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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/ A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 16, 2000
NEXTLINK Communications, Inc.
Delaware | 333-34974 | 54-1983517 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
1505 Farm Credit Drive, McLean, Virginia | 22102 |
(Address of principal executive offices) | (Zip Code) |
Registrants Telephone Number, including area code: (703) 547-2000
Item 2. Acquisition or Disposition of Assets.
On June 22, 2000, NEXTLINK Communications, Inc. (the Registrant) filed a Current Report on Form 8-K (the Initial Report) describing the merger on June 16, 2000 of each of NEXTLINK Communications, Inc., a Delaware corporation and Concentric Network Corporation (Concentric), a Delaware corporation, with and into the Registrant.
The purpose of this amendment to the Initial Report is to provide the financial statements of Concentric required by Item 7(a) of Form 8-K, and the pro forma combined condensed consolidated financial information required by Item 7(b) of Form 8-K, which information was not included with the Initial Report in reliance on Item 7(a)(4) of Form 8-K.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of business acquired:
The (i) Report of Ernst & Young LLP, dated January 21, 2000 (except for Note 13, as to which the date is March 20, 2000), (ii) consolidated audited balance sheets of Concentric as of December 31, 1998 and 1999, (iii) consolidated statements of operations of Concentric for the years ended 1997, 1998 and 1999, (iv) consolidated statements of common stock subject to rescission and stockholders equity (deficit) of Concentric for the years ended 1997, 1998 and 1999 and (v) consolidated statements of cash flows of Concentric for the years ended 1997, 1998 and 1999 have been filed with the SEC as part of Concentrics Annual Report on Form 10-K, filed on March 30, 2000 (File No. 000-22575), and are incorporated by reference and filed as exhibits hereto pursuant to Rule 12b-23(3). | |
The (i) unaudited consolidated balance sheet of Concentric as of March 31, 2000, (ii) unaudited condensed consolidated statements of operations of Concentric for the three month periods ended March 31, 2000 and 1999 and (iii) unaudited condensed consolidated statements of cash flows for the three month periods ended March 31, 2000 and 1999 have been filed with the SEC as part of Concentrics Quarterly Report on Form 10-Q, filed May 15, 2000 (File No. 000-22575), and are incorporated by reference and filed as exhibits hereto pursuant to Rule 12b-23(3). |
(b) Pro forma financial information.
(i) | Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 1999. | |
(ii) | Unaudited Pro Forma Condensed Combined Statements of Operations for the year ended December 31, 1999 and the three months ended March 31, 2000. |
(iii) | Notes to Unaudited Pro Forma Condensed Combined Financial Statements. |
(c) Exhibits
23 | Consent of Ernst & Young LLP. | |||
99.1 | Report of Ernst & Young LLP, dated January 21, 2000 (except for Note 13, as to which the date is March 20, 2000). | |||
99.2 | Consolidated audited balance sheets of Concentric as of December 31, 1998 and 1999. | |||
99.3 | Consolidated statements of operations of Concentric for the years ended 1997, 1998 and 1999. | |||
99.4 | Consolidated statements of common stock subject to rescission and stockholders equity (deficit) of Concentric for the years ended 1997, 1998 and 1999. | |||
99.5 | Consolidated statements of cash flows of Concentric for the years ended 1997, 1998 and 1999. | |||
99.6 | Notes to condensed consolidated financial statements. | |||
99.7 | Unaudited consolidated balance sheet of Concentric as of March 31, 2000. | |||
99.8 | Unaudited condensed consolidated statements of operations of Concentric for the three month periods ended March 31, 2000 and 1999. | |||
99.9 | Unaudited condensed consolidated statements of cash flows for the three month periods ended March 31, 2000 and 1999. | |||
99.1 | 0 | Notes to unaudited condensed consolidated financial statements. |
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7(b)
UNAUDITED PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Condensed Combined Financial Statements of NEXTLINK and Concentric
The following unaudited pro forma condensed combined financial statements combine the historical consolidated balance sheets and statements of operations of NEXTLINK and Concentric, including their respective subsidiaries after giving effect to the merger. The unaudited pro forma condensed combined balance sheet as of March 31, 2000 set forth below gives effect to the merger as if it occurred on March 31, 2000. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 1999 and the three months ending March 31, 2000 give effect to the merger as if it occurred January 1, 1999. These statements are prepared based on the notes to these unaudited pro forma condensed combined financial statements. The merger has been accounted for as a purchase business combination.
The following unaudited pro forma financial information has been prepared based upon, and should be read in conjunction with, the audited historical consolidated financial statements of NEXTLINK and Concentric. The unaudited pro forma condensed combined financial statements are not necessarily indicative of the financial position or operating results that would have occurred had the merger been completed on March 31, 2000 or at the beginning of the period for which the merger is being given effect, nor is it necessarily indicative of future financial position or operating results.
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Unaudited Pro Forma Condensed Combined Balance Sheet
Historical | Historical | Historical | Pro Forma | |||||||||||||||||||||||
NEXTLINK | Concentric | Combined | Adjustment | Note | Total | |||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||
Cash and cash equivalents | $ | 1,752,720 | $ | 103,008 | $ | 1,855,728 | (27,000 | ) | $ | 1,828,728 | ||||||||||||||||
Marketable securities | 1,286,121 | 58,566 | 1,344,687 | 2 | 1,344,687 | |||||||||||||||||||||
Accounts receivable, net | 110,000 | 34,458 | 144,458 | 144,458 | ||||||||||||||||||||||
Other current assets | 80,417 | 22,878 | 103,295 | 103,295 | ||||||||||||||||||||||
Pledged securities | 9,853 | 9,853 | 9,853 | |||||||||||||||||||||||
Restricted Cash | 19,373 | 19,373 | 19,373 | |||||||||||||||||||||||
Total current assets | 3,239,111 | 238,283 | 3,477,394 | (27,000 | ) | 3,450,394 | ||||||||||||||||||||
Property and equipment, net | 1,317,250 | 124,039 | 1,441,289 | 1,441,289 | ||||||||||||||||||||||
Investment in fixed wireless licenses | ||||||||||||||||||||||||||
Goodwill and other intangible assets | 303,244 | 303,244 | 2,686,108 | 2 | 2,932,342 | |||||||||||||||||||||
(303,244 | ) | |||||||||||||||||||||||||
246,234 | ||||||||||||||||||||||||||
Investments | 22,795 | 22,795 | 22,795 | |||||||||||||||||||||||
Other assets, net | 306,716 | 11,000 | 317,716 | 317,716 | ||||||||||||||||||||||
Investment in fixed wireless licenses | 958,077 | | 958,077 | 958,077 | ||||||||||||||||||||||
Total assets | $ | 5,821,154 | $ | 699,361 | $ | 6,520,515 | $ | 2,602,098 | $ | 9,122,613 | ||||||||||||||||
LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT) | ||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||
Accounts payable | 54,023 | 52,586 | 106,609 | 106,609 | ||||||||||||||||||||||
Other accrued liabilities | 129,704 | 26,410 | 156,114 | 156,114 | ||||||||||||||||||||||
Accrued interest payable | 100,728 | 100,728 | 100,728 | |||||||||||||||||||||||
Deferred revenue | 12,402 | 12,402 | 12,402 | |||||||||||||||||||||||
Current portion of long-term obligations | 1,214 | 7,552 | 8,766 | 8,766 | ||||||||||||||||||||||
Total current liabilities | 285,669 | 98,950 | 384,619 | 384,619 | ||||||||||||||||||||||
Long-term debt | 4,137,670 | 146,719 | 4,284,389 | 4,284,389 | ||||||||||||||||||||||
Other long-term liabilities | 16,218 | 29,467 | 45,685 | 45,685 | ||||||||||||||||||||||
Total liabilities | 4,439,557 | 275,136 | 4,714,693 | 4,714,693 | ||||||||||||||||||||||
Redeemable preferred stock | 1,476,535 | 228,865 | 1,705,400 | 1,705,400 | ||||||||||||||||||||||
Shareholders equity (deficit): | | | ||||||||||||||||||||||||
Common stock | 1,194,467 | 543,720 | 1,738,187 | (543,720 | ) | 2 | 4,028,091 | |||||||||||||||||||
2,542,356 | 2 | |||||||||||||||||||||||||
291,268 | 2 | |||||||||||||||||||||||||
Deferred compensation | (85,472 | ) | (430 | ) | (85,902 | ) | 430 | 3a | (85,472 | ) | ||||||||||||||||
Accumulated other comprehensive income | 3,756 | 387 | 4,143 | (387 | ) | 3a | 3,756 | |||||||||||||||||||
Accumulated deficit | (1,207,689 | ) | (348,317 | ) | (1,556,006 | ) | 348,317 | 3a | (1,243,855 | ) | ||||||||||||||||
(36,166 | ) | 2 | ||||||||||||||||||||||||
Total Shareholders equity (deficit) | (94,938 | ) | 195,360 | 100,422 | 2,602,098 | 2,702,520 | ||||||||||||||||||||
Total liabilities and shareholders equity (deficit) | $ | 5,821,154 | $ | 699,361 | $ | 6,520,515 | $ | 2,602,098 | $ | 9,122,613 | ||||||||||||||||
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7(b)(ii)
Unaudited Pro Forma Condensed Combined Statement of Operations
Historical | Historical | Historical | Pro Forma | |||||||||||||||||||||||
NEXTLINK | Concentric | Combined | Adjustment | Note | Total | |||||||||||||||||||||
Revenue | $ | 274,324 | $ | 148,368 | $ | 422,692 | $ | | $ | 422,692 | ||||||||||||||||
Costs and Expenses: | ||||||||||||||||||||||||||
Cost of Revenue | 221,664 | 118,426 | 340,090 | | 340,090 | |||||||||||||||||||||
Selling, general and administrative | 266,908 | 65,875 | 332,783 | | 332,783 | |||||||||||||||||||||
Restructuring | 30,935 | | 30,935 | | 30,935 | |||||||||||||||||||||
Stock-based compensation | 12,872 | 373 | 13,245 | | 13,245 | |||||||||||||||||||||
Depreciation | 93,097 | 28,658 | 121,755 | 121,755 | ||||||||||||||||||||||
Amortization | 15,378 | 10,448 | 25,826 | 598,780 | 3 | b | 624,606 | |||||||||||||||||||
Write-off of in-process technology | | | | 36,166 | 2 | 36,166 | ||||||||||||||||||||
Total costs and expenses | 640,854 | 223,780 | 864,634 | 634,946 | 1,499,580 | |||||||||||||||||||||
Loss from operations | (366,530 | ) | (75,412 | ) | (441,942 | ) | (634,946 | ) | (1,076,888 | ) | ||||||||||||||||
Interest Income | 90,961 | 13,558 | 104,519 | 104,519 | ||||||||||||||||||||||
Interest expense | (283,123 | ) | (22,569 | ) | (305,692 | ) | (305,692 | ) | ||||||||||||||||||
Net interest expense and other | | (664 | ) | (664 | ) | (664 | ) | |||||||||||||||||||
Net Loss | (558,692 | ) | (85,087 | ) | (643,779 | ) | (634,946 | ) | (1,278,725 | ) | ||||||||||||||||
Preferred stock dividends and accretion | (69,189 | ) | (26,697 | ) | (95,886 | ) | | (95,886 | ) | |||||||||||||||||
Net loss applicable to common shares | $ | (627,881 | ) | $ | (111,784 | ) | $ | (739,665 | ) | $ | (634,946 | ) | $ | (1,374,611 | ) | |||||||||||
Net loss per share (basic and diluted) | (5.02 | ) | (2.76 | ) | (7.12 | ) | ||||||||||||||||||||
Shares used in computation of net loss per share | 125,132,459 | 40,473,000 | 3 | c | 193,135,459 |
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Unaudited Pro Forma Condensed Combined Statement of Operations
Historical | Historical | Pro Forma | ||||||||||||||||||||||||
NEXTLINK | Concentric | Combined | Adjustment | Note | Total | |||||||||||||||||||||
Revenue | $ | 105,849 | $ | 57,292 | $ | 163,141 | $ | 163,141 | ||||||||||||||||||
Costs and Expenses: | ||||||||||||||||||||||||||
Operating | 76,021 | 45,268 | 121,289 | 121,289 | ||||||||||||||||||||||
Selling, general and administrative | 92,969 | 27,242 | 120,211 | 120,211 | ||||||||||||||||||||||
Stock-based compensation | 8,985 | 93 | 9,078 | 9,078 | ||||||||||||||||||||||
Depreciation | 40,383 | 10,785 | 51,168 | 51,168 | ||||||||||||||||||||||
Amortization | 5,613 | 14,949 | 20,562 | 149,695 | 3b | 170,257 | ||||||||||||||||||||
Total costs and expenses | 223,971 | 98,337 | 322,308 | 149,695 | 472,003 | |||||||||||||||||||||
Loss from Operations | (118,122 | ) | (41,045 | ) | (159,167 | ) | (149,695 | ) | (308,862 | ) | ||||||||||||||||
Interest income | 44,613 | 2,649 | 47,262 | 47,262 | ||||||||||||||||||||||
Interest expense | (108,359 | ) | (5,850 | ) | (114,209 | ) | (114,209 | ) | ||||||||||||||||||
Other income | 225,112 | 61,772 | 286,884 | 286,884 | ||||||||||||||||||||||
Net Income (Loss) | 43,244 | 17,526 | 60,770 | (149,695 | ) | (88,925 | ) | |||||||||||||||||||
Preferred stock dividends and accretion of preferred stock redemption obligation, including issue costs | (33,435 | ) | (8,006 | ) | (41,441 | ) | (41,441 | ) | ||||||||||||||||||
Earnings (loss) applicable to common shares | $ | 9,809 | $ | 9,520 | $ | 19,329 | $ | (149,695 | ) | $ | (130,366 | ) | ||||||||||||||
Earnings (loss) per common share | ||||||||||||||||||||||||||
Basic | $ | 0.07 | $ | 0.19 | $ | (0.64 | ) | |||||||||||||||||||
Diluted | $ | 0.06 | $ | 0.19 | $ | (0.64 | ) | |||||||||||||||||||
Weighted average share | ||||||||||||||||||||||||||
Basic | 135,401,000 | 49,600,000 | 3c | 203,424,000 | ||||||||||||||||||||||
Diluted | 157,210,000 | 49,600,000 | 3c | 203,424,000 |
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7(b)(iii)
NOTES TO UNAUDITED PRO FORMA CONDENSED
Note 1. Basis of Presentation
The unaudited pro forma condensed combined balance sheet as of March 31, 2000 gives effect to the merger as if it had occurred on March 31, 2000. The unaudited pro forma combined statement of operations for the year ended December 31, 1999 and the three months ended March 31, 2000, give effect to the merger as if it had occurred January 1, 1999. The merger has been accounted for as a purchase business combination.
Note 2. Purchase Price and Purchase Price Allocation
The merger was accounted for as a purchase of Concentric by NEXTLINK. The merger resulted in an allocation of purchase price to the tangible and intangible assets of Concentric, as well as a write-off of the portion of the purchase price allocated to in-process technology. The transaction is not expected to result in an incremental deferred tax liability. This allocation reflects our estimate of the fair value of assets to be acquired by NEXTLINK based upon information available to us to date. We plan to adjust this allocation based on the final purchase price and our final determination of asset value.
The calculation of the purchase consideration was based on the number of outstanding Concentric shares that were exchanged on the actual merger date and the exchange ratio applied per the merger agreement.
Concentrics outstanding options and warrants were converted to equivalent options and warrants of NM Acquisition Corp. The number of options and warrants and the exercise prices will be adjusted so that the NM Acquisition Corp. options and warrants issued for Concentric options and warrants will have an equivalent intrinsic value per option and warrant. The term and vesting of the options and warrants was not modified. We have therefore included the estimated fair value of these options and warrants in the purchase price. We calculated the fair value of the options and warrants to purchase shares in NM Acquisition Corp. based on the number of options and warrants outstanding on the actual merger date.
The aggregate purchase price was determined as follows (in thousands):
Concentric common shares outstanding | 52,862 | ||||
Exchange ratio | 1.2868 | ||||
Equivalent NEXTLINK common stock exchanged | 68,023 | ||||
NEXTLINK market value per share (see note 2) | $ | 37.375 | |||
Fair value of common stock issued | $ | 2,542,356 | |||
Fair value of Concentric liabilities at March 31, 2000 | 275,136 | ||||
Fair value of Concentric preferred stock at March 31, 2000 | 228,865 | ||||
Fair value of Concentric options | 216,698 | ||||
Fair value of Concentric warrants | 74,570 | ||||
Estimated investment banking, legal and accounting fees, and fees paid to holders of Concentric notes and preferred stock | 27,000 | ||||
Total consideration | $ | 3,364,625 | |||
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The aggregate purchase price was allocated to the tangible and intangible assets of Concentric as follows (in thousands):
Fair value of assets acquired at March 31, 2000 | $ | 396,117 | |||
Fair value of current products and technology | 95,218 | ||||
Fair value of core technology | 46,323 | ||||
Fair value of customer lists | 77,299 | ||||
Fair value of in-process technology | 36,166 | ||||
Fair value of Concentric trade name | 10,065 | ||||
Fair value of Concentric workforce | 17,329 | ||||
Preliminary goodwill | 2,686,108 | ||||
Aggregate purchase price | $ | 3,364,625 | |||
The allocation of the purchase price to the assets and liabilities of Concentric is preliminary and subject to adjustment as final determination of values and future uses are made.
Note 3. Other Pro Forma Adjustments
a. | The pro forma adjustments reflect the elimination of Concentrics historical common stock, deferred compensation, accumulated comprehensive income and accumulated deficit as of March 31, 2000. |
b. | The effect of allocating the aggregate purchase price to the tangible and intangible assets of Concentric results in additional amortization expense of $598.8 million for the year ended December 31, 1999 and $149.7 million for the quarter ended March 31, 2000. For amortization purposes, goodwill and has been assigned a five-year life and all other acquired intangible assets have been assigned a four-year life. |
c. | Proforma shares outstanding used in the computation of net loss per share for the year ended December 31, 1999 and the quarter ended March 31, 2000 is based on actual number of shares issued on the date of the merger plus NEXLINKs historically reported weighted average shares outstanding for the period. |
Note 4. Reclassifications
Certain historical amounts have been reclassified to conform with the pro forma condensed combined presentation.
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SIGNATURE
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.
NEXTLINK COMMUNICATIONS, INC.
By: | /s/ GARY D. BEGEMAN |
|
|
Gary D. Begeman Senior Vice President and General Counsel |
Dated: August 21, 2000
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Exhibit Index
23 | Consent of Ernst & Young LLP | |||
99.1 | Report of Ernst & Young LLP, dated January 21, 2000 (except for Note 13, as to which the date is March 20, 2000). | |||
99.2 | Consolidated audited balance sheets of Concentric as of December 31, 1998 and 1999. | |||
99.3 | Consolidated statements of operations of Concentric for the years ended 1997, 1998 and 1999. | |||
99.4 | Consolidated statements of common stock subject to rescission and stockholders equity (deficit) of Concentric for the years ended 1997, 1998 and 1999. | |||
99.5 | Consolidated statements of cash flows of Concentric for the years ended 1997, 1998 and 1999. | |||
99.6 | Notes to condensed consolidated financial statements. | |||
99.7 | Unaudited consolidated balance sheet of Concentric as of March 31, 2000. | |||
99.8 | Unaudited condensed consolidated statements of operations of Concentric for the three month periods ended March 31, 2000 and 1999. | |||
99.9 | Unaudited condensed consolidated statements of cash flows for the three month periods ended March 31, 2000 and 1999. | |||
99.1 | 0 | Notes to unaudited condensed consolidated financial statements. |
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