SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 10 or 15(d) of the
Securities Exchange Act of 1934
November 15, 1996
------------------------------------------------
Date of Report (date of earliest event reported)
NETWORK LONG DISTANCE, INC.
-----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-23172 77-1122018
- --------------- ----------- -------------------
(State or Other (Commission (IRS Employer Iden-
Jurisdiction of File Number) tification Number)
Incorporation)
525 Florida Street
Baton Rouge, Louisiana 70801
--------------------------------------
(Address of Principal Executive Offices
Including Zip Code)
(504) 343-3125
------------------------------
(Registrant's telephone number,
including area code)
Page 1 of 12.
<PAGE>
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited Financial Statements of United Wats, Inc.*
Item 7(a)
* previously filed
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<PAGE>
(b) Pro Forma Financial Information.
Item 7(b)
PRO FORMA COMBINING FINANCIAL STATEMENTS
The following unaudited Pro Forma Combining Balance Sheet as of September 30,
1996, and unaudited Pro Forma Combining Income Statements for the six
months ended September 30, 1996 and 1995, and years ended March 31, 1996 and
1995, illustrate the effect of a proposed merger with United Wats, Inc.
(United Wats) and the acquisition of a segment of the customer base and
related accounts receivable of Universal Network Services, Inc. (UniNet) as
of May 31, 1996. Network Long Distance, Inc. (the Company) merged with
United Wats on November 15, 1996. The Company issued approximately 2,278,000
shares of common stock for all of the outstanding shares of United Wats in a
transaction accounted for as a pooling-of-interests. The Company acquired the
UniNet customer base and accounts receivable for cash of approximately
$3,628,000 and the issuance of approximately 244,000 shares of restricted
common stock, of which approximately 49,000 shares are held in escrow, in a
transaction accounted for as a purchase of a business. The United Wats and
UniNet acquisitions are collectively referred to as the Acquisitions. The
Pro Forma Combining Balance Sheet assumes that the Acquisitions occurred on
the date the balance sheet is presented. The Pro Forma Combining Income
Statements assume that the Acquisitions occurred at the beginning of the
earliest period presented.
United Wats, prior to the proposed merger, and UniNet, prior to the
purchase, both utilized a December 31 fiscal year end. For purposes of the Pro
Forma Combining Financial Statements for the years ended March 31, 1996 and
1995, United Wats and UniNet amounts reflect historical results of
operations for these entities for the years ended December 31, 1995 and
1994. For purposes of the Pro Forma Combining Financial Statements for the
six months ended September 30, 1995, United Wats and UniNet amounts reflect
historical results of operations for these entities for the six months
ended June 30, 1995. The Pro Forma Combining Financial Statements for the
six months ended September 30, 1996, reflect a change in fiscal year end to
March 31 for United Wats. As a result, the Pro Forma Combining
Financial Statements for the six months ended September 30, 1996, represent
historical results of operations for United Wats and UniNet for the six
months ended September 30, 1996.
The Pro Forma Combining Financial Statements are presented for comparative
purposes only and are not intended to be indicative of actual results had
the transaction occurred as of the dates indicated above nor do they
purport to indicate results which may be attained in the future.
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<PAGE>
NETWORK LONG DISTANCE
PRO FORMA COMBINING BALANCE SHEET <F1>
As of September 30, 1996
<TABLE>
<CAPTION>
Network/
United Wats
Network United Wats Pro Forma Pro Forma
Historical Historical Adjustments Combined
<F2> <F3>
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Current assets $ 9,095,476 $4,321,365 $ - $13,416,841
Property and equipment,
net 1,784,243 98,953 - 1,883,196
Customer acquisition costs,
net 8,599,965 - - 8,599,965
Goodwill, net 4,744,781 - - 4,744,781
Other intangibles, net 373,297 - - 373,297
Other assets 713,406 - - 713,406
---------- ---------- ---------- ----------
Total assets $25,311,168 $ 4,420,318 $ - $29,731,486
========== ========== ========== ==========
Current liabilities $ 5,548,941 $ 2,772,511 $ - $ 8,321,452
Deferred tax liability - 374,528 - 374,528
Long-term debt 4,572,598 - - 4,572,598
Capital lease obligation 57,629 - - 57,629
Stockholders' equity:
Series A preferred stock - - - -
Common stock 449 20,000 (19,772)<F4> 673
Additional paid-in
capital 14,723,199 46,265 19,772<F4> 14,789,232
Retained earnings 408,352 1,299,304 - 1,707,656
Treasury Stock - (92,290) - (92,290)
---------- ---------- ---------- ----------
Total stockholders'
equity 15,132,000 1,273,279 - 16,405,279
---------- ---------- ---------- ----------
Total liabilities and
stockholders' equity $25,311,168 $ 4,420,318 $ - $29,731,486
========== ========== ========== ==========
</TABLE>
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<PAGE>
NETWORK LONG DISTANCE
PRO FORMA COMBINING INCOME STATEMENT <F1>
For the Six Months Ended September 30, 1996
<TABLE>
<CAPTION>
Network/
Network/ UniNet/
UniNet United Wats
Network UniNet Pro Forma Pro Forma United Wats Pro Forma Pro Forma
Historical Historical Adjust- Combined Historical Adjust- Combined
<F5> <F6> ments <F10> ments
-------- -------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $20,196,965 $2,375,000 $(791,659) <F7> $21,780,306 $9,396,711 $ - $31,177,017
Operating Expenses:
Telecommunications
costs 13,761,456 1,775,000 (591,661) <F7> 14,944,795 6,938,285 - 21,883,080
Selling, general
and administrative 4,858,299 827,000 - <F7> 5,685,299 1,737,378 - 7,422,677
Provision for losses
on accounts
receivable 543,007 49,000 (16,333) <F7> 575,674 - - 575,674
Depreciation and
amortization 845,562 148,000 (148,000) <F7> 845,562 15,000 - 860,562
90,985 <F8>
--------- --------- --------- --------- --------- --------- ---------
Total 20,008,324 2,799,000 (665,009) 22,142,315 8,690,663 - 30,832,978
--------- --------- --------- --------- --------- --------- ---------
Operating income(loss) 188,641 (424,000) (126,650) (362,009) 706,048 - 344,039
Interest income
(expense), net (254,865) 76,000 (76,000) <F7> (254,865) 50,574 - (204,291)
Other income (loss) - - (86,165) <F9> (86,165) - - (86,165)
--------- --------- --------- --------- --------- --------- ---------
Income before income
taxes (66,224) (348,000) (288,815) (703,039) 756,622 - 53,583
(Provision) benefit for
income taxes (94,731) - - <F11> (94,731) (106,688) - (201,419)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) (160,955) (348,000) (288,815) (797,770) 649,934 - (147,836)
Pro forma
tax adjustment (4,700) - - (4,700) - - (4,700)
--------- --------- --------- --------- --------- --------- ---------
$(165,655) $(348,000) $(288,815) $(802,470) $ 649,934 $ - $(152,536)
========= ========= ========= ========= ========= ========= =========
Number of shares issued
and outstanding <F12>:
Primary 3,782,807 3,814,415 6,092,192
========= ========= ==========
Fully Diluted 3,782,807 3,814,415 6,092,192
========= ========= ==========
Earnings per share:
Primary $(0.04) $(0.21) $(0.02)
========= ========= ==========
Fully Diluted $(0.04) $(0.21) $(0.02)
========= ========= ==========
Pro forma earnings
per share:
Primary $(0.04) $(0.21) $(0.03)
========= ========= ==========
Fully Diluted $(0.04) $(0.21) $(0.03)
========= ========= ==========
</TABLE>
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<PAGE>
NETWORK LONG DISTANCE
PRO FORMA COMBINING INCOME STATEMENT <F1>
For the Six Months Ended September 30, 1996
<TABLE>
<CAPTION>
Network/
Network/ UniNet/
UniNet United Wats
Network UniNet Pro Forma Pro Forma United Wats Pro Forma Pro Forma
Historical Historical Adjust- Combined Historical Adjust- Combined
<F10> ments <F10> ments
-------- -------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $15,903,736 $3,856,886 $(1,285,629) <F7> $18,474,993 $3,916,032 $ - $22,391,025
Operating Expenses:
Telecommunications
costs 11,969,747 3,065,636 (1,021,879) <F7> 14,013,504 2,706,121 - 16,719,625
Selling, general
and administrative 3,090,098 1,705,470 - <F7> 4,795,568 892,528 - 5,688,096
Provision for losses
on accounts
receivable 174,296 552,581 (184,194) <F7> 542,683 - - 542,683
Depreciation and
amortization 388,349 412,440 (412,440) <F7> 388,349 12,355 - 400,704
(181,969) <F8>
--------- --------- --------- --------- --------- --------- ---------
Total 15,622,490 5,736,127 (1,800,482) 19,558,135 3,611,004 - 23,169,139
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss) 281,246 (1,879,241) 514,853 (1,083,142) 305,028 - (778,114)
Interest income
(expense), net (68,725) (300,970) 300,970 <F7> (241,055) (11,053) - (252,108)
(172,330) <F9>
Other income (loss) 22,827 - - 22,827 9,400 - 32,227
--------- --------- --------- --------- --------- --------- ---------
Income before income
taxes 235,348 (2,180,211) 643,493 (1,301,370) 303,375 - (997,995)
(Provision) benefit
for income taxes (40,968) 800 (800) <F11> (40,968) (127,155) - (168,123)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) 194,380 (2,179,411) 642,693 (1,342,338) 176,220 - (1,166,118)
Pro forma
tax adjustment (60,145) - - (60,145) - - (60,145)
--------- --------- --------- --------- --------- --------- ---------
$ 134,235 $(2,179,411) $ 642,693 $(1,402,483) $ 176,220 $ - $(1,226,263)
========= ========= ========= ========= ========= ========= =========
Number of shares issued
and outstanding <F12>:
Primary 2,784,805 2,540,146 4,817,923
========= ========= =========
Fully Diluted 2,784,805 2,540,146 4,817,923
========= ========= =========
Earnings per share:
Primary $0.07 $(0.53) $(0.24)
========= ========= =========
Fully Diluted $0.07 $(0.53) $(0.24)
========= ========= ==========
Pro forma earnings
per share:
Primary $0.05 $(0.55) $(0.25)
========= ========= =========
Fully Diluted $0.05 $(0.55) $(0.25)
========= ========= =========
</TABLE>
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<PAGE>
NETWORK LONG DISTANCE
PRO FORMA COMBINING INCOME STATEMENT <F1>
For the Twelve Months Ended March 31, 1996
<TABLE>
<CAPTION>
Network/
Network/ UniNet/
UniNet United Wats
Network UniNet Pro Forma Pro Forma United Wats Pro Forma Pro Forma
Historical Historical Adjust- Combined Historical Adjust- Combined
<F10> ments <F10> ments
--------- --------- -------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $34,273,486 $9,307,000 $(3,102,302) <F7> $40,478,184 $10,425,705 $ - $50,903,889
Operating Expenses:
Telecommunications
costs 24,810,691 10,888,500 (3,629,464) <F7> 32,069,727 7,737,530 - 39,807,257
Selling, general
and administrative 7,133,456 5,055,300 - <F7> 12,188,756 1,902,817 - 14,091,573
Provision for losses
on accounts
receivable 1,047,151 489,100 (163,017) <F7> 1,373,234 65,000 - 1,438,234
Depreciation and
amortization 1,211,717 815,000 (815,000) <F7> 1,575,655 35,109 - 1,610,764
363,938 <F8>
--------- --------- --------- --------- --------- --------- ---------
Total 34,203,015 17,247,900 (4,243,543) 47,207,372 9,740,456 - 56,947,828
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss) 70,471 (7,940,900) 1,141,241 (6,729,188) 685,249 - (6,043,939)
Interest income
(expense), net (239,855) (451,700) 451,700 <F7> (584,515) (20,543) - (605,058)
(344,660) <F9>
Other income (loss) 40,215 (305,300) 305,300 <F7> 40,215 62,233 - 102,448
--------- --------- --------- --------- --------- --------- ---------
Income before income
taxes (129,169) (8,697,900) 1,553,581 (7,273,488) 726,939 - (6,546,549)
(Provision) benefit
for income taxes 69,031 (20,000) 20,000 <F11> 69,031 (292,304) - (223,273)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) (60,138) (8,717,900) 1,573,581 (7,204,457) 434,635 - (6,769,822)
Pro forma
tax adjustment (126,375) - - (126,375) - - (126,375)
--------- --------- --------- --------- --------- --------- ---------
$(186,513) $(8,717,900) $1,573,581 $(7,330,832) $ 434,635 $ - $(6,896,197)
========= ========= ========= ========= ========= ========= =========
Number of shares issued
and outstanding <F12>:
Primary 3,068,151 3,263,157 5,540,934
========= ========= =========
Fully Diluted 3,068,151 3,263,157 5,540,934
========= ========= =========
Earnings per share:
Primary $(0.02) $(2.21) $(1.22)
========= ========= =========
Fully Diluted $(0.02) $(2.21) $(1.22)
========= ========= =========
Pro forma earnings
per share:
Primary $(0.06) $(2.25) $(1.24)
========= ========= =========
Fully Diluted $(0.06) $(2.25) $(1.24)
========= ========= =========
</TABLE>
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<PAGE>
NETWORK LONG DISTANCE
PRO FORMA COMBINING INCOME STATEMENT <F1>
For the Twelve Months Ended March 31, 1995
<TABLE>
<CAPTION>
Network/
Network/ UniNet/
UniNet United Wats
Network UniNet Pro Forma Pro Forma United Wats Pro Forma Pro Forma
Historical Historical Adjust- Combined Historical Adjust- Combined
<F10> ments <F10> ments
--------- ---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $27,006,864 $4,170,300 $(1,390,086) <F7> $29,787,078 $2,367,989 $ - $32,155,067
Operating Expenses:
Telecommunications
costs 21,147,295 2,543,000 (847,658) <F7> 22,842,637 676,350 - 23,518,987
Selling, general
and administrative 4,481,600 2,251,400 - <F7> 6,733,000 1,170,503 - 7,903,503
Provision for losses
on accounts
receivable 396,814 327,400 109,122 <F7> 833,336 6,500 - 839,836
Depreciation and
amortization 371,688 864,500 (500,562) <F8> 735,626 24,973 - 760,599
--------- --------- --------- --------- --------- --------- ---------
Total 26,397,397 5,986,300 (1,239,098) 31,144,599 1,878,326 - 33,022,925
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss) 609,467 (1,816,000) (150,988) (1,357,521) 489,663 - (867,858)
Interest income
(expense), net 91,875 (230,200) 230,200 <F7> (252,786) (34,783) - (287,569)
(344,661) <F9>
Other income (loss) (30,142) (1,338,700) 1,338,700 <F7> (30,142) 8,388 - (21,754)
--------- --------- --------- --------- --------- --------- ---------
Income before income
taxes 671,200 (3,384,900) 1,073,251 (1,640,449) 463,268 - (1,177,181)
(Provision) benefit
for income taxes (118,743) (8,000) 8,000 <F11> (118,743) (148,211) - (266,954)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) 552,457 (3,392,900) 1,081,251 (1,759,192) 315,057 - (1,444,135)
Pro forma
tax adjustment (28,685) - - (28,685) - - (28,685)
--------- --------- --------- --------- --------- --------- ---------
$ 523,772 $(3,392,900) $1,081,251 $(1,787,877) $ 315,057 $ - $(1,472,820)
========= ========= ========= ========= ========= ========= =========
Number of shares issued
and outstanding <F12>:
Primary 2,708,057 2,903,063 5,180,840
========= ========= =========
Fully Diluted 2,708,057 2,903,063 5,180,840
========= ========= =========
Earnings per share
Primary $0.20 $(0.61) $(0.28)
========= ========= =========
Fully Diluted $0.20 $(0.61) $(0.28)
========= ========= =========
Pro forma earnings
per share:
Primary $0.19 $(0.62) $(0.28)
========= ========= =========
Fully Diluted $0.19 $(0.62) $(0.28)
========= ========= =========
</TABLE>
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<PAGE>
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
1. The adjustments to the unaudited Pro Forma Combining Financial
Statements do not give effect to direct transaction costs or any
resulting restructuring costs associated with the consummation of the
Acquisitions nor do these statements give effect to any potential
costs savings and synergies that could result from the Acquisitions.
The unaudited Pro Forma Combining Financial Statements are not
necessarily indicative of the operating results or financial position
that would have occurred had the Acquisitions been consummated at the
dates indicated nor necessarily indicative of future operating results
or financial position.
2. Represents the historical carrying value of the assets and liabilities
of Network as of September 30, 1996 which includes the effects of the
purchase of UniNet effective May 31, 1996.
3. Represents the historical carrying value of the assets and liabilities
of United Wats as of September 30, 1996.
4. These adjustments represent the restatement of common stock and
additional paid in capital to reflect the merger of the Company with
United Wats. The Company issued approximately 2,278,000 shares
of common stock in connection with the merger.
5. Represents the historical results of operations of the Company for the
six months ended September 30, 1996, which includes the results of
operations of UniNet for the months of June through September 1996
because the UniNet acquisition was not effective until May 31, 1996.
6. Represents the historical results of operations of UniNet for April
and May 1996.
7. Represents the elimination of UniNet's revenue and expenses for that
portion of the business not acquired by the Company. The Company
purchased a portion of UniNet's customer base which accounts for
approximately 67% of UniNet's monthly revenues and telecommunications
costs at the time of the acquisition. For purposes of the Pro Forma
Combining Financial Statements, the Company has assumed that certain
selling, general and administrative costs are directly attributable to
the customer base, and as such, are reflected as acquired by the
Company. The Company has estimated that the same percentage of
revenues and direct costs purchased is applicable for all periods
presented.
8. Represents the amortization expense of the incremental excess of cost
over net tangible assets acquired which is amortized using the
straight-line method over 7.5 and 30 years, respectively, for the
excess allocated to customer acquisition costs and goodwill.
9. This adjustment represents the interest expense on the borrowings from
the Company's credit facility to pay the cash portion of the UniNet
purchase price. The Company's incremental borrowing rate on the
credit facility is prime plus one. For purposes of the Pro Forma
Combining Income Statements, the Company is assuming an annual rate of
9.5% for all periods presented.
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<PAGE>
10. Represents the historical results of operations of the applicable
entity for the period presented. Prior to the proposed merger of
United Wats and the purchase of UniNet these entities utilized a
December 31 fiscal year end. For purposes of the Pro Forma Combining
Financial Statements for the years ended March 31, 1996 and 1995, the
United Wats and UniNet amounts reflect historical results of
operations for these entities for the years ended December 31, 1995
and 1994. For purposes of the Pro Forma Combining Financial
Statements for the six months ended September 30, 1995, the United Wats
and UniNet amounts reflect historical results of operations for these
entities for the six months ended June 30, 1995. For purposes of the
Pro Forma Combining Financial Staements for the six months ended
September 30, 1996, the United Wats amounts reflect historical results
of operations for this entity for the six months ended September 30,
1996.
11. This adjustment eliminates the taxes previously recorded by UniNet.
For purposes of the Pro Forma Combining Financial Statements, no
additional tax benefit will be reflected for the losses sustained by
the UniNet operation.
12. The pro forma share data are based on the Company's historical
weighted average shares outstanding as calculated for primary and
fully diluted earnings per share with pro forma amounts being adjusted
to reflect the effect of the issuance of approximately 195,000
restricted common shares in connection with the UniNet acquisition and
2,278,000 restricted common shares in connection with the proposed
United Wats acquisition. Pro Forma share data excludes approximately
49,000 common shares held in escrow as part of the UniNet acquisition
because these shares are not considered as part of the purchase price.
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<PAGE>
(c) Exhibits: Filed herewith pursuant to Reg. S-K Item 601 is
the following exhibit.
EXHIBIT NO. DESCRIPTION
----------- -----------
1 Share Exchange Agreement and Plan of
Reorganization dated November 15, 1996
between the Registrant and United Wats, Inc..*
* previously filed.
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<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.
NETWORK LONG DISTANCE, INC.
Dated: November 26, 1996 By: /s/ MARC I. BECKER
-----------------------------
Marc I. Becker,
Executive Vice President
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