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Previous: NORTH SHORE CAPITAL II INC, SC 13D, 2001-01-18 |
Next: MEGA MICRO TECHNOLOGIES GROUP, S-8, 2001-01-18 |
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 | ||||
XO COMMUNICATIONS, INC.
(Exact name of registrant as specified in charter)
| Delaware (State or other jurisdiction of incorporation) |
0-30900 (Commission File Number) |
54-1983517 (IRS Employer Identification No.) |
| 11111 Sunset Hills Road, Reston, Virginia | 20190 | |||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 703-547-2000
(Former name or former address, if changed from last report)
Item 2. Acquisition or Disposition of Assets.
On June 22, 2000, XO Communications, Inc. (f/k/a NEXTLINK Communications,
Inc.), a Delaware corporation (the “Registrant”), filed a Current Report on
Form 8-K (the “Initial Report”) describing the merger (the “Merger”) on June
16, 2000 of each of NEXTLINK Communications, Inc., a Delaware corporation (“Old
NEXTLINK”), and Concentric Network Corporation (“Concentric”), a Delaware
corporation, with and into the Registrant.
On August 21, 2000, the Registrant amended the Initial Report (the “Amended
Report”) to provide the financial statements of Concentric required by Item
7(a) of Form 8-K, and the pro forma condensed combined 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. The
pro forma condensed combined financial information in the Amended
Report included an unaudited pro forma condensed combined statement of
operations for the year ended December 31, 1999 and the three months
ended March 31, 2000 giving effect to the Merger as if it occurred
January 1, 1999.
The purpose of this further amendment to the Initial Report is to provide an
updated unaudited pro forma condensed combined statement of operations for the
year ended December 31, 1999 and the nine months ended September 30,
2000 giving effect to the Merger as if it occurred January 1, 1999.
Additionally, this amendment corrects the reference to Rule 12g-3(a) in the
last paragraph of Item 2 of the Initial Report. The Registrant is the
successor issuer to Old NEXTLINK for purposes of Rule 12g-3(c) under the
Securities Exchange Act of 1934.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro forma financial information.
| (i) | Unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended December 31, 1999 and the nine months ended September 30, 2000. |
| (ii) | Notes to Unaudited Pro Forma Condensed Combined Financial Statements. |
UNAUDITED PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Condensed Combined Financial Statements of XO and Concentric
On June 16, 2000, XO Communications, Inc. (XO), formerly known as NEXTLINK Communications, Inc., merged with Concentric Network Corporation (Concentric), a provider of high-speed digital subscriber line, or DSL, web hosting, e-commerce, and other Internet and data transmission services. In the merger, XO issued shares of XO’s Class A common stock and assumed liabilities of Concentric. The aggregate value of the common stock and the assumed liabilities was approximately $3.6 billion.
The following unaudited pro forma statements of operations combine the historical statements of operations of XO and Concentric, including their respective subsidiaries after giving effect to the merger. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 1999 and the nine months ending September 30, 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 XO and Concentric for the year ended December 31, 1999 filed on Form 10-K and the unaudited financial statements and notes thereto of XO for the nine months ended September 30, 2000, filed on Form 10-Q. The unaudited pro forma condensed combined financial statements are not necessarily indicative of the operating results that would have occurred had the merger been completed 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.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 1999
(Dollars in thousands, except per share amounts)
| Historical | Historical | Pro Forma | |||||||||||||||||||||||
| Historical XO | Concentric | Combined | Adjustment | Note | Total | ||||||||||||||||||||
| Revenue | $ | 274,324 | $ | 147,060 | $ | 421,384 | $ | — | $ | 421,384 | |||||||||||||||
| Costs and Expenses: | |||||||||||||||||||||||||
| Operating | 221,664 | 118,426 | 340,090 | — | 340,090 | ||||||||||||||||||||
| Selling, general and administrative | 266,908 | 64,567 | 331,475 | — | 331,475 | ||||||||||||||||||||
| 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 | 646,672 | (3b | ) | 672,498 | ||||||||||||||||||
| Total costs and expenses | 640,854 | 222,472 | 863,326 | 646,672 | 1,509,998 | ||||||||||||||||||||
| Loss from operations | (366,530 | ) | (75,412 | ) | (441,942 | ) | (646,672 | ) | (1,088,614 | ) | |||||||||||||||
| Interest income | 90,961 | 13,558 | 104,519 | — | 104,519 | ||||||||||||||||||||
| Interest expense | (283,123 | ) | (22,569 | ) | (305,692 | ) | — | (305,692 | ) | ||||||||||||||||
| Other income and expense, net | — | (664 | ) | (664 | ) | — | (664 | ) | |||||||||||||||||
| Net Loss | (558,692 | ) | (85,087 | ) | (643,779 | ) | (646,672 | ) | (1,290,451 | ) | |||||||||||||||
| 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 | ) | $ | (646,672 | ) | $ | (1,386,337 | ) | ||||||||||
| Loss per common share (basic and
diluted) |
$ | (2.51 | ) | $ | (4.36 | ) | |||||||||||||||||||
| Shares used in computation of net loss per share |
250,264,918 | (3c | ) | 318,264,918 | |||||||||||||||||||||
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2000
(Dollars in thousands, except per share amount)
| Historical | Historical | Pro Forma | |||||||||||||||||||||||||||
| Historical XO | (3d) | Concentric (3d) | Combined | Adjustment | Note | Total | |||||||||||||||||||||||
| Revenue | $ | 470,753 | $ | 106,382 | $ | 577,135 | $ | — | $ | 577,135 | |||||||||||||||||||
| Costs and Expenses: | |||||||||||||||||||||||||||||
| Operating | 317,015 | 89,454 | 406,469 | — | 406,469 | ||||||||||||||||||||||||
| Selling, general and administrative | 374,452 | 58,525 | 432,977 | (14,400 | ) | (3a | ) | 418,577 | |||||||||||||||||||||
| Stock-based compensation | 39,609 | 171 | 39,780 | — | 39,780 | ||||||||||||||||||||||||
| Depreciation | 139,984 | 21,166 | 161,150 | — | 161,150 | ||||||||||||||||||||||||
| Amortization | 216,788 | 33,033 | 249,821 | 323,336 | (3b | ) | 573,157 | ||||||||||||||||||||||
| In-process research and development |
36,166 | — | 36,166 | (36,166 | ) | (2 | ) | — | |||||||||||||||||||||
| Total costs and expenses | 1,124,014 | 202,349 | 1,326,363 | 272,770 | 1,599,133 | ||||||||||||||||||||||||
| Loss from operations | (653,261 | ) | (95,967 | ) | (749,228 | ) | (272,770 | ) | (1,021,998 | ) | |||||||||||||||||||
| Interest income | 141,347 | 4,421 | 145,768 | — | 145,768 | ||||||||||||||||||||||||
| Interest expense | (324,557 | ) | (10,758 | ) | (335,315 | ) | — | (335,315 | ) | ||||||||||||||||||||
| Other income and expense, net | 226,735 | 47,137 | 273,872 | — | 273,872 | ||||||||||||||||||||||||
| Net Loss | (609,736 | ) | (55,167 | ) | (664,903 | ) | (272,770 | ) | (937,673 | ) | |||||||||||||||||||
| Preferred stock dividends and accretion |
(107,505 | ) | (14,840 | ) | (122,345 | ) | — | (122,345 | ) | ||||||||||||||||||||
| Net loss applicable to common shares |
$ | (717,241 | ) | $ | (70,007 | ) | $ | (787,248 | ) | $ | (272,770 | ) | $ | (1,060,018 | ) | ||||||||||||||
| Loss per common share (basic and diluted) |
$ | (2.33 | ) | $ | (3.04 | ) | |||||||||||||||||||||||
| Shares used in computation of net loss per share |
307,774,101 | (3c | ) | 349,219,357 | |||||||||||||||||||||||||
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The unaudited pro forma combined statements of operations for the year ended December 31, 1999 and the nine months ended September 30, 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 XO. 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 XO 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.
Concentric’s outstanding options and warrants were converted to equivalent options and warrants of XO. The number of options and warrants and the exercise prices will be adjusted so that XO 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 XO 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 XO common stock exchanged | 68,023 | ||||
| XO market value per share (see note 2) | $ | 37.375 | |||
| Fair value of common stock issued | $ | 2,542,356 | |||
| Fair value of Concentric liabilities at June 16, 2000. | 321,448 | ||||
| Fair value of Concentric preferred stock at June 16, 2000. | 246,698 | ||||
| Fair value of Concentric options | 319,418 | ||||
| Fair value of Concentric warrants | 136,412 | ||||
| Estimated investment banking, legal and accounting fees, and
fees paid to holders of Concentric notes and preferred stock |
26,500 | ||||
| Total consideration | $ | 3,592,832 | |||
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS -—(Continued)
The aggregate purchase price was allocated to the tangible and intangible assets of Concentric as follows (in thousands):
| Fair value of assets acquired at June 16, 2000 | $ | 384,861 | ||
| 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 | 2,925,570 | |||
| Aggregate purchase price | $ | 3,592,832 | ||
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 adjustment reflects merger-related expenses incurred by Concentric prior to the merger. | ||
| b. | The effect of allocating the aggregate purchase price to the tangible and intangible assets of Concentric results in additional amortization expense of $646.7 million for the year ended December 31, 1999 and $323.3 million for the nine months ended September 30, 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. | Pro forma shares outstanding used in the computation of net loss per share is based on the weighted average effect of the actual number of shares issued on the date of the merger plus XO’s historically reported weighted average shares outstanding for the period. Share and per share data have been adjusted to reflect the XO two-for-one stock split on June 15, 2000. | ||
| d. | Historical XO includes the results of operations of Concentric from the closing date of the merger, June 16, 2000, through September 30, 2000. Historical Concentric includes the results of operations of Concentric from January 1, 2000 through June 15, 2000. |
Note 4. Reclassifications
Certain historical amounts have been reclassified to conform with the pro forma condensed combined presentation.
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.
XO COMMUNICATIONS, INC.
|
By:/s/ Gary D. Begeman Name: Gary D. Begeman Title: Senior Vice President, General Counsel and Secretary |
January 18, 2001
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