INTERMEDIA COMMUNICATIONS INC
8-K, 1999-08-05
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>

                      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):       August 5, 1999
                               ----------------


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


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


                                    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>

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
<PAGE>

                                   SIGNATURE

 Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date:  August 4, 1999


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



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

                                       3
<PAGE>

                                 EXHIBIT INDEX



Exhibit                                                              Page
   No.                    Description                                 No.
- --------                  -----------                                ----

   99                     Press Release, dated August 4, 1999


<PAGE>

                                                                      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.

<PAGE>

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."

<PAGE>

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.
                               -------------------------

<PAGE>

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.
- --------------------

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.

<PAGE>

                        INTERMEDIA COMMUNICATIONS INC.
                             Financial Highlights
                       (in thousands, except share data)

<TABLE>
<CAPTION>

                                                                    Three Months Ended                   Six Months Ended
                                                                          June 30,                            June 30,
                                                                -------------------------           ---------------------------
                                                                   1999            1998                1999             1998
                                                                ---------       ---------           ---------         ---------
<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
                                                               ----------      ----------          ----------        ----------
     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
                                                               ----------      ----------          ----------        ----------
     Total operating expenses                                     279,981         280,467             546,653           530,853
                                                               ----------      ----------          ----------        ----------
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
                                                               ----------      ----------          ----------        ----------
Net loss                                                         (117,567)       (132,055)           (235,137)         (284,227)
Preferred stock dividends and accretions                          (22,965)        (18,876)            (45,448)          (37,471)
                                                               ----------      ----------          ----------        ----------
Net loss attributable to common stockholders                   $ (140,532)     $ (150,931)         $ (280,585)       $ (321,698)
                                                               ==========      ==========          ==========        ==========

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)
                                                               ----------      ----------          ----------        ----------
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
                                                            -------------  --------------
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.


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