-----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, MCRuCMUqjjWM5v3WUS6/NBtEbSiHaPjgedE71C/u9Ne76EbNjL4MA+MYMGvBjZAk d7F1Fzv9wFu407i7jUbMDw== 0000912057-97-027299.txt : 19970813 0000912057-97-027299.hdr.sgml : 19970813 ACCESSION NUMBER: 0000912057-97-027299 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970629 FILED AS OF DATE: 19970812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERILINK CORP CENTRAL INDEX KEY: 0000924774 STANDARD INDUSTRIAL CLASSIFICATION: WATER, SEWER, PIPELINE, COMM AND POWER LINE CONSTRUCTION [1623] IRS NUMBER: 311409345 STATE OF INCORPORATION: OH FISCAL YEAR END: 0329 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24334 FILM NUMBER: 97657120 BUSINESS ADDRESS: STREET 1: 1900 E DUBLIN GRANVILLE RD CITY: COLUMBUS STATE: OH ZIP: 43229 BUSINESS PHONE: 6148951313 10-Q 1 10-Q 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 29, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 0-24334 --------------------------- AMERILINK CORPORATION ----------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) OHIO 31-1409345 ------------------------------- ------------------------------------ (STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 1900 E. DUBLIN-GRANVILLE ROAD, COLUMBUS, OHIO 43229 ------------------------------------------------------------ (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE) (614) 895-1313 ---------------------------------------------------- (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 . ------- ------- 3,481,580 SHARES OF COMMON STOCK WERE OUTSTANDING AS OF AUGUST 6, 1997 1 AMERILINK CORPORATION QUARTERLY REPORT FOR THE QUARTER ENDED JUNE 29, 1997 Index Page No. ----- -------- PART I: FINANCIAL INFORMATION Item 1 - Financial Statements Consolidated Balance Sheets as of March 30, 1997 and June 29, 1997 (Unaudited). . . . . . . . . . . . . . . . . . . 3 Consolidated Statements of Income (Unaudited) for the thirteen weeks ended June 30, 1996 and June 29, 1997 . . . . . 4 Consolidated Statements of Changes in Shareholders' Equity (Unaudited) for the thirteen weeks ended June 29, 1997 . . . . 5 Consolidated Statements of Cash Flows (Unaudited) for the thirteen weeks ended June 30, 1996 and June 29, 1997 . . . . . 6 Notes to Consolidated Financial Statements . . . . . . . . . . 7 - 8 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . 8 - 11 PART II: OTHER INFORMATION Items 1-6. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2 AMERILINK CORPORATION CONSOLIDATED BALANCE SHEETS - ------------------------------------------------------------------------------- March 30, 1997 June 29, 1997 - ------------------------------------------------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents. . . . . . . . . . $ 120,395 $ 101,062 Accounts receivable-trade, net of allowance for doubtful accounts of $171,000 and $252,000 . . . . . . . . . . . 13,558,789 12,795,095 Work-in-process. . . . . . . . . . . . . . . 4,294,802 6,551,560 Materials and supply inventories . . . . . . 1,509,840 1,345,345 Other receivables. . . . . . . . . . . . . . 308,217 251,942 Deferred income taxes. . . . . . . . . . . . 142,593 142,593 Other. . . . . . . . . . . . . . . . . . . . 153,125 189,252 ------------- ------------ Total current assets. . . . . . . . . . 20,087,761 21,376,849 Property and equipment - net. . . . . . . . . . . 5,928,062 6,111,356 Deposits and other assets . . . . . . . . . . . . 183,578 175,689 Deferred income taxes . . . . . . . . . . . . . . 11,710 11,710 ------------- ------------ Total assets. . . . . . . . . . . . . . . . . . . $ 26,211,111 $ 27,675,604 ------------- ------------ ------------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable . . . . . . . . . . . $ 2,318,675 $ 2,416,782 Liability to subcontractors. . . . . . . . . 1,960,754 2,369,386 Accrued compensation and related expenses. . 1,435,672 1,803,228 Accrued insurance. . . . . . . . . . . . . . 368,257 429,894 Income taxes . . . . . . . . . . . . . . . . 173,269 785,292 Other. . . . . . . . . . . . . . . . . . . . 82,882 137,782 Current maturities of long-term debt . . . . 69,190 -- ------------- ------------ Total current liabilities . . . . . . . 6,408,699 7,942,364 Long-term debt, less current maturities . . . . . 9,000,000 7,750,000 ------------- ------------ Total liabilities . . . . . . . . . . . 15,408,699 15,692,364 Shareholders' equity: Preferred stock, without par; 1,000,000 shares authorized; none issued or outstanding. . . -- -- Common stock, without par; 10,000,000 shares authorized; 3,481,580 shares issued and outstanding . . . . . . . . . . . . . . 8,084,645 8,084,645 Retained earnings. . . . . . . . . . . . . . 2,717,767 3,898,595 ------------- ------------ Total shareholders' equity. . . . . . . 10,802,412 11,983,240 ------------- ------------ Total liabilities and shareholders' equity. . . . $ 26,211,111 $ 27,675,604 ------------- ------------ ------------- ------------ See notes to financial statements. 3 AMERILINK CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - ------------------------------------------------------------------------------- Thirteen Weeks Ended June 30, 1996 June 29, 1997 - ------------------------------------------------------------------------------- Revenues. . . . . . . . . . . . . . . . . . . . . $ 13,521,020 $ 21,651,070 Cost of sales . . . . . . . . . . . . . . . . . . 9,021,244 13,349,028 ------------- ------------ Gross profit. . . . . . . . . . . . . . . . . . . 4,499,776 8,302,042 Selling, general and administrative expenses. . . 4,004,152 6,136,163 ------------- ------------ Income from operations. . . . . . . . . . . . . . 495,624 2,165,879 Interest expense. . . . . . . . . . . . . . . . . (127,632) (165,051) Other income. . . . . . . . . . . . . . . . . . . 622 -- ------------- ------------ Income before income taxes. . . . . . . . . . . . 368,614 2,000,828 Provision for income taxes. . . . . . . . . . . . 147,000 820,000 ------------- ------------ Net income. . . . . . . . . . . . . . . . . . . . $ 221,614 $ 1,180,828 ------------- ------------ ------------- ------------ Net income per common share . . . . . . . . . . . $ 0.06 $ 0.33 ------------- ------------ ------------- ------------ Weighted average common shares outstanding. . . . 3,639,952 3,596,027 See notes to financial statements. 4 AMERILINK CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THIRTEEN WEEKS ENDED JUNE 29, 1997 (UNAUDITED) - ------------------------------------------------------------------------------- Number Common Retained of Shares Stock Earnings Total - ------------------------------------------------------------------------------- Balance at March 30,1997. . . 3,481,580 $ 8,084,645 $ 2,717,767 $ 10,802,412 Net income. . . . . . . . . . -- -- 1,180,828 1,180,828 --------- ----------- ----------- ------------ Balance at June 29, 1997. . . 3,481,580 $ 8,084,645 $ 3,898,595 $ 11,983,240 --------- ----------- ----------- ------------ --------- ----------- ----------- ------------ See notes to financial statements. 5 AMERILINK CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- ---------------------------------------------------------------------------------------------- Thirteen Weeks Ended June 30, 1996 June 29, 1997 - ---------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net income. . . . . . . . . . . . . . . . . . . . . . $ 221,614 $ 1,180,828 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . 534,322 651,147 Net gain (loss) on disposal of fixed assets . . . (4,745) 3,120 Changes in operating assets and liabilities: Accounts receivable and work-in-process. . . . (701,768) (1,493,064) Materials and supply inventories . . . . . . . (348,070) 164,495 Other receivables. . . . . . . . . . . . . . . 42,578 56,275 Other current assets . . . . . . . . . . . . . 32,518 (36,127) Trade accounts payable . . . . . . . . . . . . 437,650 98,107 Liability to subcontractors. . . . . . . . . . 152,773 408,632 Accrued compensation and related expenses. . . 13,066 367,556 Accrued insurance. . . . . . . . . . . . . . . (257,546) 61,637 Income taxes . . . . . . . . . . . . . . . . . 105,395 612,023 Other current liabilities. . . . . . . . . . . 6,816 54,900 ------------ ------------ Net cash provided by operating activities . . . . . . 234,603 2,129,529 INVESTING ACTIVITIES Purchase of property and equipment. . . . . . . . (609,169) (1,004,126) Proceeds from sale of property and equipment. . . 85,065 166,565 Deposits and other assets . . . . . . . . . . . . (45,752) 7,889 ------------ ------------ Net cash used in investing activities . . . . . . . . (569,856) (829,672) FINANCING ACTIVITIES Principal payments on long-term debt. . . . . . . (4,430,000) (8,394,190) Proceeds from borrowings on long-term debt. . . . 4,825,963 7,075,000 ------------ ------------ Net cash provided by (used in) financing activities . 395,963 (1,319,190) ------------ ------------ Increase (decrease) in cash and cash equivalents. 60,710 (19,333) Cash and cash equivalents at beginning of period. . . 78,680 120,395 ------------ ------------ Cash and cash equivalents at end of period. . . . . . $ 139,390 $ 101,062 ------------ ------------ ------------ ------------ SUPPLEMENTAL CASH FLOW DISCLOSURES Interest paid . . . . . . . . . . . . . . . . . . $ 129,633 $ 166,454 Income taxes paid . . . . . . . . . . . . . . . . $ 41,605 $ 210,188
See notes to financial statements. 6 AMERILINK CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS AmeriLink Corporation (the "Company") is a nationwide provider of cabling systems for the transmission of video, voice and data. The Company offers its services on a national basis to providers of telecommunications services, including: cable television multiple system operators ("MSO"s); traditional telephone service providers, including local exchange carriers ("LEC"s) and long distance carriers; competitive local exchange carriers ("CLECs"); Direct Broadcast Satellite ("DBS") providers; and users of Local Area Network ("LAN") systems. The Company's cabling services include the designing, constructing, installing and maintaining of fiber optic, copper and coaxial cabling systems. The Company provides these services predominately through the use of independent contractors via its national network of regional and satellite field offices. These 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 information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the March 30, 1997 audited financial statements of AmeriLink Corporation contained in its Annual Report to Shareholders. The financial information included herein reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results for interim periods. The results of operations for the thirteen weeks ended June 29, 1997 are not necessarily indicative of the results to be expected for the full year. RECENTLY ISSUED ACCOUNTING STANDARDS In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share", which is effective for both interim and annual periods ending after December 15, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The Company does not believe the adoption of the standard will have a significant effect on previous reported earnings per share. RECLASSIFICATIONS Certain reclassifications have been made to the fiscal 1997 consolidated financial statements to conform to the fiscal 1998 presentation. 2. NET INCOME PER SHARE Net income per share is calculated by dividing net income by the weighted average shares outstanding for the period presented, including, when their effect is dilutive, common stock equivalents consisting of shares subject to stock options. 7 3. NOTES PAYABLE AND LONG-TERM DEBT Under a loan agreement with its commercial bank that was amended September 27, 1996, the Company has a $12,000,000 unsecured revolving credit note which matures September 30, 1998. Interest on the note is prime minus 1% and is payable monthly, and there is a commitment fee of 1/4% on any unused portion of the note. Borrowings under the revolving credit note were $7,750,000 at June 29, 1997. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION ACT OF 1995 The Company cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Act of 1995) contained in this Report or made by management of the Company involve risks and uncertainties, and are subject to change based on various important factors. These important factors include, among others, competitive and regulatory risks associated with the telecommunications industry, the risk of changing market conditions and customer purchase authorizations which may be influenced by budget cycles of the Company's customers, consolidation within the telecommunications industry, and the success of various technologies and business strategies employed by the Company's customers, and other risks described in the Company's Securities and Exchange Commission filings. RESULTS OF OPERATIONS Revenue is generated from cabling projects performed via work orders issued under master contracts. Contract costs may vary depending upon the contract volume, the level of productivity, competitive factors in the local market, and other items. Cost of sales includes subcontractor production costs, materials not supplied by the customer, vehicle and machinery expenses, and business insurance related costs. Selling, general and administrative expenses consist primarily of field employee wages and payroll costs. The Company's selling, general and administrative cost structure is maintained at levels necessary to adequately support both anticipated near term revenue levels and projected longer term revenue levels. These anticipated revenue levels and associated cost structures may vary among the Company's regional field offices and geographic market areas. COMPARISONS OF THIRTEEN WEEKS ENDED JUNE 30, 1996 AND JUNE 29, 1997 REVENUES Total revenues for the first quarter of fiscal 1998 were $21,651,070 compared to $13,521,020 for the first quarter of fiscal 1997, an increase of 60%. Revenues derived from residential and commercial premises wiring activities increased by 81% to a record $18.6 million in the first quarter of fiscal 1998, versus approximately $10.2 million in the prior year period. Such revenues accounted for 86% of the Company's total revenues for the most recent quarter, versus 76% a year earlier, consistent with the Company's announced strategy to focus efforts on premises wiring activities. Premises wiring revenues derived from telephone companies increased to approximately $8.3 million (approximately 38% of total company revenues) in the first quarter of fiscal 1998 compared to approximately $0.6 million (approximately 4% of total company revenues) in the first quarter of fiscal 1997. Of the total $8.3 million of revenues from telephone companies (approximately $3.7 million or 17% of total company revenues) was generated from work orders issued under contracts with GTE Media Ventures, a part of GTE Corporation. 8 The Company believes that as a result of the Telecommunications Act of 1996, certain telephone companies have increased their capital expenditures for video systems, and the Company has aggressively marketed its services to these companies. The first quarter of fiscal 1998 included telephone company revenues of approximately $1.1 million via a contract that was terminated in June 1997, due to the customer's decision to stop deployment of its hardwire cable system. Gross profit for the first quarter of fiscal 1998 was $8,302,042, or 38.3% of revenues, as compared to $4,499,776, or 33.3% of revenues, the first quarter of fiscal 1997. The increase in gross margin is due primarily to a decrease in cabling materials expense (included in cost of sales) as a percent of total company revenues. The majority of the Company's commercial network cabling contracts are turnkey contracts, in which the Company provides both the labor and materials necessary for the network installation. These cabling materials, which are billed at near cost, comprised approximately 8% of total company revenues in the first quarter of fiscal 1998 versus approximately 15% in the comparable period last year. The percentage decline in cabling materials is primarily due to strong first quarter fiscal 1998 labor only revenues derived from telephone companies. The increase in gross margin is also a result of subcontractor production costs, which decreased as a percent of labor cabling revenues in the first quarter of fiscal 1998 compared to the corresponding period last year. Contract and project subcontractor costs are dependent upon a number of factors, including pricing for the Company's services, the level of productivity, competitive factors in the local market, and other items. SELLING, GENERAL AND ADMINISTRATIVE Selling, general, and administrative expenses for the first quarter of fiscal 1998 were $6,136,163 or 28.3% of revenues as compared to $4,004,152 or 29.6% of revenues for fiscal 1997. The Company's selling, general and administrative cost structure, which consists primarily of field employee wages and payroll costs, is maintained at levels necessary to adequately support both anticipated near term revenues and projected longer term revenues. These anticipated revenue levels and associated cost structures may vary among the Company's regional field offices and geographic market areas. The dollar increase in selling, general, and administrative expenses for the first quarter of fiscal 1998 is primarily due to increased employee wages and associated costs incurred to support both current period revenues and anticipated future revenues. INTEREST EXPENSE Interest expense was $165,051 or 0.8% of revenues for the first quarter of fiscal 1998 as compared to $127,632 or 0.9% of revenues for the first quarter of fiscal 1997. The dollar increase in interest expense is primarily due to increased borrowings to finance accounts receivable and work-in-process. LIQUIDITY AND CAPITAL RESOURCES GENERAL. Historically, the Company's principal sources of liquidity have come from operating cash flow and credit arrangements. The Company's primary requirements for working capital are to finance accounts receivable, work-in-process and capital expenditures. Pursuant to a typical construction, MDU (multiple dwelling unit), or LAN cabling contract, work performed by the Company is generally not billed to a customer until various stages in a project are complete or until the entire project is complete. Because the Company pays its suppliers and subcontractors on a current basis, to the extent that trade payables exceed customer accounts paid at any given time, the Company draws on its revolving credit note to finance its work-in-process until project work is billed to and paid by the customer. 9 Combined accounts receivable and work-in-process at June 29, 1997 totaled $19,346,655 compared to $17,853,591 at March 30, 1997, an increase of $1,493,064 or 8%. This increase is due primarily to the record level of revenues that the Company recorded during the fiscal 1998 first quarter which ended June 29, 1997. The Company anticipates that it will continue to receive collections of its accounts receivable in the ordinary course of business in sufficient amounts to permit it to comply with all covenants and terms of its revolving credit note. There is no assurance, however, that the Company will be able to collect all or substantially all of its accounts receivable outstanding at any time, although the Company believes it has adequately provided for potential losses through its allowance for doubtful accounts. The Company's failure to collect substantially all of its accounts receivable and work-in-process would have an adverse impact on its working capital and could adversely affect its results of operations. Capital requirements are dependent upon a number of factors, including the Company's revenues, level of operations, and the type of contracts and work that the Company performs. Due to the fact that the Company generally has no extended commitments from its customers, it is difficult to forecast longer term revenues and associated capital expenditure and operating cash requirements. The Company reviews credit arrangements with its commercial bank annually. As of June 29, 1997, the Company had available $4,250,000 under its revolving credit note versus $3,000,000 available at March 30, 1997, an increase of $1,250,000 in available funds. The Company does not anticipate difficulties in obtaining additional credit from its commercial bank should the need arise. The Company will also periodically examine financing capital needs through the issuance of additional common stock. Management believes that current and possible additional credit from its commercial bank, cash flow from operations, and funds which may be obtained from the issuance of common stock should provide sufficient capital to meet the reasonably foreseeable business needs of the Company. CURRENT CREDIT ARRANGEMENTS. Under a loan agreement with its commercial bank that was amended September 27, 1996, the Company has a $12,000,000 unsecured revolving credit note which matures September 30, 1998. Interest on the note is prime minus 1% and is payable monthly, and there is a commitment fee of 1/4% on any unused portion of the note. Borrowings under the revolving credit note were $7,750,000 at June 29, 1997. The loan agreement limits the Company's ability to create or incur liens on its assets, to incur additional indebtedness, to guarantee the indebtedness of others and to make loans or advances. Additionally, the agreement restricts the Company from entering into merger or acquisition transactions or transactions involving the sale of substantially all of its assets without the prior consent of the bank. The loan agreement also requires the Company to meet certain financial tests. CASH FLOW FROM OPERATING ACTIVITIES. For the first three months of fiscal 1998, net cash provided by operating activities was $2,129,529. This was due primarily to the Company's net income, depreciation and amortization, and income taxes payable which combined totaled $2,443,998. These items were somewhat negated by increases in accounts receivable and work-in-process that were not offset by corresponding increases in trade accounts payable and liabilities to subcontractors. The Company is limited in its ability to offset increases in accounts receivable and work-in-process through increases in accounts payable or liabilities to subcontractors. CASH FLOW FROM INVESTING ACTIVITIES. Net cash used in investing activities for the first three months of fiscal 1998 totaled $829,672 versus $569,856 for the corresponding period last year. Cash used in investing activities is primarily a result of the purchase of property and equipment, which totaled $1,004,126 (4.6% of revenues) for the fiscal 1998 first quarter versus $609,169 (4.5% of revenues) for the comparable period last year. 10 SEASONALITY AND VARIABILITY IN QUARTERLY RESULTS The Company's quarterly revenues and associated operating results have in the past, and may in the future, vary depending upon a number of factors. The Company has no long-term contractual commitments to provide its services. The contractual commitments which do exist generally can be terminated on 30 days notice. These contractual commitments do not involve a firm backlog of committed work because the nature of the Company's contracts with MSOs, CLECs, Telcos and DBS providers produce daily work orders only on a project-by-project basis which must be funded by an approved purchase order. In addition, network cabling services are generally nonrecurring in nature and are contracted on a project-by-project basis. Therefore, the amount of work performed at any given time and the general mix of customers for which work is being performed can vary significantly. The Company's operations historically have also been influenced by the budget cycles of the Company's customers. Many of the Company's cable television customers utilize a calendar year budget cycle, funded with quarterly purchase authorizations, which in certain fiscal years has resulted in a lack of availability of funds in the Company's third fiscal quarter and has delayed work authorizations in the Company's fourth fiscal quarter. Consolidation within the telecommunications industry may also delay or depress capital spending, as companies assess their new business plans and strategies and focus on administrative and operational issues associated with their acquisitions or alliances. Telecommunication providers are also subject to actual and potential local, state, and federal regulations that influence the availability of work for which the Company may compete. For example, the Company believes that uncertainty regarding pending federal telecommunications legislation decreased capital spending by many of its customers during the 1996 fiscal year. Weather may affect operating results due to the fact that construction cabling services are performed outdoors. Weather can also impact the Company's premises wiring cabling services due to the limited and lost production associated with poor driving conditions and generally difficult working environments. Operating results may also be affected by the capital spending patterns of the Company's customers and by the success of various technologies and business strategies employed by them. For the first quarter of fiscal 1998, the Company recorded approximately $8.3 million in revenues (38% of total company revenues) from telephone companies that were investing in relatively new markets by building or expanding broadband or wireless video systems. Of the total $8.3 million of revenues from telephone companies (approximately $3.7 million or 17% of total company revenues) was generated from work orders issued under contracts with GTE Media Ventures, a part of GTE Corporation. The amount of future capital allocated by these companies to their video programs is largely contingent upon the financial success of these programs. The Company's operating profitability and capacity to increase revenues is also largely dependent upon its ability to locate and attract qualified field managers, project managers, and technical production personnel. Other factors that may affect the Company's operating results include the size and timing of significant projects, and the gain or loss of a significant contract or customer. INFLATION Historically, inflation has not been a significant factor to the Company as labor is the primary cost of operations and its contracts are typically short-term in nature. On an ongoing basis, the Company attempts to minimize any effects of inflation on its operating results by controlling operating costs and, whenever possible, seeking to insure that selling prices reflect increases in costs due to inflation. ENVIRONMENTAL MATTERS The Company anticipates that its compliance with various laws and regulations relating to the protection of the environment will not have a material effect on its capital expenditures, future earnings or competitive position. 11 AMERILINK CORPORATION PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. NOT APPLICABLE Item 2. CHANGE IN SECURITIES. NOT APPLICABLE Item 3. DEFAULTS UPON SENIOR SECURITIES. NOT APPLICABLE Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. NOT APPLICABLE Item 5. OTHER INFORMATION. NOT APPLICABLE Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Exhibit No. Description ----------- ----------- 27 Financial Data Schedule filed herewith as part of this report on Form 10-Q. (b) No reports on Form 8-K have been filed during the quarter ended June 29, 1997. 12 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. AMERILINK CORPORATION (Registrant) Date: August 11, 1997 By:/s/Larry R. Linhart ------------------------------- Larry R. Linhart Chief Executive Officer President Date: August 11, 1997 By:/s/James W. Brittan ------------------------------- James W. Brittan Vice President of Finance (Principal Financial and Accounting Officer) 13 EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF JUNE 29, 1997 AND THE STATEMENT OF INCOME FOR THE THIRTEEN WEEKS ENDED JUNE 29, 1997 OF AMERILINK CORPORATION. 3-MOS MAR-29-1998 MAR-31-1997 JUN-29-1997 101,062 0 13,047,095 252,000 1,345,345 21,376,849 6,111,356 0 27,675,604 7,942,364 7,750,000 0 0 8,084,645 3,898,595 27,675,604 21,651,070 21,651,070 13,349,028 19,485,191 0 0 165,051 2,000,828 820,000 1,180,828 0 0 0 1,180,828 0.33 0.33 PROPERTY, PLANT, AND EQUIPMENT IS REPORTED NET OF ACCUMULATED DEPRECIATION ON THE CONSOLIDATED BALANCE SHEET.
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