its deposit and paying an additional $5.1 million as
down-payment, and obtaining vendor financing for the remaining $15.8
million purchase price. This vendor financing bears interest at a rate
of 11.5% and requires quarterly principal payments of $1.2 million
beginning on the earlier of the Company having received aggregate
proceeds from debt or equity issuances (other than vendor financing) of
at least $150 million, or March 1, 2000 and ending March 2002. The
Company has not yet made any principal payments on this vendor
financing. The Company intends to sell all or a portion of this
capacity in conjunction with other asset sale activities now under
consideration.
In February 1999, the Company entered into an agreement with a
telecommunication carrier to sell to such carrier transmission capacity
throughout various points of presence in Europe for approximately $8
million, payable upon acceptance of the circuits by the carrier. The
contract provides the purchaser with an indefeasible right of use of
this capacity for a period of 20 years. The Company has entered into a
separate agreement with a European telecommunications company which
gives the Company the right to purchase capacity through these points
of presence. This contract provides for indefeasible rights of use for
a period of 10 years. The Company is pursuing means to satisfy the
capacity commitment to the Company's customer for the remaining 10
years of that contract. During the second quarter of 1999, the Company
recorded revenue under the contract of $2.1 million and costs,
including an estimate of future costs for years 11-20 based on an
independent third party's estimate, of $2.5 million. This represents
management's best estimate of the present value of such future costs to
provide these services. Management will monitor this estimate and
adjust as necessary when, and if, additional information is available.
The initial transaction under the contract was negotiated in
anticipation of future profitable revenues from the customer.
Legal
The Company's common stock is now quoted and traded on the OTC Bulletin
Board under the symbol "WRDP.OB" after having been delisted from the
Nasdaq SmallCap Market as of the close of business on August 4, 1999.
Since July 14, 1999, the Company and certain of its former officers
have been named as defendants in
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multiple shareholder class action lawsuits filed in the United States
District Court for the Northern District of Georgia. The plaintiffs in
these lawsuits seek to represent a class of individuals who purchased
or otherwise acquired the Company's common stock from as early as
December 31, 1998 through June 25, 1999. Among other things, the
plaintiffs allege the defendants spoke positively about financing the
Company obtained from The Heico Companies, LLC without disclosing the
risk that the financing might cause the Company to be delisted from
Nasdaq. The plaintiffs further allege the truth was purportedly
revealed on June 28, 1999 when the Company announced that it was under
review by Nasdaq and the disclosure that the Company might be delisted
from Nasdaq adversely affected the value of the Company's common stock.
The plaintiffs allege violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934. The Company intends to defend these
lawsuits vigorously, but due to inherent uncertainties of the
litigation process and the judicial system, the Company is unable to
predict the outcome of this litigation. If the outcome of this
litigation is adverse to the Company, it would have a material adverse
effect on the Company's business, financial condition and results of
operations.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NOTE ON "FORWARD-LOOKING" STATEMENTS
The information set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations ("MD&A") contains certain
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, Section 21E of the Securities
Exchange Act of 1934, as amended, and the Private Securities Litigation
Reform Act of 1995, including, among others (i) expected changes in the
Company's revenues and profitability, (ii) prospective business
opportunities and (iii) the Company's strategy for financing its
business. Forward-looking statements are statements other than
historical information or statements of current condition. Some
forward-looking statements may be identified by use of terms such as
"believes", "anticipates", "intends" or "expects". These
forward-looking statements relate to the plans, objectives and
expectations of the Company for future operations. Although the Company
believes that its expectations with respect to the forward-looking
statements are based upon reasonable assumptions within the bounds of
its knowledge of its business and operations, in light of the risks and
uncertainties inherent in all future projections, the inclusion of
forward-looking statements in this report should not be regarded as a
representation by the Company or any other person that the objectives
or plans of the Company will be achieved.
The Company's revenues and results of operations could differ
materially from those projected in the forward-looking statements as a
result of numerous factors, including, but not limited to, the
following: (i) an inability to repay the Interim Loan Facility due
November 18, 1999, (ii) changes in external competitive market factors,
(iii) termination of certain operating agreements or inability to enter
into additional operating agreements, (iv) inability to satisfy
anticipated working capital or other cash requirements, (v) changes in
or developments under domestic or foreign laws, regulations, licensing
requirements or telecommunications standards, (vi) changes in the
availability of transmission facilities, (vii) changes in the Company's
business strategy or an inability to execute its strategy due to
unanticipated changes in the market, (viii) various competitive factors
that may prevent the Company from competing successfully in the
marketplace, and (ix) the Company's lack of liquidity and its ability
to raise additional capital. In light of these risks and uncertainties,
there can be no assurance that actual results, performance or
achievements of the Company will not differ materially from any future
results, performance or achievements expressed or implied by such
forward-looking statements. The foregoing review of important factors
should not be construed as exhaustive. The Company undertakes no
obligation to release publicly the results of any future revisions it
may make to forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
The following discussion should be read in conjunction with the
Condensed Consolidated Financial Statements and Notes thereto included
under Item 1 of this Form 10-Q. In addition, reference should be made
to the Financial Statements and Notes thereto and related Management's
Discussion and Analysis of Financial Condition and Results of
Operations included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998.
OVERVIEW
The Company is a facilities-based global telecommunications carrier
offering voice, data and other telecommunications services to carriers,
internet service providers ("ISPs"), medium and large corporations and
distributors and resellers. In order to meet its obligations under the
Interim Loan Facility due November 18, 1999, the Company is currently
exploring the sale of some or all of its assets. On November 11, 1999,
the Company entered into a series of agreements for the purchase by
Energis of 100% of WorldPort Communications Europe for an estimated
aggregate value of $570 million. The Company owns 85% of the
outstanding capital stock of WorldPort Communications Europe which is
the parent of EnerTel. As part of the transaction, the Company is
selling to Energis certain additional assets, including its switch
operations in London and New York. It is expected that this sale will
be consummated by the end of the first quarter of the year 2000.
Following the repayment of the Company's outstanding indebtedness
(including the Interim Loan) and accounts payable, the assumption by
Energis of certain contractual obligations of the Company and the
payment of applicable taxes and transaction costs, the Company expects
to receive between $200 to $215 million of net cash proceeds from this
sale. It is expected that the Company will consider a new strategic
focus following this sale utilizing the remaining net proceeds.
The Company's growth to date has occurred principally through
acquisitions, most notably its acquisition
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of EnerTel, a national provider of telecommunications services in the
Netherlands. The Company acquired EnerTel in June 1998, for
consideration consisting of approximately $92 million and the payment
of certain EnerTel indebtedness of approximately $17 million. In
November 1998 the Company sold a 15% interest in the direct parent of
EnerTel to former shareholders of EnerTel for approximately $14.8
million, of which approximately $2.8 million was an equity investment
in the subsidiary and approximately $12 million was in the form of a
shareholder note. The principal on this shareholder note is payable ten
years after the Company's repayment of the Interim Loan, which financed
the Company's acquisition of EnerTel.
In addition to the Company's EnerTel operations, during 1998 the
Company acquired Intercontinental Exchange, Inc. ("ICX") and
International InterConnect, Inc. ("IIC") which serve distributors and
resellers focused on international calling card and private line
services. Formerly based in the San Francisco Bay area, ICX provides
telecommunication services principally through a network of agents and
distributors in Japan and other Asian countries. During the first
quarter of 1999, ICX's operations were integrated with the Company's
Omaha, Nebraska based calling card operation and its traffic was
migrated to the Company's Omaha switch. The Company acquired the assets
and operations of ICX in April 1998, in exchange for 400,000 shares of
Common Stock.
In August 1998, the Company acquired the assets and operations of IIC.
The purchase consideration was 879,442 shares of Common Stock and
$750,000 in cash. Based in Rockledge, Florida, IIC specializes in
providing international long distance services primarily in Latin
America. IIC's customer base consists primarily of resellers,
multinational corporations, foreign embassies, and other businesses.
In February 1998, the Company commenced operations in the Netherlands
through the acquisition of MathComp B.V., whose name was changed to
WorldPort Communications Europe, B.V. ("WorldPort Europe"). In
connection with this acquisition, the Company issued 150,000 shares of
Common Stock and paid $250,000 in cash. The former shareholder of
WorldPort Europe is eligible to earn an additional 2,350,000 shares of
Common Stock contingent upon the attainment of certain revenue and
gross margin requirements during the first and second quarters of 1999.
Following the acquisition of EnerTel, the Company recorded charges of
approximately $5.2 million in the fourth quarter of 1998 for the wind
down of the WorldPort Europe operations in 1999. See "Legal
Proceedings."
As of November 8, 1999, the Company had 27,160,014 shares of Common
Stock outstanding, or 59,907,057 shares on a fully diluted basis. The
number of shares outstanding on a fully-diluted basis takes into
account (i) all outstanding shares of Common Stock, (ii) all
outstanding shares of the Company's convertible preferred stock,
together with all options to acquire such stock, (iii) all outstanding
warrants to acquire the Company's Common Stock, together with such
number of additional warrants which the Company would have been
required to issue to the Interim Loan holders had the Interim Loan been
repaid on November 8, 1999 so that such holders would hold warrants
exercisable into 11% of the fully-diluted outstanding Common Stock on
such date (as contemplated by the Interim Loan facility), and (iv) all
outstanding options which had vested as of November 8, 1999 and which
had an exercise price at or below the market price on such date.
Capacity Commitments
The Company has entered into agreements with a vendor for the purchase
of STM-1's of capacity on the AC-1 cable system or STM-1 level capacity
on additional undersea or terrestrial cable systems under development
by this vendor. In 1998, the Company made a deposit of $2 million with
this vendor which will be applied against the Company's aggregate $66
million commitment over the next 3 years under this agreement. In March
1999, the Company purchased undersea cable capacity from the vendor by
converting its deposit and paying an additional $5.1 million as
down-payment, and obtaining vendor financing for the remaining $15.8
million purchase price. This vendor financing bears interest at a rate
of 11.5% and requires quarterly principal payments beginning on the
earlier of the Company having received aggregate proceeds from debt or
equity issuances (other than Vendor financing) of at least $150
million, or March 1, 2000 and ending in March 2002. The Company has not
yet made any principal payments on this
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vendor financing. The Company intends to sell all or a portion of this
capacity in conjunction with other asset sale activities now under
consideration.
In February 1999, the Company entered into an agreement with a
telecommunication carrier to sell to such carrier transmission capacity
throughout various points of presence in Europe for approximately $8
million, payable upon acceptance of the circuits by the carrier. The
contract provides the purchaser with an indefeasible right of use of
this capacity for a period of 20 years. The Company has entered into a
separate agreement with a European telecommunications company which
gives the Company the right to purchase capacity through these points
of presence. This contract provides for indefeasible right of use for a
period of 10 years. The Company is pursuing means to satisfy the
capacity commitment to the Company's customer for the remaining 10
years of that contract. During the second quarter of 1999, the Company
recorded revenue under the contract of $2.1 million and costs,
including an estimate of future costs for years 11-20 based on an
independent third party's estimate, of $2.5 million. This represents
management's best estimate of the present value of such future costs to
provide these services. Management will monitor this estimate and
adjust as necessary when, and if, additional information is available.
The initial transaction under the contract was negotiated in
anticipation of future profitable revenues from the customer.
RESULTS OF OPERATIONS
During the three months and nine months ended September 30, 1999, the
Company incurred losses of $36.3 million and $94.7 million,
respectively, compared to losses of $24.5 million and $32.9 million
during the same periods in 1998. Included in the losses incurred during
the three and nine months ended September 30, 1999 are the operating
results of EnerTel, IIC and ICX, including amortization of the
purchased intangibles and recording of financing costs related to the
Company's acquisition of EnerTel, as well as general expenses related
to the Company's worldwide business development and financing
activities. The operating results for ICX and IIC did not have a
material impact on the losses incurred by the Company in 1999. To
address and remedy historical operating losses and to increase its
competitiveness, revenues and gross margins, the Company has taken
various steps to improve each subsidiary's operating efficiency,
network capability and carrier cost structure. In August 1999, the
Company took steps to terminate its U.S. wholesale carrier operations
and significantly reduce its U.S. staffing related to those wholesale
operations. It also announced plans to explore strategic alternatives,
including the sale of assets. On November 11, 1999, the Company entered
into a series of agreements for the purchase by Energis of 100% of
WorldPort Communications Europe for an estimated aggregate value of
$570 million. The Company owns 85% of the outstanding capital stock of
WorldPort Communications Europe which is the parent of EnerTel. As part
of the transaction, the Company is selling to Energis certain
additional assets, including its switch operations in London and New
York. It is expected that this sale will be consummated by the end of
the first quarter of the year 2000. Following the repayment of the
Company's outstanding indebtedness (including the Interim Loan) and
accounts payable, the assumption by Energis of certain contractual
obligations of the Company and the payment of applicable taxes and
transaction costs, the Company expects to receive between $200 to $215
million of net cash proceeds from this sale. It is expected that the
Company will consider a new strategic focus following this sale
utilizing the remaining net proceeds. Failure to complete the sale of
EnerTel or failure to obtain sufficient capital will materially affect
the Company's operations. As a result of the aforementioned factors and
related uncertainties, there is substantial doubt about the Company's
ability to continue as a going concern.
Revenues
Revenues for the three and nine months ended September 30, 1999 were
$22.5 million and $65.3 million, respectively, compared to $11.7
million and $14.4 million for the three and nine months ended September
30, 1998. The increase in revenues is primarily attributed to the
inclusion of the results of operations of EnerTel, acquired in June
1998 and the commencement of the Company's U.S. wholesale carrier
operations during 1999. EnerTel's revenues were $15.5 million and $45.8
million, respectively, during the three and nine months ended September
30, 1999. The U.S. wholesale carrier operations, which the Company
terminated in the third quarter of 1999, contributed revenues of $3.5
million and $6.8 million during the three and nine months ended
September 30, 1999, respectively. Also contributing to the increase
over the prior year is the inclusion of IIC acquired in July 1998. This
entity contributed approximately $1.6 million and $5.3 million in total
revenues during the three and nine months ended September 30, 1999.
Results for the nine months ended September 30, 1999 also include
revenue of $2.1 million from the
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sale of transmission capacity under an agreement between the Company
and a telecommunication carrier.
EnerTel primarily generates revenue from the transmission of both
domestic and international switched minutes in the Netherlands. EnerTel
also derives revenues from the fixed monthly rental of private line
circuits. The growth in EnerTel's revenues during 1998 and the first
nine months of 1999 included growth in all EnerTel product lines
including virtual point of presence (VPOP) internet access; the
Kennisnet national data network for the Dutch school system, direct
access local, national and international switched services; and 800/900
products as well as the wholesale portion of the Bel 1600 business, a
residential services business which the Company sold in 1998.
Gross Margin
Gross margin for the three and nine months ended September 30, 1999 was
$8.3 million and $20.4 million, respectively, compared to $3.3 million
and $3.4 million for the three and nine months ended September 30,
1998. The increase in gross margin was primarily due to the inclusion
of the results of operations of EnerTel. The Company's primary costs of
sales are its cost of terminating switched minutes through third
parties, as well as its cost of access circuits used to connect its
customers in the Netherlands.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to $15.8 million
from $14.1 million and to $41.5 million from $20.3 million for the
three and nine months ended September 30, 1999 and 1998, respectively.
The increase is primarily due to (i) the inclusion of the selling,
general and administrative expenses associated with the operation of
EnerTel, the U.S. wholesale carrier operations and IIC, (ii) increased
business development and expansion activity, and (iii) costs incurred
in connection with the termination of the Company's U.S. wholesale
carrier operations and the reduction in the U.S. corporate headquarters
staff.
Depreciation and Amortization
Depreciation and amortization expense for the three and nine months
ended September 30, 1999 was $6.1 million and $17.1 million,
respectively, compared to $4.3 million and $5.8 million for the three
and nine months ended September 30, 1998. The increase was due to (i)
depreciation on the assets acquired in connection with the EnerTel and
IIC acquisitions, (ii) amortization of goodwill and other intangible
assets associated with the EnerTel and IIC acquisitions, and (iii)
depreciation on additional switching and network equipment acquired
during 1998 and 1999.
Asset Impairment
In the quarter ended September 30, 1999, the Company recorded
nonrecurring charges totaling approximately $12.8 million in connection
with its decision to close and/or sell certain U.S. operations.
Included in these nonrecurring charges are charges totaling
approximately $11.8 million to write-down the Company's investment in
TNC and IIC to their estimated net realizable value and an asset
impairment charge of $1 million to reduce certain U.S. based
telecommunications equipment to their estimated resale values.
Other Income (Expense)
Interest expense, net was $9.7 million compared to $9.4 million for the
three months ended September 30, 1999 and 1998, respectively. For the
nine months ended September 30, 1999 interest expense, net was $44.2
million compared to $10.2 million during the same period in 1998. The
increase in interest expense is due primarily to the Interim Loan
issued on June 23, 1998. Interest expense also included interest for
the debt the Company assumed in connection with the EnerTel and IIC
acquisitions, and the acquisition of switching equipment subject to
capital lease.
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Other expense, net for the three and nine months ended September 30,
1999 was $.2 million and $1.3 million. This amount mainly consists of
costs incurred to exit certain commitments.
LIQUIDITY AND CAPITAL RESOURCES
The Company is an emerging international telecommunications service
provider executing a business plan that requires substantial capital.
The Company currently has a working capital deficit and has operated at
a loss since its inception. Funding of the working capital deficit,
current and future operating losses, expansion of the Company's global
network, and repayment of the Interim Loan facility will require
substantial continuing capital investment.
As of September 30, 1999 and December 31, 1998 the Company had a
working capital deficit of $150.7 million and $103.8 million,
respectively. The working capital deficit at September 30, 1999 is due
to (i) the Interim Loan, (ii) the acquisition of additional switching
and peripheral equipment and transatlantic capacity, the majority of
which is being financed pursuant to capital leases and vendor
financing, and (iii) the operating losses of the Company.
Operations used $34.9 million during the nine months ended September
30, 1999 due primarily to the (i) operating losses, and (ii) increased
business development activity.
Investing activities used $16.2 million during the nine months ended
September 30, 1999. Investing activities during the nine-month period
consisted entirely of capital spending.
Financing activities provided $43.3 million during the nine months
ended September 30, 1999. Financing activities during the nine months
ended September 30, 1999 consisted primarily of proceeds from the
issuance of 920,419 shares of the Series C convertible preferred stock
in January 1999, the exercise of an option to purchase 283,206 shares
of the Series C convertible preferred stock in July 1999, the issuance
of 141,603 shares of the Series E convertible preferred stock in July
1999, and the exercise of employee stock options, reduced by principal
payments on capital leases and notes payable.
To finance the EnerTel acquisition, the Company entered into a $120
million Interim Loan facility with a consortium of lenders effective
June 23, 1998, the terms of which also included the issuance of
warrants. The Interim Loan, which originally matured on June 23, 1999
and has been extended until November 18, 1999, includes certain
negative and affirmative covenants and is secured by a lien on
substantially all of the assets of the Company and certain of its
subsidiaries and a pledge of the capital stock of certain of the
Company's subsidiaries. In order to secure the extension until November
18, 1999, the Company has agreed to pay the Lenders an amendment fee of
$600,000 at the maturity date. The amendment fee has been recorded as
interest expense in the accompanying financial statements. The Interim
Loan bears interest at LIBOR (as defined in the credit agreement
related to the Interim Loan) plus 6% per annum (13.5% at September 30,
1999) increasing by 0.5% per annum at the end of each period of three
consecutive months after June 23, 1998; provided, that such interest
rate shall not exceed 16% per annum if paid in cash or 18% per annum if
capitalized. As of September 30, 1999, the Interim Loan holders, in
aggregate, have received warrants exercisable for 4,069,904 shares of
Common Stock at a price per share of $0.01. In addition to the warrants
which the Interim Loan holders had received as of September 30, 1999,
such holders are entitled to receive additional warrants on the date
the Interim Loan is repaid in full, so that all warrants issued to such
holders represent 11% of the Company's fully-diluted outstanding Common
Stock on the date of such repayment. As of September 30, 1999, the
warrants were valued at an aggregate of approximately $29.1 million.
The Company intends to apply a portion of the net proceeds to be
realized from this sale to repay all existing debt, including the
Interim Loan, trade credit and other liabilities. It is expected that
the Company will consider a new strategic focus following this sale
utilizing the remaining net proceeds.
Funding of the Company's working capital deficit, current and future
operating losses and any investment in additional telecommunication
assets will require substantial continuing capital investment. The
Company's strategy has been to fund these cash requirements through
debt facilities and additional equity financing. The Company is also
seeking to finance its cash requirements through the sale of some or
all of
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its present operating assets. On November 11, 1999, the Company entered
into a series of agreements for the purchase by Energis of 100% of
WorldPort Communications Europe for an estimated aggregate
value of $570 million. The Company owns 85% of the outstanding capital
stock of WorldPort Communications Europe which is the parent of
EnerTel. As part of the transaction, the Company is selling to Energis
certain additional assets, including its switch operations in London
and New York. It is expected that this sale will be consummated by the
end or the first quarter of the Year 2000. Following the repayment of
the Company's outstanding indebtedness (including the Interim Loan) and
accounts payable, the assumption by Energis of certain contractual
obligations of the Company and the payment of applicable taxes and
transaction costs, the Company expects to receive between $200 to $215
million of net cash proceeds from this sale. It is expected that the
Company will consider a new strategic focus following this sale
utilizing the remaining net proceeds.
The Company's Interim Loan facility, which matures on November 18,
1999, is secured by a lien on substantially all of the Company's assets
and certain of its subsidiaries and a pledge of the capital stock of
certain of the Company's subsidiaries. In the event that the Interim
Loan is not repaid by its current maturity date (or any further
extended maturity date, as the case may be), the Interim Loan holders
have an agreement with the Company and certain of the Company's
stockholders pursuant to which the Company and such stockholders will
be obligated to support and use their respective best efforts to
achieve any transaction or series of transactions involving the sale of
all or any part of the Company or any subsidiary or any of their assets
which is proposed by the Interim Loan holders.
Although the Company has been able to arrange debt facilities or equity
financing to date, there can be no assurance that sufficient debt or
equity financing will continue to be available in the future or that it
will be available on terms acceptable to the Company. Failure to
complete the sale of EnerTel or failure to obtain sufficient capital
will materially affect the Company's operations. As a result of the
aforementioned factors and related uncertainties, there is substantial
doubt about the Company's ability to continue as a going concern.
YEAR 2000 ISSUE
The efficient operation of the Company's business is dependent in part
on computer software programs and operating systems. These programs and
systems are used in network trafficking, call origination and
termination, pricing, sales, billing and financial reporting, as well
as various administrative functions. Recognizing the importance and
need for an integrated information systems solution, the Company has
developed an implementation plan for upgrading its systems
architecture. This plan also addresses the functionality of its systems
beyond December 31, 1999 ("Year 2000 compliance"). Typically the
Company's upgrades made for additional functionality also remedy any
Year 2000 deficiencies in the related software.
The Company does not anticipate additional material expenditures for
Year 2000 compliance issues. As WorldPort is a relatively new company,
commencing operations in late 1997, Year 2000 compliance has been a
requirement in all system related procurement. In circumstances where
acquired subsidiaries' systems are not compliant, remediation via
upgrades or system change-out is on-going. The Company's new systems
implementation is expected to be completed by December 15, 1999.
Management believes that the Company's remaining information technology
("IT") systems and other non IT systems are currently Year 2000
compliant or will be compliant by December 15, 1999 after applying
vendor supplied upgrades to these systems. The cost of the upgrades are
not considered to be material.
The Company has obtained documentation from its suppliers, customers,
financial institutions and others as to the status of their Year 2000
compliance programs and the possibility of any interface difficulties
relating to Year 2000 compliance that may affect the Company. While few
significant concerns were identified, each has been addressed with a
program of remediation. All programs are targeted for completion by
December 15, 1999. However, Year 2000-related operating problems or
expenses may arise in connection with the Company's computer systems
and software or in connection with the Company's interface with the
computer systems and software of its suppliers, customers, financial
institutions and others. Because such third-party systems or software
may not be Year 2000 compliant, the Company has developed contingency
plans to address Year 2000 failures of the entities with which it
interfaces. The Company could be required to incur unanticipated
expenses to remedy any problems, which could have a material adverse
effect on its business, results of operation and financial conditions.
The Company's worst case scenario does not contemplate a major business
disruption from internal systems. The Company believes that it has
exercised reasonable diligence to assess whether external
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systems and interfaces are adequately prepared.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities, which is effective for fiscal years beginning after June
15, 1999. In June 1999, the FASB issued Statement No. 137, Accounting
for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133, which amends Statement 133 to
be effective for all fiscal quarters of all fiscal years beginning
after June 15, 2000 (that is, January 1, 2001 for companies with
calendar-year fiscal years). SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and transactions
involving hedge accounting. The Company has not yet determined the
impact this statement will have on its consolidated financial
statements.
PART II. OTHER INFORMATION
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to its report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WORLDPORT COMMUNICATIONS, INC.
Date: November 17, 1999 By: /s/ John T. Hanson
------------------------------------
John T. Hanson
Chief Financial Officer
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