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:
October 29, 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)816-3000
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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
October 29, 1998.
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ELECTRIC LIGHTWAVE REPORTS CONTINUED GROWTH WITH THIRD QUARTER RESULTS
* REVENUE UP 20% FROM 1998 SECOND QUARTER, 50% FROM 1997 THIRD QUARTER * SALES
FORCE INCREASES 29% FROM 1998 SECOND QUARTER, 175% FROM 1997 THIRD QUARTER
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VANCOUVER, Wash., Oct. 29, 1998 -- Electric Lightwave, Inc. (Nasdaq: ELIX), a
leading facilities-based integrated communications provider, today announced
continued rapid revenue growth and further progress on its strategic development
for the third quarter ended September 30, 1998.
Revenues for the latest quarter were $25.7 million, or 50% above revenues
of $17.1 million in the third quarter of 1997 and 20% above second quarter 1998
revenues of $21.4 million. The company's loss before interest, taxes,
depreciation and amortization (EBITDA loss), excluding operating lease expense,
was $13.5 million in the third quarter this year, compared with $2.3 million in
the third quarter a year ago and $10.9 million in this year's second quarter.
The net loss in the 1998 third quarter was $18.4 million or $0.37 per share,
compared with a net loss of $5.9 million or $0.14 per share in the prior year's
third quarter.
"Our sequential revenue growth accelerated in the third quarter, as we said
it would at the end of the second quarter," commented Dave Sharkey, president
and chief operating officer of Electric Lightwave. "In line with our plans,
local dial tone revenue and enhanced data services continued to be the strongest
contributors to our revenue growth. During the quarter, we expanded our sales
force to 146 people from 53 a year ago. That total will continue to grow to over
160 by the end of this year and will contribute to further top-line growth. We
also announced initial enhanced data services and the opening of a sales office
for customers in Las Vegas, as well as implementation of the largest, ringed
Synchronous Optical Network (SONET) in the western U.S."
In the third quarter of 1998, local dial tone revenue, including ISDN
service, was $10.0 million, up 245% from the third quarter a year ago and up 29%
from the second quarter of this year. Enhanced services revenue, which includes
frame relay, internet, asynchronous transfer mode (ATM) and LAN-to-LAN services,
was $4.2 million, or 77% above last year's third quarter and 22% above this
year's second quarter. Access line equivalents at the end of the quarter were
62,657, an increase of 155% over the end of last year's third quarter and 15%
over the end of the second quarter of this year. 99% of those access line
equivalents are on-switch, representing high asset utilization for Electric
Lightwave.
For the nine months ended September 30, 1998, Electric Lightwave's revenue
was $67.2 million, or 61% above the first nine months of 1997. The EBITDA loss,
excluding operating lease expenses, for the first three quarters of 1998 was
$32.9 million, compared to $13.9 million a year ago. The net loss for the
year-to-date period in 1998 was $47.9 million or $0.91 per share (before the
cumulative effect of a change in an accounting principle), compared with a net
loss of $26.0 million or $0.62 per share a year earlier.
"In the last few years, Electric Lightwave has been building the physical
assets and the corporate infrastructure to support a much larger company,"
concluded Sharkey. "We are now at the point where we can accelerate our revenue
growth further to take advantage of that foundation and the exciting market
opportunities in front of us. Our strategy targets expanded market penetration
in our growing western core cities, excellent data communications services and
expansion of our products and geographic reach. The opportunities are large, and
we are taking the operating steps to capitalize on them."
Electric Lightwave is a facilities-based integrated communications provider
offering data, internet access and broadband transport services to businesses
nationwide. In the western U.S., the company is a full-service provider offering
local and long distance telephone service, videoconferencing and prepaid
services to business customers. As of September 30, the company serves 84
municipalities with 62,657 access line equivalents, 2,782 route miles and 711
on-net buildings connected. The company has interconnected its market clusters
with owned and leased long-haul fiber optic networks.
This press release contains forward-looking statements that are subject to
risks and uncertainties which could cause actual results to differ materially
from those expressed or implied in the statements. All forward-looking
statements are only predictions or statements of current plans, which are
constantly under review by Electric Lightwave (the Company). All forward-looking
statements may differ from actual future results due to, but not limited to,
changes in the local and overall economy, the nature and pace of technological
changes, the number and effectiveness of competitors in the Company's markets,
success in overall strategy, changes in legal and regulatory policy, relations
with Incumbent Local Exchange Carriers (ILECs) and their ability to provide
delivery of services including interoffice trunking, implementation of back
office service delivery systems, the Company's ability to identify future
markets and successfully expand existing ones and the mix of products and
services offered in the Company's target markets. Readers should consider these
important factors in evaluating any statement contained herein and/or made by
the Company or on its behalf. The Company has no obligation to update or revise
forward-looking statements to reflect the occurrence of future events or
circumstances.
Electric Lightwave, Inc.
Statements of Operations
(In thousands, except per share data)
Three Months Ended
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September 30, 1998 June 30, 1998 September 30, 1997
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Revenues $ 25,664 $ 21,443 $ 17,078
Operating Expenses:
Network Access 12,317 9,860 7,341
Operating Expenses 7,308 6,528 3,467
Depreciation and Amortization 4,090 3,780 1,998
Selling, General and Administrative 21,243 17,588 9,980
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Total Operating Expenses 44,958 37,756 22,786
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Loss from Operations (19,294) (16,313) (5,708)
Interest Expense, Net 2,742 1,467 211
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Net Loss Before Income Taxes and Cumulative Effect of
Change in Accounting Principle (22,036) (17,780) (5,919)
Income Tax Benefit (3,631) (3,022) -
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Net Loss Before Cumulative Effect of a
Change in Accounting Principle (18,405) (14,758) (5,919)
Cumulative Effect of Change in Accounting Principle - - -
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Net Loss $ (18,405) $ (14,758) $ (5,919)
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EBITDA* $ (13,533) $ (10,894) $ (2,314)
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Weighted average shares outstanding 49,711 49,694 41,685
Net Loss Per Common Share:
Basic $ (0.37) $ (0.30) $ (0.14)
Diluted $ (0.37) $ (0.30) $ (0.14)
*Excludes operating lease expenses of $1,671, $1,639, and $1,396 for the
three months ended September 30, 1998, June 30, 1998, and September 30,
1997, respectively.
Electric Lightwave, Inc.
Statements of Operations
(In thousands, except per share data)
Nine Months Ended
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September 30,1998 September 30, 1997
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Revenues $ 67,164 $ 41,843
Operating Expenses:
Network Access 31,389 19,287
Operating Expenses 19,082 11,990
Depreciation and Amortization 11,754 7,601
Selling, General and Administrative 54,206 28,487
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Total Operating Expenses 116,431 67,365
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Loss from Operations (49,267) (25,522)
Interest Expense, Net 4,953 513
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Net Loss Before Income Taxes and Cumulative Effect of a Change
in Accounting Principle (54,220) (26,035)
Income Tax Benefit (9,102) -
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Net Loss Before Cumulative Effect of a Change in
Accounting Principle (45,118) (26,035)
Cumulative Effect of Change in Accounting Principle
2,817 -
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Net Loss $ (47,935) $ (26,035)
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EBITDA* $ (32,882) $ (13,892)
====================== ====================
Weighted average shares outstanding 49,697 41,685
Net Loss Before Cumulative Effect of Change in Accounting
Principle per Common Share:
Basic $ (0.91) $ (0.62)
Diluted $ (0.91) $ (0.62)
Net Loss Per Common Share:
Basic $ (0.96) $ (0.62)
Diluted $ (0.96) $ (0.62)
*Excludes operating lease expenses of $4,631 and $4,029 for the nine months
ended September 30, 1998 and September 30, 1997, respectively.
Selected Financial & Operating Data
(In thousands except selected operating data)
September 30, 1998 June 30, 1998 September 30, 1997
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Selected Financial Data
Property, Plant & Equipment - Owned $462,844 $396,080 $249,499
Property, Plant & Equipment - Leased $108,541 $108,541 $ 87,426
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Total $571,385 $504,621 $336,925
Selected Operating Data
Markets 9 9 5
Municipalities 84 83 59
Route Miles 2,782 2,656 2,087
Fiber Miles 156,949 153,002 123,257
Buildings Connected 711 682 540
Switches:
Voice 7 7 5
Internet Routers 21 18 11
ATM 10 9 -
Frame Relay 22 22 17
Access Lines 62,657 54,490 24,544
Access Lines/Switch 8,951 7,784 4,909
% on Switch 99% 98% 95%
Employees 1,010 841 482
Customers 1,475 1,330 1,085
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
_____________________________
Vice President and Controller
Date: October 30, 1998