SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: December 20, 1996
(Amending form 8K filed on October 25, 1995 to report event on October 12, 1996)
Able Telcom Holding Corp.
(Exact name of registrant as specified in charter)
<TABLE>
<S> <C> <C>
Florida 0-21986 65-0013218
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
</TABLE>
<TABLE>
<S> <C>
1601 Forum Place, Suite 1110, West Palm Beach, Florida 33401
(Address of principal executive offices) (Zip code)
</TABLE>
Registrant's telephone number, including area code: (561) 688-0400
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
Item 7. Financial Statements and Exhibits.
The following financial statements, pro forma financial information and
exhibits are filed as part of this Form 8-K/A-1:
(a) Financial Statements.
Financial Statements of Georgia Electric Company:
Report of Independent Auditors
Balance Sheet as of December 31, 1995 and 1994
Statements of Income and Retained Earnings for the Years Ended
December 31, 1995 and 1994
Statement of Cash Flows for the years ended December 31, 1995
and 1994
Notes to Financial Statements
Report of Independent Auditors
Balance Sheet as of December 31, 1993
Statements of Income and Retained Earnings for the Years Ended
December 31, 1993
Statement of Cash Flows for the years ended December 31, 1993
Notes to Financial Statements
Report of Independent Auditors
Balance Sheet as of April 30, 1993 and 1992
Statements of Income and Retained Earnings for the Years Ended
April 30, 1993 and 1992
Statement of Cash Flows for the years ended April 30, 1993 and
1992
Notes to Financial Statements
Supplemental Information
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
(b) Pro Forma Financial Information.
On October 12, 1996, the Registrant, through its wholly-owned
subsidiary Traffic Management Group, completed the acquisition of
all of the issued and outstanding stock of Georgia Electric Company
("GEC"), a Georgia corporation, from Gerry W. Hall and J. Barry Hall
for a combination of $3,000,000 cash plus the issuance at the end of
each of the next five years a number of shares of common stock of
the registrant having a then current market value of $1,000,000,
subject to adjustment based on the pretax earnings of GEC.
The following Pro Forma Combined Balance Sheet of the Registrant has
been prepared by management of the Registrant based upon the balance
sheets of the Registrant as of October 31, 1995 and July 31, 1996
and of GEC as of December 31, 1995 and October 12, 1996. The Pro
Forma Combined Statement of Income was prepared based upon the
statement of income for the Registrant for the twelve months ended
October 31, 1995 and the nine months ended July 31, 1996 and for the
twelve months ended December 31, 1995 and the nine and one half
months ended October 12, 1996 and. The pro forma statements give
effect to the transaction under the purchase method of accounting
and the assumptions and adjustments in the accompanying notes to pro
forma combined financial statements. The pro forma combined balance
sheet gives effect to the acquisition as if it had occurred as of
July 31, 1996. The pro forma combined statement of income for the
year ended October 31, 1995 gives effect to the acquisition as if it
had occurred as of November 1, 1994. The pro forma combined
statement of income for the nine months ended July 31, 1996 gives
effect to the acquisition as if it had occurred as of November 1,
1995.
The pro forma adjustments are based upon available information and
certain assumptions that management believes are reasonable. The pro
forma combined financial statements don not purport to represent
what the combined companies's financial position or results of
operations would actually have been had the acquisition occurred on
such date or as of the beginning of the period indicated, or to
project the combined companies' financial position or results of
operations for any future period.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ABLE TELCOM HOLDING CORP.
By: /s/ Daniel L. Osborne
-----------------------------------
Daniel L. Osborne
Chief Accounting Officer
Dated: December 20, 1996
<PAGE>
MITCHELL, HONEYCUTT & RAY, P.C.
Certified Public Accountants
3310 Atlanta Road, Smyrna Georgia 30080
(770) 434-4040 Voice
(770) 432-5043 Fax
Board of Directors
Georgia Electric Company
Albany, Georgia
We have audited the accompanying balance sheet of Georgia Electric Company as of
December 31, 1995 and December 31, 1994 and the related statements of income,
retained earnings, and cash flows for the year 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 audit 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 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 Georgia Electric Company as of
December 31, 1995 and December 31, 1994 and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The Supplementary Information is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/Mitchell, Honeycutt & Ray, P.C.
- ---------------------------------
Mitchell, Honeycutt & Ray, P.C.
Certified Public Accountants
March 13, 1996
<PAGE>
Georgia Electric Company
Balance Sheet
December 31, 1995 and 1994
Assets
<TABLE>
<S> <C> <C>
1995 1994
Current Assets
Cash in Bank and Temporary Investments $ 550,022 $ 1,266,635
Cash in Bank - Retainage Escrow 103,629 136,306
Accounts Receivable
Trade 3,225,875 1,820,621
Retainage 433,391 176,244
Other 33,928 32,151
Provision for Doubtful Accounts (2,882) (2,882)
-------------- -----------
Total Accounts Receivable $ 3,690,312 $ 2,206,134
Inventory - Material 580 793
Prepaid Expenses 148,708 110,685
Cost and Profit on Incomplete Contracts in
Excess of Billings 325,280 247,810
-------------- -----------
Total Current Assets $ 4,818,531 $ 3,788,363
Property and Equipment net of Accumulated
Depreciation totaling $2,084,127 and
$1,681,302 for 1995 and 1994 respectively 1,337,848 1,058,323
Cash Value of Life Insurance 254,098 198,342
------------- -----------
Total Assets $ 6,410,477 $ 5,045,028
============== ===========
</TABLE>
Liabilities and Stockholders' Equity
<TABLE>
<S> <C> <C>
Current Liabilities
Accounts Payable $ 922,030 $ 336,171
Accrued Salaries and Bonuses 304,679 207,352
Accrued and Withheld Taxes 123,823 72,827
Accrued Expenses 222,653 163,383
Provision for Workers Compensation Claims 350,000 281,244
Provision for Warranty Costs 35,395 35,395
Billings in Excess of Cost and Profit on
Incomplete Contracts 127,802 170,774
Other Current Liabilities 73,783 73,782
Notes Payable - Due After One Year - Note E 550,000 1,000,000
----------- -----------
Total Current Liabilities $ 2,710,165 $ 2,340,928
Stockholders' Equity
Common Stock - 45,000 Shares $1 Par Value
Issued and Outstanding $ 45,000 $ 45,000
Paid-in Capital 1,036,640 1,036,640
Retained Earnings 2,618,672 1,622,460
----------- -----------
Total Stockholders' Equity $ 3,700,312 $ 2,704,100
----------- -----------
Total Liabilities and Stockholders' Equity $ 6,410,477 $ 5,045,028
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE>
Georgia Electric Company
Statement of Income and Retained Earnings
For the Years Ended December 31, 1995 and 1994
1995 1994
<TABLE>
<S> <C> <C>
Revenue $ 21,978,222 $ 14,585,287
Cost of Contract Operations 18,816,967 11,972,650
------------ ------------
Gross Profit - Note A $ 3,161,255 $ 2,612,637
Operating Expenses
Equipment and Shop Expense $ (805,501) $ (139,213)
Sales and Estimating Expense 198,747 163,179
Administrative Expense 1,129,080 941,258
------------ ------------
Total Operating Expenses $ 522,326 $ 965,224
------------ ------------
Income From Operations $ 2,638,929 $ 1,647,413
Other Income 43,071 44,291
------------ ------------
Net Income $ 2,682,000 $ 1,691,704
Retained Earnings, January 1 1,622,460 2,005,256
Distributions (1,685,788) (2,074,500)
------------ ------------
Retained Earnings, December 31 $ 2,618,672 $ 1,622,460
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE>
Georgia Electric Company
Statement of Cash Flows
For the Years Ended December 31, 1995 and 1994
<TABLE>
<S> <C> <C>
1995 1994
------------ ------------
Cash Flows From Operating Activities:
Net Income Provided From Operations $ 2,682,000 $ 1,691,704
Adjustments to Reconcile Net Income to Net
Cash Provided By Operating Activities:
Depreciation 402,825 329,421
(Increase) Decrease in:
Accounts Receivable (1,664,178) (297,144)
Inventory and Work in Process (120,228) 52,674
Prepaid Expenses (38,023) (83,335)
Increase (Decrease) in:
Accounts Payable 585,859 (808,865)
Accrued Expenses 207,593 (104,481)
Other Payables 68,756 211,849
Other Liabilities 0 (60,397)
------------ ------------
Net Cash Provided by Operations $ 2,124,604 $ 931,426
Cash Flows From Investing Activities
Increase in Cash Value of Life Insurance (55,756) (139,694)
Purchases of Equipment (682,350) (524,185)
------------ ------------
Total Cash Flows From Investing Activities $ (738,106) $ (663,879)
Cash Flows From Financing Activities
Payment of Note Payable (450,000) 0
Distributions to Stockholders (1,685,788) (2,074,500)
------------ ------------
Total Cash Flows From Financing Activities $(2,135,788) $ (2,074,500)
Increase (Decrease) in Cash $ (749,290) $ (1,806,953)
Cash at Beginning of Year 1,402,941 3,209,894
------------ ------------
Cash at End of Year $ 653,651 $ 1,402,941
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
Georgia Electric Company
Notes to Financial Statements
December 31, 1995 and 1994
Note A - Summary of Significant Account Policies
Revenue and Cost Recognition
The Company recognized revenues from fixed price and modified fixed price
contracts on the percentage- of-completion method, measured by the percentage of
cost incurred to date to estimated total cost for each contract. Revenue from
contracts based on time and materials is recognized when invoices are issued.
Contract costs include all direct material and labor costs and those indirect
costs related to contract performance such as indirect labor, supplies, and
tools and equipment usage costs. Provisions for estimated losses on uncompleted
contracts are made in the period in which such loss is determined. Changes in
job performance, conditions and the estimated profitability may result in
revisions to costs and income which are recognized in the period in which the
revisions are determined.
Depreciation
Depreciation is provided principally on the straight line method over the
estimated useful lives of the assets which are generally five years.
Income Taxes
Effective May 1, 1993, the Company and its shareholders elected under provisions
of the Internal Revenue Code to be an S Corporation. In lieu of corporate income
taxes, the shareholders of an S Corporation are taxed on their proportionate
share of the company's taxable income. Therefore, no provision or liability for
federal income taxes has been included in the financial statements.
Note B - Organization
Georgia Electric Company, a Georgia Corporation was, prior to May 1, 1993, a
subsidiary of Electric Company of Georgia, Inc. On May 1, 1993 Electric Company
of Georgia, Inc. distributed the shares of Georgia Electric Company to its
shareholders. Also on May 1, 1993 the shareholders elected to be taxed as an S
Corporation and in accordance with the regulations covering S Corporations
elected to change the fiscal year of the Company to a calendar year.
Note C - Operating Lease Agreements
The Company leases its office and storage facilities in Albany, Georgia from
officers of the Company who are the shareholders of the Company. The monthly
rental is $5,000.00.
Page 5
<PAGE>
Georgia Electric Company
Notes to Financial Statements
December 31, 1995 and 1994
Note D - Costs and Estimated Earnings on Uncompleted Contracts
<TABLE>
<CAPTION>
December 31,
<S> <C> <C>
1995 1994
Costs Incurred on Uncompleted Contracts $ 9,697,706 $ 7,391,722
Earnings Recognized on Uncompleted
Contracts 1,257,705 1,107,449
----------- -----------
Total $10,995,411 $ 8,499,171
Billings to date 10,757,933 8,422,134
----------- -----------
Total $ 197,478 $ 77,037
=========== ===========
Included in the accompanying balance
sheet under the following headings:
Cost and Profit on Incomplete Contracts
in Excess of Billing 325,280 247,811
Billings in Excess of Cost and Profit
on Incomplete Contracts 127,802 170,774
----------- -----------
Total $ 197,478 $ 77,037
=========== ===========
</TABLE>
Note E - Long Term Indebtedness
Long Term Indebtedness consists of a note payable to Trust Company Bank of South
Georgia, N.A., bearing interest at the prime rate charged by that bank. The
original terms were that the loan was to be repaid in five annual installments
of $200,000 beginning January 1, 1996. During 1995 principal payments totaling
$450,000 were made to reduce the balance due at December 31, 1995 to $550,000.
Based on the 1995 payments and the intentions of management to repay this loan
when cash flows are adequate, the amount is included as a current liability.
Note F - Property and Equipment
Property and Equipment of the Company is summarized as follows:
<TABLE>
<S> <C> <C>
1995 1994
Motor Vehicles $ 1,683,979 $ 1,449,146
Equipment 1,495,870 1,082,753
Trailers 36,340 16,382
Office Furniture and Equipment 60,417 52,588
Data Processing Equipment 134,781 128,169
Leasehold Improvements 10,588 10,588
------------ -----------
Totals $ 3,421,975 $ 2,739,626
Accumulated Depreciation 2,084,127 1,681,303
------------ -----------
Total $ 1,337,848 $ 1,058,323
============ ===========
</TABLE>
Note G - Related Party Transactions
The Company has transactions with related corporations and its stockholders.
These include the rental of property noted in Note C above, and various services
provided at cost which are not material.
Page 6
<PAGE>
Georgia Electric Company
Notes to Financial Statements
December 31, 1995 and 1994
Note H - Employee Savings and Benefit Plan
The Company has a qualified Section 401K Savings and Benefit Plan for its
employees with one year's service. The Company contributes based on employee
savings. The contributions to the plan for the period ending December 31, 1995
totaled $69,277 and for the year ended December 31, 1994, $64,072.
Note I - Shop Expense - Allocations to Contracts
Contracts are charged, at market rates, for equipment used on the contract.
Allocations for the year exceeded the total shop expense for the year since the
amounts charged to contracts at market rates exceed the actual cost.
Note J - Provision for Workers Compensation Claims
The Company elected, with the renewal of its insurance policy on May, 1994, to
be self insured on the first $325,000 of workers compensation claims. Claims
totaling $43,756 were received through December 31, 1994 and provision is made
for the remainder of the contingent liability during the remaining period of the
policy. The self insured portion was reduced to $250,000 for the policy year
beginning May 1, 1995. The provision for claims was increased to $350,000 at
December 31, 1995.
Note K - Distributions to Stockholders
Distributions were made during 1994 and 1995 primarily for the payment of income
taxes due by stockholders resulting from the inclusion of corporate income in
their personal returns. Due to increased income in 1995, additional
distributions will be made in 1996 for payment of income tax due on 1995 income.
Note L - Business Concentration
A substantial portion of the revenue of the Company is from one Company. The
nature of this business is based on cost-plus contracts for maintenance and
contract services. It is the opinion of management that this concentration does
not jeopardize the operations of the Company.
Note M - Available Line of Credit
The company has an open, unused line of credit available from Trust Company Bank
of South Georgia, N.A. in the amount of $1,000,000 at December 31, 1995 and at
the date of this report.
Page 7
<PAGE>
MITCHELL, HONEYCUTT & RAY, P.C.
Certified Public Accountants
3310 Atlanta Road, Smyrna Georgia 30080
(404) 434-4040
Board of Directors
Georgia Electric Company
Albany, Georgia
We have audited the accompanying balance sheet of Georgia Electric Company
as of December 31, 1993, and the related statements of income, 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 audit 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 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 Georgia Electric Company as
of December 31, 1993 and the results of its operations and its cash flows for
the years then ended in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Supplementary Information is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/Mitchell, Honeycutt & Ray, P.C.
---------------------------------
Mitchell, Honeycutt & Ray, P.C.
Certified Public Accountants
February 26, 1994
<PAGE>
Georgia Electric Company
Balance Sheet
December 31, 1993
Assets
<TABLE>
<S> <C> <C>
Current Assets
Cash in Bank and Temporary Investments $ 3,140,308
Cash in Bank - Retainage Escrow 69,586
Accounts Receivable
Trade $ 1,407,699
Retainage 197,035
Other 130,098
-----------
Total $ 1,734,832
Provision for Doubtful Accounts -5,843 1,728,989
Prepaid Expenses 27,350
Cost and Profit on Incomplete Contracts
in Excess of Billings 477,963
-----------
Total Current Assets $ 5,444,196
Property and Equipment Less Accumulated
Depreciation of $ 1,359,682 863,558
Cash Value of Life Insurance 58,649
-----------
Total Assets $ 6,366,403
===========
</TABLE>
Liabilities and Stockholders' Equity
<TABLE>
<S> <C> <C>
Current Liabilities
Accounts Payable $ 1,145,036
Accrued Salaries and Bonuses 178,259
Accrued and withheld Taxes 31,724
Accrued Expenses 338,062
Provision for Warranty Costs 75,220
Accrued Profit Sharing Plan Contribution 29,570
Billings in Excess of Cost and Profit on
Incomplete Contracts 347,459
Other Current Liabilities 134,177
-----------
Total Current Liabilities $ 2,279,507
Long Term Indebtedness 1,000,000
-----------
Total Liabilities $ 3,279,507
Stockholders' Equity
Common Stock - 45,000 Shares $1 Par Value
Issued and Outstanding $ 45,000
Paid-in Capital 1,036,640
Retained Earnings 2,005,256
-----------
Total Stockholders' Equity $ 3,086,896
Total Liabilities and Stockholders' Equity $ 6,366,403
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE>
Georgia Electric Company
Statement of Income and Retained Earnings
For the Period May 1, 1993 through December 31, 1993
<TABLE>
<S> <C>
Revenue $ 13,677,087
Cost of Contract Operations 12,163,127
------------
Gross Profit - Note A $ 1,513,960
Operating Expenses
Shop Expense (Credit) $ (282,463)
Sales and Estimating Expense 64,603
Administrative Expense 444,926 227,066
------------ ------------
Income From Operations $ 1,286,894
Other Income 65,172
Net Income $ 1,352,066
Retained Earnings, May 1 1,183,190
Dividends Paid 530,000 653,190
------------ ------------
Retained Earnings, December 31 $ 2,005,256
============
Earnings Per Share $ 44.56
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE>
Georgia Electric Company
Statement of Cash Flows
For the Period May 1, 1993 through December 31, 1993
<TABLE>
<S> <C>
Cash Flows From Operating Activities:
Net Income Provided From Operations $ 1,352,066
Adjustments to Reconcile Net Income to Net Cash Provided
By Operating Activities:
Depreciation 198,945
Deferred Income Taxes (59,440)
Loss (Gain) From Fixed Asset Disposal (778)
(Increase) Decrease in:
Inventory and Work in Process (62,126)
Accounts Receivable 274,843
Prepaid Expenses (27,350)
Increase (Decrease) in:
Accounts Payable 705,379
Accrued Expenses 29,195
Other Payables (27,046)
Other Liabilities (49,729)
-----------
Net Cash Provided by Operations $ 2,333,959
Cash Flows From Investing Activities:
Increase in Cash Value of Life Insurance (572)
Purchases of Equipment (149,624)
Proceeds From Sale of Property and Equipment 2,525
-----------
Total Cash Flows From Investing Activities $ (147,671)
Cash Flows From Financing Activities:
Dividends Paid (530,000)
-----------
Increase (Decrease) in Cash $ 1,656,288
Cash at Beginning of Year 1,553,606
-----------
Cash at End of Year $ 3,209,894
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
Georgia Electric Company
Notes to Financial Statements
December 31, 1993
Note A - Summary Of Significant Accounting Policies
Revenue and Cost Recognition
The Company recognizes revenues from fixed price and modified fixed price
contracts on the percentage-of- completion method, measured by the percentage of
cost incurred to date to estimated total cost for each contract. Revenue from
contracts based on time and materials is recognized when invoices are issued.
Contract costs include all direct material and labor costs and those indirect
costs related to contract performance such as indirect labor, supplies, and
tools and equipment usage costs. Provisions for estimated losses on uncompleted
contracts are made in the period in which such loss is determined. Changes in
job performance, conditions and the estimated profitability may result in
revisions to costs and income which are recognized in the period in which the
revisions are determined.
Depreciation
Depreciation is provided principally on the straight line method over the
estimated useful lives of the assets which are generally five years.
Income Taxes
Effective May 1, 1993, the Company and its shareholders elected under provisions
of the Internal Revenue Code to be an S Corporation. In lieu of corporate income
taxes, the shareholders of an S Corporation are taxed on their proportionate
share of the Company's taxable income. Therefore, no provision or liability for
federal income taxes has been included in the financial statements.
Note B - Organization
Georgia Electric Company, a Georgia Corporation was, prior to May 1, 1993, a
subsidiary of Electric Company of Georgia, Inc. On May 1, 1993 Electric Company
of Georgia, Inc. distributed the shares of Georgia Electric Company to its
shareholders. Also on May 1, 1993 the shareholders elected to be taxed as an S
Corporation and in accordance with the regulations covering S Corporations
elected to change the fiscal year of the Company to a calendar year.
Note C - Operating Lease Agreements
The Company leases its offices and storage facilities in Albany, Georgia from
officers of the Company who are the shareholders of the Company. The monthly
rental is $5,000.00.
Page 5
<PAGE>
Georgia Electric Company
Notes to Financial Statements
December 31, 1993
Note D - Costs and Estimated Earnings on Uncompleted Contracts
<TABLE>
<S> <C>
Costs Incurred on Uncompleted Contracts $ 8,395,054
Earnings Recognized On Uncompleted Contracts 879,720
Total $ 9,274,774
Billings to Date 9,144,270
------------
Total $ 130,504
============
Included in the accompanying balance sheet
under the following headings:
Cost and Profit on Incomplete Contracts in
Excess of Billings $ 477,963
Billings in Excess of Cost and Profit on
Incomplete Contracts 347,459
------------
Total $ 130,504
============
</TABLE>
Note E - Due From Parent Company
The amount represents advances to Electric Company of Georgia, Inc., the sole
shareholder of the Company.
Note F - Long Term Indebtedness
Long term indebtedness consists of a note payable to Trust Company Bank of South
Georgia, N.A. bearing interest at the prime rate charged by that bank and to be
repaid in five annual installments of $200,000 beginning January 1, 1995.
Note G - Property and Equipment
Property and Equipment of the Company is summarized as follows:
<TABLE>
<S> <C>
Motor Vehicles $ 1,184,482
Equipment 841,309
Trailers 10,782
Office Furniture and Equipment 47,910
Data Processing Equipment 128,169
Leasehold Improvements 10,588
-----------
Totals 2,223,240
-----------
Accumulated Depreciation $ 1,359,682
-----------
Total $ 863,558
===========
</TABLE>
Page 6
<PAGE>
Note H - Related Party Transactions
The Company has transactions with related corporations and its stockholders.
These include the rental of property noted in Note D above, and various services
provided at cost which are not material.
Note I - Employee Savings and Benefit Plan
The Company has aa qualified Section 401K savings and benefit plan for its
employees with one year's service. The Company contributes based on employee
savings. The contributions to the plan for the period ended December 31, 1993
totaled $26,852.
Note J - Shop Expense - Allocations to Contracts
Contracts are charged, at market rates, for equipment used on the contract.
Allocations for the year exceeded the total shop expense for the year since
market rates exceed the actual cost.
Note K - Subsequent Events
The Directors and Stockholders of the parent company, Electric Company of
Georgia, Inc. elected to distribute the shares of Georgia Electric Company stock
to its shareholders effective May 1, 1993. Subsequently the stockholders of
Georgia Electric Company elected with the Internal Revenue Service to be taxed
as an S Corporation with a taxable year ending on December 31. The effect of the
election will be the tax on corporate income being paid by the shareholders
rather than the Company. It is anticipated that dividends will be paid in the
future in the amount at lease equal to the individual tax liability resulting
from inclusion of corporate income.
Page 7
<PAGE>
MITCHELL, HONEYCUTT & RAY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
3310 Atlanta Road, Smyma, Georgia 30080 (404) 434-4040
Board of Directors
Georgia Electric Company
Albany, GA
We have audited the accompanying balance sheet of Georgia Electric Company
as of April 30, 1993 and 1992, and the related statements of income, 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 audit 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 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 Georgia Electric
Company as of April 30, 1993 and 1992, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Supplementary Information is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Mitchell, Honeycutt & Ray, P.C.
-----------------------------------
Mitchell, Honeycutt & Ray, P.C.
Certified Public Accountants
July 21, 1993
<PAGE>
Georgia Electric Company
Balance Sheet
As of April 30, 1993 and 1992
Assets
<TABLE>
<S> <C> <C>
1993 1992
Current Assets
Cash in Bank and Temporary Investment $ 1,553,606 $ 1,044,200
Accounts Receivable
Trade 1,777,860 1,610,861
Retainage 96,713 83,338
Other 135,102 48,505
----------- -----------
Total $ 2,009,675 $ 1,742,704
Provision for Doubtful Accounts -5,843 -5,843
----------- -----------
Accounts Receivable - Net $ 2,003,832 $ 1,736,861
Deposits -0- 7,500
Cost and Profit on Incomplete Contracts in
Excess of Billings 123,265 68,368
----------- -----------
Total Current Assets $ 3,680,703 $ 2,856,929
Property and Equipment Less Accumulated
Depreciation of $1,175,224 for 1993 and
$932,077 for 1992 917,626 885,986
Cash Value of Life Insurance 58,077 -0-
Due From Parent Company -0- 1,703,704
----------- -----------
Total Assets $ 4,656,406 $ 5,446,619
=========== ===========
</TABLE>
Liabilities and Stockholders' Equity
<TABLE>
<S> <C> <C>
Current Liabilities
Accounts Payable $ 439,657 $ 740,246
Accrued Salaries and Bonuses 91,154 77,191
Accrued and withheld Taxes 92,634 101,627
Other Payables 365,108 115,702
Provision for Warranty Costs 75,220 75,946
Accrued Profit Sharing Plan Contribution 36,955 31,024
Billings in Excess of Cost and Profit on
Incomplete Contracts 54,887 308,993
Other Current Liabilities 176,521 109,389
----------- -----------
Total Current Liabilities $ 1,332,136 $ 1,560,118
Long Term Indebtedness 1,000,000 -0-
Deferred Income Tax 59,440 70,061
----------- -----------
Total Liabilities $ 2,391,576 $ 1,630,179
Stockholders' Equity
Common Stock - 45,000 Shares $1 Par Value
Issued and Outstanding $ 45,000 $ 45,000
Paid-in Capital 1,036,640 1,036,640
Retained Earnings 1,183,190 2,734,800
----------- -----------
Total Stockholders' Equity $ 2,264,830 $ 3,816,440
Total Liabilities and Stockholders' Equity $ 4,656,406 $ 5,446,619
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE>
Georgia Electric Company
Statement of Income and Retained Earnings
For the Years Ended April 30, 1993 and 1992
<TABLE>
<S> <C> <C>
1993 1992
Revenue $ 14,818,781 $ 9,973,013
Cost of Contract Operations 11,747,662 7,872,381
------------ ------------
Gross Profit - Note A $ 3,071,119 $ 2,100,632
Operating Expenses
Shop Expense (Credit) $ (350,273) $ (336,835)
Sales and Estimating Expense 146,726 142,752
Administrative Expense 1,812,571 1,167,821
------------ ------------
Total Operating Expenses $ 1,609,024 $ 973,738
Income From Operations $ 1,462,095 $ 1,126,894
Other Income 45,537 104,095
------------ ------------
Income Before Provision for Income Tax $ 1,507,632 $ 1,230,989
Provision for Income Taxes 569,422 326,065
------------ ------------
Net Income $ 938,210 $ 904,924
Retained Earnings, May 1 2,734,800 2,529,876
Dividends Paid (2,489,820) (700,000)
------------ ------------
Retained Earnings, April 30 $ 1,183,190 $ 2,734,800
============ ============
Earnings Per Share $ 20.85 $ 20.11
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE>
Georgia Electric Company
Statement of Cash Flows
For the Years Ended April 30, 1993 and 1992
<TABLE>
<S> <C> <C>
1993 1992
Cash Flows From Operating Activities
Net Income Provided From Operations $ 938,210 $ 904,924
Adjustments to Reconcile Net Income to Net Cash
Provided By Operating Activities:
Depreciation 265,960 218,423
Deferred Income Taxes (10,621) (78,843)
Loss (Gain) From Fixed Asset Disposal 8,297 (24,808)
(Increase) Decrease in:
Inventory and Work in Process (309,003) (290,675)
Contract Deposits -0- 60,000
Accounts Receivable (266,971) (404,762)
Deposits 7,500 (7,500)
Increase (Decrease) in:
Accounts Payable (300,589) 257,307
Accrued Expenses 4,970 (13,354)
Other Payables 249,406 (168,532)
Other Liabilities 72,337 (93,726)
----------- -----------
Net Cash Provided by Operations $ 659,496 $ 358,454
Cash Flows From Investing Activities:
Increase in Cash Value of Life Insurance (58,077) -0-
Purchases of Equipment (369,297) (331,648)
Proceeds From Sale of Property and Equipment 63,400 45,439
Collection in Amount Due From Parent 1,703,704 15,413
----------- -----------
Total Cash Flows From Investing Activities $ 1,339,730 $ (270,796)
Cash Flows From Financing Activities
Proceeds from Long Term Indebtedness 1,000,000 0
Dividends Paid (2,489,820) (700,000)
----------- -----------
Increase (Decrease) in Cash $(1,489,820) $ (612,342)
Cash at Beginning of Year 1,044,200 1,656,542
----------- -----------
Cash at End of Year $ 1,553,606 $ 1,044,200
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
Georgia Electric Company
Notes to Financial Statements
April 30, 1993 and 1992
Note A - Summary Of Significant Accounting Policies
Revenue and Cost Recognition
The Company recognizes revenues from fixed price and modified fixed price
contracts on the percentage-of-completion method, measured by the percentage of
cost incurred to date to estimated total cost for each contract. Revenue from
contracts based on time and materials is recognized when invoices are issued.
Contract costs include all direct material and labor costs and those indirect
costs related to contract performance such as Indirect labor, supplies, and
tools and e(equipment usage costs. Provisions for estimated losses on
uncompleted contracts are made in the period in which such loss is determined.
Changes in job performance, conditions and the estimated profitability may
result in revisions to costs and income which are recognized in the period in
which the revisions are determined.
Depreciation
Depreciation is provided principally on the straight line method over the
estimated useful lives of the assets which are generally five years.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes. The
deferred taxes represent the future tax return consequences of the timing
differences in the recognition of revenue and expenses for tax and financial
reporting. The primary differences consist of the deferral of revenue and
expense for tax purposes, provisions for future costs, and depreciation, which
is computed for tax purposes using accelerated methods. Taxes due currently are
paid to the parent corporation to apply against taxes on the consolidated
returns.
Note B - Organization
Georgia Electric Company, a Georgia Corporation, is a wholly owned subsidiary of
Electric Company of Georgia, Inc., also a Georgia Corporation.
Note C - Operating Lease Agreements
The Company leases its offices and storage facilities in Albany, Georgia from
officers of the Company who are also majority shareholders of Electric Company
of Georgia, Inc., the sole shareholder of the Company. The monthly rental is
$4,750.00
Page 5
<PAGE>
Georgia Electric Company
Notes to Financial Statements
April 30, 1993 and 1992
Note D - Costs and Estimated Earnings On Uncompleted Contracts
<TABLE>
<S> <C> <C>
1993 1992
Cost Incurred on Uncompleted Contracts $ 3,781,432 $ 3,547,595
Earnings Recognized on Uncompleted Contracts 381,896 2,931,946
----------- -----------
Total $ 4,163,328 $16,479,541
Billings to Date 4,094,950 -16,720,166
----------- -----------
Total $ 68,378 $ -240,625
=========== ===========
Included in the accompanying balance sheet under
the following headings:
Cost and Profit on Incomplete Contracts
in Excess of Billings $ 123,265 $ 68,368
Billings in Excess of Cost and Profit on
Incomplete Contracts -54,887 -308,993
----------- -----------
Total $68,378 $ -240,625
=========== ===========
</TABLE>
Note E - Due From Parent Company
The amount represents advances to Electric Company of Georgia, Inc., the sole
shareholder of the Company.
Note F - Long Term Indebtedness
Long term indebtedness consists of a note payable to Trust Company Bank of South
Georgia, N.A. bean' interest at the prime rate charged by that bank and to be
repaid in five annual installments of $200,000 beginning May 1, 1994. The note
is secured by the shareholders of Electric Company of Georgia, Inc.
Note G - Property and Equipment
Property and equipment of the Company is summarized as follows:
<TABLE>
<S> <C> <C>
1993 1992
Motor Vehicles $ 1,051,070 $ 968,211
Equipment 841,309 652,013
Trailers 10,782 10,782
Office Furniture and Equipment 45,101 45,101
Data Processing Equipment 126,150 123,518
Leasehold improvements 18,438 18,438
----------- -----------
Totals $ 2,092,850 $ 1,818,063
Accumulated Depreciation 1,175,224 932,077
----------- -----------
$ 917,626 $ 885,986
=========== ===========
</TABLE>
Page 6
<PAGE>
Georgia Electric Company
Notes to Financial Statements
April 30, 1993 and 1992
Note H - Related Party Transactions
The Company has transactions with related corporations and its stockholders.
These include the rental of property noted in Note D above, and various services
provided at cost which are not material.
Note I - Employee Savings and Benefit Plan
The Company has a qualified Section 401K savings and benefit plan for its
employees with one year's service. The Company contributes based on employee
savings. The contributions to the plan for 1993 totaled $30,874 and $17,393 for
1992.
Note J - Shop Expense - Allocations to Contracts
Contracts arc charged, at market rates, for equipment used on the contract.
Allocations for the year exceeded the total shop expense for the year since
market rates exceed the actual cost.
Note K
During the year the Directors declared a dividend payable to the parent company,
Electric Company of Georgia, Inc. in the amount of the balance advanced to the
parent over the years. The amount distributed totaled $1,789,820.
Note L - Subsequent Events
The Directors and Stockholders of the parent company, Electric Company of
Georgia, Inc. elected to distribute the shares of Georgia Electric Company stock
to its shareholders effective May 1, 1993. Subsequently the stockholders of
Georgia Electric Company elected with the Internal Revenue Service to be taxed
as an S Corporation with a taxable year ending on December 31. The effect of the
election will be the tax on corporate income being paid by the shareholders
rather than the company. It is anticipated that dividends will be paid in the
future in the amount at least equal to the individual tax liability resulting
from inclusion of corporate income.
Page 7
<PAGE>
Supplementary Information
<PAGE>
Georgia Electric Company
Supporting Schedules
For the Years Ended April 30, 1993 and 1992
<TABLE>
<S> <C> <C>
1993 1992
Cost of Contract Operations
Salaries, Wages and Bonuses $ 8,001,488 $ 4,259,685
Employee Benefits and Taxes 1,290,423 744,111
Subcontractors 340,001 206,963
Materials 1,269,647 1,750,704
Travel 33,023 40,684
Yard and Office Rental 19,100 15,751
Telephone and Utilities 22,005 23,853
Equipment Rental 757,301 728,579
Repair and Maintenance 169,823 203,603
Tools and Supplies 112,417 147,115
Bond Expense 34,445 9,223
Consulting and Legal Fees 242 -345
Warranty Expense -0- 25,069
Taxes and Licenses 6,658 1,309
Other Costs 145 7,721
----------- -----------
Total Cost of Contract Operations $12,056,718 $ 8,164,025
Work in Process Adjustments -309,056 -291,644
----------- -----------
Total $11,747,662 $ 7,872,381
=========== ===========
Shop Expense
Salaries and Wages $ 21,113 $ 23,545
Employee Benefits and Taxes 5,017 6,142
Travel 30 55
Equipment Rental 318 270
Rent 39,608 28,500
Telephone and Utilities 1,164 1,191
Repairs and Maintenance 25,658 31,308
Tools and Supplies 1,051 2,262
Depreciation 207,756 181,630
Taxes and Licenses 6,935 13,460
Insurance 61,365 69,038
Other Expenses 3,148 133
----------- -----------
Total Shop Expense $ 373,163 $ 357,534
Less Allocations to Contracts -723,436 -694,369
------------ -----------
Total $ -350,273 $ -336,835
============ ===========
</TABLE>
Page 8
<PAGE>
Georgia Electric Company
Supporting Schedules
For the Year Ended April 30, 1993 and 1992
<TABLE>
<S> <C> <C>
1993 1992
Selling Expense
Salaries and Wages $ 68,882 $ 78,196
Employee Benefits and Taxes 10,745 13,964
Travel 8,694 18,600
Telephone and Utilities 9,496 9,704
Rent 22,108 5,700
Repairs and Maintenance 3,924 5,165
Dues and Subscriptions 1,222 989
Plans and Proposals 6,246 4,088
Depreciation 2,632 2,394
Supplies 5,878 147
Insurance 6,607 3,702
Other Expenses 292 103
----------- -----------
Total Selling Expense $ 146,726 $ 142,752
=========== ===========
Administrative Expense
Management Fees $ 961,590 $ 651,795
Salaries and Wages 217,446 223,923
Employee Benefits 33,699 -81,024
Payroll Taxes 20,447 20,076
Travel and Entertainment 88,532 103,443
Rent 34,883 22,800
Telephone and Utilities 23,948 22,488
Repairs and Maintenance 15,624 21,461
Office Supplies and Expense 19,328 13,584
Depreciation 55,572 30,534
Insurance 123,788 21,298
Taxes and Licenses 32,594 34,644
Computer Programming 2,049 1,500
Computer Expense 4,846 4,105
Legal and Accounting 48,937 33,345
Profit Sharing Contribution 30,874 17,393
Dues and Subscriptions 2,408 3,272
Bad Debt Expense 500 12,676
Bond Forfeiture 88,572 -0-
Other Expense 6,934 10,508
----------- -----------
Total Administrative Expense $ 1,812,571 $ 1,167,821
=========== ===========
</TABLE>
Page 9
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
Pro Forma Combined Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
Able
Telcom
Holding
Corp. Georgia
and Electric
Subsidiaries Company
----------- ----------
July 31, October 12, Pro Forma
-------------------------
1996 1996 Adjustments Combined
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash $ 1,230,118 $ 1,366,619 $ - $ 2,596,737
Investments, net 566,250 566,250
Accounts receivable, net 9,758,910 4,373,914 14,132,824
Inventories 3,075,588 28,225 3,103,813
Prepaid expense and other 1,235,855 269,594 1,505,449
----------- ----------- ----------- -----------
Total current assets 15,866,721 6,038,352 21,905,073
Property and equipment, net 6,752,240 1,658,672 600,000(B) 9,010,912
Other assets:
Deferred income taxes 439,405 439,405
Investment in Latin 2,005,427 2,005,427
American subsidiary
Goodwill and contractual 6,004,596 6,004,596
rights, net
Other 357,927 357,927
----------- ----------- ----------- -----------
Total other assets 8,807,355 8,807,355
----------- ----------- ----------- -----------
Total assets $31,426,316 7,697,024 600,000 $39,723,340
=========== ========== =========== ===========
</TABLE>
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
Pro Forma Combined Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
Able
Telcom
Holding
Corp. Geordia
and Electric
Subsidiaries Company
----------- ----------
July 31, October 12, Pro Forma
-------------------------
1996 1996 Adjustments Combined
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Liabilities and Shareholders'
Equity
Current liabilities:
Current Portion of
long-term debt $ 1,266,694 $ - 600,000(A) $ 1,866,694
Notes payable to
shareholders/directors 1,557,976 1,557,976
Notes payable - other 1,869,049 1,869,049
Line of credit 4,538,437 4,538,437
Accounts payable 2,902,482 1,175,513 4,077,995
Accrued expenses 1,210,476 1,449,874 2,660,350
----------- ----------- ---------- -----------
Total current liabilities 13,345,114 2,625,387 600,000 16,570,501
Deferred income taxes 479,486 479,486
Distributions payable 2,671,637 2,671,637
Long-term debt, excluding
current portion 3,091,008 2,400,000(A) 5,491,008
----------- ---------- ---------- -----------
Total liabilities 16,915,608 5,297,024 3,000,000 25,212,632
Stockholders' equity:
Common stock, $.001 par
value, authorized
25,000,000 shares;
8,193,212 issued
and outstanding 8,203 45,000 (45,000) 8,203
Additional paid-in capital 12,800,222 1,036,640 (1,036,640) 12,800,222
Unrealized loss on
investments, net (58,750) (58,750)
Retained earnings 1,761,033 1,318,360 (1,318,360) 1,761,033
----------- ---------- ---------- -----------
Total shareholders' equity 14,510,708 2,400,000 (2,400,000) 14,510,708
----------- ---------- ---------- -----------
Total liabilities and
shareholders' equity $31,426,316 $7,697,024 $ 600,000 $39,723,340
=========== ========== ========== ===========
</TABLE>
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
Pro Forma Combined Statements of Income (Unaudited)
For the twelve months ended
<TABLE>
<CAPTION>
Able
Telcom
Holding
Corp. Georgia
and Electric
Subsidiaries Company
----------- -----------
October 31, December 31, Pro Forma
--------------------------
1995 1995 Adjustments Combined
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues $35,407,581 $21,978,222 $ - $57,385,803
Cost and expenses:
Cost of revenues (exclusive
of depreciation and
amortization shown
separately below) 27,719,750 17,656,529 45,376,279
General and administrative 5,464,338 1,279,939 50,000(C) 6,794,277
Depreciation and
amortization 1,914,064 402,825 150,000(D) 2,466,889
Translation/transaction
losses, net 95,798 95,798
Loss on sale of investments 100,379 100,379
Interest expense 1,117,932 255,000(E) 1,372,932
Interest and dividends (672,598) (43,071) (715,669)
----------- ----------- ---------- ---------
35,739,663 19,296,222 455,000 55,490,885
----------- ----------- ---------- ----------
(Loss) income before income
taxes and minority interest (332,082) 2,682,000 (455,000) 1,894,918
Income tax (benefit) expense (368,105) 823,990(F) 455,885
---------- ----------- ---------- ----------
Income before minority
interest 36,023 2,682,000 (1,278,990) 1,439,033
Minority interest 317,189 317,189
---------- ----------- ----------- ----------
Net (loss) income $ (281,166) $ 2,682,000 $(1,278,990) $1,121,844
=========== =========== =========== ==========
(Loss) income per common
share and common equivalent
share:
Primary and fully
diluted $ (0.03) $ 0.14
Wieghted average shares
outstanding:
Primary and fully
diluted 8,283,668 8,283,668
</TABLE>
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
Pro Forma Combined Statements of Income (Unaudited)
For the nine months ended
<TABLE>
<CAPTION>
Able
Telcom
Holding
Corp. Georgia
and Electric
Subsidiaries Company
----------- ----------
July 31, October 12, Pro Forma
---------------------------
1996 1996 Adjustments Combined
------------ ------------ -------------- --------------
<S> <C> <C> <C> <C>
Revenues $36,030,910 $23,343,226 $ - $59,374,136
Cost and expenses:
Cost of revenues (exclusive
of depreciation and
amortization shown
separately below) 28,285,785 16,750,713 45,036,498
General and administrative 4,866,655 1,698,288 (25,000)(C) 6,539,943
Depreciation and
amortization 1,746,911 327,405 90,000 (D) 2,164,316
Translation/transaction
losses, net 1,508,556 1,508,556
Restructuring charges 2,433,085 2,433,085
Interest expense 828,500 5,160 191,500 (E) 1,025,160
Interest and dividends (181,098) (73,025) (254,123)
------------ ------------ -------------- --------------
Total cost and expenses 39,488,394 18,708,541 256,500 58,453,435
------------ ------------ -------------- --------------
(Loss) income before income
taxes and minority interest (3,457,484) 4,634,685 (256,500) 920,701
Income tax expense 282,412 10,000 1,479,215 (F) 1,771,627
------------ ------------ -------------- --------------
Income before minority interest (3,739,896) 4,624,685 (1,735,715) (850,926)
Minority interest (781,408) (781,408)
------------ ------------ -------------- --------------
Net (loss) income $(2,958,488) $ 4,624,685 $(1,735,715) $ (69,518)
============ ============ ============== ==============
(Loss) income per common share
and common equivalent share:
Primary and fully diluted $ (0.35) $ (0.01)
Wieghted average shares
outstanding:
Primary and fully diluted 8,355,804 8,355,804
</TABLE>
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
Notes To Pro Forma Combined Financial Statements
(Unaudited)
(A) The initial purchase price for the acquisition of all of the Common Stock
of Georgia Electric Company was $3,000,000 which approximates the
stepped-up book value at the closing date. Accordingly, no goodwill was
recorded upon payment of the initial purchase price. However, the purchase
price is subject to adjustment based upon an earn-out arrangement payable
in Able Telcom Holding Corp. Common Stock over the next five years which
may result in recorded goodwill. The acquisition is accounted for under
the purchase method of accounting.
(B) To reflect the fair market value of the property and equipment acquired.
(C) To reflect the increase (decrease) in salaries and benefits paid to the
former owners of Georgia Electric Company during the pro forma periods.
(D) Adjustment to record the additional depreciation expense associated with
the fair market value of the property and equipment.
(E) Interest expense on the debt incurred of $3,000,000, at 8.5%. Interest was
computed based on the debt having been outstanding as of November 1, of
each pro forma period.
(F) To reflect the tax effect of the combinations on the tax income using a
federal and state tax rate of 37%.
(G) Certain items in the July 31, 1996, Consolidated Financial Statements have
been reclassified to conform to the 1995 presentation.
