SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
August 12, 1998
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(Date of earliest event reported)
Electric Lightwave, Inc.
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(Exact name of Registrant as specified in charter)
Delaware 0-23393 93-1035711
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4400 NE 77th Avenue, Vancouver, WA 98662
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(Address of principal executive offices) (Zip Code)
(360)892-1000
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(Registrant's telephone number, including area code)
No change since last report
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(Former name or address, if changed since last report)
Item 5. Other Events.
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This report is being filed to make available the following press release dated
August 12, 1998
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ELECTRIC LIGHTWAVE REPORTS
SECOND QUARTER 1998 FINANCIAL RESULTS
Access lines up 32% over 1Q 1998, 167% over 2Q 1997
Local dial tone revenue up 29% over 1Q 1998, 289% over 2Q 1997
Sales staff growth up 27% over 1Q 1998, 95% over 2Q 1997
VANCOUVER, Wash., August 12, 1998 -- Electric Lightwave, Inc. (NASDAQ: ELIX), an
integrated communications provider operating in 83 municipalities in the western
U.S., today announced its financial results for the quarter ended June 30, 1998.
Revenues for the quarter were $21.4 million, compared to $14.2 million in the
second quarter of 1997, a 51% increase. EBITDA loss (loss before interest,
taxes, depreciation and amortization) for the quarter was $12.5 million which
compares to a $7.0 million EBITDA loss for the second quarter of 1997.
"We're especially pleased with the growth in access lines and local dial tone
revenue as well as our product bundles," said Electric Lightwave President and
Chief Operating Officer Dave Sharkey. "This shows the continued strong demand
for our products."
Sharkey added that more than 95% of the company's access lines are on-switch,
representing high margins and high asset utilization for Electric Lightwave.
In addition, Electric Lightwave's recent announcement regarding its agreement
with Qwest (June 25) complements Electric Lightwave's facilities-based business
strategy in the West, and gives the company the ability to offer high-speed,
point-to-point bandwidth, Internet, Frame Relay, ATM and Transparent LAN
Services to business customers in a number of major markets across the country.
"This agreement is significant because it provides the framework for us to
reduce leased long-haul network costs approximately 25%," said Sharkey.
BACKOFFICE IMPLEMENTATION
As announced in its July 13 news release, the company's implementation of new
business systems that enables the integration of order flow, provisioning,
network monitoring and billing systems has had a temporary impact on its ability
to ramp-up order processing. This has led to slower than expected revenue growth
in the second quarter. However, with productivity improvement doubling over the
last three months, Electric Lightwave's management team is very confident that
revenue will to return to quarterly double-digit growth rates later in the year.
"We've implemented a scaleable integrated back office system that can support
our targeted growth for the forseeable future," Sharkey said. "This system will
truly be a competitive advantage in our ability to provide high quality, low
cost services."
REVENUE COMPONENTS
Local dial tone revenue and enhanced services revenue continue to be the fastest
growing components of Electric Lightwave's revenue stream. Local dial tone
services revenue increased to $7.8 million, up 289% over the $2.0 million in the
second quarter of 1997 and up from $6.0 million, or 29% over the second quarter
of 1998. Enhanced services revenue, which includes frame relay, Internet and
LAN-to-LAN service revenue totaled $3.4 million, up 50% from the $2.3 million in
the second quarter of 1997 and up from $3.1 million, or 10% over the first
quarter of 1998.
The company grew its access lines by 167%, from 20,413 in the second quarter of
1997 to 54,490 in the second quarter of 1998. Access line growth was up 32% from
the first quarter total of 41,270.
Electric Lightwave is a facilities-based integrated communications provider
offering data and Internet access solutions, local, long distance, network
access, videoconferencing, prepaid services and broadband transport services to
businesses nationwide. ELI currently serves 83 municipalities with 54,490 local
access line equivalents, 2,656 route miles and 682 on-net buildings connected as
of June 30, 1998. The company has interconnected its market clusters with
facilities-based owned and leased long-haul fiber optic networks.
Except for any historical information, the matters discussed in this press
release contain forward-looking statements that involve risks and uncertainties
that are described in the company's filings with the Securities and Exchange
Commission.
ELECTRIC LIGHTWAVE, INC.
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1997
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Revenues $ 21,443 $ 14,246 $ 41,500 $ 24,765
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Operating Expenses:
Network Access 9,860 7,016 19,072 11,946
Sales and Marketing 5,735 3,761 10,675 6,667
Depreciation and Amortization 3,780 2,786 7,664 5,603
Other Operating Expenses 18,381 10,426 34,062 20,363
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Total Operating Expenses 37,756 23,989 71,473 44,579
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Loss from Operations (16,313) (9,743) (29,973) (19,814)
Interest Expense, Net 1,467 211 2,211 302
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Net Loss Before Income Taxes and Cumulative Effect of a Change (17,780) (9,954) (32,184) (20,116)
in Accounting Principle
Income Tax Benefit (3,022) - (5,471) -
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Net Loss Before Cumulative Effect of a Change in Accounting (14,758) (9,954) (26,713) (20,116)
Principle
Cumulative Effect of Change in Accounting Principle - - 2,817 -
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Net Loss $ (14,758) $ (9,954) $ (29,530) $ (20,116)
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EBITDA $ (12,533) $ (6,957) $ (22,309) $ (14,211)
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Weighted average shares outstanding 49,694 41,685 49,690 41,685
Net Loss Before Cumulative Effect of Change in
Accounting Principle per Common Share:
Basic $ (0.30) $ (0.24) $ (0.54) $ (0.48)
Diluted $ (0.30) $ (0.24) $ (0.54) $ (0.48)
Net Loss Per Common Share:
Basic $ (0.30) $ (0.24) $ (0.59) $ (0.48)
Diluted $ (0.30) $ (0.24) $ (0.59) $ (0.48)
SELECTED FINANCIAL & OPERATING DATA
(IN THOUSANDS EXCEPT SELECTED OPERATING DATA)
JUNE 30, 1998 JUNE 30, 1997 MARCH 31, 1998
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SELECTED FINANCIAL DATA
Property, Plant & Equipment - Owned $ 396,080 $ 235,953 $ 352,062
Property, Plant & Equipment - Leased 108,541 73,042 105,226
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Total $ 504,621 $ 308,995 $ 457,288
SELECTED OPERATING DATA
Markets 9 5 6
Municipalities 83 n/a 75
Route Miles 2,656 1,528 2,525
Fiber Miles 153,002 107,876 145,350
Buildings Connected 682 509 631
Switches:
Voice 7 5 5
Internet Routers 18 8 18
ATM 9 - 9
Frame Relay 22 13 22
Access Lines 54,490 20,413 41,270
Access Lines/Switch 7,784 4,083 8,254
% on Switch 98% 94% 97%
Employees 841 485 670
Customers 1,330 991 1,226
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Electric Lightwave, Inc.
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Registrant
By: /s/ Kerry D. Rea
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Vice President and Controller
Date: August 13, 1998