8-K 1 f8k_042301mpower.txt CURRENT REPORT 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 (Date of earliest event reported): April 24, 2001 Mpower Communications Corp. ------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Nevada 0-24059 88-0360042 --------- ---------- -------------------- (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification No.) incorporation) 175 Sully's Trail, Suite 300, Pittsford, NY 14534 ------------------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) Registrants telephone number, including area code: (716) 218-6550 -------------------- Item 9. Regulation FD Disclosure. Mpower Communications Corp. is furnishing under Item 9 of this Current Report on Form 8-K the information included as Exhibit 99.1 to this report. Exhibit 99.1 is the slide show presentation given by Mpower's management to certain research analysts on April 24, 2001 updating previous disclosures regarding Mpower's long-term business plan. A copy of this slide show presentation can be obtained from the Investor Relations section of Mpower's website at www.mpowercom.com/corpinfo/relationships/htm. Mpower is furnishing under Item 9 of this Current Report on Form 8-K the information included as Exhibit 99.2 to this report. Exhibit 99.2 is Mpower's press release announcing that Mpower will defer declaring at this time the quarterly 7.25% dividend on its Series D convertible preferred shares. 1 The information in this Current Report on Form 8-K, including the information set forth in the slide presentation and press release referred to above, is furnished pursuant to Item 9 and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized. MPOWER COMMUNICATIONS CORP. By /s/ Russell I. Zuckerman --------------------------------------------- Name: Russell I. Zuckerman Title: Senior Vice President, General Counsel and Secretary Date: April 24, 2001 2 Exhibit 99.1 Other Documents. Mpower's slide show presentation to analysts. 3 Slide #1 Mpower Communications [NOW YOU HAVE THE POWER.] Bear Stearns 2001 Global Credit Conference April 24, 2001 4 Slide #2 Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Mpower cautions investors that certain statements contained in this presentation that state Mpower's and/or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. Management wishes to caution the reader these forward-looking statements are not historical facts and are only estimates or predictions. Actual results may differ materially from those projected as a result of risks and uncertainties including, but not limited to, projections of future sales, market acceptance of our product offerings, our ability to secure adequate financing or equity capital to fund our operations and network expansion, our ability to manage rapid growth and maintain a high level of customer service, the performance of our network and equipment, the cooperation of incumbent local exchange carriers in provisioning lines and interconnecting our equipment, regulatory approval processes, changes in technology, price competition, and other market conditions and risks listed from time to time in Mpower's Securities and Exchange Commission filings. 5 Slide #3 ! One Year Ago... -------------------------------------------- All Telecom Business Models Were Being Funded - Wholesale Long Distance Fixed Wireless Digital Subscriber Line Broadband - Resale Local Voice Long Distance Digital Subscriber Line Broadband - Reciprocal Compensation 6 Slide #4 ! One Year Ago... -------------------------------------------- Opportunity = $$ - Everyone intuitively understood the opportunity to take market share from Local Exchange Carriers - Billions of dollars invested in the industry - Competitive Local Exchange Carriers easily access debt and credit - Buying fiber for your network was the "in thing" - Valuations driven by operating stats rather than underlying economics of business If You Build It OR Rent It They Will Come 7 Slide #5 ! One Year Later... -------------------------------------------- o Flawed Business Models Are Dying - Wholesale - Reseller - Reciprocal Compensation o Confusion About What Economic Model Can Work o Heavy Debt Loads Are Weighing Down Some Reasonable Business Models o Investment Has Stopped Irrational Exuberance Has Shifted To Irrational Pessimism 8 Slide #6 ! What is the Market Opportunity? o Local Telecom Offers $120 BB Revenue, 45% EBITDA Margins and 5% Growth o Business Customers Generate 60% of Local Revenue and 70% of Local EBITDA o Business Customers are Densely Clustered in Urban Population Areas o Local Network Assets are the Most Time Consuming and Costly to Deploy o Local Pricing Has Been the Most Stable in Telecom Over the Past 5 Years o Powerful Drivers of Demand Exist in the Marketplace Today and Going Forward 9 Slide #7 ! What Should You Know About Mpower -------------------------------------------- 1. Retail/Small Business, Customer Focused Strategy 2. Facilities Based Strategy, - Mpower owns and controls all of its collocations and switching equipment 3. Solid Economic Model - small business focused - build program is complete, our network is in place 4. Quality Revenue Streams - our revenue is derived primarily from customers, not wholesale or resale revenues - the company does not rely on reciprocal compensation and has the vast majority of its switched access revenue under contract 5. Reasonable Debt Levels - approximately 18 months of cash in the bank to fund operations and meet debt obligations 10 Slide #8 ! What Should You Know About Mpower -------------------------------------------- 6. Commitment to Fully Funded Position - based on current guidance we have sufficient funding through the end of 2002 - currently project a $75 mm funding gap before operating cash flow positive - we are committed to being fully funded prior to operating cash flow positive with or without further outside support 7. We Have a Base of Markets That Are Operating Cash Flow Positive or Very Close 8. We Are Actively Considering All Options To Attaining A Fully Funded Position - further expense/capital reduction initiatives - further reduction of existing markets - private equity - bank lines/vendor financing Commitment To Survive The Shakeout! 11 Slide #9 ! The Economics of a Competitive Local Exchange Carrier ----------------------------------------------------- The following three slides focus on: o Major one-time and monthly cash inflow and outflows of the business o Summary average over the next three years of the economics of each of our product lines through operating cash flow, based on our major expenses and recurring revenue o Summary of Internal Rates of Return over the next three years These slides are excerpts from an 8K filing dated 1/31/01, which includes the economic model in its entirety 12 Slide #10 ! The Economics of a Competitive Local Exchange Carrier ------------------------------------------------------

13 Slide #11 Summary Economics (2001-2004)

14 Slide #12 Mpower Economics (IRR) [A chart reflecting Mpower's internal rate of return over each of our four product lines: voice, data, voice/data and voice over digital subscriber line as an average over the years 2001-2004 and for the year 2004.] Voice: 2001-2004 2004 17% 31% Data: 2001-2004 2004 72% 90% Voice/Data: 2001-2004 2004 32% 47% VoDSL: 2001-2004 2004 69% 94% 15 Slide #13 ! Results... -------------------------------------------- In 2000... Triple Digit Growth on all Metrics o Footprint/Collocations 245 to 761 +211% o Markets 13 to 40 +208% o Revenue run rate $81 million to $178 million +120% o Cash $189 million to $503 million +166% 16 Slide #14 ! The Mpower Opportunity -------------------------------------------- Focus on Customer Revenue... o Sales Force Focus on Revenue Not Lines o Quotas Reflect Focus on Data Sales o Assigned Territories for Effective Network Utilization Retail Focus 17 Slide #15 ! Expectations -------------------------------------- 1Q01 Guidance* Revenue $44-45 customer revenue growth 11-13% EBIDTA ($50)-(48) CAPEX $50-55 * Based on guidance released 2/15/01 Focus on Operational Excellence 18 Slide #16 Capitalization - Strong Balance Sheet with Financial Flexibility ($ in millions) Dec-99 Dec-00 % Cash (incl. restricted) $189 $ 503 50% Total Debt 162 485 48% Convertible Preferred 90 245 24% Stockholders' Equity 104 318 32% Capitalization 356 1,009 ---- ----- Common Stock 225 673 19 Slide # 17 ! Funding Gap...Multiple Paths --------------------------------------------------------- Guidance = $75 mm Funding Shortfall We will address this funding shortfall through: o Announced cancellation of entry into planned markets in NE & NW o Reduction of additional markets if necessary o Or we will attempt to meet gap through vendor financing, a bank facility or private equity Continually Assess Market Viability 20 Slide #18 ! Business Fundamentals -------------------------------------------------------- o Sound Strategy o Network Footprint o Strong Equity Sponsorship o Strong Balance Sheet o Solid Management Team Focus on Operational Excellence Not Market Perception 21 Slide #19 Mpower(TM) Communications www.mpowercom.com 22

MPOWER COMMUNICATIONS CORP 8-K