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: October 29, 1998
Anicom, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-25364 36-3885212
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(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.
6133 North River Road, Suite 1000, Rosemont, Illinois 60018
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(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 September 21, 1998, the Registrant purchased substantially all of
the assets of Texcan Cables Inc., a Nevada corporation, Texcan Cables
International, Inc., a Nevada corporation and wholly owned subsidiary
of Texcan Cables Inc., and Texcan Cables Limited, a Canadian
corporation (collectively, referred to as "Texcan"). The assets
acquired include all property and assets used in the conduct of
Texcan's business, including inventory, accounts receivable, equipment,
the name "Texcan Cables" and the goodwill associated therewith.
Prior to this transaction, no material relationship existed between the
Registrant and the Texcan Entities, or between any affiliates of such
entities.
The Registrant paid Texcan at the closing an aggregate purchase price
consisting of 1,403,509 shares of the Registrant's common stock, par
value U.S.$.001 per share, 20,000 shares of the Registrant's Series B
convertible preferred stock, par value U.S.$.01 per share, which are
convertible, in the aggregate, into an additional 1,403,509 shares of
Registrant's common stock, and approximately U.S.$27 million in cash.
In addition, Anicom assumed approximately U.S. $12 million of bank
indebtedness.
The cash portion of the purchase price in this transaction was paid out
of proceeds from Registrant's existing credit facility with Harris
Trust & Savings Bank, LaSalle National Bank, The First National Bank of
Chicago, and Bank of America National Trust & Savings Association, and
a new term loan facility with the Bank of Montreal dated September 21,
1998.
(b) Pursuant to this transaction, the Registrant acquired from Texcan
substantially all of the assets used by Texcan in its business as a
distributor of wire, cable and related 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
Audited financial statements of Texcan required pursuant to
Regulation S-X cannot be provided at this time but shall be filed
as soon as practical and in no event later than 60 days after the
date by which our initial Report on Form 8-K was required to be
filed.
(b) Pro Forma Financial Information
The following unaudited pro forma condensed combined financial
information of Anicom, Inc. , Texcan and Other Acquisitions are
submitted herewith on the indicated pages.
Page
Pro Forma Unaudited Condensed Combined
Financial Information F-1
Pro Forma Unaudited Condensed Combined Balance Sheet
as of June 30, 1998 F-3
Notes to Pro Forma Unaudited Condensed Combined
Balance Sheet, June 30, 1998 F-4
Pro Forma Unaudited Condensed Combined Statement of
Income for the six months ended June 30, 1998 F-5
Notes to Pro Forma Unaudited
Condensed Combined Statement of Income
for the six months ended June 30, 1998. F-6
Pro Forma Unaudited Condensed Combined Statement of
Income for the year ended December 31, 1997 F-7
Notes to Pro Forma Unaudited
Condensed Combined Statement of Income
for the year ended December 31, 1997 F-8
(c) Previously filed Exhibits
The following exhibits were filed in the Registrant's initial report on
Form 8-K:
2.1 Asset Purchase Agreement by and among Anicom, Inc., Anicom Multimedia
Wiring Systems Incorporated, Texcan Cables Inc., Texcan Cables
International, Inc., and Texcan Cables Limited, dated as of September
21, 1998.
4.1 Certificate of Designations, Preferences and Rights of Series B
convertible preferred stock of Anicom, Inc.
4.2 Registration Rights Agreement by an between Anicom, Inc., Texcan
Cables Inc., and Texcan Cables Limited, dated September 21, 1998.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
Anicom, Inc., Texcan and Other Acquisitions
Pro Forma Unaudited Condensed Combined Financial Information
The unaudited pro forma condensed combined financial information gives effect,
on a purchase accounting basis, to the Asset Purchase Agreement dated as of
September 21, 1998 by and among Anicom, Inc., Anicom Multimedia Wiring Systems
Incorporated (collectively referred to as "Anicom"), and Texcan and certain
other acquisitions completed by Anicom during 1997.
The historical financial statements of Texcan reported activity on a fiscal year
ending March 31 using generally accepted accounting principles in Canada. The
Texcan historical financial information presented in this document has been
adjusted to reflect a calendar year-end using generally accepted accounting
principles in the United States.
The unaudited pro forma condensed combined statements, which are based on
historical financial results, do not include any adjustments to reflect
anticipated cost savings and other benefits management believes will result from
the integration of Texcan.
The unaudited pro forma condensed combined balance sheet at June 30, 1998
assumes that the transaction occurred on June 30, 1998.
In connection with this transaction Anicom issued 1,403,509 shares of common
stock, 20,000 shares of Series B Convertible Preferred Stock ("Convertible
Preferred Stock"), which are convertible in the aggregate, into another
1,403,509 shares of common stock, and paid approximately U.S. $ 27 million in
cash. In addition, Anicom assumed approximately U.S.$12 million of permitted
bank indebtedness. The cash portion of the purchase price was paid out of
proceeds from Anicom's unsecured revolving credit facility (the "Facility") and
a Term Credit Agreement ("Term Agreement") dated September 21, 1998 with a
Canadian lender.
The Convertible Preferred Stock, par value of $.01 per share, contains a
liquidation preference of $1,000 per share and earn dividends at the rate of 3%
of the liquidation preference, payable semi-annually. The Convertible Preferred
Stock is redeemable at the holder's or the Company's option after 3 years from
the date of issue for their liquidation preference value plus accrued and unpaid
interest. Mandatory redemption occurs after 5 years from the date of issue.
Conversion of the Convertible Preferred Stock to common stock may occur at
anytime at the option of the holder. The number of common shares to be issued
upon conversion will be computed by dividing the liquidation preference for each
share of Convertible Preferred Stock by $14.25 (rounded to the nearest whole
share). In addition, mandatory conversion may occur based on the future trading
price of the Company's common stock.
The conversion of the Convertible Preferred Stock in the accompanying unaudited
pro forma condensed combined statement of income for the year ended December 31,
1997 on the fully diluted pro forma earnings per share computation would result
in antidilution; therefore conversion was not assumed.
The unaudited pro forma condensed combined balance sheet at June 30, 1998
assumes that the common stock and the Convertible Preferred Stock were issued,
and the cash purchase price financing occurred on, June 30, 1998. The unaudited
pro forma condensed combined statements of income for the six months ended June
30, 1998 and the year ended December 31, 1997 assume that these items occurred
on January 1, 1997.
F-1
The unaudited pro forma condensed combined statements of operations also assume
that Anicom's 1997 acquisitions of TW Communication Corporation ("TW") and
Energy Electric Cable, a division of Connectivity Products, Inc. ("Energy"),
occurred on January 1, 1997.
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 pro forma condensed combined financial 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 Texcan as
of September, 1998.
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-K for the year ended
December 31, 1997 and Quarterly Report on Form 10-Q for the six months ended
June 30, 1998.
F-2
Anicom, Inc., and Texcan
Pro Forma Unaudited Condensed Combined Balance Sheet
June 30, 1998
(in thousands)
Historic Pro Forma
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Anicom Texcan Adjustments Combined
Assets
Current assets:
Cash and cash equivalents $ 409 $ 38,933 A $ 409
(38,933) B
Accounts receivable, net 96,685 $ 16,726 113,411
Inventory, primarily finished goods 67,291 23,843 91,134
Other current assets 6,773 594 7,367
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Total current assets 171,158 41,163 212,321
Property and equipment, net 6,550 1,846 8,396
Goodwill, net 84,327 36 38,965 C 123,292
(36) D
Other assets, primarily notes receivable 1,944 8,090 (8,090) D 1,944
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Total assets $ 263,979 $ 51,135 $ 345,953
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 63,251 $ 6,930 $ 70,181
Accrued expenses and acquisition liabilities 12,119 2,094 4,070 E 17,719
(564) D
Long-term debt, current portion 1,936 35,000 A 36,936
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Total current liabilities 77,306 9,024 124,836
Long-term debt, net of current portion 30,829 14,207 (14,207) B 34,762
3,933 A
Other long-term liabilities 2,001 8,355 (8,355) D 2,001
Commitments and Contingencies
Series B Convertible Preferred Stock 20,000 F 20,000
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Stockholders' Equity:
Common stock 15 1 F 16
Additional paid-in capital 144,956 10,510 F 155,466
Retained earnings 8,872 8,872
Net equity 19,549 (19,549) G
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Total stockholders' equity 153,843 19,549 164,354
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Total liabilities and stockholders' equity $ 263,979 $ 51,135 $ 345,953
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F-3
Anicom, Inc. and Texcan
Notes to Pro Forma Unaudited Condensed Combined Balance Sheet
June 30, 1998
The unaudited balance sheets as of June 30, 1998 have been combined to reflect
the pro forma impact of the acquisition of Texcan by Anicom as if the
transaction had occurred on June 30, 1998.
The following is a summary of the adjustments reflected in the pro forma
condensed combined balance sheet:
A - To reflect Anicom's purchase of the net assets of Texcan and related
financing activities as though the transaction had occurred on June 30,
1998.
B - To reflect the retirement of the Texcan outstanding debt immediately
following the close of the transaction and the cash payment to the seller
as though the sale and the retirement of the related debt had occurred on
June 30, 1998.
C - 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 Texcan.
D - To eliminate Texcan assets and liabilities not acquired by Anicom.
E - To Record estimated transaction and business integration costs, principally
fees for outside consultants and lease exit costs.
F - To record the issuance of 1,403,509 shares of common stock, and 20,000
shares of Convertible Preferred Stock as of June 30, 1998.
G - Eliminate the net equity of Texcan.
F-4
Anicom, Inc. and Texcan
Pro Forma Unaudited Condensed Combined Statement of Income
for the six months ended June 30, 1998
(in thousands, except per share amounts)
Historic Pro Forma
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Anicom Texcan Adjustments Combined
Net sales $ 215,349 $ 53,072 $ 268,421
Cost of sales 167,482 42,456 209,938
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Gross profit 47,867 10,616 58,483
Selling, general and administrative 38,066 8,250 $ 487 A 46,738
(65) B
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Income from operations 9,801 2,366 11,745
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Other income (expense):
Interest income 46 46
Interest expense (713) (780) 780 C (1,982)
(1,269) D
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Total other income (expense) (667) (780) (1,936)
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Income before income taxes 9,134 1,586 9,809
Provision for income taxes 3,654 672 (1,024) E 3,302
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Net income $ 5,480 $ 914 $ 6,507
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Less: dividend on preferred stock 300 F 300
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Net income available to common stockholders 6,207
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Earnings per common share and share equivalent:
Basic $ .24 $ .25
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Diluted $ .23 $ .24
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Weighted average common shares and share
equivalents outstanding:
Basic 23,360 24,764
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Diluted 23,925 26,733
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F-5
Anicom, Inc. and Texcan
Notes to Pro Forma Unaudited Condensed Combined Statement of Income
for the six months ended June 30, 1998
The following is a summary of the adjustments reflected in the pro forma
unaudited condensed combined statement of income:
A - Earnings effect of Texcan goodwill amortization using a 40 year recovery
period.
B - Adjust expenses for management fees paid to related parties of Texcan.
C - In connection with this transaction, Anicom assumed Texcan'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 the transaction had occurred
on January 1, 1997.
D - Anicom borrowed against its Facility and its Term Agreement to fund the
acquisition of Texcan and its future working capital requirements. Interest
expense has been adjusted to give effect to interest related to these
borrowings as though the transaction had occurred on January 1, 1997.
E - Adjustment of income tax provision to reflect the approximate effective tax
rate of Anicom on the combined results.
F - This amount reflects the dividends payable under the Convertible Preferred
Stock issued in connection with the Texcan acquisition assuming the
transaction had occurred on January 1, 1997.
F-6
Anicom, Inc., Texcan and Other Acquisitions
Pro Forma Unaudited Condensed Combined Statement of Income
for the year ended December 31, 1997
(in thousands, except per share amounts)
Historic Pro Forma
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Other
Anicom Texcan Acquistions Adjustments Combined
Net sales $ 243,664 $ 122,853 $114,860 $ 481,377
Cost of sales 187,098 98,736 94,159 379,993
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Gross profit 56,566 24,117 20,701 101,384
Selling, general and administrative 55,079 17,747 18,751 $ 974 A 93,037
683 B
(94) C
(103) D
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Income from operations 1,487 6,370 1,950 8,347
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Other income (expense):
Interest income 225 192 417
Interest expense (762) (2,036) (939) 2,036 E (3,242)
(2,480) F
656 G
283 H
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Total other income (expense) (537) (1,844) (939) (2,825)
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Income before income taxes 950 4,526 1,011 5,522
Provision for income taxes 650 2,035 492 (1,743) I 1,434
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Net income 300 2,491 519 4,088
Less: dividends on preferred stock (296) (600) J (896)
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Net income available to common stockholders $ 4 $ 2,491 $ 519 $ 3,192
========= ========= ======== ==========
Earnings per common share and share equivalent:
Basic $ - $ .14
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Diluted $ - $ .14
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Weighted average common shares and share
equivalents outstanding:
Basic 17,476 22,845
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Diluted 17,476 22,845
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F-7
Anicom, Inc., Texcan and Other Acquisitions
Notes to Pro Forma Unaudited Condensed Combined Statement of Income
for the year ended December 31, 1997
The following is a summary of the adjustments reflected in the pro forma
unaudited condensed combined statement of income:
A - Earnings effect of Texcan 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 management fees paid to related parties of Texcan.
D - Adjust expenses for costs not relevant to the acquired operations of Other
Acquisitions.
E - In connection with this transaction, Anicom assumed Texcan'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 the transaction had occurred
on January 1, 1997.
F - Anicom borrowed against its Facility and its Term Agreement to fund the
acquisition of Texcan and its future working capital requirements. Interest
expense has been adjusted to give effect to interest related to these
borrowings as though the transaction had occurred on January 1, 1997.
G - Anicom borrowed against its 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, 1997.
H - Interest expense has been adjusted to eliminate related party interest
allocated to Energy by its former parent.
I - Adjustment of income tax provision to reflect the approximate effective tax
rate of Anicom on the combined results.
J - This amount reflects the dividends payable under the Convertible
Preferred Stock issued in connection with the Texcan acquisition assuming
the transaction had occurred on January 1, 1997.
F-8
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: October 29, 1998 By: /S/ Donald C. Welchko
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Donald C. Welchko
Vice President, Chief Financial Officer