SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(MArk One)

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the Quarter Ended June 30, 2001

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934

      For the transition period from      to

                         Commission File Number: 0-20135

                         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)

                               ONE INTERMEDIA WAY
                              TAMPA, FLORIDA 33647
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                 (813) 829-0011
                                Telephone Number

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:

                                Yes |X|  No |_|

             As of July 1, 2001, there were 57,161,806 shares of the
                     Registrant's Common Stock outstanding.

<Page>

                         INTERMEDIA COMMUNICATIONS INC.

                                      INDEX

                                                                            Page
                                                                             No.
                                                                            ----

                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED):

        Condensed Consolidated Statements of Operations--Three and
          Six months ended June 30, 2001 and 2000............................. 3

        Condensed Consolidated Balance Sheets--June 30, 2001
          and December 31, 2000............................................... 4

        Condensed Consolidated Statements of Cash Flows--Six months ended
          June 30, 2001 and 2000.............................................. 5

        Notes to Condensed Consolidated Financial Statements.................. 6

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS...............................................11

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK............20

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.....................................................21

ITEM 2. CHANGES IN SECURITIES.................................................21

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.......................................21

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................21

ITEM 5. OTHER INFORMATION.....................................................21

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................21

SIGNATURES ...................................................................23


                                       2
<Page>

                               PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                              INTERMEDIA COMMUNICATIONS INC.

                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                        (UNAUDITED)
                         (IN THOUSANDS, EXCEPT SHARE INFORMATION)

<Table>
<Caption>
                                                                                                  THREE MONTHS ENDED
                                                                                         --------------------------------
                                                                                         JUNE 30, 2001      JUNE 30, 2000
                                                                                         -------------      -------------
<S>                                                                                       <C>               <C>
Revenues:
     Local access and voice .........................................................     $     68,934      $     80,720
     Data, internet and web hosting .................................................          160,841           127,947
     Integration services ...........................................................           31,459            36,902
                                                                                          ------------      ------------
                                                                                               261,234           245,569

Expenses:
     Network operations .............................................................          133,669            92,586
     Facilities administration and maintenance ......................................           57,856            42,696
     Cost of goods sold .............................................................           34,013            28,726
     Selling, general and administrative ............................................          210,946           152,514
     Depreciation and amortization ..................................................          127,249           117,195
     Deferred compensation ..........................................................              147             1,047
     Business restructuring, merger-related and other charges .......................           35,692             6,731
                                                                                          ------------      ------------
                                                                                               599,572           441,495
                                                                                          ------------      ------------
Loss from operations ................................................................         (338,338)         (195,926)

Other income (expense):
     Interest expense ...............................................................          (69,141)          (64,347)
     Gain on sale of Digex stock ....................................................               --                --
     Other income ...................................................................            2,374            17,007
                                                                                          ------------      ------------
Income (loss) before income taxes, minority interest, cumulative change
     in accounting principle and extraodinary item ..................................         (405,105)         (243,266)
Provision for income taxes ..........................................................               --            (2,193)
                                                                                          ------------      ------------
Income (loss) before minority interest, cumulative change in accounting
     principle and extraordinary item ...............................................         (405,105)         (245,459)
Minority interest in net loss of subsidiary .........................................           18,456            13,082
                                                                                          ------------      ------------
Income (loss) before cumulative change in accounting principle and extraordinary item         (386,649)         (232,377)
Cumulative change in accounting principle ...........................................               --                --
                                                                                          ------------      ------------
Income (loss) before extraordinary item .............................................         (386,649)         (232,377)
Extraordinary gain on early retirement of debt, net of tax ..........................               --            19,861
                                                                                          ------------      ------------
Net income (loss) ...................................................................         (386,649)         (212,516)
Preferred stock dividends and accretions ............................................          (32,951)          (31,747)
                                                                                          ------------      ------------
Net income (loss) attributable to common stockholders ...............................     $   (419,600)     $   (244,263)
                                                                                          ============      ============
Basic earnings (loss) per common share:
     Income (loss) per common share before extraordinary item .......................     $      (7.36)     $      (4.94)
     Extraordinary item .............................................................               --              0.37
                                                                                          ------------      ------------
     Net income (loss) per common share .............................................     $      (7.36)     $      (4.57)
                                                                                          ------------      ------------

Diluted earnings per common share:
     Income (loss) per common share before extraordinary item .......................     $      (7.36)     $      (4.94)
     Extraordinary item .............................................................               --              0.37
                                                                                          ------------      ------------
     Net income (loss) per common share .............................................     $      (7.36)     $      (4.57)
                                                                                          ------------      ------------

Weighted average number of shares outstanding:
     Basic ..........................................................................       57,025,680        53,403,956
     Diluted ........................................................................       57,025,680        53,403,956

<Caption>
                                                                                                   SIX MONTHS ENDED
                                                                                             ------------------------------
                                                                                             JUNE 30, 2001    JUNE 30, 2000
                                                                                             -------------    -------------
<S>                                                                                          <C>               <C>
Revenues:
     Local access and voice .........................................................        $    146,041      $    189,264
     Data, internet and web hosting .................................................             316,288           240,295
     Integration services ...........................................................              66,676            75,525
                                                                                             ------------      ------------
                                                                                                  529,005           505,084
Expenses:
     Network operations .............................................................             243,458           182,755
     Facilities administration and maintenance ......................................             112,501            79,803
     Cost of goods sold .............................................................              55,662            55,415
     Selling, general and administrative ............................................             319,277           242,961
     Depreciation and amortization ..................................................             261,831           206,505
     Deferred compensation ..........................................................               2,813             4,711
     Business restructuring, merger-related and other charges .......................              56,484             9,362
                                                                                             ------------      ------------
                                                                                                1,052,026           781,512
                                                                                             ------------      ------------
Loss from operations ................................................................            (523,021)         (276,428)

Other income (expense):
     Interest expense ...............................................................            (135,557)         (137,280)
     Gain on sale of Digex stock ....................................................                  --           864,321
     Other income ...................................................................              12,593            30,826
                                                                                             ------------      ------------
Income (loss) before income taxes, minority interest, cumulative change
     in accounting principle and extraodinary item ..................................            (645,985)          481,439
Provision for income taxes ..........................................................                  --           (25,616)
                                                                                             ------------      ------------
Income (loss) before minority interest, cumulative change in accounting
     principle and extraordinary item ...............................................            (645,985)          455,823
Minority interest in net loss of subsidiary .........................................              35,259            21,381
                                                                                             ------------      ------------
Income (loss) before cumulative change in accounting principle and extraordinary item            (610,726)          477,204
Cumulative change in accounting principle ...........................................                  --              (166)
                                                                                             ------------      ------------
Income (loss) before extraordinary item .............................................            (610,726)          477,038
Extraordinary gain on early retirement of debt, net of tax ..........................                  --            19,861
                                                                                             ------------      ------------
Net income (loss) ...................................................................            (610,726)          496,899
Preferred stock dividends and accretions ............................................             (65,295)          (57,694)
                                                                                             ------------      ------------
Net income (loss) attributable to common stockholders ...............................        $   (676,021)     $    439,205
                                                                                             ============      ============
Basic earnings (loss) per common share:
     Income (loss) per common share before extraordinary item .......................        $     (11.96)     $       7.92
     Extraordinary item .............................................................                  --              0.38
                                                                                             ------------      ------------
     Net income (loss) per common share .............................................        $     (11.96)     $       8.30
                                                                                             ------------      ------------

Diluted earnings per common share:
     Income (loss) per common share before extraordinary item .......................        $     (11.96)     $       5.63
     Extraordinary item .............................................................                  --              0.25
                                                                                             ------------      ------------
     Net income (loss) per common share .............................................        $     (11.96)    $       5.88
                                                                                             ------------      ------------

Weighted average number of shares outstanding:
     Basic ..........................................................................          56,527,162        52,974,683
     Diluted ........................................................................          56,527,162        79,346,428
</Table>

                            See accompanying notes.


                                       3
<Page>

                         INTERMEDIA COMMUNICATIONS INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT SHARE INFORMATION)

<Table>
<Caption>
                                                                                             JUNE 30, 2001  DECEMBER 31, 2000
                                                                                             -------------  -----------------
                                                           ASSETS
<S>                                                                                           <C>              <C>
Current assets:
     Cash and cash equivalents ..........................................................     $    20,618      $   114,726
     Restricted investments .............................................................          16,871           15,450
     Accounts receivable, less allowance for
        doubtful accounts of $149,901 in 2001 and $58,410 in 2000 .......................         167,508          283,621
     Income Tax Receivable ..............................................................             671           10,510
     Prepaid expenses and other current assets ..........................................          47,820           61,621
                                                                                              -----------      -----------
        Total current assets ............................................................         253,488          485,928
     Telecommunications equipment, net ..................................................       2,043,380        2,067,088
     Investments - available for sale ...................................................              --            9,016
     Intangible assets, net .............................................................         840,508          876,407
     Other assets .......................................................................          36,589           46,033
                                                                                              -----------      -----------
        Total assets ....................................................................     $ 3,173,965      $ 3,484,472
                                                                                              ===========      ===========

                                 LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
Current liabilities:
     Accounts payable ...................................................................     $   118,129      $   126,414
     Other accrued expenses .............................................................         161,116          120,105
     Current portion of long-term debt and capital lease obligations ....................         275,015          128,277
                                                                                              -----------      -----------
        Total current liabilities .......................................................         554,260          374,796
Other long-term liabilities .............................................................           4,230            6,881
Long-term debt and capital lease obligations ............................................       2,549,227        2,392,430
Minority interest .......................................................................         124,029          159,288
Series B redeemable exchangeable preferred stock and accrued dividends, $1.00
  par value; 600,000 shares authorized; 532,239 and 498,053 issued and outstanding
  in 2001 and 2000, respectively ........................................................         524,469          489,787
Series D junior convertible preferred stock and accrued dividends, $1.00 par
  value; 69,000 shares authorized; 53,724 issued and outstanding
  in 2001 and 2000 ......................................................................         134,244          133,914
Series E junior convertible preferred stock and accrued dividends, $1.00 par value;
  87,500 shares authorized; 64,047 shares issued and outstanding
  in 2001 and 2000 ......................................................................         159,817          159,421
Series F junior convertible preferred stock and accrued dividends, $1.00 par
  value; 92,000 shares authorized; 79,600 shares issued and outstanding
  in 2001 and 2000 ......................................................................         197,418          196,897
Series G junior convertible participating preferred stock and accrued dividends, $1.00
  par value; 200,000 shares authorized; 200,000 shares issued and outstanding
  in 2001 and 2000 ......................................................................         173,178          168,082
Stockholders' deficit:
     Preferred stock, $1.00 par value; 911,500 authorized in 2001 and 2000,
       no shares issued .................................................................              --               --
     Series C preferred stock, $1.00 par value; 40,000 shares authorized, no
       shares issued ....................................................................              --               --
     Preferred stock in Digex subsidiary, $.01 par value; 5,000,000 shares authorized;
       100,000 designated as Series A Convertible; 100,000 shares outstanding
       in 2001 and 2000 .................................................................               1                1
     Common stock, $.01 par value; 150,000,000 shares authorized in 2001 and
       and 2000; 57,787,330 and 55,138,703 shares issued and outstanding
       in 2001 and 2000, respectively ...................................................             578              551
     Additional paid-in capital .........................................................       1,051,562        1,022,986
     Cumulative translation adjustment ..................................................            (244)             (38)
     Accumulated deficit ................................................................      (2,288,531)      (1,612,510)
     Unrealized gain on investment ......................................................              --            7,016
     Deferred compensation ..............................................................         (10,273)         (15,030)
                                                                                              -----------      -----------
Total stockholders' deficit .............................................................      (1,246,907)        (597,024)
                                                                                              -----------      -----------
Total liabilities, redeemable preferred stock and stockholders' deficit .................     $ 3,173,965      $ 3,484,472
                                                                                              ===========      ===========
</Table>

                             See accompanying notes.


                                       4
<Page>

                         INTERMEDIA COMMUNICATIONS INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                                       SIX MONTHS ENDED
                                                                               --------------------------------
                                                                               JUNE 30, 2001      JUNE 30, 2000
                                                                               -------------      -------------
<S>                                                                             <C>               <C>
OPERATING ACTIVITIES
      Net income (loss) ................................................        $   (610,726)     $    496,899
      Adjustments to reconcile net income (loss) to net cash
         used in operating activities:
          Gain on sale of Digex stock ..................................                  --          (864,321)
          Depreciation and amortization ................................             266,336           209,690
          Cumulative change in accounting principle.....................                  --               166
          Extraordinary gain on early extinguishment of debt, net of tax                  --           (19,861)
          Amortization of deferred compensation ........................               2,457             4,752
          Non cash restructuring charges ...............................                  --               (51)
          Accretion of interest on notes payable .......................              56,564            60,573
          Provision for doubtful accounts ..............................              22,966            56,868
          Loss on sale of property and equipment .......................                 622             1,726
          Gain on sale of available for sale securities ................             (11,320)               --
          Minority interest in net loss of subsidiary ..................             (35,259)          (21,381)
          Changes in operating assets and liabilities:
              Accounts receivable ......................................              93,146           (52,938)
              Prepaid expenses and other current assets ................              13,802            (7,640)
              Other assets .............................................               4,540             1,129
              Accounts payable .........................................              (8,285)          (26,408)
              Other accrued expenses ...................................              48,229             7,650
                                                                                ------------      ------------
                  Net cash used in operating activities ................            (156,928)         (153,147)

INVESTING ACTIVITIES
      Proceeds from sale of available for sale securities ..............              13,320                --
      Purchases of restricted investments ..............................              (1,421)           (3,366)
      Purchases of telecommunications equipment ........................            (191,191)         (308,847)
      Proceeds from sale of Digex stock, net of issuance costs .........                  --           914,028
      Proceeds from sales of fixed assets ..............................                 762                --
      Proceeds from sale of telecommunications equipment ...............                  --               152
                                                                                ------------      ------------
                  Net cash provided by (used in) investing activities ..            (178,530)          601,967

FINANCING ACTIVITIES
      Proceeds from issuance of long-term debt, net of issuance costs ..             119,000            24,781
      Proceeds from issuance of revolving debt, net of issuance costs ..             144,984                --
      Proceeds from termination of capital leases ......................                  --             1,515
      Proceeds from issuance of note payable ...........................               3,300                --
      Proceeds from issuance of common stock of subsidiary,
        net of issuance costs ..........................................                  --           171,641
      Proceeds from issuance of preferred stock, net of issuance costs .                  --           187,430
      Proceeds from issuance of preferred stock of subsidiary, net .....                  --            85,000
      Exercise of common stock warrants and options ....................               3,943            13,435
      Payments on early extinguishment of debt .........................                  --          (483,150)
      Principal payments on long-term debt and capital lease obligations             (29,671)         (143,500)
                                                                                ------------      ------------
                  Net cash provided by (used in) financing activities ..             241,556          (142,848)

Increase (decrease) in cash and cash equivalents .......................             (93,902)          305,972
Effect of exchange rate on cash ........................................                (206)               --
Cash and cash equivalents at beginning of period .......................             114,726           240,827
                                                                                ------------      ------------

Cash and cash equivalents at end of period .............................        $     20,618      $    546,799
                                                                                ============      ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid ..........................................................        $     72,995      $     93,071
Income taxes paid ......................................................                  --            17,130
Assets acquired under capital lease obligations and note payable .......               9,341            52,264
Amendment to capital lease obligation ..................................                  --                --
Preferred stock issued as dividends on preferred stock .................              34,186            29,935
Common stock issued as dividends on preferred stock ....................              24,270            17,344
Accretion of preferred stock ...........................................               6,839             5,270
</Table>

                             See accompanying notes.


                                       5
<Page>

                         INTERMEDIA COMMUNICATIONS INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

      The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
information set forth therein have been included. The accompanying condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and footnotes included in the Annual Report on
Form 10-K of Intermedia Communications Inc. for the year ended December 31,
2000.

      The consolidated financial statements include the accounts of Intermedia
and its majority and wholly owned subsidiaries, including Digex, Incorporated
("Digex"), a publicly-traded subsidiary of Intermedia. The consolidated
financial statements include 100% of the assets and liabilities of these
subsidiaries and the ownership interests of minority participants are recorded
as "minority interest". All significant intercompany transactions and balances
have been eliminated in consolidation.

      Operating results for the three and six month periods ended June 30, 2001
are not necessarily an indication of the results that may be expected for the
year ending December 31, 2001.

CHANGE IN ACCOUNTING PRINCIPLE

      Effective January 1, 2000, Digex changed its method of accounting for
revenue recognition in accordance with Staff Accounting Bulletin No. 101 ("SAB
101"), Revenue Recognition in Financial Statements. Historically, Digex has
recognized installation revenue, in accordance with industry practice, upon
completion of the managed Web hosting solution. The direct costs associates with
the installation were expensed as incurred. Under the new accounting method
adopted retroactive to January 1, 2000, Digex now recognizes installation
revenue and related direct incremental costs of performing the installation over
the contract term (generally 24 months). Accordingly, the consolidated statement
of operations for the second quarter of 2000 has been restated to reflect the
accounting change. With the adoption of SAB 101, there was no economic impact to
Digex's business operations or cash flows. There was also no material effect to
Digex's consolidated financial statements.

RECENTLY ISSUED ACCOUNTING STANDARDS

      In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," an amendment of SFAS No.
133, which is effective for fiscal years beginning after June 15, 2000. The
adoption of SFAS No. 133, as amended, effective January 1, 2001, had no material
effect on Intermedia's consolidated financial statements.


                                       6
<Page>

      In June 2001, the FASB issued SFAS No. 141 "Business Combinations" and
SFAS No. 142 "Goodwill and Other Intangible Assets." SFAS No. 141 requires
business combinations initiated after June 30, 2001 to be accounted for using
the purchase method of accounting and broadens the criteria for recording
intangible assets separate from goodwill. Recorded goodwill and intangibles will
be evaluated against this new criteria and may result in certain intangibles
being subsumed into goodwill, or alternatively, amounts initially recorded as
goodwill may be separately identified and recognized apart from goodwill. Under
the new rules, goodwill and intangible assets deemed to have indefinite lives
will no longer be amortized but will be subject to annual impairment tests. The
statement includes provisions for the identification of reporting units for
purposes of assessing potential future impairments of goodwill. Goodwill and
other intangibles, acquired prior to July 1, 2001, will continue to be amortized
until the adoption of the statement. The provisions of each statement which
apply to goodwill and intangible assets will be adopted by Intermedia on January
1, 2002. Intermedia expects that the adoption of these accounting standards will
result in certain of our intangibles being subsumed into goodwill and will have
the impact of reducing our amortization of goodwill and intangibles commencing
January 1, 2002; however, impairment reviews may result in future periodic
write-downs.

NOTE 2. INTERMEDIA-WORLDCOM MERGER

      On July 1, 2001, pursuant to the terms of the Agreement and Plan of
Merger, dated as of September 1, 2000 (the "Merger Agreement"), as amended by
the First Amendment to the Agreement and Plan of Merger dated as of February 15,
2001, and the Second Amendment to the Agreement and Plan of Merger dated as of
May 14, 2001 (as so amended, the "Amended Merger Agreement"), by and among
Intermedia, WorldCom, Inc., a Georgia Corporation ("WorldCom"), and Wildcat
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
WorldCom ("Merger Sub"), Merger Sub was merged with and into Intermedia (the
"Merger") with Intermedia continuing as the surviving corporation and as a
subsidiary of WorldCom. As a result of the Merger, WorldCom now owns all of the
capital stock of Intermedia, other than the 13-1/2% series B preferred stock and
approximately 90% of the voting securities of Intermedia. The Merger will be
accounted for as a purchase.

      In connection with the Merger, Merger Sub issued 70,750 shares of its
Junior Preferred Stock, par value $1.00 per share (the "Junior Preferred
Stock"), with a liquidation value of $100,000 per share, to WorldCom. In
connection with the preferred stock issuance, WorldCom paid Merger Sub $70,750
in cash and issued to Merger Sub an intercompany note in an aggregate principal
amount of approximately $7,075,000,000 (the "Note Receivable). This note bears
interest at an annual rate of 7.69% and will mature in 2009. Pursuant to the
Amended Merger Agreement, Merger Sub was merged with and into Intermedia,
resulting in the shares of Junior Preferred Stock becoming shares of Junior
Preferred Stock of Intermedia and the cash and the note being transferred to
Intermedia.

NOTE 3. GOING CONCERN

      The independent auditors report relating to the audit of Intermedia's
financial statements for the fiscal year ended December 31, 2000 included a
paragraph expressing substantial doubt about Intermedia's ability to continue as
a going concern. Intermedia's ability to continue as a going concern had been
impacted by the losses Intermedia incurred in recent years and Intermedia's
limited financial resources available to fund operating losses and capital
expenditures.

      As described in Note 2, Intermedia was acquired by WorldCom on July 1,
2001 in a transaction accounted for as a purchase. The majority of Intermedia's
cash needs through June 30, 2001 were funded by WorldCom (pursuant to Merger
Agreement and the related October 31, 2000 14.12% subordinated note purchase
agreement with WorldCom) and a Credit Facility guaranteed by WorldCom.
Additionally, in connection with the Merger, WorldCom issued to Merger Sub an
intercompany note in an aggregate principle amount of $7.1 billion. The note
bears interest at an annual rate of 7.69%, payable semi-annually on June 15 and
December 15 of each year, commencing December 15, 2001 and matures in 2009.
WorldCom has expressed the intent and ability to continue funding the working
capital and capital expenditure requirements of Intermedia at least through
December 31, 2001.

NOTE 4. FINANCING AND GAIN ON SALE OF DIGEX STOCK

      On June 29, 2001, Intermedia and its lenders entered into an amendment to
the $350.0 million Revolving Credit Agreement, whereby the termination date on
the Credit Facility was extended to: (1) July 3, 2001, (2) the consummation of
the Merger (or on the next business day if the Merger was not consummated on a
business day), or (3) the cancellation or termination of the Credit Facility in
accordance with certain provisions. At June 30, 2001, Intermedia had $258.0
million drawn under the Credit Facility, of which $12.0 million was drawn on
behalf of Digex. On July 2, 2001, Intermedia repaid the total amounts
outstanding under the Credit Facility from funds received by WorldCom for
repayment of the Note Receivable. On this date, Intermedia also entered into a
second amendment to the Revolving Credit Agreement to decrease the aggregate
commitments available under the Credit Facility from $350.0 million to $175.0
million, and to extend the termination date to the earlier of August 1, 2001 or
the cancellation or termination of the Credit Facility in accordance with
certain provisions. There were no amounts outstanding under the Credit Facility
as of August 1, 2001.

      At June 30, 2001, Intermedia had borrowed $119.0 million under the $225.0
million note purchase agreement dated October 31, 2000, as amended, with
WorldCom, all of which was evidenced by 14.12% Senior Subordinated Notes due
2009. Of the amount outstanding, $6.0 million was borrowed on behalf of Digex.


                                       7
<Page>

NOTE 5. EARNINGS PER SHARE

      The following table sets forth the computation of basic and diluted income
(loss) per share of Intermedia Common stock (dollars in thousands, except share
and per share amounts):

<Table>
<Caption>
                                                                      THREE MONTHS ENDED                  SIX MONTHS ENDED
                                                                           JUNE 30,                            JUNE 30,
                                                                ------------------------------      ------------------------------
                                                                    2001             2000              2001              2000
                                                                ------------      ------------      ------------      ------------
     <S>                                                        <C>               <C>               <C>               <C>
     Numerator:
      Income (loss) before extraordinary item                   $   (386,649)     $   (232,377)     $   (610,726)     $    477,038
      Extraordinary item, net of tax                                      --            19,861                --            19,861
                                                                ------------      ------------      ------------      ------------
      Net income (loss)                                             (386,649)         (212,516)         (610,726)          496,899
      Preferred stock dividends and accretions                       (32,951)          (31,747)          (65,295)          (57,694)
                                                                ------------      ------------      ------------      ------------
      Numerator for basic income (loss) per share -
          income (loss) attributable to common stockholders         (419,600)         (244,263)         (676,201)          439,205
      Effect of dilutive securities                                       --                --                --            27,257
                                                                ------------      ------------      ------------      ------------
      Numerator for diluted income (loss) per share -
          income (loss)  attributable to common
          stockholders after assumed conversions                $   (419,600)     $   (244,263)     $   (676,201)     $    466,462
    Denominator:
      Denominator for basic loss per share -
          weighted-average shares                                 57,025,680        53,403,956        56,527,162        52,974,683
      Effect of dilutive securities                                       --                --                --        26,371,745
                                                                ------------      ------------      ------------      ------------
      Denominator for diluted income (loss) per share -
          adjusted weighted-average shares                        57,025,680        53,403,956        56,527,162        79,346,428
                                                                ============      ============      ============      ============

    Basic income (loss) per share of common stock               $      (7.36)     $      (4.57)     $     (11.96)     $       8.30
                                                                ============      ============      ============      ============

    Diluted income (loss) per share of common stock             $      (7.36)     $      (4.57)     $     (11.96)     $       5.88
                                                                ============      ============      ============      ============
</Table>

      Unexercised options to purchase 932,600 shares of Common Stock as of June
30, 2001 and outstanding convertible preferred stock, convertible into
22,137,100 shares of Common Stock as of June 30, 2001, were not included in the
computations of diluted loss per share in 2001 because assumed
exercise/conversion would be anti-dilutive.

NOTE 6. CONTINGENCIES

      Other than the BellSouth, Sprint, and AT&T matters described below,
Intermedia is not a party to any pending legal proceedings except for various
claims and lawsuits arising in the normal course of business. Intermedia does
not believe that such claims or lawsuits will have a material effect on
Intermedia's financial condition, results of operations or cash flow.

      Intermedia maintains interconnection agreements with incumbent local
exchange carriers ("ILECs") across the country. These contracts govern, among
other things, the reciprocal amounts billed by Intermedia for terminating local
traffic to Internet service providers ("ISPs") in each state (commonly known as
"reciprocal compensation"). Some of Intermedia's interconnection agreements have
expired and


                                       8
<Page>

continue on a month-to-month basis. New interconnection agreements with
BellSouth were executed and filed in Florida, North Carolina, Georgia, and
Tennessee on October 4, 2000, October 16, 2000, May 15, 2001, and August 9, 2001
respectively. Intermedia accounts for reciprocal compensation with the ILECs,
including the activity associated with the disputed ISP traffic, as local
network services, pursuant to the terms of Intermedia's interconnection
agreements. Accordingly, revenue is recognized in the period that the traffic is
terminated.

      Intermedia had filed complaints against BellSouth in Florida on September
23, 1999 and North Carolina on May 15, 2000, and BellSouth had filed a complaint
against Intermedia in Georgia on May 23, 2000, concerning a dispute over the
correct rates for reciprocal compensation. This dispute arose because of an
amendment to the interconnection agreement between the two companies designed to
implement a cost savings for Intermedia in interconnection architecture, known
as Multiple Tandem Access ("MTA"), in return for significantly lower reciprocal
compensation rates. BellSouth contended that the signing of the amendment
triggered the lower rates, while Intermedia contended that the lower rates would
only be in force if Intermedia elected MTA, which Intermedia asserted it did
not.

      On June 5, 2000, BellSouth filed a complaint against Intermedia before the
Florida Public Service Commission alleging that Intermedia had improperly
reported its percentage of interstate usage ("PIU") for the billing of
terminating access services and requesting an award of damages.

      On July 11, 2000, Intermedia filed a complaint against BellSouth in U.S.
District Court for the Middle District of Florida, alleging that BellSouth had
violated antitrust laws, the Federal Communications Act, and other federal and
state laws and regulations in refusing to provide adequate transport facilities
to Intermedia.

      On June 27, 2001, BellSouth and Intermedia entered into a confidential
settlement agreement which, among other things, resolved any and all claims that
were brought or could have been brought in any regulatory proceeding, civil
action, appeal, or in any other proceeding (including claims related to PIU/PLU
reporting and claims for state commission-authorized "true-ups" for intercarrier
compensation) for traffic exchanged through June 13, 2001 under the
BellSouth-Intermedia interconnection agreements; any and all claims that were
brought or could have been brought relating to intercarrier and/or reciprocal
compensation in an appeal of a state commission arbitration award/decision; and
any and all claims that were brought or could have been brought alleging
violations of state and/or federal antitrust and unfair competition laws through
June 13, 2001. Intermedia and BellSouth agreed to


                                       9
<Page>

dismiss all lawsuits and regulatory complaints pertaining to these disputes and
have submitted the appropriate filings.

            Intermedia and Sprint Florida and North Carolina had been involved
in a billing/payment dispute with regard to reciprocal compensation, intraLATA
toll, and late payment charges that Intermedia claimed it was owed by Sprint
under their interconnection agreement for all traffic terminated through May 31,
2001 (the "Reciprocal Compensation Dispute"). Intermedia and Sprint also had
been involved in a dispute concerning the PIU factors that Intermedia had
reported in multiple states and filed with Sprint beginning on January 1, 1996,
and continuing through December 31, 2000, which Sprint alleged resulted in
Sprint under-billing Intermedia for terminating intrastate access in states
where they exchange traffic (the "PIU Dispute"). On July 10, 2001, Sprint and
Intermedia entered into a Settlement and Release Agreement which, among other
things, resolved all outstanding claims related to the Reciprocal Compensation
Dispute and the PIU Dispute.

            On April 27, 2001, the FCC released its decision in IMPLEMENTATION
OF THE LOCAL COMPETITION PROVISIONS IN THE TELECOMMUNICATIONS ACT OF 1996;
INTERCARRIER COMPENSATION FOR ISP-BOUND TRAFFIC, CC Docket No. 96-98/99-68 (the
ISP REMAND ORDER), in which it adopted a gradually declining cap on the amount
that carriers may recover from other carriers for delivering ISP-bound traffic.
The ISP REMAND ORDER became effective on June 15, 2001, and is currently on
appeal. Although BellSouth and Sprint have agreed in their settlement with
Intermedia to mirror the transitional reciprocal compensation mechanism
established by the FCC for the transport and termination of local and
compensable ISP traffic, several ILECs with whom Intermedia has interconnection
agreements have not announced their position. While Intermedia continues to
pursue vigorously the collection of all reciprocal compensation receivables and
believes that future revenue recognized under the new interconnection agreements
will be realized, there can be no assurance that future regulatory,
congressional, and judicial rulings will be favorable, or that different pricing
plans will not be adopted when the interconnection agreements are renegotiated
or arbitrated.

      OTHER DISPUTES. Intermedia has joined a number of other competitive
carriers in filing a multi-party complaint against Sprint and AT&T in the U.S.
District Court for the Eastern District of Virginia. The action charges that
Sprint and AT&T are unlawfully refusing to pay Intermedia and the other
plaintiffs lawfully tariffed charges for access services provided to Sprint and
AT&T. Intermedia's claims total over $3.5 million. In January 2001, Intermedia
reached a settlement with Sprint and subsequently dismissed its claims against
Sprint. However, Intermedia remains a party to the action against AT&T. The
judge in the AT&T litigation has stayed the case for six months and referred
portions of the access rate dispute to the FCC for consideration. Because the
FCC failed to render a ruling by the court-imposed deadline on August 10, 2001,
the district court, among other things, ordered the parties to file briefs in
the nature of motions for summary judgement no later than August 23, 2001, and
it scheduled a trial for November 6, 2001, in the event any claims survive
summary judgement. In addition, an informal FCC complaint in which AT&T alleges
that Intermedia's access rates are unreasonable remains pending at the FCC.
While Intermedia continues to vigorously pursue the collection of all
receivables and believes that future revenue recognized under its tariffs will
be realized, there can be no assurance that future regulatory, congressional,
and judicial actions relating to these matters will be favorable.

NOTE 7. SEGMENT INFORMATION

            Intermedia has two separate operating segments. The core business is
its integrated communications services segment which provides three principal
groups of service offerings to business and government customers, as reported in
Intermedia's statement of operations. Intermedia also owns a 61.6% interest in
Digex, which provides managed Web site and application hosting services to large
businesses and


                                       10
<Page>

Internet companies operating mission-critical, multi-functional Web sites and
Web-based applications. Each of these segments has separate management teams and
operational infrastructures. Substantially all of the revenues from both
Intermedia and Digex are attributable to customers in the United States.
Additionally, all of the Intermedia's assets are located within the United
States.

The table below summarizes Intermedia's segment reporting data (in millions).
Eliminations include intersegment revenues, receivables, and investment related
accounts.

                                       11
<Page>
<Table>
<Caption>
                                                 CORE
                                              INTEGRATED
                                            COMMUNICATIONS                               CONSOLIDATED
                                               SERVICES        DIGEX     ELIMINATIONS     INTERMEDIA
                                            --------------     -----     ------------    ------------
<S>                                            <C>           <C>             <C>          <C>
Three months ended June 30, 2001
   Revenue from external customers             $  207.4      $   53.8          --         $  261.2
   Intersegment revenue                             0.6            --         (.6)              --
   Loss from operations                          (291.6)        (46.7)         --           (338.3)
Three months ended June 30, 2000
   Revenue from external customers             $  205.2      $   40.4          --         $  245.6
   Intersegment revenue                             2.7            --        (2.7)              --
   Loss from operations                          (158.0)        (37.9)         --           (195.9)
Six months ended June 30, 2001
   Revenue from external customers                422.2         106.8          --            529.0
   Intersegment revenue                             5.9            --        (5.9)              --
   Loss from operations                          (432.7)        (90.3)         --           (523.0)
Six months ended June 30, 2000
   Revenue from external customers                438.9          66.2          --            505.1
   Intersegment revenue                             1.1            --        (1.1)              --
   Loss from operations                          (209.7)        (66.7)         --           (276.4)

Total assets at June 30, 2001                  $2,720.2      $  453.8        (5.6)        $3,174.0
Total assets at December 31, 2000              $2,963.4      $  521.1          --         $3,484.5
</Table>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

      The following discussion should be read in conjunction with the condensed
consolidated financial statements and notes thereto included herewith, and with
the


                                       12
<Page>

Management's Discussion and Analysis of Financial Condition and Results of
Operations and audited consolidated financial statements and notes thereto
included in Intermedia's Annual Report on Form 10-K for the year ended December
31, 2000, filed with the Commission.

OVERVIEW

      On July 1, 2001, pursuant to the terms of the Merger Agreement, Merger Sub
was merged with and into Intermedia, with Intermedia continuing as the surviving
corporation and as a subsidiary of WorldCom. As a result of the Merger, WorldCom
now owns all of the capital stock of Intermedia, other than the 13-1/2% series B
preferred stock and approximately 90% of the voting securities of Intermedia.

      In addition, pursuant to the Stipulation that WorldCom and Intermedia
entered into with the Antitrust Division of the Department of Justice, WorldCom
agreed to divest all of Intermedia's assets, except for its Digex stock, within
six months after the Merger (unless extended or amended by the Antitrust
Division) and, until the divestiture, Intermedia and WorldCom have agreed to
continue to operate Intermedia as an independent competitive business.

      Intermedia provides integrated data and voice communications services,
including enterprise data solutions (frame relay and ATM), Internet
connectivity, private line data, managed Web site and application hosting, local
and long distance, and integration services to business and government
customers. As of June 30, 2001, Intermedia is the fourth largest nationwide
frame relay provider in the United States (based upon frame relay revenues), a
leading Tier One Internet service provider, the largest shared tenant
telecommunications service provider in the United States, and a leading domestic
provider of systems integration services. Intermedia is also a leading and
rapidly growing provider of managed Web site and application hosting services to
large corporations and Internet companies through Digex, its subsidiary. As more
fully discussed in the notes to the financial statements, Intermedia operates in
primarily two segments, integrated communications provider and Web site and
application hosting services. Intermedia uses a management approach to report
its financial and descriptive information about its operating segments. Where
significant, the revenue, profitability and cash needs of the Digex Web site
segment are discussed below.

      Intermedia delivers its local access and voice services, primarily through
its owned local and long distance switches, over a digital transport network.
Intermedia offers its data and Internet services to its customers on an
extensive inter-city network that connects its customers to locations
nationwide. Through its network to network interfaces ("NNIs") and data
switches, Intermedia has established one of the most densely deployed frame
relay switching networks in the nation. Intermedia's nationwide interexchange
network carries both its data and voice traffic.

PLAN OF OPERATION

      Intermedia believes its revenue growth will be generated primarily from
its Data, internet and web hosting and local access and voice services. Based on
Intermedia's analysis of Federal Communications Commission market data and its
knowledge of the industry, Intermedia estimates that the market for enhanced
data,


                                       13
<Page>

local exchange, and interexchange services exceeds $100.0 billion within its
service territory.


                                       14
<Page>

RESULTS OF OPERATIONS

      The following table presents, for the periods indicated, certain
information derived from the Unaudited Condensed Consolidated Statements of
Operations of Intermedia, expressed in percentages of revenue:

<Table>
<Caption>
                                                                    THREE MONTHS ENDED        SIX MONTHS ENDED
                                                                         JUNE 30,                 JUNE 30,
                                                                    ------------------      ------------------
                                                                     2001        2000         2001        2000
                                                                    ------       -----      ------       -----
<S>                                                                  <C>         <C>         <C>         <C>
Revenues:
     Local access and voice                                           26.4%       32.9%       27.6%       37.5%
     Data, internet, and web hosting                                  61.6        52.1        59.8        47.6
     Integration services                                             12.0        15.0        12.6        15.0
                                                                    ------       -----      ------       -----
                                                                     100.0       100.0       100.0       100.0
Expenses:
     Network operations                                               51.2        37.7        46.0        36.2
     Facilities administration and maintenance                        28.1        17.4        21.3        15.8
     Cost of goods sold                                               13.0        11.7        10.5        11.0
     Selling, general and administrative                              80.7        62.1        60.4        48.1
     Depreciation and amortization                                    42.7        47.7        49.5        40.9
     Deferred compensation                                             0.1         0.4         0.5         0.9
     Business restructuring, merger-related
         and other charges                                            13.7         2.7        10.7         1.9
                                                                    ------       -----      ------       -----
Loss from operations                                                (129.5)      (79.8)      (98.9)      (54.7)
Other income (expense):
     Interest expense                                                (26.5)      (26.2)      (25.6)      (27.2)
     Gain on sale of Digex stock                                        --          --          --       171.1
     Other income                                                      0.9         6.9         2.4         6.1
                                                                    ------       -----      ------       -----
Income (loss) before income taxes, minority interest, cumulative
     change in accounting principle and extraordinary item          (155.1)      (99.1)     (122.1)       95.3
Provision for income taxes                                              --        (0.9)         --        (5.1)
                                                                    ------       -----      ------       -----
Income (loss) before minority interest, cumulative change in
     accounting principle and extraordinary item                    (155.1)     (100.0)     (122.1)       90.2
Minority interest in net loss of subsidiary                            7.1         5.3         6.7         4.2
                                                                    ------       -----      ------       -----
Income (loss) before cumulative change in accounting principle
     and extraordinary item                                         (148.0)      (94.6)     (115.4)       94.5
                                                                    ------       -----      ------       -----
Cumulative change in accounting principle                               --          --          --          --
                                                                    ------       -----      ------       -----
Income (loss) before extraordinary item                             (148.0)      (94.6)     (115.4)       94.5
                                                                    ------       -----      ------       -----
Extraordinary gain on early retirement of debt, net of tax              --         8.1          --         3.9
                                                                    ------       -----      ------       -----
Net income (loss)                                                   (148.0)      (86.5)     (115.4)       98.4
     Preferred stock dividends and accretions                        (12.6)      (12.9)      (12.3)      (11.4)
                                                                    ------       -----      ------       -----
Net income (loss) attributable to common stockholders               (160.6)%     (99.5)%    (127.8)%      87.0%
                                                                    ======       =====      ======       =====
</Table>


                                       15
<Page>

      The following table sets forth other statistical data derived from
Intermedia's operating records:

<Table>
<Caption>
                                           JUNE 30, 2001     JUNE 30, 2000
                                           -------------     -------------
<S>                                            <C>                <C>
Data, Internet and Web Hosting:(1)
           Web hosting servers                 3,764             3,647
           Data switches in operation            213               199
           NNI connections                     1,135             1,035
   Access and Voice: (1)
           Voice switches in operation            29                29

Employees (1)                                  5,582             5,673
</Table>

(1)   Amounts reflected in the table are based upon information contained in
      Intermedia's and Digex's operating records.

QUARTER ENDED JUNE 30, 2001 COMPARED TO QUARTER ENDED JUNE 30, 2000

REVENUE

      Total revenue increased 6.4% to $261.2 million for the second quarter of
2001 compared to $245.6 million for the same period in 2000. This increase was
primarily due to the continued expansion of frame relay and ATM services as well
as strong growth in Internet and Web site and application hosting services.
Intermedia's core strategic revenue categories continue to grow, and Intermedia
plans to maintain its emphasis on sales of data, Internet and Web hosting as the
core component of its growth in revenue.

      Local access and voice revenue decreased 14.6% to $68.9 million for the
second quarter of 2001 compared to $80.7 million for the same period in 2000.
This decrease was principally due to a decrease in long distance and reciprocal
compensation revenue. The decrease in long distance revenue is a result of
per minute pricing declines industry-wide as well as attrition of the
customer base. Intermedia is no longer focusing its marketing efforts on sales
of stand alone long distance services.

      Data, Internet, and Web hosting revenue increased 25.7% to $160.8 million
for the second quarter of 2001 compared to $127.9 million for the same period in
2000. This increase was principally a result of the expansion of Intermedia's
frame relay and ATM services as well as strong growth in Internet and web
related services. The Digex Web site segment revenues increased by $13.4 million
due to new customer growth and to a significant increase in the number of
servers per customer and revenue per server. Intermedia's data network expanded
by 100 NNI connections and 14 data switches since June 30, 2000 that facilitated
the revenue growth.

      Integration services revenue decreased 14.8% to $31.4 million for the
second quarter of 2001 compared to $36.9 million for the same period in 2000.
This decrease was principally due to a decreased demand for telecommunications
equipment.

OPERATING EXPENSES

      Total operating expenses increased 35.8% to $599.6 million for the second
quarter of 2001 compared to $441.5 million for the same period in 2000. The
increase during the period is due to increased network costs, expenses related
to retention and change of control payments to certain employees as a result of
the Merger and increases to reserves for bad debt and inventory triggered by
reciprocal compensation settlements coupled with an overall decline in the
telecommunications market. The Digex Web site segment total operating expenses
increased $22.0 million during the period due to increased level of operations,
an expanded customer base to support, and build up of the infrastructure and
administrative requirements necessary for Digex to operate as a public company
separate from Intermedia.


                                       16
<Page>

      Network expenses increased 44.4% to $133.7 million for the second quarter
of 2001 compared to $92.6 million for the same period in 2000. The increase was
a result of increased network costs related to the growth in Enhanced Data as
well as specific one time charges related to the resolution of certain billing
disputes. Intermedia has continued to focus its selling efforts to on-switch
access lines, which have better gross margins and improved provisioning time and
expects that the Merger will enhance their efforts.

      Facilities administration and maintenance expenses increased 35.5% to
$57.9 million for the second quarter of 2001 compared to $42.7 million for the
same period in 2000. The increase resulted from support costs relating to the
expansion of Intermedia's owned and leased network capacity, and increases in
maintenance expenses due to network expansion. The Digex Web site segment
accounted for $10.4 million of the increase which is due to higher levels of
operations and the expansion of its new data centers including costs related to
the hiring of additional personnel and consultants in customer service,
engineering, and facilities administration supporting server growth and accruals
for changes in employee benefits.

      Cost of goods sold increased 18.4% to $34.0 million for the second quarter
of 2001 compared to $28.7 million for the same period in 2000. This increase was
impacted by additional inventory reserves in the amount of $15 million relating
to slow moving and obsolete telecommunications equipment triggered by the
declining growth in the overall telecommunications market.

      Selling, general and administrative expenses increased 38.3% to $210.9
million for the second quarter of 2001 compared to $152.5 million for the same
period in 2000. Intermedia recorded adjustments to bad debt expense relating to
reciprocal compensation revenue in the amounts of $75.4 million and $46.1
million during the second quarters of 2001 and 2000, respectively. These amounts
were recorded in anticipation of settlement relating to its ongoing disputes
with BellSouth and others. Final settlement with BellSouth was reached on June
27, 2001 for outstanding balances through June 13, 2001. As a result of the
settlement, Intermedia also expensed $1.0 million in deferred legal fees
associated with various interconnection agreements. Intermedia recorded an
additional $25.0 million adjustment to bad debt expense to reserve for uncertain
collectibles as a result of bankruptcies and increased numbers of slow paying
accounts due to the recent downturn in the telecommunications industry. As a
result of attriting sales headcount, Intermedia wrote off $3 million in prepaid
commissions in the second quarter of 2001. These amounts are offset in part by
decreased spending in outside professional services, employment agency fees and
travel related expenses. The Digex web site segment accounted for approximately
$2.4 million of this increase. Increases in 2001 costs for Digex include the
costs associated with an increased employee base, advertising campaigns, rent
for additional office space, consultants' professional fees, an increased
provision for doubtful accounts receivable, researched development costs, the
addition of key executive management to support the growth of the business, and
accruals for changes in employee benefits.

      Depreciation and amortization expenses increased 8.6% to $127.2 million
for the second quarter of 2001 compared to $117.2 million for the same period in
2000. This increase was principally due to depreciation and amortization of
telecommunications equipment placed in service since July 1, 2000 relating to
ongoing network expansion (including the indefeasable right of use of the
Williams Communications network). The Digex Web site segment accounted for $14.1
million of the increase due to additional servers and facilities placed in
service and a change in the useful lives of electronics, computer hardware, and
computer software from five years to three years for assets purchased since June
30, 2001. Depreciation and amortization expense is expected to increase in
future periods based on Digex's plan to expand the data centers and increase
server installations.

      Deferred compensation expense decreased by 86.0% to $.1 million for the
second quarter of 2001 compared to $1.0 million in 2000 resulting from decreases
in stock options granted to certain Digex employees at exercise prices below
market value.


                                       17
<Page>

      Business restructuring, merger related and other charges increased 430.3%
to $35.7 million for the second quarter of 2001 compared to $6.7 million in the
same period in 2000. The costs incurred during the second quarter of 2001 relate
primarily to professional fees, retention and change of control payments to
certain employees associated with the WorldCom merger. The costs incurred during
the second quarter of 2000 relate primarily to network integration associated
with a restructuring program which was completed in June 2000.

INTEREST EXPENSE

      Interest expense increased 7.5% to $69.1 million for the second quarter of
2001 compared to $64.3 million for the same period in 2000. This increase is due
to increased borrowings related the Credit Facility and the Note Purchase
Agreement with WorldCom.

OTHER INCOME

      Other income decreased 86.0% to $2.4 million for the second quarter of
2001 compared to $17.0 million for the same period in 2000. This decrease was
primarily the result of interest earned on the comparatively higher level of
average cash balances in the second quarter of 2000 as compared to the second
quarter of 2001.

PROVISION FOR INCOME TAXES

      Provision for income taxes was approximately $2.2 million for the second
quarter of 2000 resulting from the gain on sale of Digex stock in February 2000.
Although Intermedia utilized net operating losses to offset regular federal
taxable income, a provision for current income tax expense is required for AMT
purposes.

MINORITY INTEREST IN NET LOSS OF SUBSIDIARY

      Minority interest in net loss of subsidiary increased 41.1% to $18.5
million for the second quarter of 2001 compared to $13.1 million for the same
period in 2001. The increase is due to increased losses recorded by Digex in the
second quarter of 2001.


                                       18
<Page>

EXTRAORDINARY GAIN ON EARLY EXTINGUISHMENT OF DEBT, NET OF TAX

      Extraordinary gain on early extinguishment of debt of $19.9 million in the
second quarter in 2000 is due to a gain on the repurchase of senior notes
originally issued in October 1997, December 1997, and February 1999 of $20.9
million, net of a tax provision of $1.0 million.

NET INCOME (LOSS)

      Net loss increased 81.9% to $(386.6) million for the second quarter of
2001 compared to $(212.5) million for the same period in 2000. Diluted loss per
share was $7.36 for the second quarter of 2001 versus $4.57 for the same period
in 2000.

PREFERRED STOCK DIVIDENDS AND ACCRETIONS

      Preferred stock dividends and accretions increased 3.8% to $33.0 million
for the second quarter of 2001 compared to $31.7 million for the same period in
2000 due to the increased number of Series B Preferred Stock shares issued and
outstanding in the second quarter of 2001 compared to the same period in 2000.
Management does not expect to pay cash dividends in the foreseeable future.

SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000

REVENUE

      Total revenue increased 4.7% to $529.0 million for the six months ended
June 30, 2001 compared to $505.1 million for the same period in 2000. This
increase was primarily due to the continued expansion of the frame relay and ATM
networks as well as strong growth in Internet and Web site and application
hosting services. Intermedia's core strategic revenue categories continue to
grow, and Intermedia plans to maintain its emphasis on sales of data, Internet
and Web hosting as the core component of its growth in revenue.

      Local access and voice revenue decreased 22.8% to $146.0 million for the
six months ended June 30, 2001 compared to $189.3 million for the same period in
2000. This decrease was principally due to a decrease in long distance and
reciprocal compensation revenue. The decrease in long distance revenue is a
result of per minute pricing declines


                                       19
<Page>

industry-wide as well as attrition of the customer base. Intermedia is no longer
focusing its marketing efforts on sales of stand alone long distance services.
In addition, reciprocal revenue from certain ILECS decreased approximately $27.8
million from the same period last year as a result of lower rates due to
regulatory changes during 2000 and 2001.

      Data, Internet, and Web hosting revenue increased 31.6% to $316.3 million
for the six months ended June 30, 2001 compared to $240.3 million for the same
period in 2000. This increase was principally a result of the expansion of
Intermedia's frame relay and ATM network as well as strong growth in Internet
and web related services. Intermedia's data network expanded by 100 NNI
connections and 14 data switches since June 30, 2000 that facilitated the
revenue growth. The Digex Web site segment revenues increased by $40.7 million
due to new customer growth and to a significant increase in the number of
servers per customer and revenue per server.

      Integration services revenue decreased 11.7% to $66.7 million for the six
months ended June 30, 2001 compared to $75.5 million for the same period in
2000. This decrease was principally due to a decreased demand for
telecommunications equipment.

OPERATING EXPENSES

      Total operating expenses increased 34.6% to $1,052.0 million for the six
months ended June 30, 2001 compared to $781.5 million for the same period in
2000. The increase during the period is due to increased network costs, expenses
related to retention and change of control payments to certain employees as a
result of the Merger and increases to reserves for bad debt and inventory
triggered by reciprocal compensation settlements coupled with an overall decline
in the telecommunications market. The Digex web site segment total operating
expenses increased $64.3 million during the six months ended June 30, 2001
compared to the same period in 2000. The increase in the Operating Expenses of
Digex is due to increased level of operations, an expanded customer base to
support, and build up of the infrastructure and administrative requirements
needed for Digex to operate as a public company separate from Intermedia.

      Network expenses increased 33.2% to $243.5 million for the six months
ended June 30, 2001 compared to $182.8 million for the same period in 2000. The
increase was a result of increased network costs related to the growth in
Enhanced Data as well as specific one time charges related to the resolution of
certain billing disputes. Intermedia has continued to focus its selling efforts
to on-switch access lines, which have better gross margins and improved
provisioning time and expects that the Merger will enhance these efforts.

      Facilities administration and maintenance expenses increased 41.0% to
$112.5 million for the six months ended June 30, 2001 compared to $79.8 million
for the same period in 2000. The increase is due to increased support costs
related to Intermedia's owned and leased network capacity and increased
maintenance expenses due to the network expansion. The Digex Web site segment
resulted in a $10.4 million increase primarily due to higher levels of
operations and the expansion of the new data centers including costs related to
the hiring of additional personnel in customer service, engineering, and
facilities administration supporting server growth and accruals for changes in
employee benefits.

      Cost of goods sold increased 0.4% to $55.7 million for the six months
ended June 30, 2001 compared to $55.4 million for the same period in 2000. This
increase was impacted by additional inventory reserves in the amount of $15
million relating to slow moving and obsolete telecommunications equipment
triggered by the declining growth in the overall telecommunications market.

      Selling, general and administrative expenses increased 31.4% to $319.3
million for the six months ended June 30, 2001 compared to $243.0 million for
the same period in 2000. Intermedia recorded adjustments to bad debt expense
relating to reciprocal compensation revenue in the amounts of $75.4 million and
$46.1 million during the second quarters of 2001 and 2000, respectively. These
amounts were recorded in anticipation of settlement relating to its ongoing
disputes with BellSouth and others. Final


                                       20
<Page>

settlement with BellSouth was reached on June 27, 2001 for outstanding balances
through June 13, 2001. As a result of the settlement, Intermedia also expensed
$1.0 million in deferred legal fees associated with various interconnection
agreements. Intermedia recorded an additional $25.0 million adjustment to bad
debt expense to reserve for uncertain collectibles as a result of bankruptcies
and increased numbers of slow paying accounts due to the recent downturn in the
telecommunications industry. As a result of attriting sales headcount,
Intermedia wrote off $3 million in prepaid commissions in the second quarter of
2001. These amounts were offset in part by decreased spending in outside
professional services, employment agency fees and travel related expenses. The
increase in such expenses of Digex includes the costs associated with an
increased employee base, advertising campaigns, rent for additional office
space, consultants' professional fees, an increased provision for doubtful
accounts receivable, research and development costs, the addition of key
executive management to support the growth of the business, and accruals for
changes in employee benefits.

      Depreciation and amortization expenses increased 26.8% to $261.8 million
for the six months ended June 30, 2001 compared to $206.5 million for the same
period in 2000. This increase was principally due to depreciation and
amortization of telecommunications equipment placed in service since July 1,
2000 as a result of ongoing network expansion (including the irrevocable right
of use acquired from the Williams Communications nationwide network). The
depreciation and amortization expense increase at the Digex Web site segment was
$30.4 million due to additional servers and other facilities and equipment
placed in service since June 30, 2000. Depreciation and amortization expense is
expected to increase in future periods based on Digex's plans to expand the data
centers and increase server installations.

      Deferred compensation expense decreased by 40.3% to $2.8 million for the
six months ended June 30, 2001 compared to $4.7 million for the same period in
2001, The decrease resulting from fewer stock options granted to certain Digex
employees at exercise prices below market value.

      Business restructuring, merger related and other charges increased 503.3%
to $56.5 million for the second quarter of 2001 compared to $9.3 million in the
same period in 2000. The costs incurred during the six months ended June 30,2001
were related primarily to professional fees, retention and change of control
payments to certain employees associated with the WorldCom merger. The costs
incurred during the six month period ended June 30, 2000 relate primarily to
network integration associated with a restructuring program which was completed
in June 2000.

      Depreciation and amortization expenses increased 26.8% to $261.8 million
for the six months ended June 30, 2001 compared to $206.5 million for the same
period in 2000. This increase was principally due to depreciation and
amortization of telecommunications equipment placed in service since July 1,
2000 as a result of ongoing network expansion (including the irrevocable right
of use acquired from the Williams Communications network). The depreciation and
amortization expense increase at the Digex Web site segment was $30.4 million
due to additional servers and other facilities and equipment placed in service
since June 30, 2000. Depreciation and amortization expense is expected to
increase in future periods based on Digex's plans to continue expanding its
network and facilities.

INTEREST EXPENSE

      Interest expense decreased 1.3% to $135.5 million for the six months ended
June 30, 2001 compared to $137.3 million for the same period in 2000. This
decrease is due to the early retirement of debt in 2000, partially offset by
increased borrowings related to the Credit Facility and the Note Purchase
Agreement with WorldCom.

GAIN ON SALE OF DIGEX STOCK

      Gain on sale of Digex stock is approximately $864.3 million for the six
months ended June 30, 2000. On February 16, 2000, Intermedia sold 10,650,000
shares of its investment


                                       21
<Page>

in Digex's Class B Common Stock which was converted to Class A Common Stock upon
such sale. Gross proceeds amounted to $914 million.


                                       22
<Page>

OTHER INCOME

      Other income decreased 59.1% to $12.6 million for the six months ended
June 30, 2001 compared to $30.8 million for the same period in 2000. This
decrease was the result of interest earned on the comparatively higher level of
average cash balances for the six months ended June 30, 2000 as compared to the
same period in 2001.

PROVISION FOR INCOME TAXES

      Provision for income taxes is approximately $25.6 million for the six
months ended June 30, 2000. Although Intermedia utilized net operating losses to
offset regular federal taxable income, a provision for current income tax
expense is required for AMT purposes.

MINORITY INTEREST IN NET LOSS OF SUBSIDIARY

      A minority interest in net loss of subsidiary increased 64.9% to $35.3
million for the six months ended June 30, 2001 compared to $21.4 million for the
same period in 2001. The increase is due to increased losses recorded by Digex.

CUMULATIVE CHANGE IN ACCOUNTING PRINCIPLE

      The cumulative change in accounting principle of $0.2 million in 2000 was
due to the Digex Web site and application hosting segment's change in method of
accounting for revenue recognition in accordance with SAB 101 effective January
1, 2000.

EXTRAORDINARY GAIN ON EARLY EXTINGUISHMENT OF DEBT, NET OF TAX


                                       23
<Page>

      Extraordinary gain on early extinguishment of debt of $19.9 million in the
second quarter in 2000 is due to the repurchase of senior notes originally
issued in October 1997, December 1997, and February 1999, net of a tax provision
of $1.0 million.

NET INCOME (LOSS)

      Net income (loss) was $(610.7) million for the six months ended June 30,
2001 compared to $497.1 million for the same period in 2000. Diluted loss per
share for the six months ended June 30, 2001 was $11.96 versus diluted earnings
per share of $5.88 for the six months ended June 30, 2000.

PREFERRED STOCK DIVIDENDS AND ACCRETIONS

      Preferred stock dividends and accretions increased 13.2% to $65.3 million
for the six months ended June 30, 2001 compared to $57.7 million for the same
period in 2000 due to the increased number of Series B Preferred Stock shares
issued for the six months ended June 30, 2001 compared to the same period in
2000. Management does not expect to pay cash dividends in the foreseeable
future.

LIQUIDITY AND CAPITAL RESOURCES

      Intermedia's operations have historically required substantial capital
investment for the purchase of telecommunications equipment and the design,
construction and development of Intermedia's and Digex's networks and
facilities. Capital expenditures for Intermedia were approximately $191.2
million and $308.8 million for the six months ended June 30, 2001 and 2000,
respectively, excluding capital leases. Intermedia expects that it will continue
to have substantial capital requirements in connection with the continued
expansion of data centers related to the development of the Digex Web site and
application hosting segment.

      Net cash used in operating activities was $157 million and $153 million
during the six months ended June 30, 2001 and 2000, respectively. Net cash used
for operating activities was primarily the result of operating losses and
changes in working capital.

On June 29, 2001, Intermedia and its lenders entered into an amendment to the
$350.0 million Revolving Credit Agreement, whereby the termination date on the
Credit Facility was extended to: (1) July 3, 2001, (2) the consummation of the
Merger (or on the next business day if the Merger was not consummated on a
business day), or (3) the cancellation or termination of the Credit Facility in
accordance with certain provisions. At June 30, 2001, Intermedia had $258.0
million drawn under the Credit Facility, of which $12.0 million was drawn on
behalf of Digex. On July 2, 2001, WorldCom repaid the total amounts outstanding
under the Credit Facility. On this date, Intermedia also entered into a second
amendment to the Revolving Credit Agreement to decrease the aggregate
commitments available under the Credit Facility from $350.0 million to $175.0
million, and to extend the termination date to the earlier of August 1, 2001 or
the cancellation or termination of the Credit Facility in accordance with
certain provisions. There were no amounts outstanding under the Credit Facility
as of August 1, 2001.

At June 30, 2001, Intermedia had borrowed $119.0 million under the $225.0
million note purchase agreement dated October 31, 2000, as amended, with
WorldCom, all of which was evidenced by 14.12% Senior Subordinated Notes due
2009. Of the amount outstanding, $6.0 million was borrowed on behalf of Digex.


                                       24
<Page>

In connection with the Merger, Merger Sub issued 70,750 shares of its Junior
Preferred Stock with a liquidation value of $100,000 per share, to WorldCom. In
connection with the preferred stock issuance, WorldCom issued to Merger Sub an
intercompany note (the "Note Receivable") in an aggregate principal amount of
approximately $7.1 billion. This note bears interest at an annual rate of 7.69%,
payable semi-annually on June 15 and December 15 of each year, commencing
December 15, 2001 and matures in 2009. Pursuant to the Merger Agreement, Merger
Sub was merged with and into Intermedia, and the shares of Junior Preferred
Stock became shares of Junior Preferred Stock of Intermedia and the cash and the
Note Receivable were transferred to Intermedia. As a subsidiary of WorldCom,
Intermedia's cash needs will be funded by WorldCom and it is expected that
future fundings for Intermedia will be made through reductions against the Note
Receivable.

On July 31, 2001, Digex entered into a note purchase agreement with WorldCom
whereby WorldCom has agreed to provide funding for the Digex business plans for
2001 and 2002 as approved by the Digex and WorldCom boards of directors. To
date, the Digex and WorldCom boards of directors have approved the Digex 2001
business plan. The preparation of the Digex business plan for 2002 is currently
underway and is expected to be submitted to the WorldCom board of directors for
approval no later than December 1, 2001. Subject to the terms and conditions of
the agreement, Digex will issue and WorldCom will purchase (or cause an
affiliate to purchase) a series of senior notes up to aggregate principal amount
sufficient to satisfy our net cash requirements under the approved business
plan. Interest on the unpaid principal balance is payable monthly at a rate
equal to LIBOR plus 300 basis points. Repayment of principal is due on December
31, 2002 and may be extended to December 31, 2006 upon election by written
notice by Digex. Any changes to the Digex business plans that require increased
funding would require the WorldCom board of directors' approval before WorldCom
would be obligated to fund any such increase.

In connection with the change of control provision under various Intermedia and
Digex indentures and preferred stock designations, Intermedia, as a result of
the Merger, offered to buy back the related securities as required in the
indentures. Intermedia does not expect a significant amount of presentations on
the change of control offers, however, any amounts due as a result of these
offers will be funded by WorldCom through early repayment of the Note
Receivable.


                                       25
<Page>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE

      While all of Intermedia's long term debt bears fixed interest rates, the
fair market value of Intermedia's fixed rate long-term debt is sensitive to
changes in interest rates. Intermedia runs the risk that market rates will
decline and the required payments will exceed those based on the current market.
Under its policies, Intermedia does not use interest rate derivative instruments
to manage its exposure to interest rate changes. Beginning in the third quarter
of 2000, Digex began to recognize revenue from international sales denominated
in foreign currency. As a global concern, Digex could face exposure to adverse
movements in foreign currency exchange rates on the financial results of foreign
subsidiaries that are translated into U.S. dollars upon consolidation. These
exposures may change over time as business practices evolve and could affect
Digex's financial results. Currently, Digex does not hedge against any foreign
currency risk due to restrictions in Intermedia's debt indentures and, as a
result, could incur gains or losses.

IMPACT OF INFLATION

      Inflation has not had a significant impact on Intermedia's operations over
the past 3 years.

      The information set forth above in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" include forward-looking
statements that involve numerous risks and uncertainties. Forward-looking
statements can be identified by the use of forward-looking terminology such as
"estimates," "projects," "anticipates," "expects," "intends," "believes," or the
negative thereof or other variations thereon or comparable terminology or by
discussions of strategy that involve risks and uncertainties. Intermedia's
actual results could differ materially from those anticipated in such
forward-looking statements as a result of certain factors, including those set
forth in the section entitled "Risk Factors" in Intermedia's Annual Report on
Form 10-K report for the year ended December 31, 2000. Readers are cautioned not
to place undue reliance on any forward-looking statements contained in this
report. Intermedia undertakes no obligation to publish the results of any
adjustments to these forward-looking statements that may be made to reflect
events on or after the date of this report or to reflect the occurrence of
unexpected events.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      Intermedia is not a party to any material legal proceedings other than the
reciprocal compensation proceedings and the BellSouth lawsuit described in Note
7 of the "Notes to Condensed Consolidated Financial Statements" and various
claims and lawsuits arising in the normal course of business. Intermedia does
not believe that these normal course of business claims or lawsuits will have a
material effect on Intermedia's financial condition or results of operations.

ITEM 2. CHANGES IN SECURITIES

      None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      None.


                                       26
<Page>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      A Special Meeting was held on June 19, 2001. At the meeting, the following
actions were taken by the stockholders:

      To adopt the Agreement and Plan of Merger dated as September 1, 2000,
among WorldCom, Inc., Intermedia Communications Inc. and a wholly owned
subsidiary of WorldCom, Inc., as amended by the First Amendment to Agreement and
Plan of Merger and the Second Amendment to Agreement and Plan of Merger dated as
of February, 15, 2001 and as of May 14, 2001, respectively. The shares were
voted as follows:

<Table>
<Caption>
               FOR                   AGAINST                ABSTAINED
               ---                   -------                ---------
           <S>                       <C>                      <C>
           41,353,835                818,321                  20,441
</Table>

ITEM 5. OTHER INFORMATION

      None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits

Number        Exhibit
------        -------

3.1           Restated Certificate of Incorporation of Intermedia, together with
              all amendments, thereto. Exhibit 3.1 to Intermedia's Registration
              Statement on Form S-4, filed with the SEC on June 16, 1998 (No.
              333-46369) is incorporated herein by reference.

3.2           By-laws of Intermedia, together with all amendments thereto.
              Exhibit 3.2 to Intermedia's Registration Statement on Form S-1,
              filed with the Commission on November 8, 1993 (No. 33-69052) is
              incorporated herein by reference.

      (b)   Reports on Form 8-K

      The following reports on Form 8-K of Intermedia were filed during the
second quarter of 2001:

      Intermedia filed a Current Report on Form 8-K, dated June 20, 2001,
reporting under Item 5 the issuance of a press release relating to the June 19,
special meeting of stockholders to vote to adopt the Agreement and Plan of
merger by and among Intermedia, WorldCom, Inc. and a wholly owned subsidiary of
WorldCom, Inc. Intermedia also reported under Item 7 the filing of the press
release as an exhibit to the Form-8K.

      Intermedia filed a Current Report on Form 8-K, dated May 16, 2001,
reporting under Item 5 the issuance of a press release discussing Intermedia's
first quarter results. Intermedia also reported under Item 7 the filing of the
press release as an exhibit to the Form 8-K.

      Intermedia filed a Current Report on Form 8-K, dated May 16, 2001,
reporting under Item 5 the filing of the Form 10-Q of its subsidiary, Digex,
Inc. for the quarter ended March 31, 2001. Intermedia also reported under Item 7
the Form 10-Q of Digex, Inc. for the quarter ended March 31, 2001 as an exhibit
to the Form 8-K.


                                       27
<Page>

      Intermedia filed a Current Report on Form 8-K, dated May 3, 2001,
reporting under Item 5 the issuance of a press release discussing Digex's first
quarter results. Intermedia also reported under Item 7 the filing of the press
release as an exhibit to the Form 8-K.

      Intermedia filed a Current Report on Form 8-K, dated April 27, 2001,
reporting under Item 5 the filing of the Form 10-K/A of its subsidiary, Digex,
Inc. for the year ended December 31, 2000. Intermedia also reported under Item 7
the Form 10-K/A of Digex, Inc. for the quarter ended December 31, 2000 as an
exhibit to the Form 8-K.

      Intermedia filed a Current Report on Form 8-K, dated April 6, 2001,
reporting under Item 5 the filing of a press release disclosing the Order and
Final Judgement of the Court of Chancery of the State of Delaware approving the
previously announced settlement of certain litigation and Award of Attorneys'
Fees and Reimbursement of Expenses relating to the Digex Delaware Stockholders
Litigation. Intermedia also reported under Item 7 the filing the Order and Final
Judgment and the Award of Attorneys' Fees and Reimbursement of Expenses as an
exhibit to the Form 8-K.


                                       28
<Page>

                                   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: August 14, 2001

                                                 INTERMEDIA COMMUNICATIONS INC.
                                                          (Registrant)


                                                        Jeanne M. Walters
                                                 -------------------------------
                                                 Vice President, Controller and
                                                    Chief Accounting Officer


                                       29