ICG COMMUNICATIONS INC /DE/ - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

[ ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Commission File Number 1-11965)

ICG COMMUNICATIONS, INC.
(Exact names of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

84‑1342022
(IRS Employer Identification Number)

161 Inverness Drive West
Englewood, Colorado 80112
(Address of principal executive offices)

Registrant's telephone numbers, including area codes: (888) 424‑1144 or (303) 414‑5000

Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

Yes [ X ]

No [ ]

The number of outstanding common shares of ICG Communications, Inc. (the "Predecessor Company", as defined herein) as of October 10, 2002 was 55,244,915. On October 10, 2002, all outstanding common shares of the Predecessor Company were cancelled in connection with its emergence from bankruptcy and in accordance with the Modified Plan of reorganization. Distribution of the common shares of the ICG Communications, Inc. (the "Reorganized Company", as defined herein) is expected to occur no later than December 31, 2002.

ICG COMMUNICATIONS, INC. AND SUBSIDIARIES (Predecessor Company)
Consolidated Balance Sheets
December 31, 2001 and September 30, 2002 (Unaudited)

	December 31, 2001		September 30, 2002

	(in thousands)

Assets

Current assets:
Cash and cash equivalents	$	146,587	$	109,753
Trade receivables, net of allowance of $44 million and $13 million at December 31, 2001 and September 30, 2002, respectively		42,365		31,051
Other receivables		559		279
Prepaid expenses and deposits		13,559		10,906


Total current assets		203,070		151,989

Property and equipment, net (note 6)		531,187		496,723

Restricted cash		7,299		7,019
Investments		100		100
Deferred financing costs, net of accumulated amortization of $2 million		3,050		2,508
Deposits		10,459		10,063


Total Assets	$	755,165	$	668,402



(continued)
See accompanying notes to consolidated financial statements.

ICG COMMUNICATIONS, INC. AND SUBSIDIARIES (Predecessor Company)
Consolidated Balance Sheets (Unaudited), Continued

	December 31, 2001				September 30, 2002

	(in thousands)

Liabilities and Stockholders' Deficit

Current liabilities not subject to compromise:
Accounts payable	$	8,871		$	12,167
Accrued liabilities		73,853			46,360
Deferred revenue		9,067			7,272

Total current liabilities not subject to compromise		91,791			65,799

Liabilities subject to compromise (note 3)		2,729,590			2,723,449

Long-term liabilities not subject to compromise:
Capital lease obligations		50,708			51,154
Other long-term liabilities		1,088			348


Total liabilities		2,873,177			2,840,750

Predecessor Company Preferred stock, at liquidation value:
Redeemable preferred stock of subsidiary		449,056			449,056
Mandatorily redeemable preferred securities of ICG Funding		92,336			55,380
8% Series A Convertible Preferred Stock		785,353			785,353

Total preferred stock		1,326,745			1,289,789

Stockholders' equity (deficit):
Predecessor Company Common stock, $0.01 par value, 100,000,000 shares authorized; 53,706,777 and 55,244,915 shares issued and outstanding at December 31, 2001 and September 30, 2002, respectively		537			552
Additional paid-in capital		922,040			958,980
Accumulated deficit		(4,367,334	)		(4,421,669	)


Total stockholders' deficit		(3,444,757	)		(3,462,137	)

Commitments and contingencies (note 9)


Total Liabilities and Stockholders' Deficit	$	755,165		$	668,402





See accompanying notes to consolidated financial statements.

ICG COMMUNICATIONS, INC. AND SUBSIDIARIES (Predecessor Company)
Consolidated Statements of Operations (Unaudited)

	Three months ended September 30,						Nine months ended September 30,

	2001			2002			2001			2002

	(in thousands, except per share data)

Revenue	$	124,071		$	105,914		$	381,720		$	320,865

Operating costs and expenses:
Operating costs		84,954			63,053			282,329			191,343
Selling, general and administrative expenses		23,469			16,128			80,635			67,690
Depreciation and amortization		18,301			21,442			50,484			66,379
Loss (gain) on disposal of assets		1,908			(570	)		9,541			(684	)
Provision for impairment of long-lived assets		-			30			-			673

Total operating costs and expenses		128,632			100,083			422,989			325,401


Operating income (loss)		(4,561	)		5,831			(41,269	)		(4,536	)

Other income (expense):
Interest expense (note 3)		(277	)		(5,087	)		(24,076	)		(15,390	)
Reorganization income (expense), net (note 3)		30,697			(5,673	)		3,192			(34,405	)
Other income (expense), net		(95	)		(87	)		1,239			(4	)

Total other income (expense), net		30,325			(10,847	)		(19,645	)		(49,799	)


Net income (loss)	$	25,764		$	(5,016	)	$	(60,914	)	$	(54,335	)




Net income (loss) per share – basic and diluted	$	0.48		$	(0.09	)	$	(1.16	)	$	(1.00	)




Weighted average number of shares outstanding - basic and diluted		53,158			55,245			52,452			54,608





See accompanying notes to consolidated financial statements.

ICG COMMUNICATIONS, INC. AND SUBSIDIARIES (Predecessor Company)
Consolidated Statement of Stockholders' Deficit (Unaudited)
(In Thousands)

	Common Stock			Additional Paid-in Capital					Total Stockholders' Deficit

	Shares	Amount				Accumulated Deficit


Balances at January 1, 2002	53,707	$	537	$	922,040	$	(4,367,334	)	$	(3,444,757	)

Shares issued upon conversion of mandatorily redeemable preferred securities of ICG Funding	1,538		15		36,940		-			36,955
Net loss	-		-		-		(54,335	)		(54,335	)


Balances at September 30, 2002	55,245	$	552	$	958,980	$	(4,421,669	)	$	(3,462,137	)






See accompanying notes to consolidated financial statements.

ICG COMMUNICATIONS, INC. AND SUBSIDIARIES (Predecessor Company)
Consolidated Statements of Cash Flows (Unaudited)

	Nine months ended September 30,

	2001			2002

	(in thousands)

Cash flows from operating activities:
Net loss	$	(60,914	)	$	(54,335	)
Adjustments to reconcile net loss to net cash provided by operating activities before reorganization items:
Reorganization expense (income), net		(3,192	)		34,405
Depreciation and amortization		50,484			66,379
Net loss (gain) on disposal of long-lived assets		9,541			(684	)
Provision for uncollectible accounts		8,403			4,016
Provision for impairment of long-lived assets		-			673
Interest costs capitalized on assets under construction		(1,049	)		(342	)
Interest expense deferred and included in capital lease obligations		5,748			2,921
Amortization of deferred financing costs included in interest expense		6,657			537
Realized gain on sale of available for sale securities		(1,542	)		-
Change in operating assets and liabilities, excluding the effects of dispositions and non-cash transactions:
Receivables		20,114			7,663
Prepaid expenses and deposits		(1,819	)		1,617
Accounts payable and accrued liabilities		5,498			(28,435	)
Deferred revenue		(6,289	)		(2,535	)

Net cash provided by operating activities before reorganization items		31,640			31,880
Reorganization items:
Reorganization income (expense), net		3,192			(34,405	)
Net gain on contract settlements and disposals of long-lived assets		(36,421	)		(3,637	)
Increase (decrease) in post-petition restructuring accruals		(1,412	)		1,798
Increase (decrease) in liabilities subject to compromise		(30,413	)		10,352

Total cash used by reorganization items		(65,054	)		(25,892	)

Net cash provided (used) by operating activities		(33,414	)		5,988

Cash flows from investing activities:
Acquisition of property and equipment		(23,471	)		(41,285	)
Change in prepaid expenses, accounts payable and accrued liabilities for acquisition of property and equipment		438			3,312
Proceeds from disposition of property, equipment and other assets		3,052			2,768
Proceeds from sales of short-term investments		16,190			-

PART I
	ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
		Consolidated Balance Sheets as of December 31, 2001 and September 30, 2002 (unaudited)
		Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2001 and 2002 (unaudited)
		Consolidated Statement of Stockholders' Deficit for the Nine Months Ended September 30, 2002 (unaudited)
		Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2001 and 2002 (unaudited)
		Notes to Consolidated Financial Statements (unaudited)
	ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4.	CONTROLS AND PROCEDURES


PART II
	ITEM 1.	LEGAL PROCEEDINGS
	ITEM 2.	CHANGES IN SECURITIES
	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES
	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
	ITEM 5.	OTHER INFORMATION
	ITEM 6.	EXHIBITS AND REPORT ON FORM 8-K
		Exhibits
		Reports on Form 8-K