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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 JUNE 30, 1999
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
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 37,399,773 on August 1,
1999.
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
TABLE OF CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets June 30, 1999 and
December 31, 1998......................................... 3
Condensed Consolidated Statements of Operations Three and
Six Months Ended
June 30, 1999 and 1998.................................... 4
Condensed Consolidated Statements of Cash Flows Six Months
Ended June 30, 1999
and 1998.................................................. 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 and Use of Proceeds................... 17
Item 3. Defaults Upon Senior Securities............................. 17
Item 4. Submission of Matters to a Vote of Security Holders......... 17
Item 5. Other Information........................................... 18
Item 6. Exhibits and Reports on Form 8-K............................ 18
SIGNATURES........................................................... 24
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IXC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
JUNE 30, DECEMBER 31,
1999 1998
----------- ------------
(UNAUDITED)
Cash and cash equivalents................................... $ 98,562 $ 264,826
Accounts and other receivables, net of allowance for
doubtful accounts of $31,047 at June 30, 1999 and $16,664
at December 31, 1998...................................... 95,662 107,558
Current portion of notes receivable......................... -- 63,748
Note receivable from Westel................................. -- 9,421
Other current assets........................................ 22,752 10,965
---------- ----------
Total current assets.............................. 216,976 456,518
Property and equipment...................................... 1,523,344 1,193,655
Less: accumulated depreciation.............................. (272,054) (209,979)
---------- ----------
Property and equipment, net....................... 1,251,290 983,676
Non-current marketable securities........................... 452,553 219,880
Investments in unconsolidated subsidiaries.................. 8,414 9,505
Deferred charges and other non-current assets, net.......... 172,260 78,658
---------- ----------
Total assets...................................... $2,101,493 $1,748,237
========== ==========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Current portion of long-term debt and capital lease
obligations............................................... $ 12,804 $ 13,984
Accounts payable trade...................................... 97,755 33,558
Accrued service cost........................................ 59,667 43,177
Accrued liabilities......................................... 116,038 72,307
Current portion of unearned revenue......................... 53,453 33,640
---------- ----------
Total current liabilities......................... 339,717 196,666
Long-term debt and capital lease obligations, less current
portion................................................... 760,239 679,016
Unearned revenue -- noncurrent.............................. 532,965 488,395
Other noncurrent liabilities................................ 85,329 8,848
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 at
June 30, 1999 and December 31, 1998 (aggregate liquidation
preference of $107,450 at June 30, 1999).................. 103,849 103,623
12 1/2% Junior Exchangeable Preferred Stock; $.01 par value;
3,000,000 shares of all classes of Preferred Stock
authorized; 371,618 and 349,434 shares issued and
outstanding at June 30, 1999 and December 31, 1998
(aggregate liquidation preference of $377,413 at June 30,
1999 including accrued dividends of $5,806)............... 367,263 344,235
Stockholders' deficit:
6 3/4% Cumulative Convertible Preferred Stock, $.01 par
value; 3,000,000 shares of all classes of Preferred
Stock authorized; $155,250 shares issued and
outstanding at June 30, 1999 and December 31, 1998
(aggregate liquidation preference of $155,250 at June
30, 1999).............................................. 2 2
Common Stock, $.01 par value; 100,000,000 shares
authorized; 37,390,765 shares issued and outstanding at
June 30, 1999 and 36,409,709 shares issued and
outstanding at December 31, 1998....................... 374 364
Additional paid-in capital................................ 253,392 253,429
Unrealized gain on marketable securities.................. 141,091 --
Accumulated deficit....................................... (482,728) (326,341)
---------- ----------
Total stockholders' deficit............................... (87,869) (72,546)
---------- ----------
Total liabilities, redeemable preferred stock and
stockholders' deficit.................................. $2,101,493 $1,748,237
========== ==========
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 SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
---------------------- ----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
Net operating revenue:
Private line service...................... $ 73,569 $ 49,232 $ 144,433 $ 92,572
Long distance switched services........... 74,898 105,502 152,645 219,269
Data and Internet services................ 5,353 1,201 10,528 1,677
Other..................................... 4,072 -- 11,644 --
--------- --------- --------- ---------
157,892 155,935 319,250 313,518
Operating expenses:
Cost of services.......................... 108,289 107,593 213,093 215,542
Operations and administration............. 60,948 29,992 112,757 59,328
Restructuring charges..................... 25,826 -- 25,826 --
Depreciation and amortization............. 39,565 22,636 75,843 42,788
Merger and other infrequent costs......... 90 7,681 145 7,645
--------- --------- --------- ---------
Operating loss.................... (76,826) (11,967) (108,414) (11,785)
Interest income............................. 1,839 3,324 7,663 4,921
Interest expense............................ (9,092) (8,530) (20,109) (14,841)
Equity (loss) from unconsolidated
subsidiaries.............................. (13,111) (10,754) (15,982) (22,019)
Other, net.................................. (12,760) 33 (12,725) 176
--------- --------- --------- ---------
Loss before provision for income taxes and
minority interest......................... (109,950) (27,894) (149,567) (43,548)
Provision for income taxes.................. (3,900) (4,551) (6,311) (6,619)
Minority interest........................... (301) (252) (509) (425)
--------- --------- --------- ---------
Loss before extraordinary loss.............. (114,151) (32,697) (156,387) (50,592)
--------- --------- --------- ---------
Extraordinary loss, net..................... -- (69,810) -- (69,810)
--------- --------- --------- ---------
Net loss.................................... (114,151) (102,507) (156,387) (120,402)
--------- --------- --------- ---------
Dividends applicable to preferred stock..... (16,372) (15,471) (32,390) (27,207)
--------- --------- --------- ---------
Net loss applicable to common
stockholders.............................. (130,523) (117,978) (188,777) (147,609)
--------- --------- --------- ---------
Other comprehensive income, net of tax of
$4,252 and $75,972:
Change in unrealized gain on marketable
securities................................ 7,896 -- 141,091 --
--------- --------- --------- ---------
Comprehensive income (loss)................. $(122,627) $(117,978) $ (47,686) $(147,609)
========= ========= ========= =========
Basic and diluted loss per share:
Before extraordinary loss................. $ (3.53) $ (1.35) $ (5.14) $ (2.18)
Extraordinary loss........................ -- (1.95) -- (1.96)
--------- --------- --------- ---------
Net loss.................................. $ (3.53) $ (3.30) $ (5.14) $ (4.14)
========= ========= ========= =========
Weighted average shares outstanding......... 36,946 35,785 36,714 35,653
========= ========= ========= =========
See accompanying notes.
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IXC COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
FOR THE SIX MONTHS
ENDED JUNE 30,
----------------------
1999 1998
--------- ---------
Net cash provided by operating activities................... $ 105,451 $ 41,311
--------- ---------
Investing activities:
Purchase of property and equipment........................ (261,642) (239,627)
Proceeds from collection of notes receivable.............. 750 --
Acquisitions, net of cash acquired........................ (73,247) (22,699)
Investments in unconsolidated subsidiaries................ (6,220) (12,431)
--------- ---------
Net cash used in investing activities....................... (340,359) (274,757)
--------- ---------
Financing activities:
Proceeds from sale of 9% Senior Notes..................... -- 450,000
Proceeds from sale of 6 3/4% Cumulative Convertible
Preferred Stock........................................ -- 147,213
Net proceeds from issuance of debt........................ 79,156 --
Proceeds from debt and capital lease obligations.......... -- 12,704
Principal payments on debt and capital lease
obligations............................................ (9,112) (353,094)
Redemption of 10% Junior Series 3 Cumulative Preferred
Stock.................................................. -- (708)
Stock option exercises.................................... 5,116 2,842
Payment of dividends on preferred stock................... (6,516) (1,948)
Other financing activities................................ -- (3,186)
--------- ---------
Net cash provided by financing activities................... 68,644 253,823
--------- ---------
Effect of differing year-ends from merged entities.......... -- (1,502)
--------- ---------
Net increase (decrease) in cash and cash equivalents........ (166,264) 18,875
Cash and cash equivalents at beginning of period............ 264,826 155,855
--------- ---------
Cash and cash equivalents at end of period.................. $ 98,562 $ 174,730
========= =========
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
six month periods ended June 30, 1999 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1999. The
accompanying unaudited Condensed Consolidated Financial Statements have been
restated for 1998 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. The Condensed
Consolidated Balance Sheet at December 31, 1998 has been derived from our
audited financial statements 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 our audited consolidated financial statements and notes thereto
for the year ended December 31, 1998. Certain amounts shown in our 1998
financial statements have been reclassified to conform to the 1999 presentation.
2. MARKETABLE SECURITIES
PSINET INVESTMENT
We own approximately 10.2 million shares of common stock of PSINet, Inc.
This investment had a fair market value of approximately $447.6 million as of
June 30, 1999. Of the total fair value, $240.0 million was recorded as unearned
revenue because it represented the sale to PSINet of an agreement for an
indefeasible right to use ("IRU") capacity on our network. We accounted for the
remaining fair value, net of tax, as Unrealized Gain on Marketable Securities
because the PSINet investment is "available-for-sale" as defined in Statement of
Financial Accounting Standards ("SFAS") No. 115. The change in the unrealized
gain amount is included in Other Comprehensive Income on the accompanying
condensed consolidated statement of operations.
The accompanying balance sheet includes approximately $52.0 million
representing amounts received from a financial institution in June 1999 in
connection with a prepaid, forward-sale contract of 1.5 million shares of PSINet
common stock. This amount is accounted for as a note payable and is secured by
the 1.5 million shares of stock. The forward-sale obligation may be settled at a
specified date in the second quarter of 2002 for a maximum amount of 1.5 million
shares of PSINet stock, or, at our option, the equivalent value of PSINet stock
in cash. We are accruing interest expense on this liability at an effective
interest rate of 6.8%.
DCI TELECOMMUNICATIONS
In November 1998 we entered into an agreement to acquire common stock of
DCI Telecommunications, Inc. ("DCI"), as consideration for payment of amounts
due from one of our customers that was also a vendor of DCI. The agreement
provided that DCI was to issue us additional common stock if the market value of
the shares we owned did not reach $17.7 million by June 1, 1999. As of June 1,
1999, and subsequent thereto, the market value of the shares we owned was less
than the $17.7 million guaranteed in the November 1998 agreement. DCI has
publicly disclosed that it does not intend to issue additional shares to us. We
intend to vigorously pursue the remedies to which we are entitled under the
November 1998 agreement. As of June 30, 1999, we have reduced our investment in
DCI as a result of these uncertainties. This writedown is included in "other,
net" in the accompanying statement of operations. The investment in DCI is
included in non-current marketable securities in the accompanying consolidated
balance sheet.
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. INCOME TAXES
The provision for income taxes recorded during interim periods is
calculated based on an estimated annual effective tax rate. For 1999, the
effective tax rate includes the impact of IRU transactions anticipated to occur
during the year. We have applied a valuation allowance against the deferred tax
assets arising during 1999 due to uncertainty regarding their realizability.
4. COMMITMENTS AND CONTINGENCIES
From time to time we are involved in legal proceedings arising in the
ordinary course of business, some of which are covered by insurance. In the
opinion of management, none of the claims relating to such proceedings will have
a material adverse effect on our financial condition or results of operations.
5. SEGMENT REPORTING
Our financial reporting segments are based on the way management organizes
the company for making operating decisions and assessing performance. These
segments are based on the different types of products we offer. The segments
consist of the private line segment, the switched long distance segment, and the
data/ Internet segment. The segments are separately evaluated because the
products or services sold are subject to different market forces and sales
strategies. Management reviews the gross profits of each reporting segment, but
views the costs of the network and administrative functions as supporting all
business segments. Therefore, assets (other than accounts receivable),
liabilities, general and administrative expenses, interest expense and income,
and other expenses are not charged to any one segment. Losses from equity method
subsidiaries are not charged to any one segment because those subsidiaries may
have operations in multiple segments. All operating revenue shown is derived
from sales to external customers. Revenue related to the sale of options in
fibers that are jointly owned with other carriers are not reported in any
segment. The summarized segment data are as follows (in thousands):
PRIVATE SWITCHED DATA &
LINE LONG DISTANCE INTERNET UNALLOCATED TOTAL
------------ ------------- -------- ----------- ---------
THREE MONTHS ENDED JUNE 30, 1999
Net operating revenue................... $ 73,569 $ 74,898 $ 5,353 $4,072 $ 157,892
Cost of service......................... 26,130 77,310 4,849 -- 108,289
-------- -------- ------- ------ ---------
Gross profit............................ 47,439 (2,412) 504 4,072 49,603
Operations and administration........... 60,948
Restructuring charges................... 25,826
Depreciation and amortization........... 39,565
Merger and other infrequent costs....... 90
---------
Operating loss.......................... (76,826)
Interest income......................... 1,839
Interest expense........................ (9,092)
Equity (loss) from unconsolidated
subsidiaries.......................... (13,111)
Other, net.............................. (12,760)
---------
Loss before provision for income taxes,
minority interest, and extraordinary
loss.................................. $(109,950)
=========
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
PRIVATE SWITCHED DATA &
LINE LONG DISTANCE INTERNET UNALLOCATED TOTAL
------------ ------------- -------- ----------- ---------
THREE MONTHS ENDED JUNE 30, 1998
Net operating revenue................... $ 49,232 $105,502 $ 1,201 $ -- $ 155,935
Cost of service......................... 22,448 82,342 2,803 -- 107,593
-------- -------- ------- ------- ---------
Gross profit............................ 26,784 23,160 (1,602) -- 48,342
Operations and administration........... 29,992
Depreciation and amortization........... 22,636
Merger and other infrequent costs....... 7,681
---------
Operating loss.......................... (11,967)
Interest income......................... 3,324
Interest expense........................ (8,530)
Equity (loss) from unconsolidated
subsidiaries.......................... (10,754)
Other, net.............................. 33
---------
Loss before provision for income taxes,
minority interest, and extraordinary
loss.................................. $ (27,894)
=========
PRIVATE SWITCHED DATA &
LINE LONG DISTANCE INTERNET UNALLOCATED TOTAL
------------ ------------- -------- ----------- ---------
SIX MONTHS ENDED JUNE 30, 1999
Net operating revenue................... $144,433 $152,645 $10,528 $11,644 $ 319,250
Cost of service......................... 52,233 151,639 9,221 -- 213,093
-------- -------- ------- ------- ---------
Gross profit............................ 92,200 1,006 1,307 11,644 106,157
Operations and administration........... 112,757
Restructuring charges................... 25,826
Depreciation and amortization........... 75,843
Merger and other infrequent costs....... 145
---------
Operating loss.......................... (108,414)
Interest income......................... 7,663
Interest expense........................ (20,109)
Equity (loss) from unconsolidated
subsidiaries.......................... (15,982)
Other, net.............................. (12,725)
---------
Loss before provision for income taxes,
minority interest, and extraordinary
loss.................................. $(149,567)
=========
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
PRIVATE SWITCHED DATA &
LINE LONG DISTANCE INTERNET UNALLOCATED TOTAL
------------ ------------- -------- ----------- ---------
SIX MONTHS ENDED JUNE 30, 1998
Net operating revenue................... $ 92,572 $219,269 $ 1,677 $ -- $ 313,518
Cost of service......................... 41,637 169,261 4,644 -- 215,542
-------- -------- ------- ------- ---------
Gross profit............................ 50,935 50,008 (2,967) -- 97,976
Operations and administration........... 59,328
Depreciation and amortization........... 42,788
Merger and other infrequent costs....... 7,645
---------
Operating loss.......................... (11,785)
Interest income......................... 4,921
Interest expense........................ (14,841)
Equity (loss) from unconsolidated
subsidiaries.......................... (22,019)
Other, net.............................. 176
---------
Loss before provision for income taxes,
minority interest, and extraordinary
loss.................................. $ (43,548)
=========
6. ACQUISITION OF COASTAL TELECOM LIMITED COMPANY
On May 10, 1999, we acquired Coastal Telecom Limited Company, and other
related companies under common control ("Coastal"). Coastal is a retail long
distance reseller. The purchase price amounted to approximately $110 million and
was paid with a combination of $73.2 million of cash (including approximately
$10 million paid for working capital items), $10 million of notes payable, $25.0
million of our common stock, and warrants to purchase 75,000 shares of our
common stock. Assets acquired included approximately $103 million of goodwill
and approximately $7 million of property and equipment. In connection with the
acquisition we completed a credit agreement with a commercial bank pursuant to
which Eclipse, our wholly owned subsidiary, borrowed $27 million and used the
proceeds to fund a portion of the Coastal purchase price. The credit agreement
has a three-year term beginning in May 1999, may be extended for successive
one-year terms, and is subject to a borrowing base calculation based on eligible
accounts receivable. Amounts outstanding thereunder bear interest at either the
bank's prime rate or LIBOR plus a 2.25% margin. The credit agreement is secured
by the assets of Eclipse, including the assets acquired in the Coastal
transaction. We must comply with various financial covenants under the credit
agreement, including maintaining certain minimum cash flow ratios.
7. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
At December 31, 1998, we were owed $9.4 million by Westel, our partner in
Progress International LLC ("Progress"). The note was secured by Westel's
ownership in Progress, and repayment was due on May 31, 1999. Westel failed to
make scheduled payments on the note and thereby transferred their share rights
to us. As a result of that forfeiture, we now own 65.4% of Progress.
In February 1999 Marca-Tel S.A. de C.V. and its primary creditor agreed to
allow MarcaTel to defer certain payments to the creditor until June 1999. The
creditor was given the right to acquire up to 10% of MarcaTel and the creditor
acquired additional shares which diluted our indirect interest from 32.1% (after
taking into consideration the additional share rights forfeited by Westel) to
30.5%. In June 1999 MarcaTel did not pay the creditor, and a default was
declared on the loan. Management of MarcaTel, IXC and the creditor are
anticipated to meet during the third quarter to attempt to work out the default
provisions. However, there is no assurance that the default provisions will be
waived.
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
8. RESTRUCTURING CHARGE
In the second quarter of 1999, we recorded a charge of approximately $25.8
million to exit certain operations in the switched wholesale business. This
charge resulted from our plan to reduce traffic, operations, and administrative
headcount by exiting this under-performing business. The restructuring charge
includes costs associated with workforce reduction, asset write-downs, network
decommissioning costs, and fees to terminate certain lease contracts. The
workforce reduction of 94 people includes both employees in the sales
organization and employees contributing to network operations. These employees
were notified of the workforce reduction in June 1999. All of the $2.9 million
associated with the workforce reduction is expected to be paid in cash during
the remainder of 1999. The costs accrued related to network decommissioning
include labor, lease rentals, and other operating costs expected to be paid to
decommission various network assets. We have adjusted the remaining useful lives
of equipment being decommissioned to extend only to the date the asset is
expected to be removed from service. All of the decommissioning costs are
expected to be paid in cash within twelve months. The asset write-downs are
non-cash in nature and include leasehold improvements related to facilities to
be vacated and reserves for accounts receivable related to customers whose
traffic we are removing from our network. We believe that collection of the
identified accounts receivable is unlikely as a direct result of our decision to
unilaterally terminate the affected customers' service under their contracts.
The costs to terminate leases which are being abandoned are expected to be paid
in cash over the next nine months. The restructuring activities are expected to
be substantially complete by June 30, 2000. Activity in the accrued
restructuring liability during the quarter ended June 30, 1999 is as follows (in
thousands):
ACCRUAL
RESTRUCTURING COSTS BALANCE AT
CHARGE PAID JUNE 30, 1999
------------- ----- -------------
Severance.............................................. $ 2,864 $249 $ 2,615
Network decommissioning................................ 3,872 -- 3,872
Asset write-downs...................................... 12,722 -- 12,722
Terminate contractual obligations and exit
facilities........................................... 6,368 2 6,366
------- ---- -------
Total restructuring costs.................... $25,826 $251 $25,575
======= ==== =======
9. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards requiring that derivative
instruments be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 is effective for all fiscal years
beginning after June 15, 2000. We have not yet assessed the impact of SFAS No.
133 on our results of operations and financial position.
10. SUBSEQUENT EVENTS
MERGER AGREEMENT WITH CINCINNATI BELL, INC.
On July 20, 1999, we entered into an agreement to merge with Cincinnati
Bell Inc. ("CBI") at a fixed exchange ratio of 2.0976 shares of CBI common stock
for each share of our common stock. Also on July 20, 1999, General Electric
Pension Trust ("GEPT") entered into an agreement with CBI in which CBI agreed to
purchase approximately 5.0 million shares of our common stock from GEPT for $50
per share. Shareholders representing approximately 40% of the outstanding shares
of IXC have committed to vote in favor of the merger. The merger is expected to
close near the end of 1999 and is subject to shareholder and regulatory
approval.
On July 21, July 23, and July 27, 1999, five purported stockholder class
action suits were filed in the Delaware Court of Chancery against us, certain
current and former members of our board of directors, and in
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IXC COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
two suits, also against CBI. These complaints allege, among other things that
the defendants have breached their fiduciary duties to our stockholders in
establishing the merger consideration in the merger agreement with CBI. The
complaints seek, among other things, a court order enjoining completion of the
merger. We and CBI believe that the complaints are without merit and intend to
vigorously defend against the complaints.
PSINET STOCK SALE
In July 1999 we received $59.8 million from a financial institution in
connection with a prepaid, forward-sale contract of an additional 1.5 million
shares of PSINet common stock. This amount is accounted for as a note payable
and is secured by the additional 1.5 million shares of stock. The forward-sale
obligation may be settled at a specified date in the second quarter of 2002 for
a maximum amount of 1.5 million shares of PSINet stock, or, at our option, the
equivalent value of the PSINet stock in cash.
BUSINESS REORGANIZATION
In connection with the hiring of the new chief executive officer and the
new chief financial officer, we are reviewing plans to streamline our
operations, including reducing the number of middle-management positions and
re-evaluating our information technology initiatives. A restructuring charge
associated with this review is expected to be recorded during the third quarter.
Although the plans are still being formulated, initial projections indicate that
the amount of the charge will be at least $10 million.
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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. Our 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
our actual results, performance or achievements to be materially different from
those expressed or implied by the forward-looking statements, see
"Business -- Risk Factors" in our Form 10-K for the fiscal year ended December
31, 1998. 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.
RESULTS OF OPERATIONS
On July 20, 1999, we entered into an agreement to merge with CBI at a fixed
exchange ratio of 2.0976 shares of CBI common stock for each share of our common
stock. Also on July 20, 1999, GEPT entered into an agreement with CBI in which
CBI agreed to purchase approximately 5.0 million shares of our common stock from
GEPT for $50 per share. Shareholders representing approximately 40% of the
outstanding shares of IXC have committed to vote in favor of the merger. The
merger is expected to close near the end of 1999 and is subject to shareholder
and regulatory approval.
Net operating revenue for the quarter and six months increased $2.0 million
(1.3%) and $5.7 million (1.8%), respectively, from the 1998 periods. The current
year's revenue includes the results of Coastal Telephone Company beginning on
its acquisition date on May 10, 1999. These year-over-year increases reflect
significant increases in private line and data/Internet service revenue and an
almost offsetting decline in switched service revenue. Other revenue of $4.1
million for the second quarter of 1999 and $11.6 million for the six-month
period of 1999 relates to the sale of an option of usage rights in fibers that
are owned jointly with another carrier.
Cost of services primarily reflects access charges paid to local exchange
carriers ("LEC's") and transmission lease payments (monetary and nonmonetary) to
other carriers. Cost of services increased $0.7 million (0.6%) over last year
for the quarter and decreased $2.4 million (1.1%) for the year-to-date period.
During the quarter, increases in transmission lease expense and data/Internet
cost of services more than offset the decrease in access costs. For the six
months the decrease in access costs more than offset the increases in
transmission lease expense and data/Internet costs. Access cost as a percentage
of net switched service revenue has increased year-over-year due to price
competition and the impact of the FCC mandated access reform, which became
effective in July 1998. In 1999 access cost was 92.5% and 89.4% of net switched
service revenue for the quarter and six-month period versus 69.8% and 69.1% for
the prior year's comparable periods.
The improved revenue and small change in cost of service resulted in an
increase in the gross profit of $1.3 million for the quarter and $8.2 million
for the six-month period. Gross profit margins increased to 31.4% for the
quarter and 33.3% for the six months versus 31.0% and 31.3% for the comparable
prior year periods. These improvements are mainly driven by the other revenue
included in the current year periods.
Operating and administrative costs increased $31.0 million to $60.9 million
for the current quarter and increased $53.4 million to $112.8 million for the
six-month period. These increases are driven by an increase in headcount from
1,209 at June 1998 to 2,116 at June 1999. The focus of these increased costs is
to build up the retail channel's infrastructure as well as to upgrade our level
of information technology across the company. Costs were also incurred to
operate the larger fiber optic network.
A restructuring charge of $25.8 million was recorded during the current
quarter associated with the costs of exiting a portion of the wholesale-switched
service business. The charge includes severance costs associated with the
termination of 94 employees, a reserve for customers who will be leaving the
network, costs to dismantle switches that will become surplus and costs to
abandon our microwave network that will no longer be needed. There was no such
restructuring charge in the prior year's quarter. In connection with the hiring
of the new chief executive officer and the new chief financial officer, we are
reviewing plans to streamline our
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operations, including reducing the number of middle-management positions and
re-evaluating our information technology initiatives. A restructuring charge
associated with this review is expected to be recorded during the third quarter.
Although the plans are still being formulated, initial projections indicate that
the amount of the charge will be at least $10 million.
Depreciation and amortization expense increased $16.9 million for the
quarter and $33.1 million for the six-month period reflecting our increased
investment in the fiber optic network and other fixed assets and amortization of
goodwill from the Coastal acquisition.
Merger and other infrequent costs decreased $7.6 million for the quarter
and $7.5 million for the year-to-date period, as costs associated with our
merger with Eclipse during 1998 were not repeated in 1999.
Interest income declined $1.5 million for the quarter and increased $2.7
million for the six-month period. The decline between quarters was due to less
cash on hand in 1999. The increase in the six-month period reflects interest
received during the first quarter of 1999 from notes receivable related to IRU
agreements.
Net interest expense rose $0.6 million for the quarter and $5.3 million for
the six-month period reflecting the expense from the $450 million 9% Senior
Subordinated Notes issued in April 1998 and the $200 million borrowed under our
$600 million credit facility in October 1998. The increase in gross interest
expense more than offset higher capitalized interest, which was due to the
increased rate of network construction between periods.
Losses from unconsolidated subsidiaries increased $2.4 million for the
quarter and declined $6.0 million for the six-month period. The current year's
increase mainly relates to a complete writedown of our investment in a joint
venture with Unidial. Losses for the prior year's quarter were related to the
investments in MarcaTel and PSINet. The investment in MarcaTel was written down
to zero in 1998, and no further significant additional funding is required from
us, so no further losses are being recorded. We stopped recognizing PSINet
losses and began accounting for this investment using the cost method during the
second quarter of 1998 because our level of ownership and influence of PSINet
was diminished.
The year-over-year increase in other, net expense of $12.8 million for the
quarter and $12.9 million for the six-month period is mainly due to the
reduction of the DCI investment during the current year as described in footnote
2 to the condensed consolidated financial statements.
Income tax expense decreased $0.7 million for the quarter and $0.3 million
for the six-month period reflecting a lower level of projected fiber sales
during the current year. A valuation allowance is applied against tax assets
arising during the year due to the uncertainty of their realization.
During the second quarter of 1998 we recorded an after-tax extraordinary
charge of $69.8 million relating to the April 1998 redemption of $284.2 million
of the 12 1/2% Senior Notes due 2005. There were no such charges in 1999.
Our net loss applicable to common shareholders increased to $130.5 million
for the quarter and to $188.8 million for the six-month period from $118.0
million and $147.6 million for the prior year comparable periods. These
increases are due to the items listed above plus an increase in the dividends
applicable to preferred stock. Dividends applicable to preferred stock increased
$0.9 million for the quarter and $5.2 million for the six-month period. The
additional dividends were from the 6 3/4% preferred stock issued in March and
April of 1998, and from dividends on the 12 1/2% Exchangeable Preferred Stock
which are paid with additional shares of 12 1/2% Exchangeable Preferred Stock.
SEGMENT INFORMATION
PRIVATE LINE SERVICES
Net private line revenue increased $24.3 million (49.4%) for the quarter
and $51.9 million (56.0%) for the six-month period. These increases are
primarily due to three large contracts including a significant Internet service
provider ("ISP") and Excel Communications. The gross profit for this segment
improved to $47.4 million for the quarter and $92.2 million year-to-date. The
gross margin rate improved from 54.4% to
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64.5% quarter over quarter and from 55.0% to 63.8% in the six-month periods.
These improvements reflect the use of our network to carry most of the
incremental revenue.
SWITCHED SERVICE REVENUE
Switched long distance revenue declined $30.6 million (29.0%) to $74.9
million during the current quarter and $66.6 million (30.4%) to $152.6 million
for the six-month period. These declines are primarily due to the conversion of
Excel Communications, formerly our largest customer, to a private line contract
as it moved traffic to its own network, and an increase of $11.8 million for the
quarter and $19.6 million for the six-month period in disputes and bad debt
expense. Many of these disputes relate to the billing of pass-through charges
and price adjustments. Cost of services declined $5.0 million (6.1%) for the
quarter and $17.6 million (10.4%) for the six-month period due to the reduction
in traffic partially offset by increased fixed access charges. The segment's
gross profit declined $25.6 million for the quarter and $49.0 million
year-to-date due mainly to the decline in net revenue.
DATA/INTERNET
Revenue increased $4.2 million for the quarter and $8.9 million
year-to-date due mainly to the ATM/frame relay and Internet products produced
and sold by the Internet companies we acquired during 1998. These products are
also sold through the retail distribution channel. The segment's gross profit
improved from a negative $1.6 million for the 1998 quarter and a negative $3.0
million for the prior year's six-month period to a positive $.5 million for the
current quarter and a positive $1.3 million for the current six-month period.
This improvement reflects the use of our network in providing these high-value
services.
LIQUIDITY AND CAPITAL RESOURCES
We have financed the expansion of our network through the issuance of debt
and equity securities, the sale of IRU's in capacity and fiber, and through
borrowing against our investment in PSINet.
Cash provided by operating activities increased $64.1 million (155.3%) to
$105.5 million primarily due to increased receipts of cash related to IRU sales
during the current period.
Cash used in investing activities increased $65.6 million (23.9%) over the
prior year to $340.4 million, due to an increase of $22.0 million in capital
expenditures and an increase of $50.5 million for the acquisition of businesses.
Coastal was acquired during the 1999 period versus several small Internet
companies acquired during the prior year. Investments in unconsolidated
subsidiaries decreased $6.2 million between years as we slowed our funding of
MarcaTel.
Cash provided by financing activities decreased $185.2 million to $68.6
million because there was no issuance of public debt in 1999 as there was in
1998. During the first six months of 1998 we issued $450 million in 9% Senior
Subordinated Notes and $155.3 million in 6 3/4% Cumulative Convertible Preferred
Stock and redeemed $284.2 million of the 12 1/2% Senior Notes. The only proceeds
from debt in 1999 related to the borrowing of $52.0 million against a portion of
our PSINet stock and $27.0 million from the line of credit used in the Coastal
acquisition.
As of August 10, 1999, the Company had $93.4 million in cash. We expect
that the primary sources for cash over the next 12 months will be cash on hand,
cash generated by operations, proceeds of IRU sales, and vendor and working
capital financing we may seek. In addition, if necessary, we can sell or borrow
against our investments in the common stock of PSINet and Applied Theory. We
expect that it will be necessary to amend or obtain a waiver of our performance
covenants under our present bank credit facility so that we can meet those
covenants at the end of the third quarter. We are working with our banks to
adjust the covenants so that we can either borrow against the remaining $150
million amount of the facilities or seek alternative debt sources. In the event
the banks do not agree to change or waive the covenants, we would be in default
under the credit facility. In addition, our lead bank has indicated to us that,
subject to certain conditions, it is willing to loan us $150 million (apart from
the $150 million remaining on the existing facility), but the arrangements for
this loan have not yet been finalized. There can be no assurance that we shall
be able to obtain covenant adjustments or waivers under the existing facility or
to finalize and borrow under the additional loan.
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We anticipate that, given the impending merger, we shall be able to meet
our financing needs through the time of the merger through stock sales or these
other sources of cash. However, there can be no assurance that sufficient
additional cash will be obtained or that the banks will agree to amend or waive
the covenants. In the event sufficient cash is not obtained, we shall have to
take steps to conserve cash, possibly including delaying or reducing capital
expenditures and reducing expenses. A default under the bank credit facility or
a failure to obtain sufficient additional cash could have a material adverse
effect on the Company.
We seek to obtain sufficient funding from these sources for the following
major uses of cash:
- Our network expansion and other capital expenditures;
- Debt service;
- Lease payments;
- Working capital;
- Downsizing the wholesale switched service business;
- Funding the third quarter restructuring program; and
- Dividends on preferred stock.
Capital spending in 1999 is projected to be approximately $600 million.
After 1999, capital expenditures are expected to continue to be substantial.
There can be no assurance that we will be successful in obtaining the necessary
financing to meet our needs if the merger with CBI does not occur. A failure to
raise cash would delay or prevent capital expenditures including the
construction of our network expansion.
We are required to make payments under our existing debt and capital lease
arrangements of $6.8 million, $11.3 million, $19.1 million, and $83.6 million
for the remainder of 1999, 2000, 2001, and 2002, respectively. We are required
to make quarterly interest payments on amounts outstanding under our $600
million credit facility, to make semi-annual interest payments on our 9% Senior
Subordinated Notes and the remaining 12 1/2% Senior Notes, and to make interest
payments under the Eclipse line of credit. This line of credit, which is based
upon the eligible accounts receivable, is due on May 1, 2002 and may be extended
for successive one-year terms. We are required to pay quarterly dividends on the
7 1/4% Convertible Preferred Stock. We are required to pay quarterly dividends
on the 12 1/2% Exchangeable Preferred Stock. These dividends must be paid in
cash except that we have the option of paying dividends in additional shares of
12 1/2% Exchangeable Preferred Stock through February 15, 2001. Dividends on our
6 3/4% Preferred Stock are payable quarterly in cash. If we are prohibited from
paying dividends in cash under the terms of our debt agreements, then we may pay
our dividends on this preferred stock in common stock, valued at 95% of the
average price of the common stock for 5 business days prior to the dividend
payment date. We anticipate that such debt and equity service payments during
1999 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.
We are required to make minimum annual lease payments for facilities,
equipment and transmission capacity used in operating our business. In 1999,
2000, 2001 and 2002, these payments are expected to amount to approximately
$35.5 million, $30.3 million, $23.1 million and $16.3 million respectively, on
operating leases. We expect to incur additional operating lease costs in
connection with the expansion of our network and the retail and Internet
operations. Additionally, in connection with our network expansionism from time
to time we enter 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, our ability to
meet such cash requirements and our ability to service our debt are based on
certain assumptions as to future events. Important assumptions which if not met,
could adversely affect our ability to achieve satisfactory results include that:
(a) there will be no significant delays with respect to our network expansion;
(b) our contractors and partners in cost-saving arrangements will perform their
obligations; (c) rights-of-way can be obtained on a timely, cost-effective
basis; (d) we will increase traffic on our network; and (e) we will not be in
default under our existing credit arrangements and will be able to obtain vendor
or additional debt financing.
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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 our 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 our ability to conduct business after
January 1, 2000, including an inability to provide telecommunications services
to our customers or to accurately invoice customers or collect payments.
Substantially all of our network was built in the last three years. As a
result, we believe that we do not have a significant investment in legacy
systems having substantial Year 2000 exposure. However, we have established a
project team to identify, evaluate and address any existing Year 2000 issues.
This Year 2000 effort covers the 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 other systems such as building operations and individual personal
computers. 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 and planning phase was substantially
complete at December 31, 1998. Substantially all mission-critical systems were
remediated as of June 30, 1999 and are being tested (including those we acquired
from Coastal). Testing on these applications is expected to be completed by
September 30, 1999. In addition, all new components being purchased as part of
the 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
our business. Therefore, in addition to evaluating our own internal systems, we
are in the process of evaluating and documenting the status of Year 2000
compliance efforts by key suppliers.
We currently project incurring approximately $3.3 million through the end
of 2000 in connection with the Year 2000 remediation project, of which
approximately $2.3 million was incurred and expensed as of June 30, 1999. Such
amounts are exclusive of amounts which were already anticipated to be spent on
new hardware and software purchases resulting from the expansion of our network
and other business operations. We believe that a 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 adverse effect on our operations.
As part of our Year 2000 initiative, we are evaluating scenarios that may
occur as a result of the century change and are developing contingency and
business continuity plans tailored for Year 2000-related problems. We have
substantially completed an enterprise-wide business contingency plan. Elements
of the plan are already in place, including working disaster recovery documents,
a key supplier/business partner survey campaign, and a risk management program.
The above information regarding cost estimates, risks, and estimated
readiness are forward looking statements based on 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.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We are exposed to market risk related to changes in interest rates because
the interest rate on approximately $225 million of our debt at June 30, 1999 is
indexed to floating interest rates. We monitor the risk associated with interest
rates on an ongoing basis, but we have not entered into any interest rate swaps
or other financial instruments to actively hedge the risk of changes in
prevailing interest rates.
Substantially all of our revenue is derived from domestic operations, so we
believe the risk related to foreign currency exchange rates is minimal.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are aware of five lawsuits filed in the Court of Chancery of the State
of Delaware relating to our merger agreement with CBI. These lawsuits were filed
in July subsequent to our announcement of the merger. The suit brought by Angie
Garone on behalf of herself and others similarly situated, the suit brought by
Robert Bernard, and the suit brought by John D. Crawford each name us, Benjamin
L. Scott (a former director) and all of the directors on our current board as
defendants. The other two suits, brought by Dr. Mark Gross and James Intagliata,
each name us, Benjamin L. Scott, all of the directors on our current board, and
CBI as defendants. Each suit was brought by a purported stockholder,
individually and allegedly as a class action on behalf of all our stockholders.
The complaints allege, among other things, that the defendants have breached
their fiduciary duties to the stockholders in establishing the merger
consideration in the merger agreement. The complaints seek, among other things,
a court order prohibiting the consummation of the merger.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In connection with our acquisition of Coastal we issued and sold warrants
to purchase 75,000 shares of common stock on May 10, 1999 and 698,985 shares of
our common stock on June 2, 1999. We issued the warrants and the stock to the
members of the limited liability companies which collectively operated as
Coastal. In exchange for the warrants and the common stock, among other
consideration, we received all of the outstanding membership interests in the
Coastal entities. Following the acquisition, the Coastal entities were merged
into Eclipse. The warrants are exercisable during the three year period
following May 10, 1999 at an exercise price of $45.00 per share. The warrants
provide no voting rights and contain provisions for adjustment upon the
occurrence of stock dividends, stock splits or similar events. We did not employ
an underwriter or placement agent in connection with the issuance of the common
stock or the warrants.
The sale and issuance of the warrants and the common stock were exempt from
registration under the Securities Act in reliance on Section 4(2), as
transactions not involving a public offering. The four Coastal members acquired
the securities in a private offering. The Coastal members each represented their
intention to acquire the securities for investment only and not with a view to
distribute the securities to the public. Appropriate legends were affixed to the
certificates representing the warrants and the common stock issued in the
Coastal acquisition. The Coastal members had adequate access to sufficient
information about us in order to make an informed investment decision.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We held our Annual Meeting of Stockholders on May 28, 1999. The meeting was
held so that our stockholders could elect our Board of Directors and vote on
four other proposals. The other proposals were:
Proposal 2: Ratify the decision of the board of directors to not
implement an amendment to the Restated Certificate of Incorporation, as
amended (the "Restated Certificate") previously approved by a majority of
our stockholders, which included, among other things, a two-for-one stock
split of our common stock;
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Proposal 3: Amend the Restated Certificate to increase the authorized
number of shares of common stock, create a new class of preferred stock,
and eliminate all matters set forth in the Restated Certificate regarding
two series of preferred stock which were no longer outstanding;
Proposal 4: Amend the Restated Certificate to effect a two-for-one
stock split of the issued and outstanding shares of common stock, such
amendment to take place at the discretion of the board of directors within
one year of stockholder approval;
Proposal 5: Adopt an amendment to our 1998 Stock Plan to increase the
number of shares of common stock available for option and restricted stock
grants.
The number of votes cast for, against, or withheld for each nominee for
director and each proposal, as well as the broker non-votes and the abstentions
are set forth below.
BROKER
FOR AGAINST WITHHELD NON-VOTES ABSTENTION
---------- --------- -------- --------- ----------
Wolfe H. Bragin.................... 32,344,373 0 0 0 260,024
Joe C. Culp........................ 32,360,863 0 0 0 243,534
Richard D. Irwin................... 32,360,863 0 0 0 243,534
Carl W. McKinzie................... 32,360,862 0 0 0 243,535
Benjamin L. Scott.................. 32,343,794 0 0 0 260,603
Ralph J. Swett..................... 32,360,863 0 0 0 243,534
Philip L. Williams................. 32,360,282 0 0 0 244,115
Proposal 2......................... 32,529,996 66,701 0 0 7,700
Proposal 3......................... 20,992,368 1,917,476 0 9,688,973 5,580
Proposal 4......................... 32,495,750 101,893 0 0 6,754
Proposal 5......................... 20,542,257 2,363,857 0 9,688,973 9,310
Each of the nominees was elected to the board of directors constituting all
of our directors. All of the Proposals were approved by a majority of our
stockholders.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2.1 Agreement and Plan of Merger dated as of July 20, 1999,
among Cincinnati Bell, Inc., IXC Communications, Inc. and
Ivory Merger Inc. (incorporated by reference to Exhibit 2.1
of Cincinnati Bell, Inc.'s Form 8-K dated July 22, 1999 and
filed with the Commission on July 23, 1999).
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).
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EXHIBIT
NUMBER DESCRIPTION
------- -----------
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 June 30, 1997, filed with the
Commission on May 15, 1997 (the "June 30, 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 June 30, 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 June 30, 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).
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")).
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EXHIBIT
NUMBER DESCRIPTION
------- -----------
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
Stanley 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 Stanley 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).
4.22+ Amendment No. 1 to Rights Agreement dated July 20, 1999, by
and between IXC Communications, Inc. and U.S. Stock Transfer
Corporation.
20
21
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.23 Form of Registration Rights Agreement among IXC
Communications, Inc. and the Coastal selling stockholders
(incorporated by reference to Exhibit 4.22 of IXC
Communications, Inc.'s Form S-3 dated April 14, 1999 and
filed with the Commission on April 15, 1999 (File No.
333-76349)).
4.24 Form of Warrant for each of the Coastal selling stockholders
(incorporated by reference to Exhibit 4.23 of IXC
Communications, Inc.'s Form S-3 dated April 14, 1999 and
filed with the Commission on April 15, 1999 (File No.
333-76349)).
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).
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 June 30, 1998, filed with the Commission on
May 15, 1998 (the "June 30, 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 (incorporated by reference to Exhibit
10.10 of the IXC Communications, Inc.'s Quarterly Report
Form 10-Q for the quarter ended September 30, 1998 filed
with the Commission on November 16, 1998).
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 June 30, 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).
21
22
EXHIBIT
NUMBER DESCRIPTION
------- -----------
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).
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, as amended.
10.23+ First Amended and Restated Credit Agreement dated as of June
29, 1999, among IXC Communications Services, Inc., the
Lenders (as defined therein), NationsBank, N.A., as a Lender
and Administrative Agent, and Credit Suisse First Boston, TD
Securities(USA), Inc. and Export Development Corporation,
each as a Lender and Co-Syndication Agents.
10.24*+ Employment Agreement dated April 8, 1999, by and between IXC
Communications, Inc. and Valerie G. Walden.
10.25*+ Employment Agreement dated April 26, 1999, by and between
IXC Communications, Inc. and James F. Guthrie.
10.26*+ Employment Agreement dated May 27, 1999, by and between IXC
Communications, Inc. and John M. Zrno.
10.27*+ Contract for Services dated June 28, 1999, by and between
IXC Communications, Inc. and American Business Development
Corp.
10.28 Stockholders Agreement dated as of July 20, 1999, among
Cincinnati Bell, Inc., Richard D. Irwin and Ralph J. Swett
(incorporated by reference to Exhibit 99.1 of Cincinnati
Bell, Inc.'s Form 8-K dated July 22, 1999 and filed with the
Commission on July 23, 1999).
22
23
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.29 Stockholder Agreement dated as of July 20, 1999, between
Cincinnati Bell, Inc. and General Electric Pension Trust
(incorporated by reference to Exhibit 99.2 of Cincinnati
Bell, Inc.'s Form 8-K dated July 22, 1999 and filed with the
Commission on July 23, 1999).
10.30 Stock Option Agreement dated as of July 20, 1999, between
IXC Communications, Inc. and Cincinnati Bell, Inc.
(incorporated by reference to Exhibit 99.3 of Cincinnati
Bell, Inc.'s Form 8-K dated July 22, 1999 and filed with the
Commission on July 23, 1999).
10.31 Stock Option Agreement dated as of July 20, 1999, between
Cincinnati Bell, Inc. and IXC Communications, Inc.
(incorporated by reference to Exhibit 99.4 of Cincinnati
Bell, Inc.'s Form 8-K dated July 22, 1999 and filed with the
Commission on July 23, 1999).
10.32 Stock Purchase Agreement dated July 20, 1999, by and among
Cincinnati Bell, Inc. and General Electric Pension Trust
(incorporated by reference to Exhibit 4 of Cincinnati Bell,
Inc.'s Form 13D dated July 29, 1999 and filed with the
Commission on July 29, 1999).
10.33 Joint Reporting Agreement dated June 15, 1999 among the
Filing Persons (incorporated by reference to Exhibit 1 of
IXC Communications, Inc.'s Amendment No. 1 to Form 13D dated
June 15, 1999 and filed with the Commission on June 17,
1999).
10.34 Master Agreement dated as of June 2, 1999 between Merrill
Lynch International ("MLI") and IXC Internet Services, Inc.
("Internet") (incorporated by reference to Exhibit 2 of IXC
Communications, Inc.'s Amendment No. 1 to Form 13D dated
June 15, 1999 and filed with the Commission on June 17,
1999).
10.35 Securities Loan Agreement dated as of June 2, 1999 between
MLI and Internet (incorporated by reference to Exhibit 3 of
IXC Communications, Inc.'s Amendment No. 1 to Form 13D dated
June 15, 1999 and filed with the Commission on June 17,
1999).
10.36 Confirmation of OTC Transaction dated as of June 3, 1999
between MLI and Internet (incorporated by reference to
Exhibit 4 of IXC Communications, Inc.'s Amendment No. 2 to
Form 13D dated June 25, 1999 and filed with the Commission
on June 29, 1999).
10.37 Confirmation of OTC Transaction dated as of July 6, 1999
between MLI and Internet (incorporated by reference to
Exhibit 1 of IXC Communications, Inc.'s Amendment No. 4 to
Form 13D dated July 31, 1999 and filed with the Commission
on August 5, 1999).
10.38*+ IXC Communications, Inc. Stock Appreciation Rights Plan
dated as of April 8, 1999.
27.1+ Financial Data Schedule.
- ---------------
* Management contract or executive compensation plan or arrangement required to
be indicated as such and filed as an exhibit pursuant to applicable rules of
the Commission.
+ Filed herewith.
(b) Reports on Form 8-K.
(1) Form 8-K dated April 12, 1999 and filed with the Commission on April
14, 1999 with respect to a press release announcing an agreement with
Electric Lightwave Inc.
(2) Form 8-K dated May 10, 1999 and filed with the Commission on May 17,
1999 with respect to a press release announcing our acquisition of the
entities doing business as Coastal Telephone Company.
(3) Form 8-K dated May 11, 1999 and filed with the Commission on May 17,
1999 with respect to a press release announcing our results of
operations for the quarter ending March 31, 1999.
(4) Form 8-K dated May 28, 1999 and filed with the Commission on June 2,
1999 with respect to a press release announcing the appointment of John
M. Zrno as President and Chief Executive Officer of
23
24
IXC Communications, Inc. and a press release announcing the election of John M.
Zrno as a member of the Board of Directors of IXC Communications, Inc.
(5) Form 8-K dated June 17, 1999 and filed with the Commission on June 29,
1999 with respect to two Schedules 13D filed with the Commission
relating to the common stock of PSINet Inc.
(6) Form 8-K dated July 21, 1999 and filed with the Commission on July 21,
1999 with respect to a press release announcing the agreement between
IXC Communications, Inc. and Cincinnati Bell, Inc. to an Agreement and
Plan of Merger and a press release reporting on IXC Communications,
Inc.'s anticipated results of operations for the fiscal quarter ending
July 31, 1999.
(7) Form 8-K dated August 3, 1999 and filed with the Commission on August
4, 1999 with respect to a press release announcing IXC Communications,
Inc.'s results of operations for the fiscal quarter ended July 31,
1999.
(8) Form 8-K dated August 6, 1999 and filed with the Commission on August
9, 1999 with respect to two Schedules 13D filed with the Commission
relating to the common stock of PSINet Inc.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: /s/ STANLEY W. KATZ
------------------------------------
Stanley W. Katz
Chief Financial Officer
Dated: August 16, 1999
24
25
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2.1 Agreement and Plan of Merger dated as of July 20, 1999,
among Cincinnati Bell, Inc., IXC Communications, Inc. and
Ivory Merger Inc. (incorporated by reference to Exhibit 2.1
of Cincinnati Bell, Inc.'s Form 8-K dated July 22, 1999 and
filed with the Commission on July 23, 1999).
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 June 30, 1997, filed with the
Commission on May 15, 1997 (the "June 30, 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 June 30, 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 June 30, 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")).
26
EXHIBIT
NUMBER DESCRIPTION
------- -----------
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).
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
Stanley 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 Stanley 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).
27
EXHIBIT
NUMBER DESCRIPTION
------- -----------
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).
4.22+ Amendment No. 1 to Rights Agreement dated July 20, 1999, by
and between IXC Communications, Inc. and U.S. Stock Transfer
Corporation.
4.23 Form of Registration Rights Agreement among IXC
Communications, Inc. and the Coastal selling stockholders
(incorporated by reference to Exhibit 4.22 of IXC
Communications, Inc.'s Form S-3 dated April 14, 1999 and
filed with the Commission on April 15, 1999 (File No.
333-76349)).
4.24 Form of Warrant for each of the Coastal selling stockholders
(incorporated by reference to Exhibit 4.23 of IXC
Communications, Inc.'s Form S-3 dated April 14, 1999 and
filed with the Commission on April 15, 1999 (File No.
333-76349)).
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).
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 June 30, 1998, filed with the Commission on
May 15, 1998 (the "June 30, 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 (incorporated by reference to Exhibit
10.10 of the IXC Communications, Inc.'s Quarterly Report
Form 10-Q for the quarter ended September 30, 1998 filed
with the Commission on November 16, 1998).
28
EXHIBIT
NUMBER DESCRIPTION
------- -----------
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 June 30, 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).
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, as amended.
10.23+ First Amended and Restated Credit Agreement dated as of June
29, 1999, among IXC Communications Services, Inc., the
Lenders (as defined therein), NationsBank, N.A., as a Lender
and Administrative Agent, and Credit Suisse First Boston, TD
Securities(USA), Inc. and Export Development Corporation,
each as a Lender and Co-Syndication Agents.
10.24*+ Employment Agreement dated April 8, 1999, by and between IXC
Communications, Inc. and Valerie G. Walden.
10.25*+ Employment Agreement dated April 26, 1999, by and between
IXC Communications, Inc. and James F. Guthrie.
10.26*+ Employment Agreement dated May 27, 1999, by and between IXC
Communications, Inc. and John M. Zrno.
10.27*+ Contract for Services dated June 28, 1999, by and between
IXC Communications, Inc. and American Business Development
Corp.
29
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.28 Stockholders Agreement dated as of July 20, 1999, among
Cincinnati Bell, Inc., Richard D. Irwin and Ralph J. Swett
(incorporated by reference to Exhibit 99.1 of Cincinnati
Bell, Inc.'s Form 8-K dated July 22, 1999 and filed with the
Commission on July 23, 1999).
10.29 Stockholder Agreement dated as of July 20, 1999, between
Cincinnati Bell, Inc. and General Electric Pension Trust
(incorporated by reference to Exhibit 99.2 of Cincinnati
Bell, Inc.'s Form 8-K dated July 22, 1999 and filed with the
Commission on July 23, 1999).
10.30 Stock Option Agreement dated as of July 20, 1999, between
IXC Communications, Inc. and Cincinnati Bell, Inc.
(incorporated by reference to Exhibit 99.3 of Cincinnati
Bell, Inc.'s Form 8-K dated July 22, 1999 and filed with the
Commission on July 23, 1999).
10.31 Stock Option Agreement dated as of July 20, 1999, between
Cincinnati Bell, Inc. and IXC Communications, Inc.
(incorporated by reference to Exhibit 99.4 of Cincinnati
Bell, Inc.'s Form 8-K dated July 22, 1999 and filed with the
Commission on July 23, 1999).
10.32 Stock Purchase Agreement dated July 20, 1999, by and among
Cincinnati Bell, Inc. and General Electric Pension Trust
(incorporated by reference to Exhibit 4 of Cincinnati Bell,
Inc.'s Form 13D dated July 29, 1999 and filed with the
Commission on July 29, 1999).
10.33 Joint Reporting Agreement dated June 15, 1999 among the
Filing Persons (incorporated by reference to Exhibit 1 of
IXC Communications, Inc.'s Amendment No. 1 to Form 13D dated
June 15, 1999 and filed with the Commission on June 17,
1999).
10.34 Master Agreement dated as of June 2, 1999 between Merrill
Lynch International ("MLI") and IXC Internet Services, Inc.
("Internet") (incorporated by reference to Exhibit 2 of IXC
Communications, Inc.'s Amendment No. 1 to Form 13D dated
June 15, 1999 and filed with the Commission on June 17,
1999).
10.35 Securities Loan Agreement dated as of June 2, 1999 between
MLI and Internet (incorporated by reference to Exhibit 3 of
IXC Communications, Inc.'s Amendment No. 1 to Form 13D dated
June 15, 1999 and filed with the Commission on June 17,
1999).
10.36 Confirmation of OTC Transaction dated as of June 3, 1999
between MLI and Internet (incorporated by reference to
Exhibit 4 of IXC Communications, Inc.'s Amendment No. 2 to
Form 13D dated June 25, 1999 and filed with the Commission
on June 29, 1999).
10.37 Confirmation of OTC Transaction dated as of July 6, 1999
between MLI and Internet (incorporated by reference to
Exhibit 1 of IXC Communications, Inc.'s Amendment No. 4 to
Form 13D dated July 31, 1999 and filed with the Commission
on August 5, 1999).
10.38*+ IXC Communications, Inc. Stock Appreciation Rights Plan
dated as of April 8, 1999.
27.1+ Financial Data Schedule.
- ---------------
* Management contract or executive compensation plan or arrangement required to
be indicated as such and filed as an exhibit pursuant to applicable rules of
the Commission.
+ Filed herewith.