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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): March 10, 1998
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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 2. Acquisition or Disposition of Assets
Item 2 of the Current Report on Form 8-K, dated March 18,
1998, of Intermedia Communications Inc., a Delaware corporation ("Intermedia"),
is hereby amended and restated in its entirety as follows:
On March 10, 1998, Moonlight Acquisition Corp. ("Moonlight"),
a wholly-owned subsidiary of Intermedia Communications Inc., effected a merger
(the "Merger") with and into Shared Technologies Fairchild Inc. ("STFI") as the
final step in its acquisition of STFI. Pursuant to the terms of that certain
Agreement and Plan of Merger dated as of November 20, 1997 between Intermedia,
Moonlight and STFI, all issued and outstanding shares of STFI common stock and
Series D Preferred Stock (other than shares owned by Intermedia, Moonlight or
any of their subsidiaries, shares held in the treasury of STFI or shares for
which appraisal rights have been perfected) were converted into the right to
receive $15.00 in cash without interest. The total amount of funds required by
Intermedia and Moonlight to effect the Merger and acquire STFI and to pay
related fees and expenses was approximately $722.7 million. The acquisition
price was funded through Intermedia's existing cash reserves.
STFI is the nation's largest provider of shared
telecommunications services and systems. Through its technical infrastructure
and 800 employees, STFI acts as a single point of contact for business
telecommunications services at more than 465 buildings throughout the United
States and Canada.
As a result of the Merger, STFI will be operated as a
wholly-owned subsidiary of Intermedia, and the separate existence of Moonlight
has ceased. Intermedia intends to continue operating STFI's assets as a provider
of shared telecommunications services and systems.
Item 7. Financial Statements and Exhibits
Item 7 of the Current Report on Form 8-K, dated March 18,
1998, of Intermedia is hereby amended and restated in its entirety as follows:
(a) Financial Statements of Businesses Acquired
The financial statements of STFI and subsidiaries as of
December 31, 1997 and 1996, and for each of the three years in the period ended
December 31, 1997 included in the Annual Report of Intermedia on Form 10-K for
the year ended December 31, 1997, filed with the Securities and Exchange
Commission on March 25, 1998, are incorporated herein by reference.
2
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(b) Pro Forma Financial Information
The unaudited pro forma condensed consolidated financial
statements for Intermedia reflecting, among other transactions, the acquisition
of STFI, are filed as part of this report.
(c) Exhibits
Exhibit 2.1 Agreement and Plan of Merger among
Intermedia, Moonlight and STFI dated
November 20, 1997. Exhibit 99(C)(1) to
Intermedia's Schedule 14D-1 and Schedule
13D filed with the Securities and
Exchange Commission on November 26, 1997
is incorporated herein by reference.
3
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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. (Intermedia) at December 31, 1997,
includes the historical and pro forma effects of the acquisition of Shared
Technologies Fairchild, Inc. (STFI), which was consummated on March 10, 1998,
and the impending acquisitions of the Long Distance Savers Group of Companies
(collectively, LDS), and National Telecommunications, Inc. Companies
(collectively, National). While the LDS and National acquisitions have not yet
been consummated, they are believed by management to be probable of consummation
during 1998. The unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 1997, has been prepared to reflect
the aforementioned purchase transactions, as well as the historical and pro
forma effects of the acquisition of DIGEX, Incorporated (DIGEX), which was
consummated in July 1997 and the March, July, October and December 1997
Offerings, as if they were consummated on January 1, 1997.
The pro forma effects are based on the historical financial statements
of the acquired businesses and probable acquisitions giving effect to these
transactions under the purchase method of accounting. As such, the total cost of
the all acquisitions have or will be allocated to the net tangible and
intangible assets acquired and liabilities assumed based upon their respective
fair values at the effective date of each acquisition. Such allocations and the
related amortization periods for purchase transactions not yet consummated will
be based on valuations or other data which have not yet been completed or
obtained. Accordingly, the allocations reflected in the pro forma financial
statements are preliminary and subject to revision.
The unaudited pro forma condensed consolidated financial statements are
not intended to purport to be indicative of the actual results of operations or
financial position that would have been achieved had the acquisitions or
offerings in fact been consummated on January 1, 1997. Such pro forma financial
information should be read in conjunction with the Consolidated Financial
Statements and Notes of Intermedia.
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Intermedia Communications Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
December 31, 1997
<TABLE>
<CAPTION>
(a)
Historical (b) (c) (d) Pro forma Proforma
Consolidated STFI LDS National Adjustments Totals
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Assets
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 756,923 $ 4,685 $ 4,030 $ 455 $(319,125)(e) $ 380,668
(21,000)(l)
(45,300)(n)
Short-term investments -
Restricted investments 6,853 6,853
Accounts receivable, net 58,579 30,110 24,233 10,715 123,637
Prepaid expenses and other current assets 6,122 8,322 6,034 0 20,478
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Total current assets 828,477 43,117 34,297 11,170 (385,425) 531,636
Telecommunications and other equipment 545,380 105,699 33,533 5,947 (61,078)(f) 629,481
Less accumulated depreciation (81,534) (40,297) (18,459) (2,322) 61,078 (f) (81,534)
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Telecommunications and other equipment, net 463,846 65,402 15,074 3,625 0 547,947
Intangible assets, net 138,028 256,122 456,474 (g) 1,138,625
143,032 (m)
144,969 (o)
Investment in Shared Technologies Fairchild 403,571 (403,571)(p) -
Other assets 41,048 1,555 79 758 43,440
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Total assets $1,874,970 $366,196 $49,450 $15,553 $ (44,521) $ 2,261,648
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Liabilities, Redeemable Preferred Stock and Stockholders' Equity (Deficiency)
Current liabilities:
Accounts payable $ 53,630 $ 22,960 $ 8,782 $ 5,721 $ - $ 91,093
Other accrued expenses 20,130 27,609 4,768 1,022 53,529
Current portion of long-term debt
and capital lease obligations 7,471 172,196 1,200 371 (127,791)(h) 53,447
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Total current liabilities 81,231 222,765 14,750 7,114 (127,791) 198,069
Other noncurrent liabilities -
Long-term debt and capital lease obligations 1,244,872 143,207 26,732 2,408 (14,707)(h) 1,279,012
(123,500)(i)
Series B redeemable exchangeable preferred stock 323,146 323,146
and accrued dividends
Series D redeemable exchangeable preferred stock 169,722 169,722
and accrued dividends
Series E redeemable exchangeable preferred stock 196,008 196,008
and accrued dividends
Preferred Stock and Put Warrants 26,131 (26,131)(j) -
Stockholders' equity (deficiency):
Common stock 175 73 2,403 5 (2,481)(k) 215
24 (l)
16 (n)
Additional paid-in capital 244,114 117,602 35 1,811 (119,448)(k) 479,774
129,976 (l)
105,684 (n)
Retained earnings (accumulated deficit) (376,006) (143,582) 5,530 4,215 133,837 (k) (376,006)
Deferred compensation (8,292) (8,292)
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Total stockholders' equity (deficiency) (140,009) (25,907) 7,968 6,031 247,608 95,691
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Total liabilities, redeemable preferred stock
and stockholders' equity (deficiency) $1,874,970 $366,196 $49,450 $15,553 $ (44,521) $2,261,648
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See Accompanying Notes
</TABLE>
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Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
(December 31, 1997)
(amounts and shares in thousands)
(a) This column represents the historical consolidated balance sheet of
Intermedia at December 31, 1997.
(b) This column represents the historical consolidated balance sheet of
STFI at December 31, 1997.
(c) This column represents the historical combined balance sheet of LDS at
December 31, 1997.
(d) This column represents the historical combined balance sheet of
National at December 31, 1997.
(e) This adjustment represents the cash purchase price for STFI and other
expenditures as follows:
Purchase of 18,130 shares of
outstanding STFI common $271,950
stock at $15 per share
Purchase and retirement of
outstanding STFI options, 74,084
warrants and convertible
preferred stock
Purchase of STFI Special 21,900
Preferred Stock
Issuance of a warrant to
purchase 100,000 shares of 1,455
Intermedia common stock
Purchase of STFI 12 1/4% Senior
Subordinated Discount Notes 175,000
(including a premium of
$32,502)
Repayment of amounts
outstanding under STFI 123,500
revolving credit facility
Break-up and other fees 54,807
Amount recorded in 1997 as (403,571)
investment in STFI
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$319,125
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(f) This adjustment represents the elimination of the STFI, LDS and
National accumulated depreciation as fixed assets will be recorded at
fair values, which the Company believes approximate net book values on
the date of acquisition.
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(g) This adjustment represents the excess of the total purchase price for
STFI over the fair values of the net tangible and intangible assets
acquired. The balance, which is subject to further allocation, may be
allocated to customer lists and other identifiable intangibles,
including in-process research and development, based upon appraised
values, with the excess allocated to goodwill. Details are as follows:
Purchase price $722,696
Book value of STFI 12 1/4% Senior
Subordinated Discount Notes (142,498)
purchased by the Company
Book value of STFI preferred
stock and warrants purchased (26,131)
by the Company
Repayment of amounts
outstanding under STFI (123,500)
revolving credit facility
Net liabilities of STFI at
December 31, 1997, including 25,907
previously recorded goodwill
Pro forma adjustment to record
additional goodwill related $456,474
to the STFI acquisition
==========
(h) These adjustments reflect the elimination of current and non-current
portion of STFI 12 1/4% Senior Subordinated Discount Notes against the
Company's investment. (See (e) above)
(i) This adjustment reflects the repayment of STFI revolving credit
facility. (See (e) and (g) above)
(j) This adjustment reflects the retirement of STFI preferred stock and put
warrants.
(k) These adjustments represent the elimination of stockholders' equity of
STFI, LDS and National for proforma combining purposes.
(l) This adjustment represents the $151,000 purchase price for LDS to be
paid with 2,364 shares of the Company's common stock valued at
approximately $130,000 and $21,000 in cash.
(m) This adjustment represents the excess of the total purchase price for
LDS over the fair values of the net tangible assets acquired.
(n) This adjustment represents the $151,000 purchase price for National to
be with 1,626 shares of the Company's common stock valued at $105,700
and $45,300 in cash.
(o) This adjustment represents the excess of the total purchase price for
National over the fair values of the net tangible assets acquired.
(p) This adjustment represents the elimination of Intermedia's equity
investment in STFI.
<PAGE>
Intermedia Communications Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
December 31, 1997
<TABLE>
<CAPTION>
Historical
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(b) (c) Pro Forma Pro Forma
Consolidated DIGEX Adjustments Sub Totals
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<S> <C> <C> <C>
Revenues $247,899 $19,646 $267,545
Costs and expenses:
Facilities administration and management and line costs 199,139 19,588 (5,400) (g) 213,327
Selling, general and administrative 98,598 18,506 (374) (h) 116,730
Depreciation and amortization 53,613 3,390 4,741 (i) 61,744
Charge off of purchased in-process R&D 60,000 60,000
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411,350 41,484 (1,033) 451,801
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Income (loss) from operations (163,451) (21,838) 1,033 (184,256)
Other income (expense):
Interest expense (60,662) (784) (76,491) (j) (137,937)
Interest and other income (expense) 26,824 486 (5,120) (k) 22,190
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Income (loss) before income taxes and extraordinary item (197,289) (22,136) (80,578) (300,003)
Income tax (provision) benefit - - -
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Income (loss) before extraordinary item (197,289) (22,136) (80,578) (300,003)
Extraordinary income (loss) (43,834) (43,834)
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Net income (loss) (241,123) (22,136) (80,578) (343,837)
Preferred stock dividends and accretions (43,742) - (28,108) (l) (71,850)
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Net loss attributable to common stockholders $ (284,865) $ (22,136) $ (108,686) $ (415,687)
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Net loss per share $ (17.09) $ (24.94)
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Weighted average number of shares O/S 16,670 16,670
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EBITDA (s) $ (49,838) $ (62,512)
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</TABLE>
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<TABLE>
<CAPTION>
Historical
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(d) (e) (f) Pro Forma Pro Forma
STFI LDS National Adjustments Totals (a)
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<S> <C> <C> <C> <C>
Revenues $181,827 $122,267 $65,243 $636,882
Costs and expenses:
Facilities administration and management and line costs 100,356 80,203 47,969 441,855
Selling, general and administrative 68,482 31,486 10,428 227,126
Depreciation and amortization 19,916 2,895 995 43,037 (m) 128,587
Charge off of purchased in-process R&D 60,000
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188,754 114,584 59,392 43,037 857,568
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Income (loss) from operations (6,927) 7,683 5,851 (43,037) (220,686)
Other income (expense):
Interest expense (29,775) (896) (145) 15,974 (n) (141,658)
11,121 (o)
Interest and other income (expense) (62,428) 4,908 212 (20,677)(k) 6,505
62,300 (p)
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Income (loss) before income taxes and extraordinary item (99,130) 11,695 5,918 25,681 (355,839)
Income tax (provision) benefit (380) (380)
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Income (loss) before extraordinary item (99,510) 11,695 5,918 25,681 (356,219)
Extraordinary income (loss) (43,834)
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Net income (loss) (99,510) 11,695 5,918 25,681 (400,053)
Preferred stock dividends and accretions (4,628) 4,628 (q) (71,850)
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Net loss attributable to common stockholders $ (104,138) $ 11,695 $ 5,918 $ 30,309 $ (471,903)
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Net loss per share $ (22.84)
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Weighted average number of shares O/S 20,660(r)
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EBITDA (s) $ (32,099)
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</TABLE>
See Accompanying Notes
<PAGE>
Notes to Unaudited Pro Forma Condensed Consolidated Statement of
Operations
Year ended December 31, 1997
(amounts and shares in thousands)
(a) The unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 1997 does not give
effect to any potential cost savings and synergies that could
result from the DIGEX, STFI, LDS or National acquisitions.
In addition, the Company has not yet determined an amount, if
any, of the respective fair values that might ultimately be
allocated to in-process research and development related to
STFI, LDS or National. However, any related charges to
operations would be excluded from the pro forma condensed
consolidated statement of operations due to its recurring
nature.
(b) This column represents the historical consolidated results of
operations for Intermedia for the year ended December 31, 1997.
(c) This column represents the operating results for DIGEX for the six
months ended June 30, 1997.
(d) This column represents the historical results of operations of STFI for
the year ended December 31, 1997.
(e) This column represents the historical results of operations of LDS for
the year ended December 31, 1997.
(f) This column represents the historical results of operations of National
for the year ended December 31, 1997.
(g) This adjustment represents the reduction of network lease expense due
to unfavorable lease terms accrued for in purchase accounting.
(h) This adjustment represents the reversal of DIGEX's amortization of
deferred compensation associated with stock compensation preceding the
purchase.
(i) This adjustment represents the amortization expense of intangible
assets related to DIGEX.
(j) This adjustment represents interest expense, including amortization of
debt discount and finance costs, of $24,400 on the 11-1/4% Senior
Discount Notes Due 2007 that were issued in July 1997 (net of $10,800
reduction of interest due to the retirement of the 13-1/2% Senior
Notes), $19,800 on 8- 7/8% Senior Notes due 2007 that were issued in
October 1997 and $43,100 on 8-1/2% Senior Notes due 2008 that were
issued in December 1997 as if the Notes had been issued January 1,
1997.
(k) Where acquisitions were paid all or partially in cash, interest income
was adjusted to reduce the absence of the cash or investments for the
full year.
(l) This adjustment increases the preferred stock dividends and accretions
to amounts that would have been recorded if Intermedia's Series B, D
and E preferred stock had been outstanding for the entire period.
<PAGE>
(m) This adjustment represents the additional amortization
expense that would have been incurred in connection with the
STFI, LDS and National acquisitions. For purposes of the pro
forma presentation, it is assumed that the excess of the
purchase price over the net tangible assets acquired will
ultimately be allocated to either identifiable intangibles
such as developed technology and customer lists or goodwill
with the weighted average amortization period of 20 years.
The Company will fully investigate the amount and appropriate
amortization periods for intangible assets and goodwill once
the acquisition is consummated.
(n) This adjustment represents the elimination of interest expense in
STFI's historical financial statements related to the 12 1/4% Senior
subordinated Discount Notes purchased by the Company.
(o) This adjustment represents the elimination of interest expense in
STFI's historical financial statements related to the Credit Facility
Term Loans and Revolving Credit Facility paid by the Company upon
closing of the acquisition.
(p) This adjustment represents the elimination of the following
non-recurring charges related to the STFI's terminated merger agreement
with Tel-Save, Inc. Termination of merger agreement - $15,000;
Termination of long distance service contract - $36,000; and Retirement
of outstanding options held by Tel-Save, Inc. - $11,300
(q) This adjustment represents the elimination of preferred stock dividends
and accretions of STFI.
(r) Includes the effect of 2,364 shares to be issued for LDS and 1,626
share to be issued for National.
(s) EBITDA consists of earnings before interest, income taxes,
depreciation, amortization and charge for in-process R & D.
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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: March 27, 1998
INTERMEDIA COMMUNICATIONS INC.
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(Registrant)
By: /s/ Robert M. Manning
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Name: Robert M. Manning
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
Exhibit Index
Exhibit No. Description
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2.1 Agreement and Plan of Merger among Intermedia,
Moonlight and STFI dated as of November 20, 1997.
Exhibit 99(C)(1) to Intermedia's Schedule 14D-1
and Schedule 13D filed with the Securities and
Exchange Commission on November 26, 1997 is
incorporated herein by reference.
