INTERMEDIA COMMUNICATIONS INC
8-K, 1998-05-20
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                            ------------------------

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                           --------------------------



Date of Report (Date of
earliest event reported): May 19, 1998
                          ------------


                         INTERMEDIA COMMUNICATIONS INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)



       Delaware                                                  59-2913586
- --------------------------                                   -------------------
(State or other jurisdic-                                    (I.R.S. Employer
 tion of incorporation or                                    Identification No.)
 organization)



                                     0-20135
                            ------------------------
                            (Commission File Number)


3625 Queen Palm Drive, Tampa, Florida                                33619-1309
- --------------------------------------------------------------------------------
(Address of principal executive offices)                             (Zip Code)


Registrant's telephone number, including area code (813) 829-0011
                                                   --------------



<PAGE>   2

Item 5.  Other Events

         On May 19, 1998, Intermedia Communications Inc. (the "Company")
announced the commencement of a private offering (the "Offering") of its
securities, to be resold pursuant to Rule 144A promulgated under the Securities
Act of 1933, as amended (the "Securities Act"). The Company intends to offer
$350 million gross proceeds of Senior Notes. The net proceeds from the Offering
will be used to fund up to 80% of the cost of acquisition or construction by the
Company of telecommunications-related assets. The Senior Notes to be sold in the
Offering will not and have not been registered under the Securities Act or any
state securities or blue sky laws, and may not be offered or sold in the United
States or in any state thereof absent registration or an applicable exemption
from the registration requirements of such laws.

         On May 19, 1998, the Company announced a two-part agreement with
Ameritech Communications International, Inc. ("Ameritech"). The two-part
agreement consists of a teaming agreement between Ameritech and the Company
which will enable them to offer jointly provided data services to customers on a
nationwide basis and an agreement in which the Company will be Ameritech's
preferred data provider for certain out-or-region interLATA frame relay and ATM
services.

         On May 20, 1998, the Company announced a 2 for 1 stock split of its
Common Stock to be effected through a stock dividend payable on June 15, 1998 to
stockholders of record on June 1, 1998.

Item 7.  Financial Statements and Exhibits

         Although there is no requirement that the Company file financial
statements with the Securities and Exchange Commission under Item 7, the Company
hereby files unaudited pro forma condensed consolidated financial statements, as
Exhibit 99.4, which give applicable effect to the acquisitions of the affiliated
entities known as National Tel, which was consummated on April 30, 1998, the
affiliated entities known as Long Distance Savers, which was consummated on
March 31, 1998, Shared Technologies Fairchild, Inc., which was consummated on
March 10, 1998, DIGEX Incorporated, which was consummated in July 1997 and the
Company's debt and equity offerings in 1997.

Exhibit 99.1   Press Release, dated May 19, 1998.

Exhibit 99.2   Press Release, dated May 19, 1998.

Exhibit 99.3   Press Release, dated May 20, 1998.

Exhibit 99.4   Unaudited Pro Forma Condensed Consolidated Financial Statements.

                                        2

<PAGE>   3

                                    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: May 20, 1998

                         INTERMEDIA COMMUNICATIONS INC.
                         ------------------------------
                                  (Registrant)



                         By: /s/ Robert M. Manning
                             ---------------------------------
                             Name:   Robert M. Manning
                             Title:  Senior Vice President and
                                     Chief Financial Officer




                                        3

<PAGE>   4



                                  EXHIBIT INDEX
                                  -------------

<TABLE>
<CAPTION>
  Exhibit                                                Page
    No.                         Description               No.
  -------                       -----------             ------

<S>               <C>                                   <C>
Exhibit 99.1      Press Release, dated May 19, 1998.       5
Exhibit 99.2      Press Release, dated May 19, 1998.       6
Exhibit 99.3      Press Release, dated May 20, 1998.       7
Exhibit 99.4      Unaudited Pro Forma Condensed    
                  Consolidated Financial Statements        8
</TABLE>



                                        4


<PAGE>   1
                                                                    EXHIBIT 99.1

[INTERMEDIA COMMUNICATIONS LOGO]                                  [NEWS RELEASE]


                       INTERMEDIA ANNOUNCES COMMENCEMENT
                              OF PRIVATE OFFERING

TAMPA, FL (May 19, 1998) - Intermedia Communications Inc. (Nasdaq: ICIX) today
announced the commencement of a private offering of $350 million of its Senior
Notes due 2008 pursuant to Rule 144A promulgated under the Securities Act of
1933, as amended.

The net proceeds from the offering of the Senior Notes will be used to fund up
to 80% of the cost of acquisition or construction by the Company of
telecommunications-related assets. A portion of the Company's expansion may
occur through acquisitions (utilizing cash or securities of the Company) as an
alternative to direct investments in the assets required to implement the
expansion.

The Senior Notes to be sold in the offerings will not be and have not been
registered under the Securities Act or any state securities or blue sky laws,
and may not be offered or sold in the United States or in any state thereof
absent of registration or an applicable exemption from the registration
requirements of such laws.

Intermedia Communications is one of the nation's fastest growing
telecommunications companies, providing integrated telecommunications solutions
to business and government customers. These solutions include voice and data,
local and long distance, and advanced network access services in major U.S.
markets, Intermedia Communications' enhanced data portfolio, including frame
relay networking, ATM, and a full range of business Internet connectivity and
web hosting services, offers seamless end-to-end service virtually anywhere in
the world.

Intermedia Communications is headquartered in Tampa, Florida, with sales
offices in 81 cities. Intermedia Communications is on the World Wide Web at
http://www.intermedia.com.


                                      5

<PAGE>   1
                                                                    EXHIBIT 99.2


[INTERMEDIA COMMUNICATIONS LOGO]                                  [NEWS RELEASE]


                         INTERMEDIA TO PROVIDE NATIONAL
                     DATA NETWORKING SERVICES FOR AMERITECH

TAMPA, FL (May 19, 1998) - Intermedia Communications, Inc. (Nasdaq:ICIX) today
announced a two-part agreement with Ameritech for the mutual provisioning of
national data services. First, Intermedia and Ameritech have established a
teaming agreement which will enable them to offer jointly provided services to
customers on a nationwide basis. Second, Intermedia will be Ameritech's vendor
of choice for certain out-of-region interLATA frame relay and ATM services.

"Businesses require the national data networking capabilities that Intermedia
provides," said David C. Ruborg, Intermedia's president, chairman, and chief
executive officer. "We have designed and built the country's largest open
network to enable Ameritech to seamlessly extend its data services outside its
operating region."

Both Ameritech's and Intermedia's networks are based on the Ascend data switch
platform. This is a critical element of Ameritech's end-to-end service
offering. "This teaming agreement builds upon our joint support to meet our
customers' needs," added James F. Geiger, Intermedia's senior vice president of
Sales and Marketing. "Over the past few years, we established multiple network
interconnection points with Ameritech in order to serve national customers.
With Intermedia acting as the provider of its interLATA frame relay and ATM
services, Ameritech will be able to offer a single point of contact for
customer service and a single monthly bill. While Ameritech and their customers
benefit from this new simplicity, we gain the revenues that accompany increased
traffic on our industry-leading network."

Through this teaming agreement, Intermedia will benefit from significant sales
opportunities in Ameritech's five-state region, which includes Illinois,
Michigan, Wisconsin, Ohio, and Indiana. The agreement will also increase
terminating traffic on Intermedia's network and increase Ameritech's ability to
support its customers' needs nationally.


In addition, Ameritech will be licensed to use ViewSPANsm, Intermedia's
advanced network monitoring and service platform, in their network operations
centers. ViewSPANsm provides Intermedia and its partners with end-to-end
network performance monitoring in real time.

About Intermedia Communications

Intermedia Communications is one of the nation's fastest growing
telecommunications companies, providing integrated telecommunications solutions
to business and government customers. These solutions include voice and data,
local and long distance, and advanced network access services in major U.S.
markets. Intermedia Communications' enhanced data portfolio, including frame
relay networking, ATM, and a full range of business Internet connectivity and
web hosting services, offers seamless end-to-end service virtually anywhere in
the world. Intermedia Communications is headquartered in Tampa, Florida, with
sales offices in 81 cities. Intermedia Communications is on the World Wide Web
at http://www.intermedia.com.


                                      6
                                     

<PAGE>   1
                                                                    EXHIBIT 99.3


Tampa, Florida (May 20, 1998) - Intermedia Communications Inc. (Nasdaq: ICIX)
today declared a stock dividend of one share of common stock on each outstanding
share of the Company's common stock, payable on June 15, 1998 to shareholders of
record on June 15, 1998. As a consequence of the stock dividend the Company's
outstanding stock will be split on a two for one basis.

Intermedia Communications is one of the nation's fastest growing
telecommunications companies, providing integrated telecommunications solutions
to business and government customers. These solutions include voice and data,
local and long distance, and advanced network access services in major U.S.
markets. Intermedia's enhanced data portfolio, including frame relay networking,
ATM, and a full range of business Internet connectivity and web hosting
services, offers seamless end-to-end services virtually anywhere in the world.

Intermedia Communications is headquartered in Tampa with sales offices in 81
cities. Intermedia Communications is on the World Wide Web at
http://www.intermedia.com.

                                        7

<PAGE>   1
                                                                    EXHIBIT 99.4
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<S>                                                           <C>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
  STATEMENTS
Unaudited Pro Forma Condensed Consolidated Financial
  Statements -- Summary.....................................   F-2
Unaudited Pro Forma Condensed Consolidated Balance
  Sheet -- March 31, 1998...................................   F-3
Notes to Unaudited Pro Forma Condensed Consolidated Balance
  Sheet.....................................................   F-4
Unaudited Pro Forma Condensed Consolidated Statement of
  Operations for the year ended December 31, 1997...........   F-5
Notes to Unaudited Pro Forma Condensed Consolidated
  Statement of Operations for the year ended December 31,
  1997......................................................   F-6
Unaudited Pro Forma Condensed Consolidated Statement of
  Operations for the three months ended March 31, 1998......   F-8
Notes to Unaudited Pro Forma Condensed Consolidated
  Statement of Operations for the three months ended March
  31, 1998..................................................   F-9
</TABLE>


                                      8
<PAGE>   2
 
                         INTERMEDIA COMMUNICATIONS INC.
 
                         UNAUDITED PRO FORMA CONDENSED
                       CONSOLIDATED FINANCIAL STATEMENTS
                                    SUMMARY
 
     The accompanying unaudited pro forma condensed consolidated balance sheet
of Intermedia Communications Inc. (Intermedia) at March 31, 1998, includes the
historical and pro forma effects of the acquisition of National
Telecommunications, Inc. Companies (collectively, National), which was
consummated on April 30, 1998. The unaudited pro forma condensed consolidated
statements of operations for the three months ended March 31, 1998 and the year
ended December 31, 1997, have been prepared to reflect the aforementioned
purchase transactions, as well as the historical and pro forma effects of the
acquisitions of Shared Technologies Fairchild, Inc. (STFI), which was
consummated on March 10, 1998, the Long Distance Savers Group of Companies
(collectively, LDS), which was consummated on March 31, 1998, and 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 giving effect to these transactions under the purchase
method of accounting. As such, the total cost of 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 recently 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 at the beginning of the periods presented or
on March 31, 1998. Such pro forma financial information should be read in
conjunction with the Consolidated Financial Statements and Notes of Intermedia.


                                     F-2
<PAGE>   3
 
                         INTERMEDIA COMMUNICATIONS INC.
 
            UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 1998
 
<TABLE>
<CAPTION>
                                                       HISTORICAL
                                                 -----------------------
                                                     (A)          (B)       PRO FORMA    PRO FORMA
                                                 CONSOLIDATED   NATIONAL   ADJUSTMENTS     TOTALS
                                                 ------------   --------   -----------   ----------
                                                               (DOLLARS IN THOUSANDS)
<S>                                              <C>            <C>        <C>           <C>
                                              ASSETS
Current assets:
  Cash and cash equivalents....................   $  335,260    $ 3,425     $(63,083)(c) $  275,602
  Restricted investments.......................        7,534                                  7,534
  Accounts receivable, net.....................      114,200     10,060                     124,260
  Prepaid expenses and other current assets....       18,281                                 18,281
                                                  ----------    -------     --------     ----------
          Total current assets.................      475,275     13,485      (63,083)       425,677
Telecommunications and other equipment.........    1,120,706      6,164       (2,551)(d)  1,124,319
Less accumulated depreciation..................     (107,918)    (2,551)       2,551(d)    (107,918)
                                                  ----------    -------     --------     ----------
Telecommunications and other equipment, net....    1,012,788      3,613            0      1,016,401
Intangible assets, net.........................      894,552          0      141,742(e)   1,041,394
Other assets...................................       43,140        602        5,100(f)      43,742
                                                  ----------    -------     --------     ----------
          Total assets.........................   $2,425,755    $17,700     $ 78,659     $2,527,214
                                                  ==========    =======     ========     ==========
 
           LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
  Accounts payable.............................   $   87,337    $ 6,573                  $   93,910
  Other accrued expenses.......................       80,422      1,037                      81,459
  Current portion of long-term debt and capital
     lease obligations.........................        8,442        509     $   (509)(g)      8,442
                                                  ----------    -------     --------     ----------
          Total current liabilities............      176,201      8,119         (509)       183,811
Long-term debt and capital lease obligations...    1,733,110      2,269       (2,269)(g)  1,733,110
Series B redeemable exchangeable preferred
  stock........................................      334,742                                334,742
Series D redeemable exchangeable preferred
  stock........................................      169,936                                169,936
Series E junior convertible preferred stock....      196,759                                196,759
Stockholders' equity (deficiency):
  Common stock.................................          205          5           (5)(h)        220
                                                                                  15(i)
  Additional paid-in capital...................      390,565      1,811       (1,811)(h)    484,399
                                                                              88,734(i)
                                                                               5,100(f)
  Retained earnings (accumulated deficit)......     (567,863)     5,496       (5,496)(h)   (567,863)
  Deferred compensation........................       (7,900)                                (7,900)
                                                  ----------    -------     --------     ----------
          Total stockholders' equity
            (deficiency).......................     (184,993)     7,312       86,537        (91,144)
                                                  ----------    -------     --------     ----------
          Total liabilities, redeemable
            preferred stock and stockholders'
            equity (deficiency)................   $2,425,755    $17,700     $ 83,759     $2,527,214
                                                  ==========    =======     ========     ==========
</TABLE>
 
                             See Accompanying Notes


                                     F-3
<PAGE>   4
 
       NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                (MARCH 31, 1998)
                       (DOLLARS AND SHARES IN THOUSANDS)
 
     (a) This column represents the historical consolidated balance sheet of
Intermedia at March 31, 1998.
 
     (b) This column represents the historical combined balance sheet of
National at March 31, 1998.
 
     (c) This adjustment represents the cash portion of the $151,832 purchase
price for National, consisting of 1,455 shares of the Company's common stock
valued at $88,749 and $63,083 in cash.
 
     (d) This adjustment represents the elimination of the 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.
 
     (e) This adjustment represents the excess of the total purchase price for
National over the fair values of the net tangible and identifiable intangible
assets acquired. The allocation reflected in this proforma financial statement
is preliminary and subject to change based upon the completion of asset
valuations.
 
     (f) These adjustments represent the elimination of imputed interest related
to the STFI purchase resulting from the recognition of the purchase on the
January 1, 1998 effective date which preceded the consummation date.
 
     (g) These adjustments represent payments made by Intermedia to retire the
debt of National. Such Payments are included in the purchase price noted at (c)
above.
 
     (h) These adjustments represent the elimination of stockholders' equity of
National for pro forma combining purposes.
 
     (i) These adjustments represent the portion of the National purchase price
paid in stock.
 


                                     F-4
<PAGE>   5
 
                         INTERMEDIA COMMUNICATIONS INC.
 
     UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS(A)
                          YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
                                       HISTORICAL                                                 HISTORICAL
                                 -----------------------                                -------------------------------
                                     (B)          (C)       PRO FORMA      PRO FORMA       (D)        (E)        (F)
                                 CONSOLIDATED    DIGEX     ADJUSTMENTS     SUB TOTALS     STFI        LDS      NATIONAL
                                 ------------   --------   -----------     ----------   ---------   --------   --------
                                                                 (DOLLARS IN THOUSANDS)
<S>                              <C>            <C>        <C>             <C>          <C>         <C>        <C>
Revenues.......................   $ 247,899     $ 19,646                   $ 267,545    $ 181,827   $122,267   $ 65,243
Costs and expenses:
  Network expenses, facilities
    administration and
    maintenance costs..........     199,139       19,588       (5,400)(g)    213,327      100,356     80,203     47,969
  Selling, general and
    administrative.............      98,598       18,506         (374)(h)    116,730       68,482     31,486     10,428
  Depreciation and
    amortization...............      53,613        3,390        4,741(i)      61,744       19,916      2,895        995
  Charge off of purchased in-
    process R&D................      60,000                                   60,000
                                  ---------     --------    ---------      ---------    ---------   --------   --------
                                    411,350       41,484       (1,033)       451,801      188,754    114,584     59,392
                                  ---------     --------    ---------      ---------    ---------   --------   --------
  Income (loss) from
    operations.................    (163,451)     (21,838)       1,033       (184,256)      (6,927)     7,683      5,851
  Other income (expense):
    Interest expense...........     (60,662)        (784)     (76,491)(j)   (137,937)     (29,775)      (896)      (145)
    Interest and other income
      (expense)................      26,824          486       (5,120)(k)     22,190      (62,428)     4,908        212
                                  ---------     --------    ---------      ---------    ---------   --------   --------
Income (loss) before income
  taxes and extraordinary
  item.........................    (197,289)     (22,136)     (80,578)      (300,003)     (99,130)    11,695      5,918
Income tax (provision)
  benefit......................          --           --                          --         (380)
                                  ---------     --------    ---------      ---------    ---------   --------   --------
Income (loss) before
  extraordinary item...........    (197,289)     (22,136)     (80,578)      (300,003)     (99,510)    11,695      5,918
Extraordinary income (loss)....     (43,834)                                 (43,834)
                                  ---------     --------    ---------      ---------    ---------   --------   --------
Net income (loss)..............    (241,123)     (22,136)     (80,578)      (343,837)     (99,510)    11,695      5,918
Preferred stock dividends and
  accretions...................     (43,742)          --      (28,108)(l)    (71,850)      (4,628)
                                  ---------     --------    ---------      ---------    ---------   --------   --------
Net loss attributable to common
  stockholders.................   $(284,865)    $(22,136)   $(108,686)     $(415,687)   $(104,138)  $ 11,695   $  5,918
                                  =========     ========    =========      =========    =========   ========   ========
Net loss per share.............   $  (17.09)                               $  (24.94)
                                  =========                                =========
Weighted average number of
  shares ......................      16,670                                   16,670
                                  =========                                =========
EBITDA(t)......................   $ (49,838)                               $ (62,512)
                                  =========                                =========
 
<CAPTION>
 
                                  PRO FORMA      PRO FORMA
                                 ADJUSTMENTS     TOTALS(A)
                                 -----------     ---------
<S>                              <C>             <C>
Revenues.......................                  $ 636,882
Costs and expenses:
  Network expenses, facilities
    administration and
    maintenance costs..........                    441,855
  Selling, general and
    administrative.............                    227,126
  Depreciation and
    amortization...............     43,037(m)      128,587
  Charge off of purchased in-
    process R&D................                     60,000
                                  --------       ---------
                                    43,037         857,568
                                  --------       ---------
  Income (loss) from
    operations.................    (43,037)       (220,686)
  Other income (expense):
    Interest expense...........     15,974(n)     (141,513)
                                    11,121(o)
                                       145(p)
    Interest and other income
      (expense)................    (20,677)(k)       6,505
                                    62,300(q)
                                  --------       ---------
Income (loss) before income
  taxes and extraordinary
  item.........................     25,826        (355,694)
Income tax (provision)
  benefit......................                       (380)
                                  --------       ---------
Income (loss) before
  extraordinary item...........     25,826        (356,074)
Extraordinary income (loss)....                    (43,834)
                                  --------       ---------
Net income (loss)..............     25,826        (399,908)
Preferred stock dividends and
  accretions...................      4,628(r)      (71,850)
                                  --------       ---------
Net loss attributable to common
  stockholders.................   $ 30,454       $(471,758)
                                  ========       =========
Net loss per share.............                  $  (22.68)
                                                 =========
Weighted average number of
  shares ......................                     20,805(s)
                                                 =========
EBITDA(t)......................                  $ (32,099)
                                                 =========
</TABLE>
 
                             See Accompanying Notes

                                     F-5
<PAGE>   6
 
              NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
                            STATEMENT OF OPERATIONS
                          YEAR ENDED DECEMBER 31, 1997
                       (DOLLARS 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. The effect of the write-off of intangible assets associated with
the STFI acquisition, consisting of in-process research and development of $85.0
million, has not been reflected in the statement as it is a non-recurring
charge. The allocations of purchase price to the fair values of assets and
liabilities of STFI, LDS and National is preliminary for purposes of these
pro forma financial statements.
 
     (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 reduced to reflect 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.
 
     (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.
 
     (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.


                                     F-6
<PAGE>   7
 
     (p) This adjustment represents the elimination of interest expense in
National's historical financial statements related to the outstanding debt paid
by the Company at closing.
 
     (q) 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
 
     (r) This adjustment represents the elimination of preferred stock dividends
and accretions of STFI.
 
     (s) Includes the effect of 2,680 shares issued for LDS and 1,455 shares
issued for National.
 
     (t) EBITDA consists of earnings (loss) before interest expense, interest
and other income, income tax (provision) benefit, depreciation, amortization and
one-time and certain non-recurring charges, such as the charge for in-process 
R & D.


                                     F-7
<PAGE>   8
 
                         INTERMEDIA COMMUNICATIONS INC.
 
     UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS(A)
                       THREE MONTHS ENDED MARCH 31, 1998
 
<TABLE>
<CAPTION>
                                                                      HISTORICAL
                                                           ---------------------------------
                                                               (B)          (C)       (D)       PRO FORMA     PRO FORMA
                                                           CONSOLIDATED     LDS     NATIONAL   ADJUSTMENTS    TOTALS(A)
                                                           ------------   -------   --------   -----------    ---------
                                                                              (DOLLARS IN THOUSANDS)
<S>                                                        <C>            <C>       <C>        <C>            <C>
Revenues.................................................   $ 136,786     $30,012   $17,897                   $ 184,695
Costs and expenses:
  Network expenses, facilities administration and
    maintenance costs....................................     100,266      19,345    12,924                     132,535
  Selling, general and administrative....................      46,347       5,816     3,385                      55,548
  Depreciation and amortization..........................      39,864         655       276      $ 3,528(e)      44,323
  Charge off of purchased in-process R&D.................      85,000                                            85,000
                                                            ---------     -------   -------      -------      ---------
                                                              271,477      25,816    16,585        3,528        317,406
                                                            ---------     -------   -------      -------      ---------
Income (loss) from operations............................    (134,691)      4,196     1,312       (3,528)      (132,711)
Other income (expense):
Interest expense.........................................     (49,301)                  (54)       1,972(f)     (42,229)
                                                                                                      54(g)
                                                                                                   5,100(h)
Interest and other income (expense)......................      10,729          65        22       (1,181)(i)      9,635
                                                            ---------     -------   -------      -------      ---------
Income (loss) before income taxes and extraordinary
  items..................................................    (173,263)      4,261     1,280        2,417       (165,305)
Income tax (provision) benefit...........................                                                             0
                                                            ---------     -------   -------      -------      ---------
Income (loss) before extraordinary item..................    (173,263)      4,261     1,280        2,417       (165,305)
Extraordinary income (loss)..............................                                                             0
                                                            ---------     -------   -------      -------      ---------
Net income (loss)........................................    (173,263)      4,261     1,280        2,417       (165,305)
Preferred stock dividends and accretions.................     (18,594)                                          (18,594)
                                                            ---------     -------   -------      -------      ---------
Net loss attributable to common stockholders.............   $(191,857)    $ 4,261   $ 1,280      $ 2,417      $(183,899)
                                                            =========     =======   =======      =======      =========
Net loss per share.......................................   $  (10.87)                                        $   (8.44)
                                                            =========                                         =========
Weighted average number of shares........................      17,653                                            21,788(j)
                                                            =========                                         =========
EBITDA(k)................................................   $  (9,827)                                        $  (3,388)
                                                            =========                                         =========
</TABLE>
 
                             See Accompanying Notes


                                     F-8
<PAGE>   9
 
              NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
                            STATEMENT OF OPERATIONS
                       THREE MONTHS ENDED MARCH 31, 1998
                       (DOLLARS AND SHARES IN THOUSANDS)
 
     (a) The unaudited pro forma condensed consolidated statement of operations
for the three months ended March 31, 1998 does not give effect to any potential
cost savings and synergies that could result from the LDS or National
acquisitions. The allocations of purchase price to fair values of assets and
liabilities of STFI, LDS and National are preliminary for purposes of proforma
financial statements.
 
     (b) This column represents the historical consolidated results of
operations for Intermedia for the three months ended March 31, 1998.
 
     (c) This column represents the historical results of operations of LDS for
the three months ended March 31, 1998.
 
     (d) This column represents the historical results of operations of National
for the three months ended March 31, 1998.
 
     (e) This adjustment represents the additional amortization expense that
would have been incurred in connection with the 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
approximately 20 years.
 
     (f) 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 and to the Credit Facility
Term Loans and Revolving Credit Facility paid by the Company upon closing of the
acquisition.
 
     (g) This adjustment represents the elimination of interest expense in
National's historical financial statements related to the outstanding debt paid
by the Company at closing.
 
     (h) This adjustment represents the elimination of imputed interest related
to the STFI purchase resulting from the recognition of the purchase on the
January 1, 1998 effective date which precedes the consummation date.
 
     (i) Where acquisitions were paid all or partially in cash, interest income
was reduced to reflect the absence of the cash or investments for the full year.
 
     (j) Includes the effect of 2,680 shares issued for LDS and 1,455 shares
issued for National.
 
     (k) EBITDA consists of earnings (loss) before interest expense, interest
and other income, income tax (provision) benefit, depreciation, amortization and
one-time and certain non-recurring charges, such as the charge for in-process 
R & D.


                                     F-9

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