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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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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): November 3, 1999
VIATEL, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 000-21261 13-3787366
(State or Other (Commission (I.R.S. Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
Viatel, Inc.
685 Third Avenue
New York, New York 10017
(Address of Principal Executive Offices, Including Zip Code)
Registrant's telephone number, including area code: 212-350-9200
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On November 3, 1999, Viatel, Inc., a Delaware corporation (the
"Company"), announced its financial results for the third quarter ended
September 30, 1999. A copy of this release is attached hereto and
incorporated herein by this reference.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements of Businesses Acquired.
Not Applicable
(b) Pro Forma Financial Information.
Not Applicable
(c) Exhibits.
The following exhibit is filed with this Report.
Exhibit No. Description.
99.1 Press release of the Company, dated November 3, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
VIATEL, INC.
Date: November 3, 1999 By: /s/ JAMES P. PRENETTA
------------------------------------
Name: James P. Prenetta
Title: Vice President and General Counsel
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EXHIBIT LIST
Exhibit No. Description.
99.1 Press release of the Company, dated November 3, 1999.
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT: GLENN DAVIDSON, Vice President, Corporate Communications & External
Affairs
VIATEL REPORTS THIRD QUARTER 1999 RESULTS
115% INCREASE IN REVENUE OVER 3Q98
SIGNIFICANT GROSS MARGIN EXPANSION
NEW YORK, NY (NOVEMBER 3, 1999) - VIATEL, INC. (NASDAQ: VYTL), an integrated
provider of communications services, today announced record results for the
third quarter of 1999.
Revenue for the third quarter increased 115.6% to $80.0 million from $37.1
million for the third quarter of 1998. Gross margin, as a percentage of revenue,
improved to 26.0% from 10.0% for the corresponding quarter of 1998.
EBITDA loss, as a percentage of revenue, narrowed to 3.4% for the third quarter
of 1999 compared to 21.4% in the same quarter last year. EBITDA loss for the
third quarter of 1999 was $2.7 million, compared with an EBITDA loss of $7.9
million for the same period in 1998.
"Clearly, we are pleased with the growth in our revenue and gross margin this
past quarter while continuing the trend of improving EBITDA," said Michael J.
Mahoney, Viatel's President and Chief Executive Officer.
"But, while we are proud of this accomplishment, we are never satisfied with
incremental increases. We continue to take other significant steps to expand our
business and our margins. During this past quarter, we:
- - moved to expand our customer base, geographic reach, and product mix, via
the acquisition of Destia Communications;
- - introduced and aggressively priced new product and service offerings - the
ONEWORLD ONERATE CLUB-TM- and the CITYCONNEX SERVICE-TM- -- that will
enable us to increase our customer base;
- - moved forward with `last mile' solutions, such as our CITYCONNEX
SERVICE-TM-;
- - signed an interconnection agreement with Telefonica in Spain and continue
actively negotiating interconnection agreements with other incumbent
carriers; and
- - continued building the Circe Pan-European Network."
Mahoney concluded, "These and other contemplated actions will only serve to
solidify our role as among Europe's premier providers of telecommunications
services."
Revenue from Europe, the Company's largest market, increased by 250.6% to $56.8
million in the third quarter of 1999 from $16.2 million in the third quarter of
1998. Revenue generated in Europe represented 71.0% of revenue compared to 43.7%
for the corresponding quarter of 1998. Revenue derived from North America
represented 26.3% of revenue in the third quarter compared to 45.3% in the
corresponding quarter of 1998. Revenue derived from Latin America represented
the balance of revenue.
SG&A expenses for the third quarter of 1999 decreased, as a percentage of
revenue, to 29.4% from 31.4% in the corresponding quarter, marking the
thirteenth consecutive quarter that SG&A has declined as a percentage of
revenue quarter-over-quarter. Allan
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L. Shaw, Viatel's Senior Vice President and Chief Financial Officer noted that
the Company "remains on track to show a reduction in SG&A as a percentage of
revenue for 1999 compared with 1998."
Net loss attributable to common stockholders was $(48.2) million, or ($1.48) per
share, for the third quarter of 1999, compared to a net loss attributable to
common stockholders of ($29.0) million, or ($1.25) per share, before an
extraordinary loss, for the third quarter of 1998. Substantially all of the
increase in the Company's net loss for the third quarter of 1999 was due to
increased interest, depreciation and amortization expense associated with its
network infrastructure initiatives.
At September 30, 1999, the Company had gross property, plant and equipment of
$770.1 million and $514.5 million of unrestricted cash, cash equivalents,
marketable securities and cash securing letters of credit for network
construction. Shaw noted that the Company expects gross property, plant and
equipment to exceed $1.0 billion by year-end 2000.
NINE MONTH RESULTS
Revenue for the first nine months of 1999 increased by 144% to $210.4 million
from $86.1 million for the nine months ended September 30, 1998. Revenue from
Europe was $152.4 million, or 72.4% of revenue, for the first nine months of
1999 compared to $40.8 million, or 47.4% of revenue, for the prior year period.
Revenue derived from North America represented 24.0% of revenue in the first
nine months of 1999 compared to 38.0% in the same period of 1998. Revenue
derived from Latin America represented the balance of revenue.
Gross margin improved to 22.6% from 9.9% for the corresponding period in 1998.
For the first nine months of 1999, EBITDA loss was $15.9 million, or 7.5% of
revenue, compared to an EBITDA loss of $22.5 million, or 26.2% of revenue, for
the prior year period.
During the first nine months of 1999, SG&A expenses decreased to 30.1% of
revenue from 36.1% of revenue for the corresponding period in 1998. Net loss
attributable to common stockholders was $(132.2) million, or ($5.39) per share,
for the first nine months of 1999, compared to a net loss attributable to common
stockholders of ($96.5) million, or ($2.96) per share, before an extraordinary
loss, for the same period of 1998.
Viatel is an integrated provider of communications services to end-users,
carriers and resellers in over 230 countries and territories worldwide. The
Company currently operates one of the largest pan-European networks, with
international gateways in London and New York; network points of interconnection
in over 78 European cities; a direct sales force in 12 Western European cities
and an indirect sales force in more than 180 locations in Western Europe.
CERTAIN MATTERS DISCUSSED IN THIS RELEASE ARE FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES, INCLUDING CONSTRUCTION RISKS AND OTHER RISKS
DETAILED FROM TIME TO TIME IN THE COMPANY'S REGISTRATION STATEMENTS AND REPORTS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THOSE CONTAINED IN
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998
AND ITS REGISTRATION STATEMENTS ON FORMS S-3 AND S-4 FILED DURING 1999.
-Tables Follow-
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VIATEL, INC.
Unaudited Summary Consolidated Financial and Other Data
(IN THOUSANDS, EXCEPT OTHER OPERATING AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
STATEMENT OF OPERATIONS DATA: 1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
Communication services revenue $ 54,960 $ 37,144 $ 151,204 $ 86,133
Capacity sales 25,072 -- 59,173 --
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Total revenue 80,032 37,144 210,377 86,133
Operating expenses:
Cost of services and sales 59,250 33,424 162,858 77,624
Selling, general and administrative 23,527 11,669 63,380 31,057
Depreciation and amortization 17,458 3,670 39,039 10,706
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Total operating expenses 100,235 48,763 265,277 119,387
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Operating loss (20,203) (11,619) (54,900) (33,254)
Interest income 7,648 10,093 21,413 19,906
Interest expense (35,681) (26,384) (97,344) (52,715)
--------- --------- --------- ---------
Loss before extraordinary loss (48,236) (27,910) (130,831) (66,063)
Extraordinary loss on debt prepayment -- -- -- (28,304)
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Net loss (48,236) (27,910) (130,831) (94,367)
Dividends on redeemable convertible preferred
stock -- (1,120) (1,341) (2,131)
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Net loss attributable to common stockholders $ (48,236) $ (29,030) $(132,172) $ (96,498)
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Loss per common share, basic and diluted:
Before extraordinary item $ (1.48) $ (1.25) $ (5.39) $ (2.96)
From extraordinary item -- -- -- (1.23)
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Net loss attributable to common stockholders $ (1.48) $ (1.25) $ (5.39) $ (4.19)
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Weighted average common shares outstanding
basic and diluted 32,608 23,157 24,532 23,013
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OTHER FINANCIAL DATA:
EBITDA (1) $ (2,745) $ (7,949) $ (15,861) $ (22,548)
Capital additions (2) 511,909 105,385
Other Operating Data
Billable minutes (000s) 360,286 113,215 909,574 248,887
Switches (3) 15 15
POIs (points of interconnection)(3) 78 33
Fiber kilometers of European
cable in operation (3) 172,542 0
BALANCE SHEET DATA (000S): (3)
Cash, cash equivalents, marketable
securities and cash securing letters of
credit or network construction $ 514,473 $ 588,352
Restricted cash equivalents and restricted
marketable securities 168,863 162,094
Property and equipment, net 715,483 151,298
Long-term debt, excluding current installments 1,290,600 899,775
Redeemable convertible preferred stock -- 45,951
</TABLE>
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(1) As used herein, "EBITDA" consists of earnings before interest, income
taxes, extraordinary loss, dividends on convertible preferred stock and
depreciation and amortization. EBITDA is a measure commonly used in the
telecommunications industry to analyze companies on the basis of operating
performance. EBITDA is not a measure of financial performance under
generally accepted accounting principles, is not necessarily comparable to
similarly titled measures of other companies and should not be considered
as an alternative to net income as a measure of performance nor as an
alternative to cash flow as a measure of liquidity.
(2) Capital additions for each period consist of capital expenditures, the net
increase in payables for property and equipment purchases, assets acquired
under capital leases, obligations and capitalized interest during the
period.
(3) Information presented as of the end of the period indicated.
