<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (Fee Required)
For the fiscal year ended October 31, 1995
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No Fee Required)
For the transition period from ____________ to ___________.
Commission file number 0-21986
ABLE TELCOM HOLDING CORP.
(Exact name of registrant as specified in its charter)
FLORIDA 65-0013218
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1601 FORUM PLACE, SUITE 1110, WEST PALM BEACH, FLORIDA 33401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 688-0400
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Act: Common Stock
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of February 1, 1996, 5,669,012 shares of the registrant's Common Stock
were held by non-affiliates of the registrant (assuming, solely for these
purposes, such persons to be all persons other than (i) current directors and
executive officers of the registrant and (ii) persons believed by the
registrant to beneficially own more than 10% of the registrant's outstanding
Common Stock, based on reports, if any, submitted to the registrant by such
persons). As of such date, the aggregate market value of the voting stock of
the registrant held by non-affiliates, computed by reference to the average
closing bid and asked prices on that date, was $34,014,072.
There were 8,193,212 shares of Common Stock outstanding as of February 1,
1996.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for registrant's 1996 Annual Meeting of
Shareholders to be held March 26, 1996 are incorporated by reference in Part
III.
<PAGE> 2
PART 1
ITEM 1. BUSINESS
OVERVIEW
Able Telcom Holding Corp. ("Able Telcom" or the "Company") through its
subsidiaries, provides specialized communication services and products relating
to the engineering, installation and maintenance of communication networks,
primarily those for telecommunications and traffic management systems.
Telecommunication service activities include specifically the installation
and maintenance of telephone central office switching equipment, coaxial and
fiber optic cable, wireless networks and all facets of outside and inside plant
engineering and construction. In addition, through an acquisition on December
8, 1995, the Company expanded its outside plant services to include the
maintenance and installation of electric utility grids and water and sewer
utilities. The Company provides these services primarily under hourly and per
unit basis contracts to domestic and Latin American telephone companies and to
various private and governmental concerns.
Commencing in mid-1992 and lasting until mid-1994, over 95% of the
Company's revenues and profits were derived from telecommunication services
provided principally to one customer in Venezuela. In mid-1994, the Company's
business in Venezuela decreased dramatically as a result of various economic
events including currency exchange control restrictions and a major currency
devaluation.
Through an acquisition in June 1994, the Company provides specialty
products and services relating to traffic management systems including the
light manufacture, installation and maintenance of highway signage, lighting,
guardrailing and other traffic control products and systems. The Company
obtains installation work through a competitive bidding process and performs
under bonded fixed price contracts. Such contracts have a usual duration of
three months to one year and compensate on a "completed item" basis. The
Company also obtains one to three year maintenance contracts, usually
pertaining to a defined segment of highway, upon completion of the installation
contracts. Maintenance contracts provide for payment on a per unit basis and
typically yield relatively stronger margins. The Company conducts this
business in the Southeastern United States, principally as a prime contractor
for state and local governmental entities or as a subcontractor to other,
large prime contractors.
HISTORICAL DEVELOPMENT OF BUSINESS
The Company was incorporated in 1987 as "Delta Venture Fund, Inc.," a
Colorado corporation. The Company adopted it current name in 1989 and changed
its corporate domicile to Florida in 1991. Most of the Company's business
activities are carried on through its majority or wholly-owned operating
subsidiaries.
Commencing in mid-1992 until mid-1994, the Company's principal source of
revenues and profits were derived from telecommunication services provided
primarily through two 80% owned subsidiaries located in Caracas, Venezuela.
Such services were provided to one customer, CANTV, the Venezuelan national
telephone company. A 20% minority interest in these subsidiaries is owned by
BFGP Ingenenieros C.A. ("BFGP") which, other than its minority interest in
certain of the Company's ventures, is not otherwise affiliated with the
Company. On August 1, 1995, the Company entered into an agreement increasing
BFGP's proportionate share of any future earnings of its Venezuelan
subsidiaries to 50%. During the second half of the fiscal
<PAGE> 3
year ended October 31, 1994, Venezuelan operations decreased dramatically due
to the current economic climate in that country and other factors.
In 1994, the Company also acquired a 75% interest in Seima Ltda., a
Brazilian entity that performs telephone maintenance and installation services
for telephone companies throughout Brazil. Significant operations and revenues
have yet to commence in Brazil and there are no assurances that such operations
can be developed by the Company.
In June 1994, the Company entered the business of installing and
maintaining traffic management systems, and also expanded its telecommunication
service business domestically, by acquiring Transportation Safety Contractors,
Inc. and its affiliates ("Transportation Safety" or "TSCI") for a combination
of cash, promissory notes and Common Stock. At the present time, a majority of
the Company's highway sign and traffic control product business is conducted in
Florida, with the remainder being concentrated in the southeast. TSCI is
primarily engaged in the assembly, installation and maintenance of highway
signage, guardrailing, lighting and related products for the Department of
Transportation and various city and county municipalities, primarily in the
states of Florida and Virginia. An affiliated entity, Able Communications
Services, Inc. ("ACS") (formerly BCD Communications, Inc.) performs domestic
telecommunication services, consisting primarily of outside plant construction
and the installation of fiber optic systems.
During fiscal 1995, the Company focused on developing a core revenue base
domestically as economic events in Latin America continued to impact operations
adversely, particularly during the first quarter of 1995. During 1996 the
Company expects to continue a strategy of focusing on providing specialized
products and services relating to the development of telecommunications
networks and traffic management systems to customers both in the United States
and in Latin America. In addition, as a result of recent telecommunications
legislation, the Company intends to expand operations to include providing
services to cable television operators.
In line with this strategy, during the fourth quarter of fiscal 1995, the
Company initiated plans to reorganize its management and operational
organization and facilities to meet planned growth. In addition, on December
8, 1995, the Company, through a wholly owned subsidiary, acquired the Common
Stock of H. C. Connell, Inc. ("Connell"). Connell performs primarily outside
plant telecommunication and electric power services to local telephone and
utility companies. Connell provides the Company expanded market share and a
significant new customer.
SEGMENT AND GEOGRAPHIC INFORMATION
Reference is made to Note 13 to the Company's Consolidated Financial
Statements, "Industry and Geographic Area Segment Information," included
elsewhere in this report and incorporated herein by reference, for additional
information.
TELECOMMUNICATION SERVICES
DOMESTIC BUSINESS
Through two wholly owned domestic subsidiaries located in Florida, ACS and
Connell, the Company primarily performs installation and maintenance of
both inside and outside plant telecommunication equipment, hand wire and
wireless networks and also provides related services on a project by project
basis, for both commercial and governmental customers, including fiber optic
<PAGE> 4
installations. In addition, through the acquisition of Connell, the
Company expanded its outside plant services to include the maintenance
and installation of electric utility grids and water and sewer utilities. The
Company generally provides such services under comprehensive master service
contracts which pre-qualify the Company to bid on projects being offered by a
customer. Contracts for projects are awarded based on a number of factors such
as price competitiveness, quality of work, on-time completion and the ability
to mobilize equipment and personnel efficiently. The Company may be
compensated on an hourly or per unit basis or, less frequently, at a fixed
price for services performed. Contract duration either is for a specified
term, usually one to three years, or is dependent on the size and scope of the
project.
The Company currently provides telecommunication services in the state of
Florida and, to a lesser extent, in the states of Texas, Missouri, Ohio and
Alabama. Principal customers of the Company include GTE, AT&T, Sprint and
United Telephone Company. The Company derived 25% of its consolidated revenues
from domestic telecommunication services in 1995. (9% and 3% in 1994 and 1993,
respectively.)
VENEZUELA AND LATIN AMERICAN BUSINESSES
Prior to June 1994, most of the Company's telecommunication infrastructure
services consisted of performing central telephone office maintenance, outside
plant maintenance, installation and repair, engineering and special
telecommunication projects for CANTV, the Venezuelan telephone company.
Typically, the Company performs under a negotiated service contract
originating with CANTV which specifies the number and type of personnel
required for a specific project as well as the length of time of the contract,
usually 3-6 months. The Company provides the expertise, personnel, vehicles,
tools and equipment necessary to perform the services called for under the
contract and is compensated on a labor hour or per unit price basis. CANTV
generally provides inventory and similar items such as cable and conduit. The
installation and maintenance services provided by the Company may supplement
the normal daily requirements of CANTV, assist in meeting emergency and peak
load service needs, and/or modernize and expand an existing telephone network.
The Company's contracts with CANTV are priced in U.S. dollar terms.
Payments received on such contracts are in the local currency, bolivars, in an
amount equal to the U.S. dollars terms at the time of contract.
Because Venezuela has a highly inflationary and volatile economy, the
Company bears substantial foreign exchange risk from the date of contract to
the time of payment, which generally is a period of two months to one year.
Moreover, in June 1994, the Venezuelan government imposed severe foreign
currency exchange restrictions, and, as a result, the Company bears additional
foreign exchange risks on bolivars collected but which remain in banks in
Venezuela. The Company is unable to convert these funds into U.S. dollars for
use in its other activities without incurring substantial transaction losses.
The Company is cognizant of the foreign exchange risk in the bidding process,
and generally requests "major devaluation" and other protective clauses in its
contracts with CANTV. However, the enforceability of such contract clauses is
uncertain and the Company recorded significant losses relating to these
contracts during fiscal year 1994 after Venezuela experienced a major
devaluation of its currency in May of 1994. The Company expects to record
additional significant translation losses in fiscal 1996 as a result of a
further devaluation of the bolivar implemented in December, 1995. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included herein under Item 7.
<PAGE> 5
As a result of the adverse impact that economic conditions have had
on business activities in Venezuela, the Company was forced to dramatically
decrease its operations in Venezuela from the period July, 1994 through August,
1995. During the fourth quarter of 1995 operations in Venezuela reflected
improvement which is expected to continue through fiscal 1996. The Company
derived 9% of its consolidated revenues from Latin American operations.
The Company is pursing opportunities in other Latin American
countries paralleling the operations it has conducted in Venezuela. The
Company believes that the telephone companies in several Latin American
countries are in a growth and/or transitional phase of a type typically
accompanied by large capital expenditures to increase the number of telephone
lines on a per capita basis, to upgrade services and equipment to the latest
technology and to bring telephone service to rural areas. The Company believes
that these changes will present contracting opportunities. However, it is
uncertain when or if the Company can procure such contracts and changes in the
political and economic climate in these countries or in the Company's
relationships with key partners and major customers could adversely affect any
future operations or financial results in the region.
MATERIALS
In many cases, the Company's customers supply most of the materials
required for a particular project and the Company supplies the personnel, tools
and equipment necessary to perform its services. However, with respect to
certain of its fixed price contracts the Company may supply all or part of the
materials required. In these instances and with respect to the tools and
equipment that may be required, the Company is not dependent upon any one
source for any of the materials or equipment that it customarily utilizes to
complete a project, nor does it expect any difficulties in procuring adequate
materials and equipment.
COMPETITION
The domestic market for telephone services is highly competitive and is
characterized by a large number of various size companies, some of which are
larger in size and have greater financial resources than the Company. The
market for telecommunication services in Latin America has not been as
competitive, relative to the domestic market, because of the barriers to entry
and the significant economic risks involved with having operations in these
areas; however, competitive pressure is likely to increase in the future as
more businesses become aware of opportunities in these markets. There are no
competitors controlling substantial market share either domestically or in the
countries in which the Company operates in Latin America. The Company's
ability to assemble a large, trained work force and satisfy the requirements
for bonding, technical, administrative and financial pre-qualifications allows
it to bid on larger projects and to compete on a national and international
level. Management believes that the factors required for continued success with
a limited number of key customers include financial ability, quality,
reliability and the ability to mobilize a competent work force promptly for
large projects both in the United States and Latin America.
Changes in the level of telephone company capital expenditures and
telephone companies utilizing their own personnel to perform services provided
by the Company may affect the volume of work available to the Company. In
addition, the Company is highly susceptible to the financial risks associated
with operations in Latin American countries including the continued economic
and social turmoil in Venezuela. Also, barriers to market entry as well as the
significant financial risks enabled the Company to obtain greater profit
margins from Latin American operations in prior fiscal years relative to
domestic business; however, margins obtained from Latin American operations
may be reduced as competitive pressures increase in these areas.
<PAGE> 6
TRAFFIC MANAGEMENT SYSTEMS
In June 1994, the Company entered the business of installing and
maintaining traffic management systems, and also expanded its domestic
telecommunications business, by acquiring Transportation Safety Contractors,
Inc. and its affiliates (hereafter, referring to that portion of the business
that relates to traffic management systems) for a combination of cash,
promissory notes and Common Stock. At the present time, a majority of the
Company's traffic management business is conducted in Florida, with the
remainder being concentrated in the southeast. TSCI is primarily engaged in
the installation and maintenance of highway signage, railing, lighting,
traffic signal systems and related products for the Department of
Transportation and various city and county municipalities, primarily in the
states of Florida and Virginia.
PRODUCTS
Major product groups for TSCI include traffic signal and control systems,
roadway lighting, and electrical systems, highway signage (cantilever, overhead
and electronically controlled signage), guard railing, roadway communications
and emergency systems and other specialty products. During fiscal 1995, 66% of
consolidated revenues were derived from sales and services related to these
products.
The Company assembles and installs some of the latest technology in
roadway electronic monitoring and communication systems, including those
referred to as "Piezo systems." Piezo systems utilize a computerized detection
device that is installed under highway pavement. Such a detection system is
capable of measuring the weight, size and speed of passing vehicles. This data
is then transmitted via modem to a centralized computer facility within the
state. It is anticipated that such systems, in the future, will be utilized by
state governments for various purposes including monitoring vehicle traffic
violations and issuing computer generated traffic tickets from a central
location. The Company has installed Piezo systems in over 85 sites throughout
the state of Florida. However, because the product is in a market testing
stage, future revenues from the sale and installation of such systems cannot be
assured.
The Company has not incurred any material expenditures relating to
research and development ("R&D") activities, choosing instead to utilize
existing facilities and technical expertise for the production of all products
and systems. The Company does not expect to incur significant costs for R&D in
the foreseeable future and believes its existing personnel, facilities and
equipment are generally adequate to meet presently anticipated technological
changes.
CONTRACTS
The Company generally obtains fixed price contracts for projects, either
as a prime or, more often, as a subcontractor, on a competitive bid basis.
Typically, for prime contracts, a state department of transportation ("DOT") or
other governmental body provides to qualified contractors a set of
specifications for the project. The Company then estimates the total project
cost based on input from engineering, production and materials procurement
personnel. A bid is then submitted by the Company along with a bid bond.
Generally, the state DOT, at a "letting" which usually occurs once per month,
announces the apparent low bid. After a brief review process, normally two to
three days, the contract is awarded and executed and a performance bond
submitted by the contractor. For most DOT projects, the scope of work extends
across many industry segments. In such cases, the Company subcontracts its
expertise to a prime contractor.
In some cases, the project specifications issued by the state DOT include
telecommunication projects for local telephone companies which affect the
highway "right of way" as well as requirements for highway
<PAGE> 7
safety systems. In such instances, the Company is also eligible to bid on the
telecommunication portion of the project.
The Company is pre-qualified with the Florida DOT, as to contract
eligibility, for contract awards of up to $85 million. The Company must
submit performance bonds on substantially all contracts obtained. The Company
believes its relations with its bonding company are good and that its bonding
capacity is adequate. However, the financial viability of the Company is
dependent on maintaining adequate bonding capacity and any loss of such would
have a material adverse effect on the Company.
Once a contract is obtained, the Company procures the materials necessary
to produce/assemble the products required for the project and provides the
necessary technical expertise, tools and equipment and other personnel. Often,
the labor and equipment requirements for traffic safety systems are similar to
those required for telecommunication services, such as for the installation of
fiber-optics, coaxial cable and conduit for electronically controlled signage
and Piezo traffic control systems. In such cases, the Company is able to
increase operating efficiencies by interchanging personnel and equipment among
subsidiaries, which reduces labor downtime and under-utilized equipment.
Contract duration is dependent on the size and scope of the project but
typically is from six to nine months. Contracts generally set forth
date-specified milestones and provide for severe liquidated damages for failure
to meet the milestones by the specified dates. At February 1, 1996, the
Company was not aware of any contracts for which it may be subject to
liquidated damages for which it has not already provided adequate reserves.
The failure to complete the contract backlog on time could have a material
adverse impact on the financial condition of the Company.
The Company is typically paid based on "completed units". Retainage is
normally held on contracts, usually 5% to 10% of the contract amount until
approximately 90 days after the services are rendered and accepted by the
customer. The majority of the contracts are bonded/guaranteed as to payment by
the DOT upon performance by the Company.
In addition to generating revenues from the sale and installation of
highway safety products under fixed price contracts, the Company performs under
maintenance contracts with the DOT obtained through competitive bidding.
Maintenance contracts are normally for a renewable one to three year term.
Under such contracts, the Company generally is assigned a section of highway
along which to maintain lighting, signage, railing and other services and is
paid on a per unit basis.
MATERIALS
In most cases, the Company must supply the materials required for a
particular contract, including materials and component parts required for the
production of highway signage and guardrails and the assembly of various
electrical and computerized systems. Aluminum sheeting, steel poles, concrete,
reflective adhesive and wood products are the principal materials purchased
domestically for the production of highway signage and guard railing. The
Company experiences some price volatility in the price of aluminum sheeting but
this is generally factored into the bidding process. However, a significant
increase in the price of aluminum could adversely affect the profitability of
certain contracts. The supply of these materials has been and is expected to
continue to be adequate, and the Company is not dependent upon any one supplier
for these materials.
The Company also purchases various components for the assembly of various
electrical, lighting and computerized traffic control systems. Many of these
materials must be certified as meeting specifications
<PAGE> 8
established by the DOT and are generally only supplied by a limited number of
vendors. The unavailability of those components could have an adverse impact
on meeting deadlines for the completion of projects which may subject the
Company to liquidated damages. However, the availability of these materials,
generally, has been adequate.
COMPETITION
The market for highway safety products is specialized and is principally
dominated by a large number of smaller competitors that concentrate on specific
product segments. The Company's ability to offer a broad product mix,
including telecommunication related services, as well as meeting financial
requirements such as adequate bonding capacity, allow it access to a
substantial portion of the markets in which it currently operates. Because of
the fragmented nature of the industry, the Company expects opportunities from
consolidation through acquisitions and mergers.
The markets for the Company's products and services are impacted by
changes in the level of federal funding and state spending on DOT projects as
well as the pace of technological and design changes, which can provide an
opportunity to the Company for the replacement of obsolete signs , lighting
and other products, the occurrence of weather related events, such as
hurricanes, and normal replacement of worn products. Lights and signs
typically have a seven year life cycle. The Company's success relating to
highway safety products is largely dependent on the combination of these market
factors.
GENERAL
BACKLOG
As of February 1, 1996, the Company has a total backlog of business,
giving effect to the acquisition of Connell and including estimates
related to per unit basis contracts, of approximately $44 million.
Approximately 70% of the total backlog is expected to be completed within the
next fiscal year. Substantially all contract backlog relating to the
installation of traffic management systems is bonded and the Company is subject
to severe liquidated damages for failure to perform in a timely manner.
Operations of the Company in various areas are somewhat seasonal, and this
has historically resulted in reduced revenues and profits during the first
quarter (November, December and January) relative to other quarters, due to the
holiday season, shut downs and weather. However, the impact of seasonality is
mitigated somewhat by the presence of Company operations in the southern
United States.
EMPLOYEES
At February 1, 1996, the Company and its subsidiaries had approximately
930 employees of which approximately 60 were senior executive, technical and
managerial personnel. Of the total number of employees, 450 were employed in
Latin American telecommunication infrastructure operations, 280 were employed
in domestic telecommunication service operations, and 200 were employed in
traffic management operations. However, the number of employees considered as
laborers can vary significantly according to contracts in progress. Such
employees are generally available to the Company through an extensive network
of contacts within the telecommunication and traffic management industries both
in the United States and Latin America.
<PAGE> 9
For telecommunication operations in Latin America, trained employees are
initially unavailable locally in those countries that are just beginning to
update their telecommunications network with the latest technology. To meet
its labor requirements the Company has, in prior years, recruited from an
international pool of trained labor from such countries as Mexico, Puerto Rico,
Chile, the United States and the Philippines. The Company believes that
trained employees will be generally available for any future Latin American
operations.
Certain non-administrative employees for the Company's Venezuela
subsidiaries are represented by a local labor union and operations have
sometimes been disrupted by strikes and various violent acts by its members.
No other employees of the Company are represented by a labor union and the
Company considers relations with key and other employees to be good.
ITEM 2. PROPERTIES
The Company leases 3,349 square feet for its corporate offices in West
Palm Beach, Florida.
Latin American telecommunication executive offices are based in 2,886
square feet of leased office space located in Ft. Lauderdale, Florida. The
leased offices spaces are subject to long-term leases. The Company's
Venezuelan subsidiaries own and operate from a 33,000 square foot floor of an
office building located in Caracas, Venezuela (of which a portion is leased to
third parties) and lease an additional 50,000 square feet of covered parking
and shop facilities to store tools, equipment and approximately 120 licensed
vehicles, substantially all of which are owned. The Company also owns two
small condominiums near Maracaibo, Venezuela, utilized principally for housing
non-Venezuelan personnel. The Company leases on a short term basis a small
facility in Rio de Janeiro, Brazil for its operations in that country.
TSCI's executive offices and principal operations are located in a
22,000 square foot plant located in Tampa, Florida. This location is leased
from shareholders/directors (see "Commitments and Contingencies" in the Notes to
the Consolidated Financial Statements). The Company also owns an approximately
10,000 square foot plant for operations in Virginia.
The Company also leases several smaller offices, temporary equipment yards
or storage locations in various areas as necessary to enable it to
efficiently perform its service contracts which are generally subject to
short-term or cancelable leases.
The Company believes that its properties are in good condition and
adequate for current operations and, if additional capacity becomes necessary
due to growth, other suitable locations are available in all areas where it
currently does business. See "Commitments and Contingencies" in the Notes to
the Consolidated Financial Statements for additional information relating to
leased facilities.
Certain of the Company's plant and equipment, primarily those associated
with traffic managment, are encumbered pursuant to loan agreements. (See
"Long-Term Debt" in the Notes to the Consolidated Financial Statements).
Certain of the Company's plants relating to traffic management are
subject to federal, state and local provisions involving the protection of the
environment. Compliance with these provisions has not had and is not expected
to have a material effect upon the Company's financial position.
<PAGE> 10
ITEM 3. LEGAL PROCEEDINGS
The Company is party to various legal proceedings, including suits in
which it is a defendant. In the opinion of management, the ultimate outcome of
the legal proceedings will not have a material adverse effect on the financial
position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to shareholders for a vote during Fiscal
Year 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The Company's Common Stock, par value $.001 per share, began trading on
NASDAQ on February 24, 1994 under the symbol "ABTE." Prior to the NASDAQ
listing, the Company's Common Stock was sporadically traded over-the-counter
since September 15, 1988, the date the Company's initial public offering was
completed, under the same symbol. Set forth below is the range of the high and
low closing bid quotations of the Company's Common Stock for each quarter
within the last two fiscal years as reported by one of the Company's principal
market makers in the over-the-counter market through February 24, 1994 and as
reported by NASDAQ thereafter.
The quotations set forth below through February 24, 1994 are interdealer
prices and do not reflect retail markups, markdowns or commission and may not
necessarily represent actual transactions. Because of the sporadic trading in
the Company's Common Stock prior to February 24, 1994, the quotations through
February 24, 1994 may not reflect prices that would be obtained in an
established public trading market.
<TABLE>
<CAPTION>
FISCAL YEAR 1995 FISCAL YEAR 1994
HIGH LOW HIGH LOW
---- ---- ---- ---
<S> <C> <C> <C> <C>
First Quarter 8 15/16 5 4/8 13 1/4 8 1/8
Second Quarter 8 3/4 4 1/16 15 7/8 10
Third Quarter 7 1/2 5 13 1/4 7 1/2
Fourth Quarter 7 5 9 3/4 6 13/16
</TABLE>
At February 1, 1996, there were 566 shareholders of record of the
Company's Common Stock. No cash dividends have been declared by the Company
since its inception and the Company has no present intention to declare or pay
cash dividends on the Common Stock in the foreseeable future. The Company
intends to retain any earnings which it may realize in the foreseeable future
to finance its operations. There are no specific restrictions that limit the
ability of the Company to pay cash dividends on its Common Stock. See
"Management Discussion and Analysis of Financial Condition and Result of
Operations."
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth certain selected consolidated financial
data of the Company for the five years ended October 31, 1995 which has been
derived from the audited consolidated financial statements of the Company and
its subsidiaries. All per share amounts have been restated to reflect a 1:50
<PAGE> 11
reverse split completed in May of 1991. Financial data includes the results of
operations and financial position relating to the commencement of Venezuelan
operations in August of 1992 and the acquisition of TSCI on June 22, 1994. See
Notes 1 and 17 in the Notes to the Consolidated Financial Statements for a
discussion of economic events occurring in Venezuela in mid-1994 and the
resulting impact on operations. This data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition" and Results of
Operations and the Consolidated Financial Statements included elsewhere in this
report.
(in thousands except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $35,408 $25,784 $20,048 $1,889 $1,679
Net income (loss) (281) 946 4,558 (606) 72
Average shares outstanding 8,284 7,736 6,907 3,482 3,750
Earnings (loss) per share (.03) .12 .66 (.17) .02
Current assets 18,573 18,635 9,487 1,414 682
Current liabilities 11,175 9,942 1,163 1,255 296
Property 6,120 5,314 1,447 914 37
Total assets 32,482 36,604 11,571 3,256 1,212
Long-term debt 3,033 6,768 1,754 473 ---
Shareholders equity $17,467 $15,832 $7,346 $1,086 $916
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis relates to the financial condition
and results of operations of the Company for the three years ended October 31,
1995. This information should be read in conjunction with the Company's
Consolidated Financial Statements appearing elsewhere in this document.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated in the Company's
Consolidated Statements of Operations as a percentage of its revenues.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Revenues 100.0% 100.0% 100.0%
----- ----- -----
Cost of revenues 78.3% 63.6% 44.3%
General and administrative 15.4% 16.2% 5.3%
Depreciation and amortization 5.4% 3.3% 2.0%
Charges related to Latin American operations --- 5.9% ---
Translation/transaction losses 0.3% 3.3% 4.1%
Loss on sale of investments 0.3% --- ---
Interest expense 3.2% 1.5% 0.3%
Interest and dividend income 1.9% 1.6% ---
Income tax (benefit) expense (1.0%) 2.5% 11.2%
Minority interest 0.9% 1.6% 10.1%
Net (loss) income (0.8%) 3.7% 22.7%
</TABLE>
<PAGE> 12
OVERVIEW
During 1995, the Company continued to expand its revenue base experiencing
significant internal growth in its core domestic telecommunication services
segment. However, operating margins and net income were negatively impacted by
the severe decline in revenues from Venezuelan telecommunications operations
which commenced with economic events in mid-1994 and continued through the
first three quarters of fiscal 1995. In addition, the Company's profits were
impacted adversely by margins lower than planned from various installation
contracts performed by its traffic management segment. Overall, the
combination of these factors provided the Company a significant loss of
$842,098 or $(.10) per share during the first quarter of fiscal 1995 followed
by three quarters of profitability, each improving from the previous quarter.
For the fiscal year ended October 31, 1995, the Company had a net loss of
$(281,166) or $(.03) per share compared to net income of $946,013 or $.12 per
share in 1994.
See Notes 1 and 13 in the Notes to the Consolidated Financial Statements
for a discussion of currency devaluations and charges relating to Venezuelan
operations and for information regarding the Company's principal business
segments and geographic information.
During the fourth quarter of fiscal 1995 the Company initiated plans to
reorganize and restructure its management and operational organization and
facilities in an effort to increase financial controls, reduce its cost
structure and assign responsibility. As a result, the Company expects costs of
revenues and general and administrative expenses, as a percentage of revenues,
to decrease in fiscal year 1996.
During fiscal 1996, the Company will continue its emphasis on becoming the
quality provider of specialized products and services relating to the
development of communications infrastructure, serving customers domestically
and in Latin America. The Company intends to enhance its core business
activities in fiscal year 1996 growing operations and its customer base through
aggressive marketing, expansion of services and products offered and through
the selective acquisition of communications companies operating in strategic
geographic areas.
In line with this strategy, on December 8, 1995, the Company, through a
wholly-owned subsidiary, acquired all of the Common Stock of H. C. Connell ,
Inc. ("Connell") for approximately $2,300,000 (book value) paid with a
promissory note to the seller and with loan proceeds from directors of
the Company. Connell, which performs primarily outside plant telecommunication
and electric power services to local phone and utility companies, provided the
Company expanded market share and a significant new customer. See Note 18 in
the Notes to the Consolidated Financial Statements.
YEAR ENDED OCTOBER 31, 1995 COMPARED TO YEAR ENDED OCTOBER 31, 1994.
The Company's revenues are derived primarily from hourly or per unit basis
contracts for services performed relating to telecommunication services. For
products and services performed relating to the installation of traffic
management systems, the Company is compensated largely under competitively bid
fixed price contracts with time of performance dependent upon the size of the
project, normally three months to one year. The Company's profitability on
fixed price contracts is partially dependent upon its ability to control
material, and particularly, labor costs incurred under such contracts. The
award of fixed price contracts are often accompanied by one to three year
maintenance contracts which compensate on a per unit basis and typically
provide higher margins.
<PAGE> 13
REVENUES
For the year ended October 31, 1995, consolidated revenue was $35,407,581,
representing an increase of $9,623,431 or 37% compared to revenues for the year
ended October 31, 1994 of $25,784,150. The overall increase in total revenues
is primarily a result of increased revenue from the Company's domestic
telecommunication services segment from $2,250,618 in 1994 to $8,992,454 in
1995 and the inclusion of a full year's revenues from the June 21, 1994
acquisition of TSCI. The acquisition of TSCI (which included domestic
telecommunication operations) accounted for $31,864,785 or 90% of consolidated
revenues in 1995 compared with $11,028,673 or 43% of consolidated revenues in
1994.
These increases in revenues were offset by the significant decline in
revenues from the Company's Latin American operations from $13,782,986 in 1994
to $3,227,750 in 1995, of which 42% of the 1995 amount was generated during the
fourth quarter as business began to improve in Latin America.
The Company expects revenues to continue to increase in fiscal year 1996
based upon current contract backlog and a more favorable Latin American economy
which may result in continued improvement in operations in that region. The
Company has a contract backlog at February 1, 1996, giving effect to the
acquisition of Connell and including estimates related to per unit basis
contracts, of approximately $44 million.
COSTS AND EXPENSES
Costs of revenues increased to $27,719,750 in 1995 from $16,395,098 for
the year ended October 31, 1994 and was 78% and 64% of revenues for the years
ended October 31, 1995 and 1994, respectively. The decline in gross margin
percentage in fiscal year 1995 is primarily attributable to the change in
business mix from the relatively high profits associated with Latin American
operations to more competitive domestic work. As noted above, Latin American
operations were insignificant to consolidated results, particularly during the
first three quarters of fiscal 1995. Additionally, in fiscal 1995, margins
continued to be lower than expectations on certain fixed price contracts
relating to the Company's Traffic Management segment.
As noted above, the Company anticipates improvement in domestic gross
margins in fiscal 1996 to be achieved through employee productivity gains,
improved cost controls and efficiencies achieved from the assimilation of
recent acquisitions. These areas of operations were adversely impacted during
both 1995 and 1994 as a result of the addition of new personnel to meet growth
and capital constraints. Consolidated gross profits in fiscal 1996 may be
impacted positively if operations in Latin America continue to improve, as
discussed previously.
General and administrative expenses for the year ended October 31, 1995
were $5,464,338 or 15% of revenues compared to $4,166,694 or 16% of revenues
for 1994. Included in general and administrative expenses in the last quarter
of fiscal 1994 and during the first three quarters of fiscal 1995 were various
overhead costs, aggregating approximately $350,000 during 1995, incurred to
maintain operations in Venezuela during a period for which there were no
material corresponding revenues. In addition, non-recurring legal expenses
associated with various capital raising efforts in fiscal 1995 totaled
approximately $90,000. The Company also incurred $300,000 of costs in 1995
relating to a joint venture arrangement established to pursue the development
and marketing of certain telecommunication equipment in Latin America.
General and administration expenses for 1995 reflect a full year inclusion of
costs relating to the mid-1994 acquisition of TSCI.
<PAGE> 14
Depreciation and amortization expenses were $1,914,064 for the year ended
October 31, 1995 or 5.4% of revenues compared to $854,251 or 3.3% of revenues
for 1994. The increase in such expenses is primarily attributable to a full
year's inclusion of the acquisition of TSCI and additional depreciation
resulting from $2,250,904 of equipment purchases required to meet growth in the
Company's domestic Telecommunication Services segment.
For the year ended October 31, 1994, the Company's Venezuelan operations
incurred certain charges totaling $1,523,189 relating to severance and certain
bad debt charges. In December 1995, the Venezuelan government implemented a
further currency devaluation and, as a result, the Company expects to record a
charge during the first quarter of fiscal 1996 of approximately $300,000, net
of applicable income taxes, relating to the devaluation of certain bolivar
denominated cash and accounts receivable. See Notes 12 and 17 of Notes to
Consolidated Financial Statements.
Translation/transaction losses decreased $762,528 from $858,326 in 1994 to
$95,798 for 1995. The 1995 amount represents primarily a transaction loss
recorded by the Company relating to the effective conversion of $350,000 of its
bolivar denominated cash into U.S. dollars. The overall decrease reflects a
controlled currency exchange rate in Venezuela that remained unchanged at 170
bolivars = $1 U.S. dollar from the period June 1994, the date of the currency
devaluation, until December 1995, which accordingly, results in no translation
adjustment. See Note 17 of Notes to Consolidated Financial Statements.
As discussed above, during fiscal year 1996, the Company expects to record
translation/transaction adjustments relating to Venezuelan operations based on
management's assessment at the end of each period of the probable realization
of U.S. dollars upon the ultimate conversion of its bolivar denominated cash
and accounts receivable. However, the Company at this time is unable to assess
the likelihood of a further devaluation or other adverse economic events and
the resulting impact on operating results.
In the third quarter of fiscal 1995, the Company incurred a loss of
$100,379 on the sale of its investment in certain municipal bond fund units
that had a carrying value of $1,408,000.
Interest expense was $1,117,932 for 1995 or 3.2% of revenues compared to
$397,167 or 1.5% of revenues for 1994. This increase is due primarily to a
full year's inclusion of debt assumed and incurred in connection with the
acquisition of TSCI. The increase as a percentage of revenues also reflects
the loss of revenues from Venezuelan operations in fiscal 1995. On November
29, 1995 the Company secured a new credit facility that restructures and
refinances substantially all of its existing borrowings. See Note 7 of Notes
to the Consolidated Financial Statements.
The increase in interest and dividend income stems directly from income
earned for a full year on various fixed income investments and cash
equivalents. A substantial portion of such investments were held as collateral
on certain acquisition debt until such debt was refinanced on November 29,
1995. See Note 7 of notes to the Consolidated Financial Statements.
For fiscal year 1995, the Company recorded a benefit for income taxes of
$368,105 on a pretax loss of $332,082 or an effective income tax credit of 111%
compared to income tax expense of $632,384 on pretax income of $2,007,727 or
an effective tax rate of 40% in 1994. The rate in 1995 results primarily
<PAGE> 15
from the reduction in taxes provided on undistributed earnings of foreign
subsidiaries.
Minority interest, which prior to August 1, 1995 represents a
shareholder's 20% share of the equity in the Company's Venezuelan corporations,
decreased from $429,330 in 1994 to $317,189 in 1995, reflecting, in part, the
dramatic decline in operations in Venezuela. On August 1, 1995, the Company
entered into an agreement which increased the shareholder's proportionate share
of any future earnings to 50%.
YEAR ENDED OCTOBER 31, 1994 COMPARED TO YEAR ENDED OCTOBER 31, 1993
REVENUES
For the year ended October 31, 1994 consolidated revenue was $25,784,150,
representing an increase of $5,736,232. or 29% compared to the year ended
October 31, 1993. The increase was accomplished primarily through the
acquisition of TSCI in June 1994, which accounted for $11,028,673 or 43% of
consolidated revenues in 1994. Revenues from Latin American operations
decreased dramatically in mid-1994 to $13,782,986 from $19,091,367 in 1993 as
a result, principally, of economic conditions in Venezuela. During fiscal
1993, over 95% of the Company's revenues and profits were derived from
telecommunication service operations in Venezuela.
COSTS AND EXPENSES
Costs of revenues increased to $16,395,098 in 1994 from $8,873,954 for the
year ended October 31, 1993, and was 64% and 44% of revenues for the years
ended October 31, 1994 and 1993, respectively. The dramatic decline in gross
profits reflects the change in business mix from the relatively strong margins
associated with Latin American telecommunication service operations to more
competitive domestic work.
General and administrative expenses increased sharply in fiscal 1994 to
$4,166,694 or 16% of revenues from $1,059,543 or 5% of revenues in the prior
year. The increase is due principally to a change in cost structure resulting
with the acquisition of TSCI. During fiscal 1994, the Company incurred
non-recurring expenses of $125,000 and $200,000 relating to the liquidation of
a subsidiary and the evaluation of a proposed acquisition, respectively.
Depreciation and amortization expense increased by $455,372 from $398,879
in 1993 primarily as a result of the acquisition of TSCI and amortization of
the goodwill recorded on the transaction.
Translation/transaction losses, as a percentage of revenues, which relate
primarily to Venezuelan operations, were 3% in 1994 and 4% in 1993. During
fiscal year 1994 the Company incurred a total of $1,523,189 in severance and
certain bad debt charges related to its Venezuelan operations. See Note 17 of
Notes to the Consolidated Financial Statements.
Interest expense increased from $64,460 in fiscal 1993 to $397,167 in 1994
primarily as a result of debt assumed and incurred in connection with the
acquisition of TSCI.
Interest and dividend income in 1994 relate to investments in various fixed
income securities which collaterialize certain acquisition debt.
<PAGE> 16
The Company recorded income tax expense in fiscal 1994 of $632,384 or an
effective rate of 32% compared to tax expense of $2,242,100 or an effective
rate of 25% in 1993.
The decrease in minority interest from $2,023,517 in 1993 to $429,330 in
1994 reflects the dramatic decline of operations in Venezuela resulting from
economic events beginning in July 1994 and related charges recorded during the
third and fourth quarters of the same fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
Cash and equivalents amounted to $2,952,239 at October 31, 1995 compared
to $3,432,349 at October 31, 1994. Cash was impacted during 1995 primarily by
first quarter operating losses, capital expenditures and the repayment of
certain debt with restricted cash in connection with the refinancing discussed
in Note 7 to the Notes to the Consolidated Financial Statements.
In 1995, cash of $473,795 was generated from operations compared to
$4,194,341 in 1994. The decrease in cash flow from operations is primarily
attributable to operating losses incurred during the first quarter of 1995, a
$417,965 increase in committed inventories and a $1,514,849 reduction of
accounts payable and accrued expenses.
Net cash of $950,004 was used in financing and investing activities during
1995 including the sale of $4,418,233 of restricted investments to liquidate
related debt. The most significant use of cash during 1995 was the addition of
$2,250,904 of equipment, primarily purchased to meet growth in the Company's
domestic telecommunication operations.
In mid-1994, the Venezuelan government implemented exchange control
restrictions which prevents the free convertibility of bolivars to U.S.
dollars. However, the Company is permitted to convert its cash bolivars to
U.S. dollars through the purchase and sale of certain publicly traded
securities, but at a substantial discount from the statutory exchange rate. At
October 31, 1995, the Company's Venezuelan operations had approximately
$2,007,000 of bolivar denominated net working capital assets, comprised of cash
and accounts receivable, which are subject to said restrictions. The Company
anticipates such working capital will be utilized to fund improving business in
Venezuela and that the exchange control restrictions will not have a material
adverse effect on its liquidity.
As discussed in Note 7 in the Notes to the Consolidated Financial
Statements, on November 29, 1995, the Company entered into a $12.5 million
credit facility (the "Credit Facility") comprised of a $6,000,000 revolving
line of credit collateralized by receivables and inventory, a $2,500,000
equipment loan facility to be secured by new or used equipment purchased, a
60-month Term A loan in the amount of $2,750,000 secured by equipment, and a
36-month Term B loan in the amount of $1,250,000. Each loan will accrue
interest at either the prime rate or, at the Company's election, the one (1)
month LIBOR rate, plus two and seven tenths percent. Proceeds from the Term A
and Term B loans and a portion of the proceeds from the credit line were used
to refinance existing debt of the Company, excluding loans from
shareholders/directors. The balance of the Line of Credit will be used by the
Company for its working capital needs. The Credit Facility contains covenants,
which require among other conditions, that the Company maintain certain
tangible net worth, funded debt and debt service amounts.
Investments, which collateralized certain debt at October 31, 1995 and
certain borrowings have been classified in the October 31, 1995 balance sheet
to reflect the removal of restrictions as a result of the November 29, 1995
refinancing. See Notes 4 and 7 in the Notes to the Consolidated Financial
Statements.
<PAGE> 17
In November 1994, the Company issued 259,434 shares of its common stock to
liquidate certain loans from shareholders/directors related to the acquisition
of TSCI. The remaining debt balance of $1,307,976 is due in June 1996. On
December 8, 1995, the Company issued promissory notes totaling approximately
$2.3 million in connection with the acquisition of H.C. Connell. Such notes
bear interest at rates of 6% and prime plus 1% and approximately $2.1 million
are due June 8, 1996 (the balance is due on December 8, 1996). The
Company anticipates it will need to refinance a portion of the $3.6 million
debt incurred in connection with these acquisitions thereby requiring the
Company to seek financing alternatives in 1996. However, established working
capital and equipment credit facilities are available sources of financing to
meet growth needs of the Company's existing operations and the Company expects
that its operations will generate sufficient cash flow to service debt under
the new Credit Facility. The Company will continue to analyze the financing of
acquisitions on a case by case basis.
No assurance can be given that the Company will achieve refinancing of the
acquisition debt on terms acceptable to the Company. In addition, economic
downturns, increased interest rates or other adverse developments could impair
the Company's ability to service its indebtedness, which in turn, may reduce
its ability to fund internal growth, additional acquisitions and capital
expenditures.
RECENTLY ISSUED ACCOUNTING STANDARDS
During 1995, the Financial Accounting Standards Board issued Statements
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" and No. 123, "Accounting for Stock Based
Compensation," which are effective for fiscal years beginning after December
15, 1995. The Company believes that the adoption of these standards will not
have a material effect on the Company's consolidated results of operations or
financial position.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements and related notes and
independent auditors' reports are included herein under Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company's former independent accountants, Mercurio & Associates, P.A.
and KPMG Peat Marwick LLP, who had been engaged by the Company to audit its
consolidated financial statements for the fiscal years ended October 31, 1993
and 1994, respectively, were dismissed by the Company on June 7, 1994 and
October 9, 1995, respectively. The reports of Mercurio & Associates, P.A. and
KPMG Peat Marwick LLP on the Consolidated Financial Statements of the Company
contained no adverse opinion or disclaimer of opinion, nor were the reports
qualified or modified as to uncertainty, audit scope, or accounting principles
used with the exception of the adoption of Financial Accounting Standards No.
109, Accounting for Income Taxes. Both decisions by the Company to change
accountants were recommended by the audit committee and approved by its Board
of Directors. From their appointment to the dismissal of the former
accountants there were no disagreements with the former accountants on any
matters of accounting principles or practice, financial statement disclosure,
or auditing scope or procedure in connection with their reports.
On October 11, 1995, the Board of Directors of the Company approved the
appointment of Ernst & Young LLP as its principal accountant to audit the
Company's Consolidated Financial Statements for the year ended October 31,
1995.
<PAGE> 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is incorporated by reference to the
Company's 1996 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
Company's 1996 Proxy Statement.
ITEM 12. SECURITY OWNERS OF CERTAIN BENEFICIAL OWNERS AND
PRINCIPAL SHAREHOLDERS
The information required by this Item is incorporated by reference to the
Company's 1996 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to the
Company's 1996 Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a)1. Financial statements and financial statement schedules
The following consolidated financial statements of Able Telcom Holding
Corp. and subsidiaries are included in Item 8.
Reports of Independent Certified Public Accountants
Consolidated Financial Statements
Consolidated Balance Sheets -- October 31, 1995 and 1994
Consolidated Statements of Operations -- Years ended October 31, 1995,
1994 and 1993
Consolidated Statements of Shareholders' Equity -- Years ended October
31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows -- Years ended October 31, 1995,
1994 and 1993
Notes to Consolidated Financial Statements -- October 31, 1995
Financial Statement Schedule
II. Valuation and Qualifying Accounts
(a)2. The financial statement schedule for the years ended October 31, 1995,
1994, and 1993 is filed as part of this report and should be read in
conjunction with the Consolidated Financial Statements of the Company.
Schedule II Valuation and Qualifying Accounts.....................F-29
Schedules not listed above have been omitted because they are not
applicable or not required or the information required to be set
forth therein is included in the Consolidated Financial Statements
or Notes thereto.
<PAGE> 19
(a)3. Exhibits.
The exhibits listed on the accompanying Index to Exhibits
immediately following the Financial Statement Schedules are filed
as part of, or incorporated by reference into, this Report.
<TABLE>
<CAPTION>
No. Description
--- -----------
<S> <C>
3.1 Articles of Incorporation of the Registrant, as amended to date(1)
3.2 Bylaws of the Registrant, as amended to date(1)
4.1 Articles of Incorporation (incorporated by reference to Exhibit
3.1)(1)
4.2 Bylaws (incorporated by reference to Exhibit 3.2)(1)
4.3 Specimen Stock Certificate(1)
4.4 Forms of "A" Warrant and "B" Warrant(1)
4.5 Gaines Option(1)
4.6 Osborne Option(1)
4.7 Specimen Common Stock Certificate(1)
4.8 Warrant Agreement with Broad Capital(2)
10.1 Shareholders Agreement between Bill B. Caudill, Frazier L.
Gaines, Gideon Taylor and Able Telcom Holding Corp. dated
September 1, 1993(1)
10.2 Stock Option Agreement with Daniel L. Osborne(1)
10.3 Stock Option Agreement with Frazier L. Gaines(1)
10.4 Consulting Agreement with Tom Payne(1)
10.5 A package of agreements referring to particular work
authorization from CANTV Caracas, Venezuela(1)
10.6 Employment Agreement with Gideon Taylor(1)
10.7 Employment Agreement with Frazier L. Gaines(1)
10.8 Employment Agreement with Bill B. Caudill(1)
10.9 Consulting Agreement with J.E. Johnson, III(1)
10.10 Master Agreement with AT&T(1)
10.11 Master Agreement with GTE(1)
10.12 Employment Agreement with Clark W. Barlow(2)
10.14 Note Restructuring Agreements with former principals of TSCI(2)
10.16 Stock Purchase Agreement between the Registrant and H.C. and Lois
A. Connell, dated November 6, 1995(3)
10.17 Amendment to Stock Purchase Agreement between the Registrant and
H.C. and Lois A. Connell, dated December 8, 1995(3)
10.18 Consulting Agreement between the Registrant and H.C. Connell,
dated November 6, 1995(3)
10.19 Form of $1,465,075 Promissory Note from H.C. Investments, Inc. to
H.C. and Lois Connell, dated December 8, 1995(3)
10.20 Form of $250,000 Promissory Note from H.C. Investments, Inc. to
H.C. and Lois Connell, dated December 8, 1995(3)
10.21 Form of $250,000 Promissory Note from H.C. Investments, Inc. to
Bill B. Caudill, dated December 8, 1995(3)
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
No. Description
--- -----------
<S> <C>
10.22 Form of $250,000 Promissory Note from H.C.
Investments, Inc. to Frazier Gaines, dated
December 8, 1995(3)
10.23 Term Loan and Revolving Line of Credit
Facility between the Registrant and SunTrust
Bank, South Florida N.A. effective as of
November 29, 1995(3)
10.24 Employment Agreement with William J. Mercurio
11 Computation of Per Share Earnings
21 List of subsidiaries as of October 31, 1995
27 Financial Data Schedule (for SEC use only)
</TABLE>
(b) Reports on Form 8-K.
A report filed on Form 8-K dated December 22, 1995 was filed
under Item 2 for the acquisition of H.C. Connell, Inc. and
Item 5 for the refinancing loan consolidating the Company's
debt.
A report filed on Form 8-K dated October 9, 1995 and one
dated October 17, 1995 was filed under Item 4 for the change
in accountants by the Registrant.
(1) Previously filed with the Commission as exhibits to the Company's
registration statement on Form S-1 (Registration #33-65854) ordered effective
by the Commission on February 26, 1994, as amended.
(2) Previously filed with the Commission as exhibits to the Company's Form
10-K filed for fiscal year 1994.
(3) Previously filed with the Commission as exhibits to the Company's Form
8-K dated December 22, 1995.
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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/ William J. Mercurio February 13, 1996
------------------------------------------------
WILLIAM J. MERCURIO, President (Date)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date Signed
---------- ----- -----------
<S> <C> <C>
/s/ Clark Barlow Chairman of the Board February 13, 1996
- ----------------- -----------------
CLARK BARLOW
/s/ William J. Mercurio President and Chief
- ------------------------ Executive Officer February 13, 1996
WILLIAM J. MERCURIO -----------------
/s/ Daniel L. Osborne Chief Financial and
- ---------------------- Accounting Officer, February 13, 1996
DANIEL L. OSBORNE Secretary (principal -----------------
financial officer,
principal accounting
officer)
/s/ Frazier L. Gaines
- --------------------- Director February 13, 1996
FRAZIER L. GAINES -----------------
/s/ Bill B. Caudill
- -------------------- Director February 13, 1996
BILL B. CAUDILL -----------------
/s/ C. Douglas Hubbard
- -----------------------
C. DOUGLAS HUBBARD Director February 13, 1996
D. -----------------
/s/ James C. Nix, Jr.
- ---------------------- Director February 13, 1996
JAMES C. NIX, JR. -----------------
/s/ William D. Callahan
- ------------------------ Director February 13, 1996
WILLIAM D. CALLAHAN -----------------
/s/ Robert Nelles
- ------------------ Director February 13, 1996
ROBERT NELLES -----------------
/s/ Gideon Taylor
- ------------------ Director February 13, 1996
GIDEON TAYLOR -----------------
</TABLE>
<PAGE> 22
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
<TABLE>
<S> <C>
PAGE
Reports of Independent Certified Public
Accountants F-2
Consolidated Financial Statements
Consolidated Balance Sheets F-5
Consolidated Statements of Operations F-7
Consolidated Statements of Shareholders' Equity F-8
Consolidated Statements of Cash Flows F-10
Notes to Consolidated Financial Statements F-12
Financial Statement Schedule:
II. Valuation and Qualifying Accounts F-29
</TABLE>
F-1
<PAGE> 23
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Shareholders and Board of Directors
Able Telcom Holding Corp.:
We have audited the accompanying consolidated balance sheet of Able Telcom
Holding Corp. and subsidiaries (the "Company") as of October 31, 1995, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for the year then ended. Our audit also included the financial
statement schedule listed in the Index at Item 14(a) for the year ended
October 31, 1995. These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and schedule 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Able Telcom Holding Corp. and subsidiaries at October 31, 1995, and the
consolidated results of their operations and the cash flows for the year then
ended, in conformity with generally accepted accounting principles. Also, in
our opinion, the related financial statement schedule, for the year ended
October 31, 1995, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information set
forth therein.
/s/ Ernst & Young LLP
West Palm Beach, Florida
January 26, 1996
F-2
<PAGE> 24
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Shareholders and Board of Directors
Able Telcom Holding Corp.:
We have audited the accompanying consolidated balance sheet of Able Telcom
Holding Corp. and subsidiaries (the "Company") as of October 31, 1994, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for the year then ended. In connection with our audit of the
consolidated financial statements, we also have audited the 1994 financial
statement schedule as listed in Item 14(a). These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Company as of October 31, 1994, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles. Also, in our opinion, the related 1994 financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
As discussed in Note 2(e) to the consolidated financial statements, the
Company adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes, effective as of November 1, 1993.
/s/ KPMG Peat Marwick LLP
February 16, 1995
F-3
<PAGE> 25
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Shareholders and Board of Directors
Able Telcom Holding Corp.:
We have audited the accompanying consolidated statements of operations,
shareholders' equity, and cash flows of Able Telcom Holding Corp. and
subsidiaries (the "Company") for the year ended October 31, 1993. Our audit
also included for the year ended October 31, 1993, the financial statement
schedule listed in the Index at Item 14(a). These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedule 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 consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated results of
operations and its cash flows of Able Telcom Holding Corp. and subsidiaries
for the year ended October 31, 1993 in conformity with generally accepted
accounting principles. Also, in our opinion, for the year ended October 31,
1993, the related financial statement schedule, when considered in relation to
the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ MERCURIO & ASSOCIATES, P.A.
January 24, 1994
F-4
<PAGE> 26
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31,
-----------
Assets 1995 1994
- ------ ---- ----
<S> <C> <C>
Current assets:
Cash and equivalents $ 2,952,239 $ 3,432,349
Investments, net 571,875 ---
Accounts receivable, net 10,529,124 11, 412,247
Inventories 3,535,622 3,182,304
Prepaid expenses and other 831,908 608,097
Deferred Income Taxes 151,879 ---
---------- -----------
Total current assets 18,572,647 18,634,997
Property and equipment, net 6,119,608 5,314,084
Other assets:
Investments, restricted, net --- 4,743,662
Deferred income taxes 331,739 ---
Goodwill and contractual rights, net 7,203,761 7,699,151
Other 254,461 211,778
---------- -----------
Total other assets 7,789,961 12,654,591
---------- -----------
Total assets $ 32,482,216 $ 36,603,672
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 27
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
October 31,
-----------
Liabilities and Shareholders' Equity 1995 1994
- ------------------------------------ ---- ----
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 2,222,369 $ 1,524,422
Notes payable to shareholders/directors 1,557,976 ---
Lines of credit 3,220,000 2,842,000
Accounts payable 3,446,123 4,189,891
Accrued expenses 728,282 1,385,435
---------- ----------
Total current liabilities 11,174,750 9,941,748
Deferred income taxes --- 69,550
Long-term debt, excluding current portion 3,033,000 6,768, 357
Notes payable to shareholders/directors --- 3,000,000
---------- ----------
Total liabilities 14,207,750 19,779,655
Minority interests 807,955 991,561
Commitments and contingencies
Shareholders' equity:
Common stock, $.001 par value, authorized
25,000,000 shares; issued and outstanding
8,193,212 shares in 1995
and 7,871,771 in 1994 8,193 7,872
Additional paid-in capital 12,790,196 10,969,121
Unrealized loss on investments, net (53,125) (146,950)
Retained earnings 4,721,247 5,002,413
---------- ----------
Total shareholders' equity 17,466,511 15,832,456
---------- ----------
Total liabilities and shareholders' equity $ 32,482,216 $ 36,603,672
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 28
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the years ended October 31,
-------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenues $ 35,407,581 $ 25,784,150 $ 20,047,918
---------- ---------- ----------
Costs and expenses:
Costs of revenues (exclusive of
depreciation and amortization shown
separately below) 27,719,750 16,395,098 8,873,954
General and administrative 5,464,338 4,166,694 1,059,543
Depreciation and amortization 1,914,064 854,251 398,879
Charges related to Latin
American operations --- 1,523,189 ---
Translation/transaction losses, net 95,798 858,326 827,673
Loss on sale of investments 100,379 --- ---
Interest expense 1,117,932 397,167 64,460
Interest and dividend income (672,598) (418,302) ---
---------- ---------- ----------
Total costs and expenses 35,739,663 23,776,423 11,224,509
---------- ---------- ----------
(Loss) income before income taxes and
minority interest (332,082) 2,007,727 8,823,409
Income tax (benefit) expense (368,105) 632,384 2,242,100
---------- ---------- ----------
Income before minority interest 36,023 1,375,343 6,581,309
Minority interest (317,189) (429,330) (2,023,517)
---------- ---------- ----------
Net (loss) income $ (281,166) $ 946,013 $ 4,557,792
========== ========== ==========
(Loss) income per common share and
common equivalent share:
Primary $ (.03) $ .12 $ .71
========== ========== ==========
Fully diluted $ (.03) $ .12 $ .66
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 29
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Preferred Stock Additional Unrealized Retained Earnings
------------------ ---------------- Paid-in Loss on
Shares Amount Shares Amount Capital Investments (Deficit) Total
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at October 31, 1992 5,020,410 5,020 63,000 $6,300 1,532,045 $ --- $(457,312) $1,086,053
Issuance of common stock to
liquidate notes payable to
shareholders 446,955 447 --- --- 462,611 --- --- 463,058
Issuance of common stock for
services rendered 90,960 91 --- --- 122,909 --- --- 123,000
Conversion of preferred stock
and cumulative dividends 285,723 286 (63,000) (63,300) 50,094 --- (44,080) ---
Issuance of common stock as
bonuses to key employees and
officers 78,500 79 --- --- 182,671 --- --- 182,750
Issuance of common stock in
connection with settlement of
litigation 49,000 49 --- --- 244,951 --- --- 245,000
Issuance of common stock for
exercise of stock options 200,000 200 --- --- 674,800 --- --- 675,000
Issuance of common stock for
acquisition 5,000 5 --- --- 13,495 --- --- 13,500
Net income --- --- --- --- --- --- 4,557,792 4,557,792
--------- ----- --------- -------- --------- -------- --------- ---------
Balance at October 31, 1993 6,176,548 6,177 --- --- 3,283,576 --- 4,056,400 7,346,153
========= ===== ========= ======== ========= ======== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-8
<PAGE> 30
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
Common Stock Preferred Stock Additional Unrealized Retained
------------------- --------------- Paid-in Loss on Earnings
Shares Amount Shares Amount Capital Investments (Deficit) Total
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance forward 6,176,548 $6,177 --- $--- $3,283,576 $ --- $4,056,400 $7,346,153
Issuance of common stock for
exercise of stock options 199,500 199 --- --- 32,051 --- --- 32,250
Tax benefit for exercise of stock
options --- --- --- --- 812,525 --- --- 812,525
Issuance of common stock for services
rendered 30,000 30 --- --- 29,970 --- --- 30,000
Tax benefit on issuance of common
stock for services rendered --- --- --- --- 116,889 --- --- 116,889
Issuance of common stock for exercise
of warrants 192,993 1,193 --- --- 4,364,129 --- --- 4,365,322
Issuance of common stock
for acquisition 272,730 273 --- --- 2,249,720 --- --- 2,249,993
Remittance by officer relating to
profits on stock transactions --- --- --- --- 80,261 --- --- 80,261
Unrealized loss on
investments, restricted,
net of tax effect --- --- --- --- --- (146,950) --- (146,950)
Net income --- --- --- --- --- --- 946,013 946,013
--------- ------ ----- ------- ----------- -------- ---------- -----------
Balance at October 31, 1994 7,871,771 7,872 --- --- 10,969,121 (146,950) 5,002,413 15,832,456
Issuance of common stock
to liquidate notes payable
to shareholders/directors 259,434 259 --- --- 1,499,741 --- --- 1,500,000
Issuance of common stock
for exercise of warrants 67,007 67 --- --- 334,829 --- --- 334,896
Cancellation of common
stock previously issued
for acquisition (5,000) (5) --- --- (13,495) --- --- (13,500)
Change in unrealized loss
on investments --- --- --- --- --- 93,825 --- 93,825
Net loss --- --- --- --- --- --- (281,166) (281,166)
--------- ------ ----- ------- ----------- -------- ---------- -----------
Balance at October 31, 1995 8,193,212 $8,193 --- $ --- $12,790,196 $(53,125) $4,721,247 $17,466,511
========= ====== ===== ======= =========== ======== ========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-9
<PAGE> 31
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the years ended October 31,
-------------------------------
1995 1994 1993
---------- ----------- ----------
<S> <C> <C> <C>
Operating Activities:
Net (loss) income $(281,166) $ 946,013 $4,557,792
Adjustments to reconcile net (loss) income
to net cash provided by operating
activities:
Depreciation and amortization 1,914,064 854,251 398,879
Bad debt expense 86,593 1,012,202 ---
Deferred income taxes (439,341) (1,423,195) 1,492,745
Loss on sale of investments 100,379 --- ---
Translation/transaction losses 95,798 858,326 827,673
Minority interest 317,189 429,330 2,023,517
Common Stock issued for services --- 30,000 315,750
Changes in assets and liabilities, net of
effects from acquisition:
Decrease (increase) in accounts receivable 796,530 1,474,805 (6,115,673)
(Increase) decrease in inventories (353,318) 448,597 86,665
Decrease in other receivables --- 402,051 194,427
(Increase) in prepaid expenses and other (223,811) (410,743) (28,542)
(Increase) in other assets (24,373) (3,873) ---
(Decrease) increase in accounts payable
and accrued expenses (1,514,749) (423,423) 296,662
---------- ----------- ----------
Net cash provided by operating activities 473,795 4,194,341 4,049,895
---------- ----------- ----------
Investing Activities:
Purchases of property and equipment (2,250,904) (1,835,377) (860,553)
Purchase of investments (350,000) (4,972,920) ---
Sale of investments 4,418,233 --- ---
Business acquisitions, net of cash acquired --- (6,422,610) ---
Investments under the equity method --- (50,000) (18,205)
---------- ----------- ----------
Net cash provided by (used in) investing
activities 1,817,329 (13,280,907) (878,758)
---------- ----------- ----------
Financing Activities:
Net borrowings under lines of credit 378,000 495,999 ---
Borrowings (repayments) from
shareholders/ directors 57,976 (260,846) 751,300
Proceeds from long-term debt 737,758 7,954,175 396,921
Payments on long-term debt (3,775,168) (1,610,346) (609,002)
Distributions to minority interests (500,795) (745,962) (1,051,49)
</TABLE>
See accompanying notes to consolidated financial statements.
F-10
<PAGE> 32
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
For the years ended October 31,
-------------------------------------
1995 1994 1993
----------- ---------- ----------
<S> <C> <C>
Foreign currency translation adjustment --- (277,764) (766,376)
Loans from minority interest owners --- --- 225,896
Repayment of loans from minority interest owners --- --- (636,461)
Proceeds from exercise of stock options --- 32,250 675,000
Tax benefit for exercise of stock options and
issuance of Common Stock for services rendered --- 929,414 ---
Proceeds from exercise of warrants 334,896 4,365,322 ---
Proceeds from officer relating to profits on stock
transactions --- 80,261 ---
----------- ---------- ----------
Net cash (used in) provided by financing activities (2,767,333) 10,962,503 (1,014,218)
----------- ---------- ----------
Effect of exchange rate changes on cash
and equivalents (3,901) (580,562) (61,297)
----------- ---------- ----------
(Decrease) increase in cash and equivalents (480,110) 1,295,375 2,095,622
Cash and equivalents at beginning of year 3,432,349 2,136,974 41,352
----------- ---------- ----------
Cash and equivalents at end of year $ 2,952,239 $3,432,349 $2,136,974
=========== ========== ==========
Supplemental disclosures of cash flow information:
Non-cash transactions affecting operating,
investing and financing activities:
Operating activities:
Issuance of Common Stock for services $ --- $ 30,000 $ 315,750
=========== ========== ==========
Investing activities:
Issuance of Common Stock for litigation settlement
and acquisition $ --- $ --- $ 258,500
=========== ========== ==========
Financing activities:
Issuance of Common Stock for acquisition --- $2,249,993 ---
Common Stock issued to repay
shareholders/directors loans $(1,500,000) --- $ (463,050)
Issuance of notes payable to shareholders/directors --- 3,000,000 ---
Preferred stock and dividends converted into
Common Stock --- --- 44,080
----------- ---------- ----------
$(1,500,000) $5,249,993 $ (418,978)
=========== ========== ==========
Interest paid $ 933,302 $ 322,167 $ 133,884
=========== ========== ==========
Income taxes paid, net of refunds $ 168,460 $ 816,143 $ 771,146
=========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-11
<PAGE> 33
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
(1) THE COMPANY
Able Telcom Holding Corp. and subsidiaries (the "Company") provide
maintenance, installation and engineering services relating to
telecommunication networks to domestic and Latin American telephone
companies. In addition, the Company acquired a subsidiary in June 1994
which provides specialty products and services relating to traffic
management systems, primarily to the Florida and Virginia departments of
transportation.
Prior to June 1994, the Company conducted its telecommunication related
service operations primarily through two 80% owned subsidiaries in
Venezuela. Approximately 6% of the Company's 1995 revenues (53% in 1994
and 95% in 1993) were generated from these operations. During the second
half of the year ended October 31, 1994, the Company's Venezuelan
operations decreased dramatically as a result of economic and political
instability, including severe foreign currency exchange control
restrictions and a major currency devaluation. See Note 17 for a
discussion of currency devaluations.
The Company also has interests in various inactive corporations both
foreign and domestic. Such corporations were formed to pursue various
business interests both in the foreign and domestic telecommunications
markets. Results of their operations, which consist primarily of costs
to maintain their existence, are immaterial.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the
Company and its subsidiaries. All material intercompany
accounts and transactions have been eliminated. Operations for
the subsidiaries acquired during the fiscal year ended October
31, 1994 (see Note 3) are included in the consolidated results
of operations since the date of acquisition.
(B) REVENUE RECOGNITION
Revenues from telecommunication related contracts are
recognized at the time services are rendered and accepted by the
customer. Prospective losses on contracts are provided for when they
become known. Revenue from contracts relating to traffic management
products and services is reported on a units of production method
for financial statement purposes. These contracts typically consist
of various separate pay items which are based on a fixed price per
unit. The revenue for each contract reflected in the accompanying
consolidated statements of operations represents units of production
multiplied by the unit prices for work performed and delivered
during the year. When estimates of costs to complete a contract
indicate a loss, a current provision is made for the entire
estimated loss.
F-12
<PAGE> 34
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
(C) INVENTORIES
Inventories are valued at the lower of first-in, first-out cost or
market and are summarized as follows at October 31:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Raw materials $ 1,719,338 $ 1,783,985
Committed inventory 1,816,284 1,398,319
------------ ------------
$ 3,535,622 $ 3,182,304
============ ============
</TABLE>
(D) PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is
recorded on the straight-line method over the estimated useful lives
of the assets.
(E) INCOME TAXES
As of November 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (Statement
109), which required a change from the deferred method to the asset
and liability method of accounting for income taxes. Under the asset
and liability method, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using the enacted
tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities due
to a change in tax rates is recognized in income in the period that
includes the enactment date.
Pursuant to the deferred method under Accounting Principles Board
Opinion No. 11, which was applied in 1993, deferred income taxes are
recognized for income and expense items that are reported in
different years for financial reporting purposes and income tax
purposes using the tax rate applicable for the year of the
calculation. Under the deferred method, deferred taxes are not
adjusted for subsequent changes in tax rates.
(F) GOODWILL AND CONTRACTUAL RIGHTS
Goodwill amounts are being amortized on a straight-line basis over
10 to 20 years. Contractual rights which relate to master
telecommunication contracts, are being amortized on a straight-line
basis over 5 to 10 years. Intangible assets are net of
F-13
<PAGE> 35
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
accumulated amortization of $733,934 in 1995 and $265,250 in
1994. Amortization expense amounted to $468,684, $188,894 and
$73,606 for the years ended October 31, 1995, 1994 and 1993,
respectively. Periodically, the Company evaluates the realizability
of goodwill based upon expectations of nondiscounted cash flows and
operating income for each subsidiary having a material goodwill
balance. Based upon its most recent analysis, the Company believes
that no material impairment of goodwill exists at October 31, 1995.
(G) CASH AND EQUIVALENTS
The Company considers all unrestricted highly liquid securities
(consisting principally of short-term money market investments and
treasury notes) with a maturity or redemption option of three months
or less at the date of purchase to be cash equivalents.
The Company maintains cash and equivalents with various financial
institutions. These financial institutions are located throughout
the country and Company policy is designed to limit exposure to any
one institution. The Company performs periodic evaluations of the
relative credit standing of those financial institutions that are
considered in the Company's investment strategy.
(H) FOREIGN CURRENCY TRANSLATION
In accordance with Statement of Financial Accounting Standards No.
52, Foreign Currency Translation, the financial statements of the
Company's subsidiaries in Latin America are remeasured using the
U.S. dollar as the functional currency. Monetary assets and
liabilities denominated in a foreign currency are remeasured into
U.S. dollars at the year end exchange rate. Non-monetary
assets and liabilities, and related income statement accounts
are remeasured at historical exchange rates. All other revenues and
expenses are remeasured at the average monthly exchange rates. See
Note 17 for a discussion of currency devaluations.
(I) INVESTMENTS
As of November 1, 1994, the Company adopted Statement of
Financial Accounting Standards No.115, "Accounting for Certain
Investments in Debt and Equity Securities". Under this statement,
the Company's investments are classified as "available for sale"
and, accordingly, are recorded at the quoted market value as of
October 31, 1995 with an offsetting adjustment to shareholders'
equity, net of tax. In accordance with the statement, prior period
financial statements have not been restated to reflect the change in
accounting principle. However, because the presentation of the
Company's investments in prior years is the same as that adopted
F-14
<PAGE> 36
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
under Statement No. 115, there is no cumulative effect adjustment
recognized in net loss and related per share amounts for the year
ended October 31, 1995.
(J) STOCK COMPENSATION
The Company currently follows Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees", and related
interpretations in accounting for its employee stock options.
During October 1995, the Financial Accounting Standards Board issued
Statement No. 123, "Accounting for Stock Based Compensation", which
is effective for fiscal years beginning after December 15, 1995.
The adoption of this statement is not expected to have a material
impact on the financial condition or results of operations of the
Company.
(K) RECLASSIFICATIONS
Certain items in the 1994 and 1993 consolidated financial statements
have been reclassified to conform to the 1995 presentation.
(3) ACQUISITIONS
On June 22, 1994, the Company acquired all of the outstanding capital
stock of Transportation Safety Contractors, Inc. and its affiliates
("TSCI"). The acquisition was accounted for under the purchase method.
TSCI's results of operations are included in the consolidated statements
of operations since the date of acquisition. Of the total purchase price
of $12.0 million, the Company paid $6.0 million in cash and issued
272,730 shares of restricted Common Stock and $3.0 million of promissory
notes to the principals of TSCI. The total cost of the acquisition
exceeded the fair value of the net assets of TSCI by $6,777,017. The
excess is being amortized on a straight-line basis over a period of 20
years. Amortization expense amounted to $339,621 in 1995 and $102,048 in
1994. In November, 1994, the promissory notes totaling $3.0 million
were renegotiated resulting in $1.5 million of the notes being converted
into 259,434 shares of restricted Common Stock of the Company. No gain
or loss on extinguishment was recognized in connection with this
transaction.
F-15
<PAGE> 37
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
The following summarizes the unaudited pro forma results of the Company's
operations for the years ended October 31, 1994 and 1993, assuming the
acquisition occurred as of the beginning of the respective periods. The
pro forma results are presented for purposes of additional analyses only
and do not purport to present the results of operations that would have
occurred for the periods presented or that may occur in the future.
<TABLE>
<CAPTION>
(Unaudited)
--------------------------------------
1994 1993
---- ----
<S> <C> <C>
Revenues $ 44,406,930 $ 41,312,406
Net income $ 622,800 $ 5,537,812
Net income per share - fully diluted $ .08 $ .77
</TABLE>
In June 1994, the Company acquired a 75% interest in a Brazilian
telecommunications company for $144,000 plus $356,000 in working capital
contributions. The acquisition was accounted for using the purchase
method with the total cost exceeding the fair value of the net assets by
$496,906. The excess is being amortized on a straight-line basis over a
period of 10 years. The acquisition did not have a material pro forma
impact on operations.
(4) INVESTMENTS, NET
At October 31, 1995, investments consist of preferred equity securities.
These investments, which have a cost basis of $625,000, are classified as
available-for-sale and, accordingly, are carried at their fair market
value of $571,875. The unrealized loss on these investments of $53,125,
net of tax, is included as a separate component of shareholders' equity
At October 31, 1994, investments, restricted, net include:
<TABLE>
<S> <C>
U.S. Treasury Bills $ 2,200,000
Municipal bond fund 1,408,000
Preferred equity securities 1,364,920
------------
Investments at cost 4,972,920
Unrealized loss (229,258)
------------
Investments at fair value $ 4,743,662
============
</TABLE>
At October 31, 1994, investments in the municipal bond fund and preferred
equity securities are carried at the lower of cost or fair market value.
The fair values of these investments are based on quoted market prices as
of the balance sheet date. The U.S. Treasury Bills are carried at cost
which approximates fair market value.
F-16
<PAGE> 38
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
Investment income, comprised of dividends and interest income, amounted
to $263,502 and $187,724 for the years ended October 31, 1995 and 1994,
respectively.
As of October 31, 1995 and 1994, the above investments (and certain cash
equivalents at October 31, 1995 totaling $1,779,845) collateralize
long-term debt totaling $3,317,014 and $6,445,333, respectively, and the
use of such assets was restricted by the Company. However, these
restrictions were removed in connection with the refinancing as discussed
in Note 7. Accordingly, investments have been classified as current in
the October 31, 1995 balance sheet to reflect the removal of the
restrictions.
During 1995, the Company sold investment securities; the proceeds and
realized loss from this sale totaled $4,418,233 and $100,379,
respectively.
(5) ACCOUNTS RECEIVABLE, NET
Accounts receivable are recorded net of an allowance for doubtful
accounts of $535,914 and $1,278,933 at October 31, 1995 and 1994,
respectively. Accounts receivable include retainage which has been billed
but is not due until approximately 90 days after the services are
rendered and accepted by the customer. Retainage aggregated $1,410,832
and $1,315,922 at October 31, 1995 and 1994, respectively. A significant
portion of accounts receivable is derived from two major customers (see
Note 12).
(6) PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consists of the following at October 31:
<TABLE>
<CAPTION>
1995 1994 Depreciable Life
---- ---- ----------------
<S> <C> <C> <C>
Land $ 242,000 $ 242,000
Buildings 1,125,121 1,201,698 15-27 years
Furniture, fixtures and equipment 7,204,304 4,930,815 5-7 years
--------------- ---------------
8,571,425 6,374,513
Less accumulated depreciation (2,451,817) (1,060,429)
--------------- ---------------
Property and equipment, net $ 6,119,608 $ 5,314,084
=============== ===============
</TABLE>
Depreciation expense amounted to $1,445,380 in 1995, $665,357 in 1994
and $327,821 in 1993.
F-17
<PAGE> 39
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
(7) BORROWINGS
The Company's borrowings consist of the following at October 31:
<TABLE>
<CAPTION>
LINES OF CREDIT: 1995 1994
---- ----
<S> <C> <C>
Bank line of credit ($2,250,000 maximum
limit), due on demand; interest payable
monthly at prime (8.75% at October 31,
1995); unsecured $ 2,095,000 $ 1,600,000
Bank line of credit ($750,000 maximum
limit); due on demand; interest payable
monthly at prime (8.75% at October 31,
1995); unsecured; personally guaranteed by
an officer of the Company 625,000 742,000
Bank line of credit ($500,000 maximum
limit); due on demand; interest payable
monthly at prime (8.75% at October 31,
1995); unsecured 500,000 500,000
------------ ------------
Total lines of credit $ 3,220,000 $ 2,842,000
============ ============
NOTES PAYABLE TO SHAREHOLDERS/DIRECTORS:
Notes payable to shareholders/directors;
principal due June 1996, interest due
quarterly at 10%; personally guaranteed by a
shareholder/director of the Company $ 1,307,976 $ 3,000,000
Note payable to director; principal due on
demand; interest due quarterly at prime
(8.75% at October 31, 1995); unsecured 250,000 ---
------------ ------------
Total notes payable to shareholders/directors $ 1,557,976 $ 3,000,000
============ ============
LONG-TERM DEBT:
Note payable to bank; payable in monthly
installments of $83,333 plus interest based
on the 30 day commercial paper rate (5.25%
at October 31, 1995) plus 3%; collateralized
by certain investments (see Note 4 ) and
Company shares owned by two shareholders/directors $ 2,081,183 $ 2,833,333
Notes payable to bank; payable in monthly
installments of $49,442 plus interest at
prime (8.75% at October 31, 1995); secured
by related equipment 1,537,527 1,392,937
Term loan payable to bank; interest based on
the LIBOR rate (5.94% at October 31, 1995)
plus 3/4%; collateralized by certain
investments (see Note 4) and Company shares
owned by two shareholders/directors 1,235,831 3,612,000
Mortgage note payable to bank; payable in
monthly installments of $1,604 plus interest
at prime (8.75% at October 31, 1995) plus
1/2%; collateralized by land and building
with a carrying value of approximately
$442,500 as of October 31, 1995; personally
guaranteed by shareholders/directors 308,000 327,250
</TABLE>
F-18
<PAGE> 40
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
<TABLE>
<S> <C> <C>
Note payable to bank; payable in monthly
installments of $2,700 plus interest at
7.75%; secured by related equipment 92,828 125,223
Equipment notes at 10% --- 2,036
------------ ------------
Total long-term debt 5,255,369 8,292,779
Less current portion, giving effect to the
November 29, 1995 refinancing as of October
31, 1995 (2,222,369) (1,524,422)
------------ ------------
Long-term debt, excluding current portion $ 3,033,000 $ 6,768,357
============ ============
</TABLE>
Effective November 29, 1995 the Company entered into a Term Loan and
Revolving Line of Credit Facility with a new lender ("Lender")
totaling $12,500,000 (the "Credit Facility"). The Credit Facility is
comprised of the following components: (i) a $6,000,000 revolving line
of credit (the "Line of Credit"), (ii) a $2,500,000 equipment loan
facility (the "Equipment Loan Facility"), (iii) a 60 month Term A loan
in the amount of $2,750,000 (the "Term A Loan"), and (iv) a 36
month Term B loan in the amount of $1,250,000 (the "Term B Loan"). The
Line of Credit, the Term A Loan and the Term B Loan are each evidenced by
separate promissory notes with varying maturities. Each loan will accrue
interest at either the Lender's prime rate or, at the Company's election,
the one (1) month LIBOR rate plus two and seven tenths percent. Proceeds
from the Term A, Term B and a portion of the proceeds from the credit
line were used to refinance existing debt of the Company. The balance of
the Line of Credit will be used by the Company for its working capital
needs. The Credit Facility contains covenants, which require among other
conditions, that the Company maintain certain tangible net worth, funded
debt and debt service amounts.
The aggregate maturities of long-term debt for years subsequent to
October 31, 1995, giving effect to the refinancing, are as follows:
<TABLE>
<CAPTION>
Amount
------
<S> <C>
1996 $ 2,222,369
1997 966,667
1998 966,667
1999 550,000
2000 549,666
------------
$ 5,255,369
============
</TABLE>
Included in interest expense is $114,720 for 1995, $14,787 for 1994, and
$10,072 for 1993 related to notes payable to shareholders/directors.
F-19
<PAGE> 41
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
(8) SHAREHOLDERS' EQUITY
(A) COMMON STOCK
The Company has authorized 25 million shares of it's $.001 per value
Common Stock of which 8,193,212 shares were issued and outstanding
at October 31, 1995. (7,871,771 in 1994)
In October 1991, the Company issued, pursuant to a Preferred Stock
offering, 45,000 units each consisting of one share of Class A
Convertible Preferred Stock and ten Class A Warrants at a price of
$10 per unit. Net proceeds to the Company aggregated $378,697. An
additional 18,000 units were issued during 1992 and net proceeds
totaled $170,500. These amounts were recorded as Preferred Stock
and additional paid-in capital. Each Class A Warrant was
exercisable at $2.50 and entitled the Warrant holder to receive one
share of Common Stock and one Class B Warrant. Each Class B Warrant
was exercisable at $5 and entitled the Warrant holder to receive one
share of Common Stock. During the year ended October 31, 1993,
shareholders, including related parties, converted all of the Class
A Convertible Preferred Stock outstanding (63,000 shares) and unpaid
cumulative dividends of $44,080 into 285,723 shares of Common Stock.
The Company filed a Registration Statement which became effective on
January 31, 1994 and a post-effective amendment which became
effective on February 25, 1994. The securities registered were
630,000 shares of Common Stock issuable upon exercise of Class A
Warrants; 630,000 shares of Common Stock issuable upon exercise of
Class B Warrants; 360,000 shares of Common Stock issuable upon
exercise of stock options granted to two of the Company's officers;
and 1,233,538 shares of Common Stock owned by certain shareholders
(including related parities). During fiscal year 1994, 630,000
Class A Warrants; 562,993 Class B Warrants and 199,500 stock options
were exercised. The remaining 67,007 Class B Warrants were
exercised during the year ended October 31, 1995. Aggregate net
proceeds to the Company from the exercise of warrants and stock
options totaled $334,896 in 1995 and $4,397,572 in 1994.
During the year ended October 31, 1993, 446,955 shares of Common
Stock were issued to shareholders/directors as a repayment of notes
payable and 78,500 shares were issued to key employees and officers
as bonuses. Also, 49,000 shares were issued to settle certain
litigation (see Note 9) and 200,000 shares were issued pursuant to
stock options.
(B) STOCK OPTIONS
As of October 31, 1995, the Company did not have a stock option
plan. However, specific option grants were made to principal
officers and certain directors, a portion which remain unexercised
at October 31, 1995. During the fiscal year ended October 31,
F-20
<PAGE> 42
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
1992, an option to purchase 260,000 shares of Common Stock at
$.05 per share was granted to an officer of the Company. In
addition, in fiscal 1993 an officer was granted an option to purchase
100,000 shares of Common Stock at $.50 per share. The Company filed
a Registration Statement to register the shares subject to these
options which became effective in early 1994 (see Note 8(a)). During
1993, the Company also granted stock options to purchase 200,000
shares of Common Stock to a financial consultant. These stock
options were exercised during 1993 at an average option price of
$3.38.
Early in 1994, the two officers of the Company exercised their
options to purchase the 360,000 shares of Common Stock covered by
such options. In April 1994, the transfer agent was notified that
each of the officers had intended to only exercise a limited number
of their options. In February 1995, the Company's Board of
Directors confirmed the Company's intent and action was taken in
April 1994 to rescind the exercise of certain options. For the years
ended October 31, 1995 and 1994, 160,500 of these options remained
outstanding and available for exercise.
In addition, during 1995, options to purchase 100,000 shares at
$4.83 per share were granted to an officer, pursuant to an
employment agreement. These options were outstanding as of October
31, 1995.
In November, 1995, the Company adopted a stock option plan comprised
of incentive stock options for employees and non-qualified stock
options for non-affiliated directors (the "Plan"). The Plan, which
is subject to shareholder approval, provides for the issuance of up
to 550,000 options to employees and non-affiliated directors. The
exercise price for incentive options under the Plan will not be less
than the fair value of the Company's Common Stock on the date of the
grant. The purchase price for grants of non-qualified stock options
will be determined by the Company's Board of Directors. Subsequent
to October 31, 1995, a total of 177,000 options have been granted
under the Plan. Incentive options granted to employees generally
become exercisable over a three year period in equal installments
beginning the year after the date of the grant. Non-qualified
options granted to non-affiliated directors become exercisable one
year after the date of the grant.
(9) MINORITY INTERESTS
Prior to August 1, 1995, minority interests represent a shareholder's
20% share of the equity in two Venezuelan corporations plus certain
working capital investments provided by such shareholder. On August 1,
1995, the Company entered into an agreement increasing the shareholder's
proportionate share of any future earnings to 50%.
F-21
<PAGE> 43
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
During the year ended October 31, 1993, the Company settled certain
litigation with a former officer of the Company who was also a minority
shareholder in one of the Venezuelan corporations. In connection with
the settlement, the Company issued 49,000 shares of Common Stock in
exchange for shares representing the former officer's 5% interest in the
Venezuela corporation (reducing the minority interest to 20%) and the
termination of an employment agreement.
(10) INCOME TAX ANALYSIS
An analysis of the components of (loss) income before income taxes and
minority interest and the related income tax (benefit) expense for
income taxes is presented below:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Domestic $ (817,790) $ 1,693,176 $ 781,984
Foreign 485,708 314,551 8,041,425
------------- ------------- --------------
$ (332,082) $ 2,007,727 $ 8,823,409
============= ============= ==============
1995 1994 1993
---- ---- ----
Provision for income taxes:
Federal
Current $ --- $ 792,440 $ 57,800
Deferred (202,074) (252,402) 1,431,200
State
Current --- 153,142 5,000
Deferred --- (60,796) 249,600
Foreign
Current 71,236 1,027,689 498,500
Deferred (237,267) (1,027,689) ---
------------- ------------- --------------
Provision for income tax
(benefit) expense $ (368,105) $ 632,384 $ 2,242,100
============= ============= ==============
</TABLE>
Reconciliation of the Federal Statutory income tax rate to the Company's
effective income tax rate is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Tax (benefit) at federal statutory rate (34%) 34% 34%
State income tax, net --- 4 2
Non-deductible goodwill 35 2 ---
Non-taxable income (7) ---
Reduction in tax provided on
undistributed earnings (87) ---
Beneficial foreign tax rates (5) (9)
Other (13) 1 (2)
----- ---- ----
Effective income tax rate (111%) 40% 25%
===== ==== ====
</TABLE>
F-22
<PAGE> 44
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are
presented below:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred tax assets:
Unrealized loss on investments $ 18,063 $ 86,270
Reserve for bad debts 148,382 345,384
Tax loss carry forward 460,270 ---
Foreign tax credit carryforwards 423,914 278,540
Other 10,297 26,624
--------- ---------
1,060,926 736,818
Less valuation allowance (44,989) (419,470)
--------- ---------
1,015,937 317,348
--------- ---------
Deferred tax liabilities:
Plant, property and equipment (195,939) (41,252)
Investment in foreign subsidiaries (329,580) (329,580)
Other (6,800) (16,066)
--------- ---------
(532,319) (386,898)
--------- ---------
Net deferred tax asset (liability) $ 483,618 $ (69,550)
========= =========
</TABLE>
The Company has not provided deferred taxes for tax that could result
from the remittance of $2,147,402 of undistributed earnings of foreign
subsidiaries as it is the Company's intention to continue to reinvest
these earnings. It is not practical to estimate the amount of taxes
that might be payable on the eventual remittance of such earnings. If
the foreign subsidiaries were to remit the above amount, the taxes
withheld would be $193,266.
At October 31, 1995, the Company has net operating loss carryforwards of
approximately $1,370,000, $500,000 of which are foreign. The U.S. net
operating loss carryovers of $870,000 begin to expire at the end of the
fiscal year ending October 31, 2009. Approximately $340,000 of the
foreign carryovers expire at end of the fiscal year ending October 31,
1998. The remaining foreign net operating loss carryforwards have no
expiration date.
In addition, the Company has domestic foreign tax credit carryforwards of
approximately $350,000 which begin to expire after the fiscal year ending
October 31, 1998 and other tax credit carryforwards of approximately
$70,000.
The valuation allowance for deferred tax assets as of November 1, 1993
was -0-. The net change in the total valuation allowance for the year
ended October 31, 1994 was an increase of $86,270. The change in the
valuation allowance during 1995 was $41,281.
F-23
<PAGE> 45
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
(11) (LOSS) INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Primary (loss) income per common share is calculated by dividing net
(loss) income applicable to Common Stock by the weighted average shares
of Common Stock and Common Stock equivalents outstanding. Common Stock
equivalents were anti-dilutive in 1995. Common Stock equivalents in 1994
and 1993 represent the dilutive effect of the assumed exercise of certain
outstanding stock options and warrants. Primary and fully dilutive
average shares were the same number of shares, 8,283,668 and 7,736,122,
respectively, in 1995 and 1994. In 1993, primary and fully diluted
average shares outstanding were 6,421,377 and 6,906,915, respectively.
(12) MAJOR CUSTOMERS/CONCENTRATION OF CREDIT RISK
Approximately 6 % of the Company's 1995 revenues (53% in 1994 and 95% in
1993) were derived from the one customer of the Company's Latin American
operations. Commencing with fiscal 1993 and continuing through mid-1994,
the Company's revenues and earnings from telecommunication activities
were principally derived from services rendered to this single customer
in Venezuela. In mid-1994, as discussed in Note 1, the Company's
business in Venezuela decreased dramatically. Accounts receivable
outstanding from this customer were $1,483,630 and $2,372,856 at
October 31, 1995 and 1994, respectively. Amounts owed by the customer
are to be paid in bolivars, and may be subject to the risk inherent in
the currency devaluation discussed in Note 17. The Company also has a
net outstanding accounts receivable balance due from a domestic
governmental agency of $1,543,513 and $1,630,422 for the years ended
October 31, 1995 and 1994, respectively.
(13) INDUSTRY AND GEOGRAPHIC AREA SEGMENT INFORMATION
The Company operates in two principal industry segments:
telecommunication network services for the years ended October 31, 1995,
1994 and 1993, and traffic management systems and devices for the year
ended October 31, 1995 and the period from June 22, 1994 (acquisition
date of TSCI) through October 31, 1994. Traffic management operations
are conducted in the United States while telecommunication network
services are conducted both in the United States and Latin America
(mainly in Venezuela and Brazil). Revenues, income (loss) from
operations, identifiable assets, capital expenditures and depreciation
and amortization pertaining to the industries and geographic areas in
which the Company operates are presented below.
<TABLE>
<CAPTION>
INDUSTRY SEGMENTS 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenues:
Traffic management operations $ 22,872,331 $ 9,750,546 $ ---
Telecommunication network services 12,535,250 16,033,604 20,047,918
------------- ------------- -------------
Total $ 35,407,581 $ 25,784,150 $ 20,047,918
============= ============= =============
Income (loss) from operations:
Traffic management operations $ 286,149 $ 531,401 $ ---
</TABLE>
F-24
<PAGE> 46
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
<TABLE>
<S> <C> <C> <C>
Telecommunication network services 23,280 2,313,517 9,715,542
------------- ------------- -------------
Total $ 309,429 $ 2,844,918 $ 9,715,542
============= ============= =============
Identifiable Assets:
Traffic management operations $ 21,701,922 $ 20,480,935 $ ---
Telecommunication network services 10,780,294 16,122,137 11,571,413
------------- ------------- -------------
Total $ 32,482,216 $ 36,603,072 $ 11,571,413
============= ============= =============
Capital Expenditures:
Traffic management operations $ 353,148 $ 160,000 $ ---
Telecommunication network services 1,897,756 1,675,377 860,553
------------- ------------- -------------
Total $ 2,250,904 $ 1,835,377 $ 860,553
============= ============= =============
Depreciation and amortization:
Traffic management operations $ 996,249 $ 218,550 $ ---
Telecommunications network services 917,815 635,701 398,879
------------- ------------- -------------
Total $ 1,914,064 $ 854,251 $ 398,879
============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
GEOGRAPHIC AREAS 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenues:
United States $ 32,179,831 $ 12,001,164 $ 956,551
Latin America 3,227,750 13,782,986 19,091,367
------------- ------------- -------------
Total $ 35,407,581 $ 25,784,150 $ 20,047,918
============= ============= =============
Income (loss) from operations:
United States $ 364,264 $ (901,660) $ (1,281,283)
Latin America (54,835) 3,746,578 10,996,825
------------- ------------- -------------
Total $ 309,429 $ 2,844,918 $ 9,715,542
============= ============= =============
Identifiable assets:
United States $ 26,955,667 $ 28,847,774 $ 3,811,033
Latin America 5,526,549 7,755,898 7,760,380
------------- ------------- -------------
Total $ 32,482,216 $ 36,603,672 $ 11,571,413
============= ============= =============
</TABLE>
(14) RELATED PARTY TRANSACTIONS
In February 1994, the Company's 80% owned Latin American subsidiary
purchased a portion of the office building from its 20% minority owner.
The purchase price of $642,788 approximated fair market value. In
conjunction with this transaction, the Company entered into a lease
agreement with monthly lease payments amounting to $2,800. In addition,
the Company's Latin American subsidiaries paid dividends and management
fees for technical assistance and other services to its minority interest
F-25
<PAGE> 47
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
shareholder aggregating $485,496, $806,866 and $1,031,098 in the years
ended October 31, 1995, 1994 and 1993, respectively.
(15) QUARTERLY FINANCIAL DATA (UNAUDITED)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
First Second Fourth
1995 Quarter Quarter Third Quarter Quarter
- ---- ------- ------- ------------- -------
<S> <C> <C> <C> <C>
Revenues $ 7,625 $ 8,234 $ 9,014 $ 10,535
Operating income (loss) (793) 139 231 637
Net income (loss) (842) 68 160 333
Income (loss) per share $ (.10) $ .01 $ .02 $ .04
1994
- ----
Revenues $ 6,707 $ 5,314 $ 4,592 $ 9,171
Operating income (loss) 2,810 2,679 (738) (1,906)
Net income (loss) 1,344 1,122 (747) (773)
Income (loss) per share $ .18 $ .15 $ (.09) $ (.12)
</TABLE>
(16) COMMITMENTS AND CONTINGENCIES
(A) LEASED PROPERTIES
At October 31, 1995, the Company had several non-cancelable
operating leases, primarily for office space, that expire at
various times through fiscal 2000. Rental expense for operating
leases during 1995, 1994 and 1993 was $323,180, $168,000 and
$70,000, respectively. Included in rent expense for 1995, is
$84,000 paid to the former owners, shareholders/directors of TSCI
for certain office space. Future minimum lease payments under
non-cancelable operating leases (with initial or remaining lease
terms in excess of one year) as of October 31, 1995 are as follows:
<TABLE>
<S> <C>
1996 $ 229,400
1997 127,627
1998 60,083
1999 58,596
2000 60,171
----------
$ 535,877
==========
</TABLE>
F-26
<PAGE> 48
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
(B) LITIGATION
The Company is involved in various claims and legal actions arising
in the ordinary course of business. In the opinion of management,
the ultimate disposition of these matters will not have a material
adverse effect on the Company's consolidated financial position.
(17) CURRENCY DEVALUATION AND CHARGES RELATED TO LATIN AMERICAN OPERATIONS
During fiscal year 1994, the Company incurred a total of $1,523,189 in
severance and certain bad debt charges related to its Venezuelan
operations. Included in this amount are charges in the amount of
$693,189 that relate to personnel severance costs incurred as a result of
the dramatic reduction of the Company's Venezuelan operations as
discussed in Note 12. In addition, a charge in the amount of $830,000 is
attributable to the establishment of an allowance for doubtful accounts
for receivables on certain contracts with the Company's major customer
(see Note 12) that were affected by the major currency devaluation in
1994 as discussed in Note 1. During the year ended October 31, 1995, the
Company recovered approximately $350,000 of this amount from the
customer, which is included in revenues in the accompanying consolidated
statements of operations.
On June 27, 1994 the government established a controlled exchange rate,
which suspends the free convertibility of the bolivar (local currency)
into other currencies at 170 bolivars = 1 U.S. dollar. During the year
ended October 31, 1995, the Company was able to effectively convert,
through the purchase and sale of certain publicly traded securities,
$350,000 of its bolivar denominated cash into U.S. dollars, incurring a
$97,000 realized loss included in translation/transaction losses
in the accompanying consolidated statements of operations. In December
1995, the Venezuelan government implemented a further major currency
devaluation re-establishing the controlled exchange rate at 290
bolivars = 1 U.S. dollar. The impact of this currency devaluation on the
Company's consolidated financial position at October 31, 1995 is not
included in the accompanying consolidated financial statements. Had the
devaluation occurred on October 31, 1995, the Company would have
recorded a translation/transaction loss, net of applicable income taxes,
of $275,000. The Company expects to record a translation loss relating
to the devaluation, net of applicable income taxes, of approximately
$300,000 in fiscal year 1996. At October 31, 1995, the Company had
approximately $2,007,000 of bolivar denominated net working capital assets
comprised of cash and accounts receivable, which are subject to said
restrictions.
F-27
<PAGE> 49
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
(18) OTHER SUBSEQUENT EVENT
ACQUISITION
The Company, through a wholly owned subsidiary, acquired all of the
outstanding Common Stock of H.C. Connell, Inc. ("Connell") on
December 8, 1995. Connell, provides outside plant telecommunication
services to local telephone operators and also provides power and other
utility services to major electric and water companies as well as various
government municipalities. The purchase price of $2,300,000 was paid by
issuing a promissory note of $1,800,000 to the seller and with loan
proceeds of $500,000 from directors of the Company. The acquisition was
accounted for using the purchase method of accounting. Connell had total
assets of $4,191,203 (unaudited) as of November 30, 1995 and total
revenues of $12,441,071 (unaudited) for the fiscal year ended June 30,
1995.
F-28
<PAGE> 50
SCHEDULE II
ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended October 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
Balance at Charged to
beginning of Acquisition costs and Balance at
period of TSCI expenses Deductions end of period
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
October 31, 1995 $1,278,933 $ --- $ 86,593 $829,612 $ 535,914
October 31, 1994 $ 32,894 $233,837 $1,012,202 $ --- $1,278,933
October 31, 1993 $ 35,934 $ --- $ --- $ 3,040 $ 32,894
</TABLE>
F-29
<PAGE> 1
Exhibit 10.24- Employment Agreement with William J. Mercurio
EMPLOYMENT AGREEMENT
Agreement dated this 30th day of June, 1995, by and between Able Telcom
Holding Corp., a Florida corporation, with its address at 8875 Hidden River
Parkway, Tampa, Florida 33637 ("Employer"), and William J. Mercurio, 12268
Channel Drive, North Palm Beach, Florida 33408 ("Employee").
W I T N E S S E T H:
WHEREAS, Employer is engaged in the telephone and telecommunication
installation and service, and the manufacture sale and installation of highway
signs and traffic control products;
WHEREAS, Employer desires to employ Employee as the President and Chief
Executive Officer of Employer;
WHEREAS, Employer desires to avail itself of the services of the Employee
in order that his knowledge and ability may be utilized in the conduct and
development of the business and affairs of Employer;
WHEREAS, Employee has evidenced his willingness to enter into an
employment agreement with respect to his employment by Employer, pursuant to
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT; DUTIES. Employer hereby employs Employee as the President
and Chief Executive Officer of Employer. Subject at all times to the direction
of the Board of Directors of Employer, Employee shall be in charge of the
overall business operations of Employer and the performance of such services
and duties as the Board of Directors shall determine. However, the duties and
responsibilities assigned to the Employee during the term of employment shall
be substantially similar in type and character to those ordinarily assigned
to and performed by persons employed as President and Chief Executive Officer
by corporations carrying on a business similar to Employer.
Employer agrees that if a substantial variance of duties and
responsibilities as defined above occurs (including reduced authority or
substantial interference), this contract can be terminated by Employee and the
severance arrangement as described in paragraph 6 shall apply.
Employee may also serve as an officer and director of Employer's
subsidiaries and shall be elected
<PAGE> 2
to the Board of Directors of Employer and its subsidiaries. (Prior to
his election to the Board of Directors, Employer shall have in effect officers
and directors liability insurance).
2. Full-Time Employment. Employee hereby accepts employment by Employer
upon the terms and conditions contained herein and agrees that during the term
of this Agreement, Employee shall devote substantially all of his business
time, attention and energies to the business of Employer. Employee may
however, devote a reasonable portion of his time to civic, charitable and
business activities. Employer acknowledges that Employee is currently a
shareholder of Parkes & Mercurio, P.A.
3. RELOCATION. Employer shall immediately commence with preparations to
move its corporate headquarters to a location acceptable to Employee in central
or northern Palm Beach County, Florida. It is anticipated that such relocation
shall occur no later than August 1, 1995.
4. TERM. The effective date of this Agreement is June 29, 1995. The
full-time employment date is June 29, 1995. Upon execution of this Agreement,
the present President and Chief Executive Officer shall resign and Employee
will commence the performance of duties described hereunder (President,
Chief Executive Officer and Director). During any interim period (between the
Agreement date and the employment date), Employee will spend as much time as
practical in this regard. Compensation shall be based on the Agreement terms
on a pro-rata basis.
Employee's employment hereunder shall be for a term of three (3)
years to commence on the date hereof and end three (3) years from date (initial
term). This Agreement shall be extended for an additional year after the
initial term of three (3) years unless Employee gives ninety (90) days prior
written notice to the Employer that Employee elects to have the Agreement
terminate effective at the end of the initial term. Said three year plus the
one year option shall hereafter be referred to as the contract period. If
Employer violates a major provision of this Agreement, Employee may terminate
this Agreement and receive the remainder of the base salary due under the
Agreement. In addition, all unexercised stock options shall be accelerated.
5. TERMINATION FOR CAUSE. Not withstanding any other provision of this
Agreement, Employee may be terminated on thirty (30) days notice without
further benefits or compensation for any of the following reasons: (a) misuse,
misappropriation or embezzlement of any Employer property or funds; (b)
intentional failure to perform duties required to be performed under the terms
of this Agreement; (c) conviction of a felony; (d) breach of any material
provision of this Agreement.
6. TERMINATION WITHOUT CAUSE. Termination without cause can only be
effected by an action by the board of directors representing a majority of the
members approving such termination. In the event of termination without cause,
the Employee will be paid the remainder of the base salary due under the
contract and all unexercised stock options shall be accelerated.
<PAGE> 3
7. COMPENSATION. As full compensation for the performance of his duties
on behalf of Employer, Employee shall be compensated as follows:
(i) Base Salary. Employer during the term hereof shall pay Employee a
base salary at the rate of Two Hundred Thousand Dollars ($200,000 per annum,
payable no less frequently than in installments.
(ii) Reimbursement of Expenses. Employer shall reimburse Employee
weekly for the expenses incurred by Employee in connection with his duties
hereunder, including travel and entertainment, such reimbursement to be made in
accordance with regular Employer policy and upon presentation by Employee of
the details of, and vouchers for, such expenses.
(iii) Salary Adjustments. Prior to the expiration of each contract
year, the Board of Directors will review Employee's salary and benefits and if
appropriate in its sole and absolute discretion will increase such salary and
benefits for the next succeeding year (however, such increase will not be less
than 5% of base salary).
(iv) Automobile Allowance. Employer shall provide Employee with an
allowance of Five Hundred Dollars ($500) per month which includes all
associated auto expenses including, but not limited to: repairs, insurance
maintenance, gas, etc.
(v) Assignment. Upon mutual consent, Employee may assign/designate
payments or other benefits provided under this contract to his consulting
company, providing such payments do not increase the net costs to Employer.
8. STOCK OPTIONS. Effective with the date of this Agreement, the Board of
Directors will grant an option to Employee for the purchase of 100,000 shares
of common stock of the Company. The option price per share will not exceed
ninety percent (90%) of the market price per the effective date of this
agreement. Such options will have an expiration date of ten (10) years and are
exercisable as follows: fifty percent (50%) at the end of year one, twenty
five percent (25%) at the end of year two, and twenty five percent (25%) at the
end of year three. Employer agrees that Employee has full authority to
determine when and if a form S-1 shall be filed to register the shares to be
issued under such options.
In the event Employee terminates his employment prior to the end of the
three year term hereof, then Employees right to exercise the relative stock
options shall also terminate. That is to say, if Employee terminates after one
year he shall forfeit fifty percent (50%) of the options; if after two years,
he shall forfeit twenty five percent (25%) of the options.
9. FRINGE BENEFITS. During the term of this Agreement, Employer shall
provide at its sole expense to the Employee, hospitalization, major medical,
life insurance and other fringe benefits on the same terms and conditions as it
shall afford other management employees.
<PAGE> 4
10. INVENTIONS; SHOP RIGHTS. All systems, inventions, discoveries,
apparatus, technique, method, know-how, formulas or improvements made,
developed or conceived by Employee during his employment by Employer, whenever
or wherever made, developed or conceived, and whether or not during business
hours, which constitutes an improvement, on those heretofore, now or at any
time during his employment, developed, manufactured or used by Employer in
connection with the manufacture, process or marketing of any product heretofore
or now or hereinafter developed or marketed in the reasonable expansion of
Employer's business, shall be and continue to remain Employer's exclusive
property, without any added compensation. Upon the conception of any and every
such invention, process, discovery or improvement and without waiting to
perfect or complete it, Employee promises and agrees that he will immediately
disclose it to Employer and to no one else and thenceforth will treat it as the
property and secret of Employer. Employee will also execute any instruments
requested from time to time by Employer to vest in it complete title and
ownership to such invention, discovery or improvement and will, at the request
of Employer, do such acts and execute such instruments as Employer may require
but at Employer's expense to obtain Letters of Patent, trademarks or copyrights
in the United States and foreign countries, for such invention, discovery or
improvement and for the purpose of vesting title thereto in Employer, all
without any additional compensation of any kind to Employee.
11. UPON TERMINATION OF EMPLOYMENT. Subsequent to the termination of the
employment of Employee, Employee will not interfere with or disrupt or attempt
to disrupt Employer's business relationship with its customers or suppliers.
Further, Employee will not solicit any of the employees of Employer to leave
the Employer for a period of two (2) years following such termination. In
addition, Employee agrees that all information received from principals and
agents of Employer will be held in total confidence for a period of two (2)
years following termination of employment.
12. INCAPACITY. In the event that Employee shall become incapacitated
or unable to perform the duties of his employment hereunder for the balance of
the Contract Period (hereinafter referred to as the "Disability Period"), the
Employee nevertheless shall be entitled to full salary and other payments, not
including bonus, provided for hereunder on the following basis: for each day
that he has actually worked hereunder, employee shall earn one disability day
(for example: after employee has worked six months, he would be entitled to six
months disability payment and so forth), provided, however, that any amount paid
to the Employee under any Employer provided disability insurance will be
subtracted from payments to be made to the Employee by the Employer. In the
event that Employee is incapacitated for a period which exceeds the Disability
Period, Employee shall not be entitled to receive the compensation and other
payments provided for hereunder for any time after the end of the Disability
Period. In no event shall the disability payment period exceed the period of
this Contract. Employee shall be considered to be incapacitated when he is
unable to perform the normal
<PAGE> 5
duties required of him hereunder. Incapacity shall be determined by two
(2) medical doctors assigned by Employer. Employee shall not be entitled to
receive any compensation for pre-existing conditions.
13. NOTICES. All notices hereunder shall be in writing and shall be sent
to the parties at the respective addresses above set forth. All notices shall
be delivered in person or given by registered or certified mail, postage
prepaid, and shall be deemed to have been given when delivered in person or
deposited in the United States mail. Either party may designate any other
address to which notice shall be given, by giving notice to the other of such
change of address in the manner herein provided.
Employer, or its management, directors, representatives, employees or
affiliates will not made any public announcements or communicate, verbally or
otherwise, the content of this agreement, or any other information related to
Employer, directly or indirectly, without the expressed written consent of
Employee.
14. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall
be declared by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced in whole or in part, the remaining conditions and
provisions or portions thereof shall nevertheless remain in full force and
effect and enforceable to the extent they are valid, legal and enforceable, and
no provision shall be deemed dependent upon any other covenant or provision
unless so expressed herein.
15. ENTIRE AGREEMENT; MODIFICATION. All prior agreements with respect to
the subject matter hereof between the parties are hereby canceled. This
Agreement contains the entire agreement of the parties relating to the subject
matter hereof, and the parties hereto have made no agreements, representations
or warranties relating to the subject matter of this Agreement which are not
set forth herein. No modification of this Agreement shall be valid unless made
in writing and signed by the parties hereto.
16. BINDING EFFECT. The rights, benefits, duties and obligations under
this Agreement shall inure to, and be binding upon, the Employer, its
successors and assigns, and upon the Employee and his legal representatives,
heirs and legatees. This Agreement constitutes a personal service agreement,
and the performance of the Employee's obligations hereunder may not be
transferred or assigned by the Employee except as indicated at paragraph 7(v).
This Agreement will not become effective until approved by the Board of
Directors of Employer.
17. NON-WAIVER. The failure of either party to insist upon the strict
performance of any of the terms, conditions and provisions of this Agreement
shall not be construed as a waiver or relinquishment of future
compliance therewith, and said terms, conditions and provisions shall remain in
full force and effect. No waiver of any term or condition of this Agreement on
the part of either party shall be effective for any purpose whatsoever unless
such waiver is in writing and signed by such party.
18. GOVERNING LAW. This Agreement shall be construed and governed by the
laws
<PAGE> 6
of the State of Florida.
19. ARBITRATION. Any controversy or claim arising under, out of, or in
connection with this Agreement or any breach or claimed breach thereof, shall
be settled by arbitration before the American Arbitration Association, in Palm
Beach County, Florida, before a panel of three arbitrators, in accordance with
its rules, and judgment upon any award rendered may be entered in any court
having jurisdiction thereof.
20. CONTRACT. This contract supersedes all previous contracts between
Employee and Employer.
21. HEADINGS. The headings of the paragraphs herein are inserted for
convenience and shall not affect any interpretation of this Agreement.
22. VACANCIES OF BOARD OF DIRECTORS. Employee is given the absolute right
and authority to fill one vacancy on the Board of Directors as it may occur
during the term of this agreement. Further, it is agreed and understood by and
between the Board of Directors and Employee that no other vacancies on the
Board which may occur during the term of this agreement will be filled without
the unanimous agreement of all members of the Board of Directors.
IN WITNESS WHEREOF the parties have set their hands and seals this 30th
day of June, 1995.
Witness: EMPLOYER: ABLE TELCOM HOLDING CORP.
By: /s/ James V. Cardeo By: /s/ Clark W. Barlow
---------------------------- --------------------------------
James V. Cardeo Clark W. Barlow
President, Chief Executive
Officer and Director
Witness: Employee:
By: /s/ Daniel L. Osborne By: /s/ William J. Mercurio
---------------------------- --------------------------------
Daniel L. Osborne William J. Mercurio
<PAGE> 1
ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
Exhibit 11 - Computation of Per Share Earnings
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net (loss) income: $ (281,166) $ 946,013 $ 4,557,792
=============== ============== ===============
Weighted average shares
outstanding
Primary 8,283,668 7,736,122 6,421,377
=============== ============== ===============
Fully diluted 8,283,668 7,736,122 6,906,915
=============== ============== ===============
(Loss) income per share:
Primary $ (.03) $ .12 $ .71
=============== ============== ===============
Fully diluted $ (.03) $ .12 $ .66
=============== ============== ===============
</TABLE>
<PAGE> 1
ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES
LIST OF SUBSIDIARIES
Exhibit 21 - List of Subsidiaries as of October 31, 1995
The following is a listing of all subsidiaries of Able Telcom Holding Corp. as
of October 31, 1995:
- - Transportation Safety Contractors, Inc.
- - Transportation Safety Contractors, of Virginia, Inc.
- - TIPCO, Inc.
- - Siema Telecommunications, Ltda. (A Brazilian Company)
- - Able Communications Services, Inc. (formerly BCD Communications, Inc.)
- - Able Telecom/TTI C.A.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ABLE TELCOM FOR THE YEAR ENDED OCTOBER 31, 1995, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<CASH> 2,952,239
<SECURITIES> 571,875
<RECEIVABLES> 11,065,038
<ALLOWANCES> 535,914
<INVENTORY> 3,535,622
<CURRENT-ASSETS> 18,572,647
<PP&E> 8,571,425
<DEPRECIATION> 2,451,817
<TOTAL-ASSETS> 32,482,216
<CURRENT-LIABILITIES> 11,174,750
<BONDS> 0
0
0
<COMMON> 8,193
<OTHER-SE> 17,458,318
<TOTAL-LIABILITY-AND-EQUITY> 32,482,216
<SALES> 0
<TOTAL-REVENUES> 35,407,581
<CGS> 0
<TOTAL-COSTS> 27,719,750
<OTHER-EXPENSES> 7,574,579
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,117,932
<INCOME-PRETAX> (332,082)
<INCOME-TAX> (368,105)
<INCOME-CONTINUING> 309,429
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (281,166)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
