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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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Form 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the three months ended December 31, 2000
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GT GROUP TELECOM INC.
Suite 700 - 20 Bay Street
Toronto, Ontario, Canada
M5J 2N8
(416) 848-2000
(Address of principal executive offices)
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[indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F]
Form 20-F X Form 40-F
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[indicate by check mark whether the registrant by furnishing information
contained
in this Form is also thereby furnishing the information to the Commission
pursuant to
rule 12g3-2(b) under the Securities Exchange Act of 1934]
Yes No X
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2
GT GROUP TELECOM INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999
(UNAUDITED)
(thousands of Canadian dollars)
3
GT GROUP TELECOM INC.
INTERIM CONSOLIDATED BALANCE SHEETS
(thousands of Canadian dollars)
DECEMBER 31, SEPTEMBER 30,
2000 2000
------------ -------------
$ $
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................... 365,960 444,050
Trade accounts receivable................................... 38,765 30,253
Sales tax and other receivables............................. 20,876 19,699
Prepaid expenses............................................ 3,870 5,939
Inventory................................................... 605 436
--------- ---------
430,076 500,377
PREPAYMENTS ON PROPERTY, PLANT AND EQUIPMENT................ 132,852 203,703
PROPERTY, PLANT AND EQUIPMENT............................... 1,157,739 954,917
LONG-TERM INVESTMENT........................................ 43,238 43,238
GOODWILL AND OTHER ASSETS................................... 229,112 227,033
--------- ---------
1,993,017 1,929,268
========= =========
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities.................... 105,170 111,395
Unearned revenue............................................ 811 544
Current portion of long-term debt........................... 6,292 4,348
--------- ---------
112,273 116,287
LONG-TERM UNEARNED REVENUE.................................. 1,118 1,255
LONG-TERM DEBT.............................................. 1,095,966 948,928
--------- ---------
1,209,357 1,066,470
SHAREHOLDERS' EQUITY
SHARE CAPITAL AND OTHER EQUITY ITEMS........................ 1,014,013 1,013,866
DEFICIT..................................................... (230,353) (151,068)
--------- ---------
783,660 862,798
--------- ---------
1,993,017 1,929,268
========= =========
The accompanying notes form an integral part of these interim consolidated
financial statements.
F-1
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GT GROUP TELECOM INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(UNAUDITED)
(thousands of Canadian dollars, except for per share amounts)
THREE MONTHS ENDED
DECEMBER 31,
-------------------
2000 1999
-------- -------
$ $
REVENUE..................................................... 39,924 2,267
COST OF SERVICES............................................ 25,426 2,138
-------- -------
14,498 129
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................ 41,780 10,863
-------- -------
(27,282) (10,734)
AMORTIZATION................................................ 23,385 1,124
INTEREST AND FINANCING CHARGES, NET......................... 27,543 141
-------- -------
LOSS BEFORE INCOME TAXES.................................... (78,210) (11,999)
PROVISION FOR INCOME TAXES.................................. 1,075 65
-------- -------
LOSS FOR THE PERIOD......................................... (79,285) (12,064)
DEFICIT -- BEGINNING OF PERIOD.............................. (151,068) (13,082)
-------- -------
DEFICIT -- END OF PERIOD.................................... (230,353) (25,146)
======== =======
LOSS PER SHARE.............................................. (0.63) (0.54)
======== =======
WEIGHTED AVERAGE NUMBER OF OUTSTANDING SHARES (in
thousands)................................................ 124,882 22,475
======== =======
The accompanying notes form an integral part of these interim consolidated
financial statements.
F-2
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GT GROUP TELECOM INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(thousands of Canadian dollars)
THREE MONTHS ENDED
DECEMBER 31,
-------------------
2000 1999
-------- -------
$ $
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Loss for the period......................................... (79,285) (12,064)
Items not affecting cash
Amortization.............................................. 23,385 1,124
Non-cash interest expense................................. 30,551 --
-------- -------
(25,349) (10,940)
-------- -------
Changes in non-cash working capital items
Increase in accounts receivable........................... (9,689) (1,731)
Increase in inventory..................................... (168) --
Increase (decrease) in prepaid expenses................... 2,069 (1,548)
Increase (decrease) in accounts payable and accrued
liabilities............................................ (6,111) 6,473
Increase (decrease) in unearned revenue................... 129 (117)
-------- -------
(13,770) 3,077
-------- -------
Cash used in operating activities........................... (39,119) (7,863)
-------- -------
FINANCING ACTIVITIES
Repayment of long-term debt................................. -- (150)
Issuance of shares.......................................... 147 14
-------- -------
147 (136)
-------- -------
INVESTING ACTIVITIES
Purchases of property, plant and equipment.................. (34,048) (18,940)
Business acquisitions....................................... -- (2,710)
Increase in other assets.................................... (5,070) (855)
-------- -------
(39,118) (22,505)
-------- -------
DECREASE IN CASH AND CASH EQUIVALENTS....................... (78,090) (30,504)
CASH AND CASH EQUIVALENTS -- BEGINNING OF PERIOD............ 444,050 59,851
-------- -------
CASH AND CASH EQUIVALENTS -- END OF PERIOD.................. 365,960 29,347
======== =======
The accompanying notes form an integral part of these interim consolidated
financial statements.
F-3
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GT GROUP TELECOM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(expressed in Canadian dollars)
1 OPERATIONS AND BASIS OF PRESENTATION
The Company markets and sells telecommunications services and related
products over fibre-optic infrastructure to small and medium-sized
businesses in Canada. The Company also uses Digital Subscriber Lines (DSL)
and fixed wireless technology to extend the reach of its network. The
Company provides data, Internet applications and voice services.
These interim consolidated financial statements are prepared following
accounting policies consistent with the Company's consolidated financial
statements for the years ended September 30, 2000, 1999 and 1998. These
financial statements are in accordance with generally accepted accounting
principles in Canada which, in the case of the company, conform in all
material respects with those in the United States, except as outlined in
note 3.
The information presented as at December 31, 2000 and for the interim
periods ended December 31, 2000 and 1999 is unaudited. These unaudited
interim financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results for the
interim periods presented; all such adjustments are of a normal recurring
nature.
2 SIGNIFICANT TRANSACTIONS
(a) During the quarter ended December 31, 2000, the Company accepted
approximately 76% of the fibre-optic capacity under the long-term
capacity lease agreement entered into with 360networks inc. in May
2000. As a result, the Company recorded an increase in property plant
and equipment and long-term debt of $61 million. The Company also
obtained for use newly constructed fibres with a carrying value of $70
million pursuant to a prepaid indefeasible right to use arrangement.
(b) On October 16, 2000, the Company entered into an asset purchase
agreement with C1 Communications Inc. (C1). This transaction is
expected to close during the quarter ended March 31, 2001. Under the
purchase agreement, the Company will purchase from C1 all the property
and assets used in its Atlantic Canada competitive local exchange
carrier business. The Company will also assume the rights and
obligations with respect to an existing indefeasible right to use
agreement, which will grant the Company the right to use certain
specifically identified existing fibres for 19 years.
The purchase consideration consists of rights to acquire 2,372,000
Class B non-voting shares of the Company and the assumption of $22
million of long-term obligations of C1 relating to the indefeasible
right to use agreement. Acquisition costs are estimated to be $2
million.
(c) On December 20, 2000, the Company entered into additional cross
currency swaps with several financial institutions to convert an
additional 31% of the future U.S. dollar payments on the senior
discount notes to Canadian dollars at fixed average exchange rate of
approximately $1.5335. The Company has now fully hedged its exposure
to fluctuations in the U.S. dollar in respect of its senior discount
notes included within long-term debt.
F-4
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GT GROUP TELECOM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(expressed in Canadian dollars)
3 RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED
STATES
The Company's condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
("GAAP") in Canada, which, in the case of the Company conform in all
material respects with GAAP in the United States of America, except as
outlined below:
A) NET LOSS AND SHAREHOLDERS' EQUITY
The following summary sets out the adjustments to the Company's loss and
shareholders' equity, which would be made to conform to U.S. GAAP:
THREE MONTHS ENDED
DECEMBER 31,
------------------
2000 1999
------- -------
$ $
Loss for the period in accordance with Canadian GAAP........ (79,285) (12,064)
Impact of U.S. accounting principles
Amortization of purchase price adjustment(c).............. (396) --
Deferred charges.......................................... -- (15)
Stock based compensation(d)............................... (3,767) (1,015)
Deferred foreign exchange(e).............................. (2,645) 670
Recovery of future income taxes(g)........................ 1,449 --
------- -------
Net loss in accordance with U.S. GAAP....................... (84,644) (12,424)
Unrealized loss on securities(f).......................... (10,993) --
Unrealized gain on derivative instruments, net of future
income tax of $1,449(g)................................ 3,380 --
------- -------
Comprehensive loss in accordance with U.S. GAAP............. (92,257) (12,424)
======= =======
Net loss per share in accordance with U.S. GAAP............. (0.74) (0.55)
======= =======
THE RECONCILIATION OF SHAREHOLDERS' EQUITY FROM CANADIAN TO U.S. GAAP IS
AS FOLLOWS:
AS AT AS AT
DECEMBER 31, SEPTEMBER 30,
2000 2000
------------ -------------
$ $
(AUDITED)
Shareholders' equity in accordance with Canadian GAAP..... 783,660 862,798
Purchase price adjustment, net of amortization of $1,013
(September 30, 2000 -- $617) (c)........................ 16,639 17,035
Deferred charges.......................................... (417) (417)
Cumulative stock-based compensation expense (d)........... (15,271) (11,651)
Deferred stock based compensation expense (d)............. (30,374) (34,266)
Net change in stock options (d)........................... 45,645 45,917
Deferred foreign exchange (e)............................. (4,311) (1,666)
Recovery of future income taxes (f)(g).................... 12,504 11,055
Other comprehensive income (f)(g)......................... 16,313 23,926
-------- --------
Shareholders' equity in accordance with U.S. GAAP......... $824,388 $912,731
-------- --------
F-5
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GT GROUP TELECOM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(expressed in Canadian dollars)
B) CONDENSED CONSOLIDATED BALANCE SHEETS
The following table indicates the restated amounts for the items in the
consolidated balance sheets of the Company that would be affected had
the financial statements been prepared in accordance with U.S. GAAP:
AS AT AS AT
DECEMBER 31, SEPTEMBER 30,
2000 2000
------------ -------------
$ $
(AUDITED)
Property, plant and equipment (c)......................... 1,161,043 957,957
Long-term investment (f).................................. 66,537 77,530
Goodwill and other assets (c)(g).......................... 254,008 239,327
Long-term debt (g)........................................ 1,113,028 --
Share capital (c)......................................... 1,032,373 1,032,079
Additional paid-in capital................................ 337 337
Deferred stock-based compensation expense (c)............. (30,374) (34,266)
Stock options outstanding (c)............................. 45,645 45,917
Deficit................................................... (239,907) (155,263)
Cumulative other comprehensive income (f)(g).............. 16,313 23,926
C) PURCHASE PRICE ADJUSTMENT
For U.S. GAAP, the Company has recorded the purchase price of the assets
acquired from Moffat Communications, based on the fair value of
consideration at the date the Company entered into the asset purchase
agreement in March 2000. For Canadian GAAP, the purchase price of the
assets acquired is based on the fair value on the date the transaction
closed in April 2000. Accordingly, property, plant and equipment,
goodwill and other assets, and share capital increased by $3 million,
$15 million and $18 million, respectively.
D) STOCK-BASED COMPENSATION
For U.S. GAAP, the Company has chosen to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25 "Accounting for Stock Issued to
Employees". This method recognizes compensation cost as the amount by
which the fair value of the stock exceeds the exercise price at the date
of grant. The compensation cost is recognized over the vesting period.
For U.S. GAAP, the compensation cost not yet recognized is presented as
a deferred stock-based compensation charge, with a corresponding amount
included in stock options outstanding, both of which form part of
shareholders' equity. For Canadian GAAP, stock-based compensation
expense is not recorded in the accounts of the Company.
F-6
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GT GROUP TELECOM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(expressed in Canadian dollars)
Had the Company determined compensation costs based on fair value at the
date of grant for its awards under a method prescribed by Statement of
Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation" the Company's loss and loss per share would be
as follows:
THREE MONTHS ENDED
DECEMBER 31,
------------------
2000 2000
------- -------
$ $
Loss in accordance with U.S. GAAP........................... (84,644) (12,424)
Additional compensation expense............................. (1,011) (105)
------- -------
Pro forma net loss.......................................... (85,655) (12,529)
======= =======
Pro forma loss per share.................................... (0.69) (0.56)
======= =======
The pro-forma compensation expense reflected above has been estimated
using the Black-Scholes option-pricing model. Assumptions used in the
pricing model included: (i) risk free interest rate of between 4.10% -
6.45%; (ii) expected volatility of ranging between nil - 65%; (iii)
expected dividend yield of nil; and (iv) an estimated average life of
ranging from 2.67 - 3 years.
E) DEFERRED FOREIGN EXCHANGE
U.S. GAAP requires immediate recognition in income of unrealized foreign
currency exchange gains and losses on long-term monetary items with a
fixed or ascertainable life whereas Canadian GAAP requires that these
unrealized gains and losses be deferred and amortized over the remaining
term of the long-term monetary items.
F) UNREALIZED LOSS ON SECURITIES
Under U.S. GAAP, portfolio investments which are considered to be
"available for sale" securities are measured at market value, with the
unrealized gains and losses included in comprehensive income/loss. Under
Canadian GAAP, the Company's long-term investment is recorded at cost.
The concept of comprehensive income/loss does not exist under Canadian
GAAP.
G) UNREALIZED GAIN ON DERIVATIVE INSTRUMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities".
This statement establishes methods of accounting for derivative
instruments, including certain derivatives embedded in other contracts,
and for hedging activities. The statement requires that entities
recognize all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value.
The Company adopted SFAS No. 133 effective October 1, 2000 and
designated certain derivative instruments as cash flow hedges. For the
three months ended December 31, 2000, the Company recorded the foreign
exchange loss on the hedged portion of the long-term debt in other
comprehensive income, offset by a gain in the fair value of the hedging
instruments. These transactions were recorded net of tax. Under U.S.
GAAP, this resulted in an additional recovery of future income taxes.
F-7
10
GT GROUP TELECOM INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(expressed in Canadian dollars)
As the Financial Accounting Standards Board continues to issue
additional guidance and interpretations on SFAS No. 133, the Company
will review its accounting practices for derivative instruments, and
make adjustments, if necessary.
F-8
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GT GROUP TELECOM INC.
SUPPLEMENTAL INFORMATION TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(thousands of Canadian dollars)
DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2000 2000 2000 2000
------------ ------------- --------- ---------
$ $ $ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents.................. 365,960 444,050 526,231 732,053
Trade accounts receivable.................. 38,765 30,253 32,799 12,801
Sales tax and other receivables............ 20,876 19,699 7,786 2,456
Prepaid expenses........................... 3,870 5,939 8,958 5,227
Inventory.................................. 605 436 201 201
--------- --------- --------- ---------
430,076 500,377 575,975 752,738
PREPAYMENT ON PROPERTY, PLANT AND
EQUIPMENT................................ 132,852 203,703 230,600 223,000
PROPERTY, PLANT AND EQUIPMENT.............. 1,157,739 954,917 778,926 567,568
LONG-TERM INVESTMENT....................... 43,238 43,238 43,238 --
GOODWILL AND OTHER ASSETS.................. 229,112 227,033 199,710 192,366
--------- --------- --------- ---------
1,993,017 1,929,268 1,828,449 1,735,672
========= ========= ========= =========
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities... 105,170 111,395 88,485 42,583
Unearned revenue........................... 811 544 1,325 925
Current portion of long-term debt.......... 6,292 4,348 1,204 6,203
--------- --------- --------- ---------
112,273 116,287 91,014 49,711
LONG-TERM UNEARNED REVENUE................. 1,118 1,255 1,080 1,219
LONG-TERM DEBT............................. 1,095,966 948,928 853,123 781,447
FUTURE INCOME TAXES........................ -- -- -- 28,200
--------- --------- --------- ---------
1,209,357 1,066,470 945,217 860,577
--------- --------- --------- ---------
SHAREHOLDERS' EQUITY
SHARE CAPITAL AND OTHER EQUITY ITEMS....... 1,014,013 1,013,866 971,468 937,550
DEFICIT.................................... (230,353) (151,068) (88,236) (62,455)
--------- --------- --------- ---------
783,660 862,798 883,232 875,095
--------- --------- --------- ---------
1,993,017 1,929,268 1,828,449 1,735,672
========= ========= ========= =========
F-9
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GT GROUP TELECOM INC.
SUPPLEMENTAL INFORMATION TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(UNAUDITED)
(thousands of Canadian dollars)
FOR THE THREE MONTHS ENDED,
------------------------------------------------------
DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2000 2000 2000 2000
------------ ------------- -------- ---------
$ $ $ $
REVENUE...................................... 39,924 32,167 25,558 13,259
COST OF SERVICES............................. 25,426 21,230 17,415 10,553
-------- -------- ------- -------
14,498 10,937 8,143 2,706
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES................................... 41,780 38,901 30,984 20,286
-------- -------- ------- -------
(27,282) (27,964) (22,841) (17,580)
AMORTIZATION................................. 23,385 20,241 15,447 6,169
INTEREST AND FINANCING CHARGES............... 27,543 26,488 14,488 13,237
-------- -------- ------- -------
LOSS BEFORE INCOME TAXES..................... (78,210) (74,693) (52,776) (36,986)
PROVISION FOR (RECOVERY OF) INCOME TAXES..... 1,075 (11,861) (26,995) 323
-------- -------- ------- -------
LOSS FOR THE PERIOD.......................... (79,285) (62,832) (25,781) (37,309)
DEFICIT -- BEGINNING OF PERIOD............... (151,068) (88,236) (62,455) (25,146)
-------- -------- ------- -------
DEFICIT -- END OF PERIOD..................... (230,353) (151,068) (88,236) (62,455)
======== ======== ======= =======
LOSS PER SHARE............................... (0.63) (0.52) (0.22) (0.90)
======== ======== ======= =======
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (in thousands)................. 124,882 120,256 118,376 41,506
======== ======== ======= =======
F-10
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MANAGEMENT'S DISCUSSION AND ANALYSIS
QUARTER ENDED DECEMBER 31, 2000
(Figures expressed in CDN dollars)
OVERVIEW
We continue to experience a significant amount of growth this period
compared to the prior year period, therefore, the analysis of our results of
operations on a year to year basis is not useful. Accordingly, we have tailored
our discussion to a quarter by quarter comparison in order to provide valuable
information.
During the quarter ended December 31, 2000, we experienced strong organic
growth in our business through the continued development of our own network. As
at December 31, 2000, we have available approximately $850 million in funding to
execute our business plan to 2004, consisting of $366 million cash on hand, $364
million in available vendor financing and $120 million in available senior bank
financing. We will continue to expand our presence as Canada's largest
independent facilities-based provider of competitive data, Internet and voice
telecommunications by executing our fully funded business plan.
GROUP TELECOM -- OUR RESULTS OF OPERATIONS
Revenue
Total revenues increased by 24.1%, from $32.2 million to $39.9 million,
from September to December 2000 quarters, respectively. The increase was driven
by strong growth of 21.2% in our data and private line, and 37.3% in our voice
services across all product categories. Data ports and private lines provisioned
grew from 5,206 at September to 6,791 at December 2000 and from 38,879 to
51,037, respectively. Voice access lines provisioned grew from 36,516 at
September to 48,435 at December 2000.
Cost of Services
Total cost of services increased by 19.8%, from $21.2 million to $25.4
million from September to December 2000 quarters, respectively. The increase was
related to large growth in revenues for the same period. Gross margin totaled
$14.5 million or 36.3% of revenues compared with $10.9 million or 34.0% of
revenues in the previous quarter. For the second quarter in a row, our gross
margin has increased due to a shift in our product mix to more on-net traffic.
Selling, general and administrative expenses
Total selling, general and administrative expenses amounted to $41.8
million for the current quarter compared to $38.9 million for the previous
quarter, representing an increase of 7.4%. Selling, general and administrative
expenses as a percentage of revenues decreased from 120.9% to 104.6% from
September to December 2000 quarters, respectively. As we continue to grow our
business, we expect to continue to leverage off and realize the benefits from
our established infrastructure.
EBITDA
Earnings before interest, taxes, depreciation and amortization (EBITDA)
related to data, application and voice services for the quarter ended December
31, 2000 was negative $27.3 million compared to negative $28.0 million for the
previous quarter. Based on our current funded business plan, we are projecting
to reach a positive EBITDA in the second half of 2002.
Amortization
Amortization expenses increased by $3.1 million during the current quarter
to $23.4 million compared to $20.4 million for the previous quarter,
representing an increase of 16%. Significant additions to property, plant and
equipment in connection with the deployment of our network resulted in this
increase.
14
Interest and financing charges
Interest and financing charges were $27.6 million for the current quarter
compared to $26.5 million in the previous quarter. This increase is due to a
decrease in the net foreign exchange gain recorded in the quarter compared to
the prior quarter. In December 2000, we entered into additional cross currency
swaps to convert an additional 31% of the future U.S. dollar payments on the
senior discount notes to Canadian dollars. We have now fully hedged our exposure
to fluctuations in the U.S. dollar in respect of our senior discount notes,
which are included within long-term debt.
Provision for income taxes
We have not generated any taxable income to date and therefore have not
accrued any income tax expense. We have recorded a provision for large
corporations' tax in the amount of $1 million for the quarter.
Net loss
As a result of the above, the net loss for the quarter ended December 31,
2000 was $79.3 or $0.63 per share compared to $62.8 million or $0.52 per share
for the quarter ended September 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased during the quarter ended December 31,
2000 based on our operating requirements of $39.1 million and capital
expenditures made to further expand our network amounted to $34.0 million.
Through our organic build and indefeasible right to use arrangement as described
below, we expanded the reach of our network by adding 38,182 fibre kilometres to
our fibre-optic network of 228,765 fibre kilometres. Our network development in
on plan and expected to grow to over 500,000 fibre kilometres by September 30,
2001.
Increases in trade accounts receivable were due to growth in revenues.
Accordingly, our trade receivables increased to $38.8 million compared to $30.3
million in September 2000.
Other items such as prepaid expenses, accounts payable and accrued
liabilities increased from September 30 to December 31, 2000. These increases
are directly related to our growth during the quarter.
During the quarter ended December 31, 2000, we received additional rights
to use newly constructed fibres with a carrying value of $70.9 million under
existing and prepaid indefeasible right to use arrangements. In addition, we
accepted approximately 76% of the fibre-optic capacity under the long-term
capacity lease agreement entered into with 360networks inc. in May 2000 and
recorded $61.1 million increase in property, plant and equipment and long-term
debt.
FORWARD-LOOKING STATEMENTS
Certain sections of this discussion contain forward-looking statements with
respect to Group Telecom. These forward looking statements, by their nature,
necessarily involve risks and uncertainties that could cause actual results,
performance or achievements of Group Telecom to differ materially from those
expressed or implied by the forward looking statements.
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GT GROUP TELECOM INC.
(Registrant)
Date: February 6, 2001 By /s/ STEPHEN H. SHOEMAKER
----------------------------------------------
Stephen H. Shoemaker
Executive Vice-President
and Chief Financial Officer