-----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, HoP6Xu7UtHFdXdcOhdhtfFwRtzyiF4cPouRBIgggk7JMhQUo+zvP1OueG/eNBdvU igndbUh7SPmKzTChVwNLKg== 0000950170-98-001946.txt : 19981005 0000950170-98-001946.hdr.sgml : 19981005 ACCESSION NUMBER: 0000950170-98-001946 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980511 ITEM INFORMATION: FILED AS OF DATE: 19981002 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: 8-K/A SEC ACT: SEC FILE NUMBER: 000-21986 FILM NUMBER: 98720338 BUSINESS ADDRESS: STREET 1: 1601 FORUM PL STREET 2: STE 1110 CITY: WEST PALM BEACH STATE: FL ZIP: 33401 BUSINESS PHONE: 5616880400 MAIL ADDRESS: STREET 1: 1601 FORUM PLACE STREET 2: STE 305 CITY: WEST PALM BEACH STATE: FL ZIP: 33401 FORMER COMPANY: FORMER CONFORMED NAME: DELTA VENTURE FUND INC DATE OF NAME CHANGE: 19890312 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A-3 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of earliest event reported: February 25, 1998 (Amending 8-K/A-2 filed on July 16, 1998, amending Form 8-K/A-1 filed on May 11, 1998 which amended Form 8-K filed on March 12, 1998) ABLE TELCOM HOLDING CORP. (Exact name of registrant as specified in charter) FLORIDA 0-21986 65-0013218 --------------------------------------------------- (State or other jurisdiction (Commission (IRS employer of incorporation) file number) identification no.) 1601 FORUM PLACE, SUITE 1110, WEST PALM BEACH, FLORIDA 33401 ---------------------------------------------------------------- (Address of principal executive offices) (Zip code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (561) 688-0400 EXPLANATORY NOTE On Thursday, July 16, 1998, a Form 8-K/A-2 was filed to amend Able Telcom Holding Corp.'s Form 8-K dated February 25, 1998 ("Amendment No. 2"), with respect to our acquisition of CRSI Acquisition, Inc. ("COMSAT"). Amendment No. 2 was inadvertently and erroneously filed. You should disregard Amendment No. 2 in its entirety. We have included the following amendments to Amendment No. 2 in this Form 8-K/A-3: /bullet/ We have replaced Amendment No. 2 in its entirety. /bullet/ We have added the following audited financial statements for COMSAT as of and for the periods indicated: (1) Balance sheet at December 31, 1996 (2) Statements of Operations, Cash Flows, and Shareholders' Equity (Deficit) for the year ended December 31, 1996 (3) Statements of Operations, Cash Flows and Shareholders' Equity (Deficit) for the three months ended December 31, 1995 (4) Statements of Operations, Cash Flows and Shareholders' Equity (Deficit) for the seven months ended September 30, 1995 (for a predecessor company) /bullet/ We have added the unaudited balance sheet for COMSAT at February 24, 1997. /bullet/ We have amended certain pro forma financial information. /bullet/ We have included the consent of COMSAT's independent public accountants in Exhibit 23.1. ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) FINANCIAL STATEMENTS The following financial statements are filed as a part of this Form 8-K/A-3: Financial Statements of CRSI Acquisition, Inc. and JEFA International, Inc. (Predecessor corporation): Report of Independent Auditors Balance Sheets as of December 31, 1997 (audited), 1996 (audited) and February 24, 1998 (unaudited) and 1997 (unaudited) Statements of Operations for the Years Ended December 31, 1997 (audited) and 1996 (audited), for the three months ended December 31, 1995 (audited), for the seven months ended September 30, 1995 (audited - predecessor corporation), and for the periods from January 1 to February 24, 1998 (unaudited) and 1997 (unaudited) Statements of Changes in Shareholder's Equity (Deficit) for the years ended December 31, 1997 (audited) and 1996 (audited), for the three months ended December 31, 1995 (audited), for the seven months ended September 30, 1995 (audited - predecessor corporation) and the period from January 1 to February 24, 1998 (unaudited) Statement of Cash Flows for the years ended December 31, 1997 (audited) and 1996 (audited), the three months ended December 31, 1995 (audited), the seven months ended September 30, 1995 (audited - predecessor corporation), and for the periods from January 1 to February 24, 1998 and 1997 (unaudited) Notes to Financial Statements (b) PRO FORMA FINANCIAL INFORMATION. On February 25, 1998, Able Telcom Holding Corp. ("Able"), through its wholly owned subsidiary Georgia Electric Company ("GEC") acquired substantially all of the assets, and assumed certain liabilities, of CRSI Acquisition, Inc. (d/b/a COMSAT RSI JEFA Wireless Systems), a subsidiary of COMSAT Corporation. As part of the transaction, GEC assumed certain construction contracts with the Texas Department of Transportation and various other telecommunication customers. GEC acquired the accounts receivable and fixed assets of the seller and assumed its trade payables, and received a cash payment from the seller at closing of $4,662,854. The following Pro Forma Combined Balance Sheet of the Registrant has been prepared by management of the Registrant based upon the balance sheets of the Registrant as of October 31, 1997 and January 31, 1998 and of COMSAT RSI JEFA as of December 31, 1997 and February 24, 1998. The Pro Forma Combined Statement of Income was prepared based upon the statement of income for the Registrant for the twelve months ended October 31, 1997 and the three months ended January 31, 1998. The pro forma statements give effect to the transaction under the purchase method of accounting and the assumptions and adjustments in the accompanying notes to pro forma combined financial statements. The pro forma combined balance sheet gives effect to the acquisition as if it had occurred as of January 31, 1998. The pro forma combined statement of income for the year ended October 31, 1997 gives effect to the acquisition as if it had occurred as of November 1, 1996. The pro forma combined statement of income for the three months ended January 31, 1998 gives effect to the acquisition as if it had occurred as of November 1, 1997. The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable. The pro forma combined financial statements do not purport to represent what the combined companies' financial position or results of operations would actually have been had the acquisition occurred on such date or as of the beginning of the period indicated, or to project the combined companies' financial position or results of operations for any future period. (c) EXHIBITS 23.1 Consent of Independent Certified Public Accountants 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. BY: /S/ MARK A. SHAIN ------------------------------------ Mark A. Shain Chief Financial Officer Dated: October 2, 1998 Agee Fisher, LLC. INDEPENDENT AUDITORS' REPORT Board of Directors and Shareholders Able Telcom Holding Corp. and Subsidiaries West Palm Beach, Florida We have audited the accompanying balance sheets of CRSI Acquisition, Inc. (a Delaware corporation and indirect wholly-owned subsidiary of COMSAT Corporation) as of December 31, 1996 and 1997, and the related statements of operations, changes in shareholder's equity (deficit), and cash flows for the years then ended and the three months ended December 31, 1995. We have also audited the accompanying statement of operations, changes in shareholder's equity, and cash flows of JEFA International, Inc. (the predecessor company) for the seven months ended September 30, 1995. 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 audits. We conducted our audits 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amount 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 audits provide 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 CRSI Acquisition, Inc. as of December 31, 1996 and 1997, and the results of its operations and its cash flows for the years then ended and the three months ended December 31, 1995, and the results of operations and cash flows of the predecessor company for the seven months ended September 30, 1995, in conformity with generally accepted accounting principles. /s/ Agee Fisher, LLC. ------------------------ AGEE FISHER, LLC. Atlanta, Georgia June 7, 1998
CRSI ACQUISITION, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION) BALANCE SHEETS DECEMBER 31, FEBRUARY 24, ----------------------------------- ------------------------------ 1996 1997 1997 1998 --------------- ---------------- --------------- ------------ (UNAUDITED) (UNAUDITED) ASSETS CURRENT ASSETS: Cash $ 255,908 $ 77,687 $ 106,273 $ 115,837 Accounts receivable (Note 5) 5,374,748 3,704,407 6,227,228 3,723,495 Costs and estimated earnings in excess of billings on uncompleted contracts (Note 6) 9,342,810 11,355,705 9,200,945 13,849,085 Inventory 737,916 83,259 781,737 71,365 Other receivables 5,997 15,294 120,113 6,244 Prepaid expenses 190,765 32,921 32,921 32,921 Deferred tax asset (Note 10) 1,217,008 723,294 1,108,686 674,224 ------------- -------------- ------------- ------------- 17,125,152 15,992,567 17,577,903 18,473,171 PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization (Note 7) 2,546,372 3,213,953 2,737,832 3,100,205 GOODWILL, net of accumulated amortization of $304,785 and $548,613 914,355 670,527 873,717 629,889 DEFERRED TAX ASSET, non-current portion (Note 10) 69,085 124,353 86,894 133,564 OTHER ASSETS 45,009 44,416 43,967 44,416 ------------- -------------- ------------- ------------- $ 20,699,973 $ 20,045,816 $ 21,320,313 $ 22,381,245 ============== =============== ============== ============== LIABILITIES AND SHAREHOLDER'S DEFICIT CURRENT LIABILITIES: Inter-company advances (Note 8) $ 19,847,253 $ 24,403,780 $ 19,788,570 $ 27,011,373 Accounts payable 1,329,934 2,077,854 808,061 3,552,962 Accrued expenses 452,176 358,409 523,051 237,312 Accrued losses on uncompleted contracts 4,261,140 2,880,155 4,046,279 2,932,508 Billings in excess of costs and estimated earnings on uncompleted contracts (Note 6) 181,825 135,910 26,293 ------------- -------------- ------------- ------------- 26,072,328 29,720,198 25,301,871 33,760,448 COMMITMENTS AND CONTINGENCIES (Note 12) SHAREHOLDER'S DEFICIT: Common stock, $1 par value, 1,000 shares authorized, 100 shares issued and outstanding 100 100 100 100 Additional paid-in capital 2,100,000 2,100,000 2,100,000 Accumulated deficit (5,372,455) (11,774,482) (6,081,658) (13,479,303) ------------- -------------- ------------- ------------- (5,372,355) (9,674,382) (3,981,558) (11,379,203) ------------- -------------- -------------- --------------- $ 20,699,973 $ 20,045,816 $ 21,320,313 $ 22,381,245 ============== =============== ============== ==============
See notes to financial statements. 2
CRSI ACQUISITION, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION) STATEMENTS OF OPERATIONS SEVEN MONTHS THREE MONTHS ENDED ENDED YEAR ENDED SEPTEMBER 30, DECEMBER 31, DECEMBER 31, JANUARY 1 - FEBRUARY 24, -------------------------- ---------------------------- 1995 1995 1996 1997 1997 1998 ------------- ---------------- ------------ --------------- ------------ ------------- (PREDECESSOR) (UNAUDITED) (UNAUDITED) REVENUES: Contract revenues earned $ 3,802,254 $ 2,464,646 $ 23,624,881 $ 31,662,229 $ 4,885,779 $ 5,564,983 ------------- ------------ ------------ ------------ ------------ ----------- COSTS: Cost of contract revenues earned 4,345,549 2,369,654 24,243,512 35,580,675 5,337,713 7,164,308 Provision for contract losses on uncompleted contracts 1,171,042 1,919,056 188,600 ------------ ----------- ----------- ----------- ----------- ---------- 4,345,549 3,540,696 26,162,568 35,769,275 5,337,713 7,164,308 ------------ ----------- ----------- ----------- ----------- ---------- GROSS MARGIN (543,295) (1,076,050) (2,537,687) (4,107,046) (451,934) (1,599,325) ------------ ----------- ----------- ----------- ----------- ---------- OPERATING EXPENSES: General and administrative 880,775 289,640 3,554,046 5,054,738 489,566 891,945 Selling expenses 261,337 86,882 506,181 520,013 131,731 91,793 ------------ ----------- ----------- ----------- ----------- ---------- 1,142,112 376,522 4,060,227 5,574,751 621,297 983,738 ------------ ----------- ----------- ----------- ----------- ---------- LOSS FROM OPERATIONS (1,685,407) (1,452,572) (6,597,914) (9,681,797) (1,073,231) (2,583,063) OTHER INCOME 421 62 66,953 12,461 ------------ ----------- ----------- ----------- ----------- ---------- NET LOSS BEFORE EXTRAORDINARY ITEM AND INCOME TAX BENEFIT (1,684,986) (1,452,510) (6,597,914) (9,614,844) (1,060,770) (2,583,063) EXTRAORDINARY ITEM: Gain on sale of net assets, net of income tax expense 1,271,021 ------------ ----------- ----------- ----------- ----------- ---------- LOSS BEFORE INCOME TAX BENEFIT (413,965) (1,452,510) (6,597,914) (9,614,844) (1,060,770) (2,583,063) INCOME TAX (BENEFIT) EXPENSE: Current (131,304) (1,260,572) (3,651,262) (442,081) (918,101) Deferred (19,580) (350,194) (935,899) 438,445 90,513 39,859 ------------ ----------- ----------- ----------- ----------- ---------- (19,580) (481,498) (2,196,471) (3,212,817) (351,568) (878,242) ------------ ----------- ----------- ----------- ----------- ---------- NET LOSS $ (394,385) $ (971,012) $(4,401,443) $(6,402,027) $ (709,202) $(1,704,821) ============= =========== =========== =========== =========== ===========
See notes to financial statements. 3
CRSI ACQUISITION, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION) STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY (DEFICIT) RETAINED EARNINGS TOTAL COMMON ADDITIONAL (ACCUMULATED SHAREHOLDER'S STOCK PAID-IN CAPITAL DEFICIT) EQUITY (DEFICIT) ------ --------------- ------------ ---------------- (Predecessor company) BALANCE, March 1, 1995 $ 1,000 $ 2,870 $ 390,515 $ 394,385 NET LOSS (394,385) (394,385) ----------- -------------- ------------ ------------- BALANCE, September 30, 1995 $ 1,000 $ 2,870 $ (3,870) $ 0 =========== =============== ============ ============== - ---------------------------------------------------------------------------------------------------------------------------------- (CRSI Acquisition, Inc.) ISSUANCE OF COMMON STOCK $ 100 $ 100 NET LOSS $ (971,012) (971,012) ------------ --------------- ------------ -------------- BALANCE, December 31, 1995 100 (971,012) (970,912) NET LOSS (4,401,443) (4,401,443) ------------ --------------- ------------ -------------- BALANCE, DECEMBER 31, 1996 100 (5,372,455) (5,372,355) CAPITAL INVESTMENT FROM PARENT $ 2,100,000 2,100,000 NET LOSS (6,402,027) (6,402,027) ------------ --------------- ------------ -------------- BALANCE, DECEMBER 31, 1997 100 2,100,000 (11,774,482) (9,674,382) NET LOSS (Unaudited) (1,704,821) (1,704,821) ------------ --------------- ------------ -------------- BALANCE, FEBRUARY 24, 1998 (UNAUDITED) $ 100 $ 2,100,000 $(13,479,303) $ (11,379,203) ============ =============== ============ ==============
See notes to financial statements. 4
CRSI ACQUISITION, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION) STATEMENTS OF CASH FLOW SEVEN MONTHS THREE MONTHS ENDED ENDED YEAR ENDED SEPTEMBER 30, DECEMBER 31, DECEMBER 31, JANUARY 1, - FEBRUARY 24, -------------- ---------------- ---------------------- --------------------------- 1995 1995 1996 1997 1997 1998 -------------- ------------- ------------- ------------- ------------- ----------- (PREDECESSOR) (UNAUDITED) (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (394,385) $ (971,012) $ (4,401,443) $ (6,402,027) $ (709,202) $ (1,704,821) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 116,153 92,955 558,319 884,777 82,151 159,142 Deferred tax expense (19,579) (350,194) (935,899) 438,445 90,512 39,859 Gain on sale of property and equipment (6,135) (3,224) Gain on sale of net assets in business combination (1,271,021) Changes in assets and liabilities: Accounts receivable, net 68,615 (453,310) (3,496,048) 1,670,342 (852,480) (19,088) Costs and estimated earnings in excess of billings on uncompleted contracts 576,590 (877,125) (8,465,685) (2,012,894) 141,865 (2,493,380) Inventory (48,889) 429,626 (658,294) 654,657 (43,821) 11,894 Other receivables (555) (344) 6,627 37,293 (114,116) 9,050 Prepaid expenses (3,503) (25,734) (91,899) 111,254 157,844 Other assets 3,228 (18,228) (3,800) 41,680 Accounts payable (84,344) (614,831) 1,018,414 747,920 (521,873) 1,475,108 Accrued expenses 400,205 (179,299) (95,145) (93,771) 70,875 (121,096) Accrued losses on uncompleted contracts 1,171,042 3,090,098 (1,380,985) (214,861) 52,353 Billings in excess of costs and estimated earnings on uncompleted contracts 181,825 (181,825) (45,915) 26,293 --------- --------- --------- ---------- ---------- ---------- NET CASH USED IN OPERATING ACTIVITIES (657,485) (1,796,454) (13,292,930) (5,532,949) (1,917,341) (2,567,910) --------- --------- ---------- ---------- ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Cash (transferred) acquired in business combination (46,687) 46,687 Proceeds from sale of property and equipment 37,834 3,000 Purchase of property and equipment (139,389) (318,510) (1,965,789) (1,339,635) (273,610) (4,533) --------- --------- ---------- ---------- ---------- ---------- NET CASH USED IN INVESTING ACTIVITIES (186,076) (271,823) (1,965,789) (1,301,801) (273,610) (1,533) --------- --------- ---------- ---------- ----------- ----------
(continued) 5
CRSI ACQUISITION, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION) STATEMENTS OF CASH FLOW (CONTINUED) SEVEN MONTHS THREE MONTHS ENDED ENDED YEAR ENDED SEPTEMBER 30, DECEMBER 31, DECEMBER 31, JANUARY 1 - FEBRUARY 24, ----------------------------------- ------------------------- 1995 1995 1996 1997 1997 1998 -------------- ------------- ------------- ------------- ----------- ----------- (PREDECESSOR) (UNAUDITED) (UNAUDITED) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds (payments) from inter-company advances $ 2,483,043 $ 15,191,351 $ 4,556,529 $ (58,684) $ 2,607,593 Principal payment on debt acquired in busi- ness combination (91,490) Capital investment by parent 2,100,000 2,100,000 Long-term debt: Borrowings $ 2,202,000 Payments (130,243) Net payments on line of credit (793,000) Net payments on advances from shareholder (9,997) -------------- ------------- ------------- ------------- ------------- ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 1,268,760 2,391,553 15,191,351 6,656,529 2,041,316 2,607,593 -------------- ------------- ------------- ------------- ------------- ----------- NET INCREASE (DECREASE) IN CASH 425,199 323,276 (67,368) (178,221) (149,635) 38,150 CASH, Beginning of period (425,199) 0 323,276 255,908 255,908 77,687 -------------- ------------- ------------- ------------- ------------- ----------- CASH, END OF PERIOD $ 0 $ 323,276 $ 255,908 $ 77,687 $ 106,273 $ 115,837 ============== ============= ============= ============= ============= ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for: Interest $ 136,075 $ 0 $ 0 $ 0 $ 0 $ 0 Income taxes $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
See notes to financial statements. 6 CRSI ACQUISITION, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION) NOTES TO FINANCIAL STATEMENTS NOTE 1 INTERIM FINANCIAL STATEMENTS (UNAUDITED): In the opinion of CRSI Acquisition, Inc. (the Company), the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company at February 24, 1997 and 1998 and the results of its operations and its cash flows for the period from January 1 through February 24, 1997 and 1998. NOTE 2 DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: DESCRIPTION OF BUSINESS CRSI Acquisition, Inc. (d/b/a COMSAT RSI JEFA Wireless Systems) is incorporated in Delaware and commenced operations in September 1995. The Company is an indirect wholly-owned subsidiary of COMSAT Corporation. The Company engages in the installation of intelligent traffic management systems, and the design and construction of wireless communication networks. The Company operates in twenty-one states, primarily in Texas and Alabama. JEFA International, Inc. was the predecessor company to CRSI Acquisitions, Inc., acquired by COMSAT Corporation in September 1995. JEFA International, Inc. was also engaged in the installation and maintenance of wireless communication networks. REVENUE AND COST RECOGNITION The Company's construction contracts are performed on a fixed-price basis. Contract revenues are recognized on the percentage-of-completion method, measured by the percentage of costs incurred to date to total estimated costs at completion. This method is used because management considers costs incurred to be the best available measure of progress on these contracts. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and revenues, and are recognized in the period in which the revisions are determined. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Contract costs include all direct material and labor costs, cost of work subcontracted to others but under the supervision of the Company and those indirect costs related to contract performance, such as indirect labor, depreciation, supplies, tools, and repairs. Selling, general and administrative costs are charged to expense as incurred. The current asset "Costs and estimated earnings in excess of billings on uncompleted contracts", represents revenues recognized in excess of amounts billed. The current liability, "Billings in excess of costs and estimated earnings on uncompleted contracts", represents amounts billed in excess of revenues recognized. INVENTORY Inventory is stated at the lower of cost or market value. Costs are determined by the first-in, first-out method. 7 CRSI ACQUISITION, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION) NOTES TO FINANCIAL STATEMENTS NOTE 2 DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): GOODWILL Goodwill, which represents the excess of the cost of the predecessor company over the fair value of its net assets at the date of acquisition, is being amortized on the straight-line method over five years. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation is provided by the straight-line method over the estimated useful lives of the related assets. The cost of leasehold improvements is amortized over the lesser of the length of the related leases or the estimated useful lives of the assets. ESTIMATES AND ASSUMPTIONS Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. NOTE 3 CONCENTRATION OF CREDIT RISK: The Company maintains cash balances with one financial institution. At various times, cash balances exceeded the FDIC-insured limit. NOTE 4 FAIR VALUE OF FINANCIAL INSTRUMENTS: The carrying amounts of the Company's financial instruments, consisting of cash, accounts receivable, accounts payable, and inter-company advances held for non-trading purposes, approximates fair value due to the short maturity of the instruments and the provision for reserves for potential non-performance. NOTE 5 CONTRACT RECEIVABLES:
DECEMBER 31, FEBRUARY 24, ----------------------------------- --------------------------------- 1996 1997 1997 1998 --------------- ---------------- --------------- ------------- (UNAUDITED) (UNAUDITED) Contract receivables: Completed contracts $ 3,507,482 $ 4,143,585 $ 3,738,449 $ 3,833,081 Uncompleted contracts 3,051,577 1,193,438 3,673,090 1,523,030 ------------- -------------- ------------- ------------- 6,559,059 5,337,023 7,411,539 5,356,111 Less allowance for doubtful accounts 1,184,311 1,632,616 1,184,311 1,632,616 ------------- -------------- ------------- ------------- $ 5,374,748 $ 3,704,407 $ 6,227,228 $ 3,723,495 ============== =============== ============== ==============
8 CRSI ACQUISITION, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION) NOTES TO FINANCIAL STATEMENTS NOTE 5 CONTRACT RECEIVABLES (CONTINUED):
DECEMBER 31, FEBRUARY 24, ----------------------------------- ----------------------------------- 1996 1997 1997 1998 --------------- ---------------- --------------- --------------- (UNAUDITED) (UNAUDITED) Significant customer receivables are as follows: Due from U.S. Government agency $ 1,232,656 $ 1,654,959 $ 1,654,959 $ 1,656,959 Due from State agency 371,676 812,657 498,680 894,336 ------------- -------------- ------------- ------------- 1,604,332 2,467,616 2,153,639 2,551,295 Less allowance for doubtful accounts 421,201 1,167,616 421,201 1,167,616 ------------- -------------- ------------- ------------- $ 1,183,131 $ 1,300,000 $ 1,732,438 $ 1,383,679 ============== =============== ============== ==============
NOTE 6 UNCOMPLETED CONTRACTS:
DECEMBER 31, FEBRUARY 24, ----------------------------------- ----------------------------------- 1996 1997 1997 1998 --------------- ---------------- --------------- --------------- (UNAUDITED) (UNAUDITED) Costs incurred on uncompleted contracts $ 19,684,258 $ 25,092,456 $ 20,699,917 $ 28,715,207 Estimated earnings 1,177,242 1,944,091 1,957,018 2,331,266 ------------- -------------- ------------- ------------ Contract revenues recognized to date on uncompleted contracts 20,861,500 27,036,547 22,656,935 31,046,473 Less billings to date (11,700,515) (15,680,842) (13,591,900) (17,223,681) ------------- -------------- ------------- ------------- Revenues recognized over billings, net $ 9,160,985 $ 11,355,705 $ 9,065,035 $ 13,822,792 ============== =============== ============== ============= Included in the accompanying balance sheets under the following captions: Costs and estimated earnings in excess of billings on uncompleted contracts $ 9,342,810 $ 11,355,705 $ 9,200,945 $ 13,849,085 Billings in excess of costs and estimated earnings on uncompleted contracts (181,825) (135,910) (26,293) ------------- -------------- ------------- ------------ $ 9,160,985 $ 11,355,705 $ 9,065,035 $ 13,822,792 ============== =============== ============== =============
NOTE 7 PROPERTY AND EQUIPMENT:
DECEMBER 31, FEBRUARY 24, ----------------------------------- ----------------------------------- 1996 1997 1997 1998 --------------- ---------------- --------------- --------------- (UNAUDITED) (UNAUDITED) Machinery and equipment $ 1,811,828 $ 2,127,944 $ 2,018,551 $ 2,130,940 Vehicles 877,860 1,793,031 941,106 1,793,031 Leasehold improvements 62,831 79,487 64,931 81,020 Computer software 53,953 71,084 56,739 71,084 Furniture and fixtures 30,969 61,023 30,969 61,023 Communications equipment 55,420 55,420 55,420 55,420 ------------- -------------- ------------- ------------ $ 2,892,861 $ 4,187,989 $ 3,167,716 $ 4,192,518 Less accumulated depreciation (346,489) (974,036) (429,884) (1,092,313) ------------- -------------- ------------- ------------ $ 2,546,372 $ 3,213,953 $ 2,737,832 $ 3,100,205 ============== =============== ============== =============
9 CRSI ACQUISITION, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION) NOTES TO FINANCIAL STATEMENTS NOTE 7 PROPERTY AND EQUIPMENT (CONTINUED): Depreciation expense is $116,153, $31,998, $314,491 and $640,356 for the seven months ended September 30, 1995, the three months ended December 31, 1995, and the years ended December 31, 1996 and 1997. Depreciation expense is $82,151 (unaudited) and $118,504 (unaudited) for the periods from January 1 through February 24, 1997 and 1998. NOTE 8 INTER-COMPANY ADVANCES: The Company's parent makes non-interest bearing cash advances to the Company, as required, for working capital needs. These advances are reduced by the Company's trade receivables collected by the parent. NOTE 9 OTHER RELATED PARTY TRANSACTIONS: The Company purchases inventory from its parent and a company related by common ownership. The total inventory purchases from these companies is $0, $1,493,796 and $691,927 for the three months ended December 31, 1995 and the years ended December 31, 1996 and 1997. Inventory purchases total $222,234 (unaudited) and $0 (unaudited) for the periods from January 1 through February 24, 1997 and 1998. The Company pays its parent a monthly charge for management services and other corporate overhead. These charges total $0, $504,000 and $980,136 for the three months ended December 31, 1995 and the years ended December 31, 1996 and 1997. Corporate charges are $146,300 (unaudited) and $161,200 (unaudited) for the periods from January 1, through February 24, 1997 and 1998. NOTE 10 INCOME TAXES: The income tax effects of Company operating results are determined and included in the consolidated income tax returns of the parent. For presentation of these financial statements, the Company provides for an estimated income tax benefit from operating losses on a separate-basis return, and recognizes a credit which would be received from the parent as a result of filing consolidated returns. The parent would use any such income tax benefit to off-set amounts previously advanced to the Company, therefore the estimated income tax receivable is included in inter-company advances. A reconciliation of the income tax provision at the federal statutory rate to the income tax provision at the effective tax rate is as follows:
SEVEN MONTHS THREE MONTHS YEAR ENDED ENDED ENDED DECEMBER 31, JANUARY 1 - FEBRUARY 24, SEPTEMBER 30, DECEMBER 31, ----------------------------- ---------------------------- 1995 1995 1996 1997 1997 1998 -------------- ------------- ------------- ------------- ------------- ------------ (PREDECESSOR) (UNAUDITED) (UNAUDITED) Income tax computed at the Federal statutory rate $ (19,580) $ (493,854) $ (2,243,291) $ (3,269,049) $ (360,662) $ (878,242) Nondeductible expenses 12,356 46,820 56,232 9,094 ------------- ------------ ------------ ------------ ----------- ----------- $ (19,580) $ (481,498) $ (2,196,471) $ (3,212,817) $ (351,568) $ (878,242) ============= ============ ============ ============ =========== ============
10 CRSI ACQUISITION, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION) NOTES TO FINANCIAL STATEMENTS
NOTE 10 INCOME TAXES (CONTINUED): The components of deferred taxes consist of the following: DECEMBER 31, FEBRUARY 24, ------------------------------- ------------------------------------ 1996 1997 1997 1998 ----------- -------------- ---------------- ---------------- (UNAUDITED) (UNAUDITED) DEFERRED TAX ASSETS: Accounts receivable allowance $ 402,665 $ 555,090 $ 402,665 $ 555,090 Goodwill 69,085 124,353 86,894 133,564 Accrued losses on uncompleted contracts 1,448,787 979,252 1,375,735 997,053 -------------- --------------- -------------- ------------- 1,920,537 1,658,695 1,865,294 1,685,707 DEFERRED TAX LIABILITIES: Uncompleted contracts (634,444) (811,048) (669,714) (877,919) -------------- --------------- -------------- ------------- $ 1,286,093 $ 847,647 $ 1,195,580 $ 807,788 ============== =============== ============== =============
NOTE 11 EMPLOYEE BENEFIT PLAN: The Company's parent sponsors a contributory defined contribution benefit plan for all employees working at least 20 hours per week or having one year of service. The sponsor matches employee contributions in stock of the parent, based on a formula defined in the plan. No plan expense is recorded for the seven months ended September 30, 1995, the three months ended December 31, 1995 and the year ended December 31, 1996. Plan expense is $82,482 for the year ended December 31, 1997 and $10,335 (unaudited) and $27,650 (unaudited) for the periods from January 1 through February 24, 1997 and 1998. NOTE 12 COMMITMENTS AND CONTINGENCIES: The Company leases office and warehouse space, vehicles and other equipment under non-cancelable operating lease agreements. Rental expense under these operating leases is $238,216 for the year ended December 31, 1997 and $32,845 (unaudited) and $29,389 (unaudited) for the periods from January 1 through February 24, 1997 and 1998. Minimum future lease payments under these operating leases at December 31, 1997 are as follows: YEAR ENDING DECEMBER 31, ------------ 1998 $ 123,636 1999 38,025 ------------- $ 161,661 ============= 11 CRSI ACQUISITION, INC. (A WHOLLY-OWNED SUBSIDIARY OF COMSAT CORPORATION) NOTES TO FINANCIAL STATEMENTS NOTE 13 SUBSEQUENT EVENT (UNAUDITED): On February 25, 1998, Able Telcom Holding Corp. (Able), a publicly-held corporation, purchased substantially all assets and certain liabilities of the Company in exchange for cash from the Company's parent. The purchase was effected through Able's wholly-owned subsidiary, Georgia Electric Company, Inc. As a part of this transaction, Able assumed uncompleted installation contracts with governmental agencies and telecommunications customers. As of the date of the sale, the Company ceased operations. 12
ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES PRO FORMA COMBINED BALANCE SHEETS (UNAUDITED) ABLE TELCOM HOLDING CORP. COMSAT RSI AND JEFA WIRELESS PRO FORMA SUBSIDIARIES SYSTEMS ADJUSTMENTS(A) COMBINED ------------ ------- -------------- -------- October 31, 1997 December 31, 1997 ASSETS: Current Assets: Cash and cash equivalents $ 6,229,602 $ 77,687 $ 4,585,167 $10,892,456 Accounts receivables, net 13,399,327 3,719,701 881,758 18,000,786 Inventories 1,257,218 83,259 2,016,741 3,357,218 Costs and profits in excess of billings on uncompleted contracts 5,614,813 11,355,705 (11,355,705) 5,614,813 Prepaid expenses and other 508,591 32,921 (32,921) 508,591 Deferred income taxes - 723,294 (723,294) - ------------------------------------------------------------------------- Total Current Assets 27,009,551 15,992,567 (4,628,254) 38,373,864 Property, Plant and Equipment, net 13,113,638 3,213,953 386,047 16,713,638 Other Assets: Deferred income taxes 981,976 124,353 (124,353) 981,976 Goodwill, net 8,341,064 670,527 (670,527) 8,341,064 Other 899,765 44,416 (44,416) 899,765 ------------------------------------------------------------------------- Total Other Assets 10,222,805 839,296 (839,296) 10,222,805 ------------------------------------------------------------------------- TOTAL ASSETS $50,345,994 $20,045,816 $ (5,081,503) $65,310,307 ========================================================================= Current Liabilities: Current portion of long-term debt $ 3,154,428 $ - $ - $ 3,154,428 Intercompany advances, net - 24,403,780 (24,403,780) - Notes payable to shareholders 875,000 - - 875,000 Accounts payable and accrued liabilities 8,418,323 2,436,263 112,388 10,966,974 Billings in excess of costs and profits on uncompleted contracts 291,165 - - 291,165 Accrued losses on uncompleted contracts - 2,880,155 7,402,923 10,283,078 Customer deposits 229,721 - - 229,721 ------------------------------------------------------------------------- Total Current Liabilities 12,968,637 29,720,198 (16,888,469) 25,800,366 Long term debt, excluding current portion 14,139,567 - - 14,139,567 Other liabilities 1,277,866 - - 1,277,866 Deferred profit - - 2,132,584 2,132,584 ------------------------------------------------------------------------- Total Liabilities 15,417,433 - 2,132,584 17,550,017 Series A convertible redeemable preferred stock $0.10 par value; authorized 1,000,000 shares, 995 shares issued and outstanding 6,713,314 - - 6,713,314 Shareholders' Equity: Common stock, $0.001 par value; 8,579 - - 8,579 authorized 25,000,000 shares; 8,580,422 shares issued and outstanding Common stock, $1.00 par value, - 100 (100) - authorized 1,000 shares; 100 shares issued and outstanding Additional paid in capital 15,095,863 2,100,000 (2,100,000) 15,095,863 Retained earnings (Deficit) 142,168 (11,774,482) 11,774,482 142,168 ------------------------------------------------------------------------- Total Shareholders' Equity (Deficit) 15,246,610 (9,674,382) 9,674,382 15,246,610 ------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (Deficit) $50,345,994 $ 20,045,816 $ (5,081,503) $65,310,307 =========================================================================
Able Telcom Holding Corp. And Subsidiaries Supplemental Pro Forma Combined Statements of Income (Unaudited) For the twelve months ended ABLE TELCOM HOLDING CORP. COMSAT RSI AND JEFA WIRELESS SUBSIDIARIES SYSTEMS ------------- ------------- PRO FORMA OCTOBER 31, DECEMBER 31, ---------------------------- 1997 1997 ADJUSTMENTS COMBINED ------------ ------------- ------------- ------------ Revenues $86,334,449 $ 31,662,229 $ - $117,996,678 Cost and expenses: Cost of revenues 68,164,404 34,884,498 - 103,048,902 General and administrative 8,780,430 5,574,751 - 14,355,181 Depreciation and amortization 4,532,248 884,777 - 5,417,025 Transaction/transaction losses, net 16,987 - - 16,987 ----------- ------------ ------------ ------------ Total costs and expenses 81,494,069 41,344,026 - 122,838,095 ----------- ------------ ------------ ------------ Income (loss) from operations 4,840,380 (9,681,797) - (4,841,417) ----------- ------------ ------------ ------------ Other expense (income), net Interest expense 1,565,265 - - 1,565,265 Interest and dividend income (449,479) - - (449,479) Other (income) (152,694) (66,953) - (219,647) ----------- ------------ ------------ ------------ Total other expense (income), net 963,092 (66,953) - 896,139 ----------- ------------ ------------ ------------ Income (loss) before income taxes and minority interest 3,877,288 (9,614,844) - (5,737,556) Income tax expense (benefit) 727,223 (3,212,817) - (2,485,594) ----------- ------------ ------------ ------------ Income (loss) before minority interest 3,150,065 (6,402,027) - (3,251,962) Minority interest 292,532 - - 292,532 ----------- ------------ ------------ ------------ Net income (loss) 2,857,533 (6,402,027) - (3,544,494) Preferred stock dividend 260,000 - - 260,000 Discount attributable to beneficial conversion of preferred stock 1,266,364 - - 1,266,364 ----------- ------------ ------------ ------------ Net income (loss) applicable to common stock $ 1,331,169 $ (6,402,027) $ - $ (5,070,858 =========== ============ ============ ============ Income (loss) per common share: Basic $ 0.16 $(0.60) =========== ============ Diluted $ 0.16 $(0.60) =========== ============ Weighted average common shares and common stock equivalents outstanding 8,504,972 8,504,972 =========== ============
ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES PRO FORMA COMBINED BALANCE SHEETS (UNAUDITED) ABLE TELCOM HOLDING CORP. COMSAT RSI AND JEFA WIRELESS PRO FORMA SUBSIDIARIES SYSTEMS ADJUSTMENTS(A) COMBINED ------------ ------- -------------- -------- January 31, 1998 February 24, 1998 ASSETS: Current Assets: Cash and cash equivalents $ 3,971,821 $ 115,837 $ 4,647,017 $ 8,634,675 Accounts receivables, net 15,314,102 3,729,739 871,720 19,915,561 Inventories 1,156,152 71,365 2,028,635 3,256,152 Costs and profits in excess of billings on uncompleted contracts 4,774,002 13,849,085 (13,849,085) 4,774,002 Prepaid expenses and other 858,162 32,921 (32,921) 858,162 Deferred income taxes - 674,224 (674,224) - ------------------------------------------------------------------------- Total Current Assets 26,074,239 18,473,171 (7,108,858) 37,438,552 Property, Plant and Equipment, net 15,133,388 3,100,205 499,795 18,733,388 Other Assets: Deferred income taxes 1,323,960 133,564 (133,564) 1,323,960 Goodwill, net 8,200,422 629,889 (629,889) 8,200,422 Other 1,378,451 44,416 (44,416) 1,378,451 ------------------------------------------------------------------------- Total Other Assets 10,902,833 807,869 (807,869) 10,902,883 ------------------------------------------------------------------------- TOTAL ASSETS $ 52,110,460 $ 22,381,245 $ (7,416,932) $ 67,074,773 ========================================================================= Current Liabilities: Current portion of long-term debt $ 4,025,479 $ - $ - $ 4,025,479 Intercompany advances, net - 27,011,373 (27,011,373) - Accounts payable and accrued liabilities 8,822,978 3,790,274 (1,241,623) 11,371,629 Billings in excess of costs and profits on uncompleted contracts 667,212 26,293 (26,293) 667,212 Accrued losses on uncompleted contracts - 2,932,508 7,350,570 10,283,078 Customer deposits 102,709 - - 102,709 ------------------------------------------------------------------------- Total Current Liabilities 13,618,378 33,760,448 (20,928,719) 26,450,107 Long term debt, excluding current portion 15,622,982 - - 15,622,982 Other liabilities 1,277,866 - - 1,277,866 Deferred profit - - 2,132,584 2,132,584 Minority Interest 111,081 - - 111,081 Series A convertible redeemable preferred stock $0.10 par value; authorized 1,000,000 shares; 442 shares issued and outstanding 3,343,500 - - 3,343,500 Shareholders' Equity: Common stock, $0.001 par value; authorized 25,000,000 shares; 9,090,154 shares issued and outstanding 9,090 - - 9,090 Common stock; $1.00 par value, authorized 1,000 shares; 100 shares issued and outstanding - 100 (100) - Additional paid in capital 18,809,605 2,100,000 (2,100,000) 18,809,605 Retained earnings (deficit) (682,042) (13,479,303) 13,479,303 (682,042) ------------------------------------------------------------------------- Total Shareholders' Equity (Deficit) 18,136,653 (11,379,203) 11,379,203 18,136,653 ------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (Deficit) $ 52,110,460 $ 22,381,245 $ (7,416,932) $ 67,074,773 =========================================================================
Able Telcom Holding Corp. And Subsidiaries Pro Forma Combined Statements of Income (Unaudited) For the periods ended ABLE TELCOM HOLDING CORP. COMSAT RSI AND JEFA WIRELESS SUBSIDIARIES SYSTEMS ------------- ------------- PRO FORMA JANUARY 31, FEBRUARY 24, ---------------------------- 1998 1998 ADJUSTMENTS COMBINED ------------ ------------- ------------- ------------ Revenues $ 22,267,800 $ 5,564,983 $ - $ 27,832,783 Cost and expenses: Cost of revenues 19,010,379 7,005,166 - 26,015,545 General and administrative 2,896,294 983,738 - 3,880,032 Depreciation and amortization 1,152,489 159,142 - 1,311,631 Transaction/translation Losses, net (15,429) - - (15,429) ------------ ----------- ------------ ------------ Total costs and expenses 23,043,733 8,148,046 - 31,191,779 ------------ ----------- ------------ ------------ Loss from operations (775,933) (2,583,063) - (3,358,996) ------------ ----------- ------------ ------------ Other expense (income), net Interest expense 275,611 - - 275,611 Interest and dividend income (73,602) - - (73,602) Other (income) (125,679) - - (125,679) ------------ ----------- ------------ ------------ Total other expense, net 76,330 - - 76,330 ------------ ----------- ------------ ------------ Loss before income taxes and minority interest (852,263) (2,583,063) - (3,435,326) Income tax benefit (341,984) (878,242) - (1,220,226) ------------ ----------- ------------ ------------ Loss before minority interest (510,279) (1,704,821) - (2,215,100) Minority interest 159,971 - - 159,971 ------------ ----------- ------------ ------------ Net loss (670,250) (1,704,821) - (2,375,071) Preferred stock dividend 49,187 - - 49,187 Discount attributable to beneficial conversion of preferred stock 104,773 - - 104,773 ------------ ----------- ------------ ------------ Net loss appicable to common stock $ (824,210) $(1,704,821) $ - $ (2,529,031) ============ =========== ============ ============ Loss per common share: Basic $ (0.09) $ (0.29) ============ ============ Diluted $ (0.09) $ (0.29) ============ ============ Weighted average common shares and common stock equivalents outstanding 8,825,362 8,825,362 ============ ============
ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED) (A) The Company acquired certain assets and liabilities from Comsat RSI. These assets consisted of cash, accounts receivable, stored materials and various other assets and prepaid expenses. The Company assumed various liabilities, including trade accounts payable, accrued warranty expenses, liquidated damages and other contract related expenses. The acquisition is accounted for under the purchase method of accounting. The Company expects to reduce the operating costs of the business acquired from Comsat RSI, by 22%, as a result of renegotiating subcontractor agreements and reducing salary expenses and contract costs, in line with the existing operating units of the Company. The closing of the Comsat RSI administrative offices will result in a decrease in general and administrative expenses of approximately 55%. Had these adjustments been reflected on the proformas, they would have resulted in increases in the combined net income of approximately $6,751,000 and $1,843,000 for the year ended December 31, 1997 and the period ended February 24, 1998, respectively. 6 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ------- ----------- 23.1 Consent of Independent Certified Public Accountants EX-23.1 2 EXHIBIT 23.1 Agee Fisher, LLC. CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT We hereby consent to the inclusion in this current report on Form 8-K/A-3 of our report dated June 7, 1998, relating to the financial statements of CRSI Acquisition, Inc. for the years ended December 31, 1997 and 1996 and the three months ended December 31, 1995, and the financial statements of its predecessor company, JEFA International, Inc., for the seven months ended September 30, 1995. We also hereby consent to the incorporation by reference of this report in Able Telcom Holding Corp.'s Registration Statements on Form S-3 (Commission File No. 333-22105), and Form S-8 (Commission File No. 333-04377). /s/ Agee Fisher, LLC. --------------------- AGEE FISHER, LLC. Atlanta, Georgia September 30, 1998 -----END PRIVACY-ENHANCED MESSAGE-----