-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J+prxMbLZvjotIf6t3eHGRTmZjD7YU379+jMoyP2LeSQaYsDTYaOMEtR5igJ4LBs jCJGTN8icp1z1lgN9QL4Iw== 0000950120-98-000381.txt : 19981019 0000950120-98-000381.hdr.sgml : 19981019 ACCESSION NUMBER: 0000950120-98-000381 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981014 FILED AS OF DATE: 19981016 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRICOM SA CENTRAL INDEX KEY: 0001052124 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: SEC FILE NUMBER: 001-14816 FILM NUMBER: 98726589 BUSINESS ADDRESS: STREET 1: AVE LOPE DE VEGA NO 95 CITY: SANTO DOMINGO STATE: G8 BUSINESS PHONE: 8094766000 MAIL ADDRESS: STREET 1: AVE LOPE DE VEGA NO 95 CITY: SANTO DOMINGO STATE: G8 ZIP: 00000 6-K 1 6-K FOR PRESS RELEASE DATED OCTOBER 14, 1998 FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE SECURITIES EXCHANGE ACT OF 1934 For the month of: October 14, 1998 ---------------- TRICOM, S.A. (Translation of registrant's name into English) AVENIDA LOPE DE VEGA NO. 95, SANTO DOMINGO, DOMINICAN REPUBLIC (Address of principal executives offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F X Form 40-F --------- ----------- Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes No X ----------- --------- If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- -------- FOR IMMEDIATE RELEASE -- FINAL For Further Information Contact: FOR FURTHER INFORMATION CONTACT: Jaime Garcia Robin Weinberg TRICOM, S. A. DEWE ROGERSON Ph (809) 476-4054 Ph (212) 688-6840 e-mail: jgarcia@tricom.com.do e-mail: rweinberg@dewerogerson.com --------------------- -------------------------- TRICOM, S.A. REPORTS RECORD EARNINGS IN THIRD QUARTER 1998 (Santo Domingo, Dominican Republic, October 14, 1998) -- TRICOM, S.A. (NYSE:TDR), today announced results of operations for the third quarter ended September 30, 1998. THIRD QUARTER OPERATING HIGHLIGHTS: . Operating revenues totaled US$ 32.6 million for the third quarter of 1998, a 33.4% increase over third quarter of 1997 revenues of US$ 24.5 million. . Net earnings were US$ 5.2 million for the third quarter of 1998, or US$ 0.22 per share, compared to earnings before extraordinary item of US$ 1.4 million, or US$ 0.08 per share, for the third quarter of 1997. . The Company had 71,647 local access lines in service at September 30, 1998 compared to 34,995 at September 30, 1997. . Cellular subscribers increased to 88,990 at September 30, 1998 compared to 30,129 at September 30, 1997. . Operating margin increased to 23.5% in the third quarter of 1998 from 20.9% in the third quarter of 1997. . EBITDA increased 60.8% to US$ 14.3 million for the third quarter of 1998 from US$ 8.9 million for the third quarter of 1997, with margins increasing to 43.7% in the third quarter of 1998 from 36.2% in the third quarter of 1997. For the nine months ended September 30, 1998, TRICOM reported operating revenues of US$ 90.3 million, up 41.5% from operating revenues of US$ 63.8 million for the first nine months of 1997 and net earnings of US$ 12.2 million for the first nine months of 1998 compared with earnings before extraordinary item of US$ 2.0 million for the first nine months of 1997. EBITDA for the first nine months of 1998 totaled US$ 38.6 million compared to US$ 21.2 million for the same period of 1997. Earnings per share increased to US$ 0.55 for the first nine months of 1998 as compared to earnings per share before extraordinary item of US$ 0.12 for the same period of 1997. Arturo Pellerano, President and Chief Executive Officer of TRICOM, stated, "The third quarter marked another record breaking earnings period for TRICOM. We are extremely pleased with the results which continue to reflect our growth in the local market and our revenues derived from the international markets as well. As we continue to increase our market penetration through expanded marketing efforts and the employment of state-of-the-art technology, we expect to see similar trends next quarter." OPERATING REVENUES for the third quarter of 1998 increased by ------------------ 33.4% to US$ 32.6 million from US$ 24.5 million for the third quarter of 1997. The Company attributes this growth to increased revenues from local service, cellular, installations, as well as international settlement revenues particularly from TRICOM USA's international operations. INTERNATIONAL SETTLEMENT REVENUES increased by 14.6% to US$ 13.2 --------------------------------- million for the third quarter of 1998 compared to US$ 11.5 million for the third quarter of 1997. This increase in international revenues resulted from the growth of inbound traffic volume from TRICOM USA, the Company's long distance service provider in the United States. This increase was achieved despite a 3.1% decrease in settlement rates to an average rate of US$0.222 per minute for the third quarter of 1998 from US$0.229 per minute for the third quarter of 1997. Inbound minutes increased by 18.1% to 51.4 million during the third quarter of 1998 from 43.5 million during the third quarter of 1997. The number of inbound minutes generated by TRICOM USA increased by 69.0% to 30.8 million minutes from 18.2 million minutes for the same period in 1997. For the first nine months of 1998, total inbound minutes increased by 55.0% to 143.6 million compared to 92.7 million for the first nine months of 1997. LOCAL SERVICE REVENUES increased by 77.6% to US$ 3.5 ------------------------ million for the third quarter of 1998 from US$ 2.0 million for the third quarter of 1997, reflecting the expansion of the Company's local access network, combined with a higher average monthly rate charged to customers. During the third quarter of 1998, the Company added 11,228 net local access lines compared to 6,553 net local access lines added during the same period of 1997. This represents the highest number of net line additions in any quarter since TRICOM began installing local access lines in 1994. As of September 30, 1998, the Company had 71,647 local access lines in service compared to 34,995 local access lines in service at September 30, 1997, doubling its local access line subscriber base. CELLULAR REVENUES increased by 51.0% to US$ 5.4 million during ----------------- the third quarter of 1998 compared to US$ 3.6 million for the same period in 1997 primarily as a result of a higher average subscriber base. The Company added 12,895 net cellular subscribers during the third quarter of 1998 compared to 6,608 net cellular subscribers during the third quarter of 1997. The number of cellular subscribers increased by 195.4% to 88,990 at September 30, 1998 from 30,129 at September 30, 1997. Airtime minutes increased 17.2% in the third quarter of 1998 to 24.5 million minutes from 20.9 million minutes in the third quarter of 1997. In addition, the average price per outgoing airtime minute increased by 27% to US$ 0.26 in the third quarter of 1998 from US$ 0.20 in the third quarter of 1997. The Company attributes the substantial increase in cellular subscribers to its Amigo prepaid cellular program introduced in the third quarter of 1997. INSTALLATION REVENUES increased by 206.2% to US$ 3.8 million for --------------------- the third quarter of 1998 from US$ 1.2 million for the third quarter of 1997. This increase is a result of the continued growth in the number of local access line installations and cellular activations. During the third quarter of 1998, the Company installed 12,706 gross local access lines and activated 26,191 cellular subscribers, compared to 7,919 gross local access lines installed and 9,914 cellular subscribers activated during the third quarter of 1997. OPERATING COSTS increased 29.0% to US$ 25.0 million for the third --------------- quarter of 1998 compared to US$ 19.3 million for the third quarter of 1997. However, as a percentage of total operating revenues, operating costs declined to 76.5% for the third quarter of 1998 from 79.1% for the same period in the previous year. This increase in operating costs was primarily attributable to increases in general and administrative expenses, depreciation, and expense in lieu of income taxes. General and administrative expenses increased by 54.4% to US$ 10.0 million for the third quarter of 1998 from US$ 6.5 million for the same period in 1997, mainly as a result of higher personnel costs, reflecting an increase in the number of employees, other expenses and sales commissions. However, these increases were partially offset by a decline in satellite connections and carrier costs. OPERATING INCOME, as a percentage of total operating revenues, ---------------- improved to 23.5% for the third quarter of 1998 compared to 20.9% for the third quarter of 1997. NET EARNINGS increased by US$ 9.3 million to US$ 5.2 million, or ------------ US$ 0.22 per share, for the third quarter of 1998 compared to a loss of US$ 4.0 million, or a loss of US$ 0.24 per share, for the third quarter of 1997. The loss in 1997 reflected a write-off of US$ 5.5 million in the third quarter related to the retirement of indebtedness with the proceeds of the Senior Notes. During the third quarter of 1997, the Company had earnings before extraordinary item of US$ 1.4 million, or US$ 0.08 per share. Net earnings accounted for 16.1% of total operating revenues for the 1998 third quarter, while earnings before extraordinary item accounted for 5.9% of total operating revenues for the 1997 third quarter, evidencing the continued improvement of the Company's profitability driven by its local access, cellular and international businesses. EBITDA increased by 60.8% to US$ 14.3 million for the third ------ quarter of 1998 from US$ 8.9 million for the third quarter of 1997, as a result of higher operating margins, reflecting the Company's improved operating performance. In addition, as a percentage of total operating revenues, EBITDA grew to 43.7% for the third quarter of 1998 from 36.2% for the third quarter of 1997. TRICOM is a full service telecommunications provider in the Dominican Republic, and has long distance operations in the United States and Puerto Rico. Since it began operations in 1992 as a low-cost international long distance service provider, the Company has expanded its services to include basic local service, national long distance, cellular, paging and Internet access. * * * The statements contained in this press release which are not historical facts are forward-looking statements that involve risks and uncertainties. Management cautions the reader that these forward-looking statements are only predictions; actual events or results may differ materially as a result of risks facing the Company. Such risks include, but are not limited to the following factors: competition; declining rates for international long distance traffic; opposition to increased rates for basic local service; the Company's significant capital expenditure requirements and its need to finance such expenditures; the inability of the Company to expand its local access line network in a timely manner and within the amount budgeted for such capital expenditure program; the inability of the Company to manage effectively its rapid expansion; the continued growth of the Dominican economy, demand for telephone services in the Dominican Republic and moderation of inflation; and the continuation of a favorable political and regulatory environment in the Dominican Republic. (Tables to follow) The following tables set forth comparative operating information for the three- and nine-month periods ended September 30, 1997 and 1998. ------------------------------------------------------------------- SUMMARY OF OPERATING INFORMATION 3Q'97 3Q'98 VARIATION % ------------------------------------------------------------------- Total lines in service (at period end) 34,995 71,647 36,652 104.7% Airtime minutes 20,911,737 24,499,345 3,587,608 17.2% International long distance minutes: Inbound minutes 43,538,952 51,420,700 7,881,748 18.1% Outbound minutes 5,533,817 5,829,141 295,324 5.3% Domestic long distance minutes 3,516,580 5,202,634 1,686,054 47.9% Cellular subscribers (at period end) 30,129 88,990 58,861 195.4% Paging subscribers (at period end) 27,443 28,652 1,209 4.4% Number of employees (at period end) 759 1,272 ------------------------------------------------------------------- ------------------------------------------------------------------- SUMMARY OF OPERATING INFORMATION YTD'97 YTD'98 VARIATION % ------------------------------------------------------------------- Total lines in service (at period end) 34,995 71,647 36,652 104.7% Airtime minutes 53,249,439 69,072,660 15,823,221 29.7% International long distance minutes: Inbound minutes 92,668,471 143,643,553 50,975,082 55.0% Outbound minutes 16,171,141 17,797,207 1,626,066 10.1% Domestic long distance minutes 8,927,399 14,318,142 5,390,743 60.4% Cellular subscribers (at period end) 30,129 88,990 58,861 195.4% Paging subscriber (at period end) 27,443 28,652 1,209 4.4% Number of employees (at period end) 759 1,272 ------------------------------------------------------------------- The following table sets forth the percentage contribution of each category of revenues to total operating revenues and certain items in the statement of operations expressed as a percentage of total operating revenues for the three- and nine-month periods ended September 30, 1997 and 1998. ------------------------------------------------------------------- OPERATING REVENUES 3Q'97 3Q'98 YTD'97 YTD'98 ------------------------------------------------------------------- Toll 15.6% 13.7% 17.5% 14.8% International settlement 47.0% 40.4% 44.2% 40.6% Local service 8.0% 10.7% 6.6% 10.2% Cellular 14.7% 16.7% 14.1% 16.3% Paging 5.3% 3.4% 5.9% 3.9% Sale and lease of equipment 4.2% 3.0% 6.9% 3.1% Installations 5.0% 11.6% 4.6% 10.8% Other 0.1% 0.6% 0.0% 0.3% --------------------------------------------------------------------- Operating costs 79.1% 76.5% 83.7% 76.4% Operating income 20.9% 23.5% 16.3% 23.6% Interest expense, net -11.1% -7.0% -11.8% -8.9% Earnings before extraordinary item 5.9% 16.1% 3.1% 13.5% Net earnings -16.4% 16.1% -5.4% 13.5% EBITDA 36.2% 43.7% 33.2% 42.8% --------------------------------------------------------------------- NOTE: Percentages do not add up to 100% due to rounding TRICOM, S.A. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (IN US$) DECEMBER 31, SEPTEMBER 30, ------------ ------------- 1997 1998 ASSETS (AUDITED) (UNAUDITED) Current assets: Cash and cash equivalents US$ 5,732,505 US$ 21,773,101 Accounts receivable: Customers 5,612,123 4,786,892 Carriers 5,546,399 4,436,705 Related parties 625,248 243,750 Officers and employees 200,294 241,050 Current portion of long-term accounts receivable 281,382 23,579 Other 3,525,123 7,286,684 --------------- --------------- 15,790,569 17,018,661 Allowance for (668,827) (623,437) doubtful accounts --------------- --------------- Accounts receivable, net 15,121,742 16,395,224 Current portion of pledged securities 22,750,000 54,469,879 Inventories, net 5,633,477 11,266,706 Prepaid expenses 2,518,052 1,500,593 --------------- --------------- Total current assets 51,755,776 105,405,503 Long-term accounts receivable 966,592 367,480 Unearned interest (204,576) (82,626) --------------- --------------- Long-term accounts receivable, net 762,016 284,854 Investments: Pledged securities 53,018,390 - Others 1,796,521 2,006,654 --------------- --------------- Total investments 54,814,911 2,006,654 --------------- --------------- Property and equipment, net 202,977,596 304,629,047 Other assets at cost, less accumulated amortization 10,833,238 15,732,278 TOTAL ASSETS US$ 321,143,537 US$ 428,058,336 =============== =============== TRICOM, S.A. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (IN US$) DECEMBER 31, SEPTEMBER 30, ------------ ------------- 1997 1998 LIABILITIES & (AUDITED) (UNAUDITED) SHAREHOLDERS EQUITY Current liabilities: Short-term obligations US$ - US$ 158,326 Notes payable: Borrowed funds-banks 5,905,005 7,791,342 Borrowed funds- related parties 4,849,818 18,414,988 Bonds payable-short term - - Current portion of long term debt - Carifa Loan - 32,000,000 ------------- ------------- 10,754,823 58,206,330 Accounts payable: Carriers 2,327,768 2,234,441 Suppliers 17,746,637 28,121,903 Related parties - - Other 1,023,478 916,929 ------------- ------------- 21,097,883 31,273,273 Other liabilities 3,039,761 4,346,705 Accrued expenses 12,017,371 11,730,473 ------------- ------------- Total current liabilities 46,909,838 105,715,107 Reserve for severance indemnities 140,641 25,870 Long-term debt: Carifa Loan 32,000,000 - Senior Notes 200,000,000 200,000,000 ------------- ------------- Total liabilities 279,050,479 305,740,977 Shareholders equity: Class A Common Stock at par value RD$10: Authorized 55,000,000 shares; 5,700,000 shares issued at September 30, 1998 - 3,750,000 Class B Stock at par value RD$10: Authorized 22,517,095 shares at December 31, 1997 and 21,044,544 shares at September 30, 1998; 19,390,528 shares issued at December 31, 1997 and 19,144,544 issued at September 30, 1998 43,357,343 12,595,095 Paid-in-capital, excess over par - 94,515,379 Legal reserve 600,233 600,233 Retained earnings (deficit) 3,147,997 718,290 Period net income (loss) (2,429,707) 12,162,119 Equity adjustment for foreign currency translation (2,023,757) (2,023,757) ------------- ------------- 42,652,109 122,317,359 Less treasury stock at cost, 245,985 shares (559,051) - ------------- ------------- 42,093,058 122,317,359 TOTAL LIABILITIES & SHAREHOLDERS EQUITY US$ 321,143,537 US$ 428,058,336 ============= ============= All share and per share data set forth below reflect the reclassification of the Company's shares of Common Stock that were outstanding prior to TRICOM's initial public offering of American Depository Shares into shares of Class B Stock and give effect to an approximate 3.3132-for-one stock split at that time. The financial data set forth below at and for the nine months ended September 30, 1998 are unaudited and are subject to normal year-end adjustments. The results of operations for the nine months ended September 30, 1998 are not necessarily indicative of the results of operations to be expected for the entire year ending December 31, 1998. TRICOM, S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (IN US$) THREE MONTH PERIOD ENDED SEPTEMBER 30, ----------------------------- 1997 1998 ----------- ----------- (UNAUDITED) (UNAUDITED) OPERATING REVENUES Toll US$ 3,808,391 US$ 4,465,767 International settlement 11,501,513 13,177,167 Local service 1,962,228 3,484,598 Cellular 3,604,511 5,443,230 Paging 1,306,211 1,109,492 Sale and lease of equipment 1,032,580 978,349 Installations 1,231,842 3,772,153 Other 12,566 205,150 ---------- ---------- TOTAL OPERATING REVENUES 24,459,842 32,635,906 OPERATING COSTS: Satellite connections and carrier 8,288,489 7,604,076 Network depreciation 1,550,418 3,086,136 Expense in lieu of income taxes 1,675,232 2,575,250 General and administrative expenses 6,491,570 10,020,901 Depreciation expense 519,435 914,829 Other 813,227 753,710 ---------- ---------- TOTAL OPERATING COSTS 19,338,371 24,954,902 OPERATING INCOME 5,121,471 7,681,004 OTHER INCOME (EXPENSES): Interest expense (3,512,436) (3,799,246) Interest income 806,162 1,500,694 Foreign exchange loss (301,297) (54,360) Other (680,028) (83,732) ---------- ---------- TOTAL OTHER EXPENSES (3,687,599) (2,436,644) ---------- ---------- EARNINGS BEFORE EXTRAORDINARY ITEM 1,433,872 5,244,360 EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT (5,452,995) - NET EARNINGS US$ (4,019,123) US$ 5,244,360 ========== ========== EBITDA US$ 8,866,556 US$ 14,257,219 EARNINGS PER SHARE BEFORE EXTRAORDINARY ITEM US$ 0.08 US$ 0.22 EARNINGS PER SHARE US$ (0.24) US$ 0.22 NINE MONTH PERIOD ENDED SEPTEMBER 30, ----------------------------- 1997 1998 ----------- ----------- (UNAUDITED) (UNAUDITED) OPERATING REVENUES Toll US$ 11,183,790 US$ 13,327,639 International settlement 28,207,247 36,676,456 Local service 4,234,351 9,198,808 Cellular 9,023,020 14,734,640 Paging 3,795,893 3,556,468 Sale and lease of equipment 4,418,355 2,798,781 Installations 2,949,077 9,780,712 Other 19,175 274,313 ---------- ---------- TOTAL OPERATING REVENUES 63,830,908 90,347,817 OPERATING COSTS: Satellite connections and carrier 23,113,981 23,433,672 Network depreciation 5,240,471 8,224,804 Expense in lieu of income taxes 4,370,340 6,719,661 General and administrative expenses 16,771,059 25,945,424 Depreciation expense 1,120,984 2,321,725 Other 2,778,063 2,341,223 ---------- ---------- TOTAL OPERATING COSTS 53,394,898 68,986,509 OPERATING INCOME 10,436,010 21,361,308 OTHER INCOME (EXPENSES): Interest expense (8,461,203) (12,041,255) Interest income 958,557 3,943,125 Foreign exchange loss (301,297) (139,197) Other (642,467) (961,862) ---------- ---------- TOTAL OTHER EXPENSES (8,446,410) (9,199,189) ---------- ---------- EARNINGS BEFORE EXTRAORDINARY ITEM 1,989,600 12,162,119 EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT (5,452,995) - NET EARNINGS US$ (3,463,395) US$ 12,162,119 ========== ========== EBITDA US$ 21,167,805 US$ 38,627,498 EARNINGS PER SHARE BEFORE EXTRAORDINARY ITEM US$ 0.12 US$ 0.55 EARNINGS PER SHARE US$ (0.20) US$ 0.55 TRICOM, S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (IN US$) NINE MONTH PERIOD ENDED SEPTEMBER 30, --------------------------------- 1997 1998 (UNAUDITED) (UNAUDITED) Cash flows from operating activities: Cash received from customers US$ 73,485,762 US$ 88,211,099 Cash paid to suppliers and employees (49,819,350) (49,073,587) Cash received from (paid to) related parties (159,114) 381,498 Interest paid (8,804,636) (12,163,205) Interest received on deposits 958,557 3,943,125 Expense in lieu of income tax (4,370,340) (6,719,661) Other income (expenses), net (943,765) (1,101,061) ----------- ----------- Net cash provided by (used in) operating activities 10,347,114 23,478,208 Cash flows from investing activities: Acquisition of investments (54,342,649) - Current portion of investments (22,750,000) (31,719,879) Cancellation of investments - 52,808,258 Acquisition of property and equipment (47,402,725) (112,198,006) ----------- ----------- Net cash used in investing activities (124,495,374) (91,109,627) Cash flows from financing activities: Borrowed funds (paid to) from banks (37,011,757) 2,044,663 Borrowed funds from related parties (18,569,576) 13,565,170 Short terms obligations (2,235,955) - Issuance (redemption) of short-term bonds (7,061,768) 32,000,000 High yield bond issue 200,000,000 - Long-term debt (28,000,000) (32,000,000) Issuance of common stock 20,000,000 68,062,182 ----------- ----------- Net cash provided by financing activities 127,120,944 83,672,015 Net increase (decrease) in cash and cash equivalents 12,972,684 16,040,596 Cash and cash equivalents at beginning of the year 4,291,804 5,732,505 Cash and cash equivalents at end of period US$ 17,264,488 US$ 21,773,101 =========== =========== 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, thereunto duly authorized. TRICOM, S.A Dated: October 15, 1998 By: /s/ Carl H. Carlson -------------------------- Carl H. Carlson, Executive Vice President and Member of the Office of the President -----END PRIVACY-ENHANCED MESSAGE-----