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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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): August 5, 1999
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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 jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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 5. Other Events
On August 4, 1999, Intermedia Communications Inc. (the "Company") issued
the attached press release.
Item 7. Financial Statements and Exhibits
Exhibit 99 Press Release, dated August 4, 1999.
2
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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, 1999
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
3
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EXHIBIT INDEX
Exhibit Page
No. Description No.
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99 Press Release, dated August 4, 1999
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Exhibit 99
Contact: Curtis Lightburn
Vice President, Investor Relations
813-829-2408
[email protected]
Media: Robert Pflieger
Golin/Harris
202-626-1153
[email protected]
Intermedia Communications Announces Second Quarter Results
Increased Growth Pushes Quarterly Revenue to $218 Million
Company Also Completes Digex IPO and Inks Pre-271 Data Agreement
with Bell Atlantic
TAMPA, FL - (August 4, 1999) - Intermedia Communications Inc. (NASDAQ: ICIX)
today announced record revenue of $217.9 million for the quarter ended June 30,
1999.
Last week, Intermedia's majority-owned Digex (NASDAQ: DIGX) subsidiary completed
an initial public offering (IPO) of its common stock. Gross proceeds of $195.5
million were raised by issuing 18.7 percent of Digex to the public, with
Intermedia retaining 81.3 percent ownership.
Earlier this week, the company also announced an agreement to provide data
services to Bell Atlantic's out-of-region customers on a pre-271 basis.
Intermedia has the 4th largest nationwide frame relay and IP network and an
industry leading 793 network to network data interconnections (NNIs) which makes
Intermedia's data and IP network the densest and most flexible in the United
States. Intermedia also announced its plan to expand its IP backbone to OC48
capacity.
"As usual, it has been a busy quarter at Intermedia," said David Ruberg,
Intermedia's president, chairman, and chief executive officer. "We have put
ourselves in an ideal position to continue to improve operating results in the
near term and also to capitalize on sustainable growth opportunities in
Internet, data, and managed services and applications. Our strategy is Internet
centric, and the value proposition to our customers is in integrated services
and managed applications."
SUMMARY OF SECOND QUARTER 1999 RESULTS
Revenue for the second quarter of $217.9 million was up 6 percent sequentially
over first quarter 1999 revenue of $204.7 million.
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Consolidated EBITDA (as defined below) for the second quarter was positive $10.1
million, inclusive of negative EBITDA of $12.2 million at Digex.
"In the second quarter, we saw revenue growth accelerate to over 28 percent on
an annualized basis versus 25 percent in the first quarter," said Robert M.
Manning, Intermedia's chief financial officer. "The combination of accelerating
revenue growth and increasing efficiency are driving expanding EBITDA margins in
our core business. We expect accelerating financial improvements in the second
half of 1999."
REVENUE ANALYSIS
Enhanced Data and Internet Services
Enhanced Data and Internet services continued its growth. Revenue for the
second quarter was $66.7 million, an increase of 56 percent over second quarter
1998 and an increase of 11 percent sequentially.
Revenue grew sequentially in all categories, and was led by revenue growth at
Digex, which grew 34 percent sequentially to $12.6 million in the second quarter
versus $9.4 million in the first quarter of 1999, and was up 166 percent over
the second quarter of 1998. Frame relay and ATM revenue also grew at double
digit rates sequentially, as a function of increases in managed services as well
as nodes in service. Frame relay nodes in service increased by 3,570 in the
second quarter to 42,741. Frame relay nodes in service also increased 58
percent over the second quarter of 1998.
Competitive Local Services
Competitive Local services continued its growth. Revenue for the quarter was
$55.5 million, an increase of 45 percent over second quarter 1998 and an
increase of 5 percent sequentially.
Intermedia installed 37,692 access lines in the quarter. 6,759 resale lines
were either converted on-switch or pruned, bringing the total access lines in
service at the end of the period to 407,675, a 46 percent increase versus second
quarter 1998. At the end of the second quarter, 77 percent of the lines in
service were on-switch.
"Our on-switch percentage, gross margins, and revenue per access line continue
to be the benchmarks in our industry," said Manning. "In the second quarter, we
expanded our UV.net service, which provides integrated local, long distance and
high-speed Internet access to small and medium-sized businesses, to 20
additional cities, bringing our total market coverage to 23 major metropolitan
cities."
Interexchange Services
Interexchange revenue was $64.3 million in the second quarter, a 22 percent
decrease versus second quarter 1998, and down 5 percent sequentially.
"While the reduction in long distance revenue that has resulted from our
intentional exit of certain lines of business, such as wholesale and low end
stand-alone long distance, has helped to improve margins, we are nevertheless
dissatisfied with the overall performance of this category," said Manning. "We
have focussed on selling integrated services, and 100 percent of our UV.net
sales are for multiple services. As UV.net sales and install activity ramps up
in the second half of 1999, we expect improving results in this category."
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Integration Services
Integration Services revenue for the quarter was $31.4 million, an increase of
18 percent versus second quarter of 1998 and an increase of 31 percent
sequentially.
OUTLOOK
"Overall, the second quarter results were consistent with our expectations,"
said Manning. "Our growth rate has increased, and we believe we will be able to
further accelerate revenue growth in the second half of the year."
"Our core business is delivering improving financial performance, and we expect
that trend to continue in the second half of the year," said Manning. "And, by
creating a public entity at Digex, we have attracted the management talent and
financing to aggressively pursue the opportunities in the managed web hosting
and applications outsourcing marketplace, while retaining the vast majority of
the financial benefits and all of the strategic benefits."
EBITDA consists of earnings before interest and other income, income taxes,
depreciation, amortization and charges for in-process R & D and business
restructuring, integration and other charges. EBITDA does not represent funds
available for management's discretionary use and is not intended to represent
cash flow from operations. EBITDA should not be considered as an alternative to
net loss as an indicator of the Company's operating performance or to cash flows
as a measure of liquidity. In addition, EBITDA is not a term defined by
generally accepted accounting principles, and, as a result, the measure of
EBITDA presented herein may not be comparable to similarly titled measures used
by other companies.
Statements contained in this news release regarding expected financial results
and other planned events are forward-looking statements, subject to
uncertainties and risks, including, but not limited to, the demand for
Intermedia's services, the ability of Intermedia to complete its restructuring
and integration program, and the ability of the Company to successfully
implement its strategies, each of which may be impacted, among other things, by
economic, competitive or regulatory conditions. These and other applicable
risks are summarized under the caption "Risk Factors" in the Company's Form 10-K
Annual Report for its fiscal year ended December 31, 1998, and are updated
periodically through the filing of reports and registration statements with the
Securities and Exchange Commission.
About Intermedia
Intermedia Communications provides integrated 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 solutions and web hosting services, offers
seamless end-to-end service virtually anywhere in the world.
Intermedia is one of the top 5 Internet services providers (ISPs) to businesses
and is consistently rated at or near the top of all ISPs for network performance
and customer services by such industry publications as Keynote and Boardwatch.
Intermedia Communications Inc. is headquartered in Tampa, Florida, and can be
found on the World Wide Web at http://www.intermedia.com.
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About Digex
Digex is a leading provider of Web and application hosting services for some of
the world's leading companies that rely on the Internet as a critical business
tool. Digex also offers value-added enterprise and professional services,
including performance and security testing, monitoring, reporting and networking
services. Digex customers, from mainstream corporations to Internet-based
businesses, leverage Digex's services to deploy secure, scalable, high
performance business solutions, including electronic retailing, online banking,
online procurement and customer self-service applications. Digex, Incorporated
is headquartered in Beltsville, Maryland and is a subsidiary of Intermedia
Communications. Additional information on Digex is available at
http://www.digex.com.
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INTERNET USERS: Intermedia news releases, investor contacts and other useful
information are available on Intermedia's website at http://www.intermedia.com.
To receive news releases by e-mail or to request that information be mailed to
you, please visit the Investor Relations section of our website, and go to the
"Request Information" link.
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INTERMEDIA COMMUNICATIONS INC.
Financial Highlights
(in thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
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1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Revenues:
Local network services $ 55,475 $ 38,193 $ 108,457 $ 71,869
Enhanced data services 66,675 42,668 126,768 79,205
Interexchange services 64,329 82,747 131,942 127,498
Integration services 31,410 26,622 55,444 48,443
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Total revenues 217,889 190,230 422,611 327,015
Expenses:
Network operations 93,996 88,015 187,904 159,557
Facilities administration and maintenance 23,171 18,536 45,807 33,568
Cost of goods sold 19,501 17,218 35,305 30,909
Selling, general and administrative 71,102 56,402 128,416 102,747
Depreciation and amortization 68,772 50,215 140,383 90,991
Charge-off of purchased in process R & D - - - 63,000
Business restructuring, integration and other charges 3,439 50,081 8,838 50,081
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Total operating expenses 279,981 280,467 546,653 530,853
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Loss from operations (62,092) (90,237) (124,042) (203,838)
Other income (expense)
Interest (69,224) (47,858) (131,402) (97,159)
Other 13,749 6,040 20,307 16,770
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Net loss (117,567) (132,055) (235,137) (284,227)
Preferred stock dividends and accretions (22,965) (18,876) (45,448) (37,471)
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Net loss attributable to common stockholders $ (140,532) $ (150,931) $ (280,585) $ (321,698)
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Loss per common share:
Net loss before charge for in-process R&D and restructuring $ (2.74) $ (2.33) $ (5.47) $ (5.30)
Charge for in-process R&D - - - $ (1.60)
Charge for business restructuring, integration and
other charges $ (0.07) $ (1.16) $ (0.18) $ (1.27)
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Basic and diluted net loss per common share $ (2.81) $ (3.49) $ (5.65) $ (8.17)
========== ========== ========== ==========
Weighted average shares outstanding basic and diluted 50,009,473 43,300,889 49,682,966 39,373,704
EBITDA (1) $ 10,119 $ 10,059 $ 25,179 $ 234
Other Data:
June 30, 1999 March 31, 1999
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Local and Long Distance Services (2)
Buildings (3) 4,374 4,359
Voice switches in operation 25 23
Access line equivalents 407,675 376,742
Access line equivalents per local switch (4) 14,315 13,862
Enhanced Data Services (2)
Data switches in operation 173 167
Nodes in service (5) 42,741 39,171
NNI connections 793 728
Employees 4,262 4,128
</TABLE>
(1) EBITDA consists of earnings before interest and other income, income taxes,
depreciation, amortization and charges for in-process R&D and business
restructuring and Integration expenses. EBITDA does not represent funds
available for management's discretionary use and is not intended to
represent cash flow from operations. EBITDA should not be considered as an
alternative to net loss as an indicator of the Company's operating
performance or to cash flows as a measure of liquidity. In addition, EBITDA
is not a term defined by generally accepted accounting principles, and, as a
result, the measure of EBITDA presented herein may not be comparable to
similarly titled measures used by other companies.
(2) Amounts reflected in the table are based upon information contained in the
Company's operating records.
(3) Includes both on-net direct connections with intermedia-owned fiber
optic cable and on-net extended connections with leased circuits.
(4) Calculated by dividing the number of on-switch access line equivalents by
the number of switches providing local service.
(5) Amount represents an individual point of origination and termination of
data served by the Company's enhancement network.