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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 17, 1997
GROUP LONG DISTANCE, INC.
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(Exact Name of Registrant as Specified in Charter)
Florida 0-21913 65-0213198
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(State or Other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
1451 West Cypress Creek Road, Suite 200,
Fort Lauderdale, FL 33309
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (954) 771-9696
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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<PAGE>
Item 2. Acquisition or Disposition of Assets.
On October 17, 1997, Group Long Distance, Inc. (the "Company") completed
the private sale of 1,347,000 shares of common stock of Tel-Save Holdings,
Inc. ("Tel-Save"), at approximately $19.76 per share, for gross proceedes
to the Company of approximately $26.6 million (excluding taxes and
transaction costs). The purchaser of the 1,347,000 shares of Tel-Save
common stock was the Anschutz Family Investment Company LLC, a Colorado
limited liability company.
As previously reported, the Company had acquired warrants to purchase
1,347,000 shares of Tel-Save, at $4.08 per share (the "Warrants"), in
connection with its August 11, 1997 acquisition of Eastern
Telecommunications Incorporated ("ETI"). The $8.313 million purchase price
for ETI consisted of two $3.5 million notes, the assumption of
approximately $1.2 million of certain of ETI's liabilities and the payment
of closing costs in the amount of $113,000.
In August 1997, the Company exercised one of the Warrants and purchased
600,000 shares of common stock at an aggregate exercise price of
$2,448,000. In October 1997, the Company exercised the remaining Warrant
and purchased 747,000 shares of common stock at an aggregate exercise price
of $3,047,760.
Proceeds from the sale of the shares were used to retire the aggregate
$7,000,000 in notes (and accrued interest) due in connection with the ETI
acquisition, together with certain related closing cost legal fees. The
balance of the proceeds from the sale of the shares was used to pay down
debt and accounts payable owed to Tel-Save, including payment of the
balance of the note outstanding to Tel-Save in connection with the June
1996 acquisition and marketing expenses incurred in connection with the
Company's aggressive telemarketing efforts during the first half of its
1998 fiscal year.
Item 5. Other Events.
In an unrelated action in October 1997, the Company outsourced its back
office operations, which includes collections, customer service and
provisioning, reducing its workforce from 26 to 5 employees.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Pro Forma Financial Information
The following financial statements of the Registrant giving effect to sale
of 1,347,000 shares of Tel-Save common stock by the Company are filed as
part of this Form 8-K on the pages indicated:
O Pro Forma Financial Statements (Unaudited).............................F-1
O Pro Forma Balance Sheet as at July 31, 1997 (Unaudited)................F-2
O Pro Forma Statement of Operations for the Three Months
Ended July 31, 1997 (Unaudited)........................................F-3
O Pro Forma Adjustments as at July 31, 1997 (Unaudited)..................F-4
(b) Exhibits
99.1 Press Release, dated October 21, 1997, noticing the sale of 1,347,000
shares of Tel-Save stock by the Company.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GROUP LONG DISTANCE, INC.
Date: October 30, 1997 By: /s/ Gerald M. Dunne, Jr.
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Gerald M. Dunne, Jr.
Chief Executive Officer and President
4
<PAGE>
Group Long Distance, Inc.
PRO FORMA FINANCIAL STATEMENTS
On August 11, 1997, Group Long Distance, Inc. ("GLD") acquired all the issued
and outstanding stock of Eastern Telecommunications Incorporated ("ETI"), a New
York-based long distance reseller. The purchase price aggregated $8,313,000 and
consisted of two $3,500,000 notes, assumption of approximately $1,200,000 of
certain liabilities and the payment of closing costs of $113,000. ETI's assets
consist of two warrants to purchase an aggregate 1,347,000 shares of the common
stock of Tel-Save ("the Warrants"), a customer base of 7,000 customers, and
certain receivables. No value was assigned to the receivables purchased due to
the uncertainty surrounding their collectibility. Subsequent to the ETI
acquisition, GLD exercised the Warrants to acquire an aggregate of 1,347,000
shares of Tel-Save common stock at $4.08 per share. On October 17, 1997, GLD
sold the shares to another party for $19.76 per share or an aggregate of
$26,612,720. Proceeds from the sale of the shares were used to retire the
aggregate $7,000,000 in notes (and accrued interest) due in connection with the
ETI acquisition, together with certain related closing cost legal fees. The
balance of the proceeds from the sale of the shares was used to pay down debt
and accounts payable owed to Tel-Save, including payment of the balance of the
note outstanding to Tel-Save in connection with the June 1996 acquisition and
marketing expenses incurred in connection with the Company's aggressive
telemarketing efforts during the first half of its 1998 fiscal year. The
information reflected in the Eastern Telecommunications Incorporated column in
the following unaudited pro forma balance sheet as of July 31, 1997 and the pro
forma statement of operations for the three months then ended was previously
included in the 8K filed on October 27, 1997.
The following unaudited pro forma statement of operations for the three months
ended July 31, 1997 is presented as if Group Long Distance, Inc. had entered
into the transactions described in the preceding paragraph on May 1, 1997. The
pro forma balance sheet gives effect to this acquisition as if it had occurred
on July 31, 1997.
Pro forma information is not necessarily indicative of what the Company's
results of operations actually would have been if these transactions had in fact
occurred on the dates indicated.
F-1
<PAGE>
Group Long Distance, Inc.
PRO FORMA BALANCE SHEET
July 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Eastern Exercise of
Group Long Telecommu- Warrants
Distance, nications and Sale Pro Forma Total
Inc. Incorporated of Stock Adjustments Pro Forma
---- ------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash $ 751,829 $ - $ 26,612,720(2) $ (136,110)(5) $ 567,208
(113,000)(4)
(14,052,471)(3)
(5,495,760)(7)
(7,000,000)(6)
Accounts receivable, net 7,380,947 - - - 7,380,947
Note receivable - related party 26,608 - - - 26,608
Investment - Tel-Save warrants - 7,713,000 2,448,000(1) (259,677)(8) -
3,047,760(1)
(12,949,083)(2)
Deferred tax assets 233,300 - - - 233,300
Prepaid expenses and other
current assets 7,309,948 - - - 7,309,949
------------ ---------- ------------ ------------ -----------
15,702,632 7,713,000 19,159,397 (27,057,018) 15,518,012
------------ ---------- ------------ ------------ -----------
Prepaid expenses, net of current
portion 5,070,000 - - - 5,070,000
Property and equipment, net 322,120 - - - 322,120
Customer acquisition costs, net 1,710,935 600,000 - - 2,310,935
Deferred tax assets 513,384 - - - 513,384
Other assets 33,543 - - - 33,543
------------ ---------- ------------ ------------ -----------
Total assets $ 23,352,614 $8,313,000 $ 19,159,397 $(27,057,018) $23,767,994
============ ========== ============ ============ ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ - $7,000,000 $ - $ (7,000,000)(6) $ -
Accounts payable 19,668,593 1,313,000 2,448,000(1) (11,769,250)(3) 8,952,667
3,047,760(1) (5,495,760)(7)
(259,677)(8)
Accrued expenses and other
liabilities 533,197 - - - 533,197
Income tax payable - - 5,090,813(9) - 5,090,813
Current portion of long-term debt 1,881,373 - - (1,218,750)(10) 662,623
------------ ---------- ------------ ------------ -----------
22,083,163 8,313,000 10,586,573 (25,743,437) 15,239,300
Long-term debt, net of
current portion 1,074,330 - - (1,064,471)(10) 9,859
------------ ---------- ------------ ------------ -----------
Total liabilities 23,157,493 8,313,000 10,586,573 (26,807,908) 15,249,159
------------ ---------- ------------ ------------ -----------
Stockholders' equity
Preferred stock - - - - -
Common stock - - - - -
Additional paid-in capital 5,751,319 - - - 5,751,319
Accumulated deficit (5,556,198) - 8,572,824 (249,110) 2,767,516
------------ ---------- ------------ ------------ -----------
Total stockholders' equity 195,121 - 8,572,824 (249,110) 8,518,835
------------ ---------- ------------ ------------ -----------
Total liabilities and
stockholders' equity $ 23,352,614 $8,313,000 $ 19,159,397 $(27,057,018) $23,767,994
============ ========== ============ ============ ===========
</TABLE>
F-2
<PAGE>
Group Long Distance, Inc.
PRO FORMA STATEMENT OF OPERATIONS
For the Three Months Ended July 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Eastern Exercise of
Group Long Telecommu- Warrants
Distance, nications and Sale Pro Forma Total
Inc. Incorporated of Stock Adjustments Pro Forma
---- ------------ -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Sales $ 9,064,998 $ 676,547 $ - $ - $ 9,741,545
Cost of sales 6,961,188 378,968 - - 7,340,156
------------- ------------- -------------- -------------- --------------
Gross profit 2,103,810 297,579 - - 2,401,389
Selling, general and administrative
expenses 1,188,567 96,827 - - 1,285,394
Marketing expenses 1,690,000 - - - 1,690,000
Depreciation and amortization 633,284 - - - 633,284
------------- ------------- -------------- -------------- --------------
Earnings (loss) from
operations (1,408,041) 200,752 - - (1,207,289)
Net gain from sale of warrants - - (26,612,720)(2) 113,000(4) (13,550,637)
12,949,083(2)
Interest expense, net 32,496 175,000 - 136,110(5) 343,606
------------- ------------- -------------- -------------- --------------
Earnings (loss) before
income taxes (1,440,537) 25,752 13,663,637 (249,110) 11,999,742
Income tax expense (benefit) (96,784) 29,434 5,090,813(9) - 5,023,463
------------- ------------- -------------- -------------- --------------
Net earnings (loss) $ (1,343,753) $ (3,682) $ 8,572,824 $ (249,110) $ 6,976,279
============= ============= ============== ============== ==============
Earnings (loss) per common and
common equivalent share $ (0.39) $ 2.02
============= ==============
</TABLE>
F-3
<PAGE>
Group Long Distance, Inc.
PRO FORMA ADJUSTMENTS (UNAUDITED)
July 31, 1997
1) To reflect the exercise of the Tel-Save warrants consisting of 1,347,000
shares at $4.08 per share.
2) To record the sale of the Tel-Save stock obtained through the exercise of
the warrants.
3) To record payment of $14,052,471 of accounts payable and debt due to
Tel-Save with proceeds from the sale of the stock.
4) To record payment of legal fees in connection with the ETI acquisition
and the Tel-Save warrants.
5) To record payment of interest incurred on the $7,000,000 of notes payable
in connection with the ETI acquisition.
6) To record payment of the $7,000,000 in notes payable incurred in
connection with the acquisition of ETI.
7) To record payment to Tel-Save for the amount due on the exercise of the
Tel-Save warrants.
8) To adjust the liability assumed in connection with the ETI acquisition to
what was owed at July 31, 1997.
9) To record taxes on gain on stock sale.
10) To record payment of balance on Note outstanding to Tel-Save in
connection with the June 1996 acquisition.
F-4
Exhibit 99.1
CONTACT: Gerald M. Dunne, Jr.
President & C.E.O., Group Long Distance, Inc.
954-771-9696
GROUP LONG DISTANCE REPORTS GAIN ON SALE OF CERTAIN ASSETS
October 21, 1997--Fort Lauderdale, FL--Group Long Distance ("GLD") (Nasdaq
Symbol: GLDI) announced today that it has received gross proceeds of
approximately $26.6 million (excluding taxes and transactional costs) from the
sale of 1,347,000 shares of the common stock of Tel-Save, Inc.
"We will be using proceeds to better position our balance sheet by paying down
outstanding obligations including the notes of our recent acquisition," Gerald
M. Dunne, Jr. Chairman and CEO stated.
GROUP LONG DISTANCE, INC. is a long distance telecommunications provider. GLD
utilizes special network service contracts to provide its customers with
products and services through major national long distance telecommunications
carriers.
