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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
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 0-20803
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IXC COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 75-2644120
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1122 CAPITAL OF TEXAS HIGHWAY SOUTH, 78746-6426
AUSTIN, TEXAS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE): (512) 328-1112
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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 [ ]
The number of shares of Common Stock, $.01 par value, outstanding (the only
class of common stock of the Company outstanding) was 36,177,969 on November 12,
1998.
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
TABLE OF CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
September 30, 1998 and December 31, 1997.................... 3
Condensed Consolidated Statements of Operations
Three and Nine Months Ended September 30, 1998 and 1997..... 4
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1998 and 1997............... 5
Notes to Condensed Consolidated Financial Statements........ 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 12
Item 3. Quantitative and Qualitative Disclosures About Market
Risk........................................................ 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................... 17
Item 2. Changes in Securities....................................... 17
Item 3. Defaults Upon Senior Securities............................. 17
Item 4. Submission of Matters to a Vote of Security Holders......... 17
Item 5. Other Information........................................... 17
Item 6. Exhibits and Reports on Form 8-K............................ 18
SIGNATURE............................................................ 22
2
3
IXC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
(UNAUDITED)
ASSETS
Cash and cash equivalents................................... $ 141,690 $ 155,855
Accounts and other receivables, net of allowance for
doubtful accounts of $17,763 at September 30, 1998 and
$13,119 at December 31, 1997.............................. 141,376 113,096
Current portion of notes receivable......................... 53,529 --
Other current assets........................................ 7,404 4,108
---------- ---------
Total current assets............................... 343,999 273,059
Property and equipment...................................... 1,090,455 734,282
Less: accumulated depreciation.............................. (180,952) (120,408)
---------- ---------
Property and equipment, net................................. 909,503 613,874
Investments in unconsolidated subsidiaries.................. 141,757 17,497
Other non-current assets.................................... 110,559 64,442
---------- ---------
Total assets....................................... $1,505,818 $ 968,872
========== =========
LIABILITIES, REDEEMABLE PREFERRED STOCK
AND STOCKHOLDERS' DEFICIT
Accounts payable-trade...................................... $ 91,426 $ 86,651
Accrued service cost........................................ 49,278 56,994
Accrued liabilities......................................... 83,481 43,427
Current portion of unearned revenue......................... 25,569 6,310
Current portion of long-term debt and capital lease
obligations............................................... 13,992 12,294
---------- ---------
Total current liabilities.......................... 263,746 205,676
Long-term debt and capital lease obligations, less current
portion................................................... 483,457 308,453
Unearned revenue -- noncurrent.............................. 350,632 59,627
Other noncurrent liabilities................................ 5,139 10,419
7 1/4% Junior Convertible Preferred Stock; $.01 par value;
3,000,000 shares of all classes of Preferred Stock
authorized; 1,074,500 shares issued and outstanding
(aggregate liquidation preference of $107,450 at September
30, 1998 and $105,537 and December 31, 1997).............. 103,507 101,239
12 1/2% Junior Exchangeable Preferred Stock; $.01 par value;
authorized -- 3,000,000 shares of all classes of Preferred
Stock authorized; 338,844 shares issued and outstanding
(aggregate liquidation preference of $344,132 at September
30, 1998 and $313,786 at December 31, 1997, including
accrued dividends of $5,294 at September 30, 1998 and
$4,828 at December 31, 1997).............................. 333,230 302,129
Stockholders' deficit:
10% Junior Series 3 Cumulative Preferred Stock, $.01 par
value; authorized -- 3,000,000 shares of all classes of
Preferred Stock; no shares issued and outstanding at
September 30, 1998 and 414 shares issued and outstanding
at December 31, 1997...................................... -- 1
6 3/4% Cumulative Convertible Preferred Stock, $.01 par
value; authorized -- 3,000,000 shares of all classes of
Preferred Stock authorized; 155,250 shares issued and
outstanding at September 30, 1998 (aggregate liquidation
preference of $155,250 at September 30, 1998)............. 2 --
Common Stock, $.01 par value; 100,000,000 shares authorized:
36,155,732 shares issued and outstanding at September 30,
1998 and 35,575,325 shares issued and outstanding at
December 31, 1997......................................... 361 356
Additional paid-in capital.................................. 265,331 143,355
Accumulated deficit......................................... (299,587) (162,383)
---------- ---------
Total stockholders' deficit........................ (33,893) (18,671)
---------- ---------
Total liabilities, redeemable preferred stock and
stockholders' deficit........................... $1,505,818 $ 968,872
========== =========
See accompanying notes.
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IXC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- --------------------
1998 1997 1998 1997
-------- -------- --------- --------
Net operating revenue:
Private line................................... $ 65,539 $ 41,948 $ 159,788 $111,311
Long distance switched services................ 110,741 94,881 330,010 246,212
Other.......................................... 8,989 -- 8,989 --
-------- -------- --------- --------
185,269 136,829 498,787 357,523
Operating expenses:
Cost of services............................... 109,984 101,035 325,526 276,908
Operations and administration.................. 40,094 28,047 99,422 74,410
Depreciation and amortization.................. 34,801 22,866 77,589 48,339
Merger related costs........................... 444 302 8,089 3,627
-------- -------- --------- --------
Operating loss......................... (54) (15,421) (11,839) (45,761)
Interest income.................................. 2,159 2,232 7,080 4,699
Interest expense................................. (7,580) (8,027) (22,421) (24,114)
Equity in net loss of unconsolidated
subsidiaries................................... (8,307) (7,317) (30,326) (13,668)
Other, net....................................... 181 (1,757) 357 (1,731)
-------- -------- --------- --------
Loss before provision for income taxes, minority
interest and extraordinary item................ (13,601) (30,290) (57,149) (80,575)
Provision for income taxes....................... (1,647) (696) (8,266) (506)
Minority interest................................ (216) (186) (641) (503)
-------- -------- --------- --------
Loss before extraordinary item................... (15,464) (31,172) (66,056) (81,584)
Extraordinary gain (loss) on early extinguishment
of debt, including income tax of $3,570........ 163 -- (69,647) --
-------- -------- --------- --------
Net loss......................................... (15,301) (31,172) (135,703) (81,584)
Dividends applicable to preferred stock.......... (15,341) (6,727) (42,548) (9,485)
-------- -------- --------- --------
Net loss applicable to common stockholders....... $(30,642) $(37,899) $(178,251) $(91,069)
======== ======== ========= ========
Basic and diluted loss per share:
Before extraordinary item........................ $ (.86) $ (1.09) $ (3.03) $ (2.63)
Extraordinary item............................... .01 -- (1.95) --
-------- -------- --------- --------
Net loss......................................... $ (.85) $ (1.09) $ (4.98) $ (2.63)
======== ======== ========= ========
See accompanying notes.
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5
IXC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
----------------------
1998 1997
--------- ---------
Net cash provided by operating activities................... $ 127,876 $ 21,720
--------- ---------
Investing activities
Release of funds from escrow under 12 1/2% Senior Notes... -- 69,564
Deposit into escrow under 12 1/2% Senior Notes............ -- (18,152)
Purchase of property and equipment........................ (336,609) (203,599)
Sale of short-term investments, net....................... -- 788
Proceeds from payments of notes receivable................ 2,025 --
Acquisitions, net of cash acquired and common stock
issued................................................. (22,699) (2,554)
Investment in unconsolidated subsidiaries................. (26,885) (17,742)
--------- ---------
Net cash used in investing activities....................... (384,168) (171,695)
--------- ---------
Financing activities
Proceeds from sale of 9% Senior Subordinated Notes........ 450,000 --
Net proceeds from sale of 6 3/4% Convertible Preferred
Stock.................................................. 147,213 --
Net proceeds from sale of 7 1/4% Convertible Preferred
Stock.................................................. -- 95,696
Net proceeds from sale of 12 1/2% Exchangeable Preferred
Stock.................................................. -- 288,287
Proceeds from new debt and capital lease obligations...... 14,022 --
Principal payments on long-term debt and capital lease
obligations............................................ (349,361) (12,601)
Redemption of 10% Junior Series 3 Preferred Stock......... (708) --
Stock option exercises.................................... 3,445 248
Dividends paid............................................ (6,544) --
Other financing activities................................ -- 92
Debt issuance costs....................................... (14,438) --
--------- ---------
Net cash provided by financing activities................... 243,629 371,722
--------- ---------
Effect of change in year-end from merged entities........... (1,502) --
--------- ---------
Net increase (decrease) in cash and cash equivalents........ (14,165) 221,747
Cash and cash equivalents at beginning of period............ 155,855 63,302
--------- ---------
Cash and cash equivalents at end of period.................. $ 141,690 $ 285,049
========= =========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest............................................... $ 23,117 $ 19,862
========= =========
Taxes.................................................. $ 3,092 $ 182
========= =========
See accompanying notes.
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited Condensed Consolidated Financial Statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation for
the periods indicated have been included. Operating results for the three and
nine month periods ended September 30, 1998 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1998. The
accompanying unaudited Condensed Consolidated Financial Statements have been
restated for all periods presented to include the operations of Eclipse
Telecommunications, Inc., formerly Network Long Distance, Inc. ("Eclipse"),which
was acquired on June 3, 1998, in a transaction accounted for as a pooling of
interests (See Note 2). The Condensed Consolidated Balance Sheet at December 31,
1997 has been derived from the audited financial statements for the Company but
does not include all of the information and notes required by generally accepted
accounting principles for complete financial statements. The accompanying
financial statements should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto for the year ended December
31, 1997. Certain amounts shown in the Company's 1997 financial statements have
been reclassified to conform to the 1998 presentation.
2. MERGER WITH ECLIPSE
On June 3, 1998, the Company completed the acquisition of Eclipse through a
merger of a Company subsidiary with Eclipse by exchanging approximately 4.05
million shares of its common stock for all of the outstanding common stock of
Eclipse. Each share of Eclipse common stock was exchanged for .2998 shares of
the Company's common stock. In addition, outstanding Eclipse stock options were
converted at the same exchange factor into options to purchase shares of the
Company's common stock. Prior to the merger, Eclipse's fiscal year ended on
March 31. Therefore the reported 1997 year-end balance sheet information for
Eclipse represents its financial position as of March 31, 1998. In order to
report the movement in cash for the first six months of 1998, a $1.5 million
adjustment was reported in the condensed consolidated statement of cash flows,
representing Eclipse's first quarter 1998 net income, which was in both the
beginning retained earnings balance and the current period's net income.
The merger constituted a tax-free reorganization and has been accounted for
as a pooling of interests. Accordingly, all prior period consolidated financial
statements have been restated to include the combined results of operations,
financial position and cash flows of Eclipse as though it had always been a part
of the Company.
In connection with the merger, the Company recorded charges amounting to
$8.1 million for merger related costs, including professional services
associated with the merger, termination costs associated with duplicate
functions, costs of exiting excess office space and the write-off of duplicate
equipment and software.
3. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
PSINet
On February 25, 1998, the Company consummated agreements with PSINet, Inc.
("PSINet") which allow each party to market and sell the products and services
of the other party. Under the terms of the agreements, the Company will provide
PSINet with an indefeasible right to use ("IRU") 10,000 miles of OC-48
transmission capacity on its network over a 20-year period in exchange for
approximately 10.2 million shares representing under 20% (post-issuance) of
PSINet common stock. If the value of the PSINet common stock received by the
Company is less than $240.0 million at the earlier of one year after the final
delivery of the transmission capacity (scheduled for late-1999) or February 26,
2002, PSINet will deliver to IXC either
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
cash or additional PSINet common stock such that the value of the total
consideration paid by PSINet is $240.0 million. The Company receives a
maintenance fee which, as the full capacity is delivered, is expected to
increase to approximately $11.5 million per year. Revenue from the IRU will be
recognized over its term of 20 years as the capacity is delivered.
From the transaction date through May 1998, the Company accounted for its
investment in PSINet under the equity method since the Company was deemed to
have significant influence over PSINet based on its level of ownership. In June
1998, the Company changed from the equity method to the cost method due to a
reduced level of ownership. At September 30, 1998 the Company's recorded
investment in PSINet was approximately $133.1 million.
Marca-Tel
As of September 30, 1998, the Company indirectly owned 24.5% of Marca-Tel
S.A. de C.V. ("Marca-Tel") through its ownership of 50% of Progress
International LLC ("Progress International"), which owns a holding company that
owns 49% of Marca-Tel. The remaining 51% of Marca-Tel is owned by a Mexican
individual and a subsidiary of Formento Radio Beep, S.A. de C.V. The other 50%
of Progress International is owned by Westel International, Inc ("Westel"). The
Company's investment in Progress is negative $12.8 million as of September 30,
1998 due to the recognized equity losses being greater than the Company's
funding of its investment. Summary financial information and the equity losses
recorded by the Company for Marca-Tel are as follows (in thousands):
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- --------------------
1998 1997 1998 1997
-------- ------- -------- --------
Net revenue.............................. $ 5,846 $ 1,250 $ 14,636 $ 1,723
Gross margin (loss)...................... 719 (1,650) 2,037 (2,892)
Net loss from continuing operations...... (1,982) (6,720) (7,051) (17,431)
Net income (loss)........................ (12,063) (7,000) (24,075) (19,261)
Equity in net loss of Marca-Tel.......... $ (4,621) $(7,317) $(15,873) $(13,531)
In June 1998 the Company obtained a note receivable from Westel for $14.9
million of advances that the Company had made to Progress International on
Westel's behalf. The note receivable from Westel is secured by a portion of
Westel's investment in Progress. As of September 30, 1998, the balance of the
note receivable was $12.9 million. In October 1998, Marca-Tel received a notice
of default from its primary external financing source. Representatives of the
Marca-Tel partners and the financing source are attempting to resolve this
issue. Based on these discussions, the Company's indirect interest in Marca-Tel
could be diluted or lost entirely.
4. NOTE RECEIVABLE
During the second quarter of 1998, the Company activated a previously
signed IRU with a customer in exchange for a note that is payable over an
18-month period bearing interest at 12%. At September 30, 1998, $94.1 million
was outstanding under the note receivable.
5. 9% SENIOR SUBORDINATED NOTES DUE 2008
On April 21, 1998, the Company issued $450.0 million of 9% Senior
Subordinated Notes Due 2008 (the "9% Senior Subordinated Notes"). In connection
with the sale of the 9% Senior Subordinated Notes, the Company completed its
tender offer to purchase for cash all of its outstanding 12 1/2% Senior Notes
Due 2005 (the "Old Notes"). Pursuant to the terms of the tender offer, $284.2
million (out of $285.0 million) in aggregate principal amount of the Old Notes
were tendered and accepted for payment by the Company. The Company used
approximately $342.7 million of the estimated $435.6 million net proceeds of the
9% Senior Subordinated Notes offering to pay the tender offer price for the Old
Notes. With the early extinguishment of
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the Old Notes, a charge of approximately $69.6 million was recorded as an
extraordinary item net of related tax benefit in the second and third quarters
of 1998.
The 9% Senior Subordinated Notes are general unsecured obligations of the
Company and will be subordinate in right of payment to all existing and future
senior indebtedness of the Company and other liabilities of the Company's
subsidiaries. In connection with the consummation of the tender offer, the Old
Notes were amended to eliminate substantially all of the restrictive covenants
therein and all guarantees given thereunder.
6. 6 3/4% CUMULATIVE CONVERTIBLE PREFERRED STOCK
In March and April 1998, the Company sold $155.3 million of 6 3/4%
Cumulative Convertible Preferred Stock ("6 3/4% Convertible Preferred Stock")
issued in the form of depositary shares (3,105,000 depositary shares at $50 per
share; each depositary share represents 1/20 of a share of 6 3/4% Convertible
Preferred Stock at $1,000 per share). The net proceeds of approximately $147.2
million from the offering are being used to fund capital expenditures, including
a portion of the network expansion, and for general corporate purposes,
including acquisitions of related businesses or interests therein and joint
ventures. The 6 3/4% Convertible Preferred Stock can be converted at the option
of the holder thereof into shares of Common Stock, par value $.01 per share, of
the Company at any time unless previously redeemed or repurchased, at a
conversion rate of 0.6874 shares of common stock per depositary share (13.748
shares of Common Stock per share of the 6 3/4% Convertible Preferred Stock).
Dividends on the 6 3/4% Convertible Preferred Stock are payable quarterly in
arrears in cash or Common Stock, under certain circumstances, on January 1,
April 1, July 1 and October 1 of each year, commencing on July 1, 1998.
7. SERIES 3 REDEMPTION
On March 31, 1998, the Company redeemed the remaining 414 shares of its 10%
Junior Series 3 Cumulative Redeemable Preferred Stock outstanding for
approximately $0.7 million in cash ($1,000 per share, plus $0.3 million of
accrued and unpaid dividends).
8. INCOME TAXES
The provision for income taxes recorded during interim periods is
calculated based on an estimated annual effective tax rate. For 1998, the
effective tax rate is negative and includes the impact of gains from the
transactions with PSINet (see Note 3) and other IRU transactions that have
already occurred and others that are expected to occur later in the year. The
Company has applied a valuation allowance against the deferred tax assets
arising during 1998 due to the uncertainty of realization.
9. COMMITMENTS AND CONTINGENCIES
The Company has made and will continue to make material commitments related
to the expansion of its network.
The Company entered into several agreements with major long distance
carriers for the sale of dark fiber and capacity usage. Although these
agreements provide for certain penalties if the Company does not complete
construction of the defined routes within the time frame specified in the
agreements, management does not anticipate that the Company will incur any
substantial penalties under these provisions.
From time to time the Company is involved in various legal proceedings
arising in the ordinary course of business, some of which are covered by
insurance. In the opinion of the Company's management, none of the claims
relating to such proceedings will have a material effect on the financial
condition or results of operations of the Company.
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. LOSS PER SHARE
Loss per share data are as follows (in thousands, except per share data):
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- --------------------
1998 1997 1998 1997
-------- -------- --------- --------
INCOME (NUMERATOR)
Loss before extraordinary items......... $(15,464) $(31,172) $ (66,056) $(81,584)
Extraordinary item...................... 163 -- (69,647) --
-------- -------- --------- --------
Net loss................................ (15,301) (31,172) (135,703) (81,584)
Less: Dividends applicable to preferred
stock................................ (15,341) (6,727) (42,548) (9,485)
-------- -------- --------- --------
Net loss available to common
stockholders......................... $(30,642) $(37,899) $(178,251) $(91,069)
======== ======== ========= ========
SHARES (DENOMINATOR)
Weighted average common shares
outstanding.......................... 36,014 34,791 35,774 34,623
======== ======== ========= ========
BASIC AND DILUTED LOSS PER SHARE
Before extraordinary item............... $ (0.86) $ (1.09) $ (3.03) $ (2.63)
Extraordinary item...................... 0.01 -- (1.95) --
-------- -------- --------- --------
Net loss................................ $ (0.85) $ (1.09) $ (4.98) $ (2.63)
======== ======== ========= ========
The following table summarizes securities outstanding as of the end of each
period presented which could potentially dilute basic earnings per share in the
future. Such securities were excluded from the computation above since they
would have been anti-dilutive due to the Company's net loss. The figures
presented for the 6 3/4% Convertible Preferred Stock and the 7 1/4% Junior
Convertible Preferred Stock assume that each preferred share was converted into
13.748 common shares and 4.263 common shares, respectively.
SEPTEMBER 30,
----------------------
1998 1997
--------- ---------
7 1/4% Junior Convertible Preferred Stock................... 4,580,593 4,418,915
6 3/4% Convertible Preferred Stock.......................... 2,134,377 --
Stock options............................................... 3,773,041 3,059,090
Stock in escrow from acquisitions........................... 26,008 26,008
Other stock in escrow....................................... 93,941 93,941
11. STOCKHOLDER RIGHTS PLAN
In September 1998 the Company's Board of Directors declared a dividend of
one Preferred Share Purchase Right on each outstanding share of its Common
Stock. Each Right entitles the holder to buy one one-thousandth of a share of
new Series A Junior Participating Preferred Stock of the Company at an exercise
price of $210.00 per Right. The Rights will be exercisable if a person or group
acquires 20% or more of the Common Stock of the Company (or if a stockholder of
the Company currently holding more than 20% of the outstanding stock of the
Company acquires any additional shares of Common Stock) or announces a tender
offer for 20% or more of the Common Stock. The Company will be entitled to
redeem the Rights at one cent per Right at any time before any such person
acquires 20% or more of the outstanding Common Stock. Each Right will entitle
its holder to purchase, at the Right's exercise price, a number of shares of
Common Stock having a market value at that time of twice the Right's exercise
price. Rights held by the 20% or more holder will become void and will not be
exercisable to purchase shares at the bargain purchase price. If the Company is
acquired in a merger or other business combination transaction after a person
acquires 20% or more of the Company's Common Stock, each Right will entitle its
holder to purchase, at the Right's then-current exercise price, a number of the
acquiring company's common shares having a market value at that time of twice
the
9
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Right's exercise price. The dividend distribution was payable to stockholders of
record on September 20, 1998. The Rights will expire on September 20, 2008.
12. STOCKHOLDERS' EQUITY
On July 29, 1998, the Company's Board of Directors approved a two-for-one
split of the Company's common stock. The directors also approved an increase in
the authorized number of shares of common stock to 300 million shares and the
creation of a new class of Series B preferred stock for future use by the
Company. Authorized shares of the new Series B preferred stock will be 17
million. The effective date for the stock split and change in capital structure
was originally anticipated to occur in September 1998; however, in September
1998 these actions were postponed.
During the third quarter the Company's Board of Directors adopted and the
Company's stockholders approved the Company's 1998 Stock Plan and reserved
3,150,000 shares for issuance thereunder. The 1998 Stock Plan provides for the
grant of incentive stock options, non-qualified stock options, and restricted
stock to employees, directors, and others, with grants generally having exercise
prices equal to the fair market value of the Company's common stock at the date
of grant. Options and restricted stock granted under the plan vest in four equal
annual installments and expire after 10 years.
13. SUBSEQUENT EVENTS
On October 28, 1998, the Company entered into a $600 million senior secured
credit facility with a syndicate of commercial banks. The Company received
funding under the credit facility of $200 million, less $4.2 million of
transaction costs. The senior secured credit facility consists of a $150 million
revolving facility, a $200 million term loan facility, and an uncommitted
special purpose loan facility of $250 million. The Company must comply with
various financial and other covenants on an ongoing basis in addition to meeting
the covenants on a pro forma basis prior to drawing additional amounts under the
credit facility. Loans outstanding under the credit facility bear interest at
either LIBOR or the lead commercial bank's prime rate plus applicable margins.
14. NEW ACCOUNTING PRONOUNCEMENTS
In September 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"). SFAS No. 130 establishes standards for reporting and
display of comprehensive income and its components in a full set of
general-purpose financial statements. SFAS No. 130 is effective for fiscal years
beginning after December 15, 1997. Due to the Company having no items of other
comprehensive income in any of the periods presented, the adoption of SFAS No.
130 had no impact on the Company's reporting or display of financial information
at September 30, 1998.
Also in September 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS No. 131"). SFAS No.
131 establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports issued to stockholders. SFAS No. 131 is effective for
financial statements for fiscal years beginning after December 15, 1997. Interim
period reporting of segment information is not required in the first year of
adoption. The adoption of SFAS No. 131 will have no impact on the Company's
consolidated results of operations, financial position or cash flows but will
affect the disclosure of segment information.
In September 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. Special accounting for qualifying hedges allows a derivative's gains and
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
losses to offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting. Because the Company
has not entered into derivative financial instruments, the implementation of
SFAS No. 133 will not have a material impact on the Company's consolidated
results of operations, financial position or cash flows.
In April 1998, the Accounting Standards Executive Committee issued
Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up
Activities". The SOP requires costs of start-up activities and organization
costs to be expensed as incurred, and is effective for fiscal years beginning
after December 15, 1998. The effects of adoption must be reported as a
cumulative change in accounting principle. The Company expects that it will
record a cumulative effect of a change in accounting to write off all
unamortized start-up costs on its balance sheet at January 1, 1999 in its first
quarter ended March 31, 1999; however, the Company has not yet quantified the
amount of this write-off.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the historical information contained below, the matters
discussed in this item are forward-looking statements that involve a number of
risks and uncertainties. The Company's actual liquidity needs, capital resources
and results may differ materially from the discussion set forth in the
forward-looking statements. For a discussion of important factors that may cause
the actual results, performance or achievements of the Company to be materially
different from those expressed or implied by the forward-looking statements, see
"Business -- Risk Factors" in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997. In light of such risks and uncertainties,
there can be no assurance that the forward-looking information contained in this
item will in fact transpire.
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1997
On June 3, 1998, the Company completed a merger of a Company subsidiary
with Eclipse Telecommunications, Inc., formerly Network Long Distance, Inc.
("Eclipse"), by exchanging approximately 4.05 million shares of its common stock
for all of the outstanding common stock of Eclipse. Each share of Eclipse was
exchanged for .2998 shares of common stock of the Company. In addition,
outstanding Eclipse stock options were converted at the same exchange factor
into options to purchase shares of the Company's common stock. The merger
constituted a tax-free reorganization and has been accounted for as a pooling of
interests. Accordingly, all prior period consolidated financial statements have
been restated to include the combined results of operations, financial position,
and cash flows of Eclipse as though it had always been a part of the Company.
Net operating revenue for the third quarter of 1998 increased by 35.4% over
the third quarter of 1997 due in part to a $23.6 million increase in private
line revenue. The private line increase reflected the impact of the Company's
larger network and associated capacity available for lease in 1998. A
significant portion of this improvement was from a large capacity contract with
one Internet Service Provider ("ISP"). Net operating revenue in the third
quarter of 1998 was also affected by a $15.9 million increase in switched long
distance revenue due mainly to a 21.9% increase in wholesale billable minutes of
use ("MOU"). A major portion of this increase was due to services provided to a
debit card provider during the third quarter. The debit card provider has been a
customer for switched long distance services for several years and became a
significant customer in the third quarter due to the success of its sale of
debit cards. In November 1998, the Company resolved certain billing and payment
disputes with the customer and such resolution is expected to result in further
significant increases in this customer's MOUs. In light of the dramatic increase
in MOUs from this customer, the Company agreed (i) to credit certain of the
customer's third quarter billings (which amount was adequately reserved at
September 30, 1998) primarily to reflect reduced rates for increased volume;
(ii) to decrease its current billing rates to reflect the customer's continuing
increase in MOUs and (iii) to accept a secured note for approximately $16
million payable at the rate of $250,000 per week for prior services. Net
operating revenue in the third quarter of 1998 also included $9.0 million of
other revenue relating to cash received from the sale of an option in certain
rights in fibers jointly owned with another carrier. Operating revenue for the
first nine months of 1998 increased 39.5% over the first nine months of 1997.
That increase of $141.3 million was mainly due to an increase in switched long
distance revenue of $83.8 million. The improvement in switched long distance
revenue for the nine months came from a 33.9% increase in wholesale MOU as well
as the increase in the number of retail customers. The private line revenue
increase was due to increased demand for capacity, including the large capacity
agreement with the ISP, and the availability of additional capacity on the
Company's network in 1998.
Cost of services primarily reflects access charges paid to Local Exchange
Carriers ("LEC's") and transmission lease payments (monetary and nonmonetary) to
other carriers. These costs for the quarter and year to date increased 8.9% and
17.6% respectively over the comparable 1997 periods. Transmission lease expense
for the quarter increased 10.6% over the 1997 quarter related to additional
transmission lease expense paid to support the Company's private line and
switched long distance businesses in advance of expanding the network's
capacity. The increase in the transmission lease expense was mitigated by the
Company transferring off-net traffic to its expanding fiber network, and by a
greater proportion of new revenue being carried on the Company's network. The
increase in access costs was caused by additional wholesale MOU's overflowed to
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other carriers and access charges paid to LEC's associated with the additional
revenue. The increase in access costs was mitigated by FCC-mandated reductions
in unitary (per minute) access costs, net of increased costs related to new
tandem trunking charges which were implemented July 1, 1998 and by improved
management of costs related to traffic mix and overflow traffic.
The improved revenue and smaller increases in cost of services resulted in
gross margin in the third quarter of 1998 of 40.6% compared to 26.2% in the same
period in 1997. On a year-to-date basis, the gross margin increased to 34.7% in
1998 compared to 22.5% during the 1997 period.
Operating and administrative costs in the quarter increased $12.0 million
to $40.1 million, representing 21.6% of revenue versus 20.5% in the prior year's
third quarter. The increase was due primarily to additional headcount and other
operating costs related to the expanded fiber network and higher sales and
administration costs related to expanding the Company's retail sales force. The
Company intends to continue to expand the retail sales force and the network;
therefore, operating and administration expenses may continue to increase in
total and as a percentage of revenue.
Depreciation and amortization increased 52.2% from last year's third
quarter and 60.5% for the nine month period, due to an increase in depreciable
assets relating to completed segments of the Company's expanding network and
capacity available on the network. Depreciation and amortization are expected to
continue to rise because of increased spending on assets to add to the network's
capacity.
In connection with the Eclipse merger, the Company recorded merger-related
costs of $8.1 million during 1998 related to the execution of the transaction,
the write-off of duplicate assets, and the integration of the functions of the
two companies. These costs consist of (i) professional services including legal,
investment banking and accounting associated with the transaction of $3.5
million; (ii) severance costs of $0.6 million from the termination of
approximately 125 duplicate administrative and sales positions; (iii) costs of
$1.7 million to terminate leases for duplicate office space; (iv) the write off
of $1.8 million in duplicate equipment and software; and (v) costs of $0.5
million incurred during the second and third quarters to integrate the business
processes. The Company expects to incur $2.0 to $4.0 million in additional
integration costs during the remainder of 1998. Merger-related costs incurred
during 1997 relate to earlier acquisitions by Eclipse.
Interest income increased 50.7% for the first three quarters over the prior
year's period due to the additional funds available in 1998 from the issuance of
the 6 3/4% Convertible Preferred Stock ("6 3/4% Convertible Preferred Stock")
and the $450 million of 9% Senior Subordinated Notes Due 2008 (the "9% Senior
Subordinated Notes") in March and April 1998. Interest income in the third
quarter of 1998 was relatively unchanged from the third quarter of 1997 as a
result of the use of cash for capital expenditures in 1998.
Interest expense decreased by 5.6% from last year's third quarter to $7.6
million this quarter. For the first three quarters of 1998, interest expense
decreased 7.0% to $22.4 million from the comparable period in 1997. Interest
expense for both the quarter and nine months decreased due to additional
capitalized interest relating to increased capital expenditures in 1998.
Equity in net losses of unconsolidated subsidiaries for the third quarter
increased $1.0 million from 1997 to $8.3 million in 1998. For the nine-month
period, equity losses increased $16.7 million to $30.3 million in 1998. The
increased losses for the quarter relate to the Company's 20% interest in Unidial
Communications Services, LLC a retail long distance joint venture and the
Company's 40% interest in Storm, a European joint venture. Neither of these
investments were in place during the first nine months of 1997. Losses from the
Company's indirect interest in Marca-Tel S.A. de C. V. ("Marca-Tel"), a Mexican
joint venture which is constructing a fiber network in Mexico and has been
operating since the first quarter of 1997, declined year-over-year for the third
quarter due to the increased level of revenue generated by Marca-Tel. Beginning
in June 1998 the Company's investment in PSINet, Inc. ("PSINet"), an internet
service provider, was reported on a cost basis due to a reduced level of
ownership; therefore, no equity results were recorded during the quarter for
this investment. The year-over-year increase in equity losses is due to losses
from all four unconsolidated subsidiaries. Currently, the Company's investment
balance in Marca-Tel is negative and Marca-Tel required minimal funding by the
Company in the current quarter. At the present time, the Company does not
anticipate significant additional funding to Progress International LLC
("Progress
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International") for investment in Marca-Tel until the regulatory and market
conditions improve in Mexico. The Company is not obligated to continue to fund
Progress International. The Company and the other direct and indirect owners of
Marca-Tel are currently in discussions with investment bankers to obtain
additional financing for Marca-Tel; however, with the current depressed
financing market for companies in emerging markets, it is unlikely that public
financing will be available in the near term. Marca-Tel received a notice of
default from its major source of current financing in October 1998. Negotiations
are in process and the outcome of those discussions is unclear at this time. The
default could result in the foreclosure of a third party's security interest in
Progress International's interest in Marca-Tel. If that were to occur, the
Company's indirect interest in Marca-Tel could be diluted or lost entirely.
Income tax expense increased to $1.6 million in the current period from
$0.7 million in the prior year's third quarter. For the first nine months of
1998, income tax expense increased to $8.3 million from $.5 million in the first
nine months of 1997. These increases are primarily due to state income taxes
related to the sale of indefeasible rights to use capacity or fibers on the
Company's network and the other operating revenue of $9.0 million in the third
quarter 1998. The deferred tax assets relating to the Company's pretax operating
losses have been fully reserved due to the uncertainty of their realization.
In connection with the sale of $450 million of 9% Senior Subordinated
Notes, the Company completed a tender offer to purchase for cash its outstanding
12 1/2% Senior Notes Due 2005. The Company recorded an after-tax extraordinary
loss of $69.6 million relating to the redemption of $284.2 million of the
12 1/2% Senior Notes Due 2005.
LIQUIDITY AND CAPITAL RESOURCES
Historically, private line operations provided adequate cash flow to meet
the Company's operational needs. The Company is financing the expansion of its
network through the issuance of debt and equity securities.
Cash provided by operating activities was $127.9 million for the nine
months ended September 30, 1998 compared to $21.7 million in the comparable
period of 1997. This change occurred primarily because of payments received
relating to indefeasible right to use ("IRU") agreements, other operating
revenue, and improved operations in both the private line and switched long
distance businesses.
Cash used in investing activities for the nine months ended September 30,
1998 was $384.2 million compared to $171.7 million for the comparable period of
1997. The increase is primarily due to an increase in capital expenditures
compared to the 1997 period related to building the Company's network. Funding
from escrow accounts related to the 12 1/2% Senior Notes Due 2005 provided a net
of $51.4 million during the first nine months of 1997. There was no such
activity during 1998. The Company expects that its capital expenditures will
continue to require a significant amount of cash through the end of fiscal year
1999 and thereafter. The remaining increase in cash used for investing
activities was due to funding certain acquisitions and investments in
unconsolidated subsidiaries.
Cash provided by financing activities decreased $128.1 million as net
proceeds from debt and equity financing increased by $212.8 million but were
more than offset by an increase of $336.8 million in debt repayments principally
related to the Company's 12 1/2% Senior Notes Due 2005.
As of September 30, 1998, the Company had $141.7 million in cash. On
October 28, 1998, the Company entered into a $600 million senior secured credit
facility with a syndicate of commercial banks. The Company received funding of
$200 million, net of $4.2 million of transaction costs. The facility consists of
a $150 million revolving facility, a $200 million term loan facility, and an
uncommitted special purpose loan facility of $250 million. The Company must
comply with various financial and other covenants on an ongoing basis in
addition to meeting the covenants on a pro forma basis prior to drawing
additional amounts under the credit facility. Loans outstanding under the credit
facility bear interest at either LIBOR or the lead commercial bank's prime rate
plus applicable margins.
The Company expects that its primary sources for cash over the next twelve
months will be cash on hand, cash generated by operations, proceeds from the
credit facility discussed above, proceeds of fiber use sales and the proceeds
from any additional debt, vendor and working capital financing the Company may
seek. The
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Company is in discussions with various investment bankers, vendors and lending
institutions regarding substantial additional debt financing for the remainder
of 1998 and beyond. The Company seeks to obtain sufficient funding from these
sources plus cash receipts from fiber use sales for the following major uses of
cash: (i) the network expansion and other capital expenditures; (ii) debt
service; (iii) lease payments; (iv) increasing the retail and internet sales
forces; (v) funding joint ventures; (vi) working capital, and (vii) dividends on
preferred stock. Capital spending in 1998 is projected to be over $525.0
million, of which $362.7 million has been spent through September 30, 1998.
After 1998, capital expenditures are expected to continue to be substantial.
There can be no assurance that the Company will be successful in obtaining the
necessary financing to meet its needs. A failure to raise cash would delay or
prevent capital expenditures including the construction of the network
expansion. The foregoing capital expenditure and cash requirements for 1998 do
not take into account any acquisitions that may subsequently occur.
The Company is required to make semi-annual interest payments on its 9%
Senior Subordinated Notes and the remaining 12 1/2% Senior Notes. The Company is
also required to make principal payments of approximately $3.7 million on other
debt in 1998. The Company is required (except in certain circumstances when the
dividend payment can be a payment in kind) to pay quarterly cash dividends on
the 7 1/4% Convertible Preferred Stock at an annual rate of 7 1/4%, on the
6 3/4% Convertible Preferred Stock at an annual rate of 6 3/4% and on the Junior
Exchangeable Preferred Stock due 2009 (the "12 1/2% Exchangeable Preferred
Stock") at an annual rate of 12 1/2%. The Company anticipates that such debt and
equity service payments during 1998 will be made from cash on hand, except for
the dividends on the 12 1/2% Exchangeable Preferred Stock which are anticipated
to be paid in kind with stock dividends.
The Company is required to make minimum annual lease payments for
facilities, equipment and transmission capacity used in its operations. In the
remainder of 1998, 1999, and 2000, the Company is currently required to make
payments of approximately $1.8 million, $7.0 million and $5.9 million,
respectively, on capital leases and $12.7 million, $19.8 million and $8.8
million, respectively, on operating leases. The Company expects to incur
additional operating and capital lease costs in connection with the expansion of
its network and its retail and Internet operations. Additionally, in connection
with its network expansion, the Company from time to time enters into various
construction and installation agreements with contractors.
The forward-looking statements set forth above with respect to the
estimated cash requirements relating to capital expenditures, the Company's
ability to meet such cash requirements and the Company's ability to service its
debt are based on certain assumptions as to future events. Important
assumptions, which if not met, could adversely affect the Company's ability to
achieve satisfactory results include that: (i) there will be no significant
delays or cost overruns with respect to the network expansion; (ii) the
Company's contractors and partners in cost-saving arrangements will perform
their obligations; (iii) rights-of-way can be obtained in a timely,
cost-effective basis; (iv) the routes of the network expansion are substantially
completed on schedule; (v) the Company will continue to increase traffic on its
network; and (vi) the Company can obtain vendor or additional debt financing.
YEAR 2000 RISKS
The Year 2000 issue is the result of computer software programs being coded
to use two digits rather than four to define the year. It is possible that some
of the Company's existing computer programs that have date-sensitive coding may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in system failures or miscalculations causing disruption of
operations, which could have a material adverse effect on the Company's ability
to conduct business after January 1, 2000, including the inability of the
Company to provide telecommunications services to its customers or to accurately
invoice customers or collect payments.
Substantially all of the Company's network was built in the last three
years. As a result, the Company believes that it does not have a significant
investment in legacy systems having substantial Year 2000 exposure. However, the
Company has established a project team to identify, evaluate and address any
existing Year 2000 issues. This Year 2000 effort covers the Company's fiber
optic network and supporting infrastructure related to providing switched,
private line and data telecommunications services, and other operational and
financial information technology ("IT") systems and applications. Also included
in this effort are various
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other systems such as building operations and individual personal computers used
by Company personnel. The project team is reviewing the status of the Year 2000
compliance effort of key suppliers and other business partners, and is
developing business continuity plans related to Year 2000 issues. While the Year
2000 project team is evaluating all potentially non-compliant systems, the Year
2000 effort is structured to give priority to those systems identified as
"mission critical".
The project team has identified the following principal phases of the
project: a) assessment and planning, b) remediation, c) testing, and d)
contingency planning. The assessment phase is expected to be substantially
complete by December 31, 1998. The Company has established a target date of
March 31, 1999, for remediation of mission critical systems. Of the applications
identified as critical, many have already been remediated and are being tested.
Testing is expected to be completed by September 30, 1999 for all applications.
In addition, all new components being purchased as part of the Company's ongoing
network and IT infrastructure expansion are being evaluated to ensure
compliance.
There can be no assurances that third parties, including customers,
suppliers, and other business partners, will convert their critical systems and
processes in a timely manner. Such failure by any of these parties could disrupt
the Company's business. Therefore, in addition to evaluating its own internal
systems, the Company is in the process of evaluating and documenting the status
of Year 2000 compliance efforts by its key suppliers.
The Company currently projects that it will incur and expense approximately
$2 million through the end of 2000 in connection with the Year 2000 remediation
project, of which less than $0.5 million has been incurred and expensed as of
September 30, 1998. Such amounts are exclusive of amounts which were already
anticipated to be spent on new hardware and software purchases resulting from
the expansion of the Company's network and other business operations. The
Company believes that a significant portion of the Year 2000 expenses will not
be incremental costs, but rather will represent the redeployment of existing IT
resources. This redeployment may cause delays in making other IT or network
upgrades or enhancements; however, the delays are not expected to have a
material effect on the Company's operations.
As part of its Year 2000 initiative, the Company is evaluating scenarios
that may occur as a result of the century change and anticipates developing
contingency and business continuity plans tailored for Year 2000-related
problems by December 31, 1998. These plans are expected to provide for key
operational back-up, recovery and restoration alternatives.
The above information is based on estimates, which were derived using
numerous assumptions of future events, including the availability and future
costs of certain technological and other resources, third party modification
actions and other factors. Given the complexity of these issues and other
unidentified risks, actual results may vary materially from those anticipated
and discussed above. Specific factors that might cause such differences include,
among others, the availability and cost of personnel trained in this area, the
ability to locate and correct all affected computer code, the timing and success
of remedial efforts of our third party suppliers and similar uncertainties.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
In August 1998, the Corporation furnished an Information Statement to
stockholders of the Corporation pursuant to Rule 14c-2 under the Securities
Exchange Act of 1934 (the "Exchange Act"), in connection with an amendment (the
"Amendment") to the Restated Certificate of Incorporation, as amended (the
"Restated Certificate") of the Corporation to (i) provide for an increase in the
authorized number of shares of the Corporation's common stock (the "Common
Stock"); (ii) effect a two-for-one stock split of the Common Stock; (iii) create
a new class of preferred stock; and (iv) eliminate from the Restated Certificate
all matters therein with respect to the Corporation's 10% Senior Series 1
Cumulative Redeemable Preferred Stock and 10% Junior Series 3 Redeemable
Preferred Stock. The Amendment was approved by the Board and a majority of the
outstanding shares of Common Stock by written consent in lieu of a meeting
pursuant to Section 228(a) of the Delaware General Corporation Law (the "DGCL").
The Information Statement also served as notice to stockholders of an action
taken by less than unanimous written consent as required by Section 228(d) of
the DGCL. The Information Statement was mailed on or about August 14, 1998 to
persons who were stockholders of record on July 22, 1998.
On September 2, 1998, the Corporation announced that it was postponing the
filing of a Certificate of Amendment to the Restated Certificate which would
effectuate the Amendment. The Corporation's Board of Directors determined that
under current market conditions, it would not be in the best interests of the
stockholders of the Corporation to file the Certificate of Amendment to
effectuate the Amendment.
In September 1998, the Corporation also furnished an Information Statement
to stockholders of the Corporation pursuant to Rule 14c-2 of the Exchange Act in
connection with the Corporation's 1998 Stock Plan (the "1998 Plan"). The 1998
Plan was approved by the Board and by a majority of the outstanding shares of
Common Stock by written consent in lieu of a meeting pursuant to Section 228(a)
of the DGCL. The adoption and approval of the 1998 Plan became effective on
October 7, 1998 which, pursuant to Rule 14c-2 under the Exchange Act, was a date
at least 20 days following the date on which the Information Statement was
mailed to the stockholders of the Corporation. The Information Statement also
served as notice to stockholders of an action taken by less than unanimous
written consent as required by Section 228(d) of the DGCL. The Information
Statement was mailed on or about September 14, 1998 to persons who were
stockholders of record on August 5, 1998.
ITEM 5. OTHER INFORMATION
On September 2, 1998, the Corporation announced that it was postponing its
previously announced two-for-one stock split, the increase in its authorized
shares of common stock and the creation of a new class of preferred stock.
The two-for-one stock split and adjustments to the capital structure had a
record date of (and were to be effected by the filing of the Certificate of
Amendment as described above on) September 4, 1998. The Corporation's Board of
Directors has determined that under current market conditions, it would not be
in the best interests of stockholders to file the Certificate of Amendment which
would effectuate the two-for-one stock split previously approved by its
directors and its stockholders. As a result, the number of authorized, issued
and outstanding shares of the Corporation, and the holdings of each individual
stockholder, remain unchanged at the present time.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1+ Restated Certificate of Incorporation of IXC Communications,
Inc., as amended.
3.2 Bylaws of IXC Communications, Inc., as amended (incorporated
by reference to Exhibit 3.2 of the IXC Communications,
Inc.'s Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997 filed with the Commission on November 14,
1997).
4.1 Indenture dated as of October 5, 1995, by and among IXC
Communications, Inc., on its behalf and as
successor-in-interest to I-Link Holdings, Inc. and IXC
Carrier Group, Inc., each of IXC Carrier, Inc., on its
behalf and as successor-in-interest to I-Link, Inc., CTI
Investments, Inc., Texas Microwave Inc. and WTM Microwave
Inc., Atlantic States Microwave Transmission Company,
Central States Microwave Transmission Company, Telcom
Engineering, Inc., on its behalf and as
successor-in-interest to SWTT Company and Microwave Network,
Inc., Tower Communication Systems Corp., West Texas
Microwave Company, Western States Microwave Transmission
Company, Rio Grande Transmission, Inc., IXC Long Distance,
Inc., Link Net International, Inc. (collectively, the
"Guarantors"), and IBJ Schroder Bank & Trust Company, as
Trustee (the "Trustee"), with respect to the 12 1/2% Series
A and Series B Senior Notes due 2005 (incorporated by
reference to Exhibit 4.1 of IXC Communications, Inc.'s and
each of the Guarantor's Registration Statement on Form S-4
filed with the Commission on April 1, 1996 (File No.
333-2936) (the "S-4")).
4.2 Form of 12 1/2% Series A Senior Notes due 2005 (incorporated
by reference to Exhibit 4.6 of the S-4).
4.3 Form of 12 1/2% Series B Senior Notes due 2005 and
Subsidiary Guarantee (incorporated by reference to Exhibit
4.8 of IXC Communications, Inc.'s Amendment No. 1 to
Registration Statement on Form S-1 filed with the Commission
on June 13, 1996 (File No. 333-4061) (the "S-1 Amendment")).
4.4 Amendment No. 1 to Indenture and Subsidiary Guarantee dated
as of June 4, 1996, by and among IXC Communications, Inc.,
the Guarantors and the Trustee (incorporated by reference to
Exhibit 4.11 of the S-1 Amendment).
4.5 Purchase Agreement dated as of March 25, 1997, by and among
IXC Communications, Inc., Credit Suisse First Boston
Corporation ("CS First Boston") and Dillon Read & Co. Inc.
("Dillon Read") (incorporated by reference to Exhibit 4.12
of IXC Communications, Inc.'s Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997, filed with the
Commission on May 15, 1997 (the "March 31, 1997 10-Q")).
4.6 Registration Rights Agreement dated as of March 25, 1997, by
and among IXC Communications, Inc., CS First Boston and
Dillon Read (incorporated by reference to Exhibit 4.13 of
the March 31, 1997 10-Q).
4.7 Amendment to Registration Rights Agreement dated as of March
25, 1997, by and between IXC Communications, Inc. and
Trustees of General Electric Pension Trust (incorporated by
reference to Exhibit 4.14 of the March 31, 1997 10-Q).
4.8 Registration Rights Agreement dated as of July 8, 1997,
among IXC Communications, Inc. and each of William G. Rodi,
Gordon Hutchins, Jr. and William F. Linsmeier (incorporated
by reference to Exhibit 4.15 of IXC Communications, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, as filed with the Commission on August 6, 1997 (the
"June 30, 1997 10-Q")).
4.9 Registration Rights Agreement dated as of July 8, 1997,
among IXC Communications, Inc. and each of William G. Rodi,
Gordon Hutchins, Jr. and William F. Linsmeier (incorporated
by reference to Exhibit 4.16 of the June 30, 1997 10-Q).
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EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
4.10 Indenture dated as of August 15, 1997, between IXC
Communications, Inc. and The Bank of New York (incorporated
by reference to Exhibit 4.2 of IXC Communications, Inc.'s
Current Report on Form 8-K dated August 20, 1997, and filed
with the Commission on August 28, 1997 (the "8-K")).
4.11 First Supplemental Indenture dated as of October 23, 1997,
among IXC Communications, Inc., the Guarantors, IXC
International, Inc. and IBJ Schroder Bank & Trust Company
(incorporated by reference to Exhibit 4.13 of IXC
Communications, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1997, and filed with the Commission
on March 16, 1998 (the "1997 10-K")).
4.12 Second Supplemental Indenture dated as of December 22, 1997,
among IXC Communications, Inc., the Guarantors, IXC Internet
Services, Inc., IXC International, Inc. and IBJ Schroder
Bank & Trust Company (incorporated by reference to Exhibit
4.14 of the 1997 10-K).
4.13 Third Supplemental Indenture dated as of January 6, 1998,
among IXC Communications, Inc., the Guarantors, IXC Internet
Services, Inc., IXC International, Inc. and IBJ Schroder
Bank & Trust Company (incorporated by reference to Exhibit
4.15 of the 1997 10-K).
4.14 Fourth Supplemental Indenture dated as of April 3, 1998,
among IXC Communications, Inc., the Guarantors, IXC Internet
Services, Inc., IXC International, Inc., and IBJ Schroder
Bank & Trust Company (incorporated by reference to Exhibit
4.15 of IXC Communications, Inc.'s Registration Statement on
Form S-3 filed with the Commission on May 12, 1998 (File No.
333-52433)).
4.15 Purchase Agreement dated as of March 25, 1998, among IXC
Communications, Inc., Goldman Sachs & Co. ("Goldman"), CS
First Boston, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill") and Morgan Stanley & Co.
Incorporated ("Morgan Stanley") (incorporated by reference
to Exhibit 4.1 IXC Communications, Inc.'s Current Report on
Form 8-K dated March 30, 1998, and filed with the Commission
on April 7, 1998 (the "April 7, 1998 8-K")).
4.16 Registration Rights Agreement dated as of March 30, 1998,
among IXC Communications, Inc., Goldman, CS First Boston,
Merrill and Morgan Stanley (incorporated by reference to
Exhibit 4.2 of the April 7, 1998 8-K).
4.17 Deposit Agreement dated as of March 30, 1998, between IXC
Communications, Inc. and BankBoston N.A. (incorporated by
reference from Exhibit 4.3 of the April 7, 1998 8-K).
4.18 Purchase Agreement dated as of April 16, 1998, by and among
IXC Communications, Inc., CS First Boston, Merrill, Morgan
and Nationsbanc Montgomery Securities LLC (incorporated by
reference to Exhibit 4.1 of IXC Communications, Inc.'s
Current Report on Form 8-K dated April 21, 1998, and filed
with the Commission on April 22, 1998 (the "April 22, 1998
8-K").
4.19 Registration Rights Agreement dated as of April 16, 1998, by
and among IXC Communications, Inc., Credit Suisse First
Boston Corporation, Merrill, Morgan and Nationsbanc
Montgomery Securities LLC (incorporated by reference to
Exhibit 4.2 of the April 22, 1998 8-K).
4.20 Indenture dated as of April 21, 1998, between IXC
Communications, Inc. and IBJ Schroder Bank & Trust Company,
as Trustee (incorporated by reference to Exhibit 4.3 of the
April 22, 1998 8-K).
4.21 Rights Agreement dated as of September 9, 1998, between IXC
Communications, Inc. and U.S. Stock Transfer Corporation
(incorporated by reference to Exhibit 4.1 of IXC
Communications, Inc.'s Form 8-K dated September 8, 1998 and
filed with Commission on September 11, 1998).
10.1 Office Lease dated as of June 21, 1989 with USAA Real Estate
Company, as amended (incorporated by reference to Exhibit
10.1 of the S-4).
10.2 Equipment Lease dated as of December 1, 1994, by and between
DSC Finance Corporation and Switched Services
Communications, L.L.C.; Assignment Agreement dated as of
December 1, 1994, by and between Switched Services
Communications, L.L.C. and DSC Finance Corporation; and
Guaranty dated December 1, 1994, made in favor of DSC
Finance Corporation by IXC Communications, Inc.
(incorporated by reference to Exhibit 10.2 of the S-4).
10.3 Amended and Restated 1994 Stock Plan of IXC Communications,
Inc., as amended (incorporated by reference to Exhibit 10.3
of the June 30, 1997 10-Q).
19
20
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.4 Form of Non-Qualified Stock Option Agreement under the 1994
Stock Plan of IXC Communications, Inc. (incorporated by
reference to Exhibit 10.4 of the S-4).
10.5 Amended and Restated Development Agreement by and between
Intertech Management Group, Inc. and IXC Long Distance, Inc.
(incorporated by reference to Exhibit 10.7 of IXC Communica-
tions, Inc.'s and the Guarantors' Amendment No. 1 to
Registration Statement on Form S-4 filed with the Commission
on May 20, 1996 (File No. 333-2936) ("Amendment No. 1 to
S-4")).
10.6 Third Amended and Restated Service Agreement dated as of
April 16, 1998, among IXC Long Distance, Inc., IXC Carrier,
Inc., IXC Broadband, Inc. and Excel Telecommunications, Inc.
(incorporated by reference to Exhibit 10.6 of IXC
Communications, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998, filed with the Commission on
May 15, 1998 (the "March 31, 1998 10-Q")).
10.7 Equipment Purchase Agreement dated as of January 16, 1996,
by and between Siecor Corporation and IXC Carrier, Inc.
(incorporated by reference to Exhibit 10.9 of the S-4).
10.8 1996 Stock Plan of IXC Communications, Inc., as amended
(incorporated by reference to Exhibit 10.10 of the IXC
Communications, Inc. Annual Report on Form 10-K for the year
ended December 31, 1996 and filed with the Commission on
March 28, 1997 (the "1996 10-K")).
10.9 IRU Agreement dated as of November 1995 between WorldCom,
Inc. and IXC Carrier, Inc. (incorporated by reference to
Exhibit 10.11 of Amendment No. 1 to the S-4).
10.10+ IXC Communications, Inc. Outside Directors' Phantom Stock
Plan 1998 Restatement.
10.11 Business Consultant and Management Agreement dated as of
March 1, 1998, by and between IXC Communications, Inc. and
Culp Communications Associates (incorporated by reference to
Exhibit 10.11 of the March 31, 1998 10-Q).
10.12 Employment Agreement dated as of December 28, 1995, by and
between IXC Communications, Inc. and James F. Guthrie
(incorporated by reference to Exhibit 10.14 of the S-1
Amendment).
10.13 Special Stock Plan of IXC Communications, Inc. (incorporated
by reference to Exhibit 10.16 of the 1996 10-K).
10.14 Lease dated as of June 4, 1997, between IXC Communications,
Inc. and Carramerca Realty, L.P. (incorporated by reference
to Exhibit 10.17 of the June 30, 1997 10-Q).
10.15 Loan and Security Agreement dated as of July 18, 1997, among
IXC Communications, Inc., IXC Carrier, Inc. and NTFC Capital
Corporation ("NTFC") (incorporated by reference to Exhibit
10.18 of the June 30, 1997 10-Q).
10.16 IRU and Stock Purchase Agreement dated as of July 22, 1997,
between IXC Internet Services, Inc. and PSINet Inc.
(incorporated by reference to Exhibit 10.19 of IXC
Communications, Inc.'s Amendment No. 1 to Form 10-Q/A for
the quarter ended September 30, 1997 filed with the
Commission on December 12, 1997 (the "September 30, 1997
10-Q/A")).
10.17 Joint Marketing and Services Agreement dated as of July 22,
1997, between IXC Internet Services, Inc. and PSINet Inc.
(incorporated by reference to Exhibit 10.20 of the September
30, 1997 10-Q/A).
10.18 Employment Agreement dated as of September 9, 1997, between
Benjamin L. Scott and IXC Communications, Inc. (incorporated
by reference to Exhibit 10.21 of IXC Communication Inc.'s
Amendment No. 1 to Registration Statement on S-4 filed with
the Commission on December 15, 1997 (File No. 333-37157)
("Amendment No. 1 to the EPS S-4")).
10.19 IXC Communications, Inc. 1997 Special Executive Stock Plan
(incorporated by reference to Exhibit 10.22 of Amendment No.
1 to the EPS S-4).
10.20 First Amendment to Loan and Security Agreement dated as of
December 23, 1997, among IXC Communications, Inc., IXC
Carrier, Inc., NTFC and Export Development Corporation
("EDC") (incorporated by reference to Exhibit 10.21 of the
1997 10-K).
20
21
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
10.21 Second Amendment to Loan and Security Agreement dated as of
January 21, 1998, among IXC Communications, Inc., IXC
Carrier, Inc., NTFC and EDC (incorporated by reference to
Exhibit 10.22 of the 1997 10-K).
10.22+ IXC Communications, Inc. 1998 Stock Plan.
10.23 Credit Agreement, dated as of October 27, 1998 among the
Borrower, NationsBank, N.A., as a Lender and Administrative
Agent, NationsBanc Montgomery Securities, LLC, as Lead
Arranger, and Credit Suisse First Boston, Goldman Sachs
Credit Partners, L.P., EDC and TD Securities (USA), Inc.,
each as a Lender and Co-Syndication Agent (incorporated by
reference to Exhibit 10.1 of IXC Communications, Inc.
Current Report on Form 8-K dated October 27, 1998 and filed
with the Commission on November 4, 1998).
27.1+ Financial Data Schedule.
- ---------------
+ Filed herewith.
(b) Reports on Form 8-K.
(1) Form 8-K dated July 29, 1998, and filed with the Commission on July 30,
1998, with respect to two press releases reporting (a) approval of a two-for-one
stock split of the Common Stock, an increase in the authorized number of shares
of Common Stock and the creation of a new class of preferred stock, and (b)
results of operations for the second quarter of 1998.
(2) Form 8-K dated July 30, 1998, and filed with the Commission on July 31,
1998, with respect to a press release announcing the extension of IXC
Communications, Inc.'s offer to exchange its 9% Senior Subordinated Notes Due
2008 which have been registered under the Securities Act of 1933 for any and all
of its outstanding 9% Senior Subordinated Notes Due 2008 (the "Exchange Offer").
(3) Form 8-K dated July 31, 1998, and filed with the Commission on August
21, 1998, announcing the completion of the acquisition of Eclipse
Telecommunications, Inc. (formerly, Network Long Distance, Inc.) and reporting
on quarterly results of operations for 1997 and 1998 and certain results of
operations for July 1998.
(4) Form 8-K dated August 21, 1998, and filed with the Commission on August
21, 1998, with respect to a press release announcing completion of the Exchange
Offer.
(5) Form 8-K dated September 2, 1998, and filed with the Commission on
September 3, 1998, with respect to a press release announcing the postponement
of the two-for-one stock split of the Common Stock, the increase in the
authorized number of shares of Common Stock and the creation of a new class of
preferred stock.
(6) Form 8-K dated September 8, 1998, and filed with the Commission on
September 11, 1998, announcing the adoption of a stockholder rights plan.
21
22
SIGNATURE
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.
IXC COMMUNICATIONS, INC.
a Delaware corporation
November 9, 1998 By: /s/ JAMES F. GUTHRIE
------------------------------------
James F. Guthrie
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer
22
23
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1+ Restated Certificate of Incorporation of IXC Communications,
Inc., as amended.
3.2 Bylaws of IXC Communications, Inc., as amended (incorporated
by reference to Exhibit 3.2 of the IXC Communications,
Inc.'s Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997 filed with the Commission on November 14,
1997).
4.1 Indenture dated as of October 5, 1995, by and among IXC
Communications, Inc., on its behalf and as
successor-in-interest to I-Link Holdings, Inc. and IXC
Carrier Group, Inc., each of IXC Carrier, Inc., on its
behalf and as successor-in-interest to I-Link, Inc., CTI
Investments, Inc., Texas Microwave Inc. and WTM Microwave
Inc., Atlantic States Microwave Transmission Company,
Central States Microwave Transmission Company, Telcom
Engineering, Inc., on its behalf and as
successor-in-interest to SWTT Company and Microwave Network,
Inc., Tower Communication Systems Corp., West Texas
Microwave Company, Western States Microwave Transmission
Company, Rio Grande Transmission, Inc., IXC Long Distance,
Inc., Link Net International, Inc. (collectively, the
"Guarantors"), and IBJ Schroder Bank & Trust Company, as
Trustee (the "Trustee"), with respect to the 12 1/2% Series
A and Series B Senior Notes due 2005 (incorporated by
reference to Exhibit 4.1 of IXC Communications, Inc.'s and
each of the Guarantor's Registration Statement on Form S-4
filed with the Commission on April 1, 1996 (File No.
333-2936) (the "S-4")).
4.2 Form of 12 1/2% Series A Senior Notes due 2005 (incorporated
by reference to Exhibit 4.6 of the S-4).
4.3 Form of 12 1/2% Series B Senior Notes due 2005 and
Subsidiary Guarantee (incorporated by reference to Exhibit
4.8 of IXC Communications, Inc.'s Amendment No. 1 to
Registration Statement on Form S-1 filed with the Commission
on June 13, 1996 (File No. 333-4061) (the "S-1 Amendment")).
4.4 Amendment No. 1 to Indenture and Subsidiary Guarantee dated
as of June 4, 1996, by and among IXC Communications, Inc.,
the Guarantors and the Trustee (incorporated by reference to
Exhibit 4.11 of the S-1 Amendment).
4.5 Purchase Agreement dated as of March 25, 1997, by and among
IXC Communications, Inc., Credit Suisse First Boston
Corporation ("CS First Boston") and Dillon Read & Co. Inc.
("Dillon Read") (incorporated by reference to Exhibit 4.12
of IXC Communications, Inc.'s Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997, filed with the
Commission on May 15, 1997 (the "March 31, 1997 10-Q")).
4.6 Registration Rights Agreement dated as of March 25, 1997, by
and among IXC Communications, Inc., CS First Boston and
Dillon Read (incorporated by reference to Exhibit 4.13 of
the March 31, 1997 10-Q).
4.7 Amendment to Registration Rights Agreement dated as of March
25, 1997, by and between IXC Communications, Inc. and
Trustees of General Electric Pension Trust (incorporated by
reference to Exhibit 4.14 of the March 31, 1997 10-Q).
4.8 Registration Rights Agreement dated as of July 8, 1997,
among IXC Communications, Inc. and each of William G. Rodi,
Gordon Hutchins, Jr. and William F. Linsmeier (incorporated
by reference to Exhibit 4.15 of IXC Communications, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, as filed with the Commission on August 6, 1997 (the
"June 30, 1997 10-Q")).
4.9 Registration Rights Agreement dated as of July 8, 1997,
among IXC Communications, Inc. and each of William G. Rodi,
Gordon Hutchins, Jr. and William F. Linsmeier (incorporated
by reference to Exhibit 4.16 of the June 30, 1997 10-Q).
24
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.10 Indenture dated as of August 15, 1997, between IXC
Communications, Inc. and The Bank of New York (incorporated
by reference to Exhibit 4.2 of IXC Communications, Inc.'s
Current Report on Form 8-K dated August 20, 1997, and filed
with the Commission on August 28, 1997 (the "8-K")).
4.11 First Supplemental Indenture dated as of October 23, 1997,
among IXC Communications, Inc., the Guarantors, IXC
International, Inc. and IBJ Schroder Bank & Trust Company
(incorporated by reference to Exhibit 4.13 of IXC
Communications, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1997, and filed with the Commission
on March 16, 1998 (the "1997 10-K")).
4.12 Second Supplemental Indenture dated as of December 22, 1997,
among IXC Communications, Inc., the Guarantors, IXC Internet
Services, Inc., IXC International, Inc. and IBJ Schroder
Bank & Trust Company (incorporated by reference to Exhibit
4.14 of the 1997 10-K).
4.13 Third Supplemental Indenture dated as of January 6, 1998,
among IXC Communications, Inc., the Guarantors, IXC Internet
Services, Inc., IXC International, Inc. and IBJ Schroder
Bank & Trust Company (incorporated by reference to Exhibit
4.15 of the 1997 10-K).
4.14 Fourth Supplemental Indenture dated as of April 3, 1998,
among IXC Communications, Inc., the Guarantors, IXC Internet
Services, Inc., IXC International, Inc., and IBJ Schroder
Bank & Trust Company (incorporated by reference to Exhibit
4.15 of IXC Communications, Inc.'s Registration Statement on
Form S-3 filed with the Commission on May 12, 1998 (File No.
333-52433)).
4.15 Purchase Agreement dated as of March 25, 1998, among IXC
Communications, Inc., Goldman Sachs & Co. ("Goldman"), CS
First Boston, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill") and Morgan Stanley & Co.
Incorporated ("Morgan Stanley") (incorporated by reference
to Exhibit 4.1 IXC Communications, Inc.'s Current Report on
Form 8-K dated March 30, 1998, and filed with the Commission
on April 7, 1998 (the "April 7, 1998 8-K")).
4.16 Registration Rights Agreement dated as of March 30, 1998,
among IXC Communications, Inc., Goldman, CS First Boston,
Merrill and Morgan Stanley (incorporated by reference to
Exhibit 4.2 of the April 7, 1998 8-K).
4.17 Deposit Agreement dated as of March 30, 1998, between IXC
Communications, Inc. and BankBoston N.A. (incorporated by
reference from Exhibit 4.3 of the April 7, 1998 8-K).
4.18 Purchase Agreement dated as of April 16, 1998, by and among
IXC Communications, Inc., CS First Boston, Merrill, Morgan
and Nationsbanc Montgomery Securities LLC (incorporated by
reference to Exhibit 4.1 of IXC Communications, Inc.'s
Current Report on Form 8-K dated April 21, 1998, and filed
with the Commission on April 22, 1998 (the "April 22, 1998
8-K").
4.19 Registration Rights Agreement dated as of April 16, 1998, by
and among IXC Communications, Inc., Credit Suisse First
Boston Corporation, Merrill, Morgan and Nationsbanc Mont-
gomery Securities LLC (incorporated by reference to Exhibit
4.2 of the April 22, 1998 8-K).
4.20 Indenture dated as of April 21, 1998, between IXC
Communications, Inc. and IBJ Schroder Bank & Trust Company,
as Trustee (incorporated by reference to Exhibit 4.3 of the
April 22, 1998 8-K).
4.21 Rights Agreement dated as of September 9, 1998, between IXC
Communications, Inc. and U.S. Stock Transfer Corporation
(incorporated by reference to Exhibit 4.1 of IXC Communi-
cations, Inc.'s Form 8-K dated September 8, 1998 and filed
with Commission on September 11, 1998).
10.1 Office Lease dated as of June 21, 1989 with USAA Real Estate
Company, as amended (incorporated by reference to Exhibit
10.1 of the S-4).
25
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.2 Equipment Lease dated as of December 1, 1994, by and between
DSC Finance Corporation and Switched Services
Communications, L.L.C.; Assignment Agreement dated as of
December 1, 1994, by and between Switched Services
Communications, L.L.C. and DSC Finance Corporation; and
Guaranty dated December 1, 1994, made in favor of DSC
Finance Corporation by IXC Communications, Inc.
(incorporated by reference to Exhibit 10.2 of the S-4).
10.3 Amended and Restated 1994 Stock Plan of IXC Communications,
Inc., as amended (incorporated by reference to Exhibit 10.3
of the June 30, 1997 10-Q).
10.4 Form of Non-Qualified Stock Option Agreement under the 1994
Stock Plan of IXC Communications, Inc. (incorporated by
reference to Exhibit 10.4 of the S-4).
10.5 Amended and Restated Development Agreement by and between
Intertech Management Group, Inc. and IXC Long Distance, Inc.
(incorporated by reference to Exhibit 10.7 of IXC
Communications, Inc.'s and the Guarantors' Amendment No. 1
to Registration Statement on Form S-4 filed with the
Commission on May 20, 1996 (File No. 333-2936) ("Amendment
No. 1 to S-4")).
10.6 Third Amended and Restated Service Agreement dated as of
April 16, 1998, among IXC Long Distance, Inc., IXC Carrier,
Inc., IXC Broadband, Inc. and Excel Telecommunications, Inc.
(incorporated by reference to Exhibit 10.6 of IXC
Communications, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998, filed with the Commission on
May 15, 1998 (the "March 31, 1998 10-Q")).
10.7 Equipment Purchase Agreement dated as of January 16, 1996,
by and between Siecor Corporation and IXC Carrier, Inc.
(incorporated by reference to Exhibit 10.9 of the S-4).
10.8 1996 Stock Plan of IXC Communications, Inc., as amended
(incorporated by reference to Exhibit 10.10 of the IXC
Communications, Inc. Annual Report on Form 10-K for the year
ended December 31, 1996 and filed with the Commission on
March 28, 1997 (the "1996 10-K")).
10.9 IRU Agreement dated as of November 1995 between WorldCom,
Inc. and IXC Carrier, Inc. (incorporated by reference to
Exhibit 10.11 of Amendment No. 1 to the S-4).
10.10+ IXC Communications, Inc. Outside Directors' Phantom Stock
Plan 1998 Restatement.
10.11 Business Consultant and Management Agreement dated as of
March 1, 1998, by and between IXC Communications, Inc. and
Culp Communications Associates (incorporated by reference to
Exhibit 10.11 of the March 31, 1998 10-Q).
10.12 Employment Agreement dated as of December 28, 1995, by and
between IXC Communications, Inc. and James F. Guthrie
(incorporated by reference to Exhibit 10.14 of the S-1
Amendment).
10.13 Special Stock Plan of IXC Communications, Inc. (incorporated
by reference to Exhibit 10.16 of the 1996 10-K).
10.14 Lease dated as of June 4, 1997, between IXC Communications,
Inc. and Carramerca Realty, L.P. (incorporated by reference
to Exhibit 10.17 of the June 30, 1997 10-Q).
10.15 Loan and Security Agreement dated as of July 18, 1997, among
IXC Communications, Inc., IXC Carrier, Inc. and NTFC Capital
Corporation ("NTFC") (incorporated by reference to Exhibit
10.18 of the June 30, 1997 10-Q).
10.16 IRU and Stock Purchase Agreement dated as of July 22, 1997,
between IXC Internet Services, Inc. and PSINet Inc.
(incorporated by reference to Exhibit 10.19 of IXC Communi-
cations, Inc.'s Amendment No. 1 to Form 10-Q/A for the
quarter ended September 30, 1997 filed with the Commission
on December 12, 1997 (the "September 30, 1997 10-Q/A")).
26
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.17 Joint Marketing and Services Agreement dated as of July 22,
1997, between IXC Internet Services, Inc. and PSINet Inc.
(incorporated by reference to Exhibit 10.20 of the Septem-
ber 30, 1997 10-Q/A).
10.18 Employment Agreement dated as of September 9, 1997, between
Benjamin L. Scott and IXC Communications, Inc. (incorporated
by reference to Exhibit 10.21 of IXC Communication Inc.'s
Amendment No. 1 to Registration Statement on S-4 filed with
the Commission on December 15, 1997 (File No. 333-37157)
("Amendment No. 1 to the EPS S-4")).
10.19 IXC Communications, Inc. 1997 Special Executive Stock Plan
(incorporated by reference to Exhibit 10.22 of Amendment No.
1 to the EPS S-4).
10.20 First Amendment to Loan and Security Agreement dated as of
December 23, 1997, among IXC Communications, Inc., IXC
Carrier, Inc., NTFC and Export Development Corporation
("EDC") (incorporated by reference to Exhibit 10.21 of the
1997 10-K).
10.21 Second Amendment to Loan and Security Agreement dated as of
January 21, 1998, among IXC Communications, Inc., IXC
Carrier, Inc., NTFC and EDC (incorporated by reference to
Exhibit 10.22 of the 1997 10-K).
10.22+ IXC Communications, Inc. 1998 Stock Plan.
10.23 Credit Agreement, dated as of October 27, 1998 among the
Borrower, NationsBank, N.A., as a Lender and Administrative
Agent, NationsBanc Montgomery Securities, LLC, as Lead
Arranger, and Credit Suisse First Boston, Goldman Sachs
Credit Partners, L.P., EDC and TD Securities (USA), Inc.,
each as a Lender and Co-Syndication Agent (incorporated by
reference to Exhibit 10.1 of IXC Communications, Inc.
Current Report on Form 8-K dated October 27, 1998 and filed
with the Commission on November 4, 1998).
27.1+ Financial Data Schedule.
- ---------------
+ Filed herewith.