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): October 28, 1999
e.spire Communications, Inc.
(Exact name of registrant as specified in its charter)
State of Delaware 0-25314 52-1947746
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
133 National Business Parkway, Suite 200
Annapolis Junction, Maryland 20701
(Address of Principal Executive (Zip Code)
Offices)
(301) 361-4200
(Registrant's telephone number,
including area code)
<PAGE>
Item 5. Other Events
On October 28, 1999, e.spire Communications, Inc. issued a press release
announcing its financial results for the quarter ending September 30, 1999 and a
press release announcing the resignation of its' Chief Financial Officer.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit Number Reference
(99) Additional Exhibits
Press Release dated October 28, 1999 -
e.spire's Financial Results Exhibit 99.1
Press Release dated October 28, 1999 - Resignation of
Chief Financial Officer Exhibit 99.2
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
e.spire Communications, Inc.
By
Date: October 28, 1999 /s/ Riley M. Murphy
Riley M. Murphy, Executive Vice President
Legal and Regulatory Affairs and Secretary
Exhibit 99.1
e.spire REPORTS SOLID THIRD QUARTER RESULTS
Revenue & Recurring EBITDA Continue to Improve
ANNAPOLIS JUNCTION, MD, OCTOBER 28, 1999 -- e.spire Communications, Inc.
(Nasdaq: ESPI), the communications company for the networked economy, today
announced revenue of $67.5 million for the quarter ended September 30, 1999, a
49% increase over the year-ago quarter and a 7% sequential improvement. Adjusted
EBITDA (earnings before interest, taxes, depreciation, amortization, non-cash
compensation expense and a charge primarily related to phasing out of a line of
business) for the quarter was ($11.8) million, an 11% sequential improvement
over the prior quarter. A charge of $8.0 million was taken during the quarter
and is primarily related to the Company's previously announced elimination of
its local resale business. Including this charge, EBITDA for the quarter was
($19.8) million.
The quarter's revenue gains were driven by continued fundamental improvement in
the Company's core Telecommunications Services business which increased by 34%
over the year-ago level. Network Technologies, e.spire's wholly-owned,
fiber-optic construction subsidiary posted record results with a revenue
contribution of $22 million, up 92% from the year-ago period.
Despite the impact of elimination of over 8,300 resale lines, cumulative access
lines in-service rose 11.7% to 131,965. With 92% of its total lines on-switch at
the end of the third quarter, e.spire surpassed its original target of 90%
on-switch more than a full quarter ahead of schedule. Gross access line
installations for the quarter exceeded 26,000, up from 23,000 in the prior
quarter. "These results speak well of our sales efforts, but more importantly,
they clearly demonstrate the improved capabilities of our back office systems,"
Pompliano said.
During the third quarter, e.spire turned up Lucent 5ESS-2000 voice switches in
New York City, Philadelphia and Las Vegas. Additionally, the Company lit a
194-mile long-haul connection from New York to Washington, DC/Northern Virginia
using Nortel Networks' Dense Wavelength Division Multiplexing (DWDM) technology.
e.spire also completed its Washington, DC/Northern Virginia local fiber-optic
network, and began introducing its comprehensive suite of fully integrated data,
Internet and voice services for businesses across a number of its markets.
"By extending our presence to these lucrative northeast markets, we now have a
significant opportunity to leverage our local networks with our national data
backbone. This platform enables e.spire to deliver local, long distance,
Internet access, and most importantly, high speed data solutions, all at lower
unit costs," said Anthony J.Pompliano, e.spire Chairman and CEO.
On the financing front, e.spire completed a $200 million Senior Secured Credit
Facility during the third quarter, announced on August 11, 1999. The facilities
consist of a $35 million revolver, a $55 million multiple draw term loan each
with a 6.5 year maturity, and a $110 million term loan with a 7 year maturity.
Due to the charge related primarily to phasing out of a line of the local resale
business, e.spire has requested waivers from its bank group regarding certain
covenants in the Facility for which it was not in compliance at the end of the
quarter. e.spire believes it will be able to obtain such waivers based upon
preliminary discussions with the bank group. There can be no assurance, however,
that e.spire will be successful in obtaining such waivers or avoiding the
adverse consequences that would result from such failure.
e.spire operates local fiber-optic networks in 38 metropolitan markets,
including: Albuquerque, NM; Amarillo, TX; Atlanta, GA; Austin, TX; Baltimore,
MD; Baton Rouge, LA; Birmingham, AL; Charleston, SC; Chattanooga, TN; Colorado
Springs, CO; Columbia, SC; Columbus, GA; Corpus Christi, TX; Dallas, TX; El
Paso, TX; Fort Worth, TX; Fort Lauderdale/Miami, FL; Greenville, SC; Irving, TX;
Jackson, MS; Jacksonville, FL; Kansas City, MO; Las Vegas, NV; Lexington, KY;
Little Rock, AR; Louisville, KY; Mobile, AL; Montgomery, AL; New Orleans, LA;
New York, NY; Philadelphia, PA; San Antonio, TX; Shreveport, LA; Spartanburg,
SC; Tampa, FL; Tucson, AZ; Tulsa, OK; and Washington, DC/Northern Virginia.
e.spire Communications, Inc. is a leading integrated communications provider,
offering traditional local and long distance, Internet access and Web hosting
services, and advanced data solutions such as native ATM and frame relay. In
addition, e.spire's subsidiary, ACSI NT, provides third parties, including other
communications concerns, municipalities and corporations, with turnkey fiber
optic design, construction and project management expertise. For more
information on e.spire, contact http://www.espire.net.
# # #
Certain statements regarding the development of the Company's businesses, the
markets for the Company's services and products, the Company's anticipated
capital expenditures, anticipated EBITDA and other statements are
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995) which can be identified as any statement that
does not relate strictly to historical or current facts. Forward-looking
statements use such words as plans, expects, will, will likely result, are
expected to, will continue, is anticipated, estimate, project, believes,
anticipates, intends and expects, may, should, continue, seek, could and other
similar expressions. Although the Company believes that its expectations are
based on reasonable assumptions, it can give no assurance that its expectations
will be achieved. The important factors that could cause actual results to
differ materially from those in the forward-looking statements herein (the
"Cautionary Statements") include, without limitation, the Company's degree of
financial leverage, risks associated with debt service requirements and interest
rate fluctuations, risks associated with acquisitions and the integration
thereof, the impact of restriction under the Company's financial instruments,
dependence on availability of transmission facilities, regulation risks
including the impact of the Telecommunications Act of 1996, contingent
liabilities, the impact of competitive services and pricing, the ability of the
Company to successfully implement its strategies, as well as the other risks
referenced from time to time in the Company's filings with the SEC, including
the Company's Form 10-K for the year ended December 31, 1998. All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by the
Cautionary Statements. The Company does not undertake any obligation to release
publicly any revisions to such forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
e.spire Communications, Inc.
Financial Highlights (unaudited)
(in thousands, except share data and statistical
data)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------------------------------------------
Statement of Operations 9/30/99 9/30/98 9/30/99 9/30/98
- ---------------------------------------------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Revenues:
Telecommunications services $ 45,461 $ 34,002 $ 130,249 $ 89,120
Network technologies services
22,031 11,458 58,636 19,561
------------- ------------ ------------- ------------
Total revenues
67,492 45,460 188,885 108,681
Cost of goods sold:
Telecommunications services 31,170 25,517 87,788 67,644
Network technologies services 10,582 3,680 30,463 5,150
------------- ------------ ------------- ------------
Total cost of goods sold 41,752 29,197 118,251 72,794
Gross margin:
Telecommunications services 14,291 8,485 42,461 21,476
Network technologies services 11,449 7,778 28,173 14,411
------------- ------------ ------------- ------------
Total gross margin 25,740 16,263 70,634 35,887
Operating expenses:
Selling, general and administrative 45,494 28,685 119,546 70,139
Noncash compensation expense 2,384 1,562 7,577 4,989
Depreciation and amortization 25,362 11,551 69,039 28,934
------------- ------------ ------------- ------------
Total operating expenses 73,240 41,798 196,162 104,062
Loss from operations (47,500) (25,535) (125,528) (68,175)
Interest income/(expense), net (22,519) (13,241) (61,056) (35,141)
------------- ------------ ------------- ------------
Net loss (70,019) (38,776) (186,584) (103,316)
Preferred stock dividends and accretion 10,305 9,022 30,002 26,122
------------- ------------ ------------- ------------
Net loss applicable to common stockholders $ (80,324) $ (47,798) $ (216,586) $(129,438)
============= ============ ============= ============
Basic and diluted net loss per common share $ (1.60) $ (1.00) $ (4.37) $ (2.97)
============= ============ ============= ============
Weighted average number of common shares 50,267,001 47,732,934 49,550,227 43,574,670
outstanding
EBITDA (a) $ (19,825) $ (12,422) $(48,533) $ (34,252)
(a) EBITDA consists of net loss before net interest expense, depreciation, amortization and a non-cash
compensation expense.
</TABLE>
e.spire Communications, Inc.
Financial Highlights (unaudited)
(in thousands)
<TABLE>
<CAPTION>
September 30, September 30,
Condensed Balance Sheets 1999 1998
- --------------------------------------------------- --------------------- --------------------
<S> <C> <C>
Current assets $ 217,118 $ 519,937
Net property, plant and equipment 672,268 408,358
Other 57,729 67,402
--------------------- --------------------
Total assets $ 947,115 $ 995,697
===================== ====================
Current liabilities $ 105,931 $ 72,223
Long-term liabilities 880,998 734,731
--------------------- --------------------
Total liabilities
986,929 806,954
Redeemable preferred stock
270,969 231,281
Stockholders' deficit
(310,783) (42,538)
--------------------- --------------------
Total liabilities, redeemable preferred stock
and stockholders' deficit $ 947,115 $ 995,697
===================== ====================
</TABLE>
<TABLE>
<CAPTION>
Selected Statistical Data
- ---------------------------------------------------
<S> <C> <C>
Fiber Networks 38 35
Fiber Networks Under Construction 1 3
Access Lines Installed 131,965 115,874
Total Buildings Connected 4,145 2,774
Route Miles 3,797 1,651
Fiber Miles 179,870 153,992
VGE's 1,774,396 1,065,706
Co-locations 110 76
Voice Switches Installed 28 18
Data POPs 388 223
Full-Time Employees 1,471 1,036
</TABLE>
Exhibit 99.2
e.spire(TM) ANNOUNCES RESIGNATION OF CHIEF FINANCIAL OFFICER
ANNAPOLIS JUNCTION, MD, OCTOBER 28, 1999 -- e.spire Communications, Inc.
(NASDAQ:ESPI) today announced the resignation of its Chief Financial Officer,
David L. Piazza, effectively immediately. John Polchin, currently Vice President
and Treasurer, will serve as interim CFO until a replacement is named.
"Dave has made important contributions to the company during his two and
one-half years at e.spire," said Anthony J.Pompliano, Chairman and
Chief Executive Officer. "We appreciate his valuable service and wish him the
best of luck in his future endeavors."
e.spire Communications, Inc. is a leading integrated communications provider,
offering traditional local and long distance, Internet access and Web-hosting
services, and advanced data solutions, such as ATM and frame relay. In addition,
e.spire's subsidiary, ACSI Network Technologies, Inc., provides third parties,
including other communications concerns, municipalities and corporations, with
turnkey fiber-optic design, construction and project management expertise. For
more information on e.spire, contact http://www.espire.net.
