<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
------------
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): July 26, 2000
CFW COMMUNICATIONS COMPANY
(Exact Name of Registrant as Specified in Charter)
Virginia 0-16751 54-1443350
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
P. O. Box 1990
Waynesboro, Virginia 22980
(Address of principal executive offices)
(540) 946-3500
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 26, 2000, CFW Communications Company ("CFW") closed its acquisition
of PrimeCo's PCS licenses, assets and operations in the Richmond and Hampton
Roads areas of Virginia. The purchase price consisted of a cash payment of
$408.6 million to PrimeCo PCS, the assumption of $20 million in lease
obligations, and transfer of the analog assets and licenses of CFW's analog
cellular properties in Harrisonburg, Staunton and Waynesboro, Virginia. CFW will
continue to provide digital communications services and products in these
markets.
In support of the acquisition, Welsh, Carson, Anderson & Stowe ("WCAS") has
invested a total of $200 million and affiliates of Morgan Stanley Dean Witter
have invested $25 million in newly issued preferred equity in the company. WCAS
has also committed to purchase an additional $25 million of preferred equity in
CFW. In connection with the WCAS investment, on July 11, 2000, CFW amended its
Rights Agreement dated February 26, 2000, between CFW and Registrar and Transfer
Company, as Rights Agent.
In addition to the equity investments, CFW has completed $700 million in
debt financing, including $280 million of Senior Notes, $95 million in
Subordinated Notes and a $325 million Senior Credit Facility. From the Senior
Credit Facility, $150 million was borrowed at closing. The remaining $175
million is available to support the continued buildout of the combined
communications network. Proceeds from these debt offerings were used to complete
funding of the acquisition of PrimeCo PCS operations and refinance certain debt
of both CFW and the Virginia and West Virginia PCS Alliances.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Audited financial statements and unaudited interim financial
statements of PrimeCo Personal Communications, L.P., Richmond Major
Trading Area, also referred to as Richmond-Norfolk PCS (incorporated
herein by reference to Exhibit 99.4.2 of CFW's Form 8-K filed on July
10, 2000).
(b) Pro Forma Financial Information.
Unaudited pro forma consolidated financial information of CFW
Communications Company.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The accompanying unaudited pro forma consolidated financial information has
been derived by the application of pro forma adjustments to our historical
consolidated financial statements included elsewhere in this document. The pro
forma adjustments give effect to:
<PAGE>
. the issuance of 3.7 million shares of our common stock for all of the
stock of R&B Communications. This merger has been accounted for using
the purchase method of accounting.
. the acquisition of Richmond-Norfolk PCS for cash of $407.3 million,
our 22% limited partnership interest in RSA 5, the analog assets and
operations of RSA 6 and the assumption of $20.0 million of lease
obligations. This acquisition has been accounted for using the
purchase method of accounting.
. the increase in our common ownership in the Virginia Alliance and West
Virginia Alliance of 70.3% and 34.3%, respectively, and the subsequent
consolidation (entities were previously accounted for on the equity
method) due to:
-- our merger with R&B Communications, which owns approximately
20.8% and 34.3% of the common interests of the Virginia Alliance
and the West Virginia Alliance, respectively;
-- the Virginia Alliance's redemption of its Series A preferred
membership interests for $16.8 million; and
-- the conversion by us and R&B Communications of our respective
Series B preferred membership interests in the Virginia Alliance
into common interests.
The increase in our common ownership interests in the Alliances has
been accounted for as a step acquisition.
. the sale of the capital stock of CFW Information Services Inc., the
provider of our directory assistance services.
. the adjustment to rental expense, depreciation expense and the
amortization of deferred gain associated with the sale and leaseback
of certain communications tower sites.
. the like-kind exchange of certain WCS licenses for certain AT&T PCS
licenses, which has no effect on the pro forma balance sheet or
statement of operations.
. the sale of $375 million of debt securities in a private placement and
the closing of a new senior credit facility.
. the sale of our Series B, Series C and Series D Preferred Stock for
gross proceeds of $250.0 million.
. the repayment of substantially all of our existing indebtedness and
that of the Alliances.
. the payment of fees and expenses related to the Transactions.
The term "Transactions" refers to:
. the issuance and sale of $375 million of debt securities in a private
placement;
. the anticipated borrowings under the new senior credit facility;
. the repayment of our existing senior indebtedness;
. the sale and issuance of our Series B, Series C and Series D Preferred
Stock;
. our acquisition of Richmond-Norfolk, PCS;
<PAGE>
. our merger with R&B Communications;
. our acquisition of PCS licenses from AT&T and disposition of WCS
licenses to AT&T;
. our consolidation of the Virginia Alliance and the West Virginia
Alliance;
. our dispositions of RSA 5 and RSA 6; and
. our disposition of our directory assistance operations.
Our unaudited pro forma consolidated balance sheet as of March 31, 2000 has
been prepared as if the Transactions had occurred on that date. The unaudited
pro forma consolidated statements of operations for the periods presented give
effect to the Transactions as if they had occurred January 1, 1999. The
adjustments, which are based upon available information and upon certain
assumptions that we believe are reasonable, are described in the accompanying
notes. The actual allocation of these adjustments will be different and the
difference may be material.
The unaudited pro forma consolidated financial statements should not be
considered indicative of actual results that would have been achieved had the
Transactions been consummated on the date or for the periods indicated and do
not purport to indicate balance sheet data or results of operations as of any
future date or for any future period.
The unaudited pro forma consolidated financial information should be read
in conjunction with the historical financial statements and the notes thereto
included elsewhere in this document.
<PAGE>
CFW COMMUNICATIONS COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
as of March 31, 2000
(in thousands)
<TABLE>
<CAPTION>
Acquisitions
------------------------------------------
Richmond - West
---------- ----
Norfolk Virginia Virginia Pro
------- -------- -------- ---
CFW PCS R&B Alliance Alliance Pro Forma Forma As
--- --- --- -------- -------- --------- --------
Historical Historical Historical Historical Historical Adjustments (a) Adjusted
--------- ---------- ---------- ---------- ---------- --------------- --------
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
Current assets
Cash and cash equivalents ..... $ 311 $ 269 $ 9,421 $ 65 $ 15,071 $ 34,145 $ 59,282
Accounts receivable, net ...... 14,091 4,568 2,389 2,032 1,601 (3,230) 21,451
Other receivables ............. 5,841 316 2,681 -- -- 4,650 13,488
Inventories, materials and
supplies ..................... 960 94 266 9,098 767 (57) 11,128
Prepaid expenses and other .... 882 859 176 429 55 -- 2,401
--------- --------- --------- --------- --------- --------- ---------
Total current assets .......... 22,085 6,106 14,933 11,624 17,494 35,508 107,750
Restricted cash ................. -- -- -- -- -- 69,121 69,121
Securities and investments ...... 36,949 -- 17,583 -- -- 2,123 56,655
Subordinated capital
certificates ................... -- -- -- 4,529 2,518 (7,047) --
Property and equipment, net ..... 129,148 133,659 25,125 99,382 42,975 (8,556) 421,733
Other assets
Cost in excess of net assets of
business acquired ............ 23,956 -- -- -- -- 528,220 552,176
Other ......................... 8,471 559 2,435 837 3,271 17,653 33,226
--------- --------- --------- --------- --------- --------- ---------
Total other assets ........... 32,427 559 2,435 837 3,271 545,873 585,402
--------- --------- --------- --------- --------- --------- ---------
Total assets ................. $ 220,609 $ 140,324 $ 60,076 $ 116,372 $ 66,258 $ 637,022 $1,240,661
========= ========= ========= ========= ========= ========= =========
<CAPTION>
LIABILITIES AND
SHAREHOLDERS'
EQUITY
(DEFICIT)
<S> <C> <C> <C> <C> <C> <C> <C>
Current
liabilities
Accounts payable .............. $ 8,601 $ 2,645 $ 559 $ 5,659 $ 6,353 $ (216) $ 23,601
Current portion of long-term
debt and capital lease
obligations .................. -- 3,857 312 -- -- -- 4,169
Current portion of recognized
losses in PCS ventures ....... -- -- 1,318 -- -- (1,318) --
Other accrued liabilities ..... 11,294 6,688 1,004 5,607 1,600 (679) 25,514
--------- --------- --------- --------- --------- --------- ---------
Total current liabilities .... 19,895 13,190 3,193 11,266 7,953 (2,213) 53,284
Long-term debt .................. 44,362 -- 7,466 116,119 51,547 302,760 522,254
Capital lease obligations ....... -- 18,838 -- -- -- -- 18,838
Long-term liabilities
Deferred income taxes ......... 27,684 -- 8,737 -- -- 5,297 41,718
Retirement benefits ........... 11,155 -- -- -- -- (195) 10,960
Long-term portion of
recognized losses in PCS
ventures ..................... -- -- 5,130 -- -- (5,130) --
Other ......................... 2,962 2,933 1,945 9,363 10,847 -- 28,050
--------- --------- --------- --------- --------- --------- ---------
Total long-term liabilities .. 41,801 2,933 15,812 9,363 10,847 (28) 80,728
--------- --------- --------- --------- --------- --------- ---------
Minority interests .............. 1,847 -- -- -- -- (1,543) 304
Series A preferred redeemable
membership interests ............ -- -- -- 15,410 -- (15,410) --
Series B redeemable preferred
stock ........................... -- -- -- -- -- 106,670 106,670
Series C redeemable preferred
stock ........................... -- -- -- -- -- 130,795 130,795
Shareholders' equity
(deficit)/members' equity
(deficit) ....................... 112,704 105,363 33,605 (35,786) (4,089) 115,991 327,788
--------- --------- --------- --------- --------- --------- ---------
Total liabilities and
shareholders' equity ............ $ 220,609 $ 140,324 $ 60,076 $ 116,372 $ 66,258 $ 637,022 $1,240,661
========= ========= ========= ========= ========= ========= =========
</TABLE>
<PAGE>
CFW COMMUNICATIONS COMPANY
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
The pro forma financial data have been derived by the application of pro forma
adjustments to our historical financial statements as of the date noted.
(a) Pro forma adjustments to the Pro Forma Consolidated Balance Sheet are
summarized in the following table (in thousands) and are described in the notes
that follow.
<TABLE>
<CAPTION>
Acquisition Disposition
Transaction Repayment Alliance of of
Fees and of Existing Merger with Step Richmond - Directory Total Net
Financing(1) Expenses(2) Debt(3) R&B(4) Acquisition(5) Norfolk PCS(6) Assistance(7) Adjustment
------------ ----------- ----------- ----------- -------------- -------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and cash
equivalents ........ $ 701,987 $ (40,075) $(192,486) $ (1,300) $ (16,848) $(436,937) $ 19,804 $ 34,145
Accounts receivable,
net ................ -- -- -- -- -- (1,212) (2,018) (3,230)
Other receivables .... -- 3,423 143 -- -- -- 1,084 4,650
Inventories, materials
and supplies ....... -- -- -- -- -- -- (57) (57)
Restricted cash ...... 69,121 -- -- -- -- -- -- 69,121
Securities and
investments ........ -- -- -- (959) 1,182 (596) 2,496 2,123
Subordinated capital
certificates ....... -- -- (7,047) -- -- -- -- (7,047)
Property and equipment,
net ................ -- -- -- -- -- (2,724) (5,832) (8,556)
Cost in excess of net
assets of business
acquired ........... -- 4,500 -- 109,650 33,683 380,387 -- 528,220
Debt issuance
costs .............. -- 18,025 (368) -- -- -- (4) 17,653
Accounts payable ..... -- -- -- -- -- (125) (91) (216)
Current portion of
recognized losses in
PCS ventures ....... -- -- -- -- (1,318) -- -- (1,318)
Other accrued
liabilities ........ -- -- (274) 1,250 -- (274) (1,381) (679)
Long-term debt ....... 502,019 -- (199,259) -- -- -- -- 302,760
Deferred income
taxes .............. -- -- -- -- -- 5,835 (538) 5,297
Retirement benefits .. -- -- -- -- -- -- (195) (195)
Long-term portion of
recognized losses in
PCS ventures........ -- -- -- -- (5,130) -- -- (5,130)
Minority interests ... -- -- -- (959) -- (584) -- (1,543)
Redeemable Series A
preferred membership
interests .......... -- -- -- -- (15,410) -- -- (15,410)
Series B redeemable
preferred stock .... 110,608 (3,938) -- -- -- -- -- 106,670
Series C redeemable
preferred stock .... 135,607 (4,812) -- -- -- -- -- 130,795
Shareholders' equity
(deficit)/members'
interests/
(deficit) .......... 22,874 (5,377) (225) 107,100 39,875 (65,934) 17,678 115,991
</TABLE>
(1) The adjustments relate to this offering, the new senior credit facility and
the sale of our preferred stock as follows (in thousands):
Senior secured Term Loans B and C ............. $150,000
Senior notes offered hereby (i), (ii) ......... 276,108
Subordinated notes due 2011 (iii) ............. 95,000
New preferred stock(iv) ....................... 250,000
--------
Total financing ............................... $771,108
========
<PAGE>
(i) Approximately $69.1 million will be placed in escrow and will be used
to fund the first four interest payments on the notes.
(ii) The issuance of $280.0 million principal amount of senior notes and
warrants to purchase 504,000 shares of common stock for $276.1
million in cash will be allocated as $269.2 million debt and $6.9
million common equity.
(iii) The issuance of $95.0 million principal amount of subordinated notes
and warrants to purchase 300,000 shares of common stock for $95.0
million in cash will be allocated as $82.8 million debt and $12.2
million common equity.
(iv) The issuance of $250.0 million of our preferred stock and warrants to
purchase 500,000 shares of common stock will be allocated as $246.2
million preferred equity and $3.8 million common equity.
(2) The portion of estimated cash expenses attributable to our new senior
credit facility and the notes totals $18.0 million and will be recorded as
deferred financing costs and will be amortized over the expected life of
the debt to be issued. Such estimated debt issuance costs include estimated
fees and expenses payable to banks, placement agents, outside professionals
and related advisors. Additionally, $4.5 million of estimated transaction
expenses have been recorded as goodwill related to the merger with R&B
Communications and the acquisition of Richmond-Norfolk PCS. The remaining
$17.6 million of estimated cash expenses represent $8.8 million of costs
associated with the sale of our preferred stock, $5.6 million ($3.4
million, net of $2.2 million tax) of costs associated with a bridge
commitment fee, $2.4 million ($1.5 million, net of $.9 million tax) of
costs associated with one-time transaction expenses and $.8 million ($.5
million, net of $.3 million tax) of costs associated with the debt
prepayment premium.
(3) The adjustments include the repayment of existing indebtedness and related
accrued interest and the write-off of capitalized debt issuance costs of
the combined companies as follows (in thousands):
CFW ................................ $42,972
Virginia Alliance................... 104,740
West Virginia Alliance.............. 51,547
-----------
Debt to be refinanced.......... 199,259
Subordinated capital certificates... (7,047)
Accrued interest.................... 274
-----------
Total use of cash.............. $192,486
===========
The related unamortized deferred loan costs of $368,000 ($225,000, net of
$143,000 tax) related to the existing indebtedness of the combined
companies will be written off as an extraordinary charge upon the repayment
of existing indebtedness.
(4) Represents the merger with R&B Communications for 3.7 million of our common
shares at $37.86 per share (the average of our closing common stock price
for the two days prior to announcement and two days subsequent to
announcement). The actual number of shares to be issued in the merger is
based on the exchange ratio of 60.27 of our shares to one share of R&B
Communications. The adjustment to common equity and the excess of the
estimated purchase price over the estimated fair value of the net
identifiable assets acquired is as follows (in thousands):
Fair value of CFW common stock issued........ $140,705
Less: R&B Communications, net assets......... 33,605
--------
Net adjustment to common equity......... 107,100
Transaction expenses......................... 1,300
Covenant not to compete...................... 1,250
--------
Net adjustment to goodwill.............. $109,650
========
We have preliminarily referred to the excess of the estimated purchase
price over the estimated fair value of the net identifiable assets acquired
as goodwill. The final allocation of the excess purchase price over net
identifiable assets, to be determined by an independent appraiser
subsequent to close, will include, if
<PAGE>
CFW COMMUNICATIONS COMPANY
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET, Continued
applicable, recognition of adjustments of the tangible assets and
liabilities to their fair values, the fair value of identifiable intangible
assets, including FCC licenses, intellectual property and residual
goodwill. We have assumed an average amortization period of 20 years for
goodwill for illustrative purposes.
The adjustment also eliminates the $959,000 investment held by us in
certain R&B PCS licenses.
(5) Represents the purchase accounting adjustments necessary to reflect the
consolidation of the Virginia and West Virginia Alliances. A controlling
interest in the Alliances will be obtained through (i) the merger with R&B
Communications, (ii) the contribution of additional common equity capital
to the Virginia Alliance and the related redemption of Series A preferred
membership interests, and (iii) the conversion of our and R&B
Communications' Series B preferred membership interests into common
membership interests. Following these transactions, we will own
approximately 91.1% and 78.9% of the Virginia Alliance and the West
Virginia Alliance, respectively. The adjustment to the excess of the
estimated purchase price over the estimated fair value of the net
identifiable assets acquired is as follows (in thousands):
Cash paid for redemption of Series A preferred stock....... $16,848
Less: Carrying value of Series A preferred stock........... (15,410)
Elimination of negative investment balance................. (7,630)
Elimination of historical net equity deficit of Alliances. 39,875
-------
Net adjustment to goodwill............................ $33,683
=======
We have preliminarily referred to the excess of the estimated purchase
price over the estimated fair value of the net identifiable assets acquired
as goodwill. The final allocation of the excess purchase price over net
identifiable assets, to be determined by an independent appraiser
subsequent to close, will include, if applicable, recognition of
adjustments of the tangible assets and liabilities to their fair values,
the fair value of identifiable intangible assets, including FCC licenses,
intellectual property and residual goodwill. We have assumed an average
amortization period of 20 years for goodwill for illustrative purposes.
(6) Represents the purchase of Richmond-Norfolk PCS for (i) $407.3 million in
cash, (ii) the assumption of $20.0 million of lease obligations, (iii) the
disposition of our 22% interest in RSA 5 and (iv) the disposition of the
analog assets and operations of RSA 6. Prior to consummation of the
Transactions, we will purchase the 15.9% of the RSA 6 membership interest
that we do not own for $10.8 million. The adjustment to the excess of the
estimated purchase price over the estimated fair value of the net
identifiable assets acquired and common equity is as follows (in
thousands):
<PAGE>
CFW COMMUNICATIONS COMPANY
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET, Continued
Cash paid to PrimeCo...................................... $407,250
Fair value of RSA 6 analog assets and operations.......... 75,000
Fair value of 22% of RSA 5................................ 3,500
--------
Total purchase consideration......................... 485,750
Less:
Historical net equity of Richmond-Norfolk PCS............. (105,363)
--------
Net adjustment to goodwill........................... $380,387
========
Fair value of RSA 6 analog assets and operations.......... $75,000
Fair value of 22% of RSA 5................................ 3,500
Less: Book value of RSA 6 and RSA 5....................... (14,340)
---------
Pre-tax gain on disposition of RSA 6 and RSA 5....... 64,160
Cash taxes on gain........................................ (18,896)
Deferred tax liability.................................... (5,835)
Historical net equity of Richmond-Norfolk PCS............. (105,363)
----------
Net adjustment to common equity...................... $ (65,934)
=========
We have preliminarily referred to the excess of the estimated purchase
price over the estimated fair value of the net identifiable assets acquired
as goodwill. The final allocation of the excess purchase price over net
identifiable assets, to be determined by an independent appraiser
subsequent to close, will include, if applicable, recognition of
adjustments of the tangible assets and liabilities to their fair values,
the fair value of identifiable intangible assets, including FCC licenses,
intellectual property and residual goodwill. We have assumed an average
amortization period of 20 years for goodwill for illustrative purposes.
The net adjustment to cash includes the sum of (i) $407.3 million cash paid
to PrimeCo, (ii) $10.8 million paid to acquire the minority interest in RSA
6, and (iii) $18.9 million of cash taxes paid on the gains from disposition
of RSA 6 and RSA 5. The remaining adjustments include the elimination of
the historical assets and liabilities of RSA 6 and the equity interest in
RSA 5.
(7) Includes the disposition of the directory assistance operations to telegate
AG for $35.5 million, consisting of $32.0 million in cash and common stock
of telegate AG with a fair value of $3.5 million. Substantially all of the
assets and liabilities of the business, with the exception of certain land
and buildings, will be sold in the transaction. The net adjustment to
common equity for the gain on the related disposition is as follows (in
thousands):
Cash proceeds.............................. $32,000
Fair value of stock consideration.......... 3,500
-------
Total consideration................... 35,500
Cash taxes on gain......................... (12,196)
Net book value of assets sold.............. (5,626)
--------
Net adjustment to common equity....... $17,678
=======
The net adjustment to cash includes the cash proceeds of $32.0 million,
less $12.2 million of cash taxes paid on the gain on disposition of the
directory assistance operations. The remaining adjustments include the
elimination of the historical assets and liabilities of the directory
assistance operations and the receipt of $3.5 million in stock
consideration.
<PAGE>
CFW COMMUNICATIONS COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the Year Ended December 31, 1999
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Acquisitions
------------------------------------------------
Richmond- West
Norfolk Virginia Virginia
CFW PCS R&B Alliance Alliance Pro Forma Pro Forma
Historical Historical Historical Historical Historical Adjustments As Adjusted
---------- ---------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues:
Wireless communications......... $ 21,692 $ 50,456 $ 1,257 $ 13,377 $ 2,989 $ (14,986)(a) $ 74,785
Wireline communications......... 44,110 -- 14,500 -- -- -- 58,610
Directory assistance............ 12,104 -- -- -- -- (12,104)(a) --
Other communications services... 4,028 -- 1,012 -- -- -- 5,040
-------- --------- -------- --------- --------- --------- ---------
81,934 50,456 16,769 13,377 2,989 (27,090) 138,435
-------- --------- -------- --------- --------- --------- ---------
Operating expenses:
Cost of sales................... 8,143 15,137 -- 5,864 3,065 (5,660)(a) 26,549
Maintenance and support......... 16,609 10,498 4,917 6,638 4,130 (1,099)(a) 41,693
Depreciation and amortization... 12,623 13,866 2,808 7,770 2,068 24,477 (b) 63,612
Asset impairment charge......... 3,951 -- -- -- -- -- 3,951
Customer operations............. 19,870 25,705 2,031 8,685 4,094 (10,576)(a) 49,809
Corporate operations............ 7,216 7,315 2,356 2,517 1,743 (981)(a) 20,166
-------- --------- -------- --------- --------- --------- ---------
68,412 72,521 12,112 31,474 15,100 6,161 205,780
-------- --------- -------- --------- --------- --------- ---------
Operating income (loss)........... 13,522 (22,065) 4,657 (18,097) (12,111) (33,251) (67,345)
Other income (expenses):
Interest expense, net........... (905) (1,462) (348) (8,042) (1,176) (61,693)(c) (73,626)
Net equity income (loss) from
PCS and other wireless
investees..................... (11,186) -- (9,652) -- -- 21,357 (d) 519
Gain/(loss) on sale of assets... 8,318 (806) 252 -- -- -- 7,764
Other income (expense).......... -- (171) -- -- -- 2,291 (e) 2,120
-------- --------- -------- --------- --------- --------- ---------
(3,773) (2,439) (9,748) (8,042) (1,176) (38,045) (63,223)
-------- --------- -------- --------- --------- --------- ---------
Income (loss) before income taxes
and minority interest........... 9,749 (24,504) (5,091) (26,139) (13,287) (71,296) (130,568)
Income taxes (benefit)............ 2,868 -- (917) -- -- (40,614)(f) (38,663)
-------- --------- -------- --------- --------- --------- ---------
Income (loss) before minority
interests....................... 6,881 (24,504) (4,174) (26,139) (13,287) (30,682) (91,905)
Minority interests................ (388) -- -- -- -- 388 (a) --
-------- --------- -------- --------- --------- --------- ---------
Net income (loss)................. $ 6,493 $ (24,504) $ (4,174) $ (26,139) $ (13,287) $ (30,294) $ (91,905)
======== ========= ======== ========= ========= ========= =========
Dividend requirements on preferred
stock........................... -- -- -- -- -- $ 18,598 (g) $ 18,598
========= =========
Income (loss) applicable to common
shares.......................... -- -- -- -- -- -- $ (110,503)
==========
Net loss per common share--basic... -- -- -- -- -- -- $ (6.60)
==========
Average shares outstanding--basic. 16,742
Other Data:
EBITDA(h)....................... 30,096 (8,199) 7,465 (10,327) (10,043) (8,774) 218
Depreciation and amortization... 12,623 13,866 2,808 7,770 2,068 24,477 63,612
Interest expense paid or payable
in cash....................... 905 1,462 685 8,304 1,176 56,743 69,275
Cash flows provided (used in):
Operating activities.......... 31,547 (6,955) 7,680 (22,926) (12,478) (65,768) (68,900)
Investing activities.......... (42,843) (12,455) (5,804) (23,202) (26,306) -- (110,610)
Financing activities.......... 11,452 19,832 (568) 46,132 38,781 -- 115,629
Pro forma deficiency of earnings
to fixed charges.............. (131,087)
</TABLE>
<PAGE>
CFW COMMUNICATIONS COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the Three Months Ended March 31, 1999
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Acquisitions
----------------------------------------------------
Richmond - Virginia West Virginia
CFW Norfolk PCS R&B Alliance Alliance Pro Forma Pro Forma
Historical Historical Historical Historical Historical Adjustments As Adjusted
----------- ---------- ---------- -------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues:
Wireless communications...... $ 5,049 $11,981 $ 344 $ 2,785 $ 233 $ (3,596)(a) $ 16,796
Wireline communications...... 9,802 -- 3,455 -- -- -- 13,257
Directory assistance......... 2,874 -- -- -- -- (2,874)(a) --
Other communications
services................... 1,044 -- 127 -- -- -- 1,171
-------- ------- ------ --------- -------- -------- --------
18,769 11,981 3,926 2,785 233 (6,470) 31,224
-------- ------- ------ --------- -------- -------- --------
Operating expenses:
Cost of sales................ 1,752 4,163 -- 1,726 251 (1,230)(a) 6,662
Maintenance and support...... 3,296 2,689 693 1,341 785 (264)(a) 8,540
Depreciation and
amortization............... 2,811 3,348 670 2,168 268 6,122 (b) 15,387
Asset impairment charge...... -- -- -- -- -- -- --
Customer operations.......... 4,567 7,080 626 1,719 692 (2,549)(a) 12,135
Corporate operations......... 1,650 2,052 577 641 408 (238)(a) 5,090
-------- ------- ------ --------- -------- -------- --------
14,076 19,332 2,566 7,595 2,404 1,841 47,814
-------- ------- ------ --------- -------- -------- --------
Operating income (loss)........ 4,693 (7,351) 1,360 (4,810) (2,171) (8,311) (16,590)
Other income (expenses):
Interest expense, net........ (212) (372) (52) (1,723) (8) (16,045)(c) (18,412)
Net equity income (loss)
from PCS and other
wireless investees......... (2,278) -- (2,045) -- -- 4,453 (d) 130
Gain/(loss) on sale of
assets..................... -- (169) -- -- -- -- (169)
Other income (expense)....... -- -- -- -- -- 573 (e) 573
-------- ------- ------ --------- -------- -------- --------
(2,490) (541) (2,097) (1,723) (8) (11,019) (17,878)
-------- ------- ------ --------- -------- -------- --------
Income (loss) before income
taxes and minority
interest..................... 2,203 (7,892) (737) (6,533) (2,179) (19,330) (34,468)
Income taxes (benefit)......... 774 -- (298) -- -- (11,326)(f) (10,850)
-------- ------- ------ --------- -------- -------- --------
Income (loss) before
minority interests........... 1,429 (7,892) (439) (6,533) (2,179) (8,004) (23,618)
Minority interests............. (89) -- -- -- -- 89 (a) --
-------- ------- ------ --------- -------- -------- --------
Net income (loss).............. $ 1,340 $(7,892) $ (439) $ (6,533) $ (2,179) $ (7,915) $(23,618)
======== ======= ====== ========= ======== ======== ========
Dividend requirements on
preferred stock.............. -- -- -- -- -- $ 4,574 (g) $ 4,574
======== ========
Income (loss) applicable
to common shares............. -- -- -- -- -- -- $ (28,192)
Net loss per common =========
share--basic................. -- -- -- -- -- -- $ (1.69)
=========
Average shares outstanding--
basic........................ -- -- -- -- -- -- 16,722
Other Data:
EBITDA(h).................... 7,504 (4,003) 2,030 (2,642) (1,903) (2,189) (1,203)
Depreciation and
amortization............... 2,811 3,348 670 2,168 268 6,122 15,387
Interest expense paid or
payable in cash............ 212 372 112 1,723 162 14,745 17,326
Cash flows provided
(used in):
Operating activities....... 6,260 (4,049) 621 (7,106) (2,550) (16,997) (23,821)
Investing activities....... (13,659) (607) (2,522) (7,326) (4,485) -- (28,599)
Financing activities....... 7,398 4,799 (324) 14,434 7,035 -- 33,342
Pro forma deficiency of
earnings to fixed
charges.................. (34,598)
</TABLE>
<PAGE>
CFW COMMUNICATIONS COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
for the Three Months Ended March 31, 2000
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Acquisitions
----------------------------------------------------
Richmond- West
Norfolk Virginia Virginia
CFW PCS R&B Alliance Alliance Pro Forma Pro Forma
Historical Historical Historical Historical Historical Adjustments As Adjusted
----------- ---------- ---------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating revenues:
Wireless communications....... $ 5,880 $ 13,330 $ 355 $ 4,789 $ 2,458 $ (3,853)(a) $ 22,959
Wireline communications....... 13,875 -- 3,990 -- -- -- 17,865
Directory assistance.......... 3,332 -- -- -- -- (3,332)(a) --
Other communications
services.................... 856 -- 199 -- -- -- 1,055
-------- -------- ------- -------- --------- -------- ----------
23,943 13,330 4,544 4,789 2,458 (7,185) 41,879
-------- -------- ------- -------- --------- -------- ----------
Operating expenses:
Cost of sales................. 2,367 4,242 -- 2,210 2,167 (1,551)(a) 9,435
Maintenance and support....... 5,877 2,637 1,208 1,981 1,405 (342)(a) 12,766
Depreciation and
amortization................ 3,706 3,111 817 2,075 702 5,872 (b) 16,283
Asset impairment charge....... -- -- -- -- -- -- --
Customer operations........... 5,361 6,886 777 2,392 1,682 (2,572)(a) 14,526
Corporate operations.......... 2,359 1,709 689 775 459 (247)(a) 5,744
-------- -------- ------- -------- --------- -------- ----------
19,670 18,585 3,491 9,433 6,415 1,160 58,754
-------- -------- ------- -------- --------- -------- ----------
Operating income (loss)......... 4,273 (5,255) 1,053 (4,644) (3,957) (8,345) (16,875)
Other income (expenses):
Interest expense, net......... (482) (359) (41) (2,681) (848) (13,995)(c) (18,406)
Net equity income (loss) from
PCS and other wireless
investees................... (3,625) -- (3,080) -- -- 6,838 (d) 133
Gain/(loss) on sale of
assets...................... -- 24 -- -- -- -- 24
Other income (expense)........ -- -- -- -- -- 573 (e) 573
-------- -------- ------- -------- --------- -------- ----------
(4,107) (335) (3,121) (2,681) (848) (6,584) (17,676)
-------- -------- ------- -------- --------- -------- ----------
Income (loss) before income
taxes and minority interest... 166 (5,590) (2,068) (7,325) (4,805) (14,929) (34.551)
Income taxes (benefit).......... 44 -- (842) -- -- (9,120)(f) (9,918)
-------- -------- ------- -------- --------- -------- ----------
Income (loss) before minority
interests..................... 122 (5,590) (1,226) (7,325) (4,805) (5,809) (24,633)
Minority interests.............. (74) -- -- -- -- 74 (a) --
-------- -------- ------- -------- --------- -------- ----------
Net income (loss)............... $ 48 $ (5,590) $ (1,226) $ (7,325) $ (4,805) $ (5,735) $ (24,633
======== ======== ======= ======== ========= ======== ==========
Dividend requirements on
preferred stock............... $ 4,887 (g) $ 4,887
======== =========
Income (loss) applicable to
common shares ................ $ (29,520)
=========
Net loss per common share--
basic......................... $ (1.76)
=========
Average shares outstanding--
basic......................... 16,767
=========
Other Data:
EBITDA(h)..................... 7,979 (2,144) 1,870 (2,569) (3,255) (2,473) (592)
Depreciation and
amortization................ 3,706 3,111 817 2,075 702 5,872 16,283
Interest expense paid or
payable in cash............. 482 359 108 2,681 896 12,793 17,319
Cash flows provided
(used in):
Operating activities........ 5,712 (4,024) 2,025 (5,808) (1,433) (15,329) (18,857)
Investing activities........ (11,157) (1,544) (474) 14,724 14,301 -- 15,850
Financing activities........ 5,558 5,415 (348) (8,915) 2,195 -- 3,905
Pro forma deficiency of
earnings to fixed
charges.................... (34,684)
</TABLE>
<PAGE>
CFW COMMUNICATIONS COMPANY
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The pro forma adjustments to the Statement of Operations exclude $5.6
million ($3.4 million, net of $2.2 million tax) related to a bridge commitment
fee, $368,000 ($225,000, net of $143,000 tax) write-off of deferred loan costs
associated with existing indebtedness, $64.1 million ($39.4 million, net of
$24.7 million tax) gain on disposition of RSA 5 and the analog assets and
operations of RSA 6, $29.9 million ($17.7 million, net of $12.2 million tax)
gain on disposition of the directory assistance operations, $2.4 million ($1.5
million, net of $.9 million tax) of costs associated with one-time transaction
expenses and $.8 million ($.5 million, net of $.3 million tax) of costs
associated with the debt prepayment premium. Such amounts represent
non-recurring items that we anticipate will be recorded in our Consolidated
Statement of Operations primarily during the third and fourth quarters of 2000.
(a) The pro forma adjustments to revenue, cost of goods sold, operating
expenses and minority interest represent (i) the elimination of operating
results associated with the disposition of the analog assets and operations
of RSA 6 and the disposition of the directory assistance operations, (ii)
the elimination of certain intercompany revenues and expenses between
combining companies, and (iii) incremental rent expense associated with the
sale of certain tower assets that occurred in the first quarter of 2000 and
the subsequent leaseback of such tower assets.
(b) The pro forma adjustment to depreciation and amortization expense reflects
(i) the elimination of historical depreciation expense associated with the
sale of certain tower assets that occurred in the first quarter of 2000,
the disposition of RSA 6 and the directory assistance operations, and (ii)
the application of purchase accounting to R&B Communications,
Richmond-Norfolk PCS and the Alliances.
<TABLE>
<CAPTION>
Year Ended
----------
December 31, 1999 Three Months Ended
----------------- ------------------
March 31, 1999 March 31, 2000
----------------- ------------------
(in thousands)
<S> <C> <C> <C>
Historical depreciation elimination:
Tower asset sales............................ $ (759) $ (223) $(403)
RSA 6........................................ (316) (77) (84)
Directory assistance operations.............. (859) (181) (244)
----------- --------- -------
$ (1,934) $ (481) $ (731)
----------- --------- -------
Purchase accounting(1):
R&B Communications........................... $ 5,483 $ 1,371 $1,371
Richmond-Norfolk PCS......................... 19,019 4,755 4,755
Transaction expenses......................... 225 56 56
Alliances.................................... 1,684 421 421
----------- ------- -------
$ 26,411 $ 6,603 $6,603
----------- --------- -------
Total depreciation and amortization expense
adjustment................................... $ 24,477 $ 6,122 $5,872
=========== ========= =======
</TABLE>
-----------
(1) The merger with R&B Communications, the acquisition of
Richmond-Norfolk PCS and the consolidation of the Alliances will be
accounted for as purchases. Under purchase accounting, the total
purchase cost will be allocated to the assets acquired and liabilities
assumed, based on valuations and other studies, as of the date of
acquisition. The actual allocation of purchase cost and the resulting
effect on income from operations may differ significantly from the
estimated pro forma amounts included in this document. For pro forma
purposes, the preliminary goodwill balance is being amortized over 20
years.
(c) The pro forma adjustment to interest expense reflects our new senior credit
facility, senior notes, subordinated notes, retained indebtedness,
amortization of related debt issuance costs and accretion of the debt
discount less the historical interest expense on debt repaid.
<PAGE>
CFW COMMUNICATIONS COMPANY
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS, Continued
A .125% increase or decrease in the assumed interest rate applicable to our
new senior credit facility, senior notes and subordinated notes would
change the pro forma interest expense and income before taxes by $657,000
for the year ended December 31, 1999 and $165,000 for the three months
ended March 31, 2000 and 1999.
(d) Represents the elimination of the equity losses related to the
Alliances, previously recorded by us and R&B Communications. After the
transactions are complete, we will control the Alliances. The Alliances'
income statements will therefore be consolidated with us. See note (5) to
unaudited pro forma balance sheet for further explanation.
(e) Includes (i) rental income earned on the assets excluded from the
disposition of the directory assistance operations, and (ii) amortization
of the deferred gain from the sale and leaseback of certain tower assets.
(f) Includes the tax effect of the pro forma adjustments and the
consolidation of the Alliances and Richmond-Norfolk PCS at the applicable
effective tax rate.
(g) Represents the 8 1/2% per annum dividend on the Series B preferred
stock and the 5 1/2% per annum dividend on the Series C preferred stock,
which both accrete semi-annually, plus the accretion of the discount
related to the 500,000 warrants and transaction expenses related to the
sale of our preferred stock. This calculation assumes shareholder approval.
In the absence of shareholder approval, our Series D preferred stock will
remain outstanding, which would result in total preferred dividends of
$30.7 million for the year ended December 31, 1999 and $8.4 million and
$7.4 million for the three months ended March 31, 2000 and 1999,
respectively. See "Certain Transactions" for a discussion of our preferred
stock.
(h) EBITDA is defined, for any period, as earnings before income taxes and
minority interest, interest expense, interest income, depreciation and
amortization, gain (loss) on sale of fixed assets, net equity income (loss)
from investees and asset impairment charges. EBITDA should not be construed
as an alternative to operating income or cash flows from operating
activities, both of which are determined in accordance with generally
accepted accounting principles, or as a measure of liquidity. Because it is
not calculated under generally accepted accounting principles, our EBITDA
may not be comparable to similarly titled measures used by other companies.
Pro forma EBITDA is calculated as follows:
<TABLE>
<CAPTION>
Year Ended
----------
December 31, 1999 Three Months Ended
----------------- --------------------
March 31, March 31,
--------- ---------
1999 2000
---- ----
(in thousands)
<S> <C> <C> <C>
Pro forma net loss before income taxes and minority
interest.............................................. $ (130,568) $(34,468) $(34,551)
Adjustments:
Other income........................................ (2,120) (573) (573)
(Gain) loss on sale of fixed assets................. (7,764) 169 (24)
Net equity income from other wireless investees..... (519) (130) (133)
Interest expense, net............................... 73,626 18,412 18,406
Asset impairment charge............................. 3,951 -- --
Depreciation and amortization....................... 63,612 15,387 16,283
------------ --------- ---------
Pro forma EBITDA......................................... $ 218 $ (1,203) $ (592)
============ ========= =========
</TABLE>
<PAGE>
(c) Exhibits.
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
2.1 Asset Exchange Agreement dated as of May 17, 2000 between
Virginia RSA 6 Cellular Limited Partnership and PrimeCo
PCS, L.P. (incorporated herein by reference to Exhibit
10.2 of CFW's Form 8-K filed May 25, 2000)
3.1 Articles of Amendment to the Articles of Incorporation of
CFW to create Senior Cumulative Convertible Preferred
Stock Series B
3.2 Articles of Amendment to the Articles of Incorporation of
CFW to create Senior Cumulative Convertible Preferred
Stock Series C and D
4.1 Senior Notes Indenture dated as of July 26, 2000 between
CFW and The Bank of New York
4.2 Subordinated Notes Indenture dated as of July 26, 2000
between CFW and The Bank of New York
4.3 Warrant Agreement dated as of July 26, 2000 between CFW
and The Bank of New York
4.4 Warrant Agreement dated as of July 26, 2000 between CFW
and WCAS Capital Partners III, L.P.
4.5 Warrant Agreement dated as of July 11, 2000 between CFW
and Welsh, Carson, Anderson & Stowe VIII, L.P. and other
Purchasers as set forth on Schedule I
4.6 Amended and Restated Shareholders Agreement dated as of
July 26, 2000 between CFW and Welsh, Carson, Anderson &
Stowe VIII, L.P. and Welsh, Carson, Anderson & Stowe IX,
L.P., and other Persons as listed on the signature page
4.7 Amendment No. 1 to the Rights Agreement, dated as of
February 26, 2000, between CFW and Registrar and Transfer
Company
23.1 Consent of PricewaterhouseCoopers LLP
99.1 Press Release dated July 25, 2000 regarding the private
sale of Senior Notes and Subordinated Notes
99.2 Press Release dated July 26, 2000 regarding the
acquisition of PrimeCo's PCS licenses, assets and
operations in the Richmond and Hampton Roads areas of
Virginia
<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.
CFW COMMUNICATIONS COMPANY
(Registrant)
By: /s/ Michael B. Moneymaker
-----------------------------------------
Michael B. Moneymaker
Senior Vice President and Chief Financial
Officer, Treasurer and Secretary
Date: August 4, 2000
