<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): July 27, 1998
AZTEC TECHNOLOGY PARTNERS, INC.
-------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 0-24417 04-3408450
-------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
50 Braintree Hill Office Park, Suite 103, Braintree, MA 02184
-------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (781)849-1702
--------------
50 Braintree Hill Office Park, Suite 220, Braintree, MA 02184
-------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Exhibit Index at Page 3
The undersigned registrant hereby amends and restates Item 7 of its current
report on Form 8-K dated August 12, 1998, so that as so amended and restated
said Item 7 shall read in its entirety as set forth on the following pages.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
--------------------------------------------------------------------
(a) Financial Statements of Business Acquired.
-----------------------------------------
The following audited financial statements of PCM, Inc. ("PCM"),
together with the report thereon by Blackman Kallick Bartelstein, LLP are
included herein as Exhibit 99.1 to this report and are incorporated herein by
this reference:
Balance Sheets as of December 31, 1997 and 1996.
Statements of Income for the years ended December 31, 1997 and 1996.
Statements of Stockholders' Equity for the years ended December 31, 1997 and
1996.
Statements of Cash Flows for the years ended December 31, 1997 and 1996.
Notes to Financial Statements.
The following unaudited condensed financial statements of PCM are included
herein as Exhibit 99.2 to this report and are incorporated herein by this
reference:
Condensed Balance Sheet as of June 30, 1998 (unaudited).
Condensed Statements of Income for the six months ended June 30, 1998 and 1997
(unaudited).
Condensed Statements of Cash Flows for the six months ended June 30, 1998 and
1997 (unaudited).
Notes to Condensed Financial Statements (unaudited).
<PAGE>
(b) Pro Forma Financial Information.
------------------------------
The following unaudited pro forma condensed consolidated financial
statements of the Registrant and PCM are included as Exhibit 99.3 to
this report and incorporated herein by this reference:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June
30, 1998.
Unaudited Pro Forma Condensed Consolidated Statement of Income for the
year ended April 25, 1998.
Unaudited Pro Forma Condensed Consolidated Statement of Income for the
nine weeks ended June 30, 1998.
Notes to Unaudited Pro Forma Condensed Consolidated Financial
Information.
(c) Exhibits.
----------
<TABLE>
<CAPTION>
Exhibit No. Description
-------------- --------------
<S> <C>
*10.15 Agreement and Plan of Reorganization By and Among the
Registrant, PCM Merger Corporation, PCM, Inc., Avi
Shaked, Babs Waldman and Benjamin Beiler, dated as of
July 27, 1998.
23.1 Consent of Blackman Kallick Bartelstein, LLP
99.1 The following audited financial statements of PCM,
together with the report thereon by Blackman Kallick
Bartelstein, LLP:
Balance Sheets as of December 31, 1997 and 1996.
Statements of Income for the years ended December 31,
1997 and 1996.
Statements of Stockholders' Equity for the years ended
December 31, 1997 and 1996.
Statements of Cash Flows for the years ended December
31, 1997 and 1996.
Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
99.2 The following unaudited condensed financial statements
of PCM:
Condensed Balance Sheet as of June 30, 1998 (unaudited).
Condensed Statements of Income for the six months
ended June 30, 1998 and 1997 (unaudited).
Condensed Statements of Cash Flows for the six months
ended June 30, 1998 and 1997 (unaudited).
Notes to Condensed Financial Statements (unaudited).
99.3 The following unaudited pro forma condensed
consolidated financial statements of the Registrant
and PCM:
Unaudited Pro Forma Condensed Consolidated Balance
Sheet as of June 30, 1998.
Unaudited Pro Forma Condensed Consolidated Statement
of Income for the year ended April 25, 1998.
Unaudited Pro Forma Condensed Consolidated Statement
of Income for the nine weeks ended June 30, 1998.
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Information.
------------------------------------------------------
* Previously filed with the registrant's Current
Report on Form 8-K dated August 12, 1998.
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Aztec
Technology Partners, Inc. has duly caused this amendment report to be signed on
its behalf by the undersigned, hereunto duly authorized.
Dated: October 13, 1998
AZTEC TECHNOLOGY PARTNERS, INC.
/S/ DOUGLAS R. JOHNSON
---------------------------------------------------------------------------
Douglas R. Johnson
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER, TREASURER AND
SECRETARY
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
-------------- --------------
<S> <C>
*10.15 Agreement and Plan of Reorganization By and Among the
Registrant, PCM Merger Corporation, PCM, Inc., Avi
Shaked, Babs Waldman and Benjamin Beiler, dated as of
July 27, 1998.
23.1 Consent of Blackman Kallick Bartelstein, LLP
99.1 The following audited financial statements of PCM,
together with the report thereon by Blackman Kallick
Bartelstein, LLP:
Balance Sheets as of December 31, 1997 and 1996.
Statements of Income for the years ended December 31,
1997 and 1996.
Statements of Stockholders' Equity for the years ended
December 31, 1997 and 1996.
Statements of Cash Flows for the years ended December
31, 1997 and 1996.
Notes to Financial Statements.
99.2 The following unaudited condensed financial statements
of PCM:
Condensed Balance Sheet as of June 30, 1998
(unaudited).
Condensed Statements of Income for the six months
ended June 30, 1998 and 1997 (unaudited).
Condensed Statements of Cash Flows for the six months
ended June 30, 1998 and 1997 (unaudited).
Notes to Condensed Financial Statements (unaudited).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
99.3 The following unaudited pro forma condensed
consolidated financial statements of the Registrant
and PCM:
Unaudited Pro Forma Condensed Consolidated Balance
Sheet as of June 30, 1998.
Unaudited Pro Forma Condensed Consolidated Statement
of Income for the year ended April 25, 1998.
Unaudited Pro Forma Condensed Consolidated Statement
of Income for the nine weeks ended June 30, 1998.
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Information.
</TABLE>
------------------------------------------------------
*Previously filed with the Company's Current Report on
Form 8-K dated July 27, 1998 filed on August 12, 1998.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements on
Form S-8 (Nos. 333-58323, 333-58319, and 333-58315) of Aztec Technology
Partners, Inc. of our report dated September 24, 1998, with respect to the
financial statements of PCM, Inc. appearing in Amendment No. 1 to the Current
Report on Form 8-K/A of Aztec Technology Partners, Inc. dated October 13, 1998.
/s/ Blackman Kallick Bartelstein, LLP
BLACKMAN KALLICK BARTELSTEIN, LLP
Chicago, Illinois
October 13, 1998
<PAGE>
Exhibit 99.1
INDEPENDENT AUDITOR'S REPORT
Board of Directors
PCM, Inc.
We have audited the accompanying balance sheets of PCM, INC. as of December
31, 1997 and 1996, and the related statements of income, stockholders' equity
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 of these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material 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 PCM, INC. as of December 31,
1997 and 1996, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
/s/ Blackman Kallick Bartelstein, LLP
BLACKMAN KALLICK BARTELSTEIN, LLP
Chicago, Illinois
September 24, 1998
<PAGE>
PCM, INC.
Balance Sheets
December 31, 1997 and 1996
ASSETS
<TABLE>
<CAPTION>
1997 1996
--------------- -----------
<S> <C> <C>
Current Assets
Cash ....................................................................... $ 2,562,650 $ 2,366
Certificates of deposit - Restricted (Note 5) .............................. 1,021,958 1,483,409
Short-term investments in marketable securities (Note 3) ................... - 889,266
Receivables
Customers (Note 9) ..................................................... 4,597,403 2,815,710
Stockholder (Note 11) .................................................. 390,957 -
Inventories ................................................................ 465,993 623,952
Prepaid expenses and other current assets .................................. 121,088 37,058
--------------- ---------------
Total Current Assets .......................................... 9,160,049 5,851,761
Property and Equipment (Net of accumulated depreciation
and amortization) (Note 4) ..................................................... 76,501 79,394
Other Assets - Note receivable - Officer (Note 11) .............................. 200,000 -
--------------- ---------------
$ 9,436,550 $ 5,931,155
--------------- ---------------
--------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Checks issued in excess of funds on deposit ................................ $ 499,144 $ 1,309,572
Short-term borrowings - Bank (Note 5) ...................................... 443,365 748,480
Accounts payable (Note 6) .................................................. 2,170,300 1,607,418
Accrued salaries, wages and other compensation ............................. 289,885 89,378
Accrued expenses ........................................................... 259,646 195,747
Deferred income ............................................................ 44,843 893,881
--------------- ---------------
Total Current Liabilities ..................................... 3,707,183 4,844,476
--------------- ---------------
Commitments and contingencies (Note 7) - -
--------------- ---------------
Stockholders' Equity (Note 10)
Common stock - No par value; authorized - 10,000 shares;
issued and outstanding - 1,111.12 shares in 1997 and 1,000 shares in 1996 .. 210,000 10,000
Retained earnings .............................................. 5,519,367 1,076,679
--------------- ---------------
Total Stockholders' Equity .................................... 5,729,367 1,086,679
--------------- ---------------
$ 9,436,550 $ 5,931,155
--------------- ---------------
--------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
PCM, INC.
Statements of Income
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Amount
-------------------------------
1997 1996
-------------- ----------------
<S> <C> <C>
Revenues (Note 9) .................................. $ 34,737,226 $ 20,981,535
Cost of Revenues ................................... 24,975,139 18,726,680
-------------- --------------
Gross Profit ....................................... 9,762,087 2,254,855
Selling, General and Administrative Expenses ....... 2,607,706 1,370,806
-------------- --------------
Income from Operations ............................. 7,154,381 884,049
-------------- --------------
Other Income (Expense)
Interest income ............................... 156,753 77,466
(Loss) gain on securities (Note 3) ............ (133,438) 258,736
Interest expense .............................. (47,386) (32,107)
-------------- --------------
Total Other (Expense)
Income, Net .............................. (24,071) 304,095
-------------- --------------
Income before Income Taxes ......................... 7,130,310 1,188,144
Income Taxes ....................................... 112,506 16,820
-------------- --------------
Net Income ......................................... 7,017,804 1,171,324
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
PCM, INC.
Statements of Stockholders' Equity
Years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Total
Common Stock Retained Stockholders'
Shares Value Earnings Equity
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 ..................... 1,000 $ 10,000 $ 836,047 $ 846,047
Net income ....................................... 1,171,324 1,171,324
Dividends declared ............................... (930,692) (930,692)
-------------- --------------- -------------- ---------------
Balance at December 31, 1996 ..................... 1,000 10,000 1,076,679 1,086,679
Issuance of common stock for services ............ 111.12 200,000 200,000
Net income ....................................... 7,017,804 7,017,804
Dividends declared ............................... (2,575,116) (2,575,116)
-------------- --------------- -------------- ---------------
Balance at December 31, 1997 ..................... 1,111.12 $ 210,000 $ 5,519,367 $ 5,729,367
-------------- --------------- -------------- ---------------
-------------- --------------- -------------- ---------------
</TABLE>
4
<PAGE>
PCM, INC.
Statements of Cash Flows
Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
Cash Flows from Operating Activities
<S> <C> <C>
Net income ................................................................ $ 7,017,804 $ 1,171,324
-------------- ---------------
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization ......................................... 14,290 19,948
Loss (gain) on sale of marketable securities .......................... 133,438 (92,980)
Unrealized gain on marketable securities .............................. - (165,756)
Bad debt expense ...................................................... 329,906 -
Stock bonus paid to officer ........................................... 200,000 -
Investment in marketable securities ................................... (607,547) (1,506,494)
Proceeds from sale of marketable securities ........................... 1,363,375 875,964
(Increase) decrease in
Receivables ...................................................... (2,111,599) (660,494)
Inventories ...................................................... 157,959 (380,426)
Prepaid expenses and other current assets ........................ (84,030) (10,676)
Increase (decrease) in
Accounts payable ................................................. 562,882 1,016,271
Accrued expenses ................................................. 264,406 203,650
Deferred income .................................................. (849,038) 803,208
-------------- ---------------
Total Adjustments ............................................ (625,958) 102,215
-------------- ---------------
Net Cash Provided by Operating Activities .................... 6,391,846 1,273,539
-------------- ---------------
Cash Flows from Investing Activities
Capital expenditures ...................................................... (11,397) (25,003)
Net (advances to) repayments from stockholder ............................. (390,957) 354,000
Net advances to officer ................................................... (200,000) -
Changes in restricted funds ............................................... 461,451 (565,664)
-------------- ---------------
Net Cash Used in Investing
Activities .................................................. (140,903) (236,667)
-------------- ---------------
Cash Flows from Financing Activities
Repayments of checks issued in excess of funds on deposit ................. (810,428) (360,813)
Net (borrowings) repayments under line of credit .......................... (305,115) 248,480
Payments of dividends ..................................................... (2,575,116) (930,692)
-------------- ---------------
Net Cash Used in Financing Activities ........................ (3,690,659) (1,043,025)
-------------- ---------------
Net Increase (Decrease) in Cash and Cash Equivalents ........................... 2,560,284 (6,153)
Cash, Beginning of Year ........................................................ 2,366 8,519
-------------- ---------------
Cash, End of Year .............................................................. $ 2,562,650 $ 2,366
-------------- ---------------
-------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
PCM, INC.
Notes to Financial Statements
Years Ended December 31, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents
- ----------------
For purposes of the statements of cash flows, the company considers time
deposits purchased with a maturity of three months or less to be cash
equivalents. Substantially all of the company's cash equivalents are held at
one financial institution and are classified as restricted at December 31,
1997 and 1996.
Inventories
- -----------
Inventories consist of computers and computer equipment and are valued at the
lower of cost (first-in, first-out) or market.
Depreciation and Amortization
- -----------------------------
Property and equipment is stated at cost. Additions and improvements are
capitalized. Maintenance and repairs are expensed as incurred.
The company's policy is to depreciate or amortize the cost of property and
equipment over the estimated useful lives of the assets as indicated in the
following tabulation by use of the declining balance and straight-line
methods. The cost of leasehold improvements is amortized over their useful
lives, or the applicable lease term, if shorter.
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Leasehold improvements .................. 3
Furniture and fixtures .................. 7
Office equipment ........................ 5-7
Computer equipment ...................... 5
Vehicles ................................ 5
Software ................................ 3
</TABLE>
Income Taxes
- ------------
The company has elected to be taxed as an S corporation under provisions of the
Internal Revenue Code. Accordingly, the accompanying financial statements do not
reflect income taxes, except for state replacement tax.
6
<PAGE>
PCM, INC.
Notes to Financial Statements
Years Ended December 31, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
- -------------------
The company recognizes revenues in the period goods are shipped or services are
performed. Revenues from maintenance contracts are recognized over the life of
the contract. Payments received by the company in advance of product delivery or
performance of services are deferred until earned.
Concentration of Credit Risk
- ----------------------------
Financial instruments which potentially subject the company to concentrations of
credit risk consist primarily of trade accounts receivable. Receivables arising
from sales to customers are not collateralized and, as a result, management
continually monitors the financial condition of its customers to reduce the risk
of loss.
Fair Value of Financial Instruments
- -----------------------------------
The carrying amounts of the company's financial instruments, including cash and
cash equivalents, accounts receivable, accounts payable and debt, approximate
fair value.
Reclassifications
- -----------------
Certain reclassifications have been made to prior year balances to conform to
the current year presentation. The reclassifications have no effect on prior
year operating results.
Investment Securities
- ---------------------
The company considers investment securities to be trading securities which are
defined by SFAS No. 115 as securities that are bought and held principally for
the purpose of selling them in the near term. The cost of securities sold is
based on the specific identification method for purposes of recording
realized gains and losses.
Management 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.
7
<PAGE>
PCM, INC.
Notes to Financial Statements
Years Ended December 31, 1997 and 1996
NOTE 2 - NATURE OF OPERATIONS
PCM, Inc. sells computers and related equipment and provides installation,
training and repair services to customers in the Chicagoland area.
NOTE 3 - SHORT-TERM INVESTMENTS IN MARKETABLE SECURITIES
As of December 31, 1996, the company held marketable equity securities for
trading purposes with estimated fair market values of $889,266. Income for
1997 and 1996 reflects realized (losses) gains of $(133,438) and $92,980,
respectively. Unrealized gains from holding securities during 1997 and 1996
amounted to $0 and $165,756, respectively.
NOTE 4 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
1997 1996
------------ --------
<S> <C> <C>
Leasehold improvements .................................... $ 30,570 $ 30,570
Furniture and fixtures .................................... 34,947 34,947
Office and computer equipment ............................. 57,878 46,685
Vehicles .................................................. 35,818 35,818
Software .................................................. 9,728 9,524
------------ ------------
168,941 157,544
Accumulated depreciation and amortization ................. (92,440) (78,150)
------------ -------------
$ 76,501 $ 79,394
------------ ------------
------------ ------------
</TABLE>
8
<PAGE>
PCM, INC.
Notes to Financial Statements
Years Ended December 31, 1997 and 1996
NOTE 5 - SHORT-TERM BORROWINGS - BANK
As of December 31, 1997 and 1996, the company was obligated under a line of
credit with Bank Leumi for $443,365 and $486,480, respectively. Borrowings
under this line of credit bear interest at 7.10% and are secured by several
certificates of deposit, held at Bank Leumi, worth approximately $1,022,000
and $970,000 as of December 31, 1997 and 1996, respectively, and a personal
guarantee by the principal stockholder. As of December 31, 1997, the maximum
additional available borrowings on this line of credit were $1,556,635. The
agreement expires on October 13, 1998.
As of December 31, 1996, the company was obligated under a line of credit
with American National Bank in the amount of $262,000. Borrowings under this
line of credit bore interest at a fluctuating rate equal to 150 basis points
in excess of the bank's certificate of deposit rate, or 6.65% as of December
31, 1996, and were secured by several certificates of deposit worth
approximately $513,000 held at American National Bank. This agreement was
terminated by the company in 1997.
NOTE 6 - ACCOUNTS PAYABLE
The company has an agreement with Deutsche Financial Services Corporation to
finance the purchase of inventory from its primary vendors. Under the terms
of the agreement, interest accrues at approximately 11% and 10.75% for 1997
and 1996, respectively, after the expiration of the grace period, which
averages 30 days. It is the company's policy to pay the obligation within the
terms of the grace period. The borrowings are secured by the assets of the
company and are subject to various restrictive covenants. As of December 31,
1997 and 1996, the amount due under this agreement was $1,360,733 and
$714,246, respectively.
NOTE 7 - OPERATING LEASES
The company has entered into leases for automobiles and its office facilities.
Total rental expense for these leases amounted to $149,259 and $146,154 for the
years ended December 31, 1997 and 1996, respectively.
The following is a schedule by year of future minimum rental payments required
under operating leases that have initial or remaining noncancelable lease terms
in excess of one year, as of December 31, 1997:
<TABLE>
<CAPTION>
Year Ending December 31:
<S> <C>
1998 ........................................ $ 130,243
1999 ........................................ 18,605
2000 ........................................ 9,070
2001 ........................................ 1,110
----------
Total Minimum Payments Required ............. $ 159,028
----------
----------
</TABLE>
9
<PAGE>
PCM, INC.
Notes to Financial Statements
Years Ended December 31, 1997 and 1996
NOTE 8 - EMPLOYEE BENEFIT PLAN
The company sponsors a profit-sharing plan for all employees who are eligible
based upon length of service. The plan provides for contributions in such
amounts as the board of directors may determine. The company funds
profit-sharing costs accrued. Contributions to the profit-sharing plan for the
years ended December 31, 1997 and 1996 amounted to $50,000 for each year.
NOTE 9 - MAJOR CUSTOMER
For the years ended December 31, 1997 and 1996, sales to a major customer
amounted to more than 10% of revenue. The amount of revenue from this customer
was $4,226,327 and $4,978,356, respectively. The receivable balance from this
major customer was $677,082 and $541,181 as of December 31, 1997 and 1996,
respectively.
NOTE 10 - NONCASH FINANCING ACTIVITIES
Cash payments for interest for the years ended December 31, 1997 and 1996
amounted to $47,023 and $32,491, respectively.
Cash payments for income taxes for the years ended December 31, 1997 and 1996
amounted to $16,819 and $7,490, respectively.
Effective March 31, 1997, the company authorized and issued 111.12 additional
shares of common stock as a stock bonus to an officer of the company. The shares
were valued at $200,000. An additional $150,000 in cash was paid in conjunction
with the stock bonus to cover the related payroll and income taxes.
10
<PAGE>
PCM, INC.
Notes to Financial Statements
Years Ended December 31, 1997 and 1996
NOTE 11 - RELATED PARTIES
As of December 31, 1997 and 1996, the amounts due from related parties were as
follows:
<TABLE>
<CAPTION>
1997 1996
----------- --------
<S> <C> <C>
Stockholder advance ............... $ 390,957 $ -
Note receivable - Officer ......... 200,000 -
------------ ----------
$ 590,957 $ -
------------ ----------
------------ ----------
</TABLE>
The stockholder advance represents a noninterest-bearing demand loan to the
majority stockholder in September 1997.
The terms of the note receivable - officer state one-fifth of the original note
balance ($40,000), along with any accrued interest, will be forgiven on December
31 of each year in which the officer is employed by the company, beginning
December 31, 1998 through December 31, 2002. In the event the officer ceases to
be employed by PCM, Inc. for any reason other than death, permanent disability,
or the bankruptcy of the company, the remaining balance of the note, including
accrued interest, will become due immediately.
11
<PAGE>
PCM, INC.
Notes to Financial Statements
Years Ended December 31, 1997 and 1996
NOTE 12 - SUBSEQUENT EVENTS
The company and its stockholders have entered into an agreement on July 27,
1998 with Aztec Technology Partners, Inc. (Aztec), in which Aztec acquired
all the outstanding shares of the company's common stock for approximately
$54,000,000 in cash.
The company paid dividends during 1998, up to the date of the sale of the
company on July 27, 1998, in the amount of $5,712,865.
12
<PAGE>
Exhibit 99.2
PCM, INC.
CONDENSED BALANCE SHEET (UNAUDITED)
June 30,1998
(In Thousands)
<TABLE>
ASSETS
<S> <C>
Current assets:
Cash $ 31
Accounts receivable,net 4,400
Due from stockholder 397
Inventories 466
Prepaid expenses and other current assets 41
-------
Total current assets 5,335
Property and equipment, net 78
Due from officer 200
-------
Total assets $ 5,613
-------
-------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 26
Accounts payable 1,065
Accrued liabilities 142
-------
Total current liabilities 1,233
-------
Stockholders' equity:
Common stock 210
Retained earnings 4,170
-------
Total stockholders' equity 4,380
-------
Total liabilities and stockholders' equity $ 5,613
-------
-------
</TABLE>
<PAGE>
PCM, INC.
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------------
1998 1997
------------ -------------
<S> <C> <C>
Revenues $ 18,052 $ 18,321
Cost of revenues 12,449 11,167
------------ -------------
Gross profit 5,603 7,154
Selling, general and administrative expenses 1,267 907
------------ -------------
Operating income 4,336 6,247
Other (income) expense (28) (187)
------------ -------------
Income before provision for income taxes 4,364 6,434
Provision for income taxes 65 97
------------ -------------
Net income $ 4,299 $ 6,337
------------ -------------
------------ -------------
</TABLE>
<PAGE>
PCM, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------
1998 1997
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 4,299 $ 6,337
Adjustments to reconcile net income to
net cash provided by operating activities (1,216) (2,751)
--------- ---------
Net cash provided by operating activities 3,083 3,586
--------- ---------
Cash flows from investing activities:
Changes in restricted funds 1,022 (312)
Other (7) -
--------- ---------
Net cash provided by (used in) investing
activities 1,015 (312)
--------- ---------
Cash flows from financing activities:
Checks issued in excess of funds on deposit (499) (1,301)
Net repayments under line of credit (418) (475)
Payment of dividends (5,713) (258)
--------- ---------
Net cash used in financing activities (6,630) (2,034)
--------- ---------
Net increase (decrease) in cash and cash equivalents (2,532) 1,240
Cash and cash equivalents at beginning of period 2,563 2
--------- ---------
Cash and cash equivalents at end of period 31 1,242
--------- ---------
--------- ---------
</TABLE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. PRESENTATION
The condensed consolidated balance sheet as of June 30, 1998, the condensed
consolidated statements of income for the six-month periods ended June 30,
1998 and 1997, and the condensed consolidated statements of cash flows for
the six-month periods then ended have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations, and cash flows have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that the condensed
consolidated financial statements contained in this report be read in
conjunction with the financial statements and notes thereto included in this
current report on Form 8-K. The results of operations for the six-months
ended June 30, 1998 are not necessarily indicative of the operating results
for the full year.
NOTE 2. SUBSEQUENT EVENT
The Company and its stockholders have entered into an agreement on July 27,
1998 with Aztec Technology Partners, Inc. (Aztec), in which Aztec acquired
all of the outstanding shares of the company's common stock for approximately
$54,000,000 in cash.
<PAGE>
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENT INFORMATION
The unaudited pro forma condensed consolidated financial information gives
effect to the acquisition of PCM, Inc. ("PCM") by Aztec Technology Partners,
Inc. (the "Company") on July 27, 1998. The Company acquired all of the
outstanding shares of PCM's common stock for approximately $54 million in cash.
The acquisition was accounted for under the purchase method of accounting. The
pro forma combined balance sheet gives effect to the acquisition of PCM as if
the acquisition had been completed as of June 30, 1998. The pro forma combined
statements of income give effect to the acquisition of PCM as if the acquisition
had been completed at the beginning of the period.
The pro forma combined statement of income for the year ended April 25, 1998
includes the audited financial information of the Company for the year ended
April 25, 1998 and the unaudited financial information of PCM for the year
ended January 31, 1998.
The pro forma combined statement of income for the nine weeks ended June 30,
1998 includes the unaudited financial information of the Company for the
period from April 26, 1998 to June 30, 1998 and the unaudited financial
information of PCM for the two months ended March 31, 1998.
The unaudited pro forma condensed consolidated financial information is based
on the historical consolidated financial statements of the Company and the
historical financial statements of PCM and reflects certain pro forma
adjustments based upon preliminary estimates, available information and
certain assumptions that management deems appropriate.
The unaudited pro forma condensed consolidated financial information is not
necessarily indicative of the financial position or results of operations
which would have actually been reported had the acquisition been consummated
as presented, or which may be reported in the future. The unaudited pro forma
condensed consolidated financial information should be read in conjunction
with the Company's Annual Report on Form 10-K for the year ended April 25,
1998 and quarterly report on Form 10-Q for the nine weeks ended June 30, 1998.
<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30,1998
(In Thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------------- --------------------------
ASSETS
Aztec PCM Notes Adjustments Combined
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 1,435 $ 31 $ - $ 1,466
Accounts receivable,net 48,678 4,400 53,078
Due from stockholder 397 397
Inventories 10,096 466 10,562
Prepaid expenses and other current assets 10,975 41 11,016
---------------------------------------------------------------
Total current assets 71,184 5,335 - 76,519
Property and equipment, net 6,152 78 6,230
Intangibles, net 63,554 5 51,650 115,204
Other assets 576 576
Due from officer 200 200
---------------------------------------------------------------
Total assets $ 141,466 $ 5,613 $ 51,650 $ 198,729
---------------------------------------------------------------
---------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 282 $ 26 $ - $ 308
Payable to U.S. Office Products 3,086 3,086
Accounts payable 17,490 1,065 18,555
Accrued liabilities 15,456 142 2 230 17,628
3 1,800
---------------------------------------------------------------
Total current liabilities 36,314 1,233 2,030 39,577
Long-term debt 278 1 54,000 54,278
Deferred income taxes 951 951
---------------------------------------------------------------
Total liabilities 37,543 1,233 56,030 94,806
---------------------------------------------------------------
---------------------------------------------------------------
Stockholders' equity:
Common stock 22 210 4 (210) 22
Additional paid-in capital 94,411 94,411
Retained earnings 9,490 4,170 4 (4,170) 9,490
---------------------------------------------------------------
Total stockholders' equity 103,923 4,380 (4,380) 103,923
---------------------------------------------------------------
Total liabilities and stockholders' equity $ 141,466 $ 5,613 $ 51,650 $ 198,729
---------------------------------------------------------------
---------------------------------------------------------------
</TABLE>
The following is a description of each of the pro forma adjustments:
1. Reflects the utilization of an acquisition credit facility.
2. Reflects legal and accounting costs incurred in connection with the
acquisition.
3. Reflects accrual for shareholder S-corporation tax liabilities due to
PCM shareholders under the acquisition agreement.
4. Reflects the elimination of PCM's historical equity.
5. Reflects the fair value ascribed to intangible assets.
<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED APRIL 25, 1998
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------------ ---------------------------------
Aztec PCM Notes Adjustments Combined
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 208,341 $ 35,841 $ - $ 244,182
Cost of revenues 158,317 26,268 184,585
---------------------------------------------------------------------
Gross profit 50,024 9,573 - 59,597
Selling, general and administrative expenses 35,185 2,929 38,114
Goodwill amortization expense 840 1 2,064 2,904
Strategic restructuring costs 1,750 1,750
---------------------------------------------------------------------
Operating income 12,249 6,644 (2,064) 16,829
Other (income) expense (22) (40) 2 3,888 3,826
---------------------------------------------------------------------
Income before provision for income taxes 12,271 6,684 (5,952) 13,003
Provision for income taxes 5,797 100 3 (2,464) 6,100
4 2,667
---------------------------------------------------------------------
Net income $ 6,474 $ 6,584 $ (6,155) $ 6,903
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted-average shares outstanding:
Basic 23,911 23,911
Diluted 24,385 24,385
Per share amounts:
Basic $ 0.27 $ 0.29
------------- -----------------
------------- -----------------
Diluted $ 0.27 $ 0.28
------------- -----------------
------------- -----------------
</TABLE>
The following is a description of each of the pro forma adjustments:
1. Represents the amortization of identified intangibles on a
straight-line basis using an estimated life of twenty-five years.
2. Represents increase in interest expense on new borrowings at a rate
of 7.2%.
3. Represents the recording of a tax benefit resulting from the effect
of the pro forma adjustments 1 and 2.
4. Represents the recording of a tax provision as if PCM had been
subject to federal and state income taxes.
<PAGE>
AZTEC TECHNOLOGY PARTNERS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
NINE WEEKS ENDED JUNE 30, 1998
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Historical Pro Forma
----------------------------- -------------------------------------
Aztec PCM Notes Adjustments Combined
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 50,708 $ 7,898 $ - $ 58,606
Cost of revenues 38,341 5,131 43,472
--------------------------------------------------------------------
Gross profit 12,367 2,767 - 15,134
Selling, general and administrative expenses 8,347 389 8,736
Goodwill amortization expense 274 1 344 618
Strategic restructuring costs 3,196 3,196
--------------------------------------------------------------------
Operating income 550 2,378 (344) 2,584
Other (income) expense 38 (36) 2 648 650
--------------------------------------------------------------------
Income before provision for income taxes 512 2,414 (992) 1,934
Provision for income taxes 225 36 3 (411) 813
4 963
--------------------------------------------------------------------
Net income $ 287 $ 2,378 $ (1,544) $ 1,121
--------------------------------------------------------------------
--------------------------------------------------------------------
Weighted-average shares outstanding:
Basic 25,238 25,238
Diluted 25,443 25,443
Per share amounts:
Basic $ 0.01 $ 0.04
------------- -----------------
------------- -----------------
Diluted $ 0.01 $ 0.04
------------- -----------------
------------- -----------------
</TABLE>
The following is a description of each of the pro forma adjustments:
1. Represents the amortization of identified intangibles on a
straight-line basis using an estimated life of twenty-five years.
2. Represents increase in interest expense on new borrowings at a rate
of 7.2%.
3. Represents the recording of a tax benefit resulting from the effect
of the pro forma adjustments 1 and 2.
4. Represents the recording of a tax provision as if PCM had been
subject to federal and state income taxes.
