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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of
earliest event reported): July 9, 1997
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INTERMEDIA COMMUNICATIONS INC.
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(Exact name of registrant as specified in its charter)
Delaware 59-2913586
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(State or other jurisdic- (I.R.S. Employer
tion of incorporation or Identification No.)
organization)
0-20135
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(Commission File Number)
3625 Queen Palm Drive, Tampa, Florida 33619-1309
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (813) 829-0011
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Item 7 of the Current Report on Form 8-K, dated July 9, 1997, of Intermedia
Communications Inc., a Delaware corporation, is hereby amended and restated in
its entirety as follows:
Item 7. Financial Statements and Exhibits
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(a) Financial Statements of Businesses Acquired
The Financial Statements of DIGEX filed as part of the Annual Report of
DIGEX on Form 10-KSB for the period ended December 31, 1996 and the
Financial Statements of DIGEX filed as part of the Quarterly Report of
DIGEX on Form 10-QSB for the period ended March 31, 1997 are incorporated
herein by reference.
(b) Pro Forma Financial Information
Unaudited Pro Forma Condensed Consolidated Financial Statements for the
Company are filed as part of this report.
(c) Exhibits
Exhibit 2.1 Agreement and Plan of Merger among the Company, Daylight and
DIGEX, dated June 4, 1997. Exhibit 99(c)(1) to the Company's
Schedule 14D-1 filed with the Securities and Exchange
Commission on June 11, 1997 is incorporated herein by
reference.
Exhibit 4.1 Indenture, by and between the Company and SunTrust Bank,
Central Florida, National Association, as Trustee, dated as
of July 9, 1997.
Exhibit 4.2 Certificate of Designation of Voting Power, Designation
Preferences and Relative, Participating, Optional and Other
Special Rights and Qualifications, Limitations and
Restrictions of 7% Series D Junior Convertible Preferred
Stock of the Company, filed with the Secretary of State of
the State of Delaware on July 8, 1997.
Exhibit 4.3 Deposit Agreement by and between the Company and Continental
Stock Transfer & Trust Company, dated as of July 9, 1997.
Exhibit 99.1 Press Release, dated July 10, 1997.
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INTERMEDIA COMMUNICATIONS INC.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited pro forma condensed consolidated balance sheet of
Intermedia Communications Inc. at March 31, 1997, and the related unaudited pro
forma condensed consolidated statements of operations for the year ended
December 31, 1996 and the three months ended March 31, 1997 includes the
historical and pro forma effects of the acquisitions of the Telecommunications
Division of EMI Communications Corporation (EMI), acquired in June 1996, certain
assets and related business lines of Universal Telcom Technologies, Inc. (UTT)
and of Netsolve, Incorporated (Netsolve) which were both acquired in December
1996, and the acquisition of DIGEX, Incorporated (DIGEX) on July 9, 1997. The
unaudited pro forma condensed consolidated statements of operations have been
prepared to reflect the aforementioned purchase transactions as if they were
consummated at the beginning of each period for which pro forma statements of
operations are presented, and at March 31, 1997 for the condensed consolidated
balance sheet. The pro forma effects are based on the historical financial
statements of the acquired businesses giving effect to the transactions under
the purchase method of accounting and the assumptions and adjustments described
in the accompanying supplemental notes. The pro forma condensed consolidated
statements of operations also reflect the effects of the issuance of preferred
stock in March 1997 as if it occurred at the beginning of the respective
periods.
The pro forma information is not intended to purport to be indicative of the
actual results or financial position that would have been achieved had the
acquisitions in fact been consummated at the beginning of each period
presented or at March 31, 1997. Such pro forma financial information should be
read in conjunction with the Consolidated Financial Statements and Notes of
Intermedia Communications Inc.
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INTERMEDIA COMMUNICATIONS INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
--------------------
(a) (b) PRO FORMA PRO FORMA
CONSOLIDATED DIGEX ADJUSTMENTS TOTALS
------------ ------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..... $435,859 $23,192 $(155,000)(c) $304,051
Short-term investments........ 5,842 -- 5,842
Restricted investments........ 27,102 -- 27,102
Accounts receivable, net...... 21,880 5,571 27,451
Prepaid expenses and other
current assets............... 5,515 1,459 6,974
-------- ------- --------- --------
Total current assets........ 496,198 30,222 (155,000) 371,420
Restricted investments.......... 10,483 -- 10,483
Telecommunications and other
equipment...................... 274,405 28,559 (5,156)(h) 297,808
Less accumulated depreciation... (44,827) (5,156) 5,156 (h) (44,827)
-------- ------- --------- --------
Telecommunications and other
equipment, net................. 229,578 23,403 -- 252,981
Intangible assets, net 47,058 -- 171,039 (d) 218,097
Other assets.................... 4,071 1,833 5,904
-------- ------- --------- --------
Total assets................ $787,388 $55,458 $ 16,039 $858,885
======== ======= ========= ========
Liabilities, redeemable
preferred stock and
stockholders' equity
Current liabilities:
Accounts payable.............. $ 17,257 $12,460 $ 29,717
Other accrued expenses........ 29,535 4,716 $ 9,800 (e) 44,051
Current portion of long-term
debt and capital lease
obligation................... 516 5,106 5,622
-------- ------- --------- --------
Total current liabilities... 47,308 22,282 9,800 79,390
Other non-current liabilities... 10,900 (e) 10,900
Long-term debt and capital lease
obligations.................... 363,964 8,515 -- 372,479
-------- ------- --------- --------
Total liabilities........... 411,272 30,797 20,700 462,769
Series A redeemable exchangeable
preferred stock and accrued
dividends...................... 292,250 -- 292,250
Stockholders' equity:
Common stock.................. 163 113 (113)(f) 163
Additional paid-in capital.... 209,918 62,540 (62,540)(f) 229,918
20,000 (g)
Accumulated deficit........... (121,921) (37,992) 37,992 (f) (121,921)
Deferred compensation......... (4,294) -- (4,294)
-------- ------- --------- --------
Total stockholders' equity.. 83,866 24,661 (4,661) 103,866
-------- ------- --------- --------
Total liabilities,
redeemable preferred stock
and stockholders' equity... $787,388 $55,458 $ 16,039 $858,885
======== ======= ========= ========
</TABLE>
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(a) This column represents Intermedia's historical consolidated balance sheet at
March 31, 1997.
(b) This column represents DIGEX's historical balance sheet at March 31, 1997.
(c) This adjustment represents the cash purchase price for 11,674,261 shares of
DIGEX common stock at $13 per share, plus estimated transaction expenses of
$3,235.
(d) This adjustment represents the excess of the total purchase price for DIGEX,
including $9,300 related to duplicate facilities, $11,400 related to
unfavorable leases and $20,000 related to stock options exchanged, over the
book values (which approximate fair values) of the net tangible assets of
DIGEX acquired. The balance, which is subject to allocation, will be
allocated to customer lists and other identifiable intangible assets based
upon appraised values, with the excess allocated to goodwill.
(e) These adjustments represents the current and non-current portions of
assumed liabilities for estimated duplicate network facility costs,
following complete suspension of use of such facilities, and unfavorable
leases.
(f) These adjustments represent the elimination of DIGEX's stockholders' equity
for pro forma combining purposes.
(g) This adjustment represents the value ascribed to DIGEX's employee stock
options and warrants that were exchanged for stock options of Intermedia at
fair market value. These options and warrants were granted/issued by DIGEX
prior to its acquisition by Intermedia and were "in-the-money" at the
acquisition date.
(h) This adjustment represents the elimination of DIGEX's accumulated
depreciation as fixed assets will be recorded at fair values, which
approximate net book value.
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INTERMEDIA COMMUNICATIONS INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
--------------------
(b) (c) PRO FORMA PRO FORMA
CONSOLIDATED DIGEX ADJUSTMENTS TOTALS(a)
------------ ------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues......................... $ 43,938 $ 8,741 $ 52,679
Costs and expenses...............
Facilities administration and
maintenance and line costs.... 36,907 9,132 $ (1,800)(d) 44,239
Selling, general and
administrative................ 19,526 7,510 27,036
Depreciation and amortization.. 8,294 1,623 5,350 (e) 15,267
-------- ------- -------- --------
64,727 18,265 3,550 86,542
-------- ------- -------- --------
Loss from operations............. (20,789) (9,524) (3,550) (33,863)
Other income (expense):
Interest expense............... (11,089) (346) (11,435)
Other income................... 4,474 232 (2,475)(f) 2,231
-------- ------- -------- --------
Net loss......................... (27,404) (9,638) (6,025) (43,067)
Preferred stock dividends and
accretions...................... (3,375) -- (6,960)(g) (10,335)
-------- ------- -------- --------
Net loss attributable to common
stockholders.................... $(30,779) $(9,638) $(12,985) $(53,402)
======== ======= ======== ========
Net loss per common share........ $ (1.89) $ (3.28)
======== ======= ======== ========
Weighted average number of shares
outstanding..................... 16,297 -- 16,297
======== ======= ======== ========
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(THREE MONTHS ENDED MARCH 31, 1997)
(a) The unaudited pro forma operating information does not give effect to any
potential cost savings and synergies that could result from the DIGEX
acquisition.
(b) This column represents Intermedia's historical results of operations for
the three months ended March 31, 1997.
(c) This column represents DIGEX's historical results of operations for the
three months ended March 31, 1997.
(d) This adjustment represents reduction of assumed liabilities in connection
with the DIGEX acquisition related to duplicate facility costs of $400 and
unfavorable lease rates of $1,400.
(e) This adjustment represents the additional amortization expense expected to
be incurred as a result of the DIGEX acquisition. For purposes of the pro
forma presentation, it is estimated that the excess of the purchase price
over the net tangible assets acquired will be allocated to customer lists
(5 year lives) and goodwill (20 year life). The estimated composite
amortization life used above is 8 years. The Company is investigating the
amount and the appropriate amortization periods for the intangible assets.
(f) This adjustment represents the estimated reduction in interest income that
would have been experienced had the cash purchase price been paid at the
beginning of the period.
(g) This adjustment represents the preferred stock dividends and accretions
that would have been recorded if Intermedia's preferred stock had been
outstanding for the entire period.
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INTERMEDIA COMMUNICATIONS INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
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(b) (c) (d) (e) (f) PRO FORMA PRO FORMA
CONSOLIDATED EMI UTT NETSOLVE DIGEX ADJUSTMENTS TOTALS (a)
------------ ------- ------- -------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $ 103,397 $25,882 $ 4,812 $18,028 $ 15,573 $ (48)(g) $ 167,644
Costs and expenses:
Facilities
administration and
maintenance and line
costs................ 81,105 24,331 4,331 12,084 16,020 (48)(g)
(9,800)(h) 128,023
Selling, general and
administrative....... 36,610 1,646 1,335 1,072 18,934 59,597
Depreciation and amor-
tization............. 19,836 1,931 40 -- 2,855 (584)(i)
1,799 (j)
21,400 (k) 47,277
--------- ------- ------- ------- -------- -------- ---------
137,551 27,908 5,706 13,156 37,809 12,767 234,897
--------- ------- ------- ------- -------- -------- ---------
Income (loss) from oper-
ations................. (34,154) (2,026) (894) 4,872 (22,236) (12,815) (67,253)
Other income (expense):
Interest expense...... (35,213) -- (230) (30) (1,566) 260 (l) (36,779)
Interest and other in-
come................. 12,168 118 -- -- 497 (10,759)(m) 2,024
--------- ------- ------- ------- -------- -------- ---------
Income (loss) before in-
come tax benefit....... (57,199) (1,908) (1,124) 4,842 (23,305) (23,314) (102,008)
Income tax benefit...... -- 677 -- -- -- (677)(n) --
--------- ------- ------- ------- -------- -------- ---------
Net income (loss)....... (57,199) (1,231) (1,124) 4,842 (23,305) (23,991) (102,008)
Preferred stock divi-
dends and accretions... (41,340)(p) (41,340)
--------- ------- ------- ------- -------- -------- ---------
Net loss attributable to
common
stockholders........... $ (57,199) $(1,231) $(1,124) $ 4,842 $(23,305) $(65,331) $(143,348)
========= ======= ======= ======= ======== ======== =========
Net loss per share...... $ (4.08) $ (9.87)
========= =========
Weighted average num-
ber of shares
outstanding.......... 14,018 14,518(o)
========= =========
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(YEAR ENDED DECEMBER 31, 1996)
(a) The unaudited pro forma operating information does not give effect to any
potential cost savings and synergies that could result from the business
acquisitions discussed in the introduction to the pro forma information.
(b) This column represents Intermedia's historical results of operations for
the year ended December 31, 1996, which includes the operating results of
EMI beginning July 1, 1996, and UTT and NetSolve beginning December 1,
1996.
(c) This column represents EMI's historical results of operations for the six
months ended June 30, 1996.
(d) This column represents UTT's historical results of operations for the
eleven months ended November 30, 1996.
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(e) This column represents Netsolve's historical results of operations for the
eleven months ended November 30, 1996.
(f) This column represents DIGEX's historical results of operations for the
year ended December 31, 1996.
(g) This adjustment represents the elimination of intercompany sales between
Intermedia and EMI, prior to its acquisition.
(h) This adjustment represents reduction of assumed liabilities in connection
with the DIGEX acquisition related to duplicate network facility costs of
$4,100 and unfavorable lease rates of $5,700.
(i) This adjustment represents a reduction in EMI's historical depreciation
expense as a result of the allocation of purchase price to fair values of
fixed assets acquired. In addition, this fixed assets are being
depreciated for pro forma purposes on a straight line basis using an
estimated weighted average remaining life of seven years versus original
estimated lives and accelerated depreciation historically followed.
(j) This adjustment represents the additional amortization expense that would
have been incurred had UTT and Netsolve been acquired at the beginning of
the year.
(k) This adjustment represents the additional amortization expense that is
expected to be incurred in connection with the DIGEX acquisition. For
purposes of the pro forma presentation, it is assumed that the excess of
the purchase price over the net tangible assets acquired will be allocated
to customer lists (5 year lives) and goodwill (20 year life). The
composite amortization life used above is eight years. The Company is
investigating the amount and the appropriate amortization periods for the
intangible assets.
(l) This adjustment represents the elimination of interest expense on UTT's
and Netsolve's historical statement of operations.
(m) Where acquisitions were paid all or partially in cash, interest income was
adjusted to reflect the absence of the cash or investments for the full
year.
(n) Represents the elimination of the historical income tax benefit of EMI
that would not have been realized had the operations of EMI been
consolidated with Intermedia for the year.
(o) Includes the weighted effect of 937,500 shares issued in June 1996 for EMI
and 31, 380 shares issued in December 1996 for UTT.
(p) This adjustment represents the preferred stock dividends and accretions
that would have been recorded if Intermedia's preferred stock had been
outstanding for the entire period.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 4, 1997
INTERMEDIA COMMUNICATIONS INC.
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(Registrant)
By: /s/ Robert M. Manning
-------------------------------------
Name: Robert M. Manning
Title: Senior Vice President and Chief
Financial Officer
