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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 2000
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _____ to _______
Commission File Number 000-25015
WORLDPORT COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1127336
-------- ----------
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
1825 Barrett Lakes Blvd.
Suite 100, Kennesaw, Georgia 30144
-----------------------------------
(Address of principal executive offices)
(770) 792-8735
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
As of May 8, 2000, the Registrant had 28,797,355 shares of Common Stock par
value $0.0001 outstanding.
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WORLDPORT COMMUNICATIONS, INC.
TABLE OF CONTENTS
<TABLE>
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Page
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
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Consolidated Balance Sheets as of
March 31, 2000 (unaudited) and December 31, 1999.............................................. 3
Consolidated Statements of Operations
For the Three Months Ended March 31,
2000 and 1999 (unaudited)..................................................................... 4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999 (unaudited)........................................ 5
Notes to Condensed Consolidated Financial Statements (unaudited).............................. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................................................. 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk.................................... 11
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings............................................................................. 12
Item 2. Changes in Securities......................................................................... 12
Item 6. Exhibits and Reports on Form 8-K.............................................................. 12
SIGNATURE ..................................................................................................... 13
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</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---- ----
ASSETS (unaudited)
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CURRENT ASSETS:
Cash and cash equivalents.......................................................... $294,474 $ 1,149
Accounts receivable, net of allowance for doubtful accounts 1,126
of $970 and $359, respectively................................................. --
Prepaid expenses and other current assets.......................................... 387 34
Net assets held for sale........................................................... 1,350 101,302
-------- ---------
Total current assets....................................................... 296,211 103,611
PROPERTY AND EQUIPMENT, net........................................................ 123 145
OTHER ASSETS....................................................................... 605 532
-------- ---------
TOTAL ASSETS.................................................... $296,939 $ 104,288
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.................................................................. $ 4,599 $ 13,168
Accrued expenses.................................................................. 1,896 1,056
Current portion of obligations under capital leases............................... 1,506 2,932
Note payable to related party..................................................... 2,000 12,981
Income taxes payable.............................................................. 85,000 --
Other current liabilities......................................................... 4,938 6,071
Interim loan facility............................................................. -- 147,541
-------- ---------
Total current liabilities.......................................... 99,939 183,749
Long-term obligations under capital leases, net of current portion..................... 3,891 4,021
-------- ---------
Total liabilities............................................. 103,830 187,770
-------- ---------
STOCKHOLDERS' EQUITY (DEFICIT):
Undesignated preferred stock, $0.0001 par value, 4,800,000 shares
authorized, no shares issued and outstanding................................... -- --
Series A convertible preferred stock, $0.0001 par value, 750,000 shares
authorized, no shares issued and outstanding................................... -- --
Series B convertible preferred stock, $0.0001 par value, 3,000,000 shares
authorized, 965,642 shares issued and outstanding.............................. -- --
Series C convertible preferred stock, $0.0001 par value, 1,450,000 shares
authorized, 1,416,030 shares issued and outstanding............................ -- --
Series D convertible preferred stock, $0.0001 par value, 650,000 shares
authorized, 316,921 shares issued and outstanding.............................. -- --
Series E convertible preferred stock, $0.0001 par value, 145,000 shares
authorized, 141,603 shares issued and outstanding.............................. -- --
Common stock, $0.0001 par value, 65,000,000 shares authorized, 28,650,511 and
28,210,280 shares issued and outstanding in 2000 and 1999, respectively........ 3 3
Warrants.......................................................................... 21,562 23,398
Additional paid-in capital........................................................ 151,747 149,824
Cumulative translation adjustment................................................. (3) (7,942)
Retained earnings (deficit)....................................................... 19,800 (248,765)
-------- ---------
Total stockholders' equity (deficit)............................... 193,109 (83,482)
-------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)............... $296,939 $ 104,288
======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
----------- -----------
(unaudited) (unaudited)
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REVENUES...................................................... $ 5,093 $ 18,275
COST OF SERVICES.............................................. 3,061 12,068
-------- --------
Gross margin............................................... 2,032 6,207
-------- --------
OPERATING EXPENSES:
Selling, general and administrative expenses............... 8,218 12,649
Depreciation and amortization.............................. 449 5,272
-------- --------
Operating loss............................................. (6,635) (11,714)
-------- --------
OTHER EXPENSE:
Gain on sale of assets..................................... 353,095 --
Interest income (expense), net............................. 4,466 (15,610)
Other income (expense), net................................ 2,639 (880)
-------- --------
INCOME (LOSS) BEFORE MINORITY INTEREST AND
INCOME TAXES................................................ 353,565 (28,204)
MINORITY INTEREST............................................. -- 1,203
-------- --------
INCOME (LOSS) BEFORE INCOME TAXES............................. 353,565 (27,001)
INCOME TAX PROVISION.......................................... 85,000 --
-------- --------
NET INCOME (LOSS)............................................. $268,565 $(27,001)
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NET INCOME (LOSS) PER SHARE:
BASIC....................................................... $ 9.44 $ (3.54)
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DILUTED..................................................... $ 4.82 $ (3.54)
======== ========
SHARES USED IN NET INCOME (LOSS) PER SHARE
CALCULATION:
BASIC...................................................... 28,449 18,912
======== ========
DILUTED.................................................... 55,679 18,912
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
2000 1999
----------- -----------
(unaudited) (unaudited)
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................................................... $ 268,565 $(27,001)
Adjustments to reconcile net income (loss) to net cash flows from operating
activities:
Depreciation and amortization................................................... 449 5,272
Gain on sale of assets.......................................................... (353,095) --
Non-cash interest expense....................................................... -- 14,523
Non-cash compensation expense................................................... -- 257
Minority interest............................................................... -- (1,203)
Change in accounts receivable, net.............................................. 1,126 (1,690)
Change in prepaid expenses and other assets..................................... (386) (1,691)
Change in accounts payable, accrued expenses and other liabilities.............. (9,152) (14,925)
Change in income taxes payable.................................................. 85,000 --
--------- --------
Net cash used in operating activities................................. (7,493) (26,458)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of assets.................................................................. 459,405 --
Capital expenditures............................................................ (15) (8,011)
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Net cash provided by (used in) investing activities................... 459,390 (8,011)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Interim Loan Facility................................................. (147,541) --
Repayment on note payable - related party.......................................... (10,981) (150)
Borrowings under capital lease facilities.......................................... -- 8,892
Principal payments on short-term debt.............................................. -- (202)
Principal payments on obligations under capital leases............................. (134) (1,329)
Exercise of stock options.......................................................... 83 230
Exercise of warrants............................................................... 4 --
Proceeds from issuance of preferred stock, net of offering expenses................ -- 32,500
--------- --------
Net cash (used in) provided by financing activities................... (158,569) 39,941
Effect of exchange rate changes on cash and cash equivalents.............................. (3) (85)
--------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS................................................. 293,325 5,387
CASH AND CASH EQUIVALENTS, beginning of the period........................................ 1,149 9,015
--------- --------
CASH AND CASH EQUIVALENTS, end of the period.............................................. $ 294,474 $ 14,402
========= ========
CASH PAID DURING THE PERIOD FOR INTEREST.................................................. $ 410 $ 520
========= ========
CASH PAID DURING THE PERIOD FOR INCOME TAXES.............................................. $ -- $ --
========= ========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Acquisition of property and equipment under capital lease.......................... $ -- $ 15,418
========= ========
Issuance of warrants in connection with Interim Loan............................... $ -- $ 3,656
========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------
Organization
------------
WorldPort Communications, Inc. (together with its subsidiaries, the
"Company"), previously known as Sage Resources, Inc., was organized as a
Colorado corporation on January 6, 1989, to evaluate, structure and
complete mergers with, or acquisitions of, other entities. In October 1996,
the Company changed its domicile to Delaware and changed to its current
name. Until consummation of the sale transactions described in Note 2, the
Company was a facilities-based global telecommunications carrier offering
voice, data and other telecommunications services to carriers, Internet
service providers ("ISPs"), medium and large corporations and distributors
and resellers.
In order to meet its obligations under the Interim Loan Facility due
November 18, 1999, the Company sold substantially all of its operating
assets during the first quarter of 2000. On November 11, 1999, the Company
entered into a series of definitive agreements with Energis for the sale of
its 85% shareholding in Worldport Communications Europe Holdings, B.V., the
parent of EnerTel N.V., and associated assets ("EnerTel") for $522 million.
The sale was consummated on January 14, 2000. The Company applied a portion
of the net proceeds realized from the sale to repay existing debt,
including the Interim Loan, trade credit and other liabilities. The Company
is now pursuing a new strategic focus to become a European provider of
complex and custom web-hosting services following the Enertel sale
utilizing the remaining net proceeds.
Basis of Presentation
---------------------
The accompanying condensed consolidated financial statements have been
prepared by the Company without audit pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted in this Form 10-Q pursuant to such rules and
regulations; however, management believes that the disclosures herein are
adequate to make the information presented not misleading. The financial
statements and notes thereto included in this Form 10-Q should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999.
In the opinion of the Company's management, the accompanying condensed
consolidated financial statements contain all adjustments necessary to
present fairly the Company's financial position as of March 31, 2000, and
the results of operations and cash flows for the three months ended March
31, 2000 and 1999. The results of operations for the three months ended
March 31, 2000 are not necessarily indicative of the operating results for
the full year.
Financial Condition
-------------------
As discussed previously, in order to meet its obligations under the Interim
Loan Facility due November 18, 1999, the Company sold substantially all of
its material assets during the first quarter of 2000 through the sale of
EnerTel. The Company applied a portion of the net proceeds realized from
the sale to repay existing debt, including the Interim Loan, trade credit
and other liabilities. The Company is now pursuing a new strategic focus
following this sale utilizing the remaining net proceeds to become a
European provider of complex and custom web-hosting
<PAGE>
services. Funding of potential future operating losses and execution of the
Company's new strategic growth plans will require substantial continuing
capital investment. The Company intends to use the remaining net proceeds
from the sale of Enertel to fund these cash requirements and any additional
requirements through debt facilities and additional equity financing.
Although the Company has been able to arrange debt facilities and/or equity
financing to date, there can be no assurance that sufficient debt or equity
financing will continue to be available in the future or that it will be
available on terms acceptable to the Company. If such financing is not
obtained, the Company will have to alter its current business plan and/or
seek alternative financing.
Consolidation
-------------
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Earnings (Loss) per Share
-------------------------
The following table reconciles basic earnings (loss) per share to diluted
earnings (loss) per share. For 1999, basic and diluted loss per share are
the same because any dilutive securities had an antidilutive effect on loss
per share.
- ------------------------------------------------------------------------------
Three Months Ended
March 31,
- ------------------------------------------------------------------------------
2000 1999
- ------------------------------------------------------------------------------
Net income (loss) $268,565 $(27,001)
Preferred stock beneficial conversion -- (40,000)
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Net income (loss) available to common stockholders $268,565 $(67,001)
- ------------------------------------------------------------------------------
Weighted average shares outstanding:
Basic 28,449 18,912
Convertible preferred stock 21,103 --
Warrants 2,849 --
Options 3,278 --
-------- --------
Diluted 55,679 18,912
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Income (loss) per share:
Basic $ 9.44 $ (3.54)
Diluted $ 4.82 $ (3.54)
- ------------------------------------------------------------------------------
(2) DISPOSITIONS
------------
On November 11, 1999, the Company entered into a series of definitive
agreements with Energis for the sale of EnerTel for $522 million. The sale
was consummated on January 14, 2000. The Company recorded a net book gain
of approximately $268.1 million in the first quarter of 2000.
In August 1999, the Company announced that it was closing its U.S. carrier
operations and initiated the process of disposing of certain assets and
subsidiaries, including Telenational Communications, Inc. ("TNC") and
International Interconnect, Inc. ("IIC"). On February 29, 2000, the Company
sold IIC for $0.3 million. The Company is currently considering the sale
of TNC, but to date does not have a definitive sale arrangement. During
1999, the Company took an asset impairment charge of approximately $4.8
million, $6.1 million and $1.0 million in connection with the proposed
sales of TNC, IIC and other U.S. based assets, respectively, to write the
net investments down to their anticipated net realizable value.
Additionally, the balance sheet accounts of EnerTel, TNC and IIC were
consolidated in the accompanying December 31, 1999 financial statements.
Only the net assets of TNC remain as net assets held for sale as of March
31,
<PAGE>
2000. If these sales had taken place on January 1, 1999, the Company would
have had no material operating results. Accordingly, separate pro forma
results are not presented.
(3) CONTINGENCIES
-------------
On April 17, 1998, the Company was served with a summons and complaint from
MC Liquidating Corporation f/k/a MIDCOM Communications, Inc. ("MIDCOM").
Both the Company and TNC are named as defendants, as are Telenational
Communications, Limited Partnership, the former owner of the TNC assets
("TCLP"), and Edmund Blankenau, a principal of TCLP and a former director
of the Company. In its complaint, filed on April 8, 1998 in the U.S.
Bankruptcy Court for the Eastern District of Michigan, Southern Division,
MIDCOM seeks payment of over $600,000 for services allegedly provided to
TCLP and the Company, together with other damages, attorney fees and costs.
The Company intends to vigorously defend against these claims.
The Company is a defendant in litigation filed in the Sub-District and
District courts of The Hague, located in Rotterdam, Netherlands. The cases,
filed in January and February 1999, by Mr. Bahman Zolfagharpour, allege
that the Company breached agreements with Mr. Zolfagharpour in connection
with its purchase of MathComp B.V. from Mr. Zolfagharpour, its subsequent
purchase of EnerTel, and Mr. Zolfagharpour's employment agreement with
WorldPort Communications Europe, B.V., a former European subsidiary. The
litigation seeks dissolution of the employment agreement and the non-
competition clause of the agreement, damages in an amount exceeding $20
million, and the award of 2,500,000 shares of the Company's common stock to
Mr. Zolfagharpour. The Company believes that the litigation is wholly
without merit and intends to defend the case vigorously.
Since July 14, 1999, WorldPort and certain of its former officers have been
named as defendants in multiple shareholder class action lawsuits filed in
the United States District Court for the Northern District of Georgia. On
or about March 21, 2000, a Consolidated Complaint was filed which adds The
Heico Companies, LLC and Michael E. Heisley, Sr. as defendants. The
plaintiffs in these lawsuits seek to represent a class of individuals who
purchased or otherwise acquired the Company's common stock from January 4,
1999 through June 28, 1999. Among other things, the plaintiffs allege that
the defendants spoke positively about the Heico financing without
disclosing the risk that non-compliance with certain Nasdaq rules in
connection with the financing might cause WorldPort to be delisted from
Nasdaq. The plaintiffs further allege the subsequent disclosure that
WorldPort might be delisted from Nasdaq adversely affected the value of the
Company's common stock. The plaintiffs allege violations of Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934. WorldPort intends to
defend these lawsuits vigorously, but due to inherent uncertainties of the
litigation process and the judicial system, WorldPort is unable to predict
the outcome of this litigation.
In addition to the aforementioned claims, the Company is involved in
various other lawsuits or claims arising in the normal course of business.
In the opinion of management, none of these lawsuits or claims will have a
material adverse effect on the consolidated financial position or results
of operations of the Company.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Note on "Forward-Looking" Statements
------------------------------------
The information set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations ("MD&A") contains certain
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, Section 21E of the Securities Exchange
Act of 1934, as amended, and the Private Securities Litigation Reform Act
of 1995, including, among others, (i) expected changes in the Company's
revenues and profitability, (ii) prospective business opportunities and
(iii) the Company's strategy for redirecting and financing its business.
Forward-looking statements are statements other than historical information
or statements of current condition. Some forward-looking statements may be
identified by use of terms such as "believes", "anticipates", "intends" or
"expects". These forward-looking statements relate to the plans, objectives
and expectations of the Company for future operations. Although the Company
believes that its expectations with respect to the forward-looking
statements are based upon reasonable assumptions within the bounds of its
knowledge of its business and operations, in light of the risks and
uncertainties inherent in all future projections, the inclusion of forward-
looking statements in this report should not be regarded as a
representation by the Company or any other person that the objectives or
plans of the Company will be achieved.
The Company's revenues and results of operations could differ materially
from those projected in the forward-looking statements as a result of
numerous factors, including, but not limited to, the following: (i) changes
in external competitive market factors, (ii) termination of certain
operating agreements or inability to enter into necessary operating
agreements, (iii) inability to satisfy anticipated working capital or other
cash requirements, (iv) changes in or developments under domestic or
foreign laws, regulations, licensing requirements or telecommunications
standards and internet protocols, (v) changes in the Company's business
strategy or an inability to execute its strategy due to unanticipated
changes in the market, (vi) various competitive factors that may prevent
the Company from competing successfully in the marketplace, and (vii) the
Company's ability to raise additional capital. In light of these risks and
uncertainties, there can be no assurance that actual results, performance
or achievements of the Company will not differ materially from any future
results, performance or achievements expressed or implied by such forward-
looking statements. The foregoing review of important factors should not be
construed as exhaustive. The Company undertakes no obligation to release
publicly the results of any future revisions it may make to forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with the Condensed
Consolidated Financial Statements and Notes thereto included under Item 1
of this Form 10-Q. In addition, reference should be made to the Financial
Statements and Notes thereto and related Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999.
Overview
--------
Until consummation of the sales transactions described below, the Company
was a facilities-based global telecommunications carrier offering voice,
data and other telecommunications services to carriers, Internet service
providers ("ISPs"), medium and large corporations and distributors and
resellers. In order to meet its obligations under the Interim Loan Facility
due November 18, 1999, the Company sold substantially all of its operating
assets during the first quarter of 2000. On November 11, 1999, the Company
entered into a series of definitive agreements with Energis for the sale of
its 85% shareholding in WorldPort Communications Europe Holdings, B.V., the
parent of EnerTel N.V., and associated assets ("EnerTel") for $522 million.
The sale was consummated on January 14, 2000. The Company applied a portion
of the net proceeds realized from the sale to
<PAGE>
repay existing debt, including the Interim Loan, trade credit and other
liabilities. Additionally, the Company completed the sale of International
InterConnect, Inc. ("IIC") in February 2000.
The Company is pursuing a new strategic focus to become a European provider
of complex and custom web-hosting services following this sale utilizing
the remaining net proceeds. The Company intends to provide a complete
complex Web hosting service portfolio including network management, co-
location services, WAP and ASP support services, and disaster recovery -
providing end-to-end service to medium and large corporations as well as
ISPs that will enable customers to completely outsource their mission-
critical Internet operations.
Results of Operations
---------------------
During the first quarter of 2000, the Company completed the disposition of
substantially all of its operating assets, and began execution of the
Company's new business plan. Accordingly, the historical results of
operations for prior periods in which the Company was operational and had
the Interim Loan obligation are not comparable to the current period and
are not representative of what future results will be. During the three
months ended March 31, 2000, the Company had net income of $268.6 million,
compared to a loss of $27.0 million during the same period in 1999. Net
income was substantially comprised of a one-time after tax gain of $268.1
million related to the sale of EnerTel. Included in the losses incurred
during the three months ended March 31, 1999, are the operating results of
EnerTel and IIC, including amortization of the purchase price premium and
recording of financing costs related to the Company's acquisition of
EnerTel, as well as general expenses related to the Company's worldwide
business development and financing activities. Included in the results of
operations for the three months ended March 31, 2000 are the results of
Enertel and IIC through their dates of sale (January 14, 2000 and February
29, 2000, respectively).
Liquidity and Capital Resources
-------------------------------
As of December 31, 1999, the Company had a working capital deficit of $80.1
million and cash of $1.1 million. The EnerTel sale transaction contributed
substantially all of the working capital increase to the Company during the
quarter. As a result the Company had working capital of $196.3 million at
March 31, 2000.
Operations used $7.5 million during the three months ended March 31, 2000,
due primarily to the payment of working capital obligations.
Investing activities provided $459.4 million during the three months ended
March 31, 2000, which consisted almost entirely of the Enertel sale
transaction.
Financing activities used $158.6 million during the three months ended
March 31, 2000, and principally related to the repayment of the Interim
Loan and a related party note payable from the proceeds of the Enertel sale
transaction.
The Company is pursuing its new business plan following the sale of Enertel
utilizing the remaining net proceeds. Funding of potential future operating
losses and execution of the Company's new strategic growth plans will
require substantial continuing capital investment. The Company intends to
use the remaining net proceeds from the sale of Enertel to fund these cash
requirements and any additional requirements through debt facilities and/or
additional equity financing. Although the Company has been able to arrange
debt facilities and/or equity financing to date, there can be no assurance
that sufficient debt or equity financing will continue to be available in
the future or that it will be available on terms acceptable to the Company.
If such financing is not obtained, the Company will have to alter its
current business plan and/or seek alternative financing.
<PAGE>
New Accounting Pronouncements
-----------------------------
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities,
which is effective for fiscal years beginning after June 15, 2000. SFAS No.
133 establishes accounting and reporting standards for derivative
instruments and transactions involving hedge accounting. The Company has
not yet determined the impact this statement will have on its consolidated
financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management believes that the Company's exposure to market rate fluctuations
on its investments is nominal due to the short-term nature of those
investments.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Since July 14, 1999, WorldPort and certain of its former officers have been
named as defendants in multiple shareholder class action lawsuits filed in
the United States District Court for the Northern District of Georgia. See
Part I Item 3 of Form 10-K for the fiscal year ended December 31, 1999. On
or about March 21, 2000, a Consolidated Complaint was filed which adds The
Heico Companies, LLC and Michael E. Heisley, Sr. as defendants. The
plaintiffs in this lawsuit seek to represent a class of individuals who
purchased or otherwise acquired the Company's common stock from January 4,
1999 through June 28, 1999.
From time to time, the Company is involved in various other lawsuits not
disclosed in Note 3 to the Condensed Consolidated Financial Statements or
claims arising from the normal course of business. In the opinion of
management, none of such other lawsuits or claims will have a material
adverse effect on the Company's financial condition or results of
operations.
ITEM 2. CHANGES IN SECURITIES
During the quarter ended March 31, 2000, various holders of warrants issued
in connection with the Company's interim loan facility exercised their
warrants for 405,231 shares the Company's Common Stock. The issuance of
these shares was exempt from registration under Section 4 (2) of the
Securities Act of 1933, as amended, as a transaction by an issuer not
involving any public offering.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
27.1 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
The Company filed a current report on Form 8-K on January 28, 2000 to
report under Item 2 the disposition of substantially all of its operating
assets to Energis on January 14, 2000. Included in the Form 8-K was the
following Unaudited Pro Forma Financial Data:
* Pro Forma Consolidated Balance Sheet Information as of September 30, 1999
* Pro Forma Consolidated Statement of Income for the Year ended December
31, 1998
* Pro Forma Consolidated Statement of Income for the Period ended September
30, 1999
<PAGE>
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, thereunto duly authorized.
WORLDPORT COMMUNICATIONS, INC.
Date: May 12, 2000 By: /s/ John T. Hanson
------------ ---------------------------------
John T. Hanson
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from the
financial statements of WorldPort Communications, Inc. for the three months
ended March 31, 2000 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 294,474
<SECURITIES> 0
<RECEIVABLES> 970
<ALLOWANCES> 970
<INVENTORY> 0
<CURRENT-ASSETS> 296,211
<PP&E> 181
<DEPRECIATION> 58
<TOTAL-ASSETS> 296,939
<CURRENT-LIABILITIES> 99,939
<BONDS> 0
0
0
<COMMON> 3
<OTHER-SE> 193,106
<TOTAL-LIABILITY-AND-EQUITY> 296,939
<SALES> 0
<TOTAL-REVENUES> 5,093
<CGS> 0
<TOTAL-COSTS> 3,061
<OTHER-EXPENSES> 8,667
<LOSS-PROVISION> 611
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 353,565
<INCOME-TAX> 85,000
<INCOME-CONTINUING> 268,565
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 268,565
<EPS-BASIC> 9.44
<EPS-DILUTED> 4.82
</TABLE>
