-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Mr/89z8vKc6z0jERxIlsQtYiSndoiD2RUnbeIf80OQ3kZuhUG32i1ygbgp8z8sCU CB7x0lIK8M4vatjiaEWD4w== 0000950144-98-011736.txt : 19981029 0000950144-98-011736.hdr.sgml : 19981029 ACCESSION NUMBER: 0000950144-98-011736 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981027 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981028 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERMEDIA COMMUNICATIONS INC CENTRAL INDEX KEY: 0000885067 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 592913586 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-20135 FILM NUMBER: 98732208 BUSINESS ADDRESS: STREET 1: 3625 QUEEN PALM DR STREET 2: STE 720 CITY: TAMPA STATE: FL ZIP: 33619 BUSINESS PHONE: 8138290011 MAIL ADDRESS: STREET 1: 3625 QUEEN PALM DRIVE CITY: TAMPA STATE: FL ZIP: 33619-1309 FORMER COMPANY: FORMER CONFORMED NAME: INTERMEDIA COMMUNICATIONS OF FLORIDA INC DATE OF NAME CHANGE: 19930328 8-K 1 INTERMEDIA COMMUNICATIONS 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): October 27, 1998 ---------------- 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 -------------------------- 2 Item 5. Other Events On October 27, 1998, Intermedia Communications Inc. (the "Company") issued the attached press release. Item 7. Financial Statements and Exhibits Exhibit 99 Press Release, dated October 27, 1998. 2 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: October 27, 1998 INTERMEDIA COMMUNICATIONS INC. ------------------------------ (Registrant) By: /s/ Robert M. Manning ------------------------------ Name: Robert M. Manning Title: Senior Vice President and Chief Financial Officer 3 4 EXHIBIT INDEX
Exhibit Page No. Description No. - ------- ----------- ---- 99 Press Release, dated October 27, 1998.
4 EX-99 2 PRESS RELEASE 1 Exhibit 99 Contact: Curtis Lightburn Vice President, Investor Relations 813-829-2408 cglightburn@intermedia.com INTERMEDIA REPORTS THIRD QUARTER 1998 RESULTS REPORTS RECORD REVENUE AND EBITDA COMPLETES DATA SERVICES AGREEMENT WITH BELL ATLANTIC TAMPA, Florida (October 27, 1998) - Intermedia Communications Inc. (NASDAQ: ICIX) today announced record revenues and EBITDA for the quarter ended September 30, 1998. Revenue for the third quarter of $192.4 million was up 170 percent over third quarter 1997 revenues of $71.3 million. Competitive Local services revenue was up 271 percent over the year ago period. EBITDA for the third quarter increased 51 percent over last quarter, to $15.1 million, versus $10.1 million for the second quarter of 1998, and was up $28.4 million versus an EBITDA loss of $13.3 million for the third quarter of 1997. Revenue for the first 9 months of 1998 was $519.4 million, up 214 percent over the $165.3 million reported for the first 9 months of 1997. EBITDA of $15.4 million for the first 9 months of 1998 represented an improvement of $55.3 million versus an EBITDA loss of $39.9 million for the first nine months of 1997. "In the third quarter, Intermedia's employees continued to focus on the execution of our core Integrated Communications Provider strategy," said David C. Ruberg, Intermedia's Chairman, President, and Chief Executive Officer. "As a result, we achieved significantly better financial and operational performance. We also completed a data services agreement with Bell Atlantic. We expect that this agreement, in addition to the agreements we have signed with USWest and Ameritech, will add significant future upside in our growth." REVENUE ANALYSIS Enhanced Data and Internet Services Enhanced Data and Internet continued its strong growth. Revenue for the quarter was $47.6 million, an increase of 54 percent over third quarter 1997 and an increase of 12 percent over second quarter 1998. Strong growth was seen in all data product offerings versus second quarter 1998. Web site management grew by 19 percent and Internet connectivity by 14 percent sequentially. -MORE- 2 "In the quarter, we were particularly pleased by the improving revenue growth at DIGEX, where revenue has shown accelerating double digit sequential growth each of the last three quarters," said Ruberg. "Additionally, our strength in the Internet arena improves our strategic position in the marketplace." Enterprise data services, principally frame relay and ATM, showed strong growth, with recurring revenue up 14 percent over second quarter 1998. Frame relay nodes in service increased by 3,143 to 30,266, up 75 percent over third quarter 1997 and up 12 percent versus second quarter 1998. Competitive Local Services Competitive Local services continued its strong growth. Revenue for the quarter was $43.8 million, an increase of 271 percent over third quarter 1997 and an increase of 15 percent over second quarter 1998. Growth in revenues was primarily due to the addition of 31,754 access lines in service. Total access lines in service at the end of the third quarter was 311,898, a 515 percent increase versus third quarter 1997 and an 11 percent increase versus second quarter 1998. "100 percent of the net additions were on-switch. Our focus on selling access lines that are on-switch has improved gross margins, operating efficiency and customer service," said Robert M. Manning, Intermedia's Chief Financial Officer. Interexchange Services Interexchange revenue was $71.6 million in the third quarter, a 159 percent increase versus third quarter 1997, but a 14 percent decrease versus second quarter 1998. The sequential decrease was primarily a result of the previously announced exit of the wholesale interexchange business and selective revenue pruning. "Intermedia deliberately pruned revenue in certain segments that were either non-strategic or economically unattractive," said Manning. "The decisions we made lowered revenue growth, but increased margins and the long term health of the business. We expect revenue growth in the long distance segment to pick up again in 1999." Integration Services Integration Services continued its strong growth. Revenue for the quarter was $29.4 million, an increase of 11 percent over second quarter 1998. Growth in revenues resulted from continued increases in sales productivity and several large systems sales. MARGIN ANALYSIS Gross Margin increased to 38.8 percent versus 16.5 percent for the third quarter 1997 and 34.9 percent for the second quarter 1998. The continuing improvement is due to improved revenue mix in favor of higher margin services, the exiting of certain lines of business, and a higher percentage of on-switch traffic. Access lines on-switch as a percent of total lines in service increased to 66 percent from 59 percent at the end of the second quarter 1998. -MORE- 3 SG&A as a percent of revenue decreased to 30.9 percent versus 35.1 percent in the third quarter 1997. The year-over-year improvement was a result of greater operating leverage and attainment of synergies from acquired companies. SG&A as a percent of revenue increased to 30.9 percent in the third quarter 1998 versus 29.6 percent in the second quarter of 1998 mostly as a function of increased headcount in operations and circuit provisioning to accommodate projected enhanced data growth. EBITDA margin, as a percent of revenue, continued its steady increase to 7.9 percent in the third quarter 1998 versus 5.3 percent in the second quarter 1998, and negative 18.6 percent a year ago. OUTLOOK "Our focus on profitability has resulted in dramatic improvements in gross margins and EBITDA margins," said Manning. "The Integration Program is going well, and has contributed to our improvement in operating efficiency. We expect that our continued focus on pursuing the best revenue opportunities, reducing costs and selling to the right customers will enable us to continue to improve profit margins." "Throughout 1998, we have made every effort to balance our drive for increasing near term profitability with our desire to invest now for future success," said Manning. "We have the financial wherewithal to do that, and the current volatility in the credit markets is not expected to have any impact on our ability to execute on our business plan. In 1999, we expect to drive increasing revenues and improving margins through the business infrastructure that we have put in place." Intermedia will host a conference call to discuss third quarter results and outlook on October 28th, 1998 at 8:30am Eastern. The conference call number is 800-540-7046 or 212-676-5363. 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 implement 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, 1997, and are updated periodically through the filing of reports and registration statements with the Securities and Exchange Commission. 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 Communications Inc. is headquartered in Tampa, Florida. Intermedia can be found on the World Wide Web at www.intermedia.com. -MORE- 4 INTERMEDIA COMMUNICATIONS INC. FINANCIAL HIGHLIGHTS (In thousands except share data)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------- ------------------------------- 1998 1997 1998 1997 ------------- ------------ ------------ ------------- Revenue: Local network $ 43,778 $ 11,814 $ 115,648 $ 25,457 Enhanced data 47,585 30,843 126,790 54,831 Interexchange 71,552 27,637 199,049 80,877 Integration 29,438 952 77,882 4,152 ------------ ------------ ------------ ------------ Total revenue 192,353 71,246 519,369 165,317 Expenses: Network operations 83,778 49,032 243,337 116,295 Facilities administration and maintenance 14,935 9,985 48,503 21,409 Cost of goods sold 19,014 503 49,923 2,537 Selling, general and administrative 59,482 25,004 162,231 64,983 Depreciation and amortization 53,662 16,100 142,827 34,274 Charge for in-process R&D -- 60,000 85,000 60,000 Business restructuring and integration expenses 9,646 -- 62,198 -- ------------ ------------ ------------ ------------ Total operating expenses 240,517 160,624 794,019 299,498 ------------ ------------ ------------ ------------ Loss from operations (48,164) (89,378) (274,650) (134,181) Other income (expense): Interest expense (53,942) (17,689) (151,101) (39,895) Other income 9,310 6,736 26,078 16,691 ------------ ------------ ------------ ------------ Loss before extraordinary items (92,796) (100,331) (399,673) (157,385) Extraordinary loss on early extinguishment of debt -- (43,834) -- (43,834) ------------ ------------ ------------ ------------ Net loss (92,796) (144,165) (201,219) Preferred stock dividends & accretions (30,647) (13,895) (68,118) (27,118) ------------ ------------ ------------ ------------ Net loss attributable to common shareholders $ (123,443) $ (158,060) $ (467,791) $ (228,337) ============ ============ ============ ============ Loss per common share: Net loss before charge for in-process R&D and business restructuring including other income, expenses and preferred stock dividends and accretions $ (2.42) $ (1.62) $ (7.64) $ (3.78) Charge for in-process R&D -- (1.79) (2.03) (1.82) Charge for extinguishment of debt -- (1.31) -- (1.33) Charge for business restructuring (.20) -- (1.48) -- ------------ ------------ ------------ ------------ Net loss per common share $ (2.62) $ (4.72) $ (11.15) $ (6.93) ============ ============ ============ ============ Weighted average shares outstanding (1) 47,041,191 33,479,460 41,948,399 32,925,462 EBITDA(2) $ 15,144 $ (13,278) $ 15,375 $ (39,907)
(1) Share and per share amounts for the three months and the nine months ended September 30, 1998, have been restated to reflect a two-for-one stock split in June 1998. (2) Earnings before interest, taxes, depreciation and amortization (EBITDA) is a measure of operating cash flow. EBITDA excludes an in-process R&D charge, related to the acquisition of Shared accounted for in the first quarter of 1998, and a business restructuring and integration expense charge. -MORE- 5 Other Data:
SEPTEMBER 30, JUNE 30, 1998 1998 ----------------- ------------------ Local and Long Distance Services:(1) Buildings connected(2) 4,331 4,309 Voice switches in operation 21 21 Long distance billable minutes (000s) 516,897 551,145 Access line equivalents 311,898 280,144 Access line equivalents per local switch(3) 7,303 6,180 Enhanced Data Services:(1) Data switches installed 164 153 Nodes in service(4) 30,266 27,123 NNI connections 608 553 Gross PP&E (000s) $ 1,399,896 $ 1,246,879 Employees 3,678 3,597 Stock Price:(5) High Low Close ---------- ----------- --------- First Quarter $ 45.625 $ 26.907 $ 39.813 Second Quarter $ 45.234 $ 30.875 $ 41.938 Third Quarter $ 41.500 $ 20.375 $ 24.563
(1) Amounts reflected in the table are based upon information contained in the Company's operating records. (2) Includes both on-net direct connections with Intermedia-owned fiber optic cable and on-net extended connections with leased circuits. (3) Calculated by dividing the number of on-switch access line equivalents by the number of switches providing local service. Excludes access lines contributed by Shared. (4) Amount represents an individual point of origination and termination of data served by the Company's enhanced network. (5) Stock prices are adjusted for the Company's stock split on June 15, 1998. -END- -----END PRIVACY-ENHANCED MESSAGE-----