<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 10, 1998
WESTOWER CORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 333-32963 91-1825860
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
2001 6th Avenue, Suite 3302, Seattle, Washington 98121
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (206) 441-0334
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
This Amendment No. 2 to Westower Corporation's Current Report on Form 8-K
dated November 20, 1998 contains revised proforma financial information of
Westower Corporation and Summit Communications, LLC adjusted to reflect the
restated balance sheet of Westower Corporation as of August 31, 1998 and the
restated results of operations of Westower Corporation for the three and six
months then ended as reported in Westower Corporation's 10-QSB/A as filed with
the Securities and Exchange Commission on June 15, 1999.
In accordance with the requirements of the Securities and Exchange
Commission, the entirety of Item 7 is set forth below.
On November 10, 1998, Westower Corporation (the "Company") completed the
acquisition of Summit, a Mississippi limited liability company, pursuant to an
Agreement and Plan of Merger among Summit, the members of Summit, Westower
and Westower Summit Acquisition LLC, a Mississippi limited liability company and
a wholly-owned subsidiary of Westower Corporation. Included below are certain
financial statements and pro forma information of Summit.
(a) Financial statements of Summit.
Audited financial statements and schedules for the fiscal year ended
December 31, 1997:
<PAGE>
SUMMIT COMMUNICATIONS, LLC
CONTENTS
Page
Report of Independent Certified Public Accountants 3
Balance Sheet 4
Statement of Income 5
Statement of Members' Equity 6
Statement of Cash Flows 7-8
Notes to the Financial Statements 9
<PAGE>
Report of Independent Certified Public Accountants
To the Members
Summit Communications, LLC
Ridgeland, Mississippi
We have audited the accompanying balance sheet of Summit Communications, LLC, as
of December 31, 1997, and the related statements of income, members' equity and
cash flows for the period from May 24, 1997 (inception) to December 31, 1997.
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 audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an 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 our audit provides 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 Summit Communications, LLC as
of December 31, 1997, the results of its operations and its cash flows for the
period from inception to December 31, 1997, in conformity with generally
accepted accounting principles.
March 5, 1998
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Balance Sheet
December 31, 1997
Assets
------
Current assets:
Contract receivables $1,142,771
Costs and estimated earnings in excess
of billings on uncompleted contracts 117,648
Other receivables 9,448
Inventories 20,000
Prepaid expenses 31,501
----------
Total current assets 1,321,368
----------
Property and equipment:
Machinery, equipment and tools 479,459
Furniture and fixtures 17,292
Vehicles 398,916
----------
895,667
Less accumulated depreciation (196,346)
----------
Net property and equipment 699,321
----------
Intangible asset, net of accumulated amortization of $715 19,671
----------
$ 2,040,360
==========
Liabilities and Members' Equity
-------------------------------
Liabilities:
Current liabilities:
Book overdraft in bank account $ 118,249
Short-term notes payable 116,537
Short-term note payable to member 388,938
Current maturities of long-term debt 52,041
Current portion of capital leases 14,917
Accounts payable 183,876
Billings in excess of costs and estimated
earnings on uncompleted contracts 265,520
Accrued expenses 46,942
Other liabilities 37,324
----------
Total current liabilities 1,224,344
----------
Long-term debt, less current maturities 231,053
Capital lease obligations, less current portion 18,881
----------
Total liabilities 1,474,278
----------
Members' Equity 566,082
----------
$ 2,040,360
==========
The accompanying notes are an integral part of this financial statement.
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Statement of Income
Period From May 24, 1997 (Inception) to December 31, 1997
Contract revenues earned $5,477,770
----------
Cost of contract revenues:
Materials, supplies and contract services 2,519,761
Direct labor 867,387
Other direct costs 726,241
----------
Total cost of contract revenues 4,113,389
----------
Gross profit 1,364,381
----------
General and administrative expenses:
Salaries and labor 270,802
Other expenses 572,212
----------
Total general and administrative expenses 843,014
----------
Income from operations 521,367
----------
Other expenses - interest expense (45,285)
----------
Net income before income taxes 476,082
----------
Income taxes:
Assumed expense 177,500
Effect of special election by members (177,500)
----------
Net income taxes -
----------
Net income $ 476,082
==========
The accompanying notes are an integral part of this financial statement.
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Statement of Members' Equity
Period From May 24, 1997 (Inception) to December 31, 1997
Capital contributions $100,000
Net income 476,082
Distributions (10,000)
--------
December 31, 1997 $566,082
========
The accompanying notes are an integral part of this financial statement.
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Statement of Cash Flows
Period From May 24, 1997 (Inception) to December 31, 1997
Cash flows from operating activities:
Net earnings $ 476,082
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 196,346
Amortization 715
(Increase) decrease in:
Contract receivables (1,142,771)
Cost and estimated earnings in excess of
billings on uncompleted contracts (117,648)
Other receivables (9,448)
Prepaid expenses (27,741)
Increase (decrease) in:
Accounts payable 183,876
Billings in excess of costs and estimated
earnings on uncompleted contracts 265,520
Accrued expenses (31,071)
Other, net 37,324
-----------
Net cash used in operating activities (168,816)
-----------
Cash flows from investing activities:
Assets acquired in acquisition (900,042)
Purchases of property and equipment (13,865)
-----------
Net cash used in investing activities (913,907)
-----------
(Continued)
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Statement of Cash Flows
Period From May 24, 1997 (Inception) to December 31, 1997
Cash flow from financing activities:
Liabilities assumed in acquisition $ 387,835
Proceeds from short-term notes payable 937,322
Repayments of short-term notes payable (820,785)
Proceeds of short-term note payable to member 400,000
Repayments of short-term note payable to member (11,062)
Repayments of capital lease obligations (301,930)
Proceeds from long-term notes payable 300,174
Repayments of long-term notes payable (17,080)
Capital contributions 100,000
Distributions (10,000)
---------
Net cash provided by financing activities 964,474
---------
Net decrease in cash (118,249)
Cash at inception -
---------
Book overdraft in bank account at end of year $ (118,249)
=========
Supplemental disclosures:
Collections on contracts $ 4,244,157
Payments for materials, sub contractors,
labor and supplies 4,510,108
Interest paid 42,644
==========
Noncash investing and financing activities:
Capital lease obligations incurred in
connection with property and equipment $ 25,905
==========
The accompanying notes are an integral part of this financial statement.
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Notes to the Financial Statements
Note 1: Summary of Significant Accounting and Reporting Policies
A summary of the significant accounting and reporting policies of Summit
Communications, LLC (the Company), which materially affect the determination
of financial position and results of operations is presented below.
Organization
The Company is incorporated under the laws of the state of Mississippi. The
Company constructs communication towers for use by the radio, television,
telephone and other industries in the continental United States. The main
business operations are located in Ridgeland, Mississippi.
Accounting Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Revenue and Cost Recognition
Revenues from fixed-priced and modified fixed-price construction contracts are
recognized on the percentage-of-completion method, measured by the
percentage of costs incurred to date to total estimated costs to complete
each contract.
Contract costs include all direct material and labor costs and those direct
costs related to contract performance, such as supplies, tools and repairs.
Indirect costs, such as labor, supplies, general repairs and depreciation
are not allocated to contract costs. Selling, general, and administrative
costs, including indirect costs on contracts, 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 may result in
revisions to costs and income which are recognized in the period in which
the revisions are determined. Changes in estimated job profitability
resulting from job performance, job conditions, contract penalty provisions,
claims, change orders and settlements are accounted for as changes in
estimates in the current period.
The asset, "Costs and estimated earnings in excess of billings on uncompleted
contracts," represents revenues recognized 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.
(Continued)
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Notes to the Financial Statements
Note 1: (Continued)
Property and Equipment
The cost of property and equipment is depreciated over the estimated useful
lives of the related assets. Depreciation is computed using the
straight-line and accelerated methods adopted by the Internal Revenue
Service for financial purposes. The difference between tax depreciation
methods and generally accepted accounting depreciation methods is not
considered material.
Intangible Assets
The Company recorded an intangible asset related to its acquisition of Summit
Communications, Inc. This intangible asset is being amortized over a fifteen
year period using the straight-line method.
Income Taxes
The Company is not a tax paying entity for Federal income tax purposes, and
thus no Federal income tax expense has been recorded in these statements.
The Company was formed as a limited liability company (LLC) and has made an
election for Federal tax purposes, and tax purposes in certain states in
which it operates, to be taxed as a subchapter S corporation. Income of the
Company is taxed to the members in their respective returns for Federal
purposes and state purposes in states where the subchapter S corporation
election is available. State income taxes will be recorded in the financial
statements for states in which the Company operates that do not allow
subchapter S elections.
Note 2: Contract Receivables
The following is a summary of contract receivables at December 31, 1997:
Billed:
Completed contracts $ 257,060
Contracts in progress 885,711
-------
$ 1,142,771
===========
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Notes to the Financial Statements
Note 3: Uncompleted Contracts
Costs, estimated earnings and billings on uncompleted contracts at December
31, 1997, are summarized as follows:
Costs incurred on uncompleted contracts $1,143,511
Estimated earnings 495,683
----------
1,639,194
Less billings 1,787,066
----------
$ (147,872)
==========
Included in accompanying balance sheets under
the following captions:
Cost and estimated earnings in excess
of billings on uncompleted contracts $ 117,648
Billings in excess of costs and estimated
earnings on uncompleted contracts (265,520)
----------
$ (147,872)
==========
Note 4: Backlog
- ----------------
The following schedule summarizes changes in the backlog of contracts from the
period of inception to December 31, 1997. Backlog represents the amount of
revenue the Company expects to realize from work to be performed on
uncompleted contracts in progress at year end and from contractual
agreements on which work has not yet begun.
Backlog balance at inception $ -
New contracts during the year 6,993,007
----------
6,993,007
Less contract revenues earned during
the year 5,477,770
----------
Backlog balance at end of year $ 1,515,237
==========
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Notes to the Financial Statements
Note 5: Short-term Notes Payable
Short-term notes payable consisted of the following at December 31, 1997:
Line of credit for $600,000 payable to commercial bank;
interest at lender's prime rate plus .5%, 9% at
December 31, 1997; principal and interest payable
January 1, 1998; secured by inventory, real estate,
fixed assets and accounts receivable $ 57,593
Line of credit for $750,000 payable to commercial bank;
interest at lender's prime rate plus .5%; 9% at
December 31, 1997; principal and interest due
July 1, 1998; secured by inventory, real
estate, fixed assets and accounts receivable 58,944
---------
$ 116,537
=========
Note 6: Short-term Note Payable to Member
Short-term notes payable to member consisted of the following at December 31,
1997:
Note payable to member at an interest rate of Trustmark
National Bank prime rate, 8.5% at December 31, 1997;
principal payable on July 18, 1998 and interest payable
quarterly $ 388,938
=========
Note 7: Long-term Debt
A summary of long-term debt at December 31, 1997, follows:
Unsecured note payable to commercial bank at an interest
rate of 8.5%; payable in monthly installments of $6,176,
including interest, through September 25, 2002; secured
by fixed assets and accounts receivable $ 283,094
Less current maturities (52,041)
Long-term debt, less current maturities $ 231,053
=========
(Continued)
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Notes to the Financial Statements
Note 7: (Continued)
A summary of the future maturities of long-term debt at December 31, 1997, is
as follows:
1998 $ 52,041
1999 56,641
2000 61,647
2001 67,096
2002 45,669
-------
$ 283,094
=======
Note 8: Capital Lease Obligations
- ----------------------------------
A summary of capital lease obligations follows:
Lease payable in monthly installments of $506 through
August 4, 1998, reflecting an effective interest
rate of 8.634%; secured by vehicle $ 3,919
Lease payable in monthly installments of $1,048
through July 28, 1998, reflecting an effective
interest rate of 6.86%; secured by equipment 5,483
Lease payable in monthly installments of $633 through
August 28, 2000, final installment of $7,772 at
September 28, 2000, reflecting an effective interest
rate of 9.325%; secured by vehicle 24,396
-------
33,798
Less current obligations (14,917)
-------
$ 18,881
=======
(Continued)
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Notes to the Financial Statements
Note 8: (Continued)
A schedule of future minimum lease payments under capital leases agreements at
December 31, 1997, follows:
1998 $ 17,362
1999 7,601
2000 13,473
--------
Total minimum lease payments 38,436
Less amount representing interest (4,638)
--------
33,798
Less current portion (14,917)
--------
Capital lease obligations, less
current portion $ 18,881
========
A summary of assets and accumulated depreciation of assets under capital
leases at December 31, 1997, follows:
Assets under capital leases $ 54,397
Less accumulated depreciation (6,802)
--------
$ 47,595
========
Depreciation expense includes amortization of assets under capital leases of
$6,802 for the period from inception to December 31, 1997.
Note 9: Employee Benefit Plan
The Company has an employee benefit plan which is a 401(k) Profit Sharing Plan
and Trust. Employees become eligible for participation in the plan after one
year of service. Employees may contribute a percentage of their gross
compensation not to exceed limits set by law. Contributions by the Company
are made at the discretion of the Board of Directors. There were no
contributions made by the Company related to this plan for the period from
inception to December 31, 1997.
Note 10: Related Party Transactions
Summit leases a vehicle from one of its officers for use in the normal course
of business. As of December 31, 1997, the capital lease obligation owed to
this officer was $3,919.
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Notes to the Financial Statements
Note 11: (Continued)
On May 24, 1997, the Company acquired certain assets and assumed certain
liabilities of Summit Communications, Inc. (SCI) in a purchase transaction.
The following is a summary of assets acquired and liabilities assumed in the
SCI transaction:
Assets acquired:
Inventory $ 20,000
Prepaid expenses 3,760
Fixed assets 855,896
Intangible asset 20,386
--------
900,042
--------
Liabilities assumed:
Long-term debt 293,634
Capital leases 16,188
Accrued expenses 78,013
--------
387,835
--------
Purchase price $512,207
========
<PAGE>
Unaudited financial statements for the interim periods ended August 31,
1998:
Summit Communications, LLC.
Balance Sheet (Unaudited)
August 31, 1998
ASSETS
1998
----------
CURRENT ASSETS
Cash $ 500
Accounts receivable, net 2,357,737
Costs and estimated earnings in excess of billings on
uncompleted contracts 290,319
Notes receivable 192,998
Inventory 22,000
Prepaid expenses 82,867
Other current assets 60,232
----------
Total current assets 3,006,653
PROPERTY AND EQUIPMENT, net 732,679
OTHER ASSETS 18,560
----------
TOTAL ASSETS $3,757,892
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 823,565
Other current liabilities 32,340
Billings in excess of costs and estimated
earnings on uncompleted contracts 886,897
Employee loan payable
Notes payable 38,375
Current portion of long-term debt 191,958
----------
Total current liabilities 1,973,135
LONG-TERM DEBT, excluding current portion 583,622
MEMBERS' EQUITY 1,201,135
----------
TOTAL LIABILITIES AND MEMBERS' EQUITY $3,757,892
==========
<PAGE>
SUMMIT COMMUNICATIONS, LLC
Statement Of Income (Unaudited)
Eight Months Ended August 31, 1998
1998
----------
CONTRACT REVENUES EARNED $6,498,844
COSTS OF REVENUES EARNED 4,875,298
----------
Gross profit 1,623,546
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 902,820
----------
OPERATING INCOME 720,726
----------
OTHER INCOME (EXPENSE)
Interest expense (86,725)
Other income 1,052
----------
Total other income expense (85,673)
----------
NET INCOME $ 635,053
==========
(b) Pro forma financial information.
The unaudited pro forma condensed combined balance sheet at August 31, 1998
combines the historical financial information as if the acquisition of Summit
had occurred on August 31, 1998. The unaudited pro forma condensed combined
statement of income for the year ended February 28, 1998 and the six months
ended August 31, 1998 combine historical statements of operations for the
Company and Summit as if the acquisition had occurred on March 1, 1997.
The unaudited proforma condensed combined balance sheet at August 31, 1998
combines historical financial information of the Company and Summit at August
31, 1998 as if the acquisition had occurred on August 31, 1998. The unaudited
pro forma condensed combined statement of income for the six months ended August
31, 1998 combines historical financial information of the Company for the six
months ended August 31, 1998 and Summit for the six months ended June 30, 1998
as if the acquisition had occurred at the beginning of the periods presented.
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 Summit for the period from May 24, 1997
(inception) through December 31, 1997 as if the acquisition had occurred at the
beginning of the periods presented. As the most recent fiscal year end of Summit
differs from the Company's fiscal year end by less than 93 days, no adjustments
were made to Summit's statement of income for the purpose of the pro forma
presentation.
The business of these entities is subject to seasonal fluctuations and,
therefore, the results of operations for periods less than twelve months may not
be indicative of annual results. 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 six
months ended August 31, 1998 have been reported on the Company's Form 10QSB/A
filed on June 15, 1999.
<PAGE>
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 Summit contained elsewhere herein.
1. Unaudited Pro Forma Condensed Combined Balance Sheet at August 31,
1998:
WESTOWER CORPORATION
PRO FORMA COMBINED CONDENSED BALANCE SHEET
August 31, 1998
<TABLE>
<CAPTION>
HISTORICAL
WESTOWER SUMMIT PRO FORMA PRO FORMA
CORPORATION COMMUNICATIONS ADJUSTMENTS COMBINED
------------------------------------------------ ----------------
<S> <C> <C> <C> <C><C>
ASSETS
CURRENT ASSETS
Cash 13,236,000 (4,400,000) 1 8,836,000
Contracts receivable, net 9,992,000 2,358,000 12,350,000
Costs and estimated earnings in excess
of billings on uncompleted contracts 3,640,000 290,000 3,930,000
Inventory 1,723,000 22,000 1,745,000
Other current assets 2,216,000 336,000 2,552,000
------------------------------------------------ ----------------
Total current assets 30,807,000 3,006,000 (4,400,000) 29,413,000
PROPERTY AND EQUIPMENT, net 5,502,000 733,000 6,235,000
INTANGIBLE ASSETS, net 14,663,000 8,000,000 1 22,663,000
OTHER ASSETS 2,727,000 19,000 2,746,000
------------------------------------------------ ----------------
TOTAL ASSETS 53,699,000 3,758,000 3,600,000 61,057,000
================================================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable 4,926,000 824,000 5,750,000
Billings in excess of costs and
estimated earnings on uncompleted contracts 1,522,000 887,000 2,409,000
Other current liabilities 3,630,000 70,000 701,000 1 4,401,000
Income taxes payable 1,636,000 1,636,000
Deferred income taxes 195,000 195,000
Current portion of long-term debt and
capital lease obligations 450,000 67,000 517,000
------------------------------------------------ ----------------
Total current liabilities 12,359,000 1,848,000 701,000 14,908,000
LONG-TERM DEBT AND CAPITAL LEASE 0
OBLIGATIONS, excluding current portion 14,706,000 709,000 15,415,000
OTHER LIABILITIES 624,000 624,000
------------------------------------------------ ----------------
Total liabilities 27,689,000 2,557,000 701,000 30,947,000
------------------------------------------------ ----------------
STOCKHOLDERS' EQUITY
Common stock 70,000 90,000 (90,000) 2 72,000
2,000 1
Additional paid-in capital 21,824,000 4,098,000 1 25,922,000
Foreign currency translation adjustment' (468,000) (468,000)
Retained Earnings 4,584,000 1,111,000 (1,111,000) 2 4,584,000
------------------------------------------------ ----------------
Total stockholders equity 26,010,000 1,201,000 2,899,000 30,110,000
------------------------------------------------ ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 53,699,000 3,758,000 3,600,000 61,057,000
================================================ ================
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AUGUST 31, 1998
1 To reflect the application of purchase accounting to the Company's
acquisition of Summit. The total purchase price was paid through the
issuance of 200,000 shares of the Company's common stock valued at
approximately $4.1 million based on the publicly traded price
and $4,400,000 in cash, and the assumption of certain liabilities
as of November 10, 1998, the date closing.
2 To eliminate the historical equity of Summit
<PAGE>
2. Unaudited Pro Forma Condensed Combined Statement of Income for the
Company's fiscal year ended February 28, 1998:
WESTOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
HISTORICAL
WESTOWER SUMMIT PRO FORMA
CORPORATION COMMUNICATIONS 5 ADJUSTMENTS PRO FORMA COMBINED
------------------------------------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
CONTRACT AND OTHER REVENUES EARNED 41,662,000 5,478,000 47,140,000
COSTS OF REVENUES EARNED 29,508,000 4,113,000 33,621,000
(exclusive of depreciation and amortization
shown below) ------------------------------------------------------- ----------------------
GROSS PROFIT 12,154,000 1,365,000 13,519,000
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 7,236,000 646,000 117,000 1 7,999,000
DEPRECIATION AND AMORTIZATION 473,000 197,000 400,000 2 1,070,000
------------------------------------------------------- ----------------------
OPERATING INCOME 4,445,000 522,000 (517,000) 4,450,000
OTHER INCOME (EXPENSE)
Other income 126,000 126,000
Interest income 127,000 127,000
Interest expense (129,000) (45,000) (174,000)
------------------------------------------------------- ----------------------
124,000 (45,000) 79,000
------------------------------------------------------- ----------------------
INCOME BEFORE INCOME TAXES 4,569,000 477,000 (517,000) 4,529,000
INCOME TAXES 1,633,000 (122,000) 3 1,511,000
------------------------------------------------------- ----------------------
NET INCOME 2,936,000 477,000 (395,000) 3,018,000
======================================================= ======================
BASIC EARNINGS PER SHARE 0.56 n/a 0.55
======================================================= ======================
DILUTED EARNINGS PER SHARE 0.52 n/a 0.52
======================================================= ======================
Shares of common stock used in computing
earnings per share:
Basic 5,263,000 200,000 4 5,463,000
======================================================= ======================
Diluted 5,594,000 200,000 4 5,794,000
======================================================= ======================
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED FEBRUARY 28, 1998
1 Contractual increases in historical compensation of former owners of
Summit.
2 To reflect amortization of intangible assets resulting from the
application of purchase accounting, producing goodwill of
approximately $8,000,000. For amortization purposes, the Company has
used a useful life of 20 years.
3 Adjustment to reflect income taxes at the Company's estimated tax
rate.
4 Represents shares of Westower common stock issued in connection with
the acquisition of Summit as if the shares had been outstanding for
the entire period.
5 Summit Communications' income statement reflects the results of
operations for the period from May 24, 1997 (inception) through
December 31, 1997.
<PAGE>
3. Unaudited Pro Forma Condensed Combined Statement of Income for the
period ended August 31, 1998:
WESTOWER CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
SIX MONTHS ENDED AUGUST 31, 1998
<TABLE>
<CAPTION>
HISTORICAL
WESTOWER SUMMIT PRO FORMA PRO FORMA
CORPORATION COMMUNICATIONS ADJUSTMENTS COMBINED
---------------------------------------------------------- --------------
<S> <C> <C> <C> <C> <C>
CONTRACT AND OTHER REVENUES EARNED 23,384,000 4,042,000 27,426,000
COSTS OF REVENUES EARNED 17,604,000 3,030,000 20,634,000
(exclusive of depreciation and amortization
shown below) ---------------------------------------------------------- --------------
GROSS PROFIT 5,780,000 1,012,000 6,792,000
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 3,702,000 546,000 114,000 1 4,362,000
DEPRECIATION AND AMORTIZATION 495,000 131,000 200,000 2 826,000
---------------------------------------------------------- --------------
OPERATING INCOME 1,583,000 335,000 (314,000) 1,604,000
OTHER INCOME (EXPENSE)
Other 94,000 1,000 95,000
Interest income 244,000 244,000
Interest expense (448,000) (68,000) (516,000)
---------------------------------------------------------- --------------
(110,000) (67,000) (177,000)
---------------------------------------------------------- --------------
INCOME BEFORE INCOME TAXES 1,473,000 268,000 (314,000) 1,427,000
INCOME TAXES 324,000 52,000 3 376,000
---------------------------------------------------------- --------------
NET INCOME 1,149,000 268,000 (366,000) 1,051,000
========================================================== ==============
BASIC EARNINGS PER SHARE 0.18 n/a 0.16
========================================================== ==============
DILUTED EARNINGS PER SHARE 0.15 n/a 0.13
========================================================== ==============
Shares of common stock used in
computing earnings per share:
Basic 6,454,000 200,000 4 6,654,000
========================================================== ==============
Diluted 7,617,000 200,000 4 7,817,000
========================================================== ==============
</TABLE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
SIX MONTHS ENDED AUGUST 31, 1998
1 Contractual increases in historical compensation of former owners of
Summit.
2 To reflect amortization of intangible assets resulting from the
application of purchase accounting, resulting in goodwill of
approximately $8,000,000. For amortization purposes, the Company has
used a useful life of 20 years.
3 Adjustment to reflect income taxes at the Company's estimated tax
rate.
4 Represents shares of Westower common stock issued in connection with
the acquisition of Summit as if the shares had been outstanding for
the entire period.
<PAGE>
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of November 10, 1998, among
Westower Corporation, Westower Summit Acquisition, LLC, Summit
Communications, LLC and the Members of Summit Communications, LLC.*
2.2 Registration Rights Agreement, dated as of November 10, 1998, among
Westower Corporation and the Members of Summit Communications, LLC.*
2.3 Employment Agreement, dated as of November 10, 1998, between Westower
Summit Acquisition, LLC and Mark J. Shapley.*
2.4 Employment Agreement, dated as of November 10, 1998, between Westower
Summit Acquisition, LLC and Mike A. Jarvis.*
23 Consent of Independent Auditor.
- ----------
* Previously filed.
<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.
WESTOWER CORPORATION
Date: June 18, 1999 By:/s/ Peter Lucas
Peter Lucas, Senior Vice President,
Chief Financial Officer, Treasurer
and Secretary
<PAGE>
Exhibit Index
Exhibits
2.1 Agreement and Plan of Merger, dated as of November 10, 1998, among
Westower Corporation, Westower Summit Acquisition, LLC, Summit
Communications, LLC and the Members of Summit Communications, LLC.*
2.2 Registration Rights Agreement, dated as of November 10, 1998, among
Westower Corporation and the Members of Summit Communications, LLC.*
2.3 Employment Agreement, dated as of November 10, 1998, between Westower
Summit Acquisition, LLC and Mark J. Shapley.*
2.4 Employment Agreement, dated as of November 10, 1998, between Westower
Summit Acquisition, LLC and Mike A. Jarvis.*
23 Consent of Independent Auditor.
- ----------
* Previously filed.
<PAGE>
Exhibit 23
SHEARER
TAYLOR
& CO.
A Professional Association
Consent of Independent Certified Public Accountants
We consent to the incorporation by reference in the Registration Statement of
Westower Corporation on Form S-8 (Registration No. 333-65337) of our report
dated March 5, 1998, relating to the financial statements of Summit
Communications, LLC appearing in this Amendment No. 2 on Form 8-K/A to the
Current Report on Form 8-K dated November 20, 1998 of Westower Corporation.
/s/ Shearer, Taylor & Co., P.A.
Jackson, Mississippi
June 17, 1999
