0000950124-95-002512.txt : 19950815 0000950124-95-002512.hdr.sgml : 19950815 ACCESSION NUMBER: 0000950124-95-002512 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALC COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000783425 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 382643582 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10831 FILM NUMBER: 95562650 BUSINESS ADDRESS: STREET 1: 30300 TELEGRAPH RD STREET 2: STE 350 CITY: BIRMINGHAM STATE: MI ZIP: 48010 BUSINESS PHONE: 8106476920 MAIL ADDRESS: STREET 1: 30300 TELEGRAPH ROAD STREET 2: SUITE 350 CITY: BIRMINGHAM STATE: MI ZIP: 48010 10-Q 1 FORM 10-Q 1 U.S. 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 quarterly period ended: June 30, 1995 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the transition period from to Commission file number: 1-10831 ALC COMMUNICATIONS CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 38-2643582 (State of incorporation) (IRS Employer ID No.) 30300 Telegraph Road, Bingham Farms, Michigan 48025-4510 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (810) 647-4060 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 August 1, 1995, the registrant had 34,586,773 shares of Common Stock outstanding. 2 ALC COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS
June 30, December 31, 1995 1994 --------- --------- (Unaudited) (In Thousands) Current Assets: Cash and cash equivalents $ 2,876 $ 41,412 Accounts receivable, less allowance for doubtful accounts of $4,647,000 and $4,192,000 110,999 81,214 Other current assets 17,944 7,121 ---------- --------- Total Current Assets $ 131,819 $ 129,747 Fixed Assets: Communication systems $ 105,804 $ 91,140 Building and other equipment 47,746 36,842 Construction in progress 8,572 8,690 ---------- --------- $ 162,122 $ 136,672 Less accumulated depreciation and amortization 84,311 77,514 ---------- --------- Total Fixed Assets $ 77,811 $ 59,158 Cost in excess of net assets acquired 88,446 47,267 Customer bases 35,706 30,444 Deferred income taxes 10,429 10,429 Other assets 13,055 7,680 ---------- --------- Total Assets $ 357,266 $ 284,725 ========== =========
3 ALC COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31, 1995 1994 --------- ------------- (Unaudited) (In Thousands) Current Liabilities: Accounts payable $ 4,886 $ 2,018 Accrued liabilities 31,495 20,864 Accrued network costs 66,752 51,672 Taxes other than income 12,151 13,425 Capitalized leases and other long-term debt 218 232 ----------- ----------- Total Current Liabilities $ 115,502 $ 88,211 Long-term Liabilities: Capitalized leases and other long-term debt $ 3,953 $ 3,048 Senior Subordinated Notes 79,442 79,418 ----------- ----------- Total Long-Term Liabilities $ 83,395 $ 82,466 ----------- ----------- Total Liabilities $ 198,897 $ 170,677 Stockholders' Equity: Preferred Stock, par value $0.01; authorized -- 14,784,000 shares; issued and outstanding -- none Common Stock, par value $0.01; authorized -- 200,000,000 shares; issued and outstanding -- 34,439,000 and 33,712,000 shares $ 344 $ 337 Capital in excess of par value 145,025 140,278 Paid-in capital -- Warrants 11,091 11,715 Retained earnings (deficit) 1,909 (38,282) ----------- ----------- Total Stockholders' Equity $ 158,369 $ 114,048 ----------- ----------- Total Liabilities and Stockholders' Equity $ 357,266 $ 284,725 =========== ===========
See notes to consolidated financial statements 4 ALC COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Six Months Ended ------------------------------- --------------------------- June 30, June 30, June 30, June 30, 1995 1994 1995 1994 --------- -------- --------- -------- (In Thousands Except Per Share Amounts) Revenue $ 197,238 $ 135,908 $ 374,991 $ 265,697 Operating Expenses: Cost of communication services and equipment sales $ 111,270 $ 74,388 $ 211,115 $ 144,398 Sales, general and administrative 45,071 32,451 83,883 63,682 Depreciation and amortization 6,956 4,263 12,908 8,290 ------------ ------------- ------------ ---------- Total Operating Expenses $ 163,297 $ 111,102 $ 307,906 $ 216,370 ------------ ------------- ------------ ---------- Operating Income $ 33,941 $ 24,806 $ 67,085 $ 49,327 Interest expense 1,600 1,615 2,894 3,241 ------------ ------------- ------------ ---------- Income Before Income Taxes $ 32,341 $ 23,191 $ 64,191 $ 46,086 Income taxes 12,125 8,350 24,000 16,600 ------------ ------------- ------------ ---------- Net Income $ 20,216 $ 14,841 $ 40,191 $ 29,486 ============ ============= ============ ========== Net income per Common and Common equivalent share $ 0.52 $ 0.39 $ 1.04 $ 0.77 ============ ============= ============ ========== Weighted average Common and Common equivalent shares 38,971 38,282 38,605 38,289 ============ ============= ============ ==========
See notes to consolidated financial statements 5 ALC COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended -------------------------------- June 30, June 30, 1995 1994 -------------------------------- Operating Activities Net income $ 40,191 $ 29,486 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 7,734 5,430 Amortization of intangible assets and bond discount 5,174 2,942 Provision for deferred income taxes (98) Increase in accounts receivable and other current assets (17,337) (15,298) Increase in current liabilities 15,015 15,564 ------------ ----------- Net Cash Provided by Operating Activities $ 50,777 $ 38,026 Financing Activities Payments on long-term debt $ (460) $ (490) Proceeds from issuance of stock 2,281 2,811 Retirement of senior subordinated notes (5,017) ------------ ----------- Net Cash Provided by (Used in) Financing Activities $ 1,821 $ (2,696) Investing Activities Expenditures for fixed assets $ (10,894) $ (10,241) Acquisition of ConferTech International, Inc. (64,054) Proceeds from sale of fixed assets 121 Change in other non-current assets (2,666) 206 Purchase of customer bases (13,520) (4,229) ------------ ----------- Net Cash Used in Investing Activities $ (91,134) $ (14,143) ------------ ----------- Increase (Decrease) in Cash and Cash Equivalents $ (38,536) $ 21,187 Cash and cash equivalents at beginning of period 41,412 1,819 ------------ ----------- Cash and cash equivalents at end of period $ 2,876 $ 23,006 ============ =========== Interest paid $ 3,960 $ 3,917 ============ =========== Income taxes paid $ 23,536 $ 8,952 ============ ===========
See notes to consolidated financial statements 6 ALC COMMUNICATIONS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY Six Months Ended June 30, 1995 (Unaudited)
Paid-in capital Common Stock Capital in -- Warrants -------------------- excess of ------------------------- Shares Amount par value Shares Amount ------ ------ --------- ------------ ------- (In Thousands) Balance, December 31, 1994 33,712 $337 $140,278 3,852 $11,715 Exercise of warrants 585 6 2,258 (585) (624) Exercise of stock options 142 1 640 Tax benefit from exercise of stock options 1,849 Net income for the six months ended June 30, 1995 ------ ----- -------- ----- ------- Balance June 30, 1995 34,439 $344 $145,025 3,267 $11,091 ====== ===== ======== ===== ======= Retained earnings (deficit) Total --------- --------- Balance, December 31, 1994 ($38,282) $114,048 Exercise of warrants 1,640 Exercise of stock options 641 Tax benefit from exercise of stock options 1,849 Net income for the six months ended June 30, 1995 40,191 40,191 ------- --------- Balance June 30, 1995 $ 1,909 $158,369 ======= =========
See notes to consolidated financial statements 7 ALC COMMUNICATIONS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Six Months Ended June 30, 1995 and 1994 NOTE A -- MANAGEMENT'S REPRESENTATION The consolidated financial statements included herein have been prepared by ALC management, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. Certain prior year amounts have been reclassified to conform to current year presentation. In the opinion of ALC management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature, and the accompanying consolidated financial statements present fairly the financial position as of June 30, 1995 and December 31, 1994, and the results of operations and cash flows for the three and six month periods ended June 30, 1995 and 1994. The balance sheet at December 31, 1994 has been derived from the audited financial statements at that date but does not include all of the information and accompanying footnotes required by generally accepted accounting principles for complete financial statements. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes included in the Company's Form 10-K for the fiscal year ended December 31, 1994. NOTE B -- DEFINITIVE MERGER AGREEMENT ALC Communications Corporation entered into a definitive agreement dated April 9, 1995, to merge with Frontier Corporation ("Frontier"). The combined company, which will operate under the name Frontier Corporation, will become the fifth largest long distance company in the United States. The combined company will have total consolidated long distance, local and cellular annual revenues approximating $2 billion. Under the terms of the merger agreement, shareholders of ALC will receive 2.0 shares of Frontier for each share of ALC stock for a total not to exceed 83.5 million shares. The merger is intended to qualify as a tax-free reorganization and a "pooling of interests" for accounting purposes. The merger is subject to various conditions including approval of the shareholders of the two companies and various regulatory approvals. Both the Company and Frontier have scheduled shareholder meetings on August 16, 1995 to seek approval for the merger from their shareholders. The Company expects that regulatory approval will have been received by that date. The transaction is expected to be effective as of August 16, 1995. NOTE C -- CONFERTECH ACQUISITION During late February 1995, ALC completed a tender offer and, by mid-March 1995, had acquired all the shares of ConferTech International, Inc. ("ConferTech"). The financial statements reflect the transaction effective March 1, 1995. ALC financed the purchase price, $66.4 million or $8.00 per share, through cash from operations as well as utilizing its line of credit. ConferTech is a leading provider of teleconferencing services and audio bridge equipment. The purchase price has been allocated between the value of the assets acquired and the cost in excess of net assets acquired which is being amortized over 40 years. The following unaudited proforma summary presents the Company's revenue and income as if the transaction occurred at the beginning of the periods presented. The proforma financial data is not necessarily indicative of the results that actually would have occurred had the transaction taken place on the dates presented and do not project the Company's results of operations. 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Three months ended Six months ended June 30, June 30, ------------------ ---------------- 1995 1994 1995 1994 ---- ---- ---- ---- (in thousands except per share amounts) Revenue $197,238 $145,819 $382,338 $286,006 Net income $ 20,216 $ 13,841 $ 40,254 $ 8,348 Earnings per Common and Common equivalent share $ 0.52 $ 0.36 $ 1.04 $ 0.74
NOTE D -- REVOLVING CREDIT FACILITY In January 1995, the Company entered into a $105 million unsecured credit facility with First Union National Bank of North Carolina and Bank One, Columbus, NA as Co-Managing Agents. Under the facility, which expires December 31, 1999, the Company is able to minimize interest expense by structuring borrowings under either of two alternatives. Each alternative has a varying interest rate associated with it. A 0.25% per annum commitment fee is charged on the unused portion of the line. As of June 30, 1995, the Company had $105.0 million of availability under the facility. 9 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company reported net income of $20.2 million and $40.2 million on revenue of $197.2 million and $375.0 million for the three and six month periods ended June 30, 1995. This compares to net income of $14.8 million and $29.5 million on revenue of $135.9 million and $265.7 million for the same periods in 1994. Gross margin, defined as revenue less cost of communication services and equipment sales, as a percent of net revenue decreased from 45.3% and 45.7% for the three and six months ended June 30, 1994 to 43.6% and 43.7% for the three and six months ended June 30, 1995 primarily due to the impact of lower average revenue per minute. The improved operating results were due primarily to an increase in long distance traffic and a reduction of sales, general and administrative expenses as a percentage of revenue. The Company's continued strong performance was reflected by the increase in operating income of $9.1 million and $17.8 million for the three and six months ended June 30, 1995 over the same periods one year earlier. OPERATING RESULTS AS A PERCENT OF REVENUE
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------------------------ 1995 1994 1995 1994 ------------------------------------------ Revenue 100.0% 100.0% 100.0% 100.0% Cost of communication services and equipment sales (56.4) (54.7) (56.3) (54.3) ----- ----- ----- ----- Gross Margin 43.6% 45.3% 43.7% 45.7% Sales, general and administrative (22.9) (23.9) (22.4) (24.0) Depreciation and amortization (3.5) (3.1) (3.4) (3.1) ----- ----- ----- ----- Operating Income 17.2% 18.3% 17.9% 18.6% ===== ===== ===== =====
Billable minutes have increased since the third quarter of 1990 when compared to the same quarter in the prior year. Sequentially, billable minutes have reached record levels for the eighth consecutive quarter. The increase results from traffic growth generated by new customers, including strong growth in reseller traffic, as well as the introduction of new products partially offset by billable minutes lost through attrition of existing customers. The results of operations for the three and six months ended June 30, 1995 reflect a continuation of the trend of strong financial performance as indicated by 36.2% and 36.3% increases in net income from the comparable quarter and year to date periods of 1994. During late February 1995, ALC completed a tender offer and, by mid-March 1995, had acquired all the shares of ConferTech International, Inc. ("ConferTech"). The financial statements reflect the transaction effective March 1, 1995. ALC financed the purchase price, $66.4 million or $8.00 per share, through cash from operations as well as utilizing its line of credit. ConferTech is a leading provider of teleconferencing services and audio bridge equipment. Operating income for the three and six months ended June 30, 1995 reflects ConferTech results since March 1, 1995. The portion of operating income relating to ConferTech totaled $1.2 million and $1.6 million or approximately 3.6% and 2.4% of total operating income. 10 DEFINITIVE MERGER AGREEMENT ALC Communications Corporation entered into a definitive agreement dated April 9, 1995, to merge with Frontier Corporation ("Frontier"). The combined company, which will operate under the name Frontier Corporation, will become the fifth largest long distance company in the United States. The combined company will have total consolidated long distance, local and cellular annual revenues approximating $2 billion. Under the terms of the merger agreement, shareholders of ALC will receive 2.0 shares of Frontier for each share of ALC stock for a total not to exceed 83.5 million shares. The merger is intended to qualify as a tax-free reorganization and a "pooling of interests" for accounting purposes. The merger is subject to various conditions including approval of the shareholders of the two companies and various regulatory approvals. Both the Company and Frontier have scheduled shareholder meetings on August 16, 1995 to seek approval for the merger from their shareholders. The Company expects that regulatory approval will have been received by that date. The transaction is expected to be effective as of August 16, 1995. REVENUE Revenue increased by 45.1% and 41.1% for the three and six months ended June 30, 1995 from the comparable periods of 1994. Billable minutes again reached the highest level in the history of the Company, increasing by 54.2% for the three months ended June 30, 1995 over the comparable period in 1994. The first full month revenue from new sales in the first quarter of 1995 has increased from the same period one year earlier. The Company's base revenue per minute of 15.3 cents continues to be strong, though it has decreased from the prior year quarter level of 17.5 cents primarily due to changes in the sales mix. Revenue from the ConferTech acquisition totaled $13.2 million for the three months ended June 30, 1995. Excluding the impact of the ConferTech acquisition, revenue increased 35.5% for the three months ended June 30, 1995 from the comparable period in 1994. Reseller revenue has continued to grow significantly from prior year periods reaching over 30% of net revenue for the three and six months ended June 30, 1995 compared to approximately 20% of net revenue for the same periods one year ago. Although reseller revenue per minute (between 11 cents and 12 cents) is lower than regular commercial traffic, the increased reseller traffic has a positive impact on operating income due to low incremental sales, general and administrative costs. Growth was also impacted positively by a major reseller customer whose revenue has increased substantially in the last year and a half and comprises approximately 17.6% of total revenue for 1995 to date. It is ALC's understanding that this reseller, through a joint venture, will be installing long distance switching capacity during 1995 which, as completed, would result in over half of this traffic gradually moving to the joint venture network. However, the joint venture has in turn entered into a three year contract with Allnet effective as of April 1, 1995. Allnet will terminate the joint venture traffic which cannot be terminated on the venture's own network. Allnet also obtained certain provisions regarding exclusivity and minimums. The provision for uncollectible revenue was 1.5% of gross revenue for the three and six months ended June 30, 1995 and 1.5% and 1.7% for the same periods of 1994. Strong controls and procedures in the collection and credit risk detection processes have enabled the Company to sustain a low bad debt rate. OPERATING EXPENSES The Company's primary cost is for communication services, which represents the costs of originating and terminating calls via local exchange carriers (primarily Bell Operating Companies). Also included in communication services are the costs of owning and leasing long-haul transmission capacity as well as bridges and the cost of providing conferencing services. The cost of communication services and equipment sales increased $36.9 million and $66.7 million during the three and six month periods ended June 30, 1995 compared to the same periods in 1994. This cost increased as a percent of net revenue for the comparable periods, due in part to the significant concentration of reseller traffic which has a lower rate per minute than regular commercial traffic. However, by the use of 11 high volume fixed price leased facilities to transmit traffic and lower prevailing unit prices for such capacity, the Company has reduced its long-haul transmission costs to less than 6% of revenue for the six months ended June 30, 1995. Sales, general and administrative expense increased by 38.9% and 31.7% for the three and six month periods ended June 30, 1995 from the same periods one year earlier (but decreased slightly as a percent of revenue). The dollar increase reflects increased salaries and other expenses related to a 23.3% increase in headcount for the six month period compared to the prior year to support the greater sales activity as well as the costs incurred by ConferTech in 1995. Results for 1994 include a $1.2 million cost reduction, recorded in the first quarter of the year, resulting from the favorable settlement of a state telecommunications excise tax dispute. Depreciation and amortization increased 63.2% and 55.7% for the three and six months ended June 30, 1995 compared to the same periods in 1994. This increase is the result of a $2.3 million increase in year to date depreciation due to newly acquired fixed assets and a $2.3 million increase in year to date amortization of intangible assets associated with the purchase of ConferTech and various customer bases. INTEREST EXPENSE Net interest expense remained relatively constant for the three months ended June 30, 1995 and decreased 10.7% for the six months ended June 30, 1995 compared to the same periods in 1994 due to improved cash flow from operations and a $0.5 million increase in interest income for the six months ended June 30, 1995 compared to the same period in the prior year. Additionally, a $5.0 million redemption of the 1993 Notes was made in April 1994. These positive factors were somewhat offset by increased interest expense due to borrowings made during late February and March under the Revolving Credit Facility ("Facility") to finance the ConferTech acquisition. INCOME TAXES The effective tax rate increased from 36.0% for the first six months of 1994 to 37.4% for the first six months of 1995, due to the increase in income (which results in a decrease in the favorable impact of the Company's annual available $10 million net operating loss carryforward on the effective tax rate). LIQUIDITY AND CAPITAL RESOURCES For the six months ended June 30, 1995 and 1994, the Company generated positive cash flow from operations of $50.8 million and $38.0 million, respectively. The positive cash flow reflects twenty consecutive quarters of increased revenue and operating profits compared to prior year comparable quarters. The Company's working capital was $16.3 million at June 30, 1995 compared to $41.5 million at December 31, 1994. The decrease in working capital is largely the result of the $38.5 million decrease in the cash balance resulting from the use of funds for the acquisition of ConferTech and the $25.7 million increase in accrued liabilities and network costs attributable to increased volume, offset by the $10.8 million increase in other current assets resulting from the ConferTech acquisition as well as the costs of the Frontier merger and the $29.8 million increase in accounts receivable due to the increase in revenue. Evidence of the Company's strong liquidity position was its ability to finance the purchase of ConferTech during March of 1995. ALC paid an aggregate purchase price of $66.4 million dollars, financing the purchase through cash from operations as well as utilizing its Revolving Credit Facility. As of March 31, 1995, the Company had borrowings of only $5.0 million remaining under the Facility and the balance was paid completely in early May. 12 In addition to the positive cash flow from operations, the Company's liquidity position is further strengthened by the availability under the Revolving Credit Facility. The Facility provides for borrowings up to $105.0 million and expires December 31, 1999. Under this Facility, the Company is able to minimize interest expense by structuring the borrowings under either of two alternatives. Each alternative has a varying interest rate associated with it. As of June 30, 1995, the Company had $105.0 million available under the line. Upon the successful completion of the Frontier merger, the Company expects to terminate the Facility. Because the Company has chosen to lease rather than own its transmission facilities, the Company's requirements for capital expenditures are modest. Capital expenditures totaled $10.9 million for the first six months of 1995 and are expected to be approximately $30 million for the year ended December 31, 1995 (without factoring in the potential impact of the pending Frontier merger). Capital expenditures year to date 1995 included projects for enhanced efficiency and technical advancement in the network. Future investment requirements for capital expenditures relate directly to traffic growth which necessitates the purchase of switching and related equipment. In addition, a major component of the capital budget relates to technological advancements as the Company continually updates its network capabilities to offer enhanced products and services. Management believes that the Company's cash flow from operations will provide adequate sources of liquidity to meet the Company's anticipated short and long term liquidity needs. 13 PART II: OTHER INFORMATION Item 1. Legal Proceedings As previously reported in the Company's Form 10-Q for the quarterly period ended March 31, 1995, immediately following the announcement of the merger (the "Merger") of Frontier Subsidiary One, Inc., a wholly owned subsidiary of Frontier Corporation ("Frontier"), with and into ALC Communications Corporation ("ALC"), three individuals who are alleged to be shareholders of ALC filed separate purported class action complaints in the Court of Chancery, in and for New Castle County, Delaware. These actions, styled Mayers v. Irwin, et al., C.A. No. 14196; Cohen v. Irwin, et al., C.A. No. 14197 and Tovar v. Irwin, et al., C.A. No. 14216 all name as defendants ALC and each member of the Board of Directors of ALC. In addition, both the Mayers and Cohen actions name Frontier as a defendant. On June 9, 1995, the Delaware court entered an order consolidating the three cases for all purposes. Under the terms of that order, the complaint in the Mayers action is designated as the consolidated complaint and the defendants are required to respond to the consolidated complaint. On July 10, 1995, ALC and its directors answered the consolidated complaint. Item 4. Submission of Matters to a Vote of Security Holders During the second fiscal quarter ended June 30, 1995, a Proxy Statement dated April 6, 1995 was furnished to the Company's stockholders in connection with the uncontested election of directors at the Annual Meeting of Shareholders held May 18, 1995. In accordance with the Company's Certificate of Incorporation, each outstanding share of ALC Common Stock is entitled to one vote. The affirmative vote of a majority of all the votes entitled to be cast by all holders of the ALC Common Stock is required to elect in the aggregate seven members of the Board of Directors. The name of each director elected at the meeting, and a separate tabulation with respect to each nominee, are set forth below:
Class Nominee Votes for Votes withheld ----- ------- ---------- -------------- Common Richard D. Irwin 29,565,971 583,942 Common Richard J. Uhl 29,609,481 540,432 Common Michael E. Faherty 29,607,971 541,942 Common John M. Zrno 29,561,969 587,944 Common William H. Oberlin 29,562,100 587,813 Common Marvin C. Moses 29,563,581 586,332
14 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits required by Item 601 of Regulation S-K EXHIBIT INDEX [refer to definitions at end of Index]
Incorporated Page Exhibit Filed Herein by Number Number Description Herewith Reference to: Herein ------ ------------ ---------- ------------- ------ 10.1 Amendment to X 1986 Option Plan 11.1 Computation of Per X Share Earnings 27.1 Financial Data Schedule X
The Registrant hereby agrees to furnish the Commission a copy of each of the Indentures or other instruments defining the rights of security holders of the long-term debt securities of the Registrant and any of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed. (b) Reports on Form 8-K No reports on Form 8-K were filed during the second quarter of 1995. 15 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. ALC COMMUNICATIONS CORPORATION (Registrant) By: /s/ Marvin C. Moses ------------------- Marvin C. Moses, Executive Vice President and Chief Financial Officer By: /s/ Marilyn M. Price -------------------- Marilyn M. Price, Vice President, Controller and Chief Accounting Officer Dated: August 11, 1995 16 EXHIBIT INDEX
Exhibit No. Description Page ------- ----------- ---- Ex 10.1 Amendment to 1986 Option Plan Ex 11.1 Computation of Earnings Per Share Ex 27.1 Financial Data Schedule
EX-10.1 2 EXHIBIT 10.1 1 EXHIBIT 10.1 AMENDMENT TO THE 1986 OPTION PLAN ADOPTED BY THE BOARD OF DIRECTORS OF ALC COMMUNICATIONS CORPORATION MAY 18, 1995 PART 9 - ADD THE FOLLOWING PROVISION The adjustment of the kind and number of shares subject to outstanding options granted under the 1986 Option Plan, and the price for which shares may be purchased upon the exercise of such outstanding options, shall be in the manner set forth in Section 5.10 of the Merger Agreement, as of the effective time of the Merger. EX-11.1 3 EXHIBIT 11.1 1 ALC COMMUNICATIONS CORPORATION AND SUBSIDIARIES Exhibit 11.1 COMPUTATION OF EARNINGS PER SHARE (Unaudited)
Three Months Ended June 30, Six Months Ended June 30, --------------------------- ------------------------- 1995 1994 1995 1994 ---- ---- ---- ---- (In thousands except per share amounts) PRIMARY EARNINGS PER SHARE Net Income Available for Common Stockholders $20,216 $14,841 $40,191 $29,486 ======= ======= ======= ======= Weighted average Common shares outstanding during the period 33,812 33,511 33,763 33,285 ======= ======= ======= ======= Earnings per Common and Common equivalent share: Net Income $0.60 $0.44 $1.19 $0.89 ======= ======= ======= ======= PRIMARY EARNINGS PER SHARE -- MODIFIED TREASURY STOCK METHOD Net Income Available for Common Stockholders $20,216 $14,841 $40,191 $29,486 ======= ======= ======= ======= Weighted average Common shares outstanding during the period 33,812 33,511 33,763 33,285 Effect of Modified Treasury Stock Method: Assumed exercise of all options and warrants 7,885 8,185 7,934 8,410 Assumed repurchase of up to 20% of Common Stock outstanding (2,726) (3,414) (3,092) (3,406) ------- ------- ------- ------- Weighted Average Common and Common Equivalent Shares 38,971 38,282 38,605 38,289 ======= ======= ======= ======= Earnings per Common and Common equivalent share: Net Income $0.52 $0.39 $1.04 $0.77 ======= ======= ======= =======
Note: This calculation is submitted in accordance with regulation S-K item 601(b)(11). The fully diluted earnings per share does not differ from the primary earnings per share. EX-27 4 FINANCIAL DATA SCHEDULE
5 1000 U.S. DOLLARS 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 1 2,876 0 115,646 4,647 0 131,819 162,122 84,311 357,266 115,502 79,442 344 0 0 158,369 357,266 0 374,991 0 211,115 96,791 0 2,894 64,191 24,000 40,191 0 0 0 40,191 1.04 1.04