-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D/6SCnak4qorEmRUOZwQLgL2UFjE9Z/9Xf7V8cDYFWBJ1WaLZ+ny4Z7O69/4dMH1 lvxoF/tb7/qU9IMMu6L/Ug== 0000826411-97-000007.txt : 19970430 0000826411-97-000007.hdr.sgml : 19970430 ACCESSION NUMBER: 0000826411-97-000007 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970429 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ABLE TELCOM HOLDING CORP CENTRAL INDEX KEY: 0000826411 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL WORK [1731] IRS NUMBER: 650013218 STATE OF INCORPORATION: FL FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-21986 FILM NUMBER: 97589676 BUSINESS ADDRESS: STREET 1: 1601 FORUM PL STREET 2: STE 305 CITY: WEST PALM BEACH STATE: FL ZIP: 33401 BUSINESS PHONE: 4076880400 MAIL ADDRESS: STREET 1: 1601 FORUM PLACE CITY: WEST PALM BEACH STATE: FL ZIP: 33401 FORMER COMPANY: FORMER CONFORMED NAME: DELTA VENTURE FUND INC DATE OF NAME CHANGE: 19890312 10-Q/A 1 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934. For the quarterly period ended January 31, 1997. ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934. For the transition period from ______________ to _____________. Commission File Number: 0-21986 ABLE TELCOM HOLDING CORP. (exact name of registrant as specified in its charter) Florida 65-0013218 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 1601 Forum Place, Suite 1110, 33401 West Palm Beach, Florida (Zip Code) (address of principal executive offices) (561) 688-0400 (Registrant's telephone number, including area code) 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 March 6, 1997, there were 8,313,701 shares, par value $.001 per share, of the Registrant's Common Stock outstanding. ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES INDEX PART I - FINANCIAL INFORMATION Page Number ----------- Item 1. Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Balance Sheets - January 31, 1997 and October 31, 1996 3 Condensed Consolidated Statements of Operations - Three months ended January 31, 1997 and 1996 5 Condensed Consolidated Statements of Cash Flows - Three months ended January 31, 1997 and 1996 6 Notes to Condensed Consolidated Financial Statements - January 31, 1997 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II - OTHER INFORMATION Items 1 through 5 - Not Applicable Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13
ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES Condensed Consolidated Balance Sheets
January 31, October 31, 1997 1996 ------------ ------------- (unaudited) (Note) Assets Current assets: Cash and cash equivalents $ 5,838,644 $ 3,267,161 Investments 593,750 571,010 Accounts receivable, net 12,559,348 13,617,792 Inventories 1,206,163 1,374,698 Costs and profits in excess of billings on uncompleted contracts 1,641,902 954,269 Prepaid expenses and other 901,852 757,883 Deferred income taxes 561,219 905,898 ----------- ----------- Total current assets 23,302,878 21,448,711 Property and equipment, net 13,394,970 10,667,357 Other assets: Deferred income taxes 269,942 269,942 Goodwill, net 7,322,665 5,919,880 Other 764,535 612,941 ----------- ----------- Total other assets 8,357,142 6,802,763 ----------- ----------- Total assets $45,054,990 $38,918,831 =========== ===========
Note: The balance sheet at October 31, 1996 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes to condensed consolidated financial statements. ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Continued)
January 31, October 31, 1997 1996 ------------ -------------- (unaudited) (Note) Liabilities and Shareholders' Equity Current liabilities: Current portion of long-term debt $ 3,598,780 $ 1,965,611 Notes payable - shareholders 1,605,309 1,307,976 Lines of credit 6,038,437 4,626,178 Accounts payable and accrued liabilities 7,055,498 8,036,142 Billings in excess of costs and profits on uncompleted contracts 1,298,760 1,218,724 ----------- ----------- Total current liabilities 19,596,784 17,154,631 Long-term debt, excluding current portion 6,476,055 8,149,807 Other liabilities --- 2,015,895 Notes payable - shareholders 594,667 --- ----------- ----------- Total liabilities 26,667,506 27,320,333 Contingencies --- --- Shareholders' equity: Common stock, $.001 par value, authorized 25,000,000 shares; 8,313,701 and 8,203,212 shares issued and outstanding in 1997 and 1996, respectively 8,313 8,203 Preferred stock 100 --- Additional paid-in capital 19,129,083 12,833,286 Unrealized loss on investments, net of tax (31,250) (53,990) Accumulated deficit (718,762) (1,189,001) ----------- ----------- Total shareholders' equity 18,387,484 11,598,498 ----------- ----------- Total liabilities and shareholders' equity $45,054,990 $38,918,831 =========== ===========
Note: The balance sheet at October 31, 1996 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See accompanying notes to condensed consolidated financial statements. ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited)
For the three months ended January 31, ---------------------------- 1997 1996 ---- ---- Revenues $ 18,326,139 $ 11,578,375 ------------ ------------ Costs and expenses: Costs of revenues 14,274,962 9,426,923 General and administrative 1,910,110 1,450,703 Depreciation and amortization 998,967 563,358 Charges and transaction/translation losses related to Latin American operations --- 1,009,792 ------------ ------------ Total costs and expenses 17,184,039 12,450,776 ------------ ------------ Income (loss) from operations 1,142,100 (872,401) ------------ ------------ Other expense (income): Interest expense 379,902 237,705 Interest and dividend income (96,509) (73,800) Other expenses 8,789 --- ------------ ------------ Total other expense 292,182 163,905 ------------ ------------ Income (loss) before income taxes and minority interest 849,918 (1,036,306) Income tax expense (benefit) 344,679 (255,553) ------------ ------------ Income (loss) before minority interest 505,239 (780,753) Minority interest --- (247,360) ------------ ------------ Net income (loss) $ 505,239 $ (533,393) Preferred stock dividends 35,333 Discount attributable to beneficial conversion privilege of preferred stock 133,000 ------------ ------------ Income (loss) applicable to common stock $ 336,906 $ (533,393) ============ ============ Income (loss) per common share: $ .04 $ (.06) ============ ============ Weighted average common shares and common stock equivalents outstanding 8,443,898 8,354,144 ============ ============
See accompanying notes to condensed consolidated financial statements. ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited)
For the three months ended January 31, ---------------------------- 1997 1996 ---- ---- Cash from operations $ 1,543,564 $ 730,416 Investing Activities: Purchase of property and equipment (646,713) (456,828) Cash acquired in acquisitions 403,617 400,000 Cash paid in acquisitions (3,000,000) (2,392,168) Other 22,944 --- ------------ ----------- Net cash used by investing activities (3,220,152) (2,448,996) ------------ ----------- Financing Activities: Net (payments) borrowings under lines of credit (87,741) 445,000 Payments on long-term debt (6,256,136) (209,979) Proceeds from debt to finance acquisitions 3,000,000 1,715,074 Proceeds from long-term debt 2,177,800 --- Net proceeds from preferred stock offering 5,664,148 --- (Repayments) proceeds from notes payable - shareholders (250,000) 250,000 Foreign currency translation adjustment --- (793,675) Other --- (13,726) ------------ ----------- Net cash provided by financing activities 4,248,071 1,392,694 ------------ ----------- Effect of exchange rate changes on cash and equivalents --- (216,117) ------------ ----------- Increase (decrease) in cash and cash equivalents $ 2,571,483 $ (542,003) ============ ===========
See accompanying notes to condensed consolidated financial statements. ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements January 31, 1997 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the results for the interim periods presented have been included. Such adjustments consist of normal recurring accruals and those adjustments recorded to reflect the impact of currency devaluations on the Company's operations in Venezuela during fiscal year 1996. These results have been determined on the basis of generally accepted accounting principles and practices applied consistently with those used in the preparation of the Company's Annual Report on Form 10-K for the year ended October 31, 1996. Operating results for the three months ended January 31, 1997 are not necessarily indicative of the results that may be expected for the year ended October 31, 1997. It is recommended that the accompanying condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1996 Annual Report on Form 10-K. Certain items in the condensed consolidated financial statements for the interim period ended January 31, 1996 have been reclassified to conform with the current presentation. 2. Acquisition On December 2, 1996, the Company, through a wholly owned subsidiary, acquired all the outstanding common stock of Dial Communications, Inc. ("Dial"). As consideration, the Company paid $3,000,000 in cash, issued 108,489 shares of common stock and issued an $892,000 promissory note. The acquisition was accounted for using the purchase method of accounting and approximately $1,500,000 of goodwill was recorded which will be amortized over 20 years. The results of operations of Dial have been included since the date of acquisition. The cash component of the purchase was funded in part from the Company's line of credit and the remainder through a $1,900,000 Term Loan from a bank with interest at prime (8.25% at January 31, 1997) plus 1/2 % due May 31, 1997. ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Continued) January 31, 1997 The pro forma unaudited results of operations for the three months ended January 31, 1997 and 1996, assuming consummation of the purchase at the beginning of the respective periods, are as follows:
For the three months ended January 31, -------------------------- 1997 1996 ---- ---- Revenues $ 19,163,658 $13,618,120 Net income (loss) 528,402 (528,030) Net income (loss) per common share and common equivalent share .06 (.06)
The unaudited pro forma information does not purport to be indicative of the results of operations which would have resulted had the acquisition been consummated at the date assumed. 3. Borrowings Effective December 2, 1996 the Company entered into a $3,000,000 Term Loan Credit Facility (the "Term Loan") with a bank. The Term Loan is collateralized by all real and personal property of Georgia Electric Company ("GEC") which was acquired on October 12, 1996. The Term Loan is payable in sixty monthly installments of $50,000 plus interest at prime (8.25% at January 31, 1997). Additionally, excess cash flow of GEC, as defined, is to be paid to the bank. The Term Loan contains covenants, which require among other conditions, that the Company maintain certain tangible net worth, working capital and debt service amounts. Proceeds from the Term Loan were used to repay $3,000,000 of borrowings from a bank outstanding at October 31, 1996 which consisted of a $1,500,000 bank line of credit and a $1,500,000 note payable that was due on December 2, 1996. See Note 2 "Acquisition" for additional debt incurred in connection with an acquisition on December 2, 1996. 4. Preferred Stock Effective December 20, 1996 the Company completed a private placement transaction of 1,000 shares of $.10 par value, Series A Convertible Preferred Stock (the "Preferred Stock") and warrants to purchase 200,000 shares of the Company's common stock at $9.82 per share. Proceeds from the offering totaled $6,000,000. Each share of Preferred Stock is convertible to shares of the Company's common stock after April 30, 1997 at the lesser of $9.82 per share or at a discount (ranging from 10% to 20% depending upon the date of conversion) of the average closing bid price of a share of common stock for three days proceeding the date of conversion. The Company is recognizing the discount attributable to the beneficial conversion privilege of approximately $660,000 by accreting the amount from the date of issuance through May 15, 1997 as an adjustment of net income attributable to common shareholders (see Note 5). Such adjustment totaled approximately $133,000 for the quarter ended January 31, 1997. The Preferred Stock accrues dividends at an annual rate of 5% and is payable quarterly in arrears in cash or through a dividend of additional shares of Preferred Stock. The warrants are ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Continued) January 31, 1997 exercisable after one year provided that the Preferred Stock is not converted to common stock prior to the first anniversary date of the private placement. Upon the occurrence of certain events, including failure to effect a timely registration statement related to the conversion features and warrants associated with the Preferred Stock, the Company may be required to redeem the Preferred Stock at a price equal to the liquidation preference, plus any accrued and unpaid dividends, plus an amount determined by formula. Proceeds from the private placement were used to repay certain debt outstanding at October 31, 1996, including a $1,869,050 note payable to the sellers of H.C. Connell, Inc. ("Connell") acquired by the Company on December 15, 1995, a $250,000 note payable to a director, and $2,015,895 due the former principals of GEC. The amount due to the former principals of GEC represented undistributed S corporation profits existing at the date of acquisition, and is presented as "Other liabilities" in the accompanying consolidated balance sheet at October 31, 1996. 5. Earnings Per Share Fully diluted earnings per share data, which includes the assumed conversion of the convertible preferred stock, has not been presented because it was not dilutive. Earnings attributable to common stock reflects adjustments for cumulative preferred dividends and imbedded dividends arising from discounted conversion terms on the Series A Convertible Preferred Stock. See Note 4 for further discussion. 6. Contingencies - Litigation The Company is involved in various claims and legal actions arising in the ordinary course of business including claims relating to notes payable to the former owners of Transportation Safety Contractors, Inc. These notes payable and related accrued interest are classified as current in the accompanying balance sheets. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's consolidated financial position or results of operations. ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis relates to the financial condition and results of operations of the Company for the three months ended January 31, 1997. This information should be read in conjunction with the Company's condensed consolidated financial statements appearing elsewhere in this document. Except for historical information contained herein, the matters discussed below contain forward looking statements that involve risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets and profitability. RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, selected elements of the Company's condensed consolidated statements of operations as a percentage of its revenues.
For the three months ended January 31, -------------------------- 1997 1996 ---- ---- Revenues 100.0% 100.0% --------- -------- Cost of revenues 78.0 81.4 General and administrative 10.4 12.5 Depreciation and amortization 5.5 4.9 Charges and transaction/translation losses related to Latin American operations 0.0 8.7 Operating income (loss) 6.1 (7.5) Interest expense and other 2.1 2.0 Net income (loss) 2.8 (4.6)
The Company reported net income of $505,239 or $.06 per share for the three months ended January 31, 1997 compared to a net loss of ($533,393) or ($.06) per share for the same period in 1996. Net income for the first quarter of 1997, primarily reflects the assimilation of the Georgia Electric Company ("GEC") and Dial Communications, Inc. ("Dial") acquisitions as well as the improved margins within the Traffic Management Group. Revenues for the three month period ended January 31, 1997 increased $6,747,764 to $18,326,139 compared to revenues of $11,578,375 for the same period in 1996. The acquisitions of GEC, in October 1996, and Dial, in December 1996, accounted for $7,275,673 of the revenue increase for the first quarter of 1997. Revenues from traffic management services decreased approximately $1.7 million from the same period in 1996 primarily as a result of the Company's focus on improving operating margins on existing contracts. Revenues from telecommunication services increased approximately $1.6 from the prior year period. Cost of revenues for the first quarter of 1997 improved to 78.0% of revenues from 81.4 % of revenue for the same period in 1996, primarily reflecting improved labor productivity within the Traffic Management Group and the assimilation of GEC and Dial. ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES General and administrative expense during the first quarter increased $459,407 from $1,450,703 in 1996 to $1,910,110 in 1997. Approximately $421,000 of the increase results from acquisitions of GEC and Dial. Interest expense during the first quarter of 1997 reflects the recent addition of acquisition related debt and the financing of equipment purchases. Depreciation and amortization expense increased approximately $435,000 from $563,358 to $998,967. Approximately $265,000 of this increase results from the GEC and Dial acquisitions. The remaining $170,000 increase resulted from the continuing improvement and updating of the Company's equipment. The foreign currency translation and transaction losses improved dramatically in the first quarter of 1997 as compared to the first quarter of 1996. The stabilization of the Venezuelan bolivar resulted in a decrease in foreign currency losses of approximately $1,010,000. Income tax expense (benefit) for the first quarter of 1997 and 1996 differ from the amount that would result from applying federal statutory tax rates to the pre tax income (loss) primarily due to non-deductible goodwill and losses from foreign operations. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents were $5,838,644 at January 31, 1997 compared to $3,267,161 at October 31, 1996. Cash was impacted during the first quarter of 1997 primarily by proceeds received from a private placement of preferred stock and the repayment of debt. On December 2, 1996 the Company entered into a $3,000,000 Term Loan (the "Term Loan") with a bank in connection with refinancing the acquisition of GEC on October 12, 1996. The Term Loan is payable in sixty monthly installments of $50,000 plus interest at prime (8.25% at January 31, 1997). Excess cash flow of GEC, as defined, is to be paid to the Bank. The Term Loan contains covenants, which require among other conditions, that the Company maintain certain tangible net worth, working capital and debt service amounts. The Term Loan is collateralized by all real and personal property of GEC. Proceeds from the Term Loan were partially used to repay a $1,500,000 note payable to a bank, outstanding at October 31, 1996 and due on December 2, 1996. The remaining proceeds were used to repay the Company's lines of credit. Effective December 20, 1996 the Company completed a private placement transaction of 1,000 shares of $.10 par value, Series A Convertible Preferred Stock (the Preferred Stock) and warrants to purchase 200,000 shares of the Company's common stock. Gross proceeds from the offering totaled $6,000,000. Each share of Preferred Stock is convertible to shares of the Company's common stock after April 30, 1997 at the lesser of $9.82 per share or at a discount (ranging from 10% to 20% depending upon the date of conversion) of the average closing bid price of a share of common stock for three days proceeding the date of conversion. The Preferred Stock accrues dividends at an annual rate of ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES 5% and is payable quarterly in arrears in cash or through a dividend of additional shares of Preferred Stock. In addition, earnings attributable to common stock reflects adjustments for cumulative preferred dividends and imbedded dividends arising from discounted conversion terms on the preferred stock. The warrants are exercisable at $9.82 per share after one year provided that the Preferred Stock is not converted to common stock prior to the first anniversary of the private placement. Upon the occurrence of certain events, including failure to effect a timely registration statement, the Company may be required to redeem the preferred stock at a price equal to the liquidation preference, plus any accrued and unpaid dividends plus an amount determined by formula. The proceeds from the private placement were used to repay a $1,869,050 note payable to the sellers of H.C. Connell, Inc. ("Connell"), a $250,000 note payable to a director in connection with the acquisition of Connell, and $2,015,895 due the former principals of GEC by GEC at the date of acquisition, all of which were outstanding at October 31, 1996. In addition, on December 2, 1996, the Company acquired all the outstanding common stock of Dial. As consideration, the Company paid $3,000,000 in cash, issued 108,489 shares of common stock (fair value of $620,421) and issued an $892,000 promissory note with a three year term bearing interest at prime (8.25% at January 31, 1997) plus 1/2%. The cash component of the purchase was funded in part from the Company's line of credit and the remainder through a $1,900,000 Term Loan from a bank with interest at prime plus 1/2%. The principal balance of this note, plus accrued interest, is due May 31, 1997. The Company expects that available cash will be sufficient to meet normal operating requirements over the near term. Part II - Other Information Items 1-5. Not applicable Item 6. Exhibits and Reports on Form 8-K a) Exhibits - None b) Reports on Form 8-K On December 13, 1996, the Company filed a Current Report on Form 8-K and reported on Item 2 thereof the acquisition of Dial Communications, Inc. This Form 8-K was amended on February 11, 1997. The acquisition of Dial Communications, Inc. did require the filing of financial statements pursuant to Regulation S-X. On December 31, 1996, the Company filed a Current Report on Form 8-K and reported on Item 5 thereof the completion of a Private Placement of Preferred Stock in exchange for aggregate proceeds of $6,000,000.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Able Telcom Holding Corp. (Registrant) By: /s/ William J. Mercurio April 24, 1997 -------------------------------------- William J. Mercurio, President and CEO EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF ABLE TELCOM HOLDING CORP. FOR THE QUARTER ENDED JANUARY 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR OCT-31-1997 NOV-01-1996 JAN-31-1997 5,838,644 593,750 12,559,348 0 1,206,163 23,302,878 13,394,970 998,967 45,054,990 19,596,784 0 0 100 8,313 18,387,484 45,054,990 0 18,326,139 0 14,274,962 8,789 0 379,902 849,918 344,695 0 0 0 0 505,239 .06 .06
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