<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO.1 TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 22, 2000 (December 7, 1999)
WORLD ACCESS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-29782 58-2398004
(State of (Commission File No.) (I.R.S. Employer
incorporation) Identification No.)
945 EAST PACES FERRY ROAD, SUITE 2200
ATLANTA, GEORGIA 30326
(Address of principal executive offices, including zip code)
(404) 231-2025
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
The undersigned registrant hereby amends the following item of its
Current Report on Form 8-K filed on December 22, 1999 (event date: December 7,
1999), related to the registrant's merger with FaciliCom International, Inc.,
as set forth below:
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<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) PRO FORMA FINANCIAL INFORMATION.
On December 9, 1999, the Board of Directors adopted a plan to divest our
Equipment Group and further focus on our strategy to be a leading provider of
bundled voice, data and Internet services to key regions of the world. The
Equipment Group currently generates annual revenues in excess of $250 million
and consists of the following business units:
- Telco Systems Division, a leading provider of next generation transport
and access solutions for service providers throughout the world. Its
products include intelligent integrated access devices, multiplexers and
digital microwave radios. We acquired Telco Systems on November 30, 1998.
- NACT Switching Division, a rapidly growing provider of advanced switching
platforms with integrated proprietary applications software as well as
billing and telemanagement systems. We acquired NACT on February 27,
1998.
- Wireless Local Loop Division, which has developed a next generation,
CDMA-based, fixed wireless local loop system known as Velocity-2000.
- Cellular Infrastructure Supply Division, a value-added supplier of new
and re-furbished cellular base stations and related equipment. We
acquired Cellular Infrastructure Supply effective January 1997.
As a result of the adoption of a formal plan to divest our non-core
operations, we will report the results of the Equipment Group as discontinued
operations as defined in Accounting Principles Board Opinion No. 30. For the
years ended December 31, 1996 and 1997 the Equipment Group represented 100
percent of the Company's operations. The only continuing item in the pro forma
statements of operations are general corporate administrative costs and interest
income and expense. Reflecting the reclassification of the Equipment Group as
discontinued operations the operating loss, loss from continuing operations and
loss from continuing operations per common share for the years ended December
31, 1996 and 1997 would have been approximately $1.0 million and $1.7 million;
$588,000 and $547,000; and $.05 and $.03, respectively.
The following unaudited pro forma financial statements give effect to the
divestiture of our Equipment Group as well as the 1999 mergers with FaciliCom
International, Inc. and Comm/Net Holding Corporation and the 1998 merger with
Cherry Communications Incorporated, d/b/a Resurgens Communications Group, and
Cherry Communications U.K. Limited. Cherry Communications Incorporated, d/b/a
Resurgens Communications Group, and Cherry Communications U.K. Limited are
collectively referred to as Resurgens in the pro forma financial statements.
The Unaudited Pro Forma Combined Balance Sheet gives effect to our merger
with FaciliCom and related transactions as if they had been completed on
September 30, 1999. The Unaudited Pro Forma Combined Statements of Operations
give effect to (1) the divestiture of the Equipment Group, (2) our December 1999
merger with FaciliCom and related transactions, (3) our May 1999 merger with
Comm/Net and (4) our December 1998 merger with Resurgens, as if each had been
completed as of January 1, 1998.
We have prepared the pro forma financial statements to demonstrate how
these combined businesses might have looked if the mergers, divestitures and
related transactions had been completed as of the date or at the beginning of
the periods presented. The pro forma financial statements, while helpful in
illustrating characteristics of the combined company under one set of
assumptions, do not attempt to predict or suggest future results. The pro forma
financial statements are preliminary and subject to change based on a final
review of the fair values of FaciliCom's net assets.
In connection with our merger with FaciliCom, we expect to record a
one-time restructuring charge for the estimated costs of (1) consolidating
certain of our United States gateway switching centers and related technical
support functions into existing FaciliCom operations; (2) consolidating our
United Kingdom operations into existing FaciliCom operations; (3) consolidating
the administrative functions of
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<PAGE> 4
our Telecommunications Group into FaciliCom's operations; and (4) eliminating
other redundant operations and assets as a result of combining our
Telecommunications Group's and FaciliCom's operations. The restructuring charge
will include the write-down of our switching and transmission equipment taken
out of service, the write-off of certain leasehold improvements, a provision for
lease commitments remaining on certain facilities and equipment taken out of
service and employee termination benefits. The restructuring program is expected
to be completed in the first quarter of 2000. We have not yet determined the
actual restructuring charge to be recorded but estimate that it will be
approximately $35.0 million. This one-time charge has been excluded from the pro
forma financial statements.
As a result of the FaciliCom merger and the restructuring program discussed
above, we expect to realize significant operational and financial synergies.
These synergies are expected to include cost reductions resulting from traffic
routing changes made to take advantage of each company's least cost routes,
elimination of redundant leased line costs, elimination of redundant switching
centers and consolidation of certain administrative functions. We currently
estimate that these annualized cost savings, which have been excluded from the
pro forma financial statements, will range from $20.0 million to $35.0 million.
The pro forma financial statements are presented for comparative purposes
only and are not intended to be indicative of the actual results had these
transactions occurred as of the dates indicated above nor do they purport to
indicate results which may be attained in the future. The pro forma financial
statements should be read in conjunction with the historical consolidated
financial statements of World Access, Resurgens and FaciliCom, which are
included herein or incorporated herein by reference.
-4-
<PAGE> 5
WORLD ACCESS, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
WORLD PRO FORMA PRO FORMA
ACCESS(1) FACILICOM(3) ADJUSTMENTS WORLD ACCESS
--------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and equivalents.................. $107,841 $ 14,706 $ 3,750(7) $ 126,297
Accounts receivable................... 123,062 104,005 (3,500)(6) 223,567
Marketable securities -- restricted... -- 31,849 -- 31,849
Inventories........................... 40,437 -- -- 40,437
Other current assets.................. 55,066 4,524 -- 59,590
-------- -------- -------- ----------
Total Current Assets.......... 326,406 155,084 250 481,740
Property and equipment, net............. 63,390 186,190 (70,144)(6) 179,436
Goodwill and other intangibles.......... 306,930 12,895 (12,521)(9) 995,370
560,641(6)
127,425(8)
Marketable securities -- restricted..... -- 14,768 -- 14,768
Other assets............................ 31,183 1,229 (350)(6) 32,062
-------- -------- -------- ----------
Total Assets.................. $727,909 $370,166 $605,301 $1,703,376
======== ======== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term debt....................... $ 13,842 $ 58,256 $ -- $ 72,098
Accounts payable...................... 75,388 124,099 3,750(6) 203,237
Other accrued liabilities............. 47,515 7,936 -- 55,451
-------- -------- -------- ----------
Total Current Liabilities..... 136,745 190,291 3,750 330,786
Long-term debt.......................... 140,839 306,705 (15,000)(6) 432,544
Noncurrent liabilities.................. 8,421 -- -- 8,421
-------- -------- -------- ----------
Total Liabilities............. 286,005 496,996 (11,250) 771,751
-------- -------- -------- ----------
Stockholders' Equity
Preferred stock....................... 1 -- 4(6) 5
Common stock.......................... 450 2 (2)(5) 516
47(6)
19(7)
Capital in excess of par value........ 547,170 38,427 (38,427)(5) 1,036,821
288,023(6)
127,425(8)
74,203(7)
Stock-based compensation.............. -- 8,041 (8,041)(5) --
Foreign currency translation
adjustment......................... -- (2,770) 2,770(5) --
Accumulated deficit................... (105,717) (170,530) 170,530(5) (105,717)
-------- -------- -------- ----------
Total Stockholders' Equity.... 441,904 (126,830) 616,551 931,625
-------- -------- -------- ----------
Total Liabilities and
Stockholders' Equity........ $727,909 $370,166 $605,301 $1,703,376
======== ======== ======== ==========
</TABLE>
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<PAGE> 6
WORLD ACCESS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
RESTATED PRO FORMA
WORLD DISCONTINUED WORLD PRO FORMA WORLD
ACCESS(1) OPERATIONS ACCESS FACILICOM(3) COMM/NET(4) ADJUSTMENTS ACCESS
--------- ------------ -------- ------------ ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Carrier service
revenues........... $329,361 $ 1,136 $328,225 $279,695 $13,868 $(16,184)(10) $605,604
Equipment sales...... 194,929 194,929 -- -- -- -- --
-------- -------- -------- -------- ------- -------- --------
Total Sales........ 524,290 196,065 328,225 279,695 13,868 (16,184) 605,604
Cost of carrier
services........... 299,253 476 298,777 257,253 9,923 (14,590)(10) 551,363
Cost of equipment
sold............... 110,924 110,924 -- -- -- -- --
Amortization of
acquired
technology......... 3,600 3,600 -- -- -- -- --
-------- -------- -------- -------- ------- -------- --------
Total Cost of
Sales............ 413,777 115,000 298,777 257,253 9,923 (14,590) 551,363
-------- -------- -------- -------- ------- -------- --------
Gross Profit....... 110,513 81,065 29,448 22,442 3,945 (1,594) 54,241
Research and
development........ 13,282 13,282 -- -- -- --
Selling, general and
administrative..... 45,945 31,605 14,340 40,718 2,324 710(11) 58,092
Depreciation and
amortization....... 12,208 5,162 7,046 16,895 390 25,194(12) 44,155
(5,370)(13) --
-------- -------- -------- -------- ------- -------- --------
Operating Income
(Loss)........... 39,078 31,016 8,062 (35,171) 1,231 (22,128) (48,006)
Gain on exchange of
securities......... 8,704 8,704 -- -- --
Foreign exchange
loss............... -- -- -- (1,346) -- (1,346)
Interest and other
income............. 2,629 844 1,785 3,646 -- 5,431
Interest expense..... (7,394) (660) (6,734) (25,690) (65) (6,810)(14) (39,299)
-------- -------- -------- -------- ------- -------- --------
Income (Loss) From
Continuing
Operations Before
Income Taxes..... 43,017 39,904 3,113 (58,561) 1,166 (28,938) (83,220)
Income taxes
(benefits)......... 20,370 17,863 2,507 (6,682) 264 (1,440)(15) (5,351)
-------- -------- -------- -------- ------- -------- --------
Income (Loss) From
Continuing
Operations....... 22,647 22,041 606 (51,879) 902 (27,498) (77,869)
Preferred stock
dividends.......... 1,197 -- 1,197 -- -- 493(16) 1,690
-------- -------- -------- -------- ------- -------- --------
Income (Loss) From
Continuing
Operations
Available to
Common
Stockholders..... $ 21,450 $ 22,041 $ (591) $(51,879) $ 902 $(27,991) $(79,559)
======== ======== ======== ======== ======= ======== ========
Income (Loss) Per
Common Share From
Continuing
Operations:
Basic.............. $ 0.59 $ (1.58)(17)
======== ========
Diluted............ $ 0.56 $ (1.58)(17)
======== ========
Weighted Average
Shares Outstanding:
Basic.............. 36,245 50,365(17)
======== ========
Diluted............ 40,048 50,365(17)
======== ========
</TABLE>
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<PAGE> 7
WORLD ACCESS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
RESTATED PRO
WORLD DISCONTINUED WORLD FORMA
ACCESS(1) OPERATIONS ACCESS RESURGENS(2) FACILICOM(3) COMM/NET(4) ADJUSTMENTS
--------- ------------ -------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Carrier service revenues.... $ 13,143 $ 2,356 $10,787 $126,324 $184,246 $49,570 $ (5,922)(10)
Equipment sales............. 138,990 138,990 -- -- -- -- --
--------- --------- ------- -------- -------- ------- --------
Total Sales................ 152,133 141,346 10,787 126,324 184,246 49,570 (5,922)
Cost of carrier services.... 12,522 2,385 10,137 145,043 184,989 44,599 (5,202)(10)
Cost of equipment sold...... 73,842 73,842 -- -- -- -- --
Write-down of inventories... 9,292 9,292 -- -- -- -- --
Amortization of acquired
technology................. 446 446 -- -- -- -- --
--------- --------- ------- -------- -------- ------- --------
Total Cost of Sales........ 96,102 85,965 10,137 145,043 184,989 44,599 (5,202)
--------- --------- ------- -------- -------- ------- --------
Gross Profit............... 56,031 55,381 650 (18,719) (743) 4,971 (720)
Research and development.... 6,842 6,842 -- -- -- -- --
Selling, general and
administrative............. 19,984 15,368 4,616 38,569 37,562 3,702 950 (11)
Depreciation and
amortization............... 4,255 3,838 417 -- 961 243 38,240 (12)
-- (8,395)(13)
In-process research and
development................ 100,300 100,300 -- -- -- -- --
Goodwill impairment......... 6,200 6,200 -- -- -- -- --
Provision for doubtful
accounts................... 11,332 11,332 -- 2,294 4,620 -- --
Restructuring and other
charges.................... 17,240 17,240 -- -- -- -- --
--------- --------- ------- -------- -------- ------- --------
Operating Income (Loss).... (110,122) (105,739) (4,383) (59,582) (43,886) 1,026 (31,515)
Foreign exchange loss....... -- -- -- -- (391) -- --
Interest and other income... 3,419 942 2,477 -- 8,943 213 --
Interest expense............ (6,832) -- (6,832) (9,457) (22,612) (141) (19,880)(14)
--------- --------- ------- -------- -------- ------- --------
Income (Loss) From
Continuing Operation
Before Income Taxes...... (113,535) (104,797) (8,738) (69,039) (57,946) 1,098 (51,395)
Income taxes (benefits)..... (1,387) 1,915 (3,302) -- (11,351) 368 (5,530)(15)
--------- --------- ------- -------- -------- ------- --------
Loss Before Minority
Interests................ (112,148) (106,712) (5,436) (69,039) (46,595) 730 (45,865)
Minority interests.......... (2,497) (2,497) -- -- -- -- --
--------- --------- ------- -------- -------- ------- --------
Loss From Continuing
Operations............... (114,645) (109,209) (5,436) $(69,039) $(46,595) 730 (45,865)
Preferred stock dividends... -- -- -- -- -- -- (985)(16)
--------- --------- ------- -------- -------- ------- --------
Income (loss) from Continuing
Operations Available to
Common Stockholders........ $(114,645) $(109,209) $(5,436) (69,039) (46,595) $ 730 $(46,850)
========= ========= ======= ======== ======== ======= ========
Loss From Continuing
Operations
Per Common Share:
Basic...................... $ (5.19)
=========
Diluted.................... $ (5.19)
=========
Weighted Average Shares
Outstanding:
Basic...................... 22,073
=========
Diluted.................... 22,073
=========
<CAPTION>
PRO
FORMA
WORLD
ACCESS
---------
<S> <C>
Carrier service revenues.... $ 365,005
Equipment sales............. --
---------
Total Sales................ 365,005
Cost of carrier sales....... (379,566)
Cost of equipment sold...... --
Write-down of inventories... --
Amortization of acquired
technology................. --
---------
Total Cost of Sales........ 379,566
---------
Gross Profit............... (14,561)
Research and development.... --
Selling, general and
administrative............. 85,399
Depreciation and
amortization............... 31,466
In-process research and
development................ --
Goodwill impairment......... --
Provision for doubtful
accounts................... 6,914
Restructuring and other
charges.................... --
---------
Operating Income (Loss).... (138,340)
Foreign exchange gain
(loss)..................... (391)
Interest and other income... 11,633
Interest expense............ (58,922)
---------
Income (Loss) From
Continuing Operation
Before Income Taxes...... (186,020)
Income taxes (benefits)..... (19,815)
---------
Loss Before Minority
Interests................ (166,205)
Minority interests.......... --
---------
Loss From Continuing
Operations................ $(166,205)
Preferred stock dividends. (985)
---------
Income (Loss) From
Continuing Operations
Available to Common
Stockholders.............. $ 167,190
=========
Loss From Continuing
Operations
Per Common Share:
Basic...................... $ (4.21)(17)
=========
Diluted.................... $ (4.21)(17)
=========
Weighted Average Shares
Outstanding:
Basic...................... 39,727(17)
=========
Diluted.................... 39,727(17)
=========
</TABLE>
-7-
<PAGE> 8
WORLD ACCESS, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. These columns represent the historical results of operations and
financial position of World Access. With respect to the information
included in the Unaudited Pro Forma Results of Operations for the year
ended December 31, 1998, the World Access information includes the
results for the following businesses from their respective dates of
acquisition: Advanced TechCom, Inc. -- January 1998; NACT -- February
1998; Telco -- November 1998; and Resurgens -- December 1998. With
respect to the information included in the Unaudited Pro Forma Results
of Operations for the nine months ended September 30, 1999, The World
Access information includes the results of Comm/Net from May 1, 1999.
Depreciation and amortization related to network operations has been
reclassified from costs of carrier sales to depreciation and
amortization to conform with the FaciliCom presentation.
2. This column represents the historical results of Resurgens for the
period January 1, 1998 to December 14, 1998.
3. These columns represent the historical results of operations and
financial position of FaciliCom. With respect to the information
included in the Unaudited Pro Forma Combined Statements of Operations
for the year ended December 31, 1998 and the nine months ended
September 30, 1999, the FaciliCom information is for the twelve months
ended September 30, 1998 and the nine months ended June 30, 1999,
respectively.
4. These columns represent the historical results of Comm/Net for the
year ended December 31, 1998 and for the period January 1, 1999 to
April 30, 1999.
5. Elimination of the historical FaciliCom stockholders' equity accounts.
6. The FaciliCom merger has been accounted for under the purchase method
of accounting. World Access has not determined the final allocation of
the purchase price, and accordingly, the amount ultimately determined
may differ from the amounts shown below.
Under the terms of the Agreement and Plan of Merger dated as of August
17, 1999 and based on the valuation of the Series C Preferred Stock
and World Access common stock at that time, the purchase price was
determined as follows (in thousands):
<TABLE>
<S> <C>
Purchase price:
Issuance of preferred stock(a)............................ $252,187
Cash...................................................... 56,000
Issuance of common stock to FaciliCom noteholders(b)...... 15,000
Issuance of common stock(c)............................... 13,328
Fair value of World Access options issued in exchange for
FaciliCom options(d)................................... 7,531
Estimated fees and expenses............................... 14,500
--------
Total purchase price.............................. 358,546
--------
Allocation to fair values:
Historical stockholders' deficit.......................... 126,830
Adjust assets and liabilities:
Eliminate historical goodwill and debt issue costs........ 12,521
Write down property and equipment......................... 70,144
Adjust other assets and liabilities to fair market
value.................................................. 7,600
Discount on World Access 13.25% Senior Notes(e)........... (15,000)
--------
Estimated goodwill................................ $560,641
========
</TABLE>
- ---------------
(a) Represents the fair value of the 350,260 shares of Series C Preferred
Stock issued as part of the FaciliCom merger consideration. The fair
value was computed using the Black-Scholes Option Pricing Model
assuming a volatility factor of 45%, a risk free rate of 6% and a 10%
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<PAGE> 9
WORLD ACCESS, INC
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
discount for the lack of liquidity in a private security. The Series
C Preferred Stock bears no dividend and is convertible into shares of
World Access common stock at a conversion rate of $20.38 per common
share of World Access common stock, subject to adjustment in the
event of below market issuances of World Access common stock, stock
dividends, subdivisions, combinations, reclassifications and other
distributions with respect to World Access common stock. If the
closing trading price of World Access common stock exceeds $20.38 per
share for 60 consecutive trading days, the Series C Preferred Stock
will automatically convert into World Access common stock.
(b) In connection with the merger of World Access and FaciliCom, all the
holders of FaciliCom's 10 1/2% Series B Senior Notes due 2008 have
tendered their notes and accepted in exchange for each $1,000 in
principal amount (1) $1,000 principal amount of World Access 13.25%
Senior Notes due 2008 (2) $10 in cash and (3) World Access common
stock having a market value of $50. These pro forma statements reflect
(1) the issuance of $300.0 million aggregate principal amount of the
World Access notes (2) the payment of $3.0 million cash to holders of
the FaciliCom notes, which represented the fee paid by World Access to
obtain the consent from the FaciliCom noteholders waiving their right
to put their notes at 101% of par in connection with the FaciliCom
merger and (3) the issuance of 942,627 shares of World Access common
stock equal in value to an aggregate amount of $15.0 million to the
holders of the FaciliCom notes.
(c) Represents the fair value of 963,722 shares of World Access common
stock issued to certain FaciliCom shareholders who elected to receive
World Access common shares in the merger. These shares were valued
based on the average market price on Nasdaq of World Access common
stock for the three days prior and three days subsequent to August 17,
1999, the date economic terms of the FaciliCom merger were announced,
or $13.83 per share.
(d) Represents the fair value of approximately 495,600 options to acquire
World Access common stock issued in exchange for certain options
outstanding to acquire FaciliCom common stock. The fair value has been
determined using the Black-Scholes Option Pricing Model with the
following assumptions: dividend yield 0%, volatility 70%, risk free
interest rate of 5.8% and an expected life of 3 years. The World
Access options have an average exercise price of $2.63 per share and
are fully vested.
(e) Represents the discount to face value to be recorded to adjust the
World Access notes to their estimated fair value. The estimated fair
value was based on the quoted market price of debt with similar
characteristics. The terms of the World Access notes were structured
to provide fair value equal to 95% of the principal amount.
7. In connection with the FaciliCom merger, World Access issued $75.0
million of World Access common stock (4,713,128 shares at $15.91 per
share) in a private transaction to a group of institutional and
sophisticated investors. World Access used the majority of the
proceeds from this private placement to fund the $56.0 million cash
portion of the merger consideration, as well as fees and expenses to
be incurred in connection with the merger.
8. In December 1998, World Access acquired Resurgens and issued
approximately 7,500,000 restricted shares of World Access common stock
which were placed in escrow for future release contingent upon their
future EBITDA performance. The release of these shares is accelerated
in connection with the FaciliCom merger as the FaciliCom merger
qualifies as a "Change in Control" as defined in the Resurgens merger
agreements. The release of the 7,500,000 shares has been accounted for
as an increase in goodwill and stockholders' equity. These shares were
valued
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<PAGE> 10
WORLD ACCESS, INC
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
based on the market price on Nasdaq of World Access common stock
December 7, 1999, the date the FaciliCom merger was consummated, or
$17.00 per share.
9. Elimination of existing goodwill from prior FaciliCom acquisitions and
debt issue costs associated with the FaciliCom notes.
10. Elimination of inter-company carrier service revenues and related
costs.
11. In October 1999, FaciliCom granted stock options to its employees who
are expected to continue with the surviving corporation after the
merger with World Access. These options, which were granted under a new
FaciliCom 1999 Stock Option Plan, have a four year vesting period. In
connection with the merger, these options converted into non-qualified
options to purchase approximately 1.9 million shares of World Access
common stock at an exercise price of $15.00 per share. The intrinsic
value of these options represents the difference between the closing
price of World Access common stock on December 7, 1999 of $17.00 per
share and the exercise price of $15.00 per share times the number of
options granted or approximately $3.8 million. The pro forma statements
of operations include compensation expense related to the amortization
of the intrinsic value of these options over the vesting period.
12. Amortization of goodwill over an estimated life of 20 years. The pro
forma adjustment to goodwill for the nine months ended September 30,
1999 was computed as follows (in thousands):
<TABLE>
<CAPTION>
HISTORICAL
PRO FORMA GOODWILL PRO FORMA
GOODWILL AMORTIZATION AMORTIZATION ADJUSTMENTS
-------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
FaciliCom (see Note 5).................... $560,641 $21,024 $ (950) $20,074
Escrowed shares (see Note 7).............. 127,425 4,776 -- 4,776
Comm/Net.................................. 20,649 774 (430) 344
------- ------- -------
$26,574 $(1,380) $25,194
======= ======= =======
</TABLE>
The pro forma adjustment to goodwill for the year ended December 31,
1998 was computed as follows (in thousands):
<TABLE>
<CAPTION>
HISTORICAL
PRO FORMA GOODWILL PRO FORMA
GOODWILL AMORTIZATION AMORTIZATION ADJUSTMENT
-------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
FaciliCom (see Note 5).................... $560,641 $ 28,031 $ (961) $27,070
Escrowed shares (see Note 7).............. 127,425 6,370 -- 6,370
Resurgens................................. 78,625 3,934 (164) 3,770
Comm/Net.................................. 20,649 1,030 -- 1,030
-------- ------- -------
$ 39,365 $(1,125) $38,240
======== ======= =======
</TABLE>
13. Adjustment to depreciation and amortization expense for the adjustment
to fair value of switching equipment and license agreements at
FaciliCom and Resurgens.
14. Represents the adjustment to interest expense related to the exchange
of FaciliCom notes with a 10 1/2% coupon for World Access notes with
a 13.25% coupon and the amortization of the $15.0 million debt
discount related to the World Access notes over a period of eight
years. The FaciliCom notes were issued on January 28, 1998 and were
outstanding for approximately eight
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<PAGE> 11
WORLD ACCESS, INC
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
months in fiscal 1998. The pro forma adjustment to interest expense
was computed as follows (in thousands):
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ -----------------
<S> <C> <C>
Interest expense on World Access notes.......... $ 29,813 $ 39,750
Debt issue cost amortization on World Access
notes......................................... 1,405 1,875
Historical FaciliCom note interest expense...... (23,625) (21,000)
Historical FaciliCom debt issue cost
amortization.................................. (783) (745)
-------- --------
$ 6,810 $ 19,880
======== ========
</TABLE>
15. Adjustment for the additional tax benefit derived from certain pro
forma adjustments. World Access has not recorded any tax benefit on a
pro forma basis that may be derived from FaciliCom's net operating
losses.
16. To increase preferred stock dividends to reflect the Series B preferred
stock issued in connection with the Comm/Net acquisition as outstanding
for the full period.
17. Represents pro forma weighted average shares and basic and diluted
earnings from continuing operations per share. The weighted average
shares are computed assuming the issuance of (1) an aggregate of
4,713,128 shares issued for $75.0 million in connection with the
private placement of World Access common stock; (2) an aggregate of
942,627 shares issued to the holders of the FaciliCom notes; (3) an
aggregate 963,722 shares issued to certain FaciliCom shareholders; and
(4) 7,500,000 shares released from escrow related to the acceleration
of the Resurgens earn-out (see Note 7) as of the beginning of the
periods presented. Due to the pro forma loss from continuing operations
for the nine months ended September 30, 1999 and the year ended
December 31, 1998, potential common stock shares related to stock
options, stock warrants, convertible notes and convertible preferred
stock have been excluded from the diluted loss per share as the
inclusion of these potential common stock shares would be
anti-dilutive.
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<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to be signed on behalf of the
undersigned hereunto duly authorized.
WORLD ACCESS, INC.
Date: February 22, 2000 By: /s/ Martin D. Kidder
--------------------------------
Martin D. Kidder
Vice President and Controller
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