-----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, UvtU85Zq3+u0TqQAoHc3BQjqtea9KEa//rsuKV68jcle1V+xtAcQhGNg2OcW7Bou T52mN9pDLaKHFoA8SEeAcg== 0000950120-98-000288.txt : 19980807 0000950120-98-000288.hdr.sgml : 19980807 ACCESSION NUMBER: 0000950120-98-000288 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980728 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980806 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICG COMMUNICATIONS INC CENTRAL INDEX KEY: 0001013240 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 841342022 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11965 FILM NUMBER: 98678239 BUSINESS ADDRESS: STREET 1: 161 INVERNESS DRIVE WEST STREET 2: PO BOX 6742 CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 8004145000 MAIL ADDRESS: STREET 1: 161 INVERNESS DRIVE WEST STREET 2: P O OX 6742 CITY: ENGLEWOOD STATE: CO ZIP: 80112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICG HOLDINGS CANADA INC CENTRAL INDEX KEY: 0000786343 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 841128866 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11052 FILM NUMBER: 98678240 BUSINESS ADDRESS: STREET 1: 161 INVERNESS DRIVE WEST STREET 2: P O BOX 6742 CITY: ENGLEWOOD STATE: CO ZIP: 80155-6742 BUSINESS PHONE: 3034145431 MAIL ADDRESS: STREET 1: 161 INVERNESS DRIVE STREET 2: PO BOX 6742 CITY: ENGLEWOOD STATE: CO ZIP: 80155-6742 FORMER COMPANY: FORMER CONFORMED NAME: INTERTEL COMMUNICATIONS INC DATE OF NAME CHANGE: 19930107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICG HOLDINGS INC CENTRAL INDEX KEY: 0001001131 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 841128866 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 033-96540 FILM NUMBER: 98678241 BUSINESS ADDRESS: STREET 1: 161 INVERNESS DRIVE WEST STREET 2: P O BOX 6742 CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 303-414-50 MAIL ADDRESS: STREET 1: P O BOX 6742 STREET 2: SUITE 1610 CITY: ENGLEWOOD STATE: CO ZIP: 80112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICG FUNDING LLC CENTRAL INDEX KEY: 0001049902 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 841434980 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 333-40495-01 FILM NUMBER: 98678242 BUSINESS ADDRESS: STREET 1: 161 INVERNESS DRIVE WEST STREET 2: P.O. BOX 6742 CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 303-414-5000 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) July 28, 1998 ----------------- ICG COMMUNICATIONS, INC. ----------------------------------------------------------------- (Exact name of registrant as specified in charter) Delaware 1-11965 84-1342022 ----------------------------------------------------------------- (State of (Commission (IRS Employer Incorporation) File Number) Identification No.) 161 Inverness Drive West, Englewood, Colorado 80112 --------------------------------------------------- (Address of principal executive offices) ICG HOLDINGS (CANADA), INC. ---------------------------------------------------------------- (Exact name of registrant as specified in charter) Canada 1-11052 Not Applicable ---------------------------------------------------------------- (State of Incorporation) Commission (IRS Employer File Number) Identification No.) 1710-1177 West Hastings Street, Vancouver, British Columbia V6E 2L3 ------------------------------------------- (Address of principal executive offices) ICG HOLDINGS, INC. ---------------------------------------------------------------- (Exact name of registrant as specified in charter) Colorado 33-96540 84-1158866 ---------------------------------------------------------------- (State of Incorporation) (Commission (IRS Employer File Number) Identification No.) 161 Inverness Drive West, Englewood, Colorado 80112 --------------------------------------------------- (Address of principal executive offices) ICG FUNDING, INC. ---------------------------------------------------------------- (Exact name of registrant as specified in charter) Delaware 333-40495-01 84-1434980 ----------------------------------------------------------------- (State of Incorporation) (Commission (IRS Employer File Number) Identification No.) 161 Inverness Drive West, Englewood, Colorado 80112 --------------------------------------------------- (Address of principal executive offices) Registrants' telephone numbers, including area codes (800) 414-5000 -------------- N/A ----------- (Former name or former address, if changed since last report.) ITEM 5. OTHER EVENTS. ------ ------------ In a press release dated July 28, 1998, ICG Communications, Inc., a Delaware corporation (the "Corporation"), announced its earnings information and results of operations for the Corporation's second quarter of 1998. A copy of the press release is attached. ITEM 7. EXHIBITS. ------ -------- (c) Exhibits -------- 99.1 Press Release, dated July 28, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized. Dated: August 5, 1998 ICG COMMUNICATIONS, INC. By: /s/ H. Don Teague -------------------------- H. Don Teague Executive Vice President, General Counsel and Secretary ICG HOLDINGS (CANADA), INC. By: /s/ H. Don Teague --------------------------- H. Don Teague Executive Vice President, General Counsel and Secretary ICG HOLDINGS, INC. By: /s/ H. Don Teague --------------------------- H. Don Teague Executive Vice President, General Counsel and Secretary ICG FUNDING, INC. By: /s/ H. Don Teague --------------------------- H. Don Teague Executive Vice President, General Counsel and Secretary EXHIBIT INDEX Exhibit Description ------- ----------- 99.1 Press release, dated July 28, 1998 EX-99 2 EXHIBIT 99.1 FOR IMMEDIATE RELEASE For more information, contact: Heathere Evans Steve Smith Public Relations Manager Director of Investor Relations 303 414-5388 303 414-5350 heathere_evans@icgcomm.com investor_relations@icgcomm.com ICG COMMUNICATIONS, INC. REPORTS SECOND QUARTER 1998 RESULTS: 49 Percent Improvement in EBITDA 51,302 New Local Dial Tone Lines In Service 33 Percent Core Telecom Services' Gross Margin to Revenue Ratio ENGLEWOOD, CO. (JULY 28, 1998) - ICG Communications, Inc. (Nasdaq: ICGX) ("ICG") today reported that the second quarter of 1998 was the fourth consecutive quarter the company recorded EBITDA (earnings before interest, taxes, depreciation and amortization, and before nonrecurring charges) improvement, and the biggest sequential increase since the company's peak EBITDA deficit recorded last year. ICG's continued EBITDA improvement is primarily related to increases in local dial tone lines in service. At June 30, 1998, ICG had 237,458 local dial tone lines in service, an increase of 51,302 lines compared to March 31, 1998. Ninety-three percent of the second quarter lines installed were "on-switch." For the three months ended June 30, 1998, the company's EBITDA deficit improved $18.0 million, or 49 percent, when compared to the same period last year. ICG's EBITDA deficit for the current quarter was $18.5 million, compared to an EBITDA deficit of $36.5 million recorded for the second quarter of 1997. ICG also announced that for the three months ended June 30, 1998, its core telephone business unit's gross operating margin (revenue less operating costs) increased to $20.9 million, or 32.6 percent of revenue, compared to a gross operating margin deficit of $0.6 million or a negative 1.8 percent of revenue for the same period in 1997. ICG's core telephone business is represented by its Telecom Services segment, excluding revenue derived from the company's majority owned subsidiary Zycom Corporation ("Zycom"). -more- ICG Communications, Inc. 161 Iverness Drive W., Englewood, Colorado 80112 (303) 414-5000 ICG Netcom 2nd Quarter Results page -2- "It is exciting to see the execution of our core telephone business strategy translate into measurable gains toward profitability," said J. Shelby Bryan, ICG's president and chief executive officer. "The continued execution of our competitive local business strategy delivering competitive telecommunications choices to our customers is fundamental to reaching our goal of becoming EBITDA positive by the end of this year." TELECOM SERVICES (excluding Zycom): ($ in millions) ----------------------------------------------------------------- THREE MONTHS ENDED 6/30/98 3/31/98 12/31/97 9/30/97 6/30/97 3/31/97 ----------------------------------------------------------------- Revenue $64.2 58.5 47.7 36.5 34.4 30.7 Operating costs (43.3) (45.7) (43.2) (35.2) (35.0) (33.9) ----------------------------------------------------------------- Gross margin 20.9 12.8 4.5 1.3 (0.6) (3.2) % of revenue 32.6% 21.9% 9.4% 3.6% (1.7%) (10.4%) Lines in service 237,458 186,156 141,035* 50,551 20,108 5,371 ----------------------------------------------------------------- * Includes 48,256 lines acquired. ICG also reported that it sold 52,234 dial tone lines for the three months ended June 30, 1998. ICG is marketing and selling competitive local dial tone services in its primary markets: California, Ohio, Colorado, its southeastern markets (Louisville, KY; Nashville, TN; Birmingham, AL; Charlotte, NC; and Atlanta, GA) and in Texas through its strategic alliance with CSW/ICG ChoiceCom L. P. REVENUE COMPONENTS: For the three months ended June 30, 1998, ICG had total revenue of $136.3 million, compared to $105.8 million for the second quarter of 1997, an increase of 28.8 percent. Consolidated revenue increased $10.6 million sequentially, compared to $125.7 million posted for the first quarter of 1998. Total Telecom Services revenue (including Zycom) increased $28.2 million, or 68.4 percent, to $69.5 million for the current quarter, compared to $41.2 million for the second quarter last year; -more- ICG Communications, Inc. 161 Iverness Drive W., Englewood, Colorado 80112 (303) 414-5000 ICG Netcom 2nd Quarter Results page -3- compared sequentially to the first quarter of 1998, this revenue increased $4.7 million, or 7.3 percent. Local switched services revenue for the three months ended June 30, 1998, was $29.5 million, an increase of $28.3 million compared to $1.2 million recorded for the same period in 1997, and compared to $23.1 million recorded for the prior quarter. Long distance revenue for the quarter ended June 30, 1998 was $5.8 million, an increase of $0.7 million compared to $5.1 million recorded in the first quarter of 1998. There is no comparable long distance revenue in 1997, as the company had not launched this service in the corresponding quarter last year. Special access service (dedicated transport) revenue was $17.5 million for the quarter ended June 30, 1998, an increase of 29.9 percent or $4.0 million over the same period last year. Telecom Services' local, long distance, and special access revenue, combined, were $52.8 million for the current quarter, compared to $44.3 million for the first quarter of 1998, a 19.2 percent sequential increase. Switched terminating access revenue decreased 42.2 percent, generating $11.4 million for the three months ended June 30, 1998, compared to $19.7 million for the corresponding period in 1997. When compared sequentially to the first quarter of 1998, switched terminating access revenue decreased 19.7 percent, or $2.8 million, compared to $14.2 million reported for the three months ended March 31, 1998. This decrease, as expected, was the result of the company's recent initiatives to raise prices and free up switch port capacity for higher margin dial tone product. The company anticipates further reductions in revenue derived from switched terminating access due to these initiatives. The company's enhanced services (Zycom) revenue decreased $1.6 million to $5.2 million for the quarter ended June 30, 1998, compared to $6.8 million reported for the same quarter in 1997. Zycom provides enhanced telecommunications services and a full range of inbound service bureau offerings through its "800/877/888/900" platform located in Reno, Nevada. -more- ICG Communications, Inc. 161 Iverness Drive W., Englewood, Colorado 80112 (303) 414-5000 ICG Netcom 2nd Quarter Results page -4- TELECOM SERVICES REVENUE COMPONENTS ($ IN MILLIONS) ------------------------------------------------------------ THREE MONTHS ENDED 6/30/98 6/30/97 PERCENT ------------------------------------------------------------ SWITCHED LOCAL $29,507 1,170 2,422.0% ------------------------------------------------------------ LONG DISTANCE 5,761 -- N/A ------------------------------------------------------------ SPECIAL ACCESS 17,543 13,501 29.9% ------------------------------------------------------------ SWITCHED TERMINATING ACCESS 11,404 19,743 (42.2%) ============================================================ CORE TELECOM REVENUE 64,215 34,414 86.6% ------------------------------------------------------------ ENHANCED (ZYCOM) 5,240 6,829 (23.3%) ------------------------------------------------------------ TOTAL TELECOM REVENUE 69,455 41,243 68.4% ------------------------------------------------------------ Netcom reported Internet services revenue of $40.4 million for the three months ended June 30, 1998, compared to $41.0 million reported for the same period last year. Netcom's higher margin business segment, related to Web hosting and dedicated services, recorded a revenue increase of $0.5 million to $8.0 million for the current quarter, compared to $7.5 million recorded for the three months ended March 31, 1998. This increase was directly attributable to growth in customers for these two business segments. Netcom provided Internet service to 18,638 business customers at June 30, 1998, compared to 14,976 business customers at March 31, 1998, a 24.5 percent sequential gain over the prior quarter. At the end of the second quarter 1998, Netcom provided Internet services to 511,806 subscribers, compared to 527,800 subscribers at the end of the first quarter of 1998. The decline in dial-up subscribers accounted for a $0.6 million reduction in Netcom's dial-up revenue which was $32.4 million for the second quarter of 1998, compared to $33.0 for the prior quarter. During the second quarter Netcom began marketing initiatives intended to stabilize and then grow its dial-up customer base. -more- ICG Communications, Inc. 161 Iverness Drive W., Englewood, Colorado 80112 (303) 414-5000 ICG Netcom 2nd Quarter Results page -5- ICG's Network Services revenue decreased $0.8 million to $14.8 million for the second quarter of 1998, compared to $15.6 million reported for the same quarter last year; however, when compared sequentially to the first quarter of 1998, Network Services revenue increased 29.1%, or $3.3 million. The company's Satellite Services business produced record revenue of $11.7 million for the quarter ended June 30, 1998, compared to $7.9 million reported for the second quarter last year. ICG recently announced an agreement to sell Satellite Services' Nova-Net Communications, Inc., (VSAT) and MarineSat Communications, Inc., (mobile satellite communications); these two subsidiaries generated $3.3 million in revenue for the three months ended June 30, 1998. Maritime Telecommunications Network, Inc. ("MTN"), which provides satellite communications for cruise ships, naval vessels and offshore platforms, remains an ICG Satellite Services, Inc. subsidiary. TOTAL OPERATING COSTS AND SG&A EXPENSES: Total operating costs for the quarter ended June 30, 1998 were $93.4 million, compared to $83.7 million recorded for the corresponding quarter last year. The increase in these costs was primarily attributable to the increase in local switched services and the addition of network operating costs which include engineering and operations personnel dedicated to the development and launch of local exchange services. Additionally, Netcom continued to experience increased transport costs due to initiatives related to the conversion from an analog to a digital based network, which produced certain duplicative costs during the period of conversion. Selling, general and administrative ("SG&A") expenses for the three months ended June 30, 1998 were $61.4 million, compared to $58.6 million reported for the same three-month period in 1997. As a percentage of total revenue, the company's SG&A expenses for the current reported quarter were 45.1 percent, compared to 48.6 percent for the prior quarter, and 55.4 percent for the second quarter of 1997. -more- ICG Communications, Inc. 161 Iverness Drive W., Englewood, Colorado 80112 (303) 414-5000 ICG Netcom 2nd Quarter Results page -6- ICG reclassified to SG&A expenses the amortization of Netcom's deferred advertising costs, which historically were presented in the company's depreciation and amortization expense, consistent with Netcom's historical financial statements. Based on the company's review of industry practice, and consultation with its external auditors, ICG believes that the amortization of deferred advertising costs is more appropriately included in S,G & A expenses. NET LOSSES: Depreciation and amortization for the three months ended June 30, 1998 was $30.7 million, an increase of $11.7 million compared to the same period in 1997. The increase in depreciation and amortization expense is primarily attributable to increased capital expenditures. Interest expense and interest income for the three months ended June 30, 1998 were $42.0 million and $9.5 million, respectively. ICG reported a net loss of $100.8 million for the three months ended June 30, 1998, compared to a net loss of $86.7 million recorded for the corresponding period in 1997. Loss per share for the quarters ended June 30, 1998 and 1997 were $2.25 and $2.06, respectively. The net loss for the three months ended June 30, 1998 includes $2.2 million in nonrecurring merger and restructuring expenses, and $3.2 million in nonrecurring legal settlement costs associated with Satellite Services' MTN subsidiary and Zycom. RESOURCES AND CAPITAL EXPENDITURES: ICG had $631.5 million in cash, cash equivalents and short-term investments at June 30, 1998. The company's capital expenditures for the three months and six months ended June 30, 1998 were $95.9 million and $173.1 million, respectively. OPERATIONS: At June 30, 1998, the company was co-located in 45 central ILEC offices, compared to 32 central -more- ICG Communications, Inc. 161 Iverness Drive W., Englewood, Colorado 80112 (303) 414-5000 ICG Netcom 2nd Quarter Results page -7- offices at the end of 1997. At June 30, 1998, ICG had 3,812 operational fiber route miles (with another 430 miles under construction), compared to 3,043 miles at December 31, 1997. ICG had 35 operational switches at the end of the second quarter of 1998, of which 20 were voice switches and 15 were data switches. The company also increased its buildings connected, reaching 4,398 buildings at the end of the current quarter. ICG's Internet business unit, Netcom, had 511,806 total subscribers at June 30, 1998, which generated an average monthly revenue per subscriber of $25.87 for the three months ended June 30, 1998. ABOUT ICG NETCOM: ICG Netcom is the brand name for products and services from ICG Communications, Inc. (NASDAQ: ICGX) and ICG's subsidiary, NETCOM On-Line Communication Services, Inc. The combined entity is a leading integrated communications provider (ICP) offering high- quality telecommunications services. Headquartered in Englewood, Colo., ICG has extensive switched fiber-optic networks and offers local, long distance and enhanced telephony and data services in California, Colorado, Ohio and parts of the southeastern United States. The company provides Internet communication solutions, connectivity and web site hosting to individuals and to small- and medium-sized businesses through its subsidiary, NETCOM On- Line Communication Services, Inc. ICG also is a leading designer and installer of copper, fiber and wireless infrastructure for buildings and campuses. At June 30, 1998, ICG had 3,089 full time employees. ### INFORMATION AND STATEMENTS CONTAINED IN THIS PRESS RELEASE CONTAIN, EXPRESSED OR IMPLIED, FORWARD-LOOKING DISCLOSURES THAT ARE BASED ON THE BELIEFS OF MANAGEMENT AS WELL AS ASSUMPTIONS MADE BASED ON INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT. THESE FORWARD-LOOKING STATEMENTS AND INFORMATION INVOLVE RISKS AND UNCERTAINTY, INCLUDING, BUT NOT LIMITED TO, FUTURE DEMAND FOR THE COMPANY'S SERVICES, GENERAL ECONOMIC CONDITIONS, GOVERNMENT REGULATIONS, COMPETITION AND CUSTOMER STRATEGIES, CAPITAL DEPLOYMENT, THE IMPACT OF PRICING AND OTHER RISKS AND UNCERTAINTIES. SHOULD ONE OR MORE OF THESE RISKS MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED HEREIN AS ANTICIPATED, BELIEVED, ESTIMATED OR EXPECTED. THESE RISKS ARE DETAILED FROM TIME TO TIME IN VARIOUS REPORTS FILED BY ICG WITH THE SEC, INCLUDING FORM 10-K FILED BY ICG FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997, FORM 10-Q FILED FOR THE QUARTER ENDED MARCH 31, 1998, AND FORM 10-Q TO BE FILED FOR THE CURRENT QUARTER ENDED JUNE 30, 1998. Attachments: Key Operating Statistics Consolidated Statements of Operations Consolidated Balance Sheet ICG Communications, Inc. 161 Iverness Drive W., Englewood, Colorado 80112 (303) 414-5000 ICG Netcom 2nd Quarter Results page -8- KEY OPERATING STATISTICS --------------------------------------------------------------------------- AS OF, TELECOM JUNE 30, MARCH 31, DEC. 31, SEPT 30, JUNE 30, MARCH SERVICES 1998 1998 1997 1997 1997 31, 1997 --------------------------------------------------------------------------- DIAL TONE LINES IN SERVICE 237,458 186,156 141,035 50,551 20,108 5,371 --------------------------------------------------------------------------- FIBER ROUTE MILES Operational 3,812 3,194 3,043 3,021 2,898 2,483 Under construction 430 -- -- -- -- -- --------------------------------------------------------------------------- FIBER STRAND MILES Operational 124,642 118,074 111,435 109,510 101,788 83,334 Under construction 11,102 -- -- -- -- -- --------------------------------------------------------------------------- WIRELESS MILES 511 511 511 511 511 511 --------------------------------------------------------------------------- BUILDINGS CONNECTED * On network 665 637 596 590 560 545 Hybrid 3,733 3,294 1,725 1,726 1,704 1,550 ----------------------------------------------------- Total buildings connected 4,398 3,931 2,321 2,316 2,264 2,095 -------------------------------------------------------------------------- CUSTOMER CIRCUITS IN SERVICE (VGEs) 1,250,479 1,171,801 1,111,697 1,006,916 917,656 816,238 -------------------------------------------------------------------------- SWITCHES Voice 20 20 19 18 17 16 Data 15 15 15 15 15 10 ----------------------------------------------------- Total switches 35 35 34 33 32 26 -------------------------------------------------------------------------- SWITCHED MINUTES OF USE (MOU) (in millions)** 516 639 660 788 742 682 -------------------------------------------------------------------------- INTERNET SERVICES -------------------------------------------------------------------------- WEB HOSTING/ DEDICATED SUBS 18,638 14,976 12,275 10,630 9,070 6,724 -------------------------------------------------------------------------- AVE. MO. REVENUE PER SUB $25.87 25.12 25.01 24.24 23.95 22.46 -------------------------------------------------------------------------- SATELLITE SERVICES -------------------------------------------------------------------------- VSATs 928 921 957 934 895 875 -------------------------------------------------------------------------- C-BAND INSTALLATIONS 66 59 57 54 57 57 -------------------------------------------------------------------------- L-BAND INSTALLATIONS 1,636 1,450 1,239 768 671 355 -------------------------------------------------------------------------- * Beginning in the first quarter of 1998, buildings connected represents both dial tone and special access connectivity. ** Based on three-month periods. ICG Communications, Inc. 161 Iverness Drive W., Englewood, Colorado 80112 (303) 414-5000 ICG Netcom 2nd Quarter Results page -9- Press release attachment [ICG Netcom logo] CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) ($ in thousands except per share data) Year-over-year comparison --------------------------------- THREE MONTHS ENDED, -------------------- Revenue 30-Jun-98 30-Jun-97 % Change -------- --------- ---------- Telecom services Switched local services $ 29,507 1,170 2422.0% Long Distance 5,761 - NA Switched terminating access 11,404 19,743 (42.2%) Special access 17,543 13,501 29.9% ------- ------- Core Telecom revenue 64,215 34,414 86.6% Enhanced (Zycom) 5,240 6,829 (23.3%) ------- ------- Total Telecom services 69,455 41,243 68.4% Internet services (Netcom) 40,370 41,020 (1.6%) Network services (FOTI) 14,759 15,640 (5.6%) Satellite services 11,683 7,883 48.2% ------- ------- TOTAL REVENUE 136,267 105,786 28.8% Operating costs Telecom services (48,840) (42,444) 15.1% Internet services (Netcom) (26,052) (23,957) 8.7% Network services (FOTI) (12,590) (12,883) (2.3%) Satellite services (5,869) (4,366) 34.4% ------- ------- Total operating costs (93,351) (83,650) 11.6% Selling, general and administrative (61,444) (58,636) 4.8% ------- ------- EBITDA (before nonrecurring charges) (18,528) (36,500) (49.2%) Depreciation and amortization (30,663) (18,955) 61.8% Net gain (loss) on disposal of long-lived assets (137) 256 (153.5%) Provision for impairment of long-lived assets - - NA Merger and restructuring costs (2,185) (1,712) 27.6% ------- ------- Operating loss (51,513) (56,911) (9.5%) Interest expense (41,991) (28,451) 47.6% Interest income 9,499 7,778 22.1% Other, net (3,224) (43) 7397.7% ------- ------- Loss before income taxes and minority interest (87,229) (77,627) 12.4% Income tax expense (12) (6) 100.0% Minority interest & (13,595) (9,116) 49.1% preferred dividends on ------- preferred securities of subsidiaries Net loss (100,836) (86,749) 16.2% ======= ======= Loss per share - basic and diluted (2.25) (2.06) 9.2% ======= ======== Weighted average number of shares outstanding - basic and diluted 44,865 42,122 Sequential comparison -------------------------------- THREE MONTHS ENDED, -------------------- Revenue 30-Jun-98 31-Mar-98 % Change --------- --------- ---------- Telecom services Switched local services $ 29,507 23,062 27.9% Long Distance 5,761 5,098 13.0% Switched terminating access 11,404 14,200 (19.7%) Special access 17,543 16,127 8.8% ------- ------- Core Telecom revenue 64,215 58,487 9.8% Enhanced (Zycom) 5,240 6,255 (16.2%) ------- ------- Total Telecom services 69,455 64,742 7.3% Internet services (Netcom) 40,370 40,534 (0.4%) Network services (FOTI) 14,759 11,431 29.1% Satellite services 11,683 8,949 30.6% ------- ------- TOTAL REVENUE 136,267 125,656 8.4% Operating costs Telecom services (48,840) (52,008) (6.1%) Internet services (Netcom) (26,052) (25,654) 1.6% Network services (FOTI) (12,590) (10,865) 15.9% Satellite services (5,869) (4,992) 17.6% ------- ------- Total operating costs (93,351) (93,519) (0.2%) Selling, general and (61,444) (61,058) 0.6% administrative ------- ------- EBITDA (before nonrecurring charges) (18,528) (28,921) (35.9%) Depreciation and amortization (30,663) (20,967) 46.2% Net gain (loss) on disposal of long-lived assets (137) (505) (72.9%) Provision for impairment of long-lived assets - (1,860) (100.0%) Merger and restructuring costs (2,185) (7,746) (71.8%) ------- ------- Operating loss (51,513) (59,999) (14.1%) Interest expense (41,991) (34,884) 20.4% Interest income 9,499 6,649 42.9% Other, net (3,224) (316) 920.3% ------- ------- Loss before income taxes and minority interest (87,229) (88,550) (1.5%) Income tax expense (12) (13) (7.7%) Minority interest & preferred dividends on preferred securities of subsidiaries (13,595) (13,192) 3.1% ------- ------- Net loss (100,836) (101,755) (0.9%) ======= ======= Loss per share - basic and diluted (2.25) (2.30) (2.2%) ======= ======= Weighted average number of shares outstanding - basic and diluted 44,865 44,311 ICG Netcom 2nd Quarter Results page -10- Press release attachment [ICG Netcom logo] CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) ($ in thousands except per share data) SIX MONTHS ENDED, -------------------- Revenue 30-Jun-98 30-Jun-97 % Change --------- --------- ---------- Telecom services Switched local services $ 52,569 1,170 4393.1% Long Distance 10,859 - NA Switched terminating access 25,604 38,344 (33.2%) Special access 33,670 25,580 31.6% ------- ------- Core Telecom revenue 122,702 65,094 88.5% Enhanced (Zycom) 11,495 14,429 (20.3%) ------- ------- Total Telecom services 134,197 79,523 68.8% Internet services (Netcom) 80,904 80,025 1.1% Network services (FOTI) 26,190 33,627 (22.1%) Satellite services 20,632 14,666 40.7% ------- ------- TOTAL REVENUE 261,923 207,841 26.0% Operating costs Telecom services (100,848) (83,894) 20.2% Internet services (Netcom) (51,706) (47,337) 9.2% Network services (FOTI) (23,455) (27,418) (14.5%) Satellite services (10,861) (7,953) 36.6% ------- ------- Total operating costs (186,870) (166,602) 12.2% Selling, general and administrative (122,502) (112,252) 9.1% ------- ------- EBITDA (before nonrecurring charges) (47,449) (71,013) (33.2%) Depreciation and amortization (51,630) (35,681) 44.7% Net gain (loss) on disposal of long-lived assets (642) 897 (171.6%) Provision for impairment of long-lived assets (1,860) - NA Merger and restructuring costs (9,931) (1,712) 480.1% ------- ------- Operating loss (111,512) (107,509) 3.7% Interest expense (76,875) (53,633) 43.3% Interest income 16,148 13,876 16.4% Other, net (3,540) (593) 497.0% ------- ------- Loss before income taxes and minority interest (175,779) (147,859) 18.9% Income tax expense (25) (13) 92.3% Minority interest & preferred dividends on preferred securities of subsidiaries (26,787) (14,869) 80.2% ------- ------- Net loss (202,591) (162,741) 24.5% ======= ======= Loss per share - basic and diluted (4.54) (3.87) 17.3% ======= ======= Weighted average number of shares outstanding - basic and diluted 44,588 42,067 ICG Netcom 2nd Quarter Results page -11- Press release attachment [ICG Netcom logo] CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) ($ in thousands except per share data) JUNE 30, DECEMBER 31, ASSETS 1998 1997 ------------ ---------- ------------ Cash, cash equivalents and $ 631,494 294,483 short-term investments Receivables, net 106,534 81,118 Property and equipment 998,615 860,495 Accumulated depreciation (203,914) (155,383) ---------- ---------- Net property and equipment 794,701 705,112 Goodwill, net 74,398 77,562 Deferred financing costs, net 38,481 23,196 Restricted cash 20,836 24,649 Deposits and other assets, net 66,188 48,391 ---------- ---------- Total assets 1,732,632 1,254,511 ========== ========== LIABILITIES AND STOCKHOLDERS' DEFICIT: ------------------------------- Accounts payable and accrued liabilities $ 145,897 120,354 Capital leases 72,762 78,617 Debt 1,513,740 892,352 ---------- ---------- Total liabilities 1,732,399 1,091,323 ---------- ---------- Redeemable preferred securities of subsidiaries 442,437 420,171 Stockholders' deficit: Common stock 747 749 Additional paid-in capital 550,989 533,541 Accumulated deficit (994,008) (791,417) Accumulated other comprehensive income 68 144 ---------- ---------- Total stockholders' deficit (442,204) (256,983) ---------- ---------- Total liabilities and stockholders' deficit $ 1,732,632 1,254,511 ========== ========== -----END PRIVACY-ENHANCED MESSAGE-----