UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: April 17, 1998
Anicom, Inc.
-----------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-25364 36-3885212
- ---------------------------- ------------ --------------------
(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6133 North River Road, Suite 1000, Rosemont, IL 60018
- ----------------------------------------------- ---------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 518-8700
Item 2. Acquisition or Disposition of Assets
(a) On December 4, 1997, a wholly owned subsidiary of Registrant was merged
into TW Communication Corporation ("TW"), resulting in TW becoming a
wholly-owned subsidiary of Registrant. The total merger consideration
was paid in the form of $3,000,000 in cash, and 873,580 shares of
Registrant's common stock, $.001 par value per share ("Common Stock").
All cash consideration from Registrant in this transaction was
paid out of Registrant's existing working capital. All shares of Common
Stock issued in this transaction were issued out of Registrant's
authorized but unissued Common Stock.
(b) Certain of the assets acquired pursuant to this transaction constitute
equipment or other physical property used by TW in its business as a
distributor of wire and cable products. The Registrant will continue to
use these assets for the same purpose.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
The following financial statements of the acquired business, TW
Communication Corporation, are submitted herewith on the indicated
pages.
Page
Report of Independent Certified Public Accountants F-3
Balance Sheet as of February 28, 1997 F-4
Statement of Earnings for the year ended February 28, 1997 F-5
Statement of Stockholder's Equity for the year ended
February 28, 1997 F-6
Statement of Cash Flows for the year ended February 28, 1997 F-7
Notes to Financial Statements F-8 to F-13
(b) Pro Financial Information
The following unaudited pro forma condensed combined financial
information of Anicom, Inc. , TW Communication Corporation and Other
Acquisitions are submitted herewith on the indicated pages.
Page
Pro forma Condensed Combined Financial Information F-14
Pro forma Condensed Combined Balance Sheet, September 30, 1997 F-15
Notes to Pro forma Condensed Combined Balance Sheet, September
30. 1997 F-16
Pro forma Condensed Combined Statement of Income for the nine
months ended September 30, 1997 F-17
Notes to Pro forma Condensed Combined Statement of Income for
the nine months ended September 30, 1997 F-18
Pro forma Condensed Combined Statement of Income for the year
ended December 31, 1996 F-19
Notes to Pro forma Condensed Combined Statement of Income for
the year ended December 31, 1996 F-20
(c) Exhibits
2.1* Agreement and Plan of Merger dated as of November 24, 1997
between Anicom, Inc., TWC Acquisition Corporation, TW
Communication Corporation, Edward Goodstein and Carl G.
Palazzolo.
23.1 Consent of Independent Certified Public Accountants
_____________
* Incorporated by reference to the same Exhibit number of the
Company's Registration Statement on Form S-3 (Registration
Statement No. 333-41225).
SIGNATURES
Pursuant to the regulations of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ANICOM, INC.
Dated: April 17, 1998 By: /S/ DONALD C. WELCHKO
--------------------------------
Donald C. Welchko
Vice President, Chief Financial Officer
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
TW Communication Corporation
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
February 28, 1997
C O N T E N T S
Page
Report of Independent Certified Public Accountants F-3
Financial Statements
Balance Sheet F-4
Statement of Earnings F-5
Statement of Stockholder's Equity F-6
Statement of Cash Flows F-7
Notes to Financial Statements F-8 - F-13
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
Board of Directors and Stockholder
TW Communication Corp.
We have audited the accompanying balance sheet of TW Communication Corp. (the
"Company") as of February 28, 1997, and the related statements of earnings,
stockholder's equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TW Communication Corp. as of
February 28, 1997, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/S/ GRANT THORNTON LLP
Melville, New York
May 9, 1997
TW Communication Corp.
BALANCE SHEET
February 28, 1997
ASSETS
CURRENT ASSETS
Cash $ 34,553
Accounts receivable, less allowance for doubtful
accounts of $232,470 12,687,927
Merchandise inventory 10,992,973
Receivables from related parties 798,204
Prepaid expenses and other 277,211
--------------
Total current assets 24,790,868
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net 389,516
RECEIVABLES FROM RELATED PARTIES 1,784,939
OTHER ASSETS
Intangible assets (net of accumulated amortization
of $62,981) 115,497
Cash surrender value of officer's life insurance 75,841
Security deposits and other 84,550
--------------
275,888
--------------
$27,241,211
==============
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 5,037
Accounts payable 9,913,966
Accrued expenses and other current liabilities 1,085,872
--------------
Total current liabilities 11,004,875
LONG-TERM DEBT, net of current portion
Notes payable - bank 11,764,741
Loans payable 2,713
--------------
11,767,454
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY
Common stock, no par value; 200 shares
authorized; 23 shares issued and outstanding 46
Retained earnings 4,468,836
--------------
4,468,882
--------------
$27,241,211
==============
The accompanying notes are an integral part of this statement.
TW Communication Corp.
STATEMENT OF EARNINGS
Year ended February 28, 1997
Net sales $82,363,899
Cost of sales 71,043,212
------------
Gross profit 11,320,687
------------
Operating expenses
Salaries 5,481,003
Warehouse 1,023,412
Selling and marketing 964,477
General and administrative 2,009,959
Depreciation and amortization 176,701
------------
9,655,552
------------
Earnings from operations before interest 1,665,135
Interest expense, net of interest income (626,796)
------------
NET EARNINGS $ 1,038,339
============
The accompanying notes are an integral part of this statement.
TW Communication Corp.
STATEMENT OF STOCKHOLDER'S EQUITY
Year ended February 28, 1997
Common Retained
stock earnings Total
Balance as of February 29, 1996 $46 $3,430,497 $3,430,543
Net earnings for the year 1,038,339 1,038,339
------ ------------ ------------
Balance as of February 28, 1997 $46 $4,468,836 $4,468,882
====== ============ ============
The accompanying notes are an integral part of this statement.
TW Communication Corp.
STATEMENT OF CASH FLOWS
Year ended February 28, 1997
Cash flows from operating activities
Net earnings $ 1,038,339
Adjustments to reconcile net earnings to net cash
used in operating activities
Depreciation and amortization 176,701
Provision for doubtful accounts 400,687
Provision for inventory reserve 69,332
Changes in operating assets and liabilities
Increase in accounts receivable (1,966,484)
Increase in merchandise inventory (2,483,091)
Decrease in prepaid expenses and other 325,545
Increase in other assets (2,382)
Increase in accounts payable 701,256
Increase in accrued expenses and other
current liabilities 443,381
------------
Net cash used in operating activities (1,296,716)
------------
Cash flows from investing activities
Capital expenditures (51,407)
Funds advanced to related parties, net (1,726,640)
Increase in cash surrender value of officer's life insurance (6,543)
------------
Net cash used in investing activities (1,784,590)
------------
Cash flows from financing activities
Borrowings from revolving credit line, net 2,957,760
Financing costs (627)
Repayment of loans payable (5,400)
------------
Net cash provided by financing activities 2,951,733
------------
NET DECREASE IN CASH (129,573)
Cash at beginning of year 164,126
------------
Cash at end of year $ 34,553
============
Supplemental disclosures of cash flow information:
Cash paid during the year for
Interest $ 758,128
============
The accompanying notes are an integral part of this statement.
TW Communication Corp.
NOTES TO FINANCIAL STATEMENTS
February 28, 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Nature of Business
TW Communication Corp. (the "Company") is a distributor of wire, cable,
fiber optics and installation supplies predominantly to the
telecommunications, data and cable television industries primarily in
the United States.
2. Merchandise Inventory
Merchandise inventory is stated at the lower of cost (moving average
method) or market and consists substantially of finished goods.
3. Equipment and Leasehold Improvements
Equipment and leasehold improvements are carried at cost. Depreciation
and amortization are provided using straight-line and accelerated
methods based on the estimated useful lives of the assets.
4. Revenue Recognition
The Company recognizes revenue on the date the product is shipped to
the customer.
5. Intangible Assets
Intangible assets consist of costs in excess of fair value of net
assets acquired (amortized on a straight-line basis over a period of
forty years) and deferred financing costs (amortized over the
three-year term of the underlying credit agreement). On an ongoing
basis, management reviews the valuation and amortization of such costs.
6. Income Taxes
The Company has elected to be treated as an S Corporation under the
Internal Revenue Code and under New York State and other state' income
tax laws. Therefore, no provision is made for
TW Communication Corp.
NOTES TO FINANCIAL STATEMENTS (continued)
February 28, 1997
NOTE A (continued)
income taxes since all earnings or losses are passed through directly
to the stockholder. S Corporations are permitted to retain their fiscal
year by making an election together with a "deposit" based upon
adjusted income of the preceding year. The federal fiscal year deposit
at February 28, 1997 is $7,086.
7. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ
from those estimates.
8. Concentration of Risk
Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of receivables.
Concentration of credit risk with respect to these receivables is
generally diversified due to the large number of entities comprising
the Company's customer base and their dispersion across geographic
areas. The Company routinely addresses the financial strength of its
customers and, as a consequence, believes that its receivable credit
risk exposure is limited.
NOTE B - RECEIVABLES FROM RELATED PARTIES
As of February 28, 1997, the Company had a receivable of $798,204 from
a company owned by the Company's sole stockholder. The demand loan
bears interest at 8.50% per annum. Interest income amounted to $65,079
in fiscal 1997.
TW Communication Corp.
NOTES TO FINANCIAL STATEMENTS (continued)
February 28, 1997
NOTE B (continued)
During fiscal 1997, the Company advanced funds to and charged for
expenditures incurred on behalf of an entity owed by the Company's sole
stockholder for an amount aggregating $1,766,439 through February 28,
1997. Such amount due from this related entity bears interest at 1/2%
over the prime rate per annum (8.75% at February 28, 1997) on which
interest approximating $18,500 accrued through February 28, 1997. The
related entity subsequently used a portion of such advanced funds to
acquire an interest in debentures and equity of a public company
operating its business and managing its affairs with relief under
Chapter XI of the Federal bankruptcy laws. On May 7, 1997, the related
entity entered into an agreement with such public company, subject to
Bankruptcy Court approval, to acquire the public company's distribution
business and all of its assets used in connection therewith. In turn,
the related entity will transfer its interest in the distribution
business together with the related assets acquired to the Company in
partial satisfaction of the receivable from such related entity. The
closing of this series of contemplated transactions is scheduled to
occur not later than ten days after approval by the Bankruptcy Court.
NOTE C - EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, net, consist of the following as
of February 28, 1997:
Asset
lives
(years)
Office and warehouse equipment 3 - 8 $ 1,715,126
Leasehold improvements 5 - 10 208,837
Transportation equipment 2 - 3 14,449
-----------
1,938,412
Less accumulated depreciation
and amortization (1,548,896)
-----------
$ 389,516
===========
Depreciation and amortization of equipment and leasehold improvements
was approximately $148,000 in fiscal 1997.
TW Communication Corp.
NOTES TO FINANCIAL STATEMENTS (continued)
February 28, 1997
NOTE D - OFFICER'S LIFE INSURANCE
The Company is the owner and beneficiary of life insurance policies
with face values aggregating $1,800,000 on the life of its sole
stockholder (Note E).
In addition, the Company pays the premiums for two split-dollar life
insurance policies on the life of its sole stockholder. These policies,
in the amount of $1,500,000 each, are owned by the Company for the
benefit of the sole stockholder and his wife, except that the Company
is entitled to retain a portion of such life insurance proceeds to the
extent of premiums paid by the Company.
NOTE E - LONG-TERM DEBT
Notes Payable - Bank
The Company has an asset-based lending agreement (the "Agreement")
dated November 15, 1995 with a bank which expires in November 1998. The
Agreement, as amended on March 17, 1997, provides for maximum
borrowings of up to $13,500,000, which includes a temporary borrowing
limit increase of $1 million through June 14, 1997, is guaranteed by an
affiliate of the Company and by the Company's sole stockholder up to
$2.8 million of the outstanding loan amount, and is collateralized by
all of the Company's assets as well as the assignment of life insurance
policies on the life of the Company's sole stockholder in the amount of
$1 million (Note D) and a mortgage on a building owned by an affiliate.
The Agreement contains certain restrictive covenants which, among other
things, require the maintenance of certain financial ratios, including
minimum net worth and interest coverage, limitation on debt coverage
and profitability, as defined. Borrowings under the Agreement are based
on eligible accounts receivable and merchandise inventory, as defined,
and bear interest at 1/2% over the bank's prime rate (8.75% at February
28, 1997), unless the LIBOR option is exercised, up to specified
borrowing limits, in which the interest is at 2% over the bank's stated
LIBOR rate (7.54% at February 28, 1997). At February 28, 1997,
$3,800,000 of the outstanding loan amount was at the LIBOR-based rate.
Loan Payable
This equipment loan is payable to the Company's sole stockholder in
monthly installments with interest at 10% per annum through August
1998.
TW Communication Corp.
NOTES TO FINANCIAL STATEMENTS (continued)
February 28, 1997
NOTE E (continued)
A summary of the Company's aggregate annual maturities of long-term
debt is as follows:
Year ending February 28,
1998 $ 5,037
1999 11,767,454
---------------
$11,772,491
===============
NOTE F - COMMITMENTS AND CONTINGENCIES
The Company leases its corporate office and a warehouse/sales office
from entities owned or controlled by the Company's sole stockholder
under noncancellable operating lease agreements. In addition to the
monthly base rentals aggregating $30,000 through 2000 and $18,000
through 2005, the Company is obligated for real estate taxes and
property insurance premiums relating to such lease agreements. During
fiscal 1997, the Company incurred $425,666, including $65,666 for real
estate taxes under these leases. Further, the Company is contingently
liable as a guarantor of mortgages on such facilities in the amount of
$2,153,155 as of February 28, 1997.
The Company is also obligated under noncancellable operating leases
through 2000 for its other warehouses, administrative and sales offices
and transportation equipment. The leases require minimum monthly rents,
and certain facility leases require payments for real estate tax and
operating expense escalations.
Rent expense for all operating leases, including leases with related
parties and required real estate taxes, during fiscal 1997 aggregated
$581,774.
TW Communication Corp.
NOTES TO FINANCIAL STATEMENTS (continued)
February 28, 1997
NOTE F (continued)
The aggregate minimum rental commitments under all operating leases,
including leases with related parties, are as follows:
Office and Trans-
warehouse portation
facilities equipment Total
Year ending February 28,
1998 $ 483,000 $45,000 $ 528,000
1999 463,000 36,000 499,000
2000 400,000 2,000 402,000
2001 216,000 216,000
2002 216,000 216,000
Thereafter 666,000 666,000
----------- --------- -----------
$2,444,000 $83,000 $2,527,000
=========== ========= ===========
NOTE G - BENEFIT PLAN
The Company sponsors a 401(k) employee pension plan (the "Plan") for
all employees meeting the eligibility requirements. The Plan is funded
by the individual contributions from the participants who elect their
individual investment options.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
Anicom, Inc., TW Communication Corporation and Other Acquisitions
Pro Forma Condensed Combined Financial Information
(Unaudited)
The unaudited pro forma condensed combined financial information give effect, on
a purchase accounting basis, to the Agreement and Plan of Merger dated as of
November 24, 1997 between Anicom, Inc., TWC Acquisition Corporation (hereinafter
referred to as "Anicom"), TW Communication Corporation ("TW"), Edward Goodstein
and Carl G. Palazzolo and certain other acquisitions completed by Anicom during
1996 and 1997.
The unaudited pro forma condensed combined balance sheet at September 30, 1997
assumes that the acquisition of TW occurred on September 30, 1997. The purchase
price consisted of $3 million in cash and 873,580 shares of Anicom's common
stock, $.001 par value per share. The source of cash used to fund the purchase
price was provided by working capital made available by the private placement of
2,900,000 shares of Anicom's common stock, $.001 par value per share, which
closed on December 4, 1997. As the TW acquisition and subsequent retirement of
TW bank debt was funded by the private placement of Anicom common stock, the
unaudited pro forma condensed combined balance sheet at September 30, 1997
assumes that this offering occurred on September 30, 1997. The unaudited pro
forma condensed combined statements of income for the nine months ended
September 30, 1997 and the year ended December 31, 1996 assume that the
acquisition of TW and the private placement of Anicom common stock occurred on
January 1, 1996.
The unaudited pro forma condensed combined statements of operations also assume
that Anicom's 1996 acquisitions of Northern Wire & Cable, Inc. ("Northern") and
Norfolk Wire & Electronics, Inc. ("Norfolk") and Anicom's 1997 acquisition of,
Energy Electric Cable, a division of Connectivity Products, Inc. ("Energy"),
occurred on January 1, 1996. As these acquisitions were substantially funded by
the November 1995 follow-on offering of 3,450,000 shares of common stock
(including 450,000 shares for the underwriters' overallotment) and the May 1997
issuance of 27,000 shares of convertible preferred stock, the unaudited pro
forma combined statements assume that these offerings occurred on January 1,
1996.
The unaudited pro forma adjustments are based on preliminary assumptions of the
allocation of the purchase price and are subject to revision upon final
settlement of all purchase price adjustments and the completion of evaluations
and other studies of the fair value of all assets acquired and liabilities
assumed. Actual purchase accounting adjustments may differ from the pro forma
adjustments presented herein.
The unaudited pro forma condensed combined statements are not necessarily
indicative of the results that actually would have occurred if the transactions
described above had been effective since the assumed dates, nor are the
statements indicative of future combined financial position or earnings.
Anicom's future financial statements will reflect the acquisition of TW as of
December 1, 1997.
The pro forma condensed combined financial statements should be read in
conjunction with the consolidated financial statements of Anicom as filed with
the Securities and Exchange Commission in its Form 10-KSB for the year ended
December 31, 1996 and Current Report on Form 10-Q for the nine months ended
September 30, 1997.
Anicom, Inc., TW Communication Corporation and Other Acquisitions
Unaudited Condensed Combined Balance Sheet
September 30, 1997
(in thousands)
Historic Pro Froma
------------------------- --------------------------
Anicom TW Adjustments Combined
Assets
Current assets:
Cash and cash equivalents $ 1,125 $ 26 $ 36,000 B $ 7,199
(3,000) C
(26,952) G
Accounts receivable, net 55,995 14,761 70,756
Inventory, primarily finished goods 43,448 11,274 54,722
Deferred income taxes 2,059 90 F 2,149
Other current assets 1,441 3,450 4,891
---------- ---------- ----------- -----------
Total current assets 104,068 29,511 6,138 139,717
Property and equipment, net 5,206 540 5,746
Goodwill, net 53,098 14,631 I 67,729
Deferred income taxes 708 708
Other assets, primarily notes receivable 1,140 302 (103) A 1,339
---------- ---------- ----------- -----------
Total assets $ 164,220 $ 30,353 $ 20,666 $ 215,239
========== ========== =========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 46,509 $ 10,856 $ 57,365
Accrued expenses 3,473 905 1,000 E 7,733
2,355 D
Long-term debt, current portion 1,938 23 1,961
---------- ---------- ----------- -----------
Total current liabilities 51,920 11,784 3,355 67,059
Long-term debt, net of current portion 14,940 13,832 (26,952) G 1,820
Other liabilities 2,486 2,486
---------- ---------- ----------- -----------
Total liabilities 69,346 25,616 (23,597) 71,365
---------- ---------- ----------- -----------
Stockholders' Equity:
Common stock 11 3 B 15
1 C
Additional paid-in capital 87,971 35,997 B 136,967
12,999 C
Retained earnings 6,892 6,892
Division equity and allocated debt 4,737 (2,355) D --
(2,382) H
---------- ---------- ----------- -----------
Total stockholders' equity 94,874 4,737 44,263 143,873
---------- ---------- ----------- -----------
Total liabilities and stockholders' $ 164,220 $ 30,353 $ 20,666 $ 215,239
equity ========== ========== =========== ===========
Anicom, Inc. and TW Communication Corporation
Notes to Unaudited Condensed Combined Balance Sheet
September 30, 1997
The unaudited balance sheets as of September 30, 1997 have been combined to
reflect the pro forma impact of the acquisition of TW by Anicom as if the
transaction had occurred on September 30, 1997.
The following is a summary of the adjustments reflected in the pro forma
condensed combined balance sheet:
A - Eliminate TW assets not acquired by Anicom.
B - The private placement of 2,900,000 shares of Anicom's common stock, $.001
par value per share, which closed on December 4, 1997 provided the funds for
the $3 million cash consideration paid for TW as well as the funds used to
retire TW's outstanding bank debt and the bank debt incurred by Anicom to
fund the July 1997 acquisition of Energy. This adjustment reflects the
private placement, net of related costs, as if it had occurred on September
30, 1997.
C - The purchase price, exclusive of related fees and expenses, of $16 million
based on the terms and conditions of the Agreement and Plan of Merger dated
as of November 24, 1997 between Anicom, Inc., TWC Acquisition Corporation,
TW Communication Corporation, Edward Goodstein and Carl G. Palazzolo. The
purchase price consisted of $13 million (873,580 shares) of Anicom common
stock,$.001par value and $3 million of cash provided by the private
placement of Anicom common stock (see B above).
D - Reflects S Corporation dividends to be paid to the former shareholders
of TW after September 30, 1997 and prior to closing.
E - Record estimated transaction and business integration costs.
F - Record deferred tax asset related to business integration costs.
G - In connection with merger of TW, Anicom assumed TW's outstanding
bank debt. Immediately after the closing of the transaction, Anicom retired
the outstanding bank debt of TW. Residual proceeds from the private
placement of Anicom common stock (see B above) were used to pay down
Anicom's revolving credit facility (the "Facility"). Long-term debt has been
adjusted to give effect to these transactions, as if such transactions had
occurred on September 30, 1997.
H - Eliminate the net equity of TW.
I - To record the amount by which the purchase price exceeds the fair market
value of assets acquired, less liabilities assumed and transaction costs
associated with the acquisition of TW.
Anicom, Inc., TW Communication Corporation and Other Acquisitions
Unaudited Condensed Combined Statement of Income
for the nine months ended September 30, 1997
(in thousands, except per share amounts)
Historic Pro Forma
------------------------------------ ------------------------------
Other
Anicom TW Acquisitions Adjustments Combined
Net sales
$ 172,831 $ 67,476 $ 34,072 $ 274,379
Cost of sales 132,161 58,236 24,989 215,386
---------- ----------- ----------- -----------
Gross profit 40,670 9,240 9,083 58,993
Selling, general and administrative 34,311 8,205 7,839 $ 275 A 50,773
237 B
(94)C
---------- ----------- ----------- ----------- -----------
Income from operations 6,359 1,035 1,244 (418) 8,220
---------- ----------- ----------- -------------- -----------
Other income (expense):
Interest income 214 -- -- 214
Interest expense (440) (539) (283) 539 D (266)
283 E
174 F
---------- ----------- ----------- -------------- -----------
Total other income (expense) (226) (539) (283) 996 (52)
---------- ----------- ----------- -------------- -----------
Income before income taxes 6,133 496 961 578 8,168
Provision for income taxes 2,331 -- 492 385 G 3,208
---------- ----------- ----------- -------------- -----------
Net income $ 3,802 $ 496 $ 469 $ 193 $ 4,960 H
========== =========== =========== ============== ===========
Earnings per common share:
Basic $ .23 H $ .25 I
========== ===========
Diluted $ .22 H $ .24 I
========== ===========
Weighted average common shares outstanding:
Basic 16,417 H 19,899 I
========== ===========
Diluted 17,048 H 20,530 I
========== ===========
Anicom, Inc. , TW Communication Corporation and Other Acquisitions
Notes to Unaudited Condensed Combined Statement of Income
for the nine months ended September 30, 1997
The following is a summary of the adjustments reflected in the unaudited pro
forma condensed combined statement of operations:
A - Earnings effect of TW goodwill amortization using a 40 year recovery
period.
B - Earnings effect of Other Acquisitions goodwill amortization using a 40 year
recovery period.
C - Adjust expenses for costs not relevant to the acquired operations of TW.
D - In connection with merger of TW, Anicom assumed TW's outstanding bank
debt. Immediately after the closing of the transaction, Anicom retired the
outstanding bank debt. Interest expense has been adjusted to give effect to
the retirement of this debt, as if such transactions had occurred on January
1, 1996.
E - Eliminate interest expense allocated to Energy by its former parent.
F - Anicom borrowed against its unsecured revolving credit facility (the
"Facility") to fund the acquisition of Energy and working capital
requirements. The completion of the private placement of 2,900,000 shares of
Anicom's common stock, $.001 par value per share, which closed on December
4, 1997, was the source of funds for the acquisition of TW and the
retirement of debt assumed in the TW acquisition. Residual proceeds were
used to pay down the Facility. Interest expense has been adjusted to give
effect to the pay down of this debt as if the private placement had occurred
on January 1, 1996.
G - Adjustment of income tax provision to reflect the approximate effective
tax rate of Anicom on the combined results.
H - Computed in accordance with FAS No. 128, "Earnings Per Share".
I - Effective September 23, 1997, the remaining outstanding Convertible
Preferred Stock was converted into common stock. Based on this, Pro forma
earnings per share and weighted average common shares and share equivalents
outstanding assume full conversion of convertible preferred stock on January
1, 1996.
Earnings per share has been computed in accordance with FAS No. 128,
"Earnings Per Share".
Anicom, Inc., TW Communication Corporation and Other Acquisitions
Unaudited Condensed Combined Statement of Income
for the year ended December 31, 1996
(in thousands, except per share amounts)
Historic Pro Forma
------------------------------------- -----------------------
Other
Anicom TW Acquisitions Adjustments Combined
Net sales $ 115,993 $ 78,171 $ 92,209 $ 286,373
Cost of sales 87,442 67,041 68,519 223,002
----------- ----------- ----------- ----------- -----------
Gross profit 28,551 11,130 23,690 63,371
Selling, general and administrative 24,615 9,325 20,814 $ 366 A 55,902
657 B
125 C
----------- ----------- ----------- ----------- -----------
Income from operations 3,936 1,805 2,876 (1,148) 7,469
----------- ----------- ----------- ----------- -----------
Other income (expense):
Interest income 565 -- 22 587
Interest expense (256) (633) (856) 633 D (288)
582 E
113 F
129 G
Other -- -- 8 8
----------- ----------- ----------- ----------- -----------
Total other income (expense) 309 (633) (826) 1,457 307
----------- ----------- ----------- ----------- -----------
Income before income taxes 4,245 1,172 2,050 309 7,776
Provision for income taxes 1.622 -- 753 719 H 3,094
----------- ----------- ----------- ----------- -----------
Net income before extraordinary loss 2,623 1,172 1,297 (410) 4,682
Extraordinary loss on debt refinancing -- -- (121) 121 I --
----------- ----------- ----------- ----------- -----------
Net income $ 2,623 $ 1,172 $ 1,176 $ (289) $ 4,682
=========== =========== =========== =========== ===========
Earnings per common share:
Basic $ .20 J $ .21 J
=========== ===========
Diluted $ .19 J $ .21 J
=========== ===========
Weighted average common shares outstanding:
Basic 13,384 J 22,565 J
=========== ===========
Diluted 13,580 J 22,760 J
=========== ===========
Anicom, Inc., TW Communication Corporation and Other Acquisitions
Notes to Unaudited Condensed Combined Statement of Income
for the year ended December 31, 1996
The following is a summary of the adjustments reflected in the unaudited pro
forma condensed combined statement of operations:
A - Earnings effect of TW goodwill amortization using a 40 year recovery
period.
B - Earnings effect of Other Acquisitions goodwill using a 40 year recovery
period.
C - Adjust expenses for costs not relevant to acquired operations.
D - In connection with merger of TW Communication Corporation, Anicom TW's
outstanding bank debt. Immediately after the closing of the transaction,
Anicom retired the outstanding bank debt assumed from TW. Interest expense
has been adjusted to give effect to the retirement of this debt as if such
transactions had occurred on January 1, 1996.
E - Eliminate interest expense allocated to Energy by its former parent.
F - In connection with the asset purchase of Northern, Anicom assumed up to $6.5
million of Northern's outstanding bank debt. Immediately after the closing
of this transaction, Anicom retired the outstanding bank debt assumed from
Northern. Interest expense has been adjusted to give effect to the
retirement of this debt as if such transactions had occurred on January 1,
1996.
G - In connection with the merger of Norfolk, Anicom assumed approximately $2.5
million of Norfolk's outstanding bank debt. Immediately after the closing of
this transaction, Anicom retired the outstanding bank debt assumed from
Norfolk. Interest expense has been adjusted to give effect to the retirement
of this debt as if such transactions had occurred on January 1, 1996.
H - Adjustment of income tax provision to reflect the approximate effective tax
rate of Anicom on the combined results.
I - Represents extraordinary loss on debt restructuring incurred by Energy prior
to acquisition by Anicom. As this amount is not relevant to the operations
of the business acquired by Anicom, the amount has been eliminated.
J - Computed in accordance with FAS No. 128, "Earnings Per Share".