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NEWS RELEASE [LETTERHEAD OF ANICOM ]
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FOR IMMEDIATE RELEASE
NOVEMBER 13, 2000
Contact: Mark Perlman
The Weiser Group
312/368-6732
mperlman@weisergroup.com
ANICOM CONCLUDES INTERNAL INVESTIGATION;
REVISES UNAUDITED FINANCIALS FOR 1998, 1999 AND FIRST QUARTER 2000
- COMPANY EXPECTS PROFITABILITY IN 2001
- NEW CREDIT FACILITY NEGOTIATIONS ON TRACK
- ANICOM APPOINTS TWO NEW OUTSIDE DIRECTORS
- BOARD ELECTS TO RETAIN CALENDAR FISCAL YEAR
ROSEMONT, ILL., NOVEMBER 13, 2000 - Anicom, Inc. (Nasdaq: ANIC), today announced
that it has concluded its internal investigation into certain accounting
matters. As a result of the investigation, the Company will revise its financial
statements for the years ended December 31, 1998 and December 31, 1999, as well
as the first quarter of calendar year 2000.
The total effect of these non-cash revisions and charges is $34.4 million on an
unaudited, pre-tax basis. On July 18, 2000, the Company stated that it expected
these items not to exceed $35 million.
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Anicom's unaudited, revised revenue and pre-tax results are as follows (in
thousands):
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1998 1999 1Q2000
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Reported Revenues $ 470,279 $ 536,721 $ 145,523
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Revised Revenues 456,667 521,759 135,484
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Reported pre-tax net income 13,142 (16,294) 1,682
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Revised pre-tax net income (loss) (2,865) (28,401) (4,623)
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The Company has not yet filed results for the second quarter and third quarter
of calendar year 2000, but intends to do so when it files its revised 1998 and
1999 audited financial statements. Unaudited results are as follows and include
the effect of restructuring charges:
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2Q2000 3Q2000
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Revenues $143,352 $149,634
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Pre-tax net income (loss) (13,426) (4,368)
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"Due to the accounting issues involved, the audit of the revised 1998 and 1999
financial statements is broader in scope and detail than an annual audit. This
is a labor intensive process, particularly given the volume of transactions that
we do and the fact that there are nine quarters involved," Anicom Chairman and
Interim President and CEO Tom Reiman said. "We anticipate that the audit by our
independent accountants of the revised amounts for 1998, 1999 and the first
quarter of 2000 will be completed, and our revised financial statements filed
with the SEC, by the end of the year. We believe that the audited results will
concur with our final totals. We decided to present this unaudited financial
information in order to give our investors, customers, vendors and associates an
indication of the Company's financial results for these periods."
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2001 BUSINESS PLAN MOVES FORWARD
The Company also reported that it has completed its new business plan for 2001
and has presented that plan to its lenders. As previously announced (October 3,
2000 release), the plan includes an already completed reduction in the workforce
of approximately 10 percent. As also previously announced, the Company
anticipates that full implementation of this plan will result in a pre-tax
charge of up to $5 million that will be recognized in the last half of calendar
year 2000.
"The new management of Anicom has shifted the Company's attention from a primary
focus on the top line to a balanced focus on the top line as well as the bottom
line in an effort to enable future growth and achieve profitability," Reiman
commented. "It is worth noting that revenues have remained strong over the past
several months and with our continued expense and cost reductions and successful
execution of this business plan, we believe that Anicom is well on its way in
its return to profitability. Under our plan, we expect to reach profitability in
the first half of calendar year 2001."
NEW CREDIT FACILITY NEGOTIATIONS
In addition, Anicom said that it is on track in its negotiation with new lenders
to refinance its existing credit facility by December 15. In September 2000,
Anicom announced an amendment of its credit facility with its existing lenders
in which they agreed to waive certain covenant defaults and continue to extend
credit to Anicom until December 15, 2000. Currently, Anicom has signed term
sheets with two asset-based lenders. Anicom believes that the balance of the
lenders' due diligence will be completed shortly.
"With the signing of the term sheets and the current progress of the lenders'
due diligence, we are confident that a new facility will be in place before
December 15," Reiman said.
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ANICOM ANNOUNCES APPOINTMENT OF TWO NEW DIRECTORS AND RETIREMENT OF THREE
DIRECTORS
The Company has named two new outside directors to its Board. Jean Dorval, 61,
and Shepherd G. Pryor IV, 54, will join the Board at its next meeting scheduled
for December 12, 2000.
Dorval is a 25-year veteran of the wire and cable industry with 12 years of
senior management experience. Now retired, Dorval was president of Anixter
International's Canadian unit and went on to become president of its
International Division.
Pryor is an independent management consultant for major financial institutions,
Fortune 500 companies and law firms. Formerly, he was an executive with Wells
Fargo Bank and The First National Bank of Chicago. Pryor currently serves on the
Boards of Petrolane Incorporated (Valley Forge, PA), a publicly owned propane
distribution company, Partners Home Care (Chicago), a home health care agency
and Catholic Health Partners (Chicago), a major hospital group. Pryor received
his MBA from the University of Chicago.
"I am absolutely delighted to add these two experienced gentlemen to our Board.
We believe that Jean's industry knowledge and Shep's financial acumen and
experience will be tremendous assets for the Company," Reiman said.
The Company also announced that the founding members from the Anixter family,
Alan, 80, William, 76, and Scott, 51, are retiring from the Company effective at
the end of this year. Reiman observed, "The Anixter family was the architect of
this industry. Alan and Bill were the pioneers when they founded Anixter Bros.
over 40 years ago. Alan and Scott, with Bill's guidance on the Board, built
Anicom from scratch to a more than $500 million distribution specialist across
North America. With a new management team and new directors, we intend to build
on this foundation as we continue to grow a stronger Anicom. We thank them and
wish them good health and happiness."
In addition, the Company reports that it is nearing a decision on a new CEO.
"We're close to concluding this important course of action, which has involved a
careful screening process by our
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Board of Directors and senior management team," Reiman said. "We have a number
of candidates who possess leadership and financial skills as well as hands-on
operations experience, all of which will be critical to moving this Company
forward."
COMPANY ELECTS TO RETAIN CALENDAR FISCAL YEAR
Anicom also announced that its Board has elected to retain the calendar year as
the Company fiscal year-end. Previously, the Company had announced a decision to
switch to a fiscal year ending on June 30. Tom Reiman said, "After reviewing our
revised financial information, the Board was not convinced that a change in
fiscal year was necessary at this time."
Anicom, Inc. (Nasdaq: ANIC) is a distribution specialist of multimedia
technology throughout North America. Headquartered in Rosemont, Illinois, Anicom
provides products that "interconnect the Internet(SM)" and is a leading
participant in commercial and public sector efforts to build the digital
communication infrastructure.
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In compliance with the Safe Harbor Provision of the Private Securities
Litigation Reform Act of 1995, the company notes the statements contained in
this press release that are not historical facts may be forward-looking
statements that are subject to a variety of risks and uncertainties more fully
described in Anicom's filings with the Securities and Exchange Commission
including, without limitation, those described under "Factors That Could Affect
Our Operations" in Anicom's Annual Report on Form 10-K for the year ended
December 31, 1999. Anicom wishes to caution readers of this press release that
these risks and uncertainties could cause Anicom's actual results in 2000 and
beyond to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, Anicom. These risks and uncertainties
include, without limitation, general economic and business conditions affecting
the industries of Anicom's customers in existing and new geographical markets,
competition from national and regional distributors, the nature of the
information derived from Anicom's internal investigation into accounting
matters, Anicom's ability to retain vendors, customers and employees following
the completion of its internal investigation, Anicom's ability to satisfy the
covenants set forth in its forbearance agreement with its lenders, Anicom's
ability to refinance its current senior debt on or before December 15, 2000 and
to generally maintain sufficient capital, possible enforcement actions by the
Securities and the Exchange Commission, the possible consequences of shareholder
lawsuits against the company, Anicom's ability to maintain its listing on the
Nasdaq National Market, Anicom's ability to hire key employees or executives,
the timing of customer projects and Anicom's ability to identify the right
product mix and to maintain sufficient inventory to meet customer demand. The
words "anticipate," "believe," and "expect" and words of similar effect used in
this press release as they relate to Anicom or its management are generally
intended to identify such forward-looking statements.
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