<PAGE>
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
May 29, 1998
---------------------------------
Date of Report
(Date of earliest event reported)
WESTOWER CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Washington 1-132963 91-1825860
------------------------------- --------------------- -------------------
(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation) Identification No.)
7001 NE 40th Avenue
Vancouver, Washington 98661
- --------------------------------------------------------------------------------
(Address of principal executive offices, including zip code)
(360) 750-9355
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Page 1 of __
Exhibit Index appears on page 26
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 29, 1998, the Company entered into a Share Exchange Agreement with
MJA Communications Corp. ("MJA") and MJA's shareholders, Michael J. Anderson and
Constance S. Anderson and Fred Faulkner, III (collectively, the "Shareholders"),
pursuant to which the Company agreed to issue an aggregate amount of 397,023
shares of its Common Stock, at the time valued at $10,000,000, to the
Shareholders in exchange for all of the outstanding shares of MJA. The amount
of consideration was determined through arm's length negotiation which resulted
in a purchase price equal to 8.3 times MJA's after-tax earnings. Additionally,
the Company entered into an Employment Agreement with Mr. Anderson. As
consideration for Mr. Anderson's Employment Agreement, in addition to cash
compensation and bonuses, the Company agreed (1) to issue to him options to
purchase 10,000 shares of the Company's Common Stock, (2) to set aside 100,000
additional options to be granted to MJA employees at Mr. Anderson's discretion,
and (3) to issue 100 shares of Common Stock to each MJA employee continuously
employed by MJA for at least one year as of May 1, 1998. The Company also
entered into a Registration Rights Agreement with the Shareholders.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
<PAGE>
MJA Communications Corp.
Financial Statements
December 31, 1997 and 1996
TABLE OF CONTENTS
Independent Auditors' Report................................... 4
FINANCIAL STATEMENTS
Balance Sheet.................................................. 5
Statement of Income and Retained Earnings...................... 7
Statement of Cash Flows........................................ 8
Notes to Financial Statements.................................. 10-14
SUPPLEMENTARY INFORMATION
Independent Auditors' Report on Supplementary Information...... 16
Schedule of Uncompleted Contracts.............................. 17
Schedule of Completed Contracts (Unaudited).................... 18
Analysis of Gross Profit, Expenses and Net Income (Unaudited).. 20
Analysis of Expenses and Net Income as a Percentage
of Revenues (Unaudited)....................................... 21
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of
MJA Communications Corp.
Palm Beach Gardens, Florida
We have audited the accompanying balance sheet of MJA Communications Corp.
as of December 31, 1997 and 1996, and the related statements of income and
retained earnings, and cash flows for the years then ended. 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 audit.
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 misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts 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 MJA Communications
Corp. as of December 31, 1997 and 1996, and the results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.
As discussed in Note 4 to the financial statements, management of the
Company discovered an error resulting in a stockholder loan to the Company
in 1997 being previously reported as additional paid-in capital.
Accordingly, the 1997 financial statements have been restated to correct
the error.
LAMN, KRIELOW, DYTRYCH & DARLING
Certified Public Accountants
February 11, 1998, except for Note 4, as to which the date is August 12,
1998
<PAGE>
MJA Communications Corp.
Balance Sheet
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 35,350 $ 6,368,090
Contract receivables 2,540,420 1,953,889
Costs and estimated earnings in excess
of billings on uncompleted contracts 742,766 422,870
Other receivables 3,124 14,825
Due from affiliates 634,731 -0-
----------- -----------
Total current assets 3,956,391 8,759,674
----------- -----------
Property and Equipment
Furniture and office equipment 256,556 148,024
Building and improvements 37,779 9,421
----------- -----------
294,335 157,445
Less accumulated depreciation (96,438) (36,875)
----------- -----------
Net property and equipment 197,897 120,570
----------- -----------
Other Assets 12,246 1,635
----------- -----------
Total assets $ 4,166,534 $ 8,881,879
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Liabilities
Current Liabilities
Accounts payable and accrued expenses $ 1,824,343 $ 3,134,751
Billings in excess of costs and estimated
earnings on uncompleted contracts 1,386,094 3,518,651
Stockholder loan 1,000,000 -0-
----------- -----------
Total current liabilities 4,210,437 6,653,402
----------- -----------
Stockholder's Equity
Common stock, $1 par value, 100 shares
authorized, issued and outstanding 100 100
Retained earnings (deficit) (44,003) 2,228,377
----------- -----------
Total stockholder's equity (deficit) (43,903) 2,228,477
----------- -----------
Total liabilities and
stockholder's equity $ 4,166,534 $ 8,881,879
=========== ===========
</TABLE>
Read the accompanying notes and the independent auditors' report.
<PAGE>
MJA COMMUNICATIONS CORP.
Statement of Income and Retained Earnings
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
<S> <C> <C>
CONSTRUCTION REVENUE $13,928,655 $26,164,446
Cost of construction and services 10,187,376 19,778,270
----------- -----------
GROSS PROFIT 3,741,279 6,386,176
General and administrative expenses 3,256,573 3,836,380
----------- -----------
INCOME BEFORE OTHER INCOME AND EXPENSE 484,706 2,549,796
Other income and expense 42,914 66,711
----------- -----------
NET INCOME 527,620 2,616,507
Retained earnings (deficit)-
January 1, 1997 and 1996 2,228,377 (3,488)
Stockholder distribution (2,800,000) (384,642)
----------- -----------
RETAINED EARNINGS (DEFICIT) -
DECEMBER 31, 1997 AND 1996 $ (44,003) $ 2,228,377
=========== ===========
</TABLE>
Read the accompanying notes and the independent auditors' report.
<PAGE>
MJA Communications Corp.
Statement of Cash Flows
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Operating Activities
Cash received from clients $10,901,372 $28,496,343
Cash paid to subcontractors,
suppliers, and employees (14,705,405) (21,516,030)
Interest income 48,455 71,026
Interest paid (5,541) (3,246)
----------- -----------
Net cash provided (used) by
operating activities (3,761,119) 7,048,093
----------- -----------
Investing Activities
Proceeds from sale of property and equipment -0- 3,492
Purchase of property and equipment (136,890) (119,123)
----------- -----------
Net cash used by investing activities (136,890) (115,631)
----------- -----------
Financing Activities
Distributions to stockholder (2,800,000) (384,642)
Stockholder loan 1,000,000 -0-
Inter-company borrowings (634,731) (242,196)
----------- -----------
Net cash used by financing activities (2,434,731) (626,838)
----------- -----------
Net increase (decrease)
in cash and cash equivalents (6,332,740) 6,305,624
Cash and cash equivalents -
January 1, 1997 and 1996 6,368,090 62,466
----------- -----------
Cash and cash equivalents -
December 31, 1997 and 1996 $ 35,350 $ 6,368,090
=========== ===========
</TABLE>
<PAGE>
Reconciliation of net income to net cash provided (used) by
operating activities:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Net income $ 527,620 $ 2,616,507
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation and amortization 59,563 33,152
(Gain) loss on disposal of property and equipment -0- 1,069
(Increase) decrease in:
Contract receivables (586,531) 508,557
Costs and estimated earnings in excess of
billings on uncompleted contracts (319,896) (276,693)
Other receivables 11,701 (14,725)
Other assets (10,611) (1,635)
Increase (decrease) in:
Accounts payable and accrued expenses (1,310,408) 2,081,828
Billings in excess of costs and estimated
earnings on uncompleted contracts (2,132,557) 2,100,033
----------- -----------
Net cash provided (used) by
operating activities $(3,761,119) $ 7,048,093
=========== ===========
</TABLE>
Read the accompanying notes and the independent auditors' report.
<PAGE>
MJA COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
NATURE OF OPERATIONS
MJA Communications Corp. (the Company) is a general contracting company and
is wholly owned by a sole stockholder. The Company grants credit to its
customers. The Company was incorporated in Florida in May 1995 and
services commercial communication accounts in Florida, Georgia, North
Carolina and South Carolina.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
POLICIES
This summary of significant accounting policies of the Company is presented
to assist in understanding the financial statements. The financial
statements and notes are representations of the management, who are
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been applied
on a consistent basis.
REVENUE AND COST RECOGNITION
Revenues from fixed-price and modified fixed-price construction contracts
are recognized on the percentage-of-completion method, measured by the
actual construction costs incurred to date to the estimated total
construction costs for each contract. This method is used because
management considers expended construction costs to be the best available
measure of progress on these contracts. Revenues from cost-plus-fee
contracts are recognized on the basis of costs incurred during the period
plus the fee earned, measured by the cost-to-cost method. Incentive
bonuses are recognized in the period in which they are earned.
Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as indirect labor,
supplies, tools, and repairs. Selling, general, and administrative costs
are charged to expense as incurred. Provisions for estimated losses on
uncompleted contracts are made in the period in which such losses are
determined. Changes in job performance, job conditions, and estimated
profitability, including those arising from contract penalty provisions,
and final contract settlements may result in revisions to costs and income
and are recognized in the period in which the revisions are determined.
<PAGE>
MJA COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
REVENUE AND COST RECOGNITION (CONTINUED)
The asset, "Costs and estimated earnings in excess of billings on
uncompleted contracts," represents revenues earned in excess of amounts
billed. The liability "Billings in excess of costs and estimated earnings
on uncompleted contracts," represents billings in excess of revenues
recognized.
The majority of all construction contracts are completed within a one-year
period.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
the straight-line and accelerated cost recovery methods over the estimated
useful lives of the assets.
Expenditures for maintenance, repairs and small tools used in the ordinary
course of operations are expensed as incurred. Major improvements
increasing the estimated useful life of an asset are capitalized.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
INCOME TAXES
The Company has made an election to be treated as a Small Business
Corporation under Subchapter S of the Internal Revenue Code, whereby
profits and losses are included directly on the stockholder's personal
income tax return.
The Company reports revenues from construction contracts on the percentage-
of-completion method for both financial statement and income tax purposes.
STATEMENT OF CASH FLOWS
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
<PAGE>
MJA COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
2. CONCENTRATION OF CREDIT RISK:
The Company's primary customers consist of three communications developers.
At December 31, 1997 and 1996, 93% and 98%, respectively, of the accounts
receivable outstanding were with these developers. The Company maintains
its cash balances at several banks in Florida, Georgia and North Carolina.
Accounts at these banks are insured by the Federal Deposit Insurance
Corporation up to $100,000.
3. CONTRACT RECEIVABLES:
Contract receivables consists of:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Completed contracts $ 117,371 $ 625,538
Contracts in process 2,322,055 1,099,134
Retentions withheld until completion 100,994 229,217
---------- ----------
$2,540,420 $1,953,889
========== ==========
</TABLE>
Management considers contract receivables to be fully collectible.
4. CORRECTION OF AN ERROR:
Management of the Company discovered an error resulting in a stockholder
loan for $1,000,000 to the Company in 1997 being previously recorded as
additional paid-in capital. Accordingly, the 1997 financial statements
have been restated to adjust additional paid-in capital and stockholder
loans to correct the error.
<PAGE>
MJA COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
5. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS:
<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
<S> <C> <C>
Costs incurred on uncompleted contracts $ 6,147,321 $ 10,121,726
Estimated earnings 1,375,964 2,588,716
----------- ------------
Earned contract price 7,523,285 12,710,442
Unallocated costs 240,775 -0-
Less:
Billings to date (8,407,388) (15,806,223)
----------- ------------
$ (643,328) $ (3,095,781)
=========== ============
Included in the accompanying balance sheet under
the following captions:
Current Asset
-------------
Costs and estimated earnings in excess of billings
on uncompleted contracts $ 742,766 $ 422,870
Current Liability
-----------------
Billings in excess of costs and estimated earnings
on uncompleted contracts (1,386,094) (3,518,651)
----------- ------------
$ (643,328) $ (3,095,781)
=========== ============
</TABLE>
6. BACKLOG:
The following schedule shows a reconciliation of backlog representing the
amount of revenue the Company expects to realize from work to be performed
on uncompleted contracts in progress at December 31, 1997:
<TABLE>
<S> <C>
Contract balance, December 31, 1997 $12,753,462
Less: contract revenue earned, 1997 (7,523,285)
-----------
Backlog balance, December 31, 1997 $ 5,230,177
===========
</TABLE>
The remaining contract balance to be billed in 1998 for contracts in
progress as of December 31, 1997 is $4,346,074.
<PAGE>
MJA COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
7. LEASE COMMITMENTS:
The Company leases vehicles with terms ranging from twenty four to thirty
six months, with no renewal options and office equipment and office space
with terms ranging from twelve to thirty six months.
Minimum annual rentals under long-term non-cancelable operating leases for
subsequent years are as follows:
<TABLE>
<S> <C>
1998 $247,992
1999 95,875
2000 7,196
--------
Total minimum payments required $351,063
========
</TABLE>
Lease expense for the years ended December 31, 1997 and 1996 is
approximately $233,100 and $196,900, respectively.
8. LINE OF CREDIT:
The Company is a guarantor on an affiliated company's line of credit with a
bank. The line of credit is for $1,500,000 and has an outstanding balance
of $1,000,000 at December 31, 1997. Interest accrues at prime plus 1/2% and
is payable monthly. Unpaid principal balance is due by June 1998. The
line is secured by a life insurance policy of $1,000,000 on the life of the
sole stockholder of both companies.
The Company has a line of credit with a bank. The line of credit is for
$1,000,000 and has no outstanding balance at December 31, 1997. Interest
is at the prime rate. The line is secured by a personal brokerage account
of the sole stockholder who guarantees to have a minimum fair market value
balance of $425,000 during the period of the loan.
9. RELATED PARTY TRANSACTIONS:
Insurance coverage for the Company is provided by a policy paid for by M.
J. Anderson, Inc. which is owned by the same stockholder.
M. J. Anderson, Inc. provided management and supervision services to the
Company, and billed $623,287 and $1,974,358 for the years ended December
31, 1997 and 1996, respectively.
The stockholder of the Company loaned $1,000,000 to the Company. The loan
was paid by the Company in 1998.
<PAGE>
SUPPLEMENTARY INFORMATION
<PAGE>
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION
To the Board of Directors and Stockholder of
MJA Communications Corp.
Palm Beach Gardens, Florida
Our report on our audits of the financial statements of MJA Communications
Corp. for 1997 and 1996 appears on page one. Those audits were made for
the purpose of forming an opinion on the financial statements taken as a
whole.
The information included in the accompanying schedules of uncompleted
contracts and completed contracts (unaudited), and analysis of gross
profit, expenses and net income (unaudited) and analysis of expenses and
net income as a percentage of revenues (unaudited) is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such information, except for that portion marked
"unaudited", on which we express no opinion, has been subjected to the
auditing procedures applied in the audit of the financial statements, and,
in our opinion, is fairly stated in all material respects in relation to
the financial statements taken as a whole.
LAMN, KRIELOW, DYTRYCH & DARLING
Certified Public Accountants
February 11, 1998, except for Note 4, as to which the date is August 12,
1998
<PAGE>
MJA COMMUNICATIONS CORP.
SCHEDULE OF UNCOMPLETED CONTRACTS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Estimated Earned
Contract Total Cost Contract Total Cost
Job# Price of Job Price to date
- -------------- ----------------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
AAT465 $ 202,032 $ 171,884 $ 168,941 $ 143,731
AAT635 146,830 128,802 146,515 128,526
CAT116 146,677 119,401 131,911 107,381
CAT136 119,462 104,092 118,797 103,513
CAT612 102,638 77,075 101,959 76,565
CAT619 117,674 100,696 113,173 96,844
CAT620 112,304 94,243 111,503 93,571
CAT621 162,871 141,050 162,184 140,455
CAT624 102,422 86,945 102,422 86,945
CAT641 143,752 114,356 137,252 109,185
CAT644 228,424 202,063 228,267 201,924
CAT646 167,244 147,886 209 185
CAT674 133,393 112,889 133,188 112,716
CAT676 138,321 123,665 137,700 123,110
CAT701 109,245 98,677 108,656 98,145
CAT702 114,758 94,654 114,165 94,165
CAT722 194,019 155,443 178,997 143,408
CAT723 128,293 108,293 1,110 937
CAT724 135,923 109,428 127,853 102,931
CAT726 107,459 89,195 89,061 73,924
CPA689 226,109 156,520 223,394 154,641
CST774 109,708 94,708 1,711 1,477
OBM701 126,975 116,354 126,975 116,354
PSS705 102,613 85,222 70,935 58,913
PSS731 113,011 102,755 -0- -0-
Misc* 9,261,305 7,604,197 4,686,407 3,777,775
Unallocated -0- -0- -0- -0-
costs ----------- ----------- ---------- ----------
$12,753,462 $10,540,493 $7,523,285 $6,147,321
=========== =========== ========== ==========
<CAPTION>
Costs and Billings in
Estimated Excess of
Earned Amount Earnings in Costs and
Gross Billed Excess of Estimated
Job# Profit to Date Billings Earnings
- -------------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
AAT465 $ 25,210 $ 202,032 $ -0- $ (33,091)
AAT635 17,989 146,830 -0- (315)
CAT116 24,530 132,493 -0- (582)
CAT136 15,284 119,462 -0- (665)
CAT612 25,394 102,638 -0- (679)
CAT619 16,329 117,674 -0- (4,501)
CAT620 17,932 112,304 -0- (801)
CAT621 21,729 162,871 -0- (687)
CAT624 15,477 102,422 -0- -0-
CAT641 28,067 134,392 2,860 -0-
CAT644 26,343 228,424 -0- (157)
CAT646 24 83,622 -0- (83,413)
CAT674 20,472 133,393 -0- (205)
CAT676 14,590 137,521 179 -0-
CAT701 10,511 109,245 -0- (589)
CAT702 20,000 114,758 -0- (593)
CAT722 35,589 193,119 -0- (14,122)
CAT723 173 64,147 -0- (63,037)
CAT724 24,922 121,011 6,842 -0-
CAT726 15,137 107,459 -0- (18,398)
CPA689 68,753 178,927 44,467 -0-
CST774 234 -0- 1,711 -0-
OBM701 10,621 126,975 -0- -0-
PSS705 12,022 76,646 -0- (5,711)
PSS731 -0- -0- -0- -0-
Misc* 908,632 5,399,023 445,932 (1,158,548)
Unallocated -0- -0- 240,775 -0-
costs ---------- ---------- -------- -----------
$1,375,964 $8,407,388 $742,766 $(1,386,094)
========== ========== ======== ===========
</TABLE>
*Contracts under $100,000
Read the accompanying notes and the independent auditors' report.
<PAGE>
MJA COMMUNICATIONS CORP.
SCHEDULE OF COMPLETED CONTRACTS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Earned
Contract Total Cost Gross
Job # Price to Date Profit
- -------------- ---------------------- ----------------------- ------------------------
<S> <C> <C> <C>
AAT116 $105,816 $ 82,270 $23,546
AAT146 105,072 89,187 15,885
AAT156 120,563 102,124 18,439
AAT261 110,259 91,425 18,834
AAT366 107,594 91,320 16,274
AAT386 132,161 111,837 20,324
AAT426 100,411 84,070 16,341
AAT562 108,632 93,268 15,364
AAT563 149,967 129,743 20,224
AAT612 117,636 94,323 23,313
AAT617 146,114 110,476 35,638
AAT618 130,044 91,153 38,891
AAT620 115,176 70,712 44,464
AAT624 118,991 80,123 38,868
AAT625 157,170 135,093 22,077
AAT626 154,930 122,819 32,111
AAT636 142,929 66,298 76,631
AAT652 128,744 101,672 27,072
AAT658 121,359 102,374 18,985
AAT659 132,873 71,524 61,349
AAT662 131,735 107,079 24,656
AAT663 101,024 83,188 17,836
AAT684 109,635 92,484 17,151
CAT066 157,978 130,339 27,639
CAT076 108,143 91,591 16,552
CAT096 131,978 108,392 23,586
CAT616 110,087 94,702 15,385
CAT626 136,842 111,039 25,803
CAT630 104,986 89,079 15,907
CAT632 165,023 144,423 20,600
CAT647 104,879 85,385 19,494
CAT649 102,350 86,365 15,985
CAT650 122,266 98,633 23,633
CAT651 113,397 90,521 22,876
CAT656 105,376 89,750 15,626
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Earned
Contract Total Cost Gross
Job # Price to Date Profit
- -------------- ------------------- ------------------- --------------------
<S> <C> <C> <C>
CAT659 $ 126,411 $ 107,518 $ 18,893
CAT672 118,045 79,891 38,154
CAT675 126,284 109,406 16,878
CAT719 100,270 86,666 13,604
MC9514 790,713 500,707 290,006
OAT621 128,492 89,583 38,909
OAT628 139,877 102,228 37,649
OAT639 145,219 104,727 40,492
PAT601 245,319 171,549 73,770
PAT602 290,060 206,618 83,442
PAT606 240,471 155,206 85,265
PAT607 103,678 70,804 32,874
PAT608 111,404 68,475 42,929
PAT611 182,525 123,648 58,877
PAT612 120,345 83,081 37,264
PAT613 148,621 99,927 48,694
PAT617 315,335 229,802 85,533
PAT620 152,616 106,969 45,647
PAT627 138,595 102,460 36,135
PAT630 121,705 91,617 30,088
PAT631 115,377 84,468 30,909
PAT634 106,494 69,890 36,604
PAT637 157,996 100,786 57,210
PAT639 119,542 81,280 38,262
PAT642 131,901 87,017 44,884
PAT643 147,168 107,838 39,330
PAT657 129,754 84,609 45,145
PSS706 118,095 93,345 24,750
PUS601 169,757 134,679 35,078
PUS603 172,050 136,016 36,034
TAT601 928,467 832,366 96,101
Misc* 8,661,090 6,233,825 2,427,265
----------- ----------- ----------
$19,115,816 $14,161,782 $4,954,034
=========== =========== ==========
</TABLE>
*Contracts under $100,000
Read the accompanying notes and the independent auditors' report.
<PAGE>
MJA Communications Corp.
Analysis of Gross Profit, Expenses and Net Income (Unaudited)
For the years ended December 31, 1997, 1996 and 1995
Expenses
Gross and
Year Profit Other Income Net Income (loss)
- -------- ------------- -------------- -------------------
1995 $420,115 $423,603 ($3,488)
1996 $6,386,176 $3,769,669 $2,616,507
1997 $3,741,279 $3,213,659 $527,620
BAR GRAPH
Read the independent auditors' report on supplementary information.
<PAGE>
MJA Communications Corp.
Analysis of Expenses and Net Income as a
Percentage of Revenues (Unaudited)
For the year ended December 31, 1997
% of
Amount Net Sales
------------ -----------
Revenues $13,928,655 100.0%
Expenses:
Cost of revenues 10,187,376 73.1%
General & administrative 3,213,659 23.0%
------------ -----------
Net income $527,620 3.9%
============ ===========
PIE CHART
(73.1%) Cost of revenues
(3.9%) Net income
(23.0%) General & administrative
Read the independent auditors' report on supplementary information.
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION - The required pro forma financial
information is set forth below:
The unaudited pro forma condensed combined balance sheet at May 31, 1998
combines historical financial information as if the acquisition of MJA occurred
on May 31, 1998. The unaudited pro forma condensed combined statement of income
for the year ended February 28, 1998 and the three months ended May 31, 1998
combine historical statements of operations for the Company and MJA as if the
acquisition had occurred on March 1, 1997.
The unaudited pro forma condensed combined balance sheet at May 31, 1998
reflects the Company's historical balance sheet as of May 31, 1998 combined with
the historical balance sheet of MJA at May 31, 1998. The unaudited pro forma
condensed combined statement of income for the three months ended May 31, 1998
combines historical financial information of the Company for the three months
ended May 31, 1998 and MJA for the three months ended May 31, 1998. The
unaudited pro forma condensed combined statement of income for the year ended
February 28, 1998 combines historical financial information of the Company for
the year ended February 28, 1998 and MJA for the year ended December 31, 1997.
As the most recent fiscal year end of MJA differs from the Company's fiscal year
end by less than 93 days, no adjustments were made to MJA's statement of income
for the purpose of the pro forma presentation.
The unaudited pro forma condensed combined financial information reflects the
use of the pooling-of-interests method of accounting for the acquisition.
Management is evaluating the appropriateness of the use of the pooling-of-
interests method. If the purchase method were used, net income for the three
months ended May 31, 1998 would be $57,000 less, and the Company, for the year
ended February 28, 1998 and in subsequent years, would record amortization of
approximately $500,000 per year, representing twenty-year straight line
amortization of $10,000,000.
The pro forma financial statements are not necessarily indicative of the
financial position or results of operations which would actually have been
reported had the transaction been consummated on March 1, 1997 or which may be
reported in the future. Actual results for the three months ended May 31, 1998
have been reported on the Company's Form 10QSB filed on July 16, 1998.
The pro forma data should be read in conjunction with the notes to unaudited pro
forma condensed combined financial information and the historical financial
statements and notes thereto of MJA contained elsewhere herein.
<PAGE>
WESTOWER CORPORATION
PRO FORMA COMBINED CONDENSED BALANCE SHEET
MAY 31, 1998
<TABLE>
<CAPTION>
HISTORICAL
WESTOWER MJA PRO FORMA PRO FORMA
CORPORATION COMMUNICATIONS ADJUSTMENTS COMBINED
------------------------------------------ ----------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash 21,569,000 0 (44,000) 1 21,525,000
Contracts receivable, net 5,772,000 3,263,000 9,035,000
Costs and estimated earnings in excess of billings
on uncompleted contracts 1,161,000 488,000 1,649,000
Inventory 2,113,000 14,000 2,127,000
------------------------------------------ ----------
Total current assets 30,615,000 3,765,000 (44,000) 34,336,000
PROPERTY AND EQUIPMENT, net 4,043,000 195,000 4,238,000
GOODWILL 2,064,000 0 2,064,000
OTHER ASSETS 859,000 0 859,000
------------------------------------------ ----------
TOTAL ASSETS 37,581,000 3,960,000 (44,000) 41,497,000
========================================== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable 2,477,000 2,967,000 (10,000) 1 5,434,000
Other current liabilities 280,000 0 280,000
Billings in excess of costs and estimated earnings
on uncompleted contracts 346,000 1,002,000 1,348,000
Current portion of long term debt 343,000 0 343,000
Income taxes payable 1,816,000 0 1,816,000
Note payable 150,000 0 150,000
Deferred income taxes 534,000 0 534,000
------------------------------------------ ----------
Total current liabilities 5,946,000 3,969,000 (10,000) 9,905,000
LONG TERM DEBT, net of current portion 187,000 0 187,000
DEFERRED INCOME TAXES 48,000 0 48,000
SUBORDINATED CONVERTIBLE NOTES 15,000,000 0 15,000,000
------------------------------------------ ----------
Total liabilities 21,181,000 3,969,000 (10,000) 25,140,000
------------------------------------------ ----------
STOCKHOLDERS' EQUITY
Common stock 12,022,000 0 12,022,000
Foreign currency translation adjustment' (67,000) 0 (67,000)
Retained Earnings 4,445,000 (9,000) (34,000) 1 4,402,000
------------------------------------------ ----------
Total stockholders equity 16,400,000 (9,000) (34,000) 16,357,000
------------------------------------------ ----------
TOTAL LIABILIITES AND STOCKHOLDERS' EQUITY 37,581,000 3,960,000 (44,000) 41,497,000
========================================== ==========
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
May 31, 1998
1 Affect of pro forma adjustments to net income per condensed combined income
statement for the three months ended May 31, 1998
<PAGE>
WESTOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
HISTORICAL
WESTOWER MJA PRO FORMA PRO FORMA
CORPORATION COMMUNICATIONS ADJUSTMENTS COMBINED
------------------------------------------ ----------
<S> <C> <C> <C> <C>
CONTRACT REVENUES EARNED 23,183,000 13,929,000 37,112,000
COSTS OF REVENUES EARNED 17,287,000 10,187,000 27,474,000
------------------------------------------ ----------
Gross profit 5,896,000 3,742,000 0 9,638,000
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 1,916,000 3,257,000 (1,974,000) 1 3,399,000
150,000 2
50,000 3
------------------------------------------ ----------
OPERATING INCOME 3,980,000 485,000 1,774,000 6,239,000
OTHER INCOME(EXPENSE)
Gain on sale of assets 125,000 125,000
Interest income 65,000 43,000 108,000
Interest expense (87,000) (87,000)
------------------------------------------ ----------
103,000 43,000 0 146,000
------------------------------------------ ----------
INCOME BEFORE INCOME TAXES 4,083,000 528,000 1,774,000 6,385,000
INCOME TAXES 1,633,000 958,000 4 2,591,000
------------------------------------------ ----------
NET INCOME 2,450,000 528,000 816,000 3,794,000
========================================== ==========
Basic earnings per share 0.57 5,280.00 n/a 0.80
========================================== ==========
Diluted earnings per share 0.53 5,280.00 n/a 0.75
========================================== ==========
Shares of common stock used in
computing earnings per share:
Basic 4,323,000 100 396,900 5 4,720,000
========================================== ==========
Diluted 4,654,000 100 396,900 5 5,051,000
========================================== ==========
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED FEBRUARY 28, 1998
1 Elimination of management and supervision fees paid to related company.
2 Agreed upon salary for services of president and selling shareholder in lieu
of management and supervision fees previously paid to related company.
3 Represents increase in administrative costs which have previously been shared
with related parties.
4 Estimated tax expense associated with C corporation treatment of MJA earnings.
5 Amount represents 397,000 shares issued in connection with acquisition of MJA,
net of cancellation of 100 shares of MJA common stock exchanged. Shares
treated as if they had been outstanding for the entire period.
<PAGE>
WESTOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
THREE MONTHS ENDED MAY 31, 1998
<TABLE>
<CAPTION> HISTORICAL
WESTOWER MJA PRO FORMA PRO FORMA
CORPORATION COMMUNICATIONS ADJUSTMENTS COMBINED
------------------------------------------ ----------
<S> <C> <C> <C> <C>
CONTRACT REVENUES EARNED 7,100,000 4,066,000 11,166,000
COSTS OF REVENUES EARNED 5,403,000 3,196,000 8,599,000
------------------------------------------ ----------
Gross profit 1,697,000 870,000 0 2,567,000
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 576,000 781,000 37,500 1 1,407,000
12,500 2
------------------------------------------ ----------
OPERATING INCOME 1,121,000 89,000 (50,000) 1,160,000
OTHER INCOME(EXPENSE)
Interest income 75,000 0 75,000
Interest expense (17,000) 0 (17,000)
------------------------------------------ ----------
58,000 0 0 58,000
------------------------------------------ ----------
INCOME BEFORE INCOME TAXES 1,179,000 89,000 (50,000) 1,218,000
INCOME TAXES 412,000 32,000 (6,000) 3 438,000
------------------------------------------ ----------
NET INCOME 767,000 57,000 (44,000) 780,000
========================================== ==========
BASIC EARNINGS PER SHARE 0.14 570.00 n/a 0.14
========================================== ==========
DILUTED EARNINGS PER SHARE 0.12 570.00 n/a 0.12
========================================== ==========
Shares of common stock used in
computing earnings per share:
Basic 5,659,000 100 (100) 4 5,659,000
========================================== ==========
Diluted 6,587,000 100 (100) 6,587,000
========================================== ==========
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
THREE MONTHS ENDED MAY 31, 1998
1 Agreed upon salary for services of president and selling shareholder in lieu
of management and supervision fees previously paid
2 Represents increase in administrative costs which have previously been shared
with related parties.
3 Estimated tax expense associated with C corporation treatment of MJA earnings.
4 Amount represents MJA shares exchanged in combination
<PAGE>
(c) EXHIBITS
Exhibit Number Description Page
-------------- ----------- ----
2.1* Share Exchange Agreement by and among
Westower Corporation, MJA Communications
Corp. and the Stockholders of MJA
Communications Corp.: Michael J. Anderson,
Constance S. Anderson, and Fred Faulkner,
III, dated as of May 29, 1998
2.2* Westower Corporation Registration Rights
Agreement Dated as of May 29, 1998
2.3* Employment agreement between Westower
Corporation and Michael J. Anderson, dated
May 29, 1998
23.1 Consent of Lamn, Krielow, Dytrych &
Darling, P.A.
* Filed previously on June 12, 1998
<PAGE>
SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WESTOWER CORPORATION
Dated: August 11, 1998
By /s/ Peter Lucas
-----------------------------------
Peter Lucas, Vice President,
Chief Financial Officer,
Treasurer and Secretary
<PAGE>
EXHIBIT INDEX
Exhibit Number Description Page
- -------------- ----------- ----
2.1* Share Exchange Agreement by and among
Westower Corporation, MJA Communications
Corp. and the Stockholders of MJA
Communications Corp.: Michael J. Anderson,
Constance S. Anderson, and Fred Faulkner,
III, dated as of May 29, 1998
2.2* Westower Corporation Registration Rights
Agreement Dated as of May 29, 1998
2.3* Employment agreement between Westower
Corporation and Michael J. Anderson, dated
May 29, 1998
23.1 Consent of Lamn, Krielow, Dytrych &
Darling, P.A.
* Filed previously on June 12, 1998
<PAGE>
EXHIBIT 23.1
[LETTERHEAD OF LAMN, KRIELOW, DYTRYCH & DARLING, P.A.]
August 13, 1998
Re: MJA Communications
As independent public accountants, we hereby consent to the inclusion in this
8-KSB/A (Amendment No. 1) of our report dated February 11, 1998, except for Note
4, as to which the date is August 12, 1998.
Very truly yours,
/s/ Gary R. Krielow
Gary R. Krielow
