INTERMEDIA COMMUNICATIONS INC
8-K, 2000-05-04
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 3, 2000


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


                         Intermedia Communications, Inc.
             (Exact name of registrant as specified in its charter)


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


               Delaware                                     59-2913586
               --------                               ----------------------
  (State or other jurisdiction of                        (I.R.S. Employer
   incorporation or organization)                     Identification Number)


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


                              3625 Queen Palm Drive
                                 Tampa, FL 33619
                    (Address of principal executive offices)


                                 (813) 829-0011
                               (Telephone Number)




<PAGE>   2

ITEM 5.  Other Events

         On May 3, 2000, Intermedia Communications, Inc. (the "Company"), issued
the attached press release.

ITEM 7.  Financial Statements and Exhibits

         Exhibit 99 Press Release, dated May 3, 2000.



























<PAGE>   3

                                   SIGNATURES

         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.

Dated: May 3, 2000


                                         INTERMEDIA COMMUNICATIONS, INC.
                                                  (Registrant)


                                          /s/   Robert M. Manning
                                          ------------------------------
                                                Robert M. Manning
                                           Senior Vice President and
                                            Chief Financial Officer


                                  EXHIBIT INDEX

Exhibit
No.                          Description                     Page

   99             Press release dated May 3, 2000




























<PAGE>   1
                                                                      Exhibit 99

                                     CONTACT: Curtis Lightburn
                                              Vice President, Investor Relations
                                              813-829-2408
                                              [email protected]

                                              Alan Hill
                                              Director, Public Relations
                                              813-829-4409
                                              [email protected]


                       INTERMEDIA COMMUNICATIONS ANNOUNCES
                              FIRST QUARTER RESULTS


                   QUARTERLY REVENUE GROWS 28% TO $262 MILLION
  INTERMEDIA INSTALLS 65,000 ACCESS LINES AND REDUCES DEBT BY OVER $550 MILLION


TAMPA, FL - MAY 3, 2000 - Intermedia Communications Inc. (Nasdaq: ICIX) today
announced record revenue of $261.7 million for the quarter ending March 31,
2000. Consolidated EBITDA for the quarter was $15.2 million.

"Intermedia continues to post better than expected financial and operating
results," said David C. Ruberg, Intermedia's chairman, president and chief
executive officer. "More importantly, the underlying trends in our business
combined with our assets and core competencies give us great confidence in our
ability to post increasingly strong results going forward."

SUMMARY OF FIRST QUARTER 2000 RESULTS

Revenue for the first quarter of $261.7 million was up 28 percent over first
quarter 1999 revenue of $204.7 million.

Consolidated EBITDA for the first quarter was positive $15.2 million, including
EBITDA losses of $15.1 million at Digex.

Intermedia and Digex also raised a total of $1.4 billion in capital as a result
of equity investments by KKR in Intermedia and by Compaq and Microsoft in Digex,
as well as a secondary offering of Digex common stock, and a sale of a portion
of Intermedia's investment in Digex. The sale by Intermedia of stock in Digex
resulted in a gain on sale of approximately $841 million, net of tax in the
first quarter of 2000.

"Intermedia made a number of moves which dramatically strengthen our position
financially and strategically," said Robert M. Manning, Intermedia's chief
financial officer. "At the end of the quarter, we had $1.3 billion in cash on
hand. Consistent with our previous announcement, we have recently used a portion
of the offering proceeds of our sale of Digex stock to reduce our debt levels by
over $550 million. Our strong capital position, improved balance sheet and
better operational performance, put us in a strong position to continue to
accelerate our growth organically. Furthermore, the market demand for our
unifiedvoice.net(sm) product and our accelerated rate of installations give us
confidence that we will continue to scale our business."





<PAGE>   2

REVENUE ANALYSIS

Data, Internet and Web Hosting

Data, Internet and Web Hosting services continued its strong growth. Revenue for
the first quarter grew to $114.5 million, up from $78.4 million in the year ago
period.

Revenue grew in all categories, and was led by revenue growth at Digex, which
grew 198 percent year-over-year to $28.0 million in the first quarter versus
$9.4 million in the first quarter of 1999. Frame Relay, ATM and Internet revenue
grew strongly year-over-year as a function of increasing demand for higher
bandwidth connections, customer migration to fully managed networks and rapid
increases from Intermedia's strategic partner channel.

Intermedia increased its Frame and ATM switches by eight in the quarter to 193,
and its Network to Network Data Interconnections (NNIs) by 78 to 959, by far the
most of any provider in the country. Intermedia also entered into an agreement
with equipment manufacturer Advanced Switching Communications, Inc. which will
enable the Company to deliver the industry's first multi-link frame relay access
solution.

Local Access and Voice

Local Access and Voice revenues for the first quarter grew to $108.5 million
versus $102.3 million in the first quarter of 1999.

In the first quarter, Intermedia increased access lines in service by 65,019,
bringing the total in service at the end of the quarter to 566,113. All of the
additions were on-switch. At the end of the first quarter, 89 percent of lines
in service were on-switch, up from 87 percent at the end of the fourth quarter
and up from 74 percent one year ago.

Intermedia increased its on-net building count by 39 to 4,437. Intermedia's
Advanced Building Networks (ABN) unit is now operational in 667 buildings,
reflecting the turn up of services in 17 new buildings during the quarter.
Intermedia has deployed DSLAMs in 280 of these buildings.

Intermedia has implemented a Sonus Networks "soft-switch" for capacity expansion
in Miami. This allows Intermedia to offer IP based voice and broadband data and
Internet services and leverage its network architecture in a capital efficient
manner.

Systems Integration

Systems Integration revenue for the quarter grew to $38.6 million from $24.0
million in the year ago period as a function of sales force expansion and market
share gains.

STRATEGIC FINANCINGS

In the first quarter of 2000, Intermedia received a strategic investment of $200
million from a fund managed by Kohlberg Kravis Roberts & Co. Further, Digex
received strategic investments from Compaq and Microsoft totaling $100 million.




<PAGE>   3

Also in the first quarter, Intermedia and Digex completed the sale of 12.65
million shares of Digex (Nasdaq: DIGX) common stock raising $1.1 billion in
gross proceeds. 10.65 million shares were sold by Intermedia, and 2.0 million
shares were issued by Digex. For Digex, the proceeds will be used to fund the
growth of its business. For Intermedia, a significant portion of the proceeds
has been used to reduce Intermedia's debt levels. Intermedia owns 39.35 million
shares of Digex stock and continues to be the majority owner.

OUTLOOK

"I believe the opportunities for Intermedia that are being presented by the
Networked Economy are bigger and better than ever," added Ruberg. "By aligning
with KKR, and with Compaq and Microsoft at Digex, we have considerably
strengthened our strategic and financial position. Combined with our competitive
strengths and core competencies in data and Internet services, I am confident in
our ability to execute on our business plan and deliver superior shareholder
returns."

EBITDA consists of earnings before interest and other income, deferred
compensation, income taxes, depreciation, amortization and charges for
in-process R & D and business restructuring, integration and other 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 income (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 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, 1999, and are updated periodically
through the filing of reports and registration statements with the Securities
and Exchange Commission.

ABOUT INTERMEDIA
Intermedia 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 is headquartered in Tampa, Florida. Intermedia can be found on the
World Wide Web at www.intermedia.com.

INTERNET USERS: Intermedia news releases, investor contacts and other useful
information are available on Intermedia's Web site at 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 the Web site, and go to the
"Request Information" link.

                                      # # #







<PAGE>   4

                         INTERMEDIA COMMUNICATIONS INC.
                       Financial and Operating Highlights
                 (In thousands, except share and operating data)

<TABLE>
<CAPTION>

                                                                        Three Months Ended
                                                                             March 31,
                                                                 -------------------------------
                                                                     2000               1999
                                                                 ------------       ------------
                                                                  (unaudited)        (unaudited)
<S>                                                              <C>                <C>
Revenues:
  Local Access and Voice                                         $    108,544       $    102,257
  Data, Internet and Web Hosting                                      114,527             78,431
  Integration Services                                                 38,623             24,034
                                                                 ------------       ------------
    Total revenues                                                    261,694            204,722

Expenses:
  Network operations                                                   90,169             93,908
  Facilities administration and maintenance                            38,015             22,634
  Cost of goods sold                                                   26,689             15,804
  Selling, general and administrative                                  91,647             57,295
  Depreciation and amortization                                        89,310             71,611
  Deferred compensation                                                 3,664                 21
  Business restructuring, integration and other charges                 2,630              5,399
                                                                 ------------       ------------
    Total operating expenses                                          342,124            266,672
                                                                 ------------       ------------
Loss from operations                                                  (80,430)           (61,950)

Other income (expense):
  Interest expense                                                    (72,933)           (62,178)
  Interest and other income                                           878,139              6,558
                                                                 ------------       ------------
Net income (loss) before minority interest and income taxes           724,776           (117,570)
Provision for income taxes                                             23,423
                                                                 ------------       ------------
Income (loss) before minority interest                                701,353           (117,570)
Minority interest in net loss of subsidiary                             8,299
                                                                 ------------       ------------
Net income (loss)                                                     709,652           (117,570)
Preferred stock dividends and accretions                              (25,946)           (22,483)
                                                                 ------------       ------------
Net income (loss) attributable to common stockholders            $    683,706       $   (140,053)
                                                                 ============       ============

Net income (loss) per common share:

Net (loss) attributable to common stockholders before
   restructuring and gain on sale of Digex stock                 $      (2.94)      $      (2.73)
Gain on sale of Digex stock, net of income taxes                        16.00
Charge for business restructuring, integration and
      other charges                                                     (0.05)             (0.11)
                                                                 ------------       ------------
Basic net income (loss) per common share                         $      13.01       $      (2.84)
                                                                 ============       ============

Diluted net income (loss) per common share                       $       9.02       $      (2.84)
                                                                 ============       ============
Shares used in computing basic and diluted net
     Income (loss) per share:
     Basic                                                         52,545,409         49,352,830
     Diluted                                                       77,010,101         49,352,830

EBITDA (1)                                                       $     15,174       $     15,081

Operating Data: (2)
</TABLE>

<TABLE>
<CAPTION>
                                                                 March 31, 2000   December 31, 1999
                                                                 --------------   -----------------
<S>                                                              <C>              <C>
Data, Internet and Web Hosting Assets
      Web hosting servers                                               2,911              2,311
      Data switches in operation                                          193                185
      NNI connections                                                     959                881

Access and Voice Assets
      Buildings (3)                                                     4,437              4,398
      Voice switches in operation                                          29                 29
      Access line equivalents                                         566,113            501,094

      Employees                                                         5,423              5,073
</TABLE>

(1) EBITDA before certain charges consists of earnings (net loss before minority
    interest) before interest and other income, deferred compensation, income
    taxes, depreciation, amortization, charges for in-process R&D and business
    restructuring, integration and other expenses. EBITDA before certain charges
    does not represent funds available for management's discretionary use and is
    not intended to represent cash flow from operations. EBITDA before certain
    charges should not be considered as an alternative to net income (loss) as
    an indicator of the Company's operating performance or to cash flows as a
    measure of liquidity. In addition, EBITDA before certain charges is not a
    term defined by generally accepted accounting principles, and, as a result,
    the measure of EBITDA before certain charges 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 high capacity connections with leased circuits.



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