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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
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 8, 1999
MINDSPRING ENTERPRISES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-27890 58-2113290
- ----------------------------- ------------- --------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1430 WEST PEACHTREE ST., SUITE 400, ATLANTA, GA 30309
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(Address of principal executive offices)
Registrant's telephone number, including area code: (404) 815-0770
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information.
INDEX TO FINANCIAL STATEMENTS
MINDSPRING ENTERPRISES, INC.
Unaudited Pro Forma Financial Data....................................... F-1
Unaudited Pro Forma Statement of Operations for the six months ended
June 30, 1999.................................................... F-2
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UNAUDITED PRO FORMA FINANCIAL DATA
The following pro forma statement of operations for the six months ended
June 30, 1999 reflects the acquisition by MindSpring of certain assets of
NETCOM On-Line Communication Services, Inc.'s Domestic Subscriber Operations as
if it had occurred on January 1, 1999. The pro forma financial information does
not purport to represent what MindSpring's consolidated results of operations
would have been if the acquisition had in fact occurred on this date, nor does
it purport to indicate MindSpring's future consolidated financial position or
future consolidated results of operations. The pro forma adjustments are based
on currently available information and certain assumptions that management
believes are reasonable.
F-1
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UNAUDITED PRO FORMA
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
MindSpring NETCOM Subtotal Adjustments(a) Pro Forma
---------- -------- -------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Revenues 147,292 18,857 166,149 - 166,149
-------- -------- -------- -------- --------
Costs and expenses:
Selling, general and
administrative 70,028 13,131 83,159 - 83,159
Cost of revenue 50,518 7,669 58,187 - 58,187
Depreciation and amortization 45,258 4,156 49,414 9,605 (b) 55,900
(3,119)(c)
-------- -------- -------- -------- --------
165,804 24,956 190,760 6,486 197,246
-------- -------- -------- -------- --------
Operating income (loss) (18,512) (6,099) (24,611) (6,486) (31,097)
-------- -------- -------- -------- --------
Interest income (expense), net 1,487 450 1,937 - 1,937
-------- -------- -------- -------- --------
Income before income tax expense (17,025) (5,649) (22,674) (6,486) (29,160)
Income tax expense 6,640 - 6,640 - 6,640
-------- -------- -------- -------- --------
Net income (10,385) (5,649) (16,034) (6,486) (22,520)
======== ======== ======== ======== ========
Shares:
Primary 59,899 2,995 (d) 62,894
Diluted 59,899 2,995 (d) 62,894
EPS:
Primary $ (0.17) $ (0.36)
======== ========
Diluted $ (0.17) $ (0.36)
======== ========
</TABLE>
(a) Adjustments have not been made to cost of revenue and selling, general and
administrative costs since the amounts that would have been incurred by
MindSpring are not readily determinable. However, such cost incurred by
NETCOM may not be indicative of the costs that would have been incurred by
MindSpring. Accordingly, cost of revenue and selling, general and
administrative costs incurred by MindSpring in future periods may be
materially different from the amounts reflected in the pro forma financial
statements.
(b) Reflects the preliminary purchase price allocation based on $245 million to
be paid via $30 million in stock, $115 million in cash, and $100 million in
borrowings under a line of credit facility. In addition to the customer
subscriber base, the Company is acquiring $3.3 million of accounts
receivable and other current assets, $0.2 million of other non-current
assets, certain fixed assets ($17.2 million) and assuming certain
liabilities ($6.3 million) of NETCOM, which have also been included in this
allocation based on management's estimate of their fair market value. All
other assets and liabilities are not being acquired. Represents additional
amortization based on preliminary purchase price allocation for NETCOM
using a three-year amortization period.
F-2
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(c) Represents the adjustment to conform the accounting policy of the acquired
company to those of MindSpring with respect to depreciable lives as well
as to adjust the historical depreciation for the assets not being acquired.
(d) Reflects (i) 5.25 million shares of common stock issued in April 1999 and
(ii) 385 thousand shares issued in conjunction with the NETCOM acquisition
as if such shares were outstanding since January 1, 1999. Also, excludes
the effect of stock options for purposes of the diluted earnings per share
calculation since the effect for pro forma purposes is antidilutive.
F-3
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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.
MINDSPRING ENTERPRISES, INC.
/s/ Juliet S. Reising
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Juliet S. Reising
Executive Vice President and Chief
Financial Officer
Date: October 8, 1999
