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 March 31, 2000

                                       OR

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

                        (Commission File Number 1-11965)
                            ICG COMMUNICATIONS, INC.
                        (Commission File Number 1-11052)
                            ICG HOLDINGS (CANADA) CO.
                        (Commission File Number 33-96540)
                               ICG HOLDINGS, INC.
           (Exact names of registrants as specified in their charters)

--------------------------------------------------------------------------------
Delaware                                    84-1342022
Nova Scotia                                 Not Applicable
Colorado                                    84-1158866
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)
--------------------------------------------------------------------------------
161 Inverness Drive West                    Not applicable
Englewood, Colorado 80112

161 Inverness Drive West                    c/o ICG Communications, Inc.
Englewood, Colorado 80112                   161 Inverness Drive West
                                            Englewood, Colorado 80112

161 Inverness Drive West                    Not applicable
Englewood, Colorado 80112
(Address of principal executive offices)    (Address of U.S. agent for service)
--------------------------------------------------------------------------------
Registrants' 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  registrants'  outstanding  common  shares as of May 10, 2000
were 48,642,985,  31,931,588 and 1,918, respectively.  ICG Canadian Acquisition,
Inc., a wholly owned  subsidiary of ICG  Communications,  Inc.,  owns all of the
issued and outstanding  common shares of ICG Holdings  (Canada) Co. ICG Holdings
(Canada) Co. owns all of the issued and outstanding shares of ICG Holdings, Inc.

<PAGE>


                                TABLE OF CONTENTS

PART I ........................................................................3
      ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS ...............................3
              Consolidated Balance Sheets as of December 31, 1999
                 and March 31, 2000 (unaudited)................................3
              Consolidated Statements of Operations for the Three
                 Months Ended March 31, 1999 and 2000 (unaudited)..............5
              Consolidated Statement of Stockholders' Deficit for
                 the Three Months Ended March 31, 2000 (unaudited).............6
              Consolidated Statements of Cash Flows for the Three
                 Months Ended March 31, 1999 and 2000 (unaudited)..............7
              Notes to Consolidated Financial Statements (unaudited)...........9
      ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
              AND RESULTS OF OPERATIONS ......................................24
      ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
              MARKET RISK ....................................................34

PART II ......................................................................36
      ITEM 1. LEGAL PROCEEDINGS...............................................36
      ITEM 2. CHANGES IN SECURITIES...........................................36
      ITEM 3. DEFAULTS UPON SENIOR SECURITIES ................................36
      ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS ..........36
      ITEM 5. OTHER INFORMATION ..............................................36
      ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ...............................36
              Exhibits .......................................................36
              Reports on Form 8-K ............................................37



                                       2
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets
                December 31, 1999 and March 31, 2000 (unaudited)


                                          December 31,        March 31,
                                              1999              2000
                                         -------------     -------------
Assets                                           (in thousands)

Current assets:
  Cash and cash equivalents               $ 103,288             40,699
  Short-term investments available for
    sale                                     22,219             31,115
  Receivables:
    Trade, net of allowance of $78,682
       and $57,160 at December 31, 1999
       and March 31, 2000, respectively
       (note 6)                             167,273            152,022
    Other                                     1,458              4,489
                                         -------------     -------------
                                            168,731            156,511

  Prepaid expenses, deposits and
    inventory                                11,388             10,670
                                         -------------     -------------
    Total current assets                    305,626            238,995
                                         -------------     -------------

Property and equipment                    1,805,378          2,017,958
  Less accumulated depreciation            (279,698)          (336,090)
                                         -------------     -------------
    Net property and equipment            1,525,680          1,681,868
                                          -------------     -------------

Restricted cash                              12,537             11,457
Investments (note 4)                         28,939              2,402
Other assets, net of accumulated
  amortization:
    Goodwill                                 95,187             87,281
    Deferred financing costs                 35,884             35,275
    Other, net                               16,768             18,059
                                         -------------     -------------
                                            147,839            140,615
                                         -------------     -------------

       Total assets (note 7)             $2,020,621          2,075,337
                                         =============     =============
                                                             (Continued)


                                       3
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

               Consolidated Balance Sheets (unaudited), Continued


                                                 December 31,      March 31,
                                                     1999            2000
                                                -------------    -------------
Liabilities and Stockholders' Deficit                   (in thousands)

Current liabilities:
  Accounts payable                              $  112,291           56,544
  Payable pursuant to IRU agreements               135,322          157,618
  Accrued liabilities                               85,709           91,284
  Deferred revenue (note 6)                         25,175           45,098
  Deferred gain on sale (note 3)                     5,475                -
  Current portion of capital lease
    obligations                                      8,090           11,256
  Current portion of long-term debt
    (note 5)                                           796              796
  Current liabilities of discontinued
    operations (note 3)                                529              436
                                                -------------    -------------
       Total current liabilities                   373,387          363,032
                                                -------------    -------------

Capital lease obligations, less current
  portion                                           63,348           72,884
Long-term debt, net of discount, less
  current portion (note 5)                       1,905,901        2,052,761
Other long-term liabilities                          2,526            2,958
                                                -------------    -------------

  Total liabilities                              2,345,162        2,491,635
                                                -------------    -------------

Redeemable preferred stock of subsidiary
  ($397.9 and $412.0 million liquidation
  value at December 31, 1999 and  March
  31, 2000, respectively) (note 5)                 390,895          405,203

Company-obligated mandatorily redeemable
  preferred securities of subsidiary
  limited liability company which holds
  solely Company preferred stock
  ($133.4 million liquidation value at
  March 31, 2000)                                  128,428          128,524

Stockholders' deficit:
  Common stock, $.01 par value,
    100,000,000 shares authorized;
    47,761,337 and 48,595,120 shares
    issued and outstanding at December
    31, 1999 and March 31, 2000,
    respectively                                       478              486
  Additional paid-in capital                       599,282          612,418
  Accumulated deficit                           (1,443,624)      (1,565,258)
  Accumulated other comprehensive income                 -            2,329
                                                -------------    -------------
    Total stockholders' deficit                   (843,864)        (950,025)
                                                -------------    -------------

Commitments and contingencies (note 6)

    Total liabilities and stockholders'
       deficit                                  $2,020,621        2,075,337
                                                =============    =============

          See accompanying notes to consolidated financial statements.



                                       4
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations
             Three Months Ended March 31, 1999 and 2000 (unaudited)


                                                        Three months ended
                                                             March 31,
                                                     ------------------------
                                                        1999         2000
                                                     -----------  -----------
                                                     (in thousands, except
                                                         per share data)

Revenue (note 7)                                     $  104,331      157,224

Operating costs and expenses:
  Operating costs                                        53,649       82,902
  Selling, general and administrative
    expenses                                             42,808       55,089
  Depreciation and amortization (note 7)                 36,375       64,599
  Other                                                    (933)         432
                                                     -----------  -----------
    Total operating costs and expenses                  131,899      203,022
                                                     -----------  -----------

    Operating loss (note 7)                             (27,568)     (45,798)

Other income (expense):
  Interest expense (note 7)                             (47,438)     (62,634)
  Interest income                                         4,104        3,277
  Other (expense) income, net,
   including unrealized gain on
   marketable trading securities in 1999
   and realized gain on sale of
   available for sale securities in 2000                   (500)         158
                                                     -----------  -----------
                                                        (43,834)     (59,199)
                                                     -----------  -----------

Loss from continuing operations before
  preferred dividends and extraordinary
  gain                                                  (71,402)    (104,997)
Accretion and preferred dividends on
  preferred securities of subsidiaries                  (14,804)     (16,637)
                                                     -----------  -----------

Loss from continuing operations before
  extraordinary gain                                    (86,206)    (121,634)
Loss from discontinued operations                          (111)           -
                                                     -----------  -----------
Loss before extraordinary gain                          (86,317)    (121,634)
Extraordinary gain on sales of
  operations of NETCOM, net of income
  taxes of $6.4 million (note 3)                        193,029            -
                                                     -----------  -----------

    Net (loss) income                                 $ 106,712     (121,634)
                                                     ===========  ===========

Other comprehensive income:
  Unrealized gain on available for sale
  securities                                          $       -        2,329
                                                     -----------  -----------
    Comprehensive (loss) income                       $ 106,712     (119,305)
                                                     ===========  ===========

Net (loss) earnings per share - basic and diluted:
  Loss from continuing operations                     $   (1.85)       (2.52)
  Loss from discontinued operations                           -            -
  Extraordinary gain on sales of
    operations of NETCOM                                   4.14            -
                                                     -----------  -----------
    Net (loss) earnings per share - basic
       and diluted                                    $    2.29        (2.52)
                                                     ===========  ===========

Weighted average number of shares
outstanding - basic and diluted                          46,538       48,189
                                                     ===========  ===========

          See accompanying notes to consolidated financial statements.



                                       5
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

                 Consolidated Statement of Stockholders' Deficit
                  Three Months Ended March 31, 1999 (unaudited)


<TABLE>
<CAPTION>

                                                                                  Accumulated
                                  Common stock       Additional                      other           Total
                                -----------------     paid-in      Accumulated   comprehensive    stockholders'
                                Shares    Amount      capital        deficit         income         deficit
                                -------  --------   -----------   ------------- ---------------  ---------------
                                                  (in thousands)

<S>                              <C>     <C>          <C>          <C>              <C>            <C>
Balances at January 1, 2000      47,761  $  478       599,282      (1,443,624)          -          (843,864)
  Shares issued for cash in
    connection with the
    exercise of options and
    warrants                        709       7        11,138               -           -            11,145
  Shares issued for cash in
    connection with the
    employee stock purchase plan     54       -           757               -           -               757
  Shares issued as contribution
    to 401(k) plan                   71       1         1,241               -           -             1,242
  Unrealized holding gain
    on available for sale
    securities, arising
    during the period, net
    of tax                            -       -             -               -       2,810             2,810
  Reclassification
    adjustment, realized
    gain on available for
    sale securities                   -       -             -               -        (481)             (481)
  Net loss                            -       -             -        (121,634)          -          (121,634)
                                -------  --------   -----------   ------------- ---------------  ---------------
Balances at March 31, 2000       48,595     486       612,418      (1,565,258)      2,329          (950,025)
                                =======  ========   ===========   ============= ===============  ===============
</TABLE>

          See accompanying notes to consolidated financial statements.



                                       6
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
             Three Months Ended March 31, 1999 and 2000 (unaudited)


                                                            Three months ended
                                                                 March 31,
                                                          ----------------------
                                                             1999        2000
                                                          ----------  ----------
                                                              (in thousands)

Cash flows from operating activities:
  Net (loss) income                                       $ 106,712    (121,634)
  Loss from discontinued operations                             111           -
  Extraordinary (gain) loss on sales of operations         (193,029)          -
  Adjustments to reconcile net (loss) income to net
    cash used by operating activities:
         Recognition of deferred gain                        (3,805)     (6,239)
         Accretion and preferred dividends on preferred
           securities of subsidiaries                        14,804      16,637
         Depreciation and amortization                       36,375      64,599
         Provision for uncollectible accounts                 3,604       3,830
         Deferred compensation                                    -         432
         Interest expense deferred and included in
           long-term debt                                    46,283      52,064
         Interest expense deferred and included in
           capital lease obligations                          1,406       1,351
         Amortization of deferred financing costs
           included in interest expense                       1,082         501
         Interest expense capitalized on assets under
           construction                                      (3,168)     (1,477)
         Contribution to 401(k) plan through issuance
           of common stock                                    2,077       1,242
         Net loss (gain) on disposal of long-lived
           assets                                              (933)          -
         Unrealized gain on marketable trading
           securities in 1999 and realized gain on
           sale of available for sale securities in 2000       (439)       (481)
         Other noncash expenses                                   -         301
         Change in operating assets and liabilities,
           excluding the effects of dispositions and
           noncash transactions:
              Receivables                                   (48,225)      8,390
              Prepaid expenses, deposits and inventory       (2,537)      1,705
              Accounts payable and accrued liabilities       (9,892)    (50,460)
              Deferred revenue                                1,669      22,005
                                                          ----------  ----------
                 Net cash used by operating activities      (47,905)     (7,234)
                                                          ----------  ----------
Cash flows from investing activities:
  Acquisition of property, equipment and other
    assets                                                  (99,151)   (141,299)
  Payments for construction of corporate
    headquarters                                                  -      (1,699)
  Proceeds from sale of available for sale
    securities                                                    -       2,201
  Proceeds from sales of operations of NETCOM, net
    of cash included in sale                                252,881           -
  Proceeds from disposition of property, equipment
    and other assets                                          4,300           -
  Proceeds from sales of short-term investments
    available for sale                                        5,340      19,399
  Decrease in restricted cash                                 1,385       1,080
  Purchase of investments                                   (27,466)     (1,150)
  Purchase of minority interest in subsidiary                (4,189)          -
                                                          ----------  ----------
         Net cash (used) provided by investing
           activities                                       133,100    (121,468)
                                                          ----------  ----------
                                                                     (Continued)



                                       7
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

          Consolidated Statements of Cash Flows (unaudited), Continued


                                                            Three months ended
                                                                 March 31,
                                                          ----------------------
                                                             1999        2000
                                                          ----------  ----------
                                                              (in thousands)

Cash flows from financing activities:
  Proceeds from issuance of common stock:
    Exercise of options and warrants                      $   2,769      11,145
    Employee stock purchase plan                              1,388         757
  Proceeds from issuance of long-term debt                        -      95,000
  Principal payments on capital lease obligations            (1,793)     (3,061)
  Payments on IRU agreement                                       -     (35,198)
  Principal payments on long-term debt                         (589)       (205)
  Payments of preferred dividends                            (2,231)     (2,231)
                                                          ----------  ----------
    Net cash (used) provided by financing
       activities                                              (456)     66,207
                                                          ----------  ----------

    Net increase (decrease) in cash and cash
     equivalents                                             84,739     (62,495)
    Net cash used by discontinued operations                 (3,356)        (94)
Cash and cash equivalents, beginning of period              210,307     103,288
                                                          ----------  ----------
Cash and cash equivalents, end of period                  $ 291,690      40,699
                                                          ==========  ==========

Supplemental disclosure of cash flows information
  of continuing operations:
    Cash paid for interest                                $   1,835       7,132
                                                          ==========  ==========
    Cash paid for income taxes                            $     409         220
                                                          ==========  ==========

Supplemental schedule of noncash investing and
  financing activities of continuing operations:
    Acquisition of corporate headquarters assets
       through the issuance of long-term debt and
       conversion of security deposit (note 5)            $  33,719           -
                                                          ==========  ==========

    Assets acquired pursuant to IRU agreement             $       -      57,494
    Assets acquired under capital leases                      3,760      14,415
                                                          ----------  ----------

       Total (note 6)                                     $   3,760      71,909
                                                          ==========  ==========

          See accompanying notes to consolidated financial statements.



                                       8
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                December 31, 1999 and March 31, 2000 (unaudited)


(1)  Organization and Nature of Business

     ICG Communications,  Inc., a Delaware corporation ("ICG" or "the Company"),
     was incorporated on April 11, 1996 and is the  publicly-traded  U.S. parent
     company of ICG Funding,  LLC, a special purpose Delaware limited  liability
     company and wholly owned  subsidiary of ICG ("ICG  Funding"),  ICG Holdings
     (Canada)    Co.,    a   Nova    Scotia    unlimited    liability    company
     ("Holdings-Canada"),   ICG   Holdings,   Inc.,   a   Colorado   corporation
     ("Holdings"),   and  ICG  Services,  Inc.,  a  Delaware  corporation  ("ICG
     Services"),   and  their   subsidiaries.   ICG  and  its  subsidiaries  are
     collectively referred to as the "Company."

     The Company's  principal business activity is  telecommunications  services
     ("Telecom  Services") which consists primarily of the Company's  operations
     as a  facilities-based  communications  provider including the provision of
     services such as network facilities and data management to Internet service
     provider ("ISP")  customers and voice and data  communications  services to
     business customers such as local, long distance and enhanced telephony. The
     Company also provides  interexchange  services  such as special  access and
     switched access services to long distance carriers and other customers. The
     Company began marketing  competitive  local dial-tone  services to business
     customers   in   early   1997,   subsequent   to   the   passage   of   the
     Telecommunications  Act of 1996, which permitted competitive interstate and
     intrastate  telephone  services and began offering network services to ISPs
     and other telecommunications providers in February 1999.

     During 1999,  the Company sold the retail  customer ISP business of NETCOM,
     retaining the national  Tier 1 data network  assets.  Additionally,  during
     1999,  the Company also sold ICG Fiber Optic  Technologies,  Inc. and Fiber
     Optic  Technologies  of the Northwest,  Inc.,  which  provided  information
     technology  services  and  selected  networking  products, as  well  as ICG
     Satellite Services,  Inc. and Maritime  Telecommunications  Network,  Inc.,
     which  provided  satellite  voice,  data and video services to major cruise
     ship lines, the U.S. Navy, the offshore oil and gas industry and integrated
     communications providers. (See note 3, "Discontinued Operations".)

(2)  Significant Accounting Policies

     (a) Basis of Presentation

         The Company's  financial  statements should be read in conjunction with
         ICG's Annual Report on Form 10-K for the year ended  December 31, 1999,
         as  certain  information  and note  disclosures  normally  included  in
         financial  statements  prepared in accordance  with generally  accepted
         accounting  principles  have been condensed or omitted  pursuant to the
         rules and  regulations  of the United  States  Securities  and Exchange
         Commission.  The interim financial  statements  reflect all adjustments
         which  are,  in  the  opinion  of  management,  necessary  for  a  fair
         presentation  of financial  position,  results of  operations  and cash
         flows as of and for the interim periods presented. Such adjustments are
         of a normal recurring  nature.  Operating  results for the three months
         ended March 31, 2000 are not necessarily indicative of the results that
         may be expected for the fiscal year ending December 31, 2000.

         All  significant  intercompany  accounts  and  transactions  have  been
         eliminated in consolidation.

     (b) Recent Accounting Pronouncements

         In March 2000, the Financial Accounting Standards Board ("FASB") issued
         FASB  Interpretation  No.  44  "Accounting  for  Certain   Transactions
         involving Stock Compensation - and interpretation of APB Opinion No. 25
         ("FIN  44").  This  opinion  provides  guidance on the  accounting  for
         certain stock option  transactions  and  subsequent  amendments to sock
         option  transactions.  FIN 44 is  effective  July 1, 2000,  but certain
         conclusions  cover specific events that occur after either December 15,



                                       9
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(2)  Significant Accounting Policies (continued)

         1998 or January 12,  2000.  To  the  extent  that FIN 44 covers  events
         occurring  during  the  period  from December  15, 1998 and January 12,
         2000,  but  before July    1,  2000,  the  effects  of  applying   this
         Interpretation are to be recognized on a prospective basis. The Company
         has not yet assessed the impact, if any,  that FIN 44 might have on its
         financial  position or results of operations.

         In December 1999, the SEC released Staff  Accounting  Bulletin  ("SAB")
         No. 101, "Revenue Recognition in Financial Statements",  which provides
         guidance on the recognition,  presentation and disclosure of revenue in
         financial statements filed with the SEC. Subsequently, the SEC released
         SAB  101A,  which  delayed  the  implementations  date  of SAB  101 for
         registrants  with fiscal years beginning  between December 16, 1999 and
         March 15, 2000.  The Company has not yet  assessed the impact,  if any,
         that  SAB 101  might  have on its  financial  position  or  results  of
         operations.

         In June 1998, the Financial Accounting Standards Board issued Statement
         of Financial  Accounting  Standards No. 133, "Accounting for Derivative
         Instruments and Hedging  Activities" ("SFAS 133"). SFAS 133 establishes
         accounting  and reporting  standards  for  derivative  instruments  and
         hedging  activities.  As  amended  by SFAS  No.  137,  "Accounting  for
         Derivative  Instruments  and Hedging  Activities-Deferral  of Effective
         Date of FASB  Statement No. 133",  SFAS 133 is effective for all fiscal
         years  beginning  after June 15, 2000.  The Company will adopt SFAS 133
         effective  at the  beginning  of its fiscal year end 2001.  The Company
         does not  believe  that the  adoption  of SFAS 133 will have a material
         effect on the Company's financial position or results of operations.

     (c) Reclassifications

         Certain 1999 amounts  have been  reclassified  to conform with the 2000
         presentation.

(3)  Discontinued Operations

     Loss from discontinued operations consists of the following:

                                 Three months ended
                                     March 31,
                                ---------------------
                                  1999       2000
                                ---------  ----------
                                   (in thousands)

      Network Services (a)      $ (412)         -
      Satellite Services (b)       301          -
                                ---------  ----------
        Loss from  discontinued
          operations            $ (111)         -
                                =========  ==========

     (a) Network Services

         On July 15, 1999,  the  Company's  board of directors  adopted a formal
         plan  to  dispose  of the  Company's  investments  in its  wholly-owned
         subsidiaries,  ICG Fiber  Optic  Technologies,  Inc.  and  Fiber  Optic
         Technologies of the Northwest, Inc. (collectively, "Network Services").
         Accordingly,  the Company's  consolidated  financial statements reflect
         the  operations  of Network  Services as  discontinued  for all periods
         presented.  On October 22, 1999, the Company  completed the sale of all
         of the capital stock of Network  Services to ACS  Communications,  Inc.
         for total proceeds of $23.9 million in cash.



                                       10
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(3)  Discontinued Operations (continued)

     (b) Satellite Services

         On  July 15, 1999,  the Company's  board of directors  adopted a formal
         plan  to  dispose  of  the  Company's   investments  in  ICG  Satellite
         Services,   Inc.  and   Maritime   Telecommunications   Network,   Inc.
         (collectively,   "Satellite   Services").  Accordingly,  the  Company's
         consolidated  financial  statements reflect the operations of Satellite
         Services as discontinued   for all periods  presented.  On November 30,
         1999,  the Company  completed  the  sale of all of the capital stock of
         Satellite Services to  ATC Teleports,  Inc. for total proceeds of $98.1
         million in cash.

     (c) NETCOM

         On February 17, 1999, the Company sold certain of the operating  assets
         and  liabilities  of NETCOM to  MindSpring  Enterprises,  Inc.,  an ISP
         located  in  Atlanta,  Georgia  and  predecessor  to  EarthLink,   Inc.
         ("MindSpring").  Total  proceeds  from the sale  were  $245.0  million,
         consisting of $215.0 million in cash and 376,116 shares of common stock
         of MindSpring,  valued at approximately $79.76 per share at the time of
         the  transaction.  Assets and liabilities  sold to MindSpring  included
         those directly related to the domestic  operations of NETCOM's Internet
         dial-up, dedicated access and Web site hosting services. In conjunction
         with the sale to MindSpring,  the Company  entered into an agreement to
         lease to  MindSpring  for a  one-year  period the  capacity  of certain
         network  operating  assets formerly owned by NETCOM and retained by the
         Company (the "MindSpring Capacity Agreement").  The MindSpring Capacity
         Agreement  was amended  during the first  quarter of 2000 to extend the
         terms of the  agreement  through  May  2000.  MindSpring  utilized  the
         Company's  network  capacity under this  agreement to provide  Internet
         access to the dial-up services  customers  formerly owned by NETCOM. In
         addition,  the Company  received for a one-year period 50% of the gross
         revenue  earned  by  MindSpring  from the  dedicated  access  customers
         formerly owned by NETCOM.  The carrying value of the assets retained by
         the Company was approximately  $21.7 million,  including  approximately
         $17.5 million of network  equipment,  on February 17, 1999. The Company
         also retained  approximately  $11.3 million of accrued  liabilities and
         capital lease obligations.

         On  March  16,  1999,  the  Company  sold all of the  capital  stock of
         NETCOM's  international  operations for total proceeds of approximately
         $41.1 million.  MetroNET  Communications  Corp., a Canadian entity, and
         Providence  Equity  Partners,  located  in  Providence,   Rhode  Island
         ("Providence"),  together  purchased  the 80% interest in NETCOM Canada
         Inc.  owned  by  NETCOM  for  approximately   $28.9  million  in  cash.
         Additionally,  Providence  purchased all of the capital stock of NETCOM
         Internet Access  Services  Limited,  NETCOM's  operations in the United
         Kingdom, for approximately $12.2 million in cash.

         During the three months ended March 31,  1999,  the Company  recorded a
         combined gain on the sales of the operations of NETCOM of approximately
         $193.0 million,  net of income taxes of approximately $6.4 million. The
         gain and  related  income  taxes were  adjusted  during the nine months
         ended December 31, 1999 to record actual  results.  Offsetting the gain
         on  the  sales  during  the  three  months  ended  March  31,  1999  is
         approximately  $16.6  million of net losses from  operations  of NETCOM
         from  November  3,  1998  (the  date on which  the  Company's  board of
         directors  adopted  the formal  plan to dispose  of the  operations  of
         NETCOM) through the dates of the sales. Additionally, since the Company
         expected to  generate  operating  costs in excess of revenue  under the
         MindSpring  Capacity Agreement and the terms of the sale agreement were
         dependent  upon and  negotiated  in  conjunction  with the terms of the
         network capacity  agreement,  the Company deferred  approximately $35.5
         million  of the  proceeds  from the sale  agreement  to be applied on a
         periodic basis to the network capacity agreement. The deferred proceeds
         were recognized in the Company's statement of operations as the Company
         incurred cash operating  losses under the network  capacity  agreement.
         Accordingly, the Company did not recognize any revenue, operating costs



                                       11
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(3)  Discontinued Operations (continued)

         or selling,  general and administrative expenses from services provided
         to MindSpring for the term of the agreement. Any incremental revenue or
         costs generated by other  customers,  or by other services  provided to
         MindSpring,  was recognized in the Company's  consolidated statement of
         operations  as incurred.  During the three months ended March 31, 2000,
         $6.2 million in losses related to the MindSpring  customers were offset
         against the deferred amount. As of March 31, 2000, all amounts deferred
         in relation to the  MindSpring  Capacity  Agreement have been offset by
         losses incurred under the agreement.  The Company, through NetAhead, is
         currently  utilizing the retained  network  operating assets to provide
         wholesale  capacity and other enhanced  network  services on an ongoing
         basis to MindSpring under an extension of the original network capacity
         agreement as well  as to other  ISPs and telecommunications  providers.
         Operating  results   from  such  services have  been  included  in  the
         Company's  statement of  operations as incurred. Since  the  operations
         sold were  acquired by ICG in a  transaction accounted for as a pooling
         of  interests,  the gain  on the sales of the  operations  of NETCOM is
         classified  as an  extraordinary  item  in the  Company's  consolidated
         statement of operations.

(4)  Investments

     On February 22, 2000,  the Company  purchased  61,845  shares of restricted
     Series D Preferred Stock ("Cyras Preferred Stock") of Cyras Systems,  Inc.,
     ("Cyras"),  for  approximately  $1.0 million.  Cyras is a  manufacturer  of
     telecommunications equipment. Dividends on the Cyras Preferred Stock are 8%
     per annum,  noncumulative  and payable in cash or any Cyras assets  legally
     available  and as declared by the board of  directors  of Cyras.  The Cyras
     Preferred Stock is automatically convertible into shares of common stock of
     Cyras upon the initial public offering of the common stock of Cyras or upon
     the  election  to  convert  by  more  than  66% of  all  of  the  preferred
     stockholders of Cyras.

     On March 30, 1999, the Company purchased,  for approximately  $10.0 million
     in cash,  454,545  shares of  restricted  Series D-1  Preferred  Stock (the
     "NorthPoint Preferred Stock") of NorthPoint  Communications Holdings, Inc.,
     a Delaware  corporation and  competitive  local exchange  carrier  ("CLEC")
     based in San Francisco,  California ("NorthPoint") which was converted into
     555,555 shares of Class B Common Stock of NorthPoint (the "NorthPoint Class
     B  Shares")  on May 5,  1999.  The  NorthPoint  Class B  Shares  were  then
     converted on March 30, 2000 on a  one-for-one  basis into a voting class of
     common stock of  NorthPoint.  The Company  accounted for its  investment in
     NorthPoint under the cost method of accounting until the NorthPoint Class B
     Shares were converted into voting and tradable  common stock of NorthPoint,
     after  which  the  investment  was  classified  as an  available  for  sale
     security.  During the three months  ended March 31, 2000,  the Company sold
     95,555 of the NorthPoint shares for proceeds of approximately $2.2 million.
     A gain of approximately $0.5 million was recognized on the sale. All shares
     remaining  at March 31,  2000 are  classified  as  available  for sale with
     unrealized  gains on the investment of $2.3 million recorded as a component
     of stockholders' equity.



                                       12
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(5)  Long-term Debt and Redeemable Preferred Stock of Subsidiary

     Long-term debt is summarized as follows:

                                                     December 31,     March 31,
                                                         1999           2000
                                                    -------------  -------------
                                                           (in thousands)

     Senior Facility due on scheduled
        maturity dates, secured by
        substantially all of the assets of
        ICG Equipment and NetAhead with
        weighted average interest rates ranging
        from 9.26% to 9.65% for the three months
        ended March 31, 2000                        $    79,625        174,438
     9 7/8% Senior discount notes of ICG
        Services, net of discount                       293,925        301,064
     10% Senior discount notes of ICG
        Services, net of discount                       361,290        370,213
     11 5/8% Senior discount notes of
        Holdings, net of discount                       137,185        141,079
     12 1/2% Senior discount notes of
        Holdings, net of discount                       468,344        482,682
     13 1/2% Senior discount notes of
        Holdings, net of discount                       532,252        550,022
     Mortgage payable with interest at 8
        1/2%, due monthly into 2009,
        secured by building                                 999            982
     Mortgage loan payable with
        adjustable rate of interest
        (15.21% at March 31, 2000), due
        monthly into 2013, secured by
        corporate headquarters                           33,077         33,077
                                                    -------------  -------------
                                                      1,906,697      2,053,557
        Less current portion                               (796)          (796)
                                                    -------------  -------------
                                                    $ 1,905,901      2,052,761
                                                    =============  =============

     (a) Senior Facility

         During  the quarter  ended March 31,  2000,  the Company  borrowed  the
         remaining  $95.0 million  available under the $100.0 million term loan.
         The $100.0  million  outstanding  under the $100.0  million  term  loan
         bears  interest at a  weighted average  interest rate of  9.26% for the
         three months ended March 31, 2000.

     Redeemable preferred stock of subsidiary is summarized as follows:

                                            December 31,     March 31,
                                                1999           2000
                                            --------------  ------------
                                                  (in thousands)
       14% Exchangeable preferred stock of
         Holdings,  mandatorily redeemable
         in 2008                             $  144,144         149,384
       14 1/4% Exchangeable preferred
         stock of Holdings, mandatorily
         redeemable in 2007                     246,751         255,819
                                            --------------  ------------
                                             $  390,895         405,203
                                            ==============  ============




                                       13
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(6)  Commitments and Contingencies

     (a) Network Capacity and Construction

         In January  2000, Qwest  Communications  Corporation  ("Qwest") and the
         Company  signed  an agreement,  whereby the Company will  provide,  for
         $126.5  million  over  the  initial  6-year term of the  agreement,  an
         indefeasible  right of  use  ("IRU")  for  designated  portions  of the
         Company's  local  fiber  optic  network.  The  Company  will  recognize
         revenue  ratably  over  the  term  of  the  agreement,  as the  network
         capacity  is  available   for  use.   Payments  will   be  received  in
         installments through June 18, 2000. The agreement was  amended in March
         2000 to include  additional  capacity for proceeds of  $53.8 million to
         be received in installments  through  September 18, 2000. Qwest may, at
         its option, extend the initial term of  the agreement for an additional
         four-year  period and an  additional  10-year  period  for  incremental
         payment  at the time of the  option  exercises.  In  the event that the
         Company  fails to deliver  any of  the  network  capacity  by March 31,
         2001,  Qwest is entitled to cancel  any  undelivered  network  capacity
         segments and receive  immediate  refund  of any amounts already paid to
         the Company for such segments.

         In June 1999, the  Company signed a minimum 10-year  agreement to lease
         certain  portions  of  its  fiber  optic  network  to Qwest  for  $32.0
         million,  which was  received in full by the Company in June 1999.  The
         Company has  accounted  for the agreement as a sales-type  lease and is
         recognizing  revenue and operating costs in its consolidated  financial
         statements  on  a  percentage  of  completion   basis  as  the  network
         build-out  is completed  and is available  for  use. On March 23, 2000,
         the final network  facilities to  be included  under the agreement were
         identified  and   made  available  for  use  allowing  the  Company  to
         recognize  all remaining  revenue  under the agreement  except  amounts
         deferred  related to maintenance  services.  For the three months ended
         March 31, 2000,  the Company included $11.5 million and $1.1 million in
         revenue  and  operating   costs,  respectively,   in  its  consolidated
         financial  statements  related  to  the  agreement,  including  revenue
         attributed to maintenance  services,  which is  recognized ratably over
         the term of the  agreement.  Approximately  $2.4   million of the total
         proceeds  received related to maintenance  services  remain in deferred
         revenue in the Company's consolidated balance sheet at March 31, 2000.

         In March 1996, the  Company  and  Southern  California  Edison  Company
         ("SCE") entered into a 25-year  agreement  under which the Company will
         license  1,258  miles  of  fiber  optic  cable  in Southern California,
         and  can install up to 500 additional miles of fiber optic cable.  This
         network,  which  will  be  maintained  and  operated  primarily  by the
         Company,  stretches from  Los Angeles to southern Orange County.  Under
         the terms of  this agreement,  SCE is entitled to receive an annual fee
         for ten  years,  certain fixed quarterly payments,  a quarterly payment
         equal to a  percentage of certain  network  revenue,  and certain other
         installation  and  fiber  connection fees. The aggregate fixed payments
         remaining under the  agreement totaled  approximately $124.4 million at
         March 31, 2000.  The  agreement  has  been  accounted  for as a capital
         lease in the accompanying consolidated balance sheets.

     (b) Telecommunications and Line Purchase Commitments

         In November  1999, the Company  entered into a one-year  agreement with
         Covad Communications Company, ("Covad"), to purchase digital subscriber
         line ("DSL") services from Covad.  Under the agreement,  the Company is
         required to purchase a minimum amount of DSL services before designated
         intervals over the one-year period.

         Effective   September  1998,  the  Company  entered  into  two  service
         agreements with three-year terms with WorldCom Network  Services,  Inc.
         ("WorldCom").  Under the Telecom Services Agreement, WorldCom provides,
         at designated  rates,  switched  telecommunications  services and other
         related  services  to  the  Company,  including  termination  services,
         toll-free  origination,  switched  access,  dedicated access and travel
         card services. Under the Carrier Digital Services Agreement,   WorldCom
         provides  the Company, at designated  rates,  with   the   installation



                                       14
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(6)  Commitments and Contingencies (continued)

         and  operation of dedicated  digital  telecommunications  interexchange
         services,  local  access and other related services,  which the Company
         believes  expedites  service   availability  to  its  customers.   Both
         agreements  require  that  the Company  provide  WorldCom  with certain
         minimum  monthly  revenue,   which if not met, would require payment by
         the Company for  the difference  between the minimum commitment and the
         actual  monthly   revenue.  Additionally,  both  agreements  limit  the
         Company's  ability  to utilize  vendors other than WorldCom for certain
         telecommunications  services  specified in the agreements.  The Company
         has successfully  achieved all  minimum revenue commitments to WorldCom
         under these agreements through March 31, 2000.

     (c) Other Commitments

         During the first quarter of 2000, the Company signed a letter of intent
         with Cisco  Systems,  Inc.  for  financing  of certain  future  capital
         expenditures.   The  Company  believes  that  this  proposed  financing
         agreement will better enable the Company to fund its scheduled  network
         expansion  through the purchase of Cisco equipment.  The proposed Cisco
         credit  facility will provide the Company with up to $180.0  million of
         capital lease financing with a three-year  repayment  term.  During the
         first quarter of 2000,  $50.0  million of the capital  lease  financing
         with Cisco was  finalized  and $11.5  million  was drawn down under the
         facility.

         The  Company  has  entered  into  various  other   equipment   purchase
         agreements with certain of its vendors. Under these agreements,  if the
         Company does not meet a minimum  purchase  level in any given year, the
         vendor may  discontinue  certain  discounts,  allowances and incentives
         otherwise provided to the Company. In addition, the  agreements may  be
         terminated  by either  the Company  or the  vendor  upon prior  written
         notice.

         Additionally,  the Company  has entered  into  certain  commitments  to
         purchase   capital   assets  with  an  aggregate   purchase   price  of
         approximately $386.9 million at March 31, 2000.

     (d) Transport and Termination Charges

         The Company has recorded  revenue of  approximately  $30.8  million and
         $35.5  million  for the three  months  ended  March 31,  1999 and 2000,
         respectively, for reciprocal compensation relating to the transport and
         termination of local traffic to ISPs from customers of incumbent  local
         exchange  carriers  ("ILECs")   pursuant  to  various   interconnection
         agreements.  During the period,  some of the ILECs have not paid all of
         the bills they have received  from the Company and have disputed  these
         charges  based on the belief  that such calls are not local  traffic as
         defined  by the  various  agreements  and not  subject  to  payment  of
         transport  and  termination  charges  under state and federal  laws and
         public  policies.  In addition,  some ILECs,  while paying a portion of
         reciprocal compensation due to ICG for ISP-bound traffic, have disputed
         other portions of the charges.

         The  resolution of these  disputes have been,  and will continue to be,
         based on  rulings by state  public  utility  commissions  and/or by the
         Federal  Communications  Commission  ("FCC"),  or through  negotiations
         between the parties. The Company has aggressively participated in state
         and  federal  regulatory  and  judicial  proceedings  that  address the
         obligation of the ILECs to pay the Company reciprocal  compensation for
         ISP-bound  traffic  under  the  Company's  interconnection  agreements.
         Subsequent   to   the  issuance  of  favorable state regulatory rulings
         by   the   Colorado,  Ohio   and  California   state   commissions, the



                                       15
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(6)  Commitments and Contingencies (continued)

         Company  has  received   payments  from  US  West,   Pacific  Bell  and
         GTE-California  for certain  amounts owed for  reciprocal  compensation
         totaling $52.4 million through March 31, 2000.

         Additionally,  through  March 31,  2000,  Southwestern  Bell  Telephone
         Company  ("SWBT") has  remitted  payment to the Company of $5.4 million
         for reciprocal  compensation  owed to the Company for traffic from SWBT
         customers in Texas to ISPs served by the Company. On December 29, 1999,
         SWBT initiated commercial arbitration to determine whether the terms of
         the Company's current interconnection  agreement with SWBT require that
         the  rates  that the  Company  has  been  billing  SWBT for  reciprocal
         compensation be reduced to rates established by the Texas PUC in a 1998
         consolidated  arbitration  with SWBT  involving AT&T  Corporation,  MCI
         Communications   Corporation  and  other  parties.  Due  to  subsequent
         procedural  developments,  this issue will be decided by the Texas PUC,
         rather than in  commercial  arbitration;  the Texas PUC  proceeding  is
         pending.

         On  September  16,  1999,   the  CPUC   rendered  a  decision   against
         MFS/Worldcom,  a CLEC ("MFS"),  in an arbitration  between Pacific Bell
         and MFS. The  California  PUC ruled that MFS should not be permitted to
         charge  reciprocal  compensation  rates for the  tandem  switching  and
         common  transport rate elements.  Although the California  PUC's ruling
         did not involve the Company,  the Company made a decision effective for
         the three  months  beginning on September  30, 1999 and  thereafter  to
         suspend the revenue  recognition  for the tandem  switching  and common
         transport rate elements for services  provided in California and in all
         other  states  where the Company  operates  and such rate  elements are
         included  in the  Company's  interconnection  agreement  with the ILEC.
         Additionally,  the Company recorded a provision of $45.2 million during
         the three months September 30, 1999 for accounts  receivable related to
         these elements  recognized in periods through June 30, 1999,  which the
         Company  believes may be  uncollectible.  The Company ceased  recording
         revenue  for the  tandem and  transport  elements  of local  reciprocal
         compensation  until the cash is received  effective  June 30, 1999. The
         Company  continues to bill Pacific  Bell for the tandem  switching  and
         common  transport  rate  elements,  and will pursue  collection  of its
         accounts  receivable,  despite any provision.  On February 4, 2000, the
         California PUC initiated a new proceeding to examine,  on a prospective
         basis,  compensation  for ISP-bound  traffic,  including the tandem and
         transport rate elements issue.

         On February 25, 1999, the FCC issued a decision that ISP-bound  traffic
         is largely jurisdictionally  interstate traffic. The decision relies on
         the   long-standing   federal   policy  that  ISP   traffic,   although
         jurisdictionally  interstate,  is treated as though it is local traffic
         for pricing  purposes.  The decision also emphasizes that because there
         currently are no federal rules governing intercarrier  compensation for
         ISP traffic, the determination as to whether such traffic is subject to
         reciprocal  compensation under the terms of interconnection  agreements
         is properly made by the state  commissions  and that carriers are bound
         by their  interconnection  agreements  and state  commission  decisions
         regarding the payment of reciprocal  compensation for ISP traffic.  The
         FCC has  initiated a rulemaking  proceeding  regarding  the adoption of
         prospective  federal  rules  for  intercarrier   compensation  for  ISP
         traffic. In its notice of rulemaking,  the FCC expresses its preference
         that  compensation  rates  for  this  traffic  continue  to be  set  by
         negotiations  between carriers,  with disputes resolved by arbitrations
         conducted by state commissions, pursuant to the Telecommunications Act.
         On March 24, 2000,  the United States Court of Appeals for the District
         of Columbia  Circuit  vacated and remanded the FCC's  February 25, 1999
         decision.  The  Company  does  not  believe  that the  Circuit  Court's
         decision will adversely  affect favorable state regulatory and judicial
         decisions  awarding  reciprocal   compensation  for  ISP  traffic.  The
         decision does,  however,  create some  uncertainty  with respect to the
         timing of future  regulatory  decisions,  and there can be no assurance
         that future FCC or state  commission  rulings  will be favorable to the
         Company.


                                       16
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(6)  Commitments and Contingencies (continued)

         The Company has also recorded revenue of approximately $5.2 million and
         $5.5  million  for the three  months  ended  March  31,  1999 and 2000,
         respectively, related to other transport and termination charges to the
         ILECs, pursuant to the Company's interconnection  agreements with these
         ILECs.  Included in the  Company's net trade  receivables  at March 31,
         2000 are approximately  $55.0 million,  for all receivables  related to
         reciprocal compensation and other transport and termination charges.

         As the  Company's  interconnection  agreements  expire or are extended,
         rates for transport and termination charges are being and will continue
         to  be  renegotiated   and/or  arbitrated.   Rates  for  transport  and
         termination   also  may  be  impacted  by  ongoing  state  and  federal
         regulatory   proceedings  addressing   intercarrier   compensation  for
         Internet  traffic on a  prospective  basis.  In  addition  to the FCC's
         pending  rulemaking  proceeding  and the District of Columbia  Court of
         Appeals recent remand,  of the states in which ICG currently  operates,
         the Ohio,  Texas and  California  commissions  currently are conducting
         proceedings on prospective compensation.

         The  Company  has   negotiated   and/or   arbitrated  new  or  extended
         interconnection  agreements with BellSouth,  Ameritech,  GTE-California
         and Pacific  Bell.  The Company has completed  arbitration  proceedings
         with BellSouth before the state commissions in Alabama, North Carolina,
         Georgia,  Kentucky, Florida and Tennessee and with Ameritech before the
         Ohio commission. Final decisions issued by the Alabama, North Carolina,
         Kentucky  and  Georgia   commissions  awarded  the  Company  reciprocal
         compensation  for ISP traffic in new  agreements  to be executed by the
         parties,   including  the  tandem  and  transport  rate  element.   The
         arbitration  decisions of the Florida and Ohio commissions  declined to
         rule on the merits of whether  the  Company  should be paid  reciprocal
         compensation  for ISP  traffic.  The  Florida  decision  ruled that the
         compensation   provisions  of  the  parties'  current   interconnection
         agreement  would  continue  to  apply,  subject  to true up,  until the
         completion  of the FCC's  rulemaking on future  compensation.  The Ohio
         commission  deferred ruling on the merits until  completion of the Ohio
         commission's  generic  proceeding  on  prospective  compensation,   and
         ordered  that in the interim  period  until  completion  of the generic
         proceeding,  bill and keep  procedures  should be followed,  subject to
         true  up once  the  commission  proceeding  is  concluded.  Arbitration
         proceedings  with US West before the Colorado  commission and with SWBT
         before the Texas commission are pending.

         Subsequent to completion of the arbitration proceedings with BellSouth,
         the Company signed a three-year  agreement with BellSouth  that,  among
         other  issues,  addresses the payment of  reciprocal  compensation  for
         Internet  traffic.  BellSouth  agreed  to pay  past  monies  due to the
         Company for local reciprocal compensation for the period beginning when
         ISP traffic was first received by the Company from BellSouth and ending
         December  31,  1999,  and the  parties  also  agreed to the  payment of
         reciprocal  compensation  for Internet and voice traffic for the period
         from January 1, 2000 through December 31, 2002 at per-minute rates that
         gradually  reduce  over  the  three  year  period.   The  agreement  is
         applicable to all nine states in the BellSouth operating territory.

         While the Company  intends to pursue the collection of all  receivables
         related to transport and  termination  charges and believes that future
         revenue from transport and  termination  charges  recognized  under the
         Company's interconnection  agreements will be realized, there can be no
         assurance that future regulatory and judicial rulings will be favorable
         to the Company,  or that  different  pricing  plans for  transport  and
         termination  charges  between  carriers  will not be  adopted  when the
         Company's  interconnection  agreements  continue to be  renegotiated or
         arbitrated,  or as a result of FCC or state  commission  proceedings on
         future  compensation  methods.  In  fact,  the  Company  believes  that
         different pricing plans will continue to be considered and adopted, and
         although  the  Company   expects  that  revenue  from   transport   and
         termination  charges  likely  will  decrease as a  percentage  of total
         revenue from local services in subsequent periods,  the Company's local
         termination   services  still  will   be   required  by  the  ILECs and



                                       17
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(6)  Commitments and Contingencies (continued)

         must be  provided  under the  Telecommunications  Act,  and likely will
         result  in  increasing  volume  in  minutes  due to the  growth  of the
         Internet and related services markets. The Company expects to negotiate
         and/or arbitrate reasonable compensation and collection terms for local
         termination  services,   although  there  is  no  assurance  that  such
         compensation will remain consistent with current levels.

     (e) Litigation

         On April 4, 1997,  certain  shareholders  of Zycom filed a  shareholder
         derivative  suit and class action  complaint for  unspecified  damages,
         purportedly on behalf of all of the minority  shareholders of Zycom, in
         the District Court of Harris County,  Texas (Case No. 97-17777) against
         the Company,  Zycom and certain of their  subsidiaries.  This complaint
         alleges  that the  Company  and  certain of its  subsidiaries  breached
         certain duties owed to the plaintiffs. The plaintiffs were denied class
         certification  by the trial court and the Court of Appeals affirmed the
         trial court's decision.  In April 2000, the Company reached a tentative
         settlement  arrangement  with the  plaintiffs.  Under  the terms of the
         proposed settlement,  the Company would be completely released from all
         claims of the  plaintiffs.  The  settlement  would not have a  material
         adverse  effect  on  the  Company's  financial  condition,  results  of
         operations  or cash  flows.  If the  parties  are unable to  finalize a
         settlement,  an  expedited  trial will take place and the Company  will
         vigorously defend against the plaintiffs' claims.

         The Company is a party to certain other  litigation which has arisen in
         the ordinary  course of  business.  In the opinion of  management,  the
         ultimate  resolution of these matters will not have a material  adverse
         effect on the Company's financial  condition,  results of operations or
         cash flows.

(7)  Business Units

     The Company  conducts  transactions  with  external  customers  through the
     operations of its Telecom Services business unit.  Administrative  services
     are provided to Telecom Services by Corporate Services.  Corporate Services
     consists of the  operating  activities  of ICG  Communications,  Inc.,  ICG
     Funding,  LLC, ICG Canadian  Acquisition,  Inc., ICG Holdings (Canada) Co.,
     ICG Holdings,  Inc.,  ICG Services,  Inc.,  ICG Tevis,  Inc., ICG Corporate
     Headquarters,  L.L.C.,  ICG 161, L.P. and ICG Mountain  View,  Inc.,  which
     primarily hold  securities and real estate  properties and provide  certain
     legal,  accounting and finance,  personnel and other administrative support
     services to Telecom Services.

     Direct and certain indirect costs incurred by Corporate  Services on behalf
     of Telecom  Services are allocated to Telecom  Services based on the nature
     of  the  underlying  costs.   Transactions  between  Telecom  Services  and
     Corporate  Services for services performed in the normal course of business
     are recorded at amounts which are intended to approximate fair value.

     Set forth  below are  revenue,  EBITDA  (before  nonrecurring  and  noncash
     charges), which  represents the measure of  operating  performance  used by
     management to evaluate  operating  results,  depreciation and amortization,
     operating  loss,  interest  expense,  capital  expenditures  of  continuing
     operations and total assets for Telecom Services and Corporate Services. As
     described in  note 3,  the  operating  results of the  Company  reflect the
     operations  of Network Services,  Satellite  Services,  Zycom and NETCOM as
     discontinued  for all periods presented.



                                       18
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(7)  Business Units (continued)

                                       Three months ended
                                            March 31,
                                      ----------------------
                                        1999        2000
                                      ----------  ----------
                                         (in thousands)
Revenue:
  Telecom Services                    $ 104,331     157,224
  Corporate Services                          -           -
                                      ----------  ----------
     Total revenue                    $ 104,331     157,224
                                      ==========  ==========

EBITDA (before nonrecurring and
  noncash charges) (a):
     Telecom Services                 $  12,257      25,093
     Corporate Services                  (4,383)     (5,860)
                                      ----------  ----------
        Total EBITDA (before
          nonrecurring and
          noncash charges)            $   7,874      19,233
                                      ==========  ==========

Depreciation and amortization (b):
  Telecom Services                    $  35,229      64,324
  Corporate Services                      1,146         275
                                      ----------  ----------
     Total depreciation and
        amortization                  $  36,375      64,599
                                      ==========  ==========

Operating loss:
  Telecom Services                    $  21,885     39,231
  Corporate Services                      5,683      6,567
                                      ----------  ----------
     Total operating loss             $  27,568     45,798
                                      ==========  ==========

Interest expense (b):
  Telecom Services                    $       -      4,975
  Corporate Services                     47,438     57,659
                                      ----------  ----------
     Total interest expense           $  47,438     62,634
                                      ==========  ==========

Extraordinary (loss) gain:
  Telecom Services                    $ 193,029          -
  Corporate Services                          -          -
                                      ----------  ----------
     Total extraordinary (loss) gain  $ 193,029          -
                                      ==========  ==========

Capital expenditures of continuing
  operations (c):
     Telecom Services                 $ 102,911     213,208
     Corporate Services                       -           -
                                      ----------  ----------
        Total capital expenditures
           of continuing operations   $ 102,911     213,208
                                      ==========  ==========


                                   December 31,     March 31,
                                       1999           2000
                                  -------------  -------------
                                        (in thousands)
Total assets:
   Telecom Services (d)            $ 1,845,171     1,989,189
   Corporate Services (d)              261,085       157,677
   Eliminations                        (85,635)      (71,529)
                                  -------------  -------------
      Total assets                 $ 2,020,621     2,075,337
                                  =============  =============


                                       19
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(7)  Business Units (continued)

     (a)  EBITDA (before nonrecurring and noncash charges) consists of loss from
          continuing operations before interest,  income taxes, depreciation and
          amortization,  provision for impairment of long-lived assets, net loss
          (gain) on  disposal  of  long-lived  assets,  other  expense,  net and
          accretion   and  preferred   dividends  on  preferred   securities  of
          subsidiaries,  or, revenue less operating  costs and selling,  general
          and administrative  expenses.  EBITDA (before nonrecurring and noncash
          charges)  is   presented  as  the   Company's   measure  of  operating
          performance   because   it  is  a   measure   commonly   used  in  the
          telecommunications  industry.  EBITDA (before nonrecurring and noncash
          charges) is presented  to enhance an  understanding  of the  Company's
          operating  results  and is not  intended  to  represent  cash flows or
          results of operations in accordance with generally accepted accounting
          principles for the periods indicated.  EBITDA (before nonrecurring and
          noncash  charges)  is  not  a  measurement  under  generally  accepted
          accounting principles and is not necessarily comparable with similarly
          titled measures of other companies.

     (b)  Although  not  included  in EBITDA  (before  nonrecurring  and noncash
          charges),  which represents the measure of operating  performance used
          by  management  to  evaluate  operating   results,   the  Company  has
          supplementally  provided  depreciation  and  amortization and interest
          expense  for  each  of the  Company's  business  units  and  Corporate
          Services.  Interest  expense  excludes amounts charged for interest on
          outstanding cash advances and expense  allocations  among the business
          units and Corporate Services.

     (c)  Capital  expenditures include assets acquired with cash, under capital
          leases  and  pursuant  to IRU  agreement  and  excludes  payments  for
          construction of the Company's  corporate  headquarters of $1.7 million
          during  the  three   months   ended  March  31,  2000  and   corporate
          headquarters assets acquired through the issuance of long-term debt of
          $33.7 million during the three months ended March 31, 1999.

     (d)  Total  assets of Telecom  Services  and  Corporate  Services  excludes
          investments   in   consolidated   subsidiaries   which   eliminate  in
          consolidation.

(8)  Summarized Financial Information of ICG Holdings, Inc.

     The 11 5/8% Senior  Discount Notes due 2007 (the "11 5/8% Notes") issued by
     Holdings  during 1997 are  guaranteed  by ICG. The 12 1/2% Senior  Discount
     Notes due 2006 (the "12 1/2% Notes") and the 13 1/2% Senior  Discount Notes
     due 2005 (the "13 1/2%  Notes")  issued by  Holdings  during 1996 and 1995,
     respectively, are guaranteed by ICG and Holdings-Canada.

     The separate financial statements of Holdings have not been included herein
     because such  disclosure is not considered to be material to the holders of
     the  11 5/8%  Notes, the 12 1/2%  Notes  and  the  13 1/2%  Notes. However,
     summarized combined financial information for Holdings and its subsidiaries
     is as follows:



                                       20
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(8)  Summarized Financial Information of ICG Holdings, Inc. (continued)

                Summarized Consolidated Balance Sheet Information

                                        December 31,      March 31,
                                            1999            2000
                                        ------------    ------------
                                               (in thousands)
                                        ----------------------------

     Current assets                     $  263,870         193,763
     Property and equipment, net           675,613         736,724
     Other non-current assets, net         128,489         105,551
                                        ------------    ------------
        Total assets                    $1,067,972       1,036,038
                                        ============    ============

     Current liabilities                   148,042         175,785
     Long-term debt, less current
        portion                          1,138,734       1,174,719
     Capital lease obligations, less
        current portion                     57,564          57,220
     Other long-term liabilities             1,233           3,649
     Due to parent                         256,348         271,252
     Due to ICG Services                   128,893         121,691
     Redeemable preferred stock            390,895         405,203
     Stockholder's deficit              (1,053,737)     (1,173,481)
                                        ------------    ------------
        Total liabilities and
           stockholders' deficit        $1,067,972       1,036,038
                                        ============    ============


           Summarized Consolidated Statement of Operations Information

                                        Three months ended March 31,
                                        --------------------------
                                           1999          2000
                                        ------------  ------------
                                             (in thousands)

   Total revenue                        $ 105,733       152,877
   Total operating costs and
      expenses                            138,105       206,659
                                        ------------  ------------
   Operating loss                       $ (32,372)      (53,782)
                                        ============  ============
   Loss from continuing operations      $ (67,370)     (119,744)
                                        ============  ============
   Net loss                             $ (82,250)     (119,744)
                                        ============  ============




                                       21
<PAGE>




                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(9)  Condensed Financial Information of ICG Holdings (Canada) Co.

     Condensed financial information for Holdings-Canada only is as follows:

                       Condensed Balance Sheet Information

                                         December 31,      March 31,
                                             1999            2000
                                        --------------   -------------
                                                 (in thousands)
                                        ------------------------------

     Current assets                      $       82              82
     Advances to subsidiaries               256,348         271,252
     Non-current assets, net                      -         255,931
                                        --------------   -------------
          Total assets                   $  256,430         527,265
                                        ==============   =============

     Current liabilities                         73              73
     Long-term debt, less
        current portion                           -               -
     Due to parent                          246,609         517,444
     Share of losses of
        subsidiaries                      1,053,737       1,173,481
     Shareholders' deficit               (1,043,989)     (1,163,733)
                                        --------------   -------------
        Total liabilities and
           shareholders' deficit         $  256,430         527,265
                                        ==============   =============


            Condensed Statement of Operations Information

                                             Three months ended
                                                  March 31,
                                          -------------------------
                                              1999          2000
                                          ------------  -----------

     Total revenue                        $        -            -
     Total operating costs and
        expenses                                 603            -
                                          ------------  -----------
     Operating loss                       $     (603)           -
                                          ============  ===========
     Losses of subsidiaries                  (82,250)    (119,744)
     Net loss attributable to
        common shareholders               $  (82,853)    (119,744)
                                          ============  ===========

(10) Condensed Financial Information of ICG Communications, Inc.(Parent company)

     The primary assets of ICG are its investments in ICG Services,  ICG Funding
     and  Holdings-Canada,  including  advances to those  subsidiaries.  Certain
     corporate expenses of the parent company are included in ICG's statement of
     operations  and were  approximately  $0.5 million for both the three months
     ended March 31, 1999 and 2000.  ICG has no  operations  other than those of
     ICG Services, ICG Funding and Holdings-Canada and their subsidiaries.

(11) Events Subsequent to March 31, 2000

     On April 10, 2000, the Company sold 75,000 shares of 8% Series A-1, A-2 and
     A-3 Convertible Preferred Stock of ICG (the "Convertible  Preferred Stock")
     and  10,000,000  warrants to purchase  ICG Common  Stock to  affiliates  of
     Liberty Media  Corporation  ("Liberty  Media"),  Hicks,  Muse, Tate & Furst
     Incorporated  ("Hicks  Muse")  and  Gleacher  Capital  Partners  ("Gleacher
     Capital")  (collectively,  "the  Investors").  The sale of the  Convertible
     Preferred  Stock  resulted in  proceeds  to the  Company of $750.0  million



                                       22
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued

(11) Events Subsequent to March 31, 2000 (continued)

     (before cash fees and expenses of approximately $36.0  million). Each share
     of Convertible Preferred Stock  has an initial  liquidation  preference  of
     $10,000  per share  and bears  cumulative  dividend  rate of 8% per  annum,
     compounded quarterly.  Dividends accrete to the liquidation preference on a
     quarterly  basis  for five  years  and are  payable  in cash or  additional
     liquidation  preference accretion  thereafter.  In the event of a change in
     control of the Company,  as defined in the  agreement,  occurring  prior to
     five years from the date of issuance of the  Convertible  Preferred  Stock,
     the Company  is, in most  instances,  required  to make a special  dividend
     payment to the Convertible  Preferred  Stockholders equal to the difference
     between  the  fully  accreted  liquidation  preference  of the  Convertible
     Preferred  Stock  five  years from the date of  issuance  and the  existing
     liquidation  preference on the date of the change in control.  In addition,
     the Company has the right,  but not the obligation,  to offer to repurchase
     the Convertible  Preferred  Stock at 101% of the liquidation  preference on
     the date of the  change in  control  (after  giving  effect to the  special
     dividend, if applicable).

     The Convertible  Preferred Stock is immediately  convertible into shares of
     ICG Common  Stock at a  conversion  rate of $28.00  per  share,  subject to
     adjustment and will have voting rights with the common  stockholders  on an
     as-converted  basis.  The holders  of the  Series A-1  and A-2  Convertible
     Preferred  Stock  collectively will  be  entitled  to  elect  up  to  three
     directors  to  the Company's  Board  of  Directors.  Additionally,  certain
     material  transactions outside the ordinary course of business will require
     an affirmative  vote of at least one of the three  directors elected by the
     holders of the Series A-1 and A-2 Convertible Preferred Stock.  The Company
     may redeem the Convertible  Preferred  Stock  at any time after five  years
     from the date of  issuance  through 15 years  from the date of issuance, at
     which time the Convertible Preferred Stock is mandatorily  redeemable.  The
     warrants  to purchase  ICG Common  Stock are immediately  convertible  into
     shares of ICG Common  Stock  at a  conversion  rate  of  $34.00  per  share
     and  expire  in five  years  from  the date of issuance.  The affiliates of
     Liberty Media, Hicks Muse  and Gleacher Capital  purchased  $500.0 million,
     $230.0 million and $20.0 million,  respectively,  in Convertible  Preferred
     Stock and received a ratable portion of the total 10,000,000 warrants.

     Separately,  on February 28,  2000,  ICG Tevis,  Inc., a subsidiary  of the
     Company,  agreed to purchase,  subject to regulatory  approvals,  1,000,000
     shares  of common  stock of  Teligent,  Inc.,  a fixed  wireless  broadband
     communications  provider  ("Teligent"),  from a  subsidiary  of Teligent in
     exchange for 2,996,076 shares of ICG Common Stock.


                                       23
<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

      The following discussion includes certain  forward-looking  statements and
information  that is based on the beliefs of management  as well as  assumptions
made by and information  currently  available to the Company.  When used in this
document, the words "anticipate", "believe", "estimate" and "expect" and similar
expressions,  as they relate to the Company or its  management,  are intended to
identify forward-looking  statements.  Such statements reflect the current views
of the Company with respect to future  events and are subject to certain  risks,
uncertainties   and   assumptions.   Should  one  or  more  of  these  risks  or
uncertainties  materialize,  or should  underlying  assumptions prove incorrect,
actual results may vary materially from those described in this document.  These
forward-looking statements are affected by important factors, including, but not
limited  to, the  ability of the Company to obtain  adequate  financing  to fund
expansion, the dependence on increased traffic on the Company's facilities,  the
successful  implementation  of the Company's  strategy of offering an integrated
telecommunications  package of local, long distance, data and enhanced telephony
and  network  services,  the  continued  development  of the  Company's  network
infrastructure and actions of competitors and regulatory  authorities that could
cause actual results to differ materially from the  forward-looking  statements.
The results of  operations  for the three  months  ended March 31, 1999 and 2000
represent the consolidated  operating results of the Company.  See the unaudited
consolidated  financial  statements  of the Company for the three  months  ended
March 31, 2000 included elsewhere herein. The Company's  consolidated  financial
statements reflect the operations of Network Services, Satellite Services, Zycom
and NETCOM as  discontinued  for all periods  presented.  The terms "fiscal" and
"fiscal year" refer to the Company's  fiscal year ending December 31. All dollar
amounts are in U.S. dollars.

Company Overview

      ICG  Communications,  Inc. ("ICG" or the "Company") is a  facilities-based
communications provider and, based on revenue and customer lines  in service, is
one of the largest  competitive communications  companies in the United  States.
The Company primarily  offers voice  and data  services  directly to  small-  to
medium-sized   business   customers  and  offers  network  facilities  and  data
management to ISP customers.  In addition, the Company offers special access and
switched access services to long-distance companies and other customers.

      The Company began marketing and selling local dial-tone  services in major
metropolitan areas in early 1997 subsequent to passage of the Telecommunications
Act, which permitted  competitive  interstate and intrastate  telephone services
including local dial tone. During the first quarter of 2000, the Company offered
competitive  telephone  services in 31 states within the United States. In early
1998,  the  Company  acquired  NETCOM  On-Line  Communication   Services,   Inc.
("NETCOM"),  which provided the Company with a Tier 1 national data network that
enabled the Company to launch its business of providing  network  infrastructure
to ISPs.  By March 31,  2000,  the company had 904,629  customer  lines and data
access  ports  in   service,  approximately   12,000   business  customers   and
approximately 500 ISP customers.

      At March 31, 2000 the Company's  Tier 1 nationwide  data network  included
public and private  peering  locations,  227 POPs,  16 frame relay  switches and
high-performance  routers  connecting  a backbone of 24 ATM  switches and 18,000
miles of leased  long-haul  fiber  lines.  In addition,  at March 31, 2000,  the
Company had 35 voice  switches,  4,807 miles of local fiber and  connections  to
8,792 buildings.

      As of March 31, 2000,  the Company had  approximately  650,000 data access
ports in service.  The Company  provides data access and  transport  services to
ISPs that in many cases rely on the  Company to provide  network  ownership  and
management.  The Company's  current product  offerings to the ISP market include
dial-up products such as primary rate interface  ("PRI"),  remote access service
("RAS") and Internet remote access service ("IRAS"), as well as broadband access
services including T-1 and T-3 connections and DSL.

      As of March 31,  2000,  the Company  had  approximately  250,000  business
customer  lines in service.  Voice and data  communication  services  offered to
business  customers include local, long distance and enhanced telephony services
through its Internet protocol, circuit switch and regional fiber optic networks.
In regional markets,  the Company is a cost-efficient  alternative to the area's
incumbent local telephone company for businesses.

      The Company also provides interexchange services to long-distance carriers


                                       24
<PAGE>


and other customers  including  "special access" services that connect end-users
to  long-distance  carrier's  facilities,   connect  a  long-distance  carrier's
facilities to the local telephone company central office and connect  facilities
of the same or different long-distance carrier.

      During the first quarter of 2000, the Company realized  significant growth
as  demonstrated by a 51% increase in revenue over the first quarter of 1999 and
a more than  doubling  of the number of lines in service  compared  to March 31,
1999. The Company's business continues to grow as a result of increased Internet
demand, new technologies and increased market share for customers  traditionally
served by incumbent telephone  companies.  The Company's year 2000 business plan
calls for accelerated  network expansion into 22 new major  metropolitan  areas.
The Company  will also invest in  developing  and  delivering  new  products and
services to add to its portfolio of offerings to each market segment.

      To better focus its efforts on its core business  operations,  the Company
disposed of certain  assets which  management  believed did not  complement  its
overall business strategy.  During the year ended December 31, 1999, the Company
sold  non-core   assets  and  related   securities  for  net  cash  proceeds  of
approximately  $405  million,  including  the sale of the  Company's  retail ISP
customer business and its Network Services and Satellite Services divisions (see
note  3,  "Discontinued  Operations"  in the  unaudited  consolidated  financial
statements  of the Company for the three  months  ended March 31, 2000  included
elsewhere  herein).  The Company also centralized its provisioning  process with
two new  provisioning  centers that  replaced 30 regional  centers and is in the
process of installing new, comprehensive  operating support systems ("OSS") from
Telcordia for provisioning service and from Saville for customer billing.

      In conjunction with the increase in its service offerings, the Company has
and will continue to need to spend significant  amounts of capital on equipment,
sales, marketing,  customer service,  engineering and support personnel prior to
the  generation  of  corresponding   revenue.   EBITDA  losses,  EBITDA  (before
nonrecurring  and  noncash  charges)  losses and  operating  and net losses have
generally increased immediately preceding and during periods of relatively rapid
network expansion and development of new services. The Company reported positive
EBITDA  (before  nonrecurring  and  noncash  charges)  of $19.2  million for the
quarter ended March 31, 2000. As the Company provides a greater volume of higher
margin  services,  carries more traffic on its own  facilities  rather than ILEC
facilities  and  obtains  the  right to use  unbundled  ILEC  facilities,  while
experiencing  decelerating increases in personnel and other selling, general and
administrative  expenses supporting its operations,  any or all of which may not
occur, the Company anticipates that EBITDA performance will improve.

Results of Operations

      The following  table  provides  certain  statement of operations  data and
certain  other  financial  data for the Company for the periods  indicated.  The
table also  presents  revenue,  operating  costs and expenses,  operating  loss,
EBITDA and EBITDA (before  nonrecurring  and noncash charges) as a percentage of
the Company's total revenue.


                                       25
<PAGE>



                                      Three months ended March 31,
                               --------------------------------------------
                                      1999                    2000
                               --------------------   ---------------------
                                   $          %            $          %
                               ---------   --------    ---------  ---------
                                               (unaudited)
Statement of Operations Data:                (in thousands)
Revenue                         104,331      100        157,224      100
Operating costs                  53,649       51         82,902       53
Selling, general and
  administrative                 42,808       41         55,089       35
Depreciation and
  amortization                   36,375       35         64,599       41
Other expense (income), net        (933)      (1)           432        -
                               ---------   --------    ---------  ---------
      Operating loss            (27,568)     (26)       (45,798)     (29)

Other Data:
Net cash used by operating
  activities                    (47,905)                 (7,234)
Net cash (used) provided
  by investing activities       133,100                (121,468)
Net cash (used) provided
  by financing activities          (456)                 66,207
EBITDA (1)                        8,807        8         18,801       12
EBITDA (before nonrecurring
  and noncash charges) (1)        7,874        8         19,233       12
Capital expenditures of
  continuing operations (2)     102,911                 213,208
Capital expenditures of
  discontinued operations (2)     2,805                       -


<TABLE>
<CAPTION>

                           March 31,      June 30,    September 30,  December 31,     March 31,
                              1999          1999          1999           1999           2000
                         -------------  ------------- -------------  -------------  -------------
                                                     (unaudited)

Statistical Data (3):
<S>                         <C>           <C>           <C>             <C>           <C>
Full time employees           2,665         2,753         3,054           2,853         2,930
Telecom services:
  Access lines in
    service (4)             418,610       494,405       584,827         730,975       904,629
  Buildings connected:
    On-net                      789           874           939             963         1,046
    Hybrid (5)                5,337         5,915         6,476           7,115         7,746
                         -------------  ------------- -------------  -------------  -------------
      Total buildings
        connected             6,126         6,789         7,415           8,078         8,792
  Operational switches:
    Circuit                      29            29            29              31            35
    ATM                           -             -             -              24            24
    Frame Relay                  17            16            16              16            16
                         -------------  ------------- -------------  -------------  -------------
      Total operational
        switches                 46            45            45              71            75
  Regional fiber route
    miles (6):
      Operational             4,351         4,406         4,449           4,596         4,807
      Under construction          -             -             -               -           368
  Regional fiber strand
    miles (7):
      Operational           155,788       164,416       167,067         174,644       177,103
      Under construction          -             -             -               -        17,813
  Long-haul broadband
    route miles                   -             -             -          18,000        18,000
  Collocations with ILECs       111           126           139             147           183
</TABLE>


(1)  EBITDA  consists  of  earnings  (loss) from  continuing  operations  before
     interest, income taxes,  depreciation and amortization,  other expense, net
     and  accretion  and   preferred   dividends  on  preferred   securities  of
     subsidiaries, or, operating loss plus depreciation and amortization. EBITDA
     (before  nonrecurring and noncash charges) represents EBITDA before certain
     nonrecurring  charges such as the net loss (gain) on disposal of long-lived
     assets and other,  net  operating  costs and expenses,  including  deferred
     compensation.  EBITDA and EBITDA (before  nonrecurring and noncash charges)


                                       26
<PAGE>


     are   provided   because   they   are   measures   commonly   used  in  the
     telecommunications  industry.  EBITDA and EBITDA (before  nonrecurring  and
     noncash charges) are presented to enhance an understanding of the Company's
     operating  results and are not intended to represent  cash flows or results
     of operations in accordance with generally accepted  accounting  principles
     ("GAAP") for the periods indicated.  EBITDA and EBITDA (before nonrecurring
     and  noncash  charges)  are  not  measurements   under  GAAP  and  are  not
     necessarily  comparable with similarly  titled measures of other companies.
     Net cash  flows from  operating,  investing  and  financing  activities  of
     continuing  operations as determined using GAAP are also presented in Other
     Data.

(2)  Capital  expenditures  include  assets  acquired  with cash,  under capital
     leases,  pursuant to IRU  agreement  and  through  the  issuance of debt or
     warrants and excludes payments for construction of the Company's  corporate
     headquarters  of $1.7 million  during the three months ended March 31, 2000
     and  corporate   headquarters  assets  acquired  through  the  issuance  of
     long-term  debt of $33.7  million  during the three  months ended March 31,
     1999. Capital expenditures of discontinued  operations includes the capital
     expenditures  of Network  Services,  Satellite  Services,  Zycom and NETCOM
     combined for all periods presented.

(3)  Amounts  presented are for  three-month  periods ended, or as of the end of
     the period presented.

(4)  Access  lines in service at March 31, 2000  includes  approximately  90% of
     lines   provisioned   through  the  Company's  switch  with  the  remainder
     provisioned through resale and other agreements with various local exchange
     carriers. Resale lines are used primarily to obtain customers. Although the
     Company  plans to  continue to migrate  lines from resale to higher  margin
     on-switch  lines,  there  is no  assurance  that it will be  successful  in
     executing this strategy.

(5)  Hybrid buildings  connected  represent buildings connected to the Company's
     network via another carrier's facilities.

(6)  Regional  fiber route miles refers to the number of miles of regional fiber
     optic cable,  including leased fiber. As of March 31, 2000, the Company had
     4,807  regional  fiber route miles,  of which 48 regional fiber route miles
     were  leased  under  operating  leases.  Regional  fiber  route miles under
     construction  represents fiber under  construction  which is expected to be
     operational within six months.

(7)  Regional  fiber strand  miles refers to the number of regional  fiber route
     miles,  including leased fiber, along a telecommunications  path multiplied
     by the number of fiber strands  along that path. As of March 31, 2000,  the
     Company had 177,103  regional  fiber  strand  miles,  of which 856 regional
     fiber strand  miles were leased  under  operating  leases.  Regional  fiber
     strand miles under  construction  represents fiber under construction which
     is expected to be operational within six months.

Three  Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999

      Revenue.  Total revenue of $157.2 million for the three months ended March
31, 2000 increased $52.9 million,  or 51%, from the three months ended March 31,
1999.  Local  services  revenue  increased  from $67.4  million (or 65% of total
revenue) for the three months ended March 31, 1999 to $102.6  million (or 65% of
total  revenue) for the three months ended March 31, 2000,  primarily  due to an
increase  in the local  access  lines at March 31,  1999 as compared to those in
service at March 31, 2000. In addition, local access revenue includes revenue of
approximately  $30.8  million and $35.5 million for the three months ended March
31, 1999 and 2000,  respectively,  for reciprocal  compensation  relating to the
transport  and  termination  of local  traffic to ISPs from  customers  of ILECs
pursuant to various interconnection agreements.  Certain of these agreements are
subject to renegotiation over the next several months. While management believes
that these  agreements will be replaced by agreements  offering the Company some
form of compensation for ISP traffic,  the  renegotiated  agreements may reflect
rates for  reciprocal  compensation  which are  lower  than the rates  under the
current  contracts.  See "Liquidity - Transport and Termination  Charges." Local
access  revenue  during the three  months  ended  March 31,  2000 also  includes
approximately  $4.3  million in revenue  for the period from  February  18, 2000
through March 31, 2000 from the  MindSpring  Capacity  Agreement  which prior to
February  17, 2000 had been  offset  against  the  deferred  gain on the sale of
NETCOM assets.  Special  access revenue  increased from $22.6 million (or 22% of
total  revenue) for the three  months ended March 31, 1999 to $39.8  million (or
25% of total revenue) for the three months ended March 31, 2000. The increase in
special  access  revenue is due to increased  sales as well as $11.5  million of


                                       27
<PAGE>


revenue  recognized  during  the three  months  ended  March 31,  2000 under the
Company's  fiber  optic  lease  agreement  with a major  interexchange  carrier.
Switched access (primarily  terminating long distance) and SS7 revenue increased
to $10.5  million for the three months  ended March 31,  2000,  compared to $9.2
million for the three months ended March 31, 1999.  The Company has  selectively
raised prices on its wholesale  switched  services  products in order to improve
margins. Revenue from long distance services decreased from $5.1 million for the
three  months  ended March 31, 1999 to $4.3  million for the three  months ended
March 31, 2000. The Company's  long distance  revenue for the three months ended
March 31, 2000 was impacted by planned  attrition  of resale  access lines which
had high long distance service penetration rates.

      Operating  costs.  Total operating costs increased $29.3 million,  or 55%,
from $53.6  million for the three months  ended March 31, 1999 to $82.9  million
for the three  months  ended March 31,  2000.  Operating  costs  increased  as a
percentage  of revenue from 51% for the three months ended March 31, 1999 to 53%
for the three months ended March 31, 2000.  Operating  costs consist of payments
to ILECs  for the use of  network  facilities  to  support  local,  special  and
switched access services,  network operating costs,  right of way fees and other
costs.  The increase in operating costs in absolute  dollars and as a percentage
of revenue is attributable to the increase in volume of local and special access
services,  the increase in network operating costs which include engineering and
operations personnel dedicated to the provision of local exchange services,  the
expansion of ICG service offerings into cities where network capacity and switch
facility access is being leased from ILECs and the recognition of  approximately
$9.4 million of operating expenses for the period from February 18, 2000 through
March 31, 2000 from the MindSpring  Capacity  Agreement  which prior to February
17, 2000 had been offset against the deferred gain on the sale of NETCOM assets.
The Company  expects the ratio of operating costs to revenue will improve as the
Company provides a greater volume of higher margin services, principally RAS and
local exchange services,  carries more traffic on its own facilities rather than
the ILEC  facilities and obtains the right to use unbundled  ILEC  facilities on
satisfactory terms, any or all of which may not occur.

      Selling,  general and administrative  expenses. Total selling, general and
administrative  ("SG&A")  expenses  increased $12.3 million,  or 29%, from $42.8
million for the three months ended March 31, 1999 to $55.1 million for the three
months ended March 31, 2000.  Total SG&A  expenses  decreased as a percentage of
revenue  from 41% for the three months ended March 31, 1999 to 35% for the three
months  ended  March  31,  2000.   SG&A   expenses   related  to  the  Company's
communication services ("Telecom Services") increased from $38.4 million, or 37%
of revenue,  for the three months ended March 31, 1999 to $49.2 million,  or 31%
of revenue,  for the three months ended March 31, 2000. The increase in absolute
dollars is principally  due to an increase in average staff levels  resulting in
increased   salary  and  benefits   expense  as  well  as  the   recognition  of
approximately  $1.0 million of SG&A  expenses  for the period from  February 18,
2000 through March 31, 2000 from the MindSpring  Capacity  Agreement which prior
to February 17, 2000 had been offset  against the  deferred  gain on the sale of
NETCOM  assets.  As the Company  benefits  from the revenue  generated  by newly
developed  services requiring  substantial  administrative and marketing expense
prior to initial service offerings,  principally local exchange  services,  SG&A
expenses have been declining as a percentage of revenue.  From time to time, the
Company will experience  increases in SG&A expenses as the Company  prepares for
offerings of newly  developed  services,  such as RAS.  Corporate  Services SG&A
expenses  increased  $1.5 million,  from $4.4 million for the three months ended
March 31, 1999  to $5.9  million  for the three  months  ended  March 31,  2000,
primarily due to increased salary costs.

      Depreciation and  amortization.  Depreciation  and amortization  increased
$28.2  million,  or 78%, for the three months ended March 31, 2000,  compared to
the three months ended March 31, 1999,  primarily due to increased investment in
depreciable  assets  resulting  from the  continued  expansion of the  Company's
networks  and  services as well as a reduction  in the overall  weighted-average
useful  life  of  depreciable  assets  in  service.  The  Company  expects  that
depreciation and amortization will continue to increase as the Company continues
to invest in the expansion and upgrade of its regional fiber and nationwide data
networks.

      Interest  expense.  Interest expense  increased $15.2 million,  from $47.4
million for the three  months  ended March 31,  1999,  to $62.6  million for the
three months  ended March 31,  2000,  which  includes  $53.9  million of noncash
interest.  The  Company's  interest  expense  increased  and  will  continue  to
increase,  because the principal amount of its indebtedness  increases until the
Company's  fixed  rate  senior  indebtedness  begins  to pay  interest  in cash,
beginning in 2001. Additionally,  interest expense increased due to the increase
in  long-term debt associated  with the senior  secured financing  facility (the
"Senior Facility") completed in August 1999.



                                       28
<PAGE>


      Interest income. Interest income decreased $0.8 million, from $4.1 million
for the three months ended March 31, 1999,  to $3.3 million for the three months
ended March 31, 2000. The decrease is attributable to the decrease in cash, cash
equivalents and short-term investments as the Company funds operating losses and
continues to invest available cash balances in telecommunications  equipment and
other assets.

      Other  (expense)  income,  net,  including  unrealized  gain on marketable
trading  securities  in 1999 and  realized  gain on sale of  available  for sale
securities in 2000. Other (expense)  income,  net fluctuated from a loss of $0.5
million for the three  months ended March 31, 1999 to income of $0.2 million for
the three  months  ended March 31,  2000.  For the three  months ended March 31,
1999,  other (expense)  income,  net primarily  includes  litigation  settlement
costs,  offset by an unrealized gain on the common stock of MindSpring which the
Company  received  as  partial  consideration  for the  sale of the  retail  ISP
operations of NETCOM. For the three months ended March 31, 2000, other (expense)
income  primarily  consists  of a realized  gain on the sale of a portion of the
NorthPoint common stock partially offset by other nonoperating expenses.

      Accretion and preferred dividends on preferred securities of subsidiaries.
Accretion  and  preferred  dividends on  preferred  securities  of  subsidiaries
increased $1.8 million,  from $14.8 million for the three months ended March 31,
1999 to $16.6 million for the three months ended March 31, 2000. The increase is
due  primarily  to the periodic  payment of  dividends  on the 14%  Exchangeable
Preferred Stock Mandatorily  Redeemable 2008 (the "14% Preferred Stock") and the
14 1/4% Exchangeable  Preferred Stock Mandatorily  Redeemable 2007 (the "14 1/4%
Preferred  Stock") in additional  shares of 14%  Preferred  Stock and 14 1/4% of
Preferred Stock.  Accretion and preferred  dividends on preferred  securities of
subsidiaries  recorded  during the three months ended March 31, 2000 consists of
the  accretion of issuance  costs $0.3 million and the accrual of the  preferred
securities  dividends  $16.3  million  associated  with the 6 3/4%  Exchangeable
Limited Liability Company Preferred Securities  Mandatorily Redeemable 2009 (the
"6  3/4%  Preferred  Securities"),  the  14%  Preferred  Stock  and  the 14 1/4%
Preferred Stock.

      Loss from continuing operations. Loss from continuing operations increased
$35.4  million,  or 41%, from $86.2 million for the three months ended March 31,
1999 to $121.6  million for the three months ended March 31, 2000 due  primarily
to  the  increases  in  depreciation  and  amortization  and  interest  expense,
partially offset by an increase in operating margin, as noted above.

      Loss from  discontinued  operations.  For the three months ended March 31,
1999,  loss from  discontinued  operations  was $0.1 million and consists of the
combined net loss of Network Services,  Satellite Services, Zycom and NETCOM for
the three-month  period.  Zycom terminated its normal  operations on October 22,
1998 and, accordingly, the Company reported no loss from discontinued operations
of Zycom for the three  months  ended March 31, 1999 or 2000.  Since the Company
reported a gain on the  disposition  of NETCOM,  the  Company  deferred  the net
losses from  operations  of NETCOM from  November 3, 1998 (the date on which the
Company's  board  of  directors  adopted  the  formal  plan  to  dispose  of the
operations  of  NETCOM)  through  the dates of the sales and,  accordingly,  the
Company  reported no loss from  discontinued  operations of NETCOM for the three
months ended March 31, 1999.

      Extraordinary  (loss) gain on sales of operations  of NETCOM.  The Company
reported an  extraordinary  gain on the sales of the operations of NETCOM during
the three months ended March 31, 1999 of $193.0 million,  net of income taxes of
$6.4 million.  The gain and related  income taxes were adjusted  during the nine
months ended December 31, 1999 to reflect actual results. Offsetting the gain on
the sales during the three months  ended March 31, 1999 is  approximately  $16.6
million of net losses of  operations of NETCOM from November 3, 1998 through the
dates of the sales. Additionally, $35.5 million of the proceeds from the sale of
certain of the domestic operating assets and liabilities of NETCOM to MindSpring
were deferred.  The deferred  proceeds were  recognized on a periodic basis over
the term of the MindSpring Capacity Agreement.

Liquidity and Capital Resources

      The  Company's  growth to date has been funded  through a  combination  of
equity,  debt and lease financing and non-core asset sales. The Company has also
incurred losses from continuing  operations since inception and, as of March 31,
2000, had a working capital deficit of $124.0 million. As of March 31, 2000, the
Company had  approximately  $71.8 million of cash and short term investments and
approximately $25.0 million of credit available under the Senior Facility.

      The Company has entered into several  financing  agreements  subsequent to
and during the three months ended March 31, 2000 to provide  additional  capital
to  support  the  Company's operating  losses  and  planned  capital  expansion,


                                       29
<PAGE>


including:

          i)   On April 10, 2000 the Company completed the sale of 75,000 shares
               of 8% Series A-1,  A-2 and A-3  Convertible  Preferred  Stock and
               warrants (see note 11,  "Events  Subsequent to March 31, 2000" in
               the unaudited  consolidated  financial  statements of the Company
               for the three  months  ended  March 31, 2000  included  elsewhere
               herein) to affiliates of Liberty Media Corporation,  Hicks, Muse,
               Tate & Furst  Incorporated  and Gleacher  Capital  Partners.  The
               transaction resulted in proceeds to the Company of $750.0 million
               (before cash expenses and fees of approximately $36.0 million).

          ii)  During the three months ended March 31, 2000,  the Company signed
               letters of intent with two major vendors, Cisco Systems, Inc. and
               Lucent   Technologies,   Inc.,  to  provide   financing  for  the
               acquisition of equipment. The proposed Cisco credit facility will
               provide the Company  with up to $180.0  million of capital  lease
               financing and is expected to close in the second quarter of 2000.
               Given the  closing of the  equity  transaction  described  in (i)
               above, the Company has postponed finalizing the arrangements with
               Lucent.

      Management  believes  that  with the  completion  of the  preferred  stock
transaction noted above,  additional financing including bank financing,  vendor
financing,  or the  issuance  of  high  yield  debt  will be  available  to fund
operations and achieve the Company's  targeted future growth through early 2001.
While the Company believes that it could obtain requisite additional  financing,
there can be no  assurance  that such  financing  would be available on a timely
basis or on acceptable terms.

Net Cash Used By Operating Activities

      The Company's operating activities used $47.9 million and $7.2 million for
the three months ended March 31, 1999 and 2000,  respectively.  Net cash used by
operating  activities  is primarily  due to losses from  continuing  operations,
decreases in accounts  payable and accrued  liabilities  and changes in accounts
receivable  balances  which are partially  offset by changes in working  capital
items and noncash  expenses,  such as depreciation  and  amortization,  deferred
interest expense and accretion and preferred  dividends on subsidiary  preferred
securities.

Net Cash (Used) Provided By Investing Activities

      Investing  activities  provided  $133.1 million and used $121.5 million in
the three  months ended March 31, 1999 and 2000,  respectively.  Net cash (used)
provided by investing  activities  includes cash expended for the acquisition of
property, equipment and other assets of $99.2 million and $141.3 million for the
three months ended March 31, 1999 and 2000,  respectively.  For the three months
ended March 31, 2000, net cash (used) provided by investing  activities included
proceeds from the sale of short-term investments available for sale. Included in
net cash (used)  provided by  investing  activities  for the three  months ended
March 31, 1999 is the purchase of long-term investments of $27.5 million, offset
by proceeds from the sales of the  operations of NETCOM of $252.9  million.  The
Company  will  continue  to use  cash in 2000  and  subsequent  periods  for the
construction  of  new  networks,   the  expansion  of  existing   networks  and,
potentially, for acquisitions.  The Company acquired assets under capital leases
of $14.4 million during the three months ended March 31, 2000.

Net Cash (Used) Provided  By Financing Activities

      Financing  activities  used $0.5 million and provided $66.2 million in the
three  months  ended  March 31,  1999 and 2000,  respectively.  Net cash  (used)
provided by financing  activities  for the three months ended March 31, 1999 and
2000 include  proceeds from the issuance of common stock in conjunction with the
exercise of options and warrants and the Company's employee stock purchase plan,
offset by principal  payments on long-term  debt and capital leases and payments
of  preferred  dividends  on  preferred  securities  of  subsidiaries.  Net cash
provided by financing  activities for the three months ended March 31, 2000 also
includes $95.0 million in proceeds from the issuance of long-term debt partially
offset by $35.2 million of payments made on the IRU agreement.

      On August 12,  1999,  ICG  Equipment  and  NetAhead  entered into a $200.0
million senior secured financing facility (the "Senior Facility")  consisting of
a $75.0  million  term  loan,  a $100.0  million  term loan and a $25.0  million
revolving line of credit.  As of March 31, 2000,  $174.4 million was outstanding


                                       30
<PAGE>


under the loans at weighted  average  interest rates ranging from 9.26% to 9.65%
for the three  months  ended March 31, 2000.  Quarterly  repayments  on the debt
commence  at  various  dates   beginning   September  30,  1999  with  remaining
outstanding  balances maturing on June 30, 2005 for the $100.0 million term loan
and the $25.0  million  line of credit and March 31, 2006 for the $75.0  million
term loan.

      As of March 31,  2000,  the Company  had an  aggregate  accreted  value of
approximately  $1.8 billion  outstanding under the 13 1/2% Senior Discount Notes
due 2005 (the "13 1/2 % Notes"), the 12 1/2% Senior Discount Notes due 2006 (the
"12 1/2 % Notes"),  the 11 5/8%  Senior  Discount  Notes due 2007 (the "11 5/8 %
Notes"),  the 10% Notes and the 9 7/8% Notes. The 13 1/2% Notes require payments
of interest to be made in cash commencing March 15, 2001 and mature on September
15,  2005.  The 12 1/2% Notes  require  payments  of interest to be made in cash
commencing November 1, 2001 and mature on May 1, 2006. The 11 5/8% Notes require
payments of interest to be made in cash commencing September 15, 2002 and mature
on March 15, 2007. The 10% Notes require payments of interest in cash commencing
August 15,  2003 and  mature on  February  15,  2008.  The 9 7/8% Notes  require
payments of interest  in cash  commencing  November 1, 2003 and mature on May 1,
2008.  With respect to fixed rate senior  indebtedness  outstanding on March 31,
2000, the Company has cash interest payment obligations of approximately  $113.3
million  in 2001,  $158.0  million  in 2002,  $212.6  million in 2003 and $257.2
million in 2004.

      As  of  March  31,  2000,  an  aggregate  amount  of  $533.7  million  was
outstanding under the 6 3/4% Preferred  Securities,  the 14% Preferred Stock and
the 14 1/4% Preferred Stock. The 6 3/4% Preferred Securities require payments of
dividends to be made in cash through  November  15, 2000.  In addition,  the 14%
Preferred Stock and 14 1/4% Preferred Stock require  payments of dividends to be
made in cash  commencing  June 15, 2002 and August 1, 2001,  respectively.  With
respect to  preferred  securities  currently  outstanding,  the Company has cash
dividend  obligations of approximately  $6.7 million remaining in 2000 for which
the Company has restricted cash balances  available for such dividend  payments,
$10.7 million in 2001 and $35.4 million in 2002 and each year thereafter through
2007.

Capital Expenditures

      The Company's capital expenditures of continuing operations (excluding the
acquisition of corporate  headquarters  assets acquired  through the issuance of
long-term debt of $33.7 million during the three months ended March 31, 1999 and
payments  for  construction  of the  Company's  corporate  headquarters  of $1.7
million  during the three  months  ended  March 31,  2000 and  including  assets
acquired with cash,  under capital  leases and pursuant to IRU  agreement)  were
$102.9  million and $213.2 million for the three months ended March 31, 1999 and
2000,  respectively.  The Company  anticipates  that the  expansion  of existing
networks,  construction of new networks and further development of the Company's
products and services will require capital  expenditures of approximately $800.0
million during the remainder of 2000. In the event that the Company's efforts to
acquire new customers and deploy new services are more  successful then planned,
the Company may be required to expand capital resources earlier in the year than
expected to accommodate customer demands.

      During the first  quarter of 2000,  the Company  entered  into a letter of
intent  with Cisco  Systems,  Inc.  The  Company  believes  that this  financing
agreement will better enable the Company to fund its scheduled network expansion
through the purchase of Cisco equipment.  The Cisco credit facility provides for
up to $180.0  million of capital  lease  financing  with a three-year  repayment
term. The Company  anticipates that the Cisco  transaction will close during the
second quarter of 2000.  There is no assurance,  however,  that this transaction
will close during that time period, or at all.

      To facilitate the expansion of its services and networks,  the Company has
entered into equipment purchase  agreements with various vendors under which the
Company has  committed to purchase a  substantial  amount of equipment and other
assets,  including a full range of switching systems, fiber optic cable, network
electronics,  software and  services.  If the Company  fails to meet the minimum
purchase level in any given year, the vendor may discontinue  certain discounts,
allowances  and  incentives  otherwise  provided to the  Company.  Further,  the
Company's  ability to make capital  expenditures  to meet its business plan will
depend on numerous  factors,  including  certain  factors  beyond the  Company's
control.  These factors  include,  but are not limited to, economic  conditions,
competition,  regulatory  developments and the availability of equity,  debt and
lease financing.


                                       31
<PAGE>



Other Cash Commitments and Capital Requirements

      The  Company's  operations  have  required  and will  continue  to require
significant capital  expenditures for development,  construction,  expansion and
acquisition of  telecommunications  assets.  Significant  amounts of capital are
required to be invested  before  revenue is generated,  which results in initial
negative cash flows. In addition to the Company's planned capital  expenditures,
it has other cash  commitments  as described in the  footnotes to the  Company's
unaudited consolidated financial statements for the three months ended March 31,
2000 included elsewhere herein.

      In  view of the  continuing  development  of the  Company's  products  and
services,  the expansion of existing networks and the construction,  leasing and
licensing of new networks,  the Company will require  additional amounts of cash
in the future from outside sources.  Changes in the Company's  business plan may
require  additional  sources of cash which may be  obtained  through  public and
private  equity  and debt  financings,  credit  facilities  and other  financing
arrangements.  In the past,  the  Company  has been  able to  secure  sufficient
amounts of  financing  to meet its  capital  needs.  There can be no  assurance,
however,  that  additional  financing  will be  available  to the Company or, if
available, that it can be obtained on terms acceptable to the Company.

      The failure to obtain sufficient  amounts of financing could result in the
delay or abandonment of some or all of the Company's  development  and expansion
plans, which could have a material adverse effect on the Company's business.  In
addition,  the  inability  to fund  operating  deficits  with  the  proceeds  of
financings  until  the  Company  establishes  a  sufficient   revenue-generating
customer base could have a material adverse effect on the Company's liquidity.

Transport and Termination Charges

      The Company has recorded revenue of approximately  $30.8 million and $35.5
million for the three  months ended March 31, 1999 and 2000,  respectively,  for
reciprocal  compensation  relating to the  transport  and  termination  of local
traffic to ISPs from customers of incumbent  local exchange  carriers  ("ILECs")
pursuant to various interconnection  agreements.  During the period, some of the
ILECs have not paid all of the bills they have  received  from the  Company  and
have  disputed  these  charges based on the belief that such calls are not local
traffic as  defined  by the  various  agreements  and not  subject to payment of
transport  and  termination  charges  under  state and  federal  laws and public
policies.  In  addition,  some  ILECs,  while  paying a  portion  of  reciprocal
compensation due to ICG for ISP-bound  traffic,  have disputed other portions of
the charges.

      The resolution of these disputes have been, and will continue to be, based
on  rulings  by  state  public  utility   commissions   and/or  by  the  Federal
Communications  Commission ("FCC"), or through negotiations between the parties.
The Company has  aggressively  participated in state and federal  regulatory and
judicial proceedings that address the obligation of the ILECs to pay the Company
reciprocal    compensation   for   ISP-bound   traffic   under   the   Company's
interconnection  agreements.  Subsequent  to the  issuance  of  favorable  state
regulatory rulings by the Colorado,  Ohio and California state commissions,  the
Company has received payments from US West,  Pacific Bell and GTE-California for
amounts owed for reciprocal  compensation  totaling $52.4 million  through March
31, 2000.

      Additionally,  through March 31, 2000, Southwestern Bell Telephone Company
("SWBT")  has  remitted  payment to the Company of $5.4  million for  reciprocal
compensation  owed to the Company for traffic  from SWBT  customers  in Texas to
ISPs served by the  Company.  On December 29, 1999,  SWBT  initiated  commercial
arbitration   to  determine   whether  the  terms  of  the   Company's   current
interconnection  agreement with SWBT require that the rates that the Company has
been billing SWBT for reciprocal compensation be reduced to rates established by
the Texas  PUC in a 1998  consolidated  arbitration  with  SWBT  involving  AT&T
Corporation, MCI Communications Corporation and other parties. Due to subsequent
procedural  developments,  this issue  will be decided by the Texas PUC,  rather
than in commercial arbitration; the Texas PUC proceeding is pending.

      On September 16, 1999, the CPUC rendered a decision against  MFS/Worldcom,
a CLEC ("MFS"),  in an arbitration  between Pacific Bell and MFS. The California
PUC ruled that MFS should not be  permitted  to charge  reciprocal  compensation
rates for the tandem switching and common transport rate elements.  Although the
California PUC's ruling did not involve the Company, the Company made a decision
effective for the three months beginning on September 30, 1999 and thereafter to
suspend the revenue  recognition for the tandem  switching and common  transport
rate elements for services  provided in California and in all other states where


                                       32
<PAGE>


the Company  operates  and such rate  elements  are  included  in the  Company's
interconnection  agreement with the ILEC.  Additionally,  the Company recorded a
provision  of $45.2  million  during the three  months  September  30,  1999 for
accounts receivable related to these elements recognized in periods through June
30, 1999,  which the Company believes may be  uncollectible.  The Company ceased
recording  revenue for the tandem and  transport  elements  of local  reciprocal
compensation  until the cash is received  effective  June 30, 1999.  The Company
continues  to bill Pacific Bell for the tandem  switching  and common  transport
rate elements,  and will pursue collection of its accounts  receivable,  despite
any  provision.  On  February  4,  2000,  the  California  PUC  initiated  a new
proceeding  to examine,  on a  prospective  basis,  compensation  for  ISP-bound
traffic, including the tandem and transport rate elements issue.

      On February 25, 1999, the FCC issued a decision that ISP-bound  traffic is
largely  jurisdictionally   interstate  traffic.  The  decision  relies  on  the
long-standing  federal  policy  that  ISP  traffic,   although  jurisdictionally
interstate,  is treated as though it is local traffic for pricing purposes.  The
decision  also  emphasizes  that because  there  currently  are no federal rules
governing  intercarrier  compensation for ISP traffic,  the  determination as to
whether such traffic is subject to  reciprocal  compensation  under the terms of
interconnection  agreements is properly made by the state  commissions  and that
carriers  are bound by their  interconnection  agreements  and state  commission
decisions regarding the payment of reciprocal  compensation for ISP traffic. The
FCC has initiated a rulemaking  proceeding regarding the adoption of prospective
federal rules for intercarrier  compensation  for ISP traffic.  In its notice of
rulemaking,  the FCC expresses its preference that  compensation  rates for this
traffic  continue to be set by  negotiations  between  carriers,  with  disputes
resolved  by  arbitrations  conducted  by  state  commissions,  pursuant  to the
Telecommunications  Act. On March 24, 2000,  the United  States Court of Appeals
for the District of Columbia Circuit vacated and remanded the FCC's February 25,
1999 decision.  The Company does not believe that the Circuit  Court's  decision
will adversely affect favorable state regulatory and judicial decisions awarding
reciprocal compensation for ISP traffic. The decision does, however, create some
uncertainty with respect to the timing of future regulatory decisions, and there
can be no  assurance  that  future  FCC or  state  commission  rulings  will  be
favorable to the Company.

      The Company has also recorded  revenue of  approximately  $5.2 million and
$5.5 million for the three  months ended March 31, 1999 and 2000,  respectively,
related to other transport and termination charges to the ILECs, pursuant to the
Company's interconnection agreements with these ILECs. Included in the Company's
net trade receivables at March 31, 2000 are approximately $55.0 million, for all
receivables   related  to  reciprocal   compensation  and  other  transport  and
termination charges.

      As the Company's interconnection  agreements expire or are extended, rates
for  transport  and  termination  charges  are  being  and will  continue  to be
renegotiated and/or arbitrated.  Rates for transport and termination also may be
impacted  by  ongoing  state  and  federal  regulatory   proceedings  addressing
intercarrier  compensation  for  Internet  traffic on a  prospective  basis.  In
addition to the FCC's pending rulemaking proceeding and the District of Columbia
Court of Appeals recent remand,  of the states in which ICG currently  operates,
the Ohio, Texas and California  commissions currently are conducting proceedings
on prospective compensation.

      The   Company   has   negotiated   and/or   arbitrated   new  or  extended
interconnection agreements with BellSouth, Ameritech, GTE-California and Pacific
Bell. The Company has completed  arbitration  proceedings with Bell South before
the state commissions in Alabama, North Carolina, Georgia, Kentucky, Florida and
Tennessee and with Ameritech before the Ohio commission.  Final decisions issued
by the Alabama,  North Carolina,  Kentucky and Georgia  commissions  awarded the
Company reciprocal compensation for ISP traffic in new agreements to be executed
by the parties, including the tandem and transport rate element. The arbitration
decisions of the Florida and Ohio commissions  declined to rule on the merits of
whether the Company should be paid reciprocal  compensation for ISP traffic. The
Florida decision ruled that the compensation  provisions of the parties' current
interconnection agreement would continue to apply, subject to true up, until the
completion of the FCC's rulemaking on future  compensation.  The Ohio commission
deferred ruling on the merits until completion of the Ohio commission's  generic
proceeding on prospective  compensation,  and ordered that in the interim period
until completion of the generic  proceeding,  bill and keep procedures should be
followed,  subject  to true up once  the  commission  proceeding  is  concluded.
Arbitration  proceedings  with US West before the Colorado  commission  and with
SWBT before the Texas commission are pending.

      Subsequent to completion of the  arbitration  proceedings  with BellSouth,
the Company  signed a three-year  agreement  with  BellSouth  that,  among other
issues,  addresses the payment of reciprocal  compensation for Internet traffic.
BellSouth  agreed to pay past  monies due to the  Company  for local  reciprocal
compensation for the period beginning when ISP traffic was first received by the
Company from BellSouth and ending December 31, 1999, and the parties also agreed



                                       33
<PAGE>


to the payment of reciprocal compensation for Internet and voice traffic for the
period from January 1, 2000 through  December 31, 2002 at per-minute  rates that
gradually reduce over the three year period.  The agreement is applicable to all
nine states in the BellSouth operating territory.

      While the  Company  intends to pursue the  collection  of all  receivables
related to transport and  termination  charges and believes that future  revenue
from  transport  and  termination   charges   recognized   under  the  Company's
interconnection  agreements  will be realized,  there can be no  assurance  that
future regulatory and judicial rulings will be favorable to the Company, or that
different  pricing plans for transport and termination  charges between carriers
will not be adopted when the Company's interconnection agreements continue to be
renegotiated  or  arbitrated,  or  as  a  result  of  FCC  or  state  commission
proceedings on future  compensation  methods. In fact, the Company believes that
different pricing plans will continue to be considered and adopted, and although
the Company expects that revenue from transport and  termination  charges likely
will decrease as a percentage of total revenue from local services in subsequent
periods,  the Company's local termination services still will be required by the
ILECs and must be provided  under the  Telecommunications  Act,  and likely will
result in  increasing  volume in minutes due to the growth of the  Internet  and
related  services  markets.  The Company expects to negotiate  and/or  arbitrate
reasonable  compensation  and collection terms for local  termination  services,
although there is no assurance  that such  compensation  will remain  consistent
with current levels.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      The Company's  financial  position and cash flows are subject to a variety
of risks in the normal course of business, which include market risks associated
with  movements  in interest  rates and equity  prices.  The  Company  routinely
assesses  these risks and has  established  policies and  business  practices to
protect against the adverse effects of these and other potential exposures.  The
Company does not, in the normal  course of business,  use  derivative  financial
instruments for trading or speculative purposes.

Interest Rate Risk

      The Company's  exposure to market risk associated with changes in interest
rates relates  primarily to the Company's  investments in marketable  securities
and its senior indebtedness.

      The Company invests  primarily in high grade short-term  investments which
consist of money market instruments,  commercial paper, certificates of deposit,
government  obligations and corporate  bonds,  all of which are considered to be
available  for sale  and  generally  have  maturities  of one year or less.  The
Company's short-term investment  objectives are safety,  liquidity and yield, in
that order. As of March 31, 2000, the Company had approximately $61.2 million in
cash, cash equivalents, and short-term investments available for sale (excluding
the $10.6 million  available for sale  investment in NorthPoint  common stock as
discussed  below) at a weighted  average  fixed  interest  rate of 5.61% for the
three  months ended March 31, 2000. A  hypothetical  10%  fluctuation  in market
rates of  interest  would not cause a  material  change in the fair value of the
Company's   investment  in   marketable   securities  at  March  31,  2000  and,
accordingly,  would  not cause a  material  impact  on the  Company's  financial
position, results of operations or cash flows.

      At March 31, 2000, the Company's  indebtedness included $1.8 billion under
the 13 1/2% Notes, 12 1/2% Notes, 11 5/8% Notes,  10% Notes and 9 7/8% Notes and
$533.7 million under the 14 1/4% Preferred Stock, 14% Preferred Stock and 6 3/4%
Preferred  Securities.  These  instruments  contain  fixed  annual  interest and
dividend rates.  Accordingly,  any change in market interest rates would have no
impact on the Company's financial position, results of operations or cash flows.
Future increases in interest rates could increase the cost of any new borrowings
by the Company.  The Company  does not hedge  against  future  changes in market
rates of interest.

      On  August  12,  1999,  the  Company  entered  into the  Senior  Facility,
consisting of two term loans and a revolving  line of credit.  All components of
the Senior Facility bear variable annual rates of interest,  based on the change
in LIBOR,  the Royal  Bank of Canada  prime  rate and the  federal  funds  rate.
Consequently,  additional  borrowings under the Senior Facility and increases in
LIBOR,  the Royal  Bank of Canada  prime  rate and the  federal  funds rate will
increase the  Company's  indebtedness  and may increase the  Company's  interest
expense in future periods. Additionally, under the terms of the Senior Facility,
the Company is required to hedge the interest rate risk on $100.0 million of the
Senior  Facility if LIBOR exceeds 9.0% for 15 consecutive  days. As of March 31,
2000, the Company had $174.4 million  outstanding  under the Senior Facility.  A


                                       34
<PAGE>



hypothetical  change in annual  interest  rate of 1% per annum would result in a
change in interest  expense of  approximately  $0.4 million for the three months
ended March 31, 2000.

Equity Price Risk

      On March 30, 1999, the Company purchased,  for approximately $10.0 million
in cash,  454,545 shares of NorthPoint  Preferred Stock which was converted into
555,555 shares of Class B Common Stock of NorthPoint  (the  "NorthPoint  Class B
Shares") on May 5, 1999. The  NorthPoint  Class B Shares were converted on March
30,  2000 on a  one-for-one  basis  into a  voting  class  of  common  stock  of
NorthPoint.  On March 30 and 31, 2000, the Company sold 95,555 of the NorthPoint
common  shares  for  proceeds  of  approximately  $2.2  million.  The  remaining
investment  is  stated  at fair  market  value  and is  included  in  short-term
investments available for sale at March 31, 2000. Accordingly,  the Company will
be subject to the effects of  fluctuations in the fair value of the common stock
of  NorthPoint  until such time as the  Company  liquidates  its  investment  in
NorthPoint.  Although  changes in the fair market  value of the common  stock of
NorthPoint  may affect the fair  market  value of the  Company's  investment  in
NorthPoint and cause unrealized  gains or losses,  such gains or losses will not
be realized until the securities are sold.

      The Company also has investments in International  ThinkLink  Corporation,
Cyras Systems,  Inc., and Centennial  Strategic  Partners VI, L.P. totaling $2.4
million at March 31, 2000. Changes in the fair market value of these investments
would not cause a material impact on the Company's financial  position,  results
of operations or cash flows.

Market Price Risk

      The fair value of the Company's  Senior  Discount  Notes  outstanding  was
$1,567.1 million as of March 31, 2000 compared to the carrying value of $1,845.1
million.  A hypothetical  10%  fluctuation in market rates of interest would not
cause a material change in the fair value of the Company's Senior Discount Notes
at March 31, 2000.


                                       35
<PAGE>


                                     PART II

ITEM 1.   LEGAL PROCEEDINGS

          See  Note 6 (e)  to the  Company's  unaudited  consolidated  financial
          statements  for the  three  months  ended  March  31,  2000  contained
          elsewhere in this Quarterly Report.

ITEM 2.   CHANGES IN SECURITIES

          None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

          None.

ITEM 5.   OTHER INFORMATION

          None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

       (A)   Exhibits.

              (10) Material Contracts.

                   10.1  Employment  Agreement  dated  as of  December  22, 1999
                         by  and  between ICG  Communications,  Inc. and William
                         S. Beans, Jr.

                   10.2  Employment Agreement dated as of March 23, 2000  by and
                         between  ICG   Communications,  Inc.  and  W.   Terrell
                         Wingfield, Jr.

                   10.3  Deferred  Compensation  Agreement dated as of March 31,
                         2000 by and between  ICG  Communications,  Inc.  and J.
                         Shelby Bryan.

                   10.4  Certificate of  Designation of the Powers,  Preferences
                         and Relative, Participating, Optional and Other Special
                         Rights of 8% Series A-1 Convertible Preferred Stock Due
                         2015,  8% Series A-2  Convertible  Preferred  Stock Due
                         2015 and 8% Series A-3 Convertible  Preferred Stock Due
                         2015, and Qualifications,  Limitations and Restrictions
                         Thereof,  Filed  on  April 7,  2000  with the  Delaware
                         Secretary of State.

                   10.5  Registration  Rights  Agreement  dated  as of  April 7,
                         2000,  by and  between  ICG  Communications,  Inc.  and
                         Liberty  Media  Corporation,  HMTF Bridge ICG, LLC, HM4
                         ICG Qualified  Fund, LLC, HM4 ICG Private Fund, LLC, HM
                         PG-IV ICG, LLC, HM 4-SBS ICG Coinvestors,  LLC, HM 4-EQ
                         ICG Coinvestors, LLC and Gleacher/ICG Investors LLC.

                   10.6  Amendment to the Preferred  Stock and Warrant  Purchase
                         Agreement  dated  as of  April  10,  2000  between  ICG
                         Communications,  Inc.  and Liberty  Media  Corporation,
                         HMTF Bridge ICG, LLC, HM4 ICG Qualified  Fund, LLC, HM4
                         ICG Private Fund,  LLC, HM PG-IV ICG, LLC, HM 4-SBS ICG
                         Coinvestors,  LLC,  HM 4-EQ  ICG  Coinvestors,  LLC and
                         Gleacher/ICG Investors LLC.




                                       36
<PAGE>


                   10.7  Form of Common Stock  Warrant Agreement dated April 10,
                         2000.

                   10.8  Amendment to Employment Agreement dated as of April 13,
                         2000  by  and  between  ICG  Communications,  Inc.  and
                         William S. Beans, Jr.

              (27) Financial Data Schedule.

                   27.1: Financial Data Schedule of ICG Communications, Inc. for
                         the  Three  Months Ended March 31, 2000.

       (B)   Reports on Form 8-K. The following  reports on  Form 8-K were filed
             by the registrants during the three months ended March 31, 2000:

                   ICG Communications, Inc.
                   ICG Holdings (Canada) Co.
                   ICG Holdings, Inc.

              (i)  Current Report on Form 8-K dated March 7, 2000, regarding the
                   announcement  of   earnings  information   and   results   of
                   operations for the quarter and year ended December 31, 1999.

              (ii) Current Report on Form 8-K dated March 8, 2000, regarding the
                   announcement of ICG's definitive  preferred stock and warrant
                   purchase agreement  with HMTF Bridge ICG, LLC, Liberty  Media
                   Corporation, and Gleacher/ICG Investors LLC.




                                       37
<PAGE>


                                INDEX TO EXHIBITS

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


<PAGE>




                                INDEX TO EXHIBITS


10.1     Employment Agreement dated as of December  22, 1999 by and  between ICG
         Communications, Inc. and William S. Beans, Jr.

10.2     Employment Agreement  dated as of  March  23, 2000 by and  between  ICG
         Communications, Inc. and W. Terrell Wingfield, Jr.

10.3     Deferred  Compensation  Agreement  dated  as  of  March 31, 2000 by and
         between  ICG  Communications,  Inc.  and J.  Shelby Bryan.

10.4     Certificate of  Designation  of the Powers,  Preferences  and Relative,
         Participating,  Optional  and Other  Special Rights  of 8%  Series  A-1
         Convertible   Preferred  Stock  Due  2015, 8%  Series  A-2  Convertible
         Preferred Stock Due 2015 and 8% Series A-3 Convertible  Preferred Stock
         Due 2015, and Qualifications,  Limitations  and  Restrictions  Thereof,
         Filed on April 7, 2000 with the Delaware Secretary of State.

10.5     Registration Rights Agreement dated as of April 7, 2000, by and between
         ICG  Communications, Inc. and  Liberty  Media Corporation, HMTF  Bridge
         ICG, LLC, HM4 ICG Qualified  Fund,  LLC, HM4 ICG Private Fund,  LLC, HM
         PG-IV ICG, LLC, HM 4-SBS ICG Coinvestors, LLC, HM 4-EQ ICG Coinvestors,
         LLC and Gleacher/ICG Investors LLC.

10.6     Amendment to  the Preferred Stock and  Warrant Purchase Agreement dated
         as of April 10, 2000 between ICG Communications, Inc. and Liberty Media
         Corporation, HMTF Bridge ICG, LLC, HM4 ICG Qualified Fund, LLC, HM4 ICG
         Private Fund, LLC, HM PG-IV ICG, LLC, HM 4-SBS ICG Coinvestors, LLC, HM
         4-EQ ICG Coinvestors, LLC and Gleacher/ICG Investors LLC.

10.7     Form of Common Stock Warrant Agreement dated April 10, 2000.

10.8     Amendment to  Employment  Agreement dated as  of April 13, 2000  by and
         between ICG Communications, Inc. and William S. Beans, Jr.

27.1:    Financial  Data Schedule  of ICG  Communications,  Inc. for  the  Three
         Months Ended March 31, 2000.



<PAGE>



                                  EXHIBIT 10.1

        Employment Agreement dated as of December 22, 1999 by and between
               ICG Communications, Inc. and William S. Beans, Jr.

<PAGE>



                                  EXHIBIT 10.2

         Employment Agreement dated as of March 23, 2000 by and between
             ICG Communications, Inc. and W. Terrell Wingfield, Jr.


<PAGE>




                                  EXHIBIT 10.3

        Deferred Compensation Agreement dated as of March 31, 2000 by and
              between ICG Communications, Inc. and J. Shelby Bryan.


<PAGE>



                                  EXHIBIT 10.4

            Certificate of Designation of the Powers, Preferences and
        Relative, Participating, Optional and Other Special Rights of 8%
         Series A-1 Convertible Preferred Stock Due 2015, 8% Series A-2
             Convertible Preferred Stock Due 2015 and 8% Series A-3
            Convertible Preferred Stock Due 2015, and Qualifications,
        Limitations and Restrictions Thereof, Filed on April 7, 2000 with
                        the Delaware Secretary of State.

<PAGE>



                                  EXHIBIT 10.5

         Registration Rights Agreement dated as of April 7, 2000, by and
         between ICG Communications, Inc. and Liberty Media Corporation,
           HMTF Bridge ICG, LLC, HM4 ICG Qualified Fund, LLC, HM4 ICG
         Private Fund, LLC, HM PG-IV ICG, LLC, HM 4-SBS ICG Coinvestors,
        LLC, HM 4-EQ ICG Coinvestors, LLC and Gleacher/ICG Investors LLC.

<PAGE>



                                  EXHIBIT 10.6

         Amendment to the Preferred Stock and Warrant Purchase Agreement
         dated as of April 10, 2000 between ICG Communications, Inc. and
            Liberty Media Corporation, HMTF Bridge ICG, LLC, HM4 ICG
          Qualified Fund, LLC, HM4 ICG Private Fund, LLC, HM PG-IV ICG,
        LLC, HM 4-SBS ICG Coinvestors, LLC, HM 4-EQ ICG Coinvestors, LLC
                         and Gleacher/ICG Investors LLC.

<PAGE>



                                  EXHIBIT 10.7

          Form of Common Stock Warrant Agreement dated April 10, 2000.



<PAGE>



                                  EXHIBIT 10.8

         Amendment to Employment Agreement dated as of April 13, 2000 by
         and between ICG Communications, Inc. and William S. Beans, Jr.



<PAGE>




                                  EXHIBIT 27.1

        Financial Data Schedule of ICG Communications, Inc. for the Three
                          Months Ended March 31, 2000.


<PAGE>



                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) 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, on May 11, 2000.


                                     ICG COMMUNICATIONS, INC.





Date:  May 11, 2000                  By: /s/ Harry R. Herbst
                                         --------------------------------
                                         Harry R. Herbst, Executive Vice
                                         President, Chief  Financial Officer and
                                         Director (Principal Financial Officer)




Date:  May 11, 2000                  By: /s/ John V. Colgan
                                         --------------------------------
                                         John V. Colgan, Senior Vice
                                         President of Finance  and Controller
                                         (Principal Accounting Officer)




<PAGE>




                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) 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, on May 11, 2000.


                                     ICG HOLDINGS (CANADA) CO.





Date:  May 11, 2000                  By: /s/ Harry R. Herbst
                                        --------------------------------
                                        Harry R. Herbst, Executive Vice
                                        President, Chief Financial Officer and
                                        Director (Principal Financial Officer)





Date:  May 11, 2000                  By: /s/ John V. Colgan
                                        --------------------------------
                                        John V. Colgan, Senior Vice
                                        President of Finance and Controller
                                        (Principal Accounting Officer)



<PAGE>



                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) 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, on May 11, 2000.

                                     ICG HOLDINGS, INC.





Date:  May 11, 2000                  By:  /s/ Harry R. Herbst
                                         --------------------------------
                                         Harry R. Herbst, Executive Vice
                                         President, Chief Financial Officer and
                                         Director (Principal Financial Officer)






Date:  May 11, 2000                   By: /s/ John V. Colgan
                                         --------------------------------
                                         John V. Colgan, Senior Vice
                                         President of Finance and Controller
                                         (Principal Accounting Officer)