UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
July 18, 1997
(Date of earliest event reported)
XLConnect Solutions, Inc.
-------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 0-28892 23-2832796
(State or other jurisdiction of Commission (IRS Employer
incorporation or organization) file number Identification No.)
411 Eagleview Boulevard, Exton, PA 19341
(Address of principal executive offices) (Zip Code)
(610) 458-5500
(Registrant's telephone number, including area code)
<PAGE>
Item 7. Financial Statements and Exhibits
(b) PRO FORMA FINANCIAL STATEMENTS
The following unaudited Pro Forma Balance Sheet of XLConnect Solutions,
Inc. (the "Company") as of June 30, 1997, and the Pro Forma Statements of
Income for the six months ended June 30, 1997 and the year ended December
31, 1996, are presented to give effect to the sale of specified "Power-by-
the-Hour" managed service contracts and related assets consisting
principally of accounts receivable and fixed assets (the "Transaction").
Historical financial data used to prepare the pro forma financial
statements were derived from the audited consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 and the unaudited consolidated financial statements
included in theCompany's quarterly report on Form 10-Q for the quarter
ended June 30, 1997. These pro forma financial statements should be read
in conjunction with such historical financial statements.
The pro forma adjustments reflected herein are based on available
information and certain assumptions that the Company's management believes
are reasonable. Pro forma adjustments made in the Pro Forma Balance Sheet
assume that the Transaction was consummated on June 30, 1997 and do not
reflect the impact of the operatingresults of the business to be sold
pursuant thereto or changes in balance sheet amounts subsequent to June 30,
1997. The pro forma adjustments to the Pro Forma Statements of Income for
the six months ended June 30, 1997 and the year ended December 31, 1996
assume that the Transaction was consummated on January 1, 1997 and January
1, 1996, respectively.
The Pro Forma Balance Sheet and Pro Forma Statements of Income are based on
assumptions and approximations and, therefore, do not reflect in precise
numerical terms the impact of the transactions on the historical financial
statements. In addition, such pro forma financial statements should not be
used as a basis for forecasting future operations of the Company.
<PAGE>
<TABLE>
<CAPTION>
XLConnect Solutions, Inc. and Subsidiaries
Pro forma Consolidated Balance Sheet
As of June 30, 1997
(In thousands)
(unaudited)
As Pro forma
Reported Adjustments Pro forma
----------- -------------- -----------
ASSETS
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $11,941 $3,465(A,E) $15,406
Trade accounts receivable, net 30,204 (4,672) (B) 25,532
Deferred tax asset 670 - 670
Prepayments and other current assets 1,497 (12) (B) 1,485
----------- ------------- -----------
Total current assets 44,312 (1,219) 43,093
Property and equipment, net of accumulated depreciation 4,763 (77) (B) 4,686
Intangible assets, net of accumulated amortization 26,281 (1,483) (B) 24,798
Other long-term assets 1,278 - 1,278
----------- ------------- -----------
Total assets $76,634 $(2,779) $73,855
=========== ============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 50 $ - $ 50
Accounts payable 1,389 - 1,389
Accrued expenses 8,130 2,920 (C) 11,050
Deferred income and other 1,231 - 1,231
Due to Parent 6,046 (6,046) (E) -
----------- ------------- -----------
Total current liabilities 16,846 (3,126) 13,720
Long-term liabilities:
Long-term debt 5,081 - 5,081
----------- ------------- -----------
Total liabilities 21,927 (3,126) 18,801
----------- ------------- -----------
Commitments and contingencies
Shareholders' equity:
Preferred stock - - -
Common stock 166 - 166
Additional paid-in capital 50,437 - 50,437
Retained earnings 4,104 347 (D) 4,451
----------- ------------- ----------
Total shareholders' equity 54,707 347 55,054
----------- ------------- ----------
Total liabilities and shareholders' equity $76,634 $(2,779) $73,855
=========== ============= ==========
</TABLE>
See accompanying notes to unaudited Pro Forma Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
XLConnect Solutions, Inc and Subsidiaries
Pro Forma Consolidated Statements of Income
(In thousands, except per-share data)
(unaudited)
Six Months Ended June 30, 1997 Year Ended December 31, 1996
Deduct Deduct
As Pro forma As Pro forma
Reported Adjustments Pro forma Reported Adjustments Pro forma
---------- ----------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenues $69,622 $9,928(F) $59,694 $114,892 $17,645(F) $97,247
Cost of revenues 48,118 9,389(F) 38,729 81,077 14,533(F) 66,544
---------- ----------- --------- ---------- ----------- ---------
Gross profit 21,504 539 20,965 33,815 3,112 30,703
Operating expenses:
Selling and marketing 6,072 26(F) 6,046 8,176 177(F) 7,999
General and administrative 9,369 478(F) 8,891 12,736 1,351(F) 11,385
Depreciation and amortization 2,216 71(F) 2,145 4,782 218(F) 4,564
---------- ----------- --------- ---------- ----------- ---------
17,657 575 17,082 25,694 1,746 23,948
---------- ----------- --------- ---------- ----------- ---------
Income from operations 3,847 (36) 3,883 8,121 1,366 6,755
Other expense (income) (103) - (103) 3,596 522(F) 3,074
---------- ----------- --------- ---------- ----------- ---------
Income before income taxes 3,950 (36) 3,986 4,525 844 3,681
---------- ----------- --------- ---------- ----------- ---------
Provision for income taxes 1,892 2(F) 1,890 2,479 370(F) 2,109
---------- ----------- --------- ---------- ----------- ---------
Net income $2,058 $ (38)(G) $2,096 $ 2,046 $ 474(G) $ 1,572
========== =========== ========= ========== =========== =========
Earnings per common share:
Net income per common share $0.12 $ 0.12 $ 0.14 $ 0.11
========== ========= ========== =========
Weighted average number
of common shares 16,799 16,799 14,448 14,448
========== ========= ========== =========
</TABLE>
See accompanying notes to unaudited Pro Forma Financial Statements.
<PAGE>
XLConnect Solutions, Inc. and Subsidiaries
Notes to the Pro Forma Consolidated Financial Statements
(In thousands)
(unaudited)
Notes to the Pro Forma Consolidated Balance Sheet
(A) Represents a purchase price of $9,511 based on the Balance Sheet as
of June 30, 1997.
(B) Represents the elimination of assets and liabilities as a result of
the Transaction.
(C) Includes the accrual of transaction costs approximating $160 and
other various accruals of approximately $2,760 relative to the
Transaction.
(D) Represents a pre-tax gain of approximately $1,565, plus taxes of
approximately $1,220. The Pro Forma Balance Sheet assumes that the
Transaction was consummated on June 30, 1997, and therefore does not
give effect to the operating results, subsequent to that date, of
the business to be sold pursuant thereto.
(E) Represents proceeds from the sale used to pay off the Company's
outstanding payable to its parent.
Notes to the Pro Forma Consolidated Statements of Income
(F) Represents the elimination of revenues and expenses related to the
contracts sold pursuant to the Transaction.
(G) The accompanying Pro Forma Statements of Income do not include any
non-recurring effects directly attributable to the Transaction. The
Company will provide a reserve for all expected costs associated
with the Transaction. Such costs are expected to include
professional fees to attorneys, accountants and advisors, printing
charges and filing fees. The amount of such costs is estimated to
total approximately $160 and is included as a decrease in the after-
tax income reflected in retained earnings on the Pro Forma
Consolidated Balance Sheet (see Note D to the Notes to the Pro Forma
Consolidated Balance Sheet).
<PAGE>
SIGNATURE
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 hereunto duly authorized.
XLCONNECT SOLUTIONS, INC.
Date: September 30, 1997 By: /s/ Stephanie D. Cohen
--------------------------------
Stephanie D. Cohen
Executive Vice President and
Chief Financial Officer
