[Intermedia Details Restructuring Program]
Integration of Five Companies Into One Expected to Yield Substantial Operational and Financial Benefits
TAMPA, Fla.--(BUSINESS WIRE)--June 30, 1998--Intermedia Communications Inc. (NASDAQ:ICIX) today released additional information regarding its previously announced restructuring program. The restructuring initiatives are designed to solidify the transformation of Intermedia's five separate companies into one integrated communications provider (ICP).
"The restructuring program, composed of a number of specific projects, positions us to take full operational and economic advantage of the recent acquisitions of DIGEX, Shared Technologies Fairchild, LDS Communications, and National Tel," said David C. Ruberg, Intermedia's chairman, president, and chief executive officer. "It will allow us to complete the consolidation and deployment of necessary infrastructure for the future, optimize and integrate all of our network assets, and exit non-strategic lines of business. It will enable us to streamline the Company, and to effectively and efficiently continue our rapid growth, with even greater focus." Intermedia expects to complete the majority of these projects during the next 12 to 15 months.
The restructuring program, established to facilitate efficient and timely integration of these recent acquisitions and to concentrate efforts on Intermedia's core business, is expected to return an ongoing operating benefit. The Company reported that a one-time charge will be taken in the second quarter to cover the cost of exiting non-strategic businesses and executing changes to business activities, providing employee benefits, the writedown of certain assets, the consolidation of facilities, and the termination of unfavorable contracts. The resulting cost savings will be manifest in workforce efficiency, and network and infrastructure improvements. The restructuring program will result in the elimination of approximately 280 positions, or approximately 7% of current employment. The Company reported that it has undertaken reasonable efforts to inform all affected employees of the position eliminations and to communicate the program's employee benefits to them. Despite the elimination of positions as a part of this restructuring program, Intermedia's total employee base is expected to increase this year and over the next few years as the Company grows.
"Our decision to implement the program at this time is a milestone in our corporate metamorphosis and was predicated by our rapid growth over the past 18 months, much of it due to acquisition," added Ruberg. "While some firms implement restructuring programs in response to cyclical downturns or other market disruptions, ours is a result of successfully executing our growth strategy. The cost reductions resulting from this program place Intermedia in an even stronger position for continued growth."
Robert Manning, Intermedia's chief financial officer, predicted that a restructured Intermedia will perform more efficiently and effectively. "Defining and implementing the many component projects of this program has provided additional impetus to a company already executing its mission," said Manning. "This is a company-wide initiative that draws upon the expertise of personnel from all operating and staff organizations. Each project has a detailed action plan and a timetable for completion. In fact, several of these projects have been completed and more are underway. We consider this program an important business management tool, one that we expect will enhance the long-term value of Intermedia by giving us a measurably reduced cost base."
The magnitude of the one-time restructuring charge, other costs associated with the implementation of the restructuring program, and the anticipated ongoing cost savings will be included in the Company's report of second quarter 1998 results on July 29.
"The Company's priority to take care of its most vital assets, its employees, is an important element of this program," commented Trevor Dignall, Intermedia's senior vice president of Human Resources. "During this process, we expect to offer as many of our affected employees as possible other positions within the Company. Intermedia has already eliminated a number of positions as part of the early integration of its acquisitions, in support of our strategic transformation into an ICP."
The Company listed the following projects as among those included in the restructuring program:
-- Consolidation, rationalization and integration of network facilities, collocations, network management, and network facility procurement, including efforts related to the recently announced preferred provider relationships with US WEST and Ameritech - all of which augment the network consolidation brought about by Intermedia's' recently announced capacity purchase from Williams Communications;
-- Consolidation and integration of certain elements of the sales forces of Intermedia, DIGEX, Shared Technologies Fairchild, LDS, and National Tel, including the integration of the companies' products and services;
-- The previously announced development and integration of information systems, including the integration of multiple billing systems, the introduction of automated sales force tools, the deployment of workflow management tools, and the automation of interfaces with all of Intermedia's trading partners;
-- Consolidation of staff and management, offices, and elimination of unnecessary legal entities across the entire company;
-- Exiting non-strategic businesses such as the previously reported exit from the wholesale interexchange business and cessation of direct agent selling programs. |
