================================================================================
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): February 28, 2002
HIGH SPEED ACCESS CORP.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
000-26153 61-1324009
- -------------------------------------- --------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
10901 WEST TOLLER DRIVE
LITTLETON, COLORADO 80127
- ---------------------------------------- --------------------------------------
(Address of Principal Executive offices) (Zip Code)
(720) 922-2500
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former Name or Former Address, if changed Since Last Report)
================================================================================
ITEM 1. NOT APPLICABLE.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 28, 2002, High Speed Access Corp. ("HSA")
consummated the sale of substantially all of its assets (the "Asset Sale") to CC
Systems, LLC ("Charter") immediately after obtaining the required approval of
HSA's stockholders. The Asset Sale was effected pursuant to an asset purchase
agreement (the "Asset Purchase Agreement"), dated September 28, 2001, between
HSA and Charter Communications Holding Company, LLC ("Charter Holdco").
Subsequent to September 28, 2001, Charter Holdco assigned to Charter the rights
to purchase assets and certain other rights under the Asset Purchase Agreement
and certain other related agreements.
The assets acquired by Charter pursuant to the Asset Purchase
Agreement were used by HSA primarily in the provision of high speed internet
access to residential and commercial customers of Charter and its affiliates via
cable modems. The assets generated approximately 60% of HSA's total revenue for
the first three fiscal quarters of 2001 and approximately 55% of its total
revenue for the fiscal year 2000. Following the completion of HSA's cost
reduction efforts initiated in the second half of 2001, the assets acquired by
Charter generated substantially all of HSA's total revenue. Accordingly, prior
to the Asset Sale, Charter and its affiliates were also HSA's largest customer.
Pursuant to the terms of the Asset Purchase Agreement, Charter
acquired certain assets from HSA in consideration for (i) the payment to HSA of
a cash amount equal to $81.1 million, subject to certain adjustments, (ii) the
assumption of certain of HSA's operating liabilities, and (iii) the tender to
HSA of all HSA's outstanding shares of Series D Preferred Stock and warrants
held by Charter Holdco to purchase shares of Common Stock. At the closing,
Charter agreed to certain reductions in HSA's indemnification obligations under
the Asset Purchase Agreement. Charter has held back an aggregate of $2.75
million of the purchase price to secure certain purchase price adjustments and
indemnity claims against HSA under the Asset Purchase Agreement. Of this amount,
$750,000 will be payable to HSA as specified in the Asset Purchase Agreement on
or about April 30, 2002, less any adjustments, and $2.0 million will be payable
on or about February 28, 2003, less any amounts used to secure or satisfy actual
indemnification claims. After taking account of the various purchase price
adjustments, obligations paid by Charter on HSA's behalf and the indemnification
holdback, HSA received from Charter on February 28, 2002, a cash amount equal to
$69.5 million.
Also on February 28, 2002, HSA purchased 20,222,139 shares of
Common Stock from Vulcan for an aggregate purchase price of $4,448,870, or $.22
per share. The consummation of the Asset Sale was a condition precedent to the
purchase of Common Stock from Vulcan. Following the consummation of the Asset
Sale and the purchase of Common Stock from Vulcan, none of Vulcan, Charter or
any of their respective affiliates hold any equity interest in HSA. Accordingly,
HSA is no longer affiliated with Vulcan, Charter or any of their respective
affiliates.
2
All information concerning the Asset Sale and the purchase of
Common Stock from Vulcan, as well as the description of HSA's plans following
the consummation of the Asset Sale, that is part of the Definitive Proxy
Statement on Schedule 14A, as filed with the Securities and Exchange Commission
(the "SEC") by HSA on February 1, 2002, is incorporated herein by reference.
ITEMS 3-6. NOT APPLICABLE.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
Not Applicable.
(b) Pro Forma Financial Information
HIGH SPEED ACCESS CORP.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
For purposes of the High Speed Access Corp. (the "Company") Unaudited Pro
Forma Condensed Consolidated Financial Information and the accompanying notes
set forth herein, except as otherwise specifically noted or unless the context
otherwise requires, any reference herein to "Charter" should be deemed a
reference individually and/or collectively to any of the following Charter
entities: Charter Communications Holding Company, LLC, Charter Communications,
Inc, CC Systems, LLC, and Charter Communications Ventures, LLC.
The following unaudited pro forma condensed consolidated balance sheet as of
September 30, 2001 and the unaudited pro forma condensed consolidated statements
of continuing operations for the nine month periods ended September 30, 2001 and
2000, the years ended December 31, 2000 and 1999 and the period April 3, 1998
(Inception) to December 31, 1998, have been presented to give effect to the
discontinuance of the Company's High Speed Internet Access and Related Services
business, which included the Asset Sale. The unaudited pro forma financial
information also gives effect to the discontinuance of the Company's
International ISP Infrastructure Services business. The pro forma financial
information illustrates (i) the effect of the Asset Sale and other discontinued
businesses as if they had been consummated on September 30, 2001 for the
unaudited pro forma balance sheet, and (ii) the effect of the Asset Sale and
other discontinued businesses as if it had been consummated on April 3, 1998 for
the unaudited pro forma condensed consolidated statements of continuing
operations.
The "pro forma" amounts in the following statements give effect to the Asset
Sale and the related discontinuance of the high speed Internet access and
related services provided to Charter. The "as adjusted" amounts in the following
statements give effect to the other
3
discontinued business including the exit of non-Charter system agreements, the
disposal of Digital Chainsaw, the discontinuance of efforts to enter the DSL
market, and the termination of our International ISP Infrastructure Services
agreement with KNRW.
The unaudited pro forma financial information also gives effect to the
purchase of 20,222,139 shares of our common stock from Vulcan, as if the
purchase had occurred on September 30, 2001 for the unaudited pro forma
condensed consolidated balance sheet and on June 4, 1999, the date on which the
shares were originally issued, for the unaudited pro forma condensed
consolidated statements of continuing operations.
The unaudited pro forma condensed consolidated financial information should
be read in conjunction with our historical consolidated financial statements and
accompanying notes. The unaudited pro forma condensed consolidated financial
information is presented for comparative purposes only and is not intended to be
indicative of actual consolidated results of continuing operations or
consolidated financial position that would have been achieved had the Asset Sale
been consummated and had the other businesses been discontinued as of the dates
indicated above, nor do they purport to indicate results which may be attained
in the future.
4
HIGH SPEED ACCESS CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2001
<Table>
<Caption>
ADJUSTMENTS
HIGH SPEED RELATING TO
ACCESS CORP. BUSINESS BUSINESS
(HISTORICAL) DISPOSITION DISPOSITION PRO FORMA
------------ ----------- ----------- ----------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS
Current assets:
Cash and cash equivalents ........................... $ 12,132 $ 70,816(a) $ (11,430)(c) $ 71,518
Short-term investments .............................. 22,419 22,419
Restricted cash ..................................... 2,404 2,404
Accounts receivable, net ............................ 5,131 (2,951)(a) 2,180
Indemnity holdback -- Charter ....................... -- 2,750(a) 2,750
Prepaid expenses and other current assets ........... 6,528 (4,821)(a) 1,707
---------- ---------- ---------- ----------
Total current assets .......................... 48,614 65,794 (11,430) 102,978
Property, equipment and improvements, net ............. 29,472 (28,322)(a) 1,150
Deferred distribution agreement costs, net ............ 9,082 (9,082)(a) --
Other non-current assets .............................. 5,424 (4,966)(a) 458
---------- ---------- ---------- ----------
Total assets .................................. $ 92,592 $ 23,424 $ (11,430) $ 104,586
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................... $ 5,467 $ 5,467
Accrued compensation and related expenses ........... 7,939 $ (1,010)(a) 6,929
Other current liabilities ........................... 13,048 13,048
Long-term debt, current portion ..................... 2,359 $ (2,345)(c) 14
Capital lease obligations, current portion .......... 8,261 (1,602)(a) (5,179)(c) 1,480
---------- ---------- ---------- ----------
Total current liabilities ..................... 37,074 (2,612) (7,524) 26,938
Long-term debt ........................................ 516 (516)(c) --
Capital lease obligations ............................. 5,311 (1,297)(a) (1,948)(c) 2,066
Other liabilities ..................................... 551 551
---------- ---------- ---------- ----------
Total liabilities ............................. 43,452 (3,909) (9,988) 29,555
---------- ---------- ---------- ----------
Stockholders' equity:
Preferred stock, $.01 par value ..................... 1 (1)(d) --
Common stock, $.01 par value ........................ 604 604
Additional paid-in-capital .......................... 742,144 (3,662)(d) 738,482
Treasury stock, at cost ............................. -- (3,663)(d) 3,663(d) --
Deferred compensation ............................... (2,056) (2,056)
Accumulated deficit ................................. (691,907) 30,996(b) (1,442)(c) (662,353)
Accumulated other comprehensive income .............. 354 354
---------- ---------- ---------- ----------
Total stockholders' equity .................... 49,140 27,333 (1,442) 75,031
---------- ---------- ---------- ----------
Total liabilities and stockholders' equity .... $ 92,592 $ 23,424 $ (11,430) $ 104,586
========== ========== ========== ==========
<Caption>
PURCHASE OF
VULCAN
COMMON
SHARES AS ADJUSTED
----------- -----------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS
Current assets:
Cash and cash equivalents ........................... $ (4,449)(e) $ 67,069
Short-term investments .............................. 22,419
Restricted cash ..................................... 2,404
Accounts receivable, net ............................ 2,180
Indemnity holdback -- Charter ....................... 2,750
Prepaid expenses and other current assets ........... 1,707
---------- ----------
Total current assets .......................... (4,449) 98,529
Property, equipment and improvements, net ............. 1,150
Deferred distribution agreement costs, net ............ --
Other non-current assets .............................. 458
---------- ----------
Total assets .................................. $ (4,449) $ 100,137
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................... $ 5,467
Accrued compensation and related expenses ........... 6,929
Other current liabilities ........................... 13,048
Long-term debt, current portion ..................... 14
Capital lease obligations, current portion .......... 1,480
---------- ----------
Total current liabilities ..................... 26,938
Long-term debt ........................................ -- --
Capital lease obligations ............................. 2,066
Other liabilities ..................................... 551
---------- ----------
Total liabilities ............................. -- 29,555
---------- ----------
Stockholders' equity:
Preferred stock, $.01 par value ..................... --
Common stock, $.01 par value ........................ 604
Additional paid-in-capital .......................... 738,482
Treasury stock, at cost ............................. $ (4,449)(e) (4,449)
Deferred compensation ............................... (2,056)
Accumulated deficit ................................. (662,353)
Accumulated other comprehensive income .............. 354
---------- ----------
Total stockholders' equity .................... (4,449) 70,582
---------- ----------
Total liabilities and stockholders' equity .... $ (4,449) $ 100,137
========== ==========
</Table>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
5
HIGH SPEED ACCESS CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
<Table>
<Caption>
UNAUDITED
INCOME ADJUSTMENTS
HIGH SPEED STATEMENT OF RELATING TO
ACCESS CORP. BUSINESS BUSINESS
(HISTORICAL) DISPOSITION DISPOSITION PRO FORMA
------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Net revenue ..................... $ 27,700 $ 16,529 $ 11,171
------------ ------------ ------------ ------------
Costs and expenses:
Operating ..................... 62,319 31,812 30,507
Engineering ................... 17,466 9,904 7,562
Sales and marketing ........... 8,603 4,508 4,095
General and
administrative:
Amortization of
distribution
agreement costs .......... 5,322 2,097 3,225
Asset impairment
charges .................. 29,147 29,147
Other general and
administrative
expenses ................. 24,590 15,947 8,643
------------ ------------ ------------ ------------
Total general and
administrative ...... 59,059 18,044 41,015
------------ ------------ ------------ ------------
Total costs and
expenses ............ 147,447 64,268 83,179
------------ ------------ ------------ ------------
Loss from continuing
operations ................... (119,747) (47,739) (72,008)
Investment income ............... 2,835 2,835
Interest expense ................ (1,778) (924) $ (597)(a) (257)
------------ ------------ ------------ ------------
Net loss from continuing
operations ................... $ (118,690) $ (48,663) $ (597) $ (69,430)
============ ============ ============ ============
Basic and diluted net loss
from continuing
operations applicable
to common
stockholders ................. $ (2.02) $ (1.18)
============ ============
Shares used in the
calculation of basic
and diluted net loss
from continuing
operations applicable
to common stockholders
per share .................... 58,755,437 58,755,437
<Caption>
OTHER
DISCONTINUED
BUSINESSES AS ADJUSTED
------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Net revenue ..................... $ 11,171(b) --
------------ ------------
Costs and expenses:
Operating ..................... 30,507(b) --
Engineering ................... 7,562(b) --
Sales and marketing ........... 4,095(b) --
General and
administrative:
Amortization of
distribution
agreement costs .......... 3,225(b) --
Asset impairment
charges .................. 29,147(b) --
Other general and
administrative
expenses ................. 4,322(b) $ 4,321
------------ ------------
Total general and
administrative ...... 36,694 4,321
------------ ------------
Total costs and
expenses ............ 78,858 4,321
------------ ------------
Loss from continuing
operations ................... (67,687) (4,321)
Investment income ............... 2,835
Interest expense ................ (257)
------------ ------------
Net loss from continuing
operations ................... $ (67,687) $ (1,743)
============ ============
Basic and diluted net loss
from continuing
operations applicable
to common
stockholders ................. $ (0.05)
============
Shares used in the
calculation of basic
and diluted net loss
from continuing
operations applicable
to common stockholders
per share .................... 38,533,298(c)
</Table>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
6
HIGH SPEED ACCESS CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
<Table>
<Caption>
UNAUDITED
INCOME ADJUSTMENTS
HIGH SPEED STATEMENT OF RELATING TO
ACCESS CORP. BUSINESS BUSINESS
(HISTORICAL) DISPOSITION DISPOSITION PRO FORMA
------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Net revenue ..................... $ 9,033 $ 5,113 $ 3,920
------------ ------------ ------------ ------------
Costs and expenses:
Operating ..................... 48,923 22,092 26,831
Engineering ................... 16,439 7,613 8,826
Sales and marketing ........... 18,393 9,938 8,455
General and
administrative:
Amortization of
distribution
agreement costs .......... 1,912 1,337 575
Other general and
administrative
expenses ................. 15,803 7,588 8,215
------------ ------------ ------------ ------------
Total general and
administrative ...... 17,715 8,925 8,790
------------ ------------ ------------ ------------
Total costs and
expenses ............ 101,470 48,568 52,902
------------ ------------ ------------ ------------
Loss from continuing
operations ................... (92,437) (43,455) (48,982)
Investment income ............... 5,535 5,535
Interest expense ................ (1,564) (689) $ (669)(a) (206)
------------ ------------ ------------ ------------
Net loss from
continuing operations ........ $ (88,466) $ (44,144) $ (669) $ (43,653)
============ ============ ============ ============
Basic and diluted net
loss from continuing
operations
applicable to common
stockholders ................. $ (1.59) $ (0.79)
============ ============
Shares used in the
calculation of basic
and diluted net loss
from continuing
operations
applicable to common
stockholders per share ....... 55,563,508 55,563,508
<Caption>
OTHER
DISCONTINUED
BUSINESSES AS ADJUSTED
------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Net revenue ..................... $ 3,920(b) --
------------ ------------
Costs and expenses:
Operating ..................... 26,831(b) --
Engineering ................... 8,826(b) --
Sales and marketing ........... 8,455(b) --
General and
administrative:
Amortization of
distribution
agreement costs .......... 575(b) --
Other general and
administrative
expenses ................. 2,590(b) $ 5,625
------------ ------------
Total general and
administrative ...... 3,165 5,625
------------ ------------
Total costs and
expenses ............ 47,277 5,625
------------ ------------
Loss from continuing
operations ................... (43,357) (5,625)
Investment income ............... 5,535
Interest expense ................ (206)
------------ ------------
Net loss from
continuing operations ........ $ (43,357) $ (296)
============ ============
Basic and diluted net
loss from continuing
operations
applicable to common
stockholders ................. $ (0.01)
============
Shares used in the
calculation of basic
and diluted net loss
from continuing
operations
applicable to common
stockholders per share ....... 35,341,369(c)
</Table>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
7
HIGH SPEED ACCESS CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
<Table>
<Caption>
UNAUDITED
INCOME ADJUSTMENTS
HIGH SPEED STATEMENT OF RELATING TO
ACCESS CORP. BUSINESS BUSINESS
(HISTORICAL) DISPOSITION DISPOSITION PRO FORMA
------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Net revenue ..................... $ 14,200 $ 7,887 $ 6,313
------------ ------------ ------------ ------------
Costs and expenses:
Operating ..................... 70,289 32,781 37,508
Engineering ................... 23,960 12,351 11,609
Sales and marketing ........... 25,147 13,958 11,189
General and
administrative:
Amortization of
distribution
agreement costs .......... 2,674 1,578 1,096
Asset impairment
charges .................. 22,444 22,444
Other general and
administrative
expenses ................. 25,309 15,197 10,112
------------ ------------ ------------ ------------
Total general and
administrative ...... 50,427 16,775 33,652
------------ ------------ ------------ ------------
Total costs
and expenses ........ 169,823 75,865 93,958
------------ ------------ ------------ ------------
Loss from continuing
operations ................... (155,623) (67,978) (87,645)
Investment income ............... 7,371 7,371
Interest expense ................ (2,158) (1,008) $ (914)(a) (236)
------------ ------------ ------------ ------------
Net loss from
continuing operations ........ $ (150,410) $ (68,986) $ (914) $ (80,510)
============ ============ ============ ============
Basic and diluted net
loss from continuing
operations
applicable to common
stockholders ................. $ (2.67) $ (1.43)
============ ============
Shares used in the
calculation of basic
and diluted net loss
from continuing
operations
applicable to common
stockholders per share ....... 56,347,891 56,347,891
<Caption>
OTHER
DISCONTINUED
BUSINESSES AS ADJUSTED
------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Net revenue ..................... $ 6,313(b) --
------------ ------------
Costs and expenses:
Operating ..................... 37,508(b) --
Engineering ................... 11,609(b) --
Sales and marketing ........... 11,189(b) --
General and
administrative:
Amortization of
distribution
agreement costs .......... 1,096(b) --
Asset impairment
charges .................. 22,444(b) --
Other general and
administrative
expenses ................. 2,612(b) $ 7,500
------------ ------------
Total general and
administrative ...... 26,152 7,500
------------ ------------
Total costs
and expenses ........ 86,458 7,500
------------ ------------
Loss from continuing
operations ................... (80,145) (7,500)
Investment income ............... 7,371
Interest expense ................ (236)
------------ ------------
Net loss from
continuing operations ........ $ (80,145) $ (365)
============ ============
Basic and diluted net
loss from continuing
operations
applicable to common
stockholders ................. $ (0.01)
============
Shares used in the
calculation of basic
and diluted net loss
from continuing
operations
applicable to common
stockholders per share ....... 36,125,752(c)
</Table>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
8
HIGH SPEED ACCESS CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<Table>
<Caption>
UNAUDITED
INCOME ADJUSTMENTS
HIGH SPEED STATEMENT OF RELATING TO
ACCESS CORP. BUSINESS BUSINESS
(HISTORICAL) DISPOSITION DISPOSITION PRO FORMA
------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Net revenue ..................... $ 3,446 $ 1,765 $ 1,681
------------ ------------ ------------ ------------
Costs and expenses:
Operating ..................... 24,021 11,491 12,530
Engineering ................... 9,255 4,422 4,833
Sales and marketing ........... 18,134 7,153 10,981
General and
administrative:
Amortization of
distribution
agreement costs .......... 3,723 154 3,569
Other general and
administrative
expenses ................. 14,927 5,827 9,100
------------ ------------ ------------ ------------
Total general and
administrative ...... 18,650 5,981 12,669
------------ ------------ ------------ ------------
Total costs
and expenses ........ 70,060 29,047 41,013
------------ ------------ ------------ ------------
Loss from continuing
operations ................... (66,614) (27,282) (39,332)
Investment income ............... 6,181 6,181
Interest expense ................ (519) (190) $ (190)(a) (139)
------------ ------------ ------------ ------------
Net loss from continuing
operations ................... (60,952) (27,472) (190) (33,290)
Mandatorily redeemable
convertible
preferred stock
dividends .................... (1,122) (1,122)
Accretion to redemption
value of mandatorily
redeemable
convertible
preferred stock .............. (229,148) (229,148)
------------ ------------
Net loss from continuing
operations available
to common stockholders ....... $ (291,222) $ (27,472) $ (190) $ (263,560)
============ ============ ============ ============
Basic and diluted net
loss from continuing
operations applicable
to common stockholders ....... $ (8.69) $ (7.87)
============ ============
Shares used in the
calculation of basic
and diluted net loss
from continuing operations
applicable to common
stockholders per share ....... 33,506,735 33,506,735
<Caption>
OTHER
DISCONTINUED
BUSINESSES AS ADJUSTED
------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Net revenue ..................... $ 1,681(b) --
------------ ------------
Costs and expenses:
Operating ..................... 12,530(b) --
Engineering ................... 4,833(b) --
Sales and marketing ........... 10,981(b) --
General and
administrative:
Amortization of
distribution
agreement costs .......... 3,569(b) --
Other general and
administrative
expenses ................. 2,350(b) $ 6,750
------------ ------------
Total general and
administrative ...... 5,919 6,750
------------ ------------
Total costs
and expenses ........ 34,263 6,750
------------ ------------
Loss from continuing
operations ................... (32,582) (6,750)
Investment income ............... 6,181
Interest expense ................ (139)
------------ ------------
Net loss from continuing
operations ................... (32,582) (708)
Mandatorily redeemable
convertible
preferred stock
dividends .................... (1,122)
Accretion to redemption
value of mandatorily
redeemable
convertible
preferred stock .............. (229,148)
------------
Net loss from continuing
operations available
to common stockholders ....... $ (32,582) $ (230,978)
============ ============
Basic and diluted net
loss from continuing
operations applicable
to common stockholders ....... $ (17.39)
============
Shares used in the
calculation of basic
and diluted net loss
from continuing operations
applicable to common
stockholders per share ....... 13,284,596(c)
</Table>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
9
HIGH SPEED ACCESS CORP.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF
CONTINUING OPERATIONS
FOR THE PERIOD APRIL 3, 1998 (INCEPTION) TO DECEMBER 31, 1998
<Table>
<Caption>
UNAUDITED
INCOME ADJUSTMENTS
HIGH SPEED STATEMENT OF RELATING TO
ACCESS CORP. BUSINESS BUSINESS
(HISTORICAL) DISPOSITION DISPOSITION PRO FORMA
------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Net revenue .................. $ 337 $ 56 $ 281
------------ ------------ ------------ ------------
Costs and expenses:
Operating .................. 2,067 942 1,125
Engineering ................ 2,266 997 1,269
Sales and marketing ........ 3,696 1,548 2,148
General and
administrative .......... 2,323 1,022 1,301
------------ ------------ ------------ ------------
Total costs
and expenses ..... 10,352 4,509 5,843
------------ ------------ ------------ ------------
Loss from continuing
operations ................ (10,015) (4,453) (5,562)
Investment income ............ 94 94
Interest expense ............. (54) (54)
------------ ------------ ------------ ------------
Net loss from continuing
operations ................ (9,975) (4,453) (5,522)
Mandatorily redeemable
convertible preferred
stock dividends ........... (385) (385)
Accretion to redemption
value of mandatorily
redeemable convertible
preferred stock ........... (120,282) (120,282)
------------ ------------
Net loss from continuing
operations available
to common stockholders .... $ (130,642) $ (4,453) $ (126,189)
============ ============ ============ ============
Basic and diluted net
loss from continuing
operations applicable
to common stockholders .... $ (21.07) $ (20.35)
============ ============
Shares used in the
calculation of basic
and diluted net loss
from continuing
operations applicable
to common stockholders
per share ................. 6,200,000 6,200,000
<Caption>
OTHER
DISCONTINUED
BUSINESSES AS ADJUSTED
------------ ------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Net revenue .................. $ 281(b) --
------------ ------------
Costs and expenses:
Operating .................. 1,125(b) --
Engineering ................ 1,269(b) --
Sales and marketing ........ 2,148(b) --
General and
administrative .......... 651 $ 650
------------ ------------
Total costs
and expenses ..... 5,193 650
------------ ------------
Loss from continuing
operations ................ (4,912) (650)
Investment income ............ 94
Interest expense ............. (54)
------------ ------------
Net loss from continuing
operations ................ (4,912) (610)
Mandatorily redeemable
convertible preferred
stock dividends ........... (385)
Accretion to redemption
value of mandatorily
redeemable convertible
preferred stock ........... (120,282)
------------
Net loss from continuing
operations available
to common stockholders .... $ (4,912) $ (121,277)
============ ============
Basic and diluted net
loss from continuing
operations applicable
to common stockholders .... $ (19.56)
============
Shares used in the
calculation of basic
and diluted net loss
from continuing
operations applicable
to common stockholders
per share ................. 6,200,000
</Table>
The accompanying notes are an integral part of these pro forma condensed
consolidated financial statements.
10
HIGH SPEED ACCESS CORP.
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
Pro forma adjustments giving effect to the Asset Sale and the discontinuance
of other businesses in the unaudited pro forma condensed consolidated balance
sheet at September 30, 2001 include the following:
a. Reflects the net cash received from Charter, and the elimination of the
assets sold to and the liabilities assumed by Charter as if the Asset Sale had
occurred on September 30, 2002. The cash received, as if the Asset Sale had
occurred on September 30, 2001, is calculated as follows (in millions):
<Table>
Cash purchase price per Agreement............................... $ 81.1
--------
Adjustments:
Current assets acquired by Charter, net of payments
due under Sections 4.02(a) and 4.03(b) of the Agreement.... 0.4
Capital leases and other current liabilities assumed by
Charter.................................................... (4.0)
Indemnity holdbacks........................................... (2.8)
Transaction expenses, net of $2.0 million paid at
September 30, 2001......................................... (3.9)
--------
Total adjustments..................................... (10.3)
--------
Net cash proceeds from sale to Charter.......................... $ 70.8
========
</Table>
After taking into account the various purchase price adjustments, certain
obligations paid by Charter on the Company's behalf and the indemnification
holdback, the Company actually received from Charter on February 28, 2002, a
cash amount equal to $69.5 million.
b. Reflects the gain on the sale of assets sold to and the liabilities
assumed by Charter as if the Asset Sale occurred on September 30, 2001. The
actual gain on the sale of assets will differ to the extent that the actual cash
proceeds from the Asset Sale and the amount of the liabilities assumed by
Charter change (in millions):
<Table>
Net cash proceeds from sale to Charter ...... $ 70.8
Fair value of preferred stock................ 3.7
Liabilities assumed by Charter............... 3.9
Book value of assets acquired by Charter..... (50.2)
Indemnity holdbacks.......................... 2.8
--------
Gain on sale................................. $ 31.0
========
</Table>
11
c. Reflects the use of cash to pay off certain outstanding capital leases
and debt as of September 30, 2001, which resulted in the recognition of a loss
on the extinguishment of these liabilities.
d. Reflects the fair value of 75,000 shares of the Company's Series D Senior
Convertible Preferred Stock held by Charter and its affiliate, Vulcan, received
by the Company as consideration for assets sold and subsequently cancelled as a
result of the Agreement. Fair value was based on the value of the Company's
common stock into which the preferred stock is convertible. Reference was made
to closing market values of the common stock two trading days before and two
trading days after September 28, 2001.
e. Reflects the purchase of 20,222,139 shares of our common stock from
Vulcan for an aggregate purchase price of $4.5 million or $0.22 per share.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF CONTINUING
OPERATIONS
Pro forma adjustments giving effect to the Asset Sale and the discontinuance
of other businesses in the unaudited pro forma condensed consolidated statements
of continuing operations for the nine months ended September 30, 2001 and 2000,
the years ended December 31, 2000 and 1999 and the period April 3, 1998
(Inception) to December 31, 1998, include the following, as if the Asset Sale
had occurred on April 3, 1998.
a. Reflects the elimination of interest expense on capital leases and debt
of the Company that would not have been incurred during each of the nine month
periods ended September 30, 2001 and 2000, the years ended December 31, 2000 and
1999 and the period April 3, 1998 (Inception) to December 31, 1998, as if the
capital leases and debt were paid down at April 3, 1998.
b. Reflect the other discontinued businesses, including the exit from
non-Charter cable systems, the disposal of Digital Chainsaw, the discontinuance
of efforts to enter the DSL market and the termination of our International
infrastructure services agreement with KNRW, as if these events occurred on
April 3, 1998.
c. Reflects the purchase of 20,222,139 shares of our common stock from
Vulcan.
12
(c) Exhibits
2.1 Asset Purchase Agreement, dated September 28, 2001, between
High Speed Access Corp. and Charter Communications Holding
Company, LLC (incorporated by reference to current report on
Form 8-K, filed by HSA on October 1, 2001).
2.2 Letter agreement between High Speed Access Corp., Charter
Communications Holding Company, LLC and CC Systems, LLC dated
February 28, 2002.*
99.1 Press Release, dated February 28, 2002.*
99.2 Financial statements (incorporated by reference to HSA's
Definitive Proxy Statement on Schedule 14A, filed by HSA on
February 1, 2002).
- ----------
* Filed herewith.
ITEMS 8-9. NOT APPLICABLE.
13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
HIGH SPEED ACCESS CORP.
Date: March 11, 2002. By: /s/ GEORGE WILLETT
-------------------------------
Name: George Willett
Title: Chief Financial Officer
14
INDEX TO EXHIBITS
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
2.1 Asset Purchase Agreement, dated September 28, 2001,
between High Speed Access Corp. and Charter
Communications Holding Company, LLC (incorporated by
reference to current report on Form 8-K, filed by HSA
on October 1, 2001).
2.2 Letter agreement between High Speed Access Corp.,
Charter Communications Holding Company, LLC and CC
Systems, LLC dated February 28, 2002.*
99.1 Press Release, dated February 28, 2002.*
99.2 Financial statements (incorporated by reference to
HSA's Definitive Proxy Statement on Schedule 14A, filed
by HSA on February 1, 2002).
</Table>
- ----------
* Filed herewith.
15