SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-K/A-1
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended October 31, 1997
OR
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
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: (561) 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 12, 1998, 7,705,404 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 off 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 $64,047,318.
There were 9,135,384 shares of Common Stock outstanding as of February 12,
1998.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the definitive Proxy Statement for the Registrant's Annual
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. The following consolidated financial statements of Able Telcom Holding
Corp. and subsidiaries are included as part of this report.
Reports of Independent Certified Public Accountants
Consolidated Financial Statements
Consolidated Balance Sheets - October 31, 1997 and 1996
Consolidated Statements of Operations - Years ended October 31,
1997, 1996 and 1995
Consolidated Statements of Shareholders' Equity - Years ended
October 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows - Years ended October 31,
1997, 1996 and 1995
Notes to Consolidated Financial Statements - October 31, 1997
(a)2. The financial statement schedule for the years ended October 31, 1997,
1996 and 1995 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
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.
(a)3. 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.
NO. DESCRIPTION
- --- -----------
3.1 Articles of Incorporation of the Registrant, as amended to date(1)
3.2 Amendment to Articles of Incorporation of the Registrant, as filed with
the Secretary of the State of Florida on December 20, 1996(7)
3.3 Bylaws of the Registrant, as amended to date(1)
4.1 Articles of Incorporation (incorporated by reference to Exhibit 3.2)(7)
4.2 Specimen Common Stock Certificate(1)
4.3 Specimen Series A Preferred Stock Certificate(3)
4.4 Forms of Warrant issued to Credit Suisse First Boston Corporation and
Silverton International Fund Limited(7)
4.5 Gaines Option(1)
4.6 Able Telcom Holding Corp. 1995 Stock Option Plan(8)
10.2 Stock Option Agreement with Frazier L. Gaines(1)
10.8 Employment Agreement with Gerry W. Hall(5)
10.9 Master Agreement with AT&T(1)
10.10 Master Agreement with GTE(1)
10.11 Note restructuring agreements with former principals of TSCI(2)
10.12 Stock Purchase Agreement between the Registrant and H.C. and Lois A.
Connell, dated November 6, 1995(4)
10.13 Amendment to Stock Purchase Agreement between the Registrant and H.C. and
Lois A. Connell, dated December 8, 1995(4)
10.14 Consulting Agreement between the Registrant and H.C. Connell, dated
November 6, 1995(4)
10.15 Stock Purchase Agreement between the Registrant, Traffic Management
Group, Inc., Georgia Electric Company, Gerry W. Hall and J. Barry Hall(5)
10.16 Stock Purchase Agreement between the Registrant, Telecommunications
Services Group, Inc., Dial Communications, Inc., William E. Newton and
Sybil C. Newton(6)
10.17 Promissory Note of the Registrant payable to William E. and Sybil C.
Newton(6)
10.18 Term Loan and Revolving Line of Credit Facility between the Registrant
and SunTrust Bank, South Florida N.A. effective as of November 29,
1995(4)
10.19 First Modification to Term Loan and Revolving Line of Credit Facility
between the
<PAGE>
Registrant and SunTrust Bank, South Florida N.A. effective as of May 20,
1996(3)
10.20 Second Modification to Term Loan and Revolving Line of Credit Facility
between the Registrant and SunTrust, South Florida N.A. effective as of
October 30, 1996(3)
10.21 Third Modification to Term Loan and Revolving Line of Credit Facility
between the Registrant and SunTrust Bank, South Florida N.A. effective as
of December 2, 1996(3)
10.22 Term Loan and Security Agreement between Able Telcom Holding Corp.,
Georgia Electric Company, Inc., Traffic Management Group, Inc.,
Transportation Safety Contractors, Inc., Transportation Safety
Contractors of Virginia, Inc. and SunTrust Bank South Florida N.A.,
effective December 2, 1996(3)
10.23 Stock Purchase Agreement(7)
10.24 Asset Purchase Agreement dated as of November 26, 1997 with COMSAT RSI,
JEFA Wireless, Transportation Safety Contractors, Inc., Georgia Electric
Company, Able Telcom Holding Corp. and COMSAT Corporation(10)
10.25 Securities Purchase Agreements, each dated as of January 6, 1998, between
Able Telcom Holding Corp. and each of the Purchasers named therein(9)
11 Computation of Per Share Earnings
21 List of subsidiaries as of October 31, 1997(9)
23.1 Consent of Ernst and Young LLP
27 Financial Data Schedule (for SEC use only)
(1) Previously filed with the Commission as an exhibit to the Company's
Registration Statement on Form S-1 (Registration #33-65854) ordered
effective by the Commission on February 26, 1994, as an amended.
(2) Previously filed with the Commission as an exhibit to the Company's
Annual Report on Form 10-K filed for fiscal year 1994.
(3) Previously filed with the Commission as an exhibit to the Company's
Annual Report on Form 10-K filed for fiscal year 1996.
(4) Previously filed with the Commission as an exhibit to the Company's
Current Report Form 8-K dated December 22, 1995.
(5) Previously filed with the Commission as an exhibit to the Company's
Current Report Form 8-K as filed with the Commission on October 25,
1996.
(6) Previously filed with the Commission as an exhibit to the Company's
Current Report Form 8-K as filed with the Commission on December 13,
1996.
(7) Previously filed with the Commission as an exhibit to the Company's
Current Report Form 8-K as filed with the Commission on December 31,
1996.
(8) Previously filed with the Commission as an exhibit to the Company's
Registration Statement on Form S-8 (Registration #333-04377) ordered
effective by the Commission on June, 1996.
(9) Previously filed with the commission as an exhibit to the Company's
Annual Report on Form 10-K filed for fiscal 1997.
(10) Previously filed with the Commission as an exhibit to the Company's
Current Report Form 8-K as filed with the Commission on March 12,
1998.
(b) No reports on Form 8-K were filed during the fiscal quarter ended October
31, 1997.
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
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: _________________________ MARCH , 1998
FRAZIER L. GAINES, CEO
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:
SIGNATURES TITLE DATE SIGNED
---------- ----- -----------
- --------------------
FRAZIER L. GAINES Chief Executive Officer and March ____, 1998
Director (Principal
Executive Officer)
- --------------------
BILLY V. RAY, JR. Chief Financial Officer and March _____, 1998
Assistant Secretary
(Principal Finance &
Accounting Officer)
- --------------------
JONATHAN A. BRATT Director March _____, 1998
- --------------------
JOHN D. FOSTER Director March ______, 1998
- --------------------
ROBERT NELLES Director March _______,1998
- --------------------
GIDEON TAYLOR Chairman and Director March ______ , 1998
- --------------------
RICHARD J. SANDULLI Director and Vice President March ______, 1998
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
PAGE
----
Report of Independent Certified Public Accountants F-2
Consolidated Financial Statements:
Consolidated Balance Sheets - October 31, 1997 and 1996 F-3
Consolidated Statements of Operations - Years ended October 31, 1997,
1996 and 1995 F-5
Consolidated Statements of Shareholders' Equity - Years ended
October 31, 1997, 1996 and 1995 F-6
Consolidated Statements of Cash Flows - Years ended October 31,
1997, 1996 and 1995 F-7
Notes to Consolidated Financial Statements - October 31, 1997 F-9
Financial Statement Schedule:
II. Valuation and Qualifying Accounts - Years ended October 31,
1997, 1996, and 1995 F-23
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Shareholders and Board of Directors
Able Telcom Holding Corp.
We have audited the accompanying consolidated balance sheets of Able Telcom
Holding Corp. and subsidiaries (the "Company") as of October 31, 1997 and 1996,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years in the period ended October 31, 1997. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express and opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the 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, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended October 31, 1997, in conformity with generally
accepted accounting principles. Also, in our opinion, 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/ ERNST & YOUNG LLP
---------------------
Ernst & Young LLP
West Palm Beach, Florida
January 19, 1998
F-2
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
October 31,1997
CONSOLIDATED BALANCE SHEETS
OCTOBER 31,
ASSETS 1997 1996
----------- -----------
Current assets:
Cash and cash equivalents $ 6,229,602 $ 3,267,161
Investments -- 571,010
Accounts receivable, net 13,399,327 13,617,792
Inventories 1,257,218 1,374,698
Costs and profits in excess of billings on
uncompleted contracts 5,614,813 954,269
Prepaid expenses and other 508,591 757,883
Deferred income taxes -- 905,898
----------- -----------
Total current assets 27,009,551 21,448,711
Property and equipment, net 13,113,638 10,667,357
Other assets:
Deferred income taxes 981,976 269,942
Goodwill, net 8,341,064 5,919,880
Other 899,765 612,941
----------- -----------
Total other assets 10,222,805 6,802,763
----------- -----------
Total assets $50,345,994 $38,918,831
=========== ===========
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
October 31, 1997
CONSOLIDATED BALANCE SHEETS
OCTOBER 31,
---------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
------------ ------------
Current liabilities:
Current portion of long-term debt $ 3,154,428 $ 1,965,611
Notes payable shareholders/directors 875,000 1,307,976
Lines of credit -- 4,626,178
Accounts payable and accrued liabilities 8,418,323 8,036,142
Billings in excess of costs and profits on
uncompleted contracts 291,165 1,218,724
Customer deposit 229,721 --
------------ ------------
Total current liabilities 12,968,637 17,154,631
Long-term debt, excluding current portion 14,139,567 8,149,807
Other liabilities 1,277,866 2,015,895
------------ ------------
Total liabilities 28,386,070 27,320,333
Commitments and contingencies
Convertible redeemable preferred stock
$.10 par value, authorized 1,000,000 shares: 6,713,314 --
995 shares issued and outstanding in 1997
Shareholders' equity:
Common stock, $.001 par value, authorized
25,000,000 shares; 8,580,422 and 8,203,212
shares issued and outstanding in 1997 and 1996
respectively 8,579 8,203
Additional paid-in capital 15,095,863 12,833,286
Unrealized loss on investments, net of tax -- (53,990)
Retained earnings (deficit) 142,168 (1,189,001)
------------ ------------
Total shareholders' equity 15,246,610 11,598,498
------------ ------------
Total liabilities and shareholders' equity $ 50,345,994 $ 38,918,831
============ ============
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
October 31, 1997
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Revenues
$ 86,334,449 $ 48,906,170 $ 35,407,581
Costs and expenses:
Costs of revenues 68,164,404 40,486,018 27,719,750
General and administrative 8,780,430 8,403,491 5,464,338
Depreciation and amortization 4,532,248 2,749,804 1,914,064
Charges and transaction/translation
losses related to Latin American
operations 16,987 3,553,373 95,798
------------ ------------ ------------
Total costs and expenses 81,494,069 55,192,686 35,193,950
------------ ------------ ------------
Income (loss) from operations 4,840,380 (6,286,516) 213,631
------------ ------------ ------------
Other expense (income):
Loss on sale of investments -- -- 100,379
Interest expense 1,565,265 1,350,440 1,117,932
Interest and dividend income (449,479) (270,163) (672,598)
Other (income) expense (152,694) 32,033 --
------------ ------------ ------------
Total other expense, net 963,09 1,112,310 545,713
------------ ------------ ------------
Income (loss) before income taxes
and minority Interest 3,877,288 (7,398,826) (332,082)
Income tax expense (benefit) 727,223 (890,695) (368,105)
------------ ------------ ------------
Income (loss) before minority
interest 3,150,065 (6,508,131) 36,023
Minority interest 292,532 (597,883) 317,189
------------ ------------ ------------
Net income (loss) 2,857,533 (5,910,2)8 (281,166)
Preferred stock dividends (260,000) -- --
Discount attributable to beneficial
conversion Privilege of preferred
stock (1,266,364) -- --
------------ ------------ ------------
Net income (loss) applicable to
common stock $ 1,331,169 $ (5,910,248) $ (281,166)
============ ============ ============
Income (loss) per common share: $ .16 $ (.71) $ (.03)
============ ============ ============
Weighted average common shares and
common stock equivalents outstanding 8,504,972 8,361,458 8,283,668
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
October 31, 1997
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
COMMON STOCK
-------------------
UNREALIZED
LOSS ON RETAINED
ADDITIONAL INVESTMENT EARNING
SHARES AMOUNT CAPITAL IN NET OF TAXES (DEFICIT) TOTAL
----------- ------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
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
Issuance of common stock to
directors in connection with
acquisition 10,000 10 43,090 -- -- 43,100
Change in unrealized loss
on Investments -- -- -- (865) -- (865)
Net loss -- -- -- -- (5,910,248) (5,910,248
----------- ------- ------------ --------- ----------- ------------
Balance at October 31, 1996 8,203,212 8,203 12,833,286 (53,990) (1,189,001) 11,598,498
Issuance of common stock in
connection with acquisition 108,489 108 620,421 620,313
Issuance of common stock
for services 2,000 2 11,436 11,438
Issuance of common stock
for exercise of options 262,240 262 732,177 732,439
Compensation recognized on
stock options 337,500 337,500
Issuance of common stock
for conversion of convertible
preferred shares 4,481 4 33,727 33,731
Changes in unrealized loss
on investments 53,990 53,990
Convertible preferred dividends paid (260,000) (260,000)
Embedded dividends on convertible
preferred shares (1,266,364) (1,266,364)
Tax benefit from exercise of options 527,424 527,424
Net income 2,857,533 2,857,533
----------- ------- ------------ --------- ----------- ------------
Balance at October 31, 1997 $ 8,580,422 $ 8,579 $ 15,095,863 $ 0 $ 142,168 $ 15,246,610
=========== ======= ============ ========= =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
October 31, 1997
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended October 31,
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Operating Activities:
Net income (loss) $ 2,857,533 $(5,910,248) $ 281,166)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities, net of effects of
Acquisitions:
Depreciation and amortization 4,532,248 2,749,804 1,914,064
Bad debt expense 160,189 1,094,503 86,593
Provision for inventory losses -- 290,500 --
Write down of Latin American -- 1,593,480 --
assets
Deferred income taxes 727,223 (890,695) (439,341)
Loss on sale of equipment (6,025) 21,805 --
Loss on sale of investments 4,096 -- 100,379
Translation/transaction losses -- 1,179,769 95,798
Minority interest 292,533 (597,883) 317,189
Common stock issued for services 11,438 -- --
Compensation recognized for
conversion of stock options 337,500 -- --
Reduction in revenue for litigation (432,979) -- --
Changes in assets and liabilities,
net of effects from
Acquisitions:
Decrease in accounts receivable 842,066 1,854,735 796,530
Decrease (increase) in inventories 117,480 1,871,004 (353,318)
Increase in costs and profits in
excess of Billings on Uncompleted
contracts (4,660,544) (828,553) --
Decrease (increase) in prepaid
expenses and Other 313,265 339,711 (223,811)
Increase in other assets (279,555) (286,996) (24,373)
Increase (decrease) in accounts
payable and Accrued expenses (198,987) 159,861 ( 1,514,749)
(Decrease) Increase in billings
in excess of costs and estimated
profits on uncompleted contracts (927,559) 681,446 --
Increase in customer deposits 229,721 -- --
----------- ----------- -----------
Net cash provided by operating activities 3,919,643 3,322,242 473,795
----------- ----------- -----------
Investing Activities:
Purchases of property and equipment (4,487,417) (2,557,258) (2,250,904)
Proceeds from the sale of equipment 95,967 128,823 --
Purchases of investments -- -- (350,000)
Sales of investments 566,914 -- 4,418,233
Cash acquired in acquisitions 403,617 1,760,970 --
Cash paid in acquisitions (3,000,000) (3,500,000) --
----------- ----------- ----------
Net cash (used in)provided by
investing Activities (6,420,919) (4,167,465) 1,817,329
----------- ----------- ----------
</TABLE>
See accompanying notes to consolidated financial statements
F-7
<PAGE>
<TABLE>
<CAPTION>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
October 31, 1997
CONSOLIDATED STATEMENTS OF CASH FLOWS
<S> <C> <C> <C>
Financing Activities:
Net borrowing under lines of credit (4,626,178) 1,254,178 378,000
Payment of shareholders/directors loan (250,000) (500,000) ---
Borrowings from shareholders/directors --- 500,000 57,976
Proceeds from long-term debt 11,014,094 4,547,148 737,758
Proceeds from debt to finance acquisition 3,000,000 3,000,000 ---
Payments on long-term debt (9,272,414) (6,251,34) (3,775,168)
Distributions to minority interest (292,532) (210,072) (500,795)
Foreign currency translation adjustment --- (778,509) ---
Proceeds from exercise of stock options 732,439 --- ---
Proceeds from issuance of preferred stock 5,418,308 --- ---
Dividends paid (260,000)
Proceeds from exercise of warrants and Options --- 334,896
----------- ----------- -----------
Net cash provided by (used in)financing activities 5,463,717 1,561,405 (2,767,333)
Effect of exchange rate changes on cash and
equivalents --- (401,260) (3,901)
----------- ----------- -----------
Increase (decrease) in cash an cash equivalents 2,962,441 314,922 (480,110)
Cash and cash equivalents at beginning of year 3,267,161 2,952,239 3,432,349
----------- ----------- -----------
Cash and cash equivalents at end of year $6,229,602 $ 3,267,161 $2,952,239
=========== =========== ===========
Supplemental disclosures of cash slow information:
Non-cash transactions affecting operating,
Investing and financing activities:
Operating activities:
Issuance of common stock for services $ 11,438 $ --- $ ---
=========== =========== ===========
Financing activities:
Issuance of common stock for acquisition 620,313 --- ---
Common stock issued to repay
Shareholders/directors loans --- --- (1,500,000)
Issuance of notes payable for acquisition 892,000 --- ---
=========== =========== ===========
Total financing activities $ 1,512,313 $ --- $(1,500,000
=========== =========== ===========
See Note 3 for information on non-cash
investing and financing activities associated
with acquisitions
Interest paid $ 1,684,529 $1,120,465 $ 933,302
=========== =========== ===========
Income taxes paid, net of refunds $ --- $ --- $ 168,460
=========== =========== ===========
</TABLE>
See accompanying notes consolidated financial statements.
F-8
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(1) THE COMPANY
Able Telcom Holding Corp. ("Able Telcom" or the "Company") specializes in
the design, installation, maintenance and system integration of advanced
communication networks for voice, data, and video systems. These services
are provided for an array of complimentary applications, including
telecommunications infrastructure, traffic management systems, automated
manufacturing systems and utility networks. The Company is currently
organized into four operating groups: telecommunication services, cable
television services, traffic management services and communications
development. Each group, excluding cable television services, is comprised
of subsidiaries of the Company with each having local executive management
functioning under a decentralized operating environment. The Company
formed the cable televisions services group to facilitate planned
expansion during 1997. Able is headquartered in West Palm Beach, Florida,
and operates its subsidiaries throughout the Southeastern United States,
as well as in areas of South America.
(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 subsidiaries acquired in
purchase business combinations are included in the consolidated
results of operations since the date of acquisition.
(B) REVENUE RECOGNITION
Revenues from "per unit basis" contracts are recognized at the time
services are rendered and accepted by the customer. Revenues from
installation contracts are recognized as contract costs are incurred
under the percentage-of-completion method measured on the cost to
cost basis. Contract costs include all direct material and labor
costs as well as those indirect costs relating to the contract such
as indirect labor, supplies and equipment costs.
Changes in job performance, condition and the estimated
profitability may result in changes in the estimates for project
costs and profits. Revised estimates are recognized in the period in
which the changes are determined.
(C) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out (FIFO) method.
(D) PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is
provided for using the straight-line method over the estimated
useful lives of the assets.
(E) INCOME TAXES
Income taxes have been provided using the asset and liability method
in accordance with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" (FASB 109).
F-9
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(F) GOODWILL
Goodwill represents the amount by which the purchase price of
businesses acquired exceeds the fair market value of the net assets
acquired under the purchase method of accounting. Goodwill is being
amortized on a straight-line basis over 10 - 20 years.
The Company, at each balance sheet date, evaluates the
recoverability of the carrying amount of goodwill if circumstances
suggest it has been impaired. If this review indicates that goodwill
is not recoverable, as principally determined based on the estimated
undiscounted cash flows of the entity which gave rise to the
goodwill, over the remaining amortization period, then the Company's
carrying value of the goodwill is reduced by the estimated shortfall
in cash flows.
The recoverability of goodwill associated with long lived assets
acquired in a purchase business combination is evaluated together
with the related assets if circumstances indicate the carrying
amount of the asset may not be recoverable. As required under
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of" (FASB No. 121), if the assets and goodwill are not
recoverable their carrying value is reduced to estimated fair value
based, generally, on a discounted cash flow analysis. The initial
adoption of FASB No. 121 in 1996 did not have a material impact on
the Company's consolidated financial condition or results of
operations.
See Note 15 regarding certain impairment write-downs that were
recorded during 1996.
Goodwill is net of accumulated amortization of $1,200,046 and
$791,329 at October 31, 1997 and 1996, respectively. Amortization
expense for the years ended October 31, 1997, 1996 and 1995 was
$408,717, $338,859 and $468,684, respectively.
(G) CASH AND CASH 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.
(H) FOREIGN CURRENCY TRANSLATION
In accordance with FASB No. 52, "Foreign Currency Translation", the
financial statements of the Company's Latin American subsidiaries
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
amounts are remeasured at historical exchange rates.
(I) INVESTMENTS
The Company adopted FASB No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", effective November 1,
1994. Under this statement, the Company's investments are classified
as "available for sale" and, accordingly, are recorded at the quoted
market value as of the fiscal year end with an offsetting adjustment
to shareholders' equity, net of tax.
F-10
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(J) STOCK COMPENSATION
In October 1995, the FASB issued SFAS NO. 123 "Accounting for Stock
Based Compensation", which was effective for the Company beginning
November 1, 1996. SFAS No. 123 requires expanded disclosures of
stock based compensation arrangements with employees and encourages
compensation cost to be measured based on the fair value of the
equity instrument. Under SFAS No. 123, companies are permitted to
continue to apply Accounting Principal Board ("APB") Opinion No. 25,
which recognizes compensation cost based on the intrinsic value of
the equity instrument awarded. The Company will continue to apply
APB Opinion No. 25 to its stock based compensation awards to
employees. See note 9 for the required pro forma effect on net
income and earnings per share as if the Company had adopted the
expense recognition requirement of SFAS No. 123.
(K) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts
receivable (generally unsecured), accounts payable and notes payable
approximate fair value due to the short maturity of the instruments
and the provision for what management believes to be adequate
reserves for potential losses. The fair value of lines-of-credit and
long-term debt approximate their carrying amount since the currently
effective rates reflect market rates.
(L) RECLASSIFICATION
Certain items in the1996 and 1995 consolidated financial statements
have been reclassified to conform to the 1997 presentation.
(M) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make certain
estimates and assumptions that affect the reported amounts of assets
and liabilities, revenues and costs. Actual results could differ
from those estimates.
(N) PER SHARE DATA
Primary earnings per common share are computed by dividing net
income (less preferred dividends) by the weighted average number of
common shares and common shares equivalents outstanding during the
period. On a fully diluted basis, both net earnings and shares
outstanding are adjusted to assume the conversion of the convertible
preferred stock, if dilutive.
F-11
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(O) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS-
" In February 1997 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings
Per Share," which will require companies to present basic earnings
per share, instead of the primary and fully diluted EPS that is
currently required. The New Standard requires additional information
disclosure, and also makes certain modifications to the currently
applicable EPS calculations defined in Accounting Principles Board
No. 15. The New Standard is required to be adopted by all public
companies for reporting periods ending after December 15, 1997 (The
Company's first quarter of fiscal 1998), and will require
restatement of EPS for all periods reported.
In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive
Income" was issued which establishes standards for reporting and
display of comprehensive income and its components (revenue,
expenses, gains, and losses) in a full set of general-purpose
financial statements. This statement requires that an enterprise
classify items other comprehensive income by their nature in a
financial statement and display the accumulated balance of other
comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a statement of
financial position. This statement is effective for The Company's
fiscal year 1998.
In June 1997, the FASB issued SFAS No. 131 "Disclosure about
Segments of an Enterprise and related Information" was issued which
establishes standards for public business enterprises to report
information about operating segments in annual financial statements
and requires those enterprises to report information about operating
segments in interim financial reports issued to shareholders. It
also establishes the standard for related disclosures about products
and services, geographic areas, and major customer. This statement
requires that a public business enterprise report financial and
descriptive information about its reportable operating segments. The
financial information is required to be reported on the basis that
it is used internally for evaluating segment performance and
deciding how to allocate resources to segments. Operating segments
are components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and
in assessing performance. This statement is effective for the
Company's fiscal year 1998.
Management is currently evaluating the requirements of SFAS No.
130 and No. 131, respectively.
(3) ACQUISITIONS
On December 2, 1996, Able acquired all the outstanding common stock of
Dial Communications, Inc. (Dial). As consideration, The Company paid
$3,000,000 in cash issued 108,489 shares of common stock (fair value of
$620,421) and issued an $892,000 promissory note with a three year term
bearing interest at Prime plus 1/2 %. The acquisition was accounted for
using the purchase method of accounting. The results of operations are
included in the consolidated statements of operations since the date of
acquisition. Goodwill of $1,500,000 was recorded in this transaction which
is being amortized over 20 years using the straight line method.
F-12
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
The following summarizes the fair value of the assets of Dial acquired and the
liabilities of Dial assumed:
Cash and cash equivalents $ 403,617
Accounts receivable 783,790
Notes receivable 63,973
Receivable from shareholders 231,609
Property and equipment 3,005,941
Deposits 7,269
Accounts payable (299,761)
Income tax payable (129,294)
Accrued expenses (383,721)
Notes payable (671,002)
-----------
Net assets $ 3,012,421
===========
On October 12, 1996, the Company, through a wholly owned subsidiary, acquired
all of the outstanding common stock of Georgia Electric Company (GEC). As
initial consideration, the Company paid $3,000,000 in cash. Under the terms of
the earn out provisions of the acquisition agreement, the Company will issue
shares of common stock over a five year period beginning in fiscal 1997,
contingent upon the operating performance of GEC and the market value of the
Company's stock. Such amounts will be accounted for as purchase price
adjustments. The acquisition was accounted for using the purchase method of
accounting. The results of operations are included in the consolidated
statements of operations since the date of acquisition.
The following summarizes the fair values of the assets of GEC acquired and the
liabilities of GEC assumed:
Cash and cash equivalents $ 1,366,619
Accounts receivable 4,422,983
Costs and profits in excess of billings on
uncompleted contracts 27,645
Prepaid expenses 221,105
Property and equipment 2,258,672
Other assets 44,258
Accounts payable and accrued liabilities (2,095,942)
Billings in excess of costs and profits on
uncompleted contract (529,445)
Undistributed S Corp earnings due to former owners (2,715,895)
-----------
Net assets $ 3,000,000
===========
F-13
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
The Company recorded goodwill of $1,277,866 at October 31, 1997 as a
result of additional purchase price due to the former owner of GEC under
the terms of the earn out provisions of the acquisition agreement. The
goodwill will be amortized over 20 years using the straight line method. A
corresponding amount was recorded as Other liabilities in the consolidated
balance sheets for the earn out contingency.
On December 8, 1995, the Company, through a wholly owned subsidiary,
acquired all of the outstanding common stock of H.C. Connell, Inc.
("Connell"). As consideration, the Company paid $500,000 in cash and
issued a $1,869,049 promissory note. The acquisition was accounted for
using the purchase method of accounting. The results of operations of
Connell are included in the consolidated statements of operations since
the date of the acquisition.
The following summarized the fair values of the assets of Connell acquired
and the liabilities of Connell assumed:
Cash and cash equivalents $ 394,351
Accounts receivable 1,614,923
Costs and profits in excess of billings on
uncompleted contracts 98,071
Prepaid expenses 109,661
Property and equipment 1,957,195
Other assets 27,226
Accounts payable and accrued liabilities (847,928)
Billings in excess of costs and profits on
uncompleted contracts (7,833)
Borrowings (663,017)
Other liabilities (313,600)
----------
Net assets $2,369,049
==========
On June 22, 1994, the Company acquired all of the outstanding common stock
of Transportation Safety Contractors, Inc. and its affiliates ("TSCI"). As
consideration, the Company paid $6,000,000 in cash, Issued $3,000,000 in
promissory notes and issued 272,300 shares of restricted common stock of
the Company. In November 1994, the $3,000,000 in promissory notes were
renegotiated resulting in $1,500,000 of the promissory notes being
converted to 259,434 shares of restricted common stock of the Company with
no gain or loss recognized on the conversion. The acquisition was
accounted for using the purchase method of accounting and $6,777,017 in
goodwill was recorded which is being amortized over 20 years under the
straight-line method. Amortization expense amounted to approximately
$339,000 in 1996 and 1995 and $102,408 in 1994. The results of operations
are included in the consolidated statements of operations since the date
of the acquisition.
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
of accounting. Approximately $497,000 in goodwill was recorded and was
being amortized over 10 years using the straight-line method. The results
of operations are included in the consolidated statements of operations
since the date of acquisition.
F-14
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
During the second quarter of fiscal 1996, the Company identified
circumstances which suggested the carrying value of goodwill related to
its Brazilian telecommunications company had been impaired. These included
continuing losses from operations, consistent failure to meet budgeted
operating results despite the Company's attempts to improve performance
and the Company's resulting decision during the second quarter of 1996 to
substantially curtail its telecommunications maintenance and construction
operations. As a result, the Company estimated the expected income to be
derived in future periods and the expected undiscounted future cash flows
of the Brazilian telecommunications company. The results indicated that
goodwill would not be recovered. Accordingly, during the second quarter,
the carrying value of goodwill related to this acquisition was reduced
from $447,010 to zero. This charge is included in "Charges and
transaction/translation losses related to Latin American operations" in
the Consolidated Statements of Operations for fiscal year 1996.
Unaudited pro forma financial information for the Company is presented as
if the Company's acquisitions of Dial, GEC, and Connell had taken place as
of November 1, for each of the respective years.
YEARS ENDED OCTOBER 31,
----------------------------------------
1997 1996 1995
----------- ----------- -----------
Revenues $86,334,449 $85,095,239 $78,293,663
Net income (loss) 1,369,142 (1,345,659) 2,363,064
Net income (loss)
per share .16 (.17) .28
This unaudited pro forma information does not purport to be indicative of
the results of operations which would have resulted had the acquisitions
been consummated at the dates assumed.
(4) INVESTMENTS
At October 31, 1996, investments consisted of preferred stock. These
securities are classified as available-for-sale and have a cost basis of
$625,000. The fair market value as determined by the quoted market prices,
at October 31, 1996 was $571,010. The unrealized losses on these
investments of $53,990 net of tax, is included as a separate component of
shareholders' equity. There were no investments at October 31, 1997.
Investment income consisted of dividends and interest income which
amounted to $449,479, $180,015 and $263,502 for the years ended October
31, 1997, 1996 and 1995, respectively. During the year ended October 31,
1997 and 1995, the Company sold investment securities; the proceeds on the
sale totaled 620,904 and $4,418,233 and the realized loss totaled $4,096
and $100,379 in 1997 and 1995, respectively.
(5) ACCOUNTS RECEIVABLE
Accounts receivable are recorded net of an allowance for doubtful accounts
of $686,602 and $828,186 at October 31, 1997 and 1996, respectively.
Accounts receivable includes retainage which has been billed but is not
due until approximately 90 days after the services are rendered and
accepted by the customer. Retainage totaled $935,858 and $1,675,698 at
October 31, 1997 and 1996, respectively. A significant portion of accounts
receivable is derived from several major customers. (See note 11)
F-15
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(6) UNCOMPLETED CONTRACTS
Uncompleted contracts consist of the following at October 31, 1997 and
1996:
1997 1996
----------- -----------
Costs incurred on uncompleted contracts $43,237,315 $15,989,067
Earnings recognized on uncompleted
contracts 7,360,962 2,706,996
----------- -----------
Total 50,598,277 18,696,063
Billings to date 45,274,629 18,960,518
----------- -----------
Net $ 5,323,648 $ (264,455)
=========== ===========
Included in the accompanying balance sheets under the following headings:
1997 1996
----------- -----------
Costs and profits in excess of billings
on uncompleted contracts $ 5,614,813 $ 954,269
Billings in excess of costs and profits
on uncompleted contracts 291,165 1,218,724
----------- -----------
Net $ 5,323,648 $ (264,455)
=========== ===========
(7) PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consists of the following at October 31,
1997 1996
----------- -----------
Land and buildings $ 1,414,725 $ 1,398,884
Equipment, furniture and fixtures 19,235,073 13,493,828
Equipment under capital lease 747,025
637,407
----------- -----------
21,396,823 15,530,119
Less accumulated depreciation and
amortization (8,283,185) (4,862,762)
----------- -----------
Property and equipment, net $13,113,638 $10,667,357
=========== ===========
Depreciation and amortization expense relating to property and equipment
amounted to $4,532,248, $2,410,945 and $1,445,380 in 1997, 1996 and 1995,
respectively.
(8) BORROWINGS
The Company's borrowings consist of the following at October 31, 1997 and
1996:
1997 1996
----------- -----------
LINES OF CREDIT-SHORT TERM :
Bank lines of credit ($6,000,000 aggregate
maximum limit at October 31, 1997)
$6,000,000 maturing on March 1, 1998
interest payable monthly at prime (8.75%
at October 31, 1997) secured by
substantially all the assets of
the Company $ 6,000,000 $ 6,126,178
Less effect of refinancing transaction (6,000,000) (1,500,000)
F-16
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
LINES OF CREDIT-SHORT TERM : 1997 1996
----------- -----------
--- $ 4,626,178
=========== ===========
NOTES PAYABLE TO SHAREHOLDERS/DIRECTORS
SHORT-TERM:
Notes payable to shareholders, principal
and interest due on demand at 18%,
unsecured, personally guaranteed by a
shareholder/director of the Company $ 875,000 $ 1,307,976
Note payable to a director, principal due
on demand, interest due quarterly at prime
(8.75% at October 31, 1996), unsecured --- $ 250,000
----------- -----------
875,000 1,557,976
Less effect of refinancing transactions --- (250,000)
----------- -----------
$ 875,000 $ 1,307,976
LONG-TERM DEBT:
Notes payable to a bank, payable in
monthly installments aggregating
approximately $158,000, interest
payable monthly Ranging from prime
(8.75% at October 31, 1997) to prime
plus 1/2%, secured by substantially
all the assets of the Company. $ 3,560,157 $ 4,061,987
Note payable to a bank, principal and
interest due December 2, 1996 at prime
(8.75% at October 31, 1997), secured
by substantially all the assets of
the Company --- 1,500,000
Note payable to the sellers of Connell,
principle and accrued interest due
January 2, 1997, interest at 9%,
secured by certain accounts receivable
and all property and equipment
of Connell not otherwise pledged
to a bank --- 1,869,049
Mortgage note payable to a bank,
payable in monthly installments of
$1,604 plus interest at prime (8.75%
at October 31, 1996) plus 1/2%secured
by land and building with a carrying
value of approximately $425,000 as of
October 31, 1997 269,430 288,750
Notes payable to banks, payable in
monthly installments of principal and
interest ranging from 8.75% to 14.9%
at October 31, 1997, secured by
related equipment --- 91,477
Notes payable to banks, payable in
monthly installments of principal
and interest of 8.50 at October 31,
1997, secured by real and personal
property of GEC 2,500,000
Notes payable to former owner of Dial
payable in monthly installments of
principal and interest of 8.50% at
October 31, 1997, secured by
promissory note 669,000
Notes payable to bank, payable in
monthly installments of principal
and interest at prime (8.75% at
October 31, 1997), secured by
real and personal property of Dial 2,875,500
Notes payable to banks, payable in
monthly installments of principal and
Interest at prime 8.75% at October 31,
1997 secured by related equipment 385,122
Notes payable to banks, payable in
monthly installments of principal
and interest at prime (8.75% at
October 31, 1997), secured by
related equipment 510,530
----------- -----------
10,769,739 7,811,263
Plus effect of refinancing transaction 6,000,000 1,750,000
Capital leases (see note 14) 524,256 554,155
----------- -----------
F-17
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
Total long-term debt 17,293,995 $10,115,418
Less current portion, giving effect to
the refinancing transaction (3,154,428) (1,965,611)
----------- -----------
Long-term debt, excluding current
portion $14,139,567 $ 8,149,807
=========== ===========
(8) BORROWINGS (CONT.)
Subsequent to the fiscal year end October 31, 1997, the Company completed
an issuance of unsecured subordinated debt totaling $10,000,000 with
detachable warrants to purchase 409,505 shares of common stock at a price
of $8.25. The subordinated debt accrues interest at 12% payable
semi-annually in arrears. Principal payments are due in January 2004 and
2005 giving the notes an average life of 6.5 years. The Subordinated Debt
agreement contains covenants which require among other conditions, that
the Company maintain certain tangible net worth, minimum fixed coverage
charges and limitations on total debt. The proceeds were used for current
working capital needs and to pay off existing debt and to provide
liquidity to finance growth and certain expenditures, including
acquisitions, associated with the Company's overall strategic plan.
In conjunction with The subordinated debt issue, Able Telcom has also
obtained a signed a commitment letter with a financial institution for a
$30,000,000 three year senior secured revolving credit facility (the
"Credit Facility") with a $2,000,000 sub-limit for the issuance of standby
letter(s) of credit. The Credit Facility allows the Company to select
between the following interest rate options: (I) a Base Rate plus an
Applicable Margin or (ii) LIBOR (1, 2, 3, or 6 months) plus an Applicable
Margin. The Applicable Margin ranges from 0.00% to 2.50 %. Interest is
payable monthly in arrears on base rate advances and at the expiration of
each interest period for LIBOR advances. The Credit Facility contains
covenants which require among other things that the Company maintain
certain tangible net worth, minimum fixed coverage charges, and
limitations on total debt. The Credit Facility is secured by a perfected
first priority security interest on all tangible assets of the Company.
The proceeds of the Credit Facility will be used to finance working
capital requirements as well as other general corporate purposes including
acquisitions and equipment capital expenditures with the Company's overall
strategic plan.
Effective December 2, 1996 the Company entered into a $3,000,000 term loan
credit facility (the Term Loan) with a bank. The Term Loan is payable in
sixty monthly installments of $50,000 plus interest at prime.
Additionally, excess cash flow of GEC, as defined, is to be paid to the
bank. The Term Loan contains covenants, which require among other
conditions, that the Company maintain certain tangible net worth, working
capital and debt service amounts. The Term Loan is collateralized by all
real and personal property of GEC which was acquired on October 12, 1996.
Proceeds from the term loan were used to repay $1,500,000 of a bank line
of credit outstanding at October 31, 1996 and to repay the $1,500,000 note
payable to a bank due on December 2, 1996.
Effective December 20, 1996 the Company completed a private placement
transaction of 1,000 shares of $.10 par value, Series A Convertible
Preferred Stock (the Preferred Stock) and warrants to purchase 200,000
shares of the Company's common stock at $9.82 per share. Proceeds from the
offering totaled $6,000,000. Each share of Preferred Stock is convertible
to shares of the Company's common stock after April 30, 1997 at the lesser
of $9.82 per share or at a discount (ranging from 10% to 20% depending
upon the date of conversion) of the average closing bid price of a share
of common stock for three days proceeding the date of conversion. The
Company recognized the discount attributable to the beneficial conversion
privilege of approximately $1,300,000 by accreting the amount from the
date of issuance, December 20, 1996, through the last date the discount
rate increase can occur, December 20, 1997, as an adjustment of net income
attributable to common shareholders. This accretion adjustment, which also
represents the adjustment needed to accrete to the redemption value of the
Preferred Stock, resulted in a charge to retained earnings and
accompanying credit to the Preferred Stock.
F-18
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(8) BORROWING (CONT.)
The Preferred Stock accrues dividends at an annual rate of 5% and is
payable quarterly in arrears in cash or through a dividend of additional
shares of Preferred Stock. Upon the occurrence of certain events,
including failure to effect a timely registration statement related to the
conversion features and warrants associated with the preferred stock, the
Company may be required to redeem the Preferred Stock at a price equal to
the liquidation preference, plus any accrued and unpaid dividends plus an
amount determined by formula. Proceeds from the private placement were
used to repay a $1,869,050 note payable to the sellers of Connell, a
$250,000 note payable to a director, and $2,015,895 due the former
principals of GEC. The amount due to the former principals of GEC
represented undistributed S corporation profits existing at the date of
acquisition, and is presented as "Other liabilities" in the accompanying
Consolidated Balance Sheet at October 31, 1996.
The classification of debt in the consolidated balance sheets reflects the
effects of the above mentioned financing transactions.
During the fiscal year ended October 31, 1997 five shares of the
convertible preferred were converted into 4481 shares of the Company's
common stock and 1,000 warrants were forfeited.
The aggregate maturates of long-term debt and capital leases for years
subsequent to October 31, 1997, giving effect to the December 1997
refinancing and private placement, are as follows:
1998 $ 3,154,428
1999 2,776,343
2000 2,387,657
2001 1,408,039
2002 656,850
Thereafter 6,910,678
-----------
$17,293,995
===========
(9) STOCK OPTIONS
During 1996, the Company's shareholders 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 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
approximate 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. At October 31,
1997, a total of 250,180 options, net of canceled shares, 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.
F-19
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(9) STOCK OPTIONS (CONT.)
In addition, specific stock options have been granted to certain officers
prior to or outside the Plan, a portion of which remain unexercised at
October 31, 1997. During the fiscal year ended October 31, 1992, an option
to purchase 260,000 shares of Common Stock at $.05 per share was granted
to a director 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. For the years ended October 31, 1996 and 1995 160,500 of these
options remained outstanding and available for exercise. On October 31,
1997 25,000 shares remained outstanding and available for exercise of
these options.
During 1995, options to purchase 100,000 shares at $4.83 per share were
granted to an officer, pursuant to employment agreement. All such options
were granted at the fair market value on the date of grant and were
outstanding as of October 31, 1996.
During fiscal year 1997 additional options were granted to officers and
non affiliated directors. These included 120,000 at $6.00 granted to
former officers and directors and 75,000, ranging from $6.00 to $7.00,
granted to current officers and directors. Certain of these options were
granted at below market price which resulted in the recognition of
compensation expense of approximately $337,500 in fiscal 1997.
The Company's 1996 Incentive Stock Option Plan has authorized the grant of
options to employees and non-affiliated directors for up to 550,000 shares
of the companies common stock.
Pro forma information regarding net income and earnings per share is
required by FASB 123 and has been determined as if the Company had
accounted for its employee stock options under the fair value method of
that statement. The fair value for these options was estimated at the date
of grant using a Black-Scholes option pricing model with the following
weighted average assumptions for 1997 and 1996 respectively: risk-free
interest rate of 5.65% and ; dividend yields of 0 and volatility factors
of the expected market price of the Company's common stock of .463 and
.463; and a weighted-average expected life of the option of 2 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price volatility. Because the company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of
the fair value of its employee stock options.
For purposes of pro forma disclosing the estimated fair value of the
options is amortized over the options vesting period. The Company's pro
forma information follows (in thousands except for earnings per share
information):
1997 1996
----------- ------------
Proforma net income
(loss) $ 2,647,457 $(5,760,098)
Proforma earnings
(loss)
Per share
Primary .313 (.689)
Fully diluted .313 (.689)
F-20
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(9) STOCK OPTIONS (CONT.)
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (ABP 25) and related
Interpretations in Accounting for its employee stock Options because, as
discussed below, the alternative fair value accounting provided for under
FASB Statement No. 123 "Accounting for Stock-Based Compensation," requires
use of option valuation Models that were not developed for use in valuing
employee stock options. Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying
stock on the date of grant, no compensation expense is recognized.
A summary of the Company's stock activity, and related information for the
years ended October 31 follows:
NUMBER OF SHARES OPTION PRICE PER TOTAL
SHARE AVERAGE PRICE
--------------------------------------------------
Shares under option
at October 31, 1995 444,500 $1.67 $742,315
Granted 248,500 6.66 1,655,010
Forfeited (44,520) 6.55 (291,606)
--------------------------------------------------
Shares under option
at October 31, 1996 648,480 3.25 2,105,719
Granted 292,000 6.50 1,898,000
Exercised (412,240) 1.80 (742,032)
Forfeited (44,800) 6.28 (281,344)
---------------------------------------------------
Shares under option
at October 31, 1997 483,440 $6.16 $2,980,343
===================================================
Shares under option
at October 31, 1996 561,166 $6.55 $3,675,637
===================================================
Shares under option
at October 31, 1997 272,400 $6.66 $1,814,184
===================================================
Exercise prices for options outstanding as of October 31, 1997 ranged from
$.50 to $7.813. The weighted-average remaining contractual life of those
options is 6 years.
F-21
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(10) INCOME TAXES
An analysis of the components of (loss) income before income taxes and
minority interest and the related income tax (benefit) expense is
presented below:
1997 1996 1995
---------- ----------- ---------
Domestic $3,304,300 $(3,770,323) $(817,790)
Foreign 572,988 (3,628,503) 485,708
---------- ----------- ---------
$3,877,288 $(7,398,826) $ (332,08)
========== =========== =========
Provision for income
taxes:
Federal
Current $ --- $ $
Deferred 657,071 (969,353) (202,07)
State
Current --- --- ---
Deferred 70,152 (165,934) ---
Foreign --- ---
Current --- 71,236
Deferred 244,592 (237,267)
---------- ----------- ---------
Provision for income
tax (benefit)
expense $ 727,223 $ (890,695) $(368,105)
========== =========== =========
Reconciliation of the federal statutory income tax rate to the Company's
effective income tax rate is as follows:
1997 1996 1995
---------- ----------- ---------
(Benefit) tax at
federal
statutory rate 34% (34)% (34)%
State income tax,
net .2 4 ---
Non-deductible
goodwill 4 2 35
Reduction in
valuation
Allowance --- (1) (7)
Reduction in
(benefit) tax
Provided on foreign
Operations (20) 22 (92)
Other 3.8 3 (13)
--- --- ----
Effective income
tax rate 22% (12)% (111)%
=== === ====
F-22
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(10) INCOME TAXES (CONT.)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are
presented below:
1997 1996
---------- ----------
Deferred tax assets:
Unrealized loss on $ --- $ 18,388
investments
Reserve for bad debts 135,108 295,804
Net operating loss carry
forward 1,142,847 1,452,313
Foreign tax credit carry
forwards 423,914 ---
Other 69,554 55,281
---------- ----------
1,771,423 1,821,786
Deferred tax liabilities:
Plant, property and equipment (659,866) (645,94)
Investment in foreign
subsidiaries (129,581) ---
Other --- ---
---------- ----------
(789,447) (645,946)
---------- ----------
Net deferred tax asset $ 981,976 $1,175,840
========== ==========
At October 31, 1997, the Company has Federal net operating loss carry
forwards of approximately $3,307,064. These net operating loss carry
forwards begin to expire at the end of the fiscal year ending October 31,
2009.
(11) MAJOR CUSTOMERS/CONCENTRATION OF CREDIT RISK
A significant portion of the Company's business is derived from four major
customers including a governmental agency, two telephone companies and an
industrial manufacturer. At October 31, 1997 and 1996, the Company had
accounts receivable from these customers of $3,109,025 and $5,453,885 or
48% and 42% of total accounts receivable, respectively. Revenues from
these customers totaled approximately $30,880,000, $22,786,000 and
$9,498,000 or 36%, 50% and 27% of consolidated revenues in fiscal years
1997, 1996 and 1995, respectively.
Approximately 50% of the Company's Latin American revenues are derived
from one customer in Venezuela. Revenues from this customer were
approximately 2 % of consolidated revenues in 1997 (4% in 1996; and 6% in
1995). Accounts receivable outstanding for this customer were $776,000 and
$257,994 at October 31, 1997 and 1996, respectively.
F-23
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(12) INDUSTRY AND GEOGRAPHIC AREA SEGMENT INFORMATION
The Company currently operates primarily in two industry segments:
telecommunication network services and traffic management systems and
devices. 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,
(loss) income 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.
INDUSTRY SEGMENTS 1997 1996 1995
----------- ----------- -----------
Revenues:
Traffic management
operations $46,795,604 $22,661,644 $22,872,331
Telecommunication network
services 39,538,845 26,244,526 12,535,250
----------- ----------- -----------
Total $86,334,449 $48,906,170 $35,407,581
=========== =========== ===========
Income (loss) from operations:
Traffic management
operations $ 3,771,385 $(3,454,076) $ 286,149
Telecommunication network
services 1,068,995 (2,832,440) (72,518)
----------- ----------- -----------
Total $ 4,840,380 $(6,286,516) $ 213,631
=========== =========== ===========
Identifiable Assets:
Traffic management
operations $28,884,967 $25,099,066 $21,701,922
Telecommunication network
services 21,461,027 13,819,765 10,780,294
----------- ----------- -----------
Total $50,345,994 $38,918,831 $32,482,216
=========== =========== ===========
Capital Expenditures:
Traffic management
operations $ 1,635,970 $ 1,275,451 $ 353,148
Telecommunication network
services 2,851,447 2,216,097 1,897,756
----------- ----------- -----------
Total $ 4,487,417 $ 3,491,548 $ 2,250,904
=========== =========== ===========
Depreciation and amortization:
Traffic management
operations $ 1,710,831 $ 1,228,647 $ 996,249
Telecommunication network
services 2,821,417 1,521,157 917,815
----------- ----------- -----------
Total $ 4,532,248 $ 2,749,804 $ 1,914,064
=========== =========== ===========
GEOGRAPHIC AREAS
Revenues:
United States $82,171,132 $45,160,312 $ 32,179,81
Latin America 4,163,317 3,745,858 3,227,750
----------- ----------- -----------
Total $86,334,449 $48,906,170 $ 35,407,51
=========== =========== ===========
Income (loss) from
operations:
United States $ 4,823,824 $(2,072,678) $ 364,264
Latin America 16,556 (4,213,838) (150,633)
----------- ----------- -----------
Total $ 4,840,380 $(6,286,516) $ 213,631
=========== =========== ===========
Identifiable Assets:
United States $47,781,370 $36,409,993 $26,955,667
Latin America 2,564,623 2,508,838 5,526,549
----------- ----------- -----------
Total $50,345,993 $38,918,831 $32,482,216
=========== =========== ===========
F-24
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(13) QUARTERLY FINANCIAL DATA (UNAUDITED)
(Dollars in thousands, except per share amounts)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------- --------- ---------- ---------
1997
Revenues $ 18,326 $ 20,871 $ 21,984 $ 25,153
Operating Income 1,142 1,785 1,024 888
Net Income 505 851 932 567
Income per share .04 .04 .06 .02
1996
Revenues $ 11,578 $ 12,592 $ 11,860 $ 12,876
Operating Income
(Loss) (1,036) (2,095) 199 (3,355)
Net Income (Loss) (533) (2,562) 137 (2,952)
Income (Loss)
per share (.06) (.31) .02 (.35)
Certain adjustments were made in the fourth quarter of 1997 which included a
reduction in reserves associated with litigation between the Company and former
owners of TSCI of $225,000. See note 14 (b).
Certain adjustments were recorded in the fourth quarter of 1996 which included
adjustments to provide allowances for uncollectible accounts receivable and
obsolete inventory. These adjustments resulted in charges against operations
aggregating approximately $1,351,000.
(14) COMMITMENTS AND CONTINGENCIES
(A) LEASED PROPERTIES
As of October 31, 1997, the Company leased office space and
equipment under various non-cancelable long-term operating lease
arrangements.
During fiscal year 1997, the Company leased certain equipment under
an agreements which are classified as capital leases. Cost and
accumulated amortization of such assets as of October 31, 1997
totaled $747,025 and $127,482.
F-25
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
Future minimum lease payments required under operating and capital
leases with initial terms in excess of one year are as follows:
CAPITAL OPERATING
LEASES LEASES
-------- -----------
YEARS ENDING OCTOBER 31,
------------------------
1998 $177,489 $ 441,602
1999 179,492 231,031
2000 177,907 183,802
2001 61,612 65,672
2002 --- 67,692
Thereafter --- 94,140
-------- -----------
Total minimum lease
payments 596,500 $ 1,083,939
===========
Present value of net
minimum lease payments 524,256
Less current installments
of obligations under
capital leases 139,001
--------
Obligations under capital
leases excluding current
installments $385,255
========
Rental expense for operating leases amounted to $833,710, $631,706
and $323,180 for the years ended October 31, 1997, 1996 and 1995,
respectively. The Company paid rent to former directors of the
Company totaling $89,460 for fiscal years 1997, 1996 and 1995. In
addition, the Company has entered into an agreement with the former
principals of GEC to purchase, by June 1997, a facility for $350,000
subject to the Company obtaining favorable financing and other
terms. The Company has paid 60,000 in rent to these former
principals of GEC on this facility in fiscal year 1997.
(B) LITIGATION
In July 1997, the Company terminated the employment of William J.
Mercurio, the company's former Chief Executive Officer and Chief
Financial Officer. On July 31, 1997, Mr. Mercurio filed a lawsuit in
the (15th Judicial Circuit Court in and for Palm Beach County,
Florida) naming the Company as a defendant and alleging that the
Company breached an employment agreement (and a stock option
agreement) to which he and the Company were parties. As a result of
the alleged breach, Mr. Mercurio seeks damages and specific
performances under the employment agreement (and stock agreement).
In the lawsuit, the Company intends vigorously to defend itself and
prove that its action in terminating Mr. Mercurio's employment were
proper and justified under the terms of his employment agreement.
Additionally, the Company is party from time to time to various
legal proceedings. In the opinion of management, none of these
proceedings are expected to have a material impact on its financial
position or results of operations.
F-26
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(15) LATIN AMERICAN OPERATIONS
Revenues, costs and expenses and net (loss) income from Latin American
operations for the years ended October 31, 1997, 1996 and 1995 are as
follows:
YEARS ENDED OCTOBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
Revenues $4,163,317 $3,745,858 $3,227,750
Costs and expenses 4,146,761 7,374,361 3,282,585
Net income (loss) 16,556 (3,628,503) (54,835)
The Company has continued to monitor closely its Latin American operations
due to the poor operating results in fiscal year 1996 Able's International
operations have shown improvement in fiscal 1997 as a result of the
stabilization of the exchange rate and increase in revenue producing
contracts. During the year ended October 31, 1997, the Company's Latin
American operations incurred approximately $200,000 of marketing expense
related to a proprietary product.
The net loss for fiscal year 1996 includes charges relating to the
write-off of certain goodwill related to Latin American operations,
foreign currency losses as a result of the devaluation of the Venezuelan
Bolivar and provisions for the write-down of certain investments, accounts
receivable and deferred tax assets. Such amounts approximate $921,000,
$1,180,000 and $353,000, respectively. Additionally, during the year ended
October 31, 1996, the Company's Latin American operations incurred
approximately $1.1million of marketing expenses related to a proprietary
product.
During the second quarter of fiscal 1996 the Company identified
circumstances which suggested the carrying value of goodwill related to
its Brazilian subsidiary and master contacts of its Venezuelan
subsidiaries had been impaired. These included continuing losses from
operations, consistent failure to meet budgeted operating results despite
the Company's attempts to improve performance, the determination that
certain revenue producing contracts would not be renewed in the forseeable
future and the Company's resulting decision during the second quarter of
1996 to substantially curtail its telecommunications maintenance and
construction operations in Latin America. As a result, the Company
estimated the expected income to be derived in future periods and the
expected undiscounted future cash flows of its Latin American operations.
The results indicated that the goodwill and master contracts would not be
recovered. Accordingly, during the second quarter of 1996, the carrying
value of these assets was reduced from approximately $921,000 to zero.
This charge is included in "Charges and transaction/translation losses
related to Latin American operations" in the Consolidated Statements of
Operations for fiscal year 1996.
F-27
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1997
(15) LATIN AMERICA OPERATIONS CONT...
Effective August 1, 1995, the Company reached an agreement with the
minority shareholders of its Venezuelan subsidiaries to compensate them
for assuming executive management and day-to-day responsibilities for the
Company's Venezuelan operations by increasing their proportionate share of
earnings and losses from 20% to 50%. The Company made this change as a
result of a demand by the minority partners for such an agreement.
Management believes such a change is necessary in that the minority
partners are Venezuelan nationals who reside in Venezuela and maintain
relationships with the customer and the workforce and are essential to the
future viability of the Company's Venezuelan operations. The agreement did
not change the Company's share of ownership and voting control in its
Venezuelan subsidiaries which remains at 80%.
During fiscal year ending 1995, the Company recovered approximately
$350,000 in accounts receivable that were written off in 1994.
The Company's investment in Latin American entities, whose primary assets
consist of accounts receivable and property and equipment, totaled
$2,588,623, and, $2,080,053 at October 31, 1997 and 1996, respectively.
(16) OTHER SUBSEQUENT EVENTS
In December 1997, the Company signed a definitive agreement with COMSAT
RSI, JEFA's Wireless ("JEFA") to acquire (the "JEFA Acquisition") certain
assets and assume certain liabilities of JEFA's intelligent traffic
systems and wireless infrastructure and services business. Finalization of
JEFA Acquisition is subject to a number of conditions, among them the
approval of the Texas Department of Transportation. Accordingly, there can
be no assurance that the JEFA Acquisition will ultimately be consummated.
F-28
<PAGE>
ABLE TELCOM HOLDING CORP.
AND SUBSIDIARIES
SCHEDULE II
Valuation and Qualifying Accounts
Years ended October 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
OF PERIOD ACQUISITIONS EXPENSES DEDUCTIONS PERIOD
---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts:
October 31, 1997 $ 828,186 --- $ 160,189 $ 301,773 $ 686,602
October 31, 1996 $ 535,914 $ 2,882 $ 746,283 $ 456,893 $ 828,186
October 31, 1995 $1,278,933 $ --- $ 86,593 $ 829,612 $ 535,914
</TABLE>
F-29
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
3.1 Articles of Incorporation of the Registrant, as amended to date(1)
3.2 Amendment to Articles of Incorporation of the Registrant, as filed with
the Secretary of the State of Florida on December 20, 1996(7)
3.3 Bylaws of the Registrant, as amended to date(1)
4.1 Articles of Incorporation (incorporated by reference to Exhibit 3.2)(7)
4.2 Specimen Common Stock Certificate(1)
4.3 Specimen Series A Preferred Stock Certificate(3)
4.4 Forms of Warrant issued to Credit Suisse First Boston Corporation and
Silverton International Fund Limited(7)
4.5 Gaines Option(1)
4.6 Able Telcom Holding Corp. 1995 Stock Option Plan(8)
10.2 Stock Option Agreement with Frazier L. Gaines(1)
10.8 Employment Agreement with Gerry W. Hall(5)
10.9 Master Agreement with AT&T(1)
10.10 Master Agreement with GTE(1)
10.11 Note restructuring agreements with former principals of TSCI(2)
10.12 Stock Purchase Agreement between the Registrant and H.C. and Lois A.
Connell, dated November 6, 1995(4)
10.13 Amendment to Stock Purchase Agreement between the Registrant and H.C. and
Lois A. Connell, dated December 8, 1995(4)
10.14 Consulting Agreement between the Registrant and H.C. Connell, dated
November 6, 1995(4)
10.15 Stock Purchase Agreement between the Registrant, Traffic Management
Group, Inc., Georgia Electric Company, Gerry W. Hall and J. Barry Hall(5)
10.16 Stock Purchase Agreement between the Registrant, Telecommunications
Services Group, Inc., Dial Communications, Inc., William E. Newton and
Sybil C. Newton(6)
10.17 Promissory Note of the Registrant payable to William E. and Sybil C.
Newton(6)
10.18 Term Loan and Revolving Line of Credit Facility between the Registrant
and SunTrust Bank, South Florida N.A. effective as of November 29,
1995(4)
10.19 First Modification to Term Loan and Revolving Line of Credit Facility
between the
Registrant and SunTrust Bank, South Florida N.A. effective as of May 20,
1996(3)
10.20 Second Modification to Term Loan and Revolving Line of Credit Facility
between the Registrant and SunTrust, South Florida N.A. effective as of
October 30, 1996(3)
10.21 Third Modification to Term Loan and Revolving Line of Credit Facility
between the Registrant and SunTrust Bank, South Florida N.A. effective as
of December 2, 1996(3)
10.22 Term Loan and Security Agreement between Able Telcom Holding Corp.,
Georgia Electric Company, Inc., Traffic Management Group, Inc.,
Transportation Safety Contractors, Inc., Transportation Safety
Contractors of Virginia, Inc. and SunTrust Bank South Florida N.A.,
effective December 2, 1996(3)
10.23 Stock Purchase Agreement(7)
10.24 Asset Purchase Agreement dated as of November 26, 1997 with COMSAT RSI,
JEFA Wireless, Transportation Safety Contractors, Inc., Georgia Electric
Company, Able Telcom Holding Corp. and COMSAT Corporation(10)
10.25 Securities Purchase Agreements, each dated as of January 6, 1998, between
Able Telcom Holding Corp. and each of the Purchasers named therein(9)
11 Computation of Per Share Earnings
21 List of subsidiaries as of October 31, 1997(9)
23.1 Consent of Ernst and Young LLP
27 Financial Data Schedule (for SEC use only)
<PAGE>
(1) Previously filed with the Commission as an exhibit to the Company's
Registration Statement on Form S-1 (Registration #33-65854) ordered
effective by the Commission on February 26, 1994, as an amended.
(2) Previously filed with the Commission as an exhibit to the Company's
Annual Report on Form 10-K filed for fiscal year 1994.
(3) Previously filed with the Commission as an exhibit to the Company's
Annual Report on Form 10-K filed for fiscal year 1996.
(4) Previously filed with the Commission as an exhibit to the Company's
Current Report Form 8-K dated December 22, 1995.
(5) Previously filed with the Commission as an exhibit to the Company's
Current Report Form 8-K as filed with the Commission on October 25,
1996.
(6) Previously filed with the Commission as an exhibit to the Company's
Current Report Form 8-K as filed with the Commission on December 13,
1996.
(7) Previously filed with the Commission as an exhibit to the Company's
Current Report Form 8-K as filed with the Commission on December 31,
1996.
(8) Previously filed with the Commission as an exhibit to the Company's
Registration Statement on Form S-8 (Registration #333-04377) ordered
effective by the Commission on June, 1996.
(9) Previously filed with the commission as an exhibit to the Company's
Annual Report on Form 10-K filed for fiscal 1997.
(10) Previously filed with the Commission as an exhibit to the Company's
Current Report Form 8-K as filed with the Commission on March 12,
1998.
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
YEAR ENDED OCTOBER 31,
-----------------------------------
1997 1996 1995
--------- --------- --------
Primary:
Average shares outstanding 8,430 8,202 8,284
Net effect of dilutive stock
options - based on the
treasury stock method using
average market price 75 160 ---
------ ------- ------
Total $8,505 $8,362 $8,284
====== ======= ======
Net income (loss) from operations 2,858 (5,910) (218)
Less: Preferred stock dividends
dividends 260 --- ---
Discount attributable to beneficial
Conversion privilege of preferred stock 1,268 --- ---
------ ------- ------
Net income (loss) applicable to
common stock $1,332 $(5,910) $ (218)
====== ======= ======
Income (loss) per common share $ 0.16 $ (0.71) $(0.03)
------ ------- ------
Fully Diluted:
Average shares outstanding 8,430 8,202 8,284
Net effect of dilutive stock
options-based on the
treasury stock method using
the year-end market price,
if higher than the average
market price 82 164 ---
Total 8,512 8,366 8,284
====== ======= ======
Net income (loss) from operations $2,858 $(5,910) $ (218)
Less: Preferred stock dividends 260 --- ---
Discount attributable to beneficial
Conversion privilege of
preferred stock 1,266 --- ---
------ ------- ------
Net income (loss) applicable to
common stock $1,332 $(5,910) $(218)
====== ======= ======
Income (loss) per common share $ 0.16 $ (0.71) $(0.03)
====== ======= ======
F-37
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in Registration Statements (Form
S-3, No. 333-22105 and Form S-8, No. 333-04377 pertaining to the 1995 Stock
Option Plan) of Able Telcom Holding Corp. of our report dated January 19, 1998,
with respect to the consolidated financial statements and schedule of Able
Telcom Holding Corp. included in the Annual Report (Form 10-K/A) for the year
ended October 31, 1997.
West Palm Beach, Florida
March 17, 1998.
<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, 1997, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 6,229,602
<SECURITIES> 0
<RECEIVABLES> 13,399,327
<ALLOWANCES> 686,602
<INVENTORY> 1,257,218
<CURRENT-ASSETS> 27,009,551
<PP&E> 13,113,638
<DEPRECIATION> 8,283,185
<TOTAL-ASSETS> 50,345,994
<CURRENT-LIABILITIES> 12,968,636
<BONDS> 0
6,713,315
0
<COMMON> 8,579
<OTHER-SE> 15,246,610
<TOTAL-LIABILITY-AND-EQUITY> 50,345,994
<SALES> 0
<TOTAL-REVENUES> 86,334,449
<CGS> 0
<TOTAL-COSTS> 68,164,404
<OTHER-EXPENSES> 13,329,665
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,565,265
<INCOME-PRETAX> 3,872,239
<INCOME-TAX> 727,223
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,857,534
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
