<PAGE>
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
__________________________________________
Commission file number 0-25194
MAY 7, 1996
(Date of Report)
INTERAMERICAS COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 87-0464860
(State of Incorporation) (IRS Employer Identification)
104 CRANDON BOULEVARD, SUITE 324
KEY BISCAYNE, FLORIDA 33149
(Address of principal executive office) (Zip Code)
Registrant's telephone number:
(305) 361-8484
NOTE: Page 1 of 36 Sequentially numbered pages
<PAGE>
ITEM 2 - ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF RED DE SERVICIOS EMPRESARIALES DE TELECOMUNICACIONES, S.A.
("RESETEL")
(a) On May 7, 1996, InterAmericas Communications Corporation ("the
Company") acquired 100% of the issued and outstanding stock of Red de
Servicios de Telecomunicaciones, S.A., a Peruvian corporation, ("Resetel") in
exchange for 1,250,000 shares of Common Stock of the Company issued to the
shareholders of Resetel pursuant to a stock purchase agreement dated May 7,
1996. The terms of the agreement and the consideration paid to the
shareholders of Resetel were determined through arms-length negotiations
among the parties.
(b) Resetel is the first company to obtain a local carrier
concession to compete with Peru's monopoly carrier, Telefonica. The
Concession, issued by Peru's Ministry of Communications, Transportation,
Housing and Construction authorizes Resetel to operate a fiber-optic
telecommunications network serving corporate customers in metropolitan Lima,
Peru and the port city of Callao. Together these cities have a population of
approximately 7 million. The Company is now engineering and plans to
commence the construction and operation of the fiber-optic network in Peru.
The Company intends to use the network design, engineering, construction,
management and marketing expertise developed through its operations in Chile
to construct and operate the network. Like the Santiago network, the new
network will provide high-bandwidth private line voice, video and data
communications services to corporate customers.
ACQUISITION OF HEWSTER, S.A.
(a) On July 31, 1996, the Company's wholly owned subsidiary Hewster
Servicios Intermedios, S.A. ("HSI") acquired 99% of Hewster, S.A.
("Hewster"), a Chilean corporation controlled by Hernan Streeter Rios, the
Company's President and Chairman of the Board. The transaction was completed
in the following manner:
On July 31, 1996, the Company transferred $1,500,000 to its subsidiary
Hewster Servicios Intermedios, S.A. ("HSI") in exchange of 95% of the issued
and outstanding capital stock of VISAT Telecomunicaciones, S.A. ("VISAT")
held by HSI, pursuant to a Stock Purchase and Sale Agreement. As a result of
this transaction, VISAT will now be a direct subsidiary of the Company
instead of a subsidiary of HSI. HSI then used the $1,500,000 to acquire 99%
of the issued an outstanding stock of Hewster, S.A. from its shareholders,
Santiago Bouza Saavedra and Inversiones Druma, S.A. a Chilean Corporation
controlled by Hernan Streeter Rios, pursuant to the Stock Purchase and Sale
Agreements dated July 30, 1996. The terms of the agreements and the amount of
consideration paid for the Hewster, S.A. stock were determined through
arms-length negotiations among the parties. The $1,500,000 was obtained by
the Company as part of a private placement which closed in July 1996.
2
<PAGE>
On September 2, 1996, the Company acquired the remaining 1% of the
outstanding stock of Hewster from Hernan Streeter Rios. Hewster was
merged into HSI. The combined entity is operating under the name of
Hewster Chile, S.A. HSI is in the process of preparing the accounting books
of Hewster, S.A. in order to file the corresponding applications before the
Chilean tax authorities giving notice of the mergers.
(b) Hewster, a Chilean systems integration service company which was
incorporated in July 1986, has annual revenues of US$1 million. The principal
objective of the purchase of Hewster was to consolidate its strong revenue
base and existing contracts to enhance the operations of HSI, a development
stage Chilean Competitive Access Provider with low revenues but in excess of
US$3.5 million in advanced fiber optic infrastructure investment over the
past two years. Hewster brings to the Company valuable relationships with
corporate customers including Xerox, Aetna, CMPC and Hertz. Hewster also
provides the Company with expertise to offer value-adding systems design as
part of its range of network services. Through Hewster's experienced systems
integration personnel, the Company will be able to offer corporate customers
in Chile Local Area Network ("LAN") design, installation and maintenance
services. By consulting customers on their internal network design, the
Company will be in a position to assist customers in taking advantage of its
high-capacity fiber-optic network and planned long distance service offerings.
The Company believes that its ongoing involvement at each phase of its
customer's network development and management will help the Company develop
stronger, long-term customer relationships.
ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
1. Financial Statements of Resetel, S.A. as of December 31,
1995 and June 30, 1996 (Audited)
2. Financial Statements of Hewster, S.A. as December 31,
1994, December 31, 1995 and June 30, 1996 (Unaudited)
(b) Proforma Financial Information
1. InterAmericas Communications Corporation pro forma
condensed consolidated balance sheet as of June 30, 1996
(Unaudited)
2. InterAmericas Communications Corporation pro forma
condensed consolidated statement of income for the year
ended December 31, 1995 (Unaudited)
3. InterAmericas Communications Corporation pro forma
condensed consolidated statement of income for the six
months ended June 30, 1996 (Unaudited)
3
<PAGE>
(c) Exhibits:
All exhibits were previously filed as exhibits to Registrant's
Form 10-Q for the quarter ended June 30, 1996 and are
incorporated herein by reference.
1. Stock Purchase Agreement by and among Registrant and
Kayhelm, Ltd. (the shareholder of RESETEL, S.A.) dated
May 9, 1996.
2. Stock Purchase/Sale Agreement by and among Registrant and
Kayhelm, Ltd. (the shareholder of RESETEL, S.A.) dated
May 10, 1996.
*3. Stock Purchase and Sale Agreement by and between Registrant
and Hewster Servicios Intermedios, S.A. dated July 30,
1996.
*4. Stock Purchase and Sale Agreement by and between Hewster
Servicios Intermedios, S.A. and Inversiones Druma, S.A. dated
July 30, 1996.
*5. Stock Purchase and Sale Agreement by and between Hewster
Servicios Intermedios, S.A. and Santiago Boza Saavedra dated
July 31, 1996.
*6. Stock Purchase Agreement by and between Registrant and
Devono Company Limited dated July 4, 1996.
*English Translation of Spanish Document
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERAMERICAS COMMUNICATIONS CORP.
/c/ Carlos M. Menendez DATE 10-14-96
- --------------------------------------- --------------------
Carlos M. Menendez
Chief Operating and Financial Officer
5
<PAGE>
INTERAMERICAS COMMUNICATIONS CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements illustrate
the effect of the acquisitions ("Pro Forma") on the Company's financial
position and results of operations. The condensed pro forma consolidated
balance sheet as of June 30, 1996 is based on the historical balance sheets
of the Company, Resetel, S.A and Hewster, S.A. as of that date and assumes
the acquisition took place on that date. The condensed pro forma consolidated
statements of income for the year ended December 31, 1995 and six months
ended June 30, 1996 are based on the historical statements of income of the
Company, Resetel, S.A. and Hewster, S.A for those periods, and assume the
acquisition took place on January 1, 1995.
The pro forma condensed consolidated financial statements may not be
indicative of the actual results of the acquisition.
The pro forma condensed consolidated pro forma financial statements
should be read in conjunction with the historical financial statements of the
Company, Resetel, S.A. and Hewster, S.A.
6
<PAGE>
INTERAMERICAS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
INTERAMERICAS
COMMUNICATIONS
CORP. HEWSTER, S.A. ADJUSTMENTS PRO FORMA
-------------- ------------- ----------- ---------
(b) (d)
<S> <C> <C> <C> <C>
ASSETS
- ------
Current Assets:
Cash $6,987,494 $ 12,950 ($1,515,000) (e) $5,485,444
Accounts Receivable 65,259 11,743 77,002
Other Receivables 18,142 18,142
Inventory 141,901 141,901
Prepaid Expenses 230,606 19,596 250,202
Due From Related Parties 39,554 72,521 112,075
Other 5,070 1,702 6,772
-------------- ------------- ----------
Total Current Assets 7,327,983 278,555 6,091,538
Property and Equipment at cost, net 2,972,526 474,018 3,446,544
Concessions and Other Intangibles, net 7,260,663 17,158 1,028,013 (f) 8,071,500
(234,334) (h)
Other Assets 2,760 12,184 14,944
-------------- ------------- -----------
Total Assets $17,563,932 $781,915 $17,624,526
-------------- ------------- -----------
-------------- ------------- -----------
</TABLE>
See Notes To Pro Forma Condensed Consolidated Financial Statements (Unaudited)
7
<PAGE>
INTERAMERICAS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
INTERAMERICAS
COMMUNICATIONS
CORP. HEWSTER, S.A. ADJUSTMENTS PRO FORMA
-------------- ------------- ----------- ---------
(b) (d)
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts Payable:
Related Parties $438,000 $ 27,269 $465,269
Other 1,130,981 18,025 1,149,006
Accrued Expenses 533,398 10,071 543,469
Notes Payable:
Related Parties 259,106 259,106
Other 238,494 41,834 280,328
Lease Obligations, current 8,235 195,602 203,837
-------------- --------- -----------
Total Current Liabilities 2,608,214 292,801 2,901,015
Lease Obligation, less current portion 210,000 210,000
Minority Interest in Subsidiary 2,127 2,127
Deferred Income Taxes 152,000 152,000
-------------- --------- -----------
Total Liabilities 2,970,214 294,928 3,265,142
Stockholders' Equity 14,593,718 486,987 (234,334) (h) 14,359,384
-------------- --------- -----------
486,987 (f)
Total Liabilities and
Stockholders' Equity $17,563,932 $781,915 $17,624,526
-------------- --------- -----------
-------------- --------- -----------
</TABLE>
See Notes To Pro Forma Condensed Consolidated Financial Statements (Unaudited)
8
<PAGE>
INTERAMERICAS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
INTERAMERICAS
COMMUNICATIONS
CORP. HEWSTER, S.A. RESETEL, S.A. ADJUSTMENTS PRO FORMA
-------------- ------------- ------------- ----------- ---------
(b) (d) (c)
<S> <C> <C> <C> <C> <C>
Sales $224,000 $969,104 $1,193,104
Cost Of Sales 804,000 551,654 1,355,654
------------- ------------ ------------ ----------
Gross Profit (Loss) (580,000) 417,450 (162,550)
------------- ------------ ------------ ----------
Selling, General And
Administrative Expenses 1,918,000 274,473 10,545 2,203,018
Depreciation and Amortization 468,667 (g) 468,667
------------- ------------ ------------ ----------
1,918,000 274,473 10,545 2,671,685
------------- ------------ ------------ ----------
Income (Loss) From Operations (2,498,000) 142,977 (10,545) (2,834,235)
Other Income (Expenses):
Interest Income 10,000 10,000
Interest Expense (319,000) (51,179) (59) (370,238)
Minority Interest in Loss from Subsidiary 3,419 3,419
Other Expenses (66,000) (70) (66,070)
------------- ------------ ------------ ----------
Net Income (Loss) before Tax Provision (2,873,000) 95,217 (10,674) (3,257,124)
Provision for Income Taxes (15,718) (15,718)
------------- ------------ ------------ ----------
Net Income (Loss) ($2,873,000) $79,499 ($10,674) ($3,272,842)
------------- ------------ ------------ ----------
------------- ------------ ------------ ----------
Net Income (Loss) Per Share ($0.31) $9.93 ($0.33) ($0.35)
------------- ------------ ------------ ----------
------------- ------------ ------------ ----------
Weighted Average Common
Shares Outstanding 9,407,000 8,000 32,000 9,407,000
------------- ------------ ------------ ----------
------------- ------------ ------------ ----------
</TABLE>
See Notes To Pro Forma Condensed Consolidated Financial Statements (Unaudited)
9
<PAGE>
INTERAMERICAS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
INTERAMERICAS
COMMUNICATIONS
CORP. HEWSTER, S.A. RESETEL, S.A. ADJUSTMENTS PRO FORMA
-------------- ------------- ------------- ----------- ---------
(b) (d) (c)
<S> <C> <C> <C> <C> <C>
Sales $112,921 $408,023 $520,944
Cost Of Sales 373,203 201,820 575,023
------------- ------------ ------------ ----------
Gross Profit (Loss) (260,282) 206,203 0 (54,079)
------------- ------------ ------------ ----------
Selling, General And
Administrative Expenses 836,422 170,563 792 1,007,777
Depreciation and Amortization 234,334 (h) 234,334
------------- ------------ ------------ ----------
836,422 170,563 792 1,242,111
------------- ------------ ------------ ----------
Income (Loss) From Operations (1,096,704) 35,640 (792) (1,296,190)
Other Income (Expenses):
Interest Income 13,759 13,759
Interest Expense (41,480) (16,154) (769) (58,403)
Minority Interest in Loss
from Subsidiary 6,640 6,640
Other - net (1,563) (1,563)
------------- ------------ ------------ ----------
Net Income (Loss) before Tax
Provision (1,124,425) 24,563 (1,561) (1,335,757)
Provision for Income Taxes (3,000) (3,000)
------------- ------------ ------------ ----------
Net Income (Loss) ($1,124,425) $21,563 ($1,561) ($1,338,757)
------------- ------------ ------------ ----------
------------- ------------ ------------ ----------
Net Income (Loss) Per Share ($0.08) $2.69 ($0.05) ($0.10)
------------- ------------ ------------ ----------
------------- ------------ ------------ ----------
Weighted Average Common
Shares Outstanding 13,432,076 8,000 32,000 13,432,076
------------- ------------ ------------ ----------
------------- ------------ ------------ ----------
</TABLE>
See Notes To Pro Forma Condensed Consolidated Financial Statements (Unaudited)
10
<PAGE>
INTERAMERICAS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
(a) Represents the audited historical results of operations of the
Company for the year ended December 31, 1995.
(b) Represents the unaudited historical results of operations of the
Company for the six month period ended June 30, 1996.
(c) Represents the audited historical results of operations of Red de
Servicios Empresariales de Telecomunicaciones, S.A. (Resetel) for the
year ended December 31, 1995 and six month period ended June 30, 1996.
(d) Represents the unaudited historical results of operations of Hewster,
S.A. for the year ended December 31, 1995 and six month period ended
June 30, 1996.
(e) Cash paid to acquire Hewster, S.A. in the amount of $1,515,000.
(f) Goodwill resulting from the acquisition of the common stock of
Hewster, S.A. and elimination of equity accounts.
(g) Represents an adjustment of $468,667 for twelve months of
amortization of concessions and other intangibles determined as
follows:
Amortization
Acquisition Intangible Period Amount
Resetel, S.A. $6,000,000 12 / 180 mos. $400,000
Hewster, S.A. 1,030,000 12 / 180 mos. 68,667
--------
$468,667
--------
--------
(h) Represents an adjustment of $234,334 for six months of amortization
of consessions and other intangibles determined as follows:
Amortization
Acquisition Intangible Period Amount
Resetel, S.A. $6,000,000 6 / 180 mos. $200,000
Hewster, S.A. 1,030,000 6 / 180 mos. 34,334
--------
$234,334
--------
--------
11
<PAGE>
RED DE SERVICIOS DE TELECOMUNICACIONES S.A.
(RESETEL S.A.)
FINANCIAL STATEMENTS
JUNE 30, 1996 AND
DECEMBER 31, 1995
<PAGE>
RED DE SERVICIOS DE TELECOMUNICACIONES S.A.
(RESETEL S.A.)
FINANCIAL STATEMENTS
JUNE 30, 1996 AND DECEMBER 31, 1995
I N D E X
---------
Page
----
REPORT OF THE INDEPENDENT AUDITORS 01
Balance Sheet 02
Statement of Operations 03
Cash Flow Statement 04
Notes to the Financial Statements 05-07
<PAGE>
[SUAREZ,CAMPERO Y ASOC. LETTERHEAD]
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of:
RESETEL, S.A.
Lima - Peru.
1. - We have examined the balance sheet of RED DE SERVICIOS DE
TELECOMUNICACIONES S.A. (RESETEL S.A.) at June 30, 1996 and December
31, 1995, the corresponding statements of operations and of cash flows,
for the periods ended in these dates. These statements have been
translated to United States Dollars. Our revision of these statements
was made in accordance with the auditing standards generally accepted
in the United States of America.
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.
2. - In our opinion the above mentioned financial statements, are presented
fairly, in all material respects, the financial position of RESETEL
S.A. as at June 30, 1996 and December 31, 1995, and the results of its
operations and its cash flows for the periods then ended in conformity
with generally accepted accounting principles.
San Isidro, August 30, 1996.
Signed by:
SUAREZ, CAMPERO Y ASOCIADOS
/s/ W. CHUNGA
-------------------------------(Principal)
WILFREDO CAMPERO CHUNGA
College Public Book-keeper
Registration No. 13404
<PAGE>
RESETEL S.A.
BALANCE SHEET
AT JUNE 30, 1996 AND DECEMBER 31, 1995
(US Dollars)
<TABLE>
<CAPTION>
30/06/96 31/12/95 30/06/96 31/12/95
---------- -------- ---------- ---------
US$ US$ US$ US$
<S> <C> <C> <C> <C>
ASSETS LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT ASSETS CURRENT LIABILITIES
Cash and Term Deposits 302,137.44 2,172.87 Taxes payable -0- 69.83
Prepaid Expenses 1,348.36 1,342.70 Other Creditors (Note 4) 314,280.98 -.-
---------- -------- ---------- ---------
TOTAL CURRENT ASSETS 303,485.80 3,515.57 TOTAL CURRENT LIABILITIES 314,280.98 69.83
---------- -------- ---------- ---------
STOCKHOLDERS EQUITY (Note 5)
OTHER ASSETS Capital 14,482.76 14,482.76
Cumulative Translation Adjustment ( 905.07) ( 363.52)
Concession and taxes 12,130.01 -.- Accumulated Deficit (12,234.86) (10,673.50)
---------- -------- ---------- ---------
TOTAL STOCKHOLDERS EQUITY 1,342.03 3,445.74
---------- ---------
TOTAL LIABILITIES AND
TOTAL ASSETS 315,623.81 3,515.57 STOCKHOLDERS EQUITY 315,623.81 3,515.57
---------- -------- ---------- ---------
---------- -------- ---------- ---------
</TABLE>
The accompanying notes 1 to 5 constitute an integral part
of these Financial Statements.
-02-
<PAGE>
RESETEL S.A.
STATEMENT OF OPERATIONS
FOR THE PERIODS ENDED JUNE 30, 1996 AND DECEMBER 31, 1995
(US Dollars)
<TABLE>
<CAPTION>
30/06/96 31/12/95
-------- --------
US$ US$
<S> <C> <C>
Operating Costs (547.11) (10,544.59)
OTHER INCOME (EXPENSES)
Interest expense (769.46) (59.08)
Other expenses (244.79) -.-
---------- -----------
LOSS BEFORE TAXES (1,561.36) (10,603.67)
Income Tax -.- (69.83)
---------- -----------
NET LOSS FOR THE PERIOD (1,561.36) (10,673.50)
---------- -----------
---------- -----------
</TABLE>
The accompanying notes 1 to 5 constitute an integral part
of these Financial Statements
-03-
<PAGE>
RESETEL S.A.
CASH FLOW STATEMENT
FOR THE PERIOD ENDED JUNE 30, 1996 AND
YEAR ENDED DECEMBER 31, 1995
(US Dollars)
<TABLE>
<CAPTION>
30/06/96 31/12/95
-------- --------
US$ US$
<S> <C> <C>
OPERATING ACTIVITIES
Net loss for the period and year (1,561.36) (10,673.50)
Adjustments to reconcile net loss
to cash flows provided by operating
activities; -.- -.-
Cash generated from net increase (decrease)
in current assets and liabilities 314,205.49 (1,272.87)
---------- ----------
Cash from operating activities 312,644.13 (11,946.37)
INVESTMENT ACTIVITIES
Investment in intangibles (12,138.01) -.-
---------- ----------
Cash used in investment activities (12,138.01) -.-
FINANCING ACTIVITIES
Increase in capital contributions -.- 14,482.76
---------- ----------
Cash from financing activities -.- 14,482.76
---------- ----------
Net cash used provided 300,506.12 2,536.39
Effect of exchange rate changes on cash (541.55) (363.52)
Cash and cash equivalents opening balance 2,172.87 0.00
---------- ----------
Cash and Cash equivalents at June 30, 1996
and December 31, 1995 302,137.44 2,172.87
---------- ----------
---------- ----------
</TABLE>
The accompanying notes 1 to 5 constitute an integral part
of these Financial Statements
-04-
<PAGE>
RESETEL S.A.
NOTES TO THE FINANCIAL STATEMENTS
AT JUNE 30, 1996 AND DECEMBER 31, 1995
NOTE 1.- THE COMPANY
Resetel S.A. is a telecommunication company incorporated on March 15, 1995,
in Lima, Peru. Resetel's concession approved by the Ministry of Transport and
Communications permits it to construct a fiber optic network in Lima and
Callao, with point-to-point digital technology to provide transmission
capacity for all types of telecommunication services. Resetel is currently in
the engineering phase of its operations and shortly plans to commence the
construction and operations of the fiber optic network in Peru. Initially
Resetel will offer its customers in Lima and Callao high speed, broadband and
dedicated digital transmission capacity, system integration and operation of
dedicated private networks.
In May 1996, InterAmericas Communications Corporation (ICC) acquired 100% of
Resetel S.A. ICC is a publicly traded U.S. company incorporated in Dallas,
Texas.
NOTE 2.- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting records are maintained in Nuevos Soles, but the accompanying
financial statements have been translated into United States dollars. The US
dollar financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America (US GAPP).
The translation to US dollars was done in accordance with the provision of the
Statement of Financial Accounting Standards (SFAS) No. 52, using Nuevo Sol as
the functional currency.
Under this method, the assets and liabilities have been translated at the
closing exchange rates which at June 30, 1996 was Nuevo Sol 2.44 per US$ 1,
and at December 31, 1995 was Nuevo Sol 2.31
per US$ 1.
The statement of operations was translated at the average exchange rate and
capital and accumulated deficit at the beginning of the year and the
-05-
<PAGE>
period were translated at the historical exchange rates.
The resultant translation effect was taken directly to Stockholder's equity
is presented in the balance sheet as cumulative translation adjustment.
3.- CASH
30/06/96 31/12/95
---------- ----------
US$ US$
Cash on hand 82.42 -.-
BANCO DEL SUR:
- --------------
- US$ Current Account 260.97 2,172.87
- US$ Term Deposit 301,794.05 -.-
---------- --------
302,137.44 2,172.87
---------- --------
---------- --------
4.- OTHER CREDITORS
30/06/96 31/12/95
---------- ----------
US$ US$
BETHANY INVESTMENTS 157,994.98 -.-
CABLEX 150,000.00 -.-
RODOLFO BEECK 6,286.00 -.-
---------- --------
314,280.98 -.-
---------- --------
---------- --------
The above sums correspond to loans received for covering the security bond
guarantee of $301,794.05 (time deposit) requested by Peru's Ministry of
Transport and Communication.
-06-
<PAGE>
5.- STOCKHOLDER'S EQUITY
The changes in stockholder's equity during the period ended June 30, 1996 and
the year ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
CUMULATIVE
ACCUMULATED TRANSLATION STOCKHOLDERS
CAPITAL DEFICIT ADJUSTMENT EQUITY
---------- ----------- ----------- ------------
US$ US$ US$ US$
<S> <C> <C> <C> <C>
Stock issuance March 15, 1995 14,482.76 -.- -.- 14,482.76
Net loss for the year 1995 -.- (10,673.50) -.- (10,673.50)
Cumulative translation adjustment 1995 -.- -.- (363.52) (363.52)
--------- ----------- -------- -----------
Balances at December 31,1995 14,482.76 (10,673.50) (363.52) 3,445.74
Cumulative translation Adjustment 1996 (541.55) (541.55)
Net loss for the period - 1996 (1,561.36) (1,561.36)
--------- ----------- -------- -----------
Balances at June 30, 1996 14,482.76 (12,234.86) (905.07) 1,342.83
--------- ----------- -------- -----------
--------- ----------- -------- -----------
</TABLE>
SHARE CAPITAL
At June 30, 1996 and December 31, 1995 the authorized share capital of the
company consists 32,000 common shares for a nominal value of one Nuevo Sol
(S/1.00) fully subscribed and paid.
-07-
<PAGE>
HEWSTER S.A.
CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
DECEMBER 31, 1995 AND 1994
<PAGE>
HEWSTER S.A.
Consolidated Financial Statements - Unaudited
December 31, 1995 and 1994
CONTENTS
Consolidated balance sheet (Unaudited)
Consolidated statements of income (Unaudited)
Consolidated cash flow statement (Unaudited)
Notes to the consolidated financial statements (Unaudited)
Ch$ - Chilean pesos
ThCh$ - Thousands of Chilean pesos
US$ - United States dollars
ThUS$ - Thousands of United States dollars
UF - Unidades de Fomento (a Chilean inflation - indexed, peso -
denominated monetary unit)
<PAGE>
HEWSTER S.A.
CONSOLIDATED BALANCE SHEET
UNAUDITED
At December 31
1995 1994
---- ----
US$ US$
CURRENT ASSETS
Cash 555 4.680
Accounts receivable - trade 37.597 54.768
Other accounts receivable 19.266 20.883
Due from related parties 99.199 129.710
Inventory 142.905 115.970
Taxes recoverable 19.648 24.643
Other current assets 2.023 323
---------- ----------
Total current assets 321.193 350.977
---------- ----------
FIXED ASSETS
Telecommunication equipment 325.618 255.738
Furniture and fixtures 37.799 35.157
Vehicles 11.537 8.819
Leased assets 305.344 -
Other fixed assets 47.682 38.483
---------- ----------
Subtotal 727.980 338.197
Accumulated depreciation (254.568) (129.769)
---------- ----------
Total fixed assets 473.412 208.428
---------- ----------
OTHER ASSETS
Intangible assets 15.079 13.463
Other 10.229 7.972
---------- ----------
Total other assets 25.308 21.435
---------- ----------
---------- ----------
Total assets 819.913 580.840
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank Loans - Short Term 57.618 52.730
Accounts payable 16.516 37.954
Notes payable 11.761 9.688
Leasing obligations - short term 103.841 -
Due to related parties 18 0
Other creditors 4.623 25
Withholdings and provisions 30.968 40.273
---------- ----------
Total current liabilities 225.346 140.670
---------- ----------
Long term portion of lease obligations 144.956 -
Minority interest in subsidiary company 8.542 12.207
STOCKHOLDERS' EQUITY
Capital 302.822 302.822
Accumulated reserves at beginning of year 96.397 91.023
Net profit for the year 79.499 5.374
Cumulative translation adjustment (37.649) 28.744
---------- ----------
Total stockholders' equity 441.070 427.963
---------- ----------
Total liabilities and ---------- ----------
stockholders' equity 819.913 580.840
---------- ----------
---------- ----------
The accompanying Notes are an integral
part of these financial statements
<PAGE>
HEWSTER S.A.
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED
For the years ended
December 31
1995 1994
---- ----
US$ US$
Revenues 969.104 952.074
Operating costs 551.654 519.783
---------- ----------
Gross margin 417.450 432.291
Administrative and selling expenses 274.473 382.706
---------- ----------
Operating profit 142.977 49.585
---------- ----------
OTHER INCOME (EXPENSES)
Interest expense (51.179) (25.050)
Other expenses - (19.850)
---------- ----------
Other income (expenses) - net (51.179) (44.901)
---------- ----------
Earnings before taxes and
minority interest 91.798 4.685
Minority interest in loss from subsidiary 3.419 3.802
Provision for income taxes (15.718) (3.112)
---------- ----------
NET INCOME FOR THE YEAR 79.499 5.374
---------- ----------
---------- ----------
The accompanying Notes are an integral
part of these financial statements
<PAGE>
HEWSTER S.A.
CONSOLIDATED CASH FLOW STATEMENT
UNAUDITED
For the year
ended
December 31
1995
----
US$
OPERATING ACTIVITIES
Net profit for the year 79,499
Adjustments to reconcile net income to cash
flows provided by operating activities:
Depreciation 98,453
Cash generated from net decrease in current
assets and liabilities 1,606
Minority interest (3,665)
-----------
Cash from operating activities 175,893
-----------
INVESTMENT ACTIVITIES
Fixed assets purchased (429,783)
Other (3,873)
-----------
Cash used in investment activities (433,656)
-----------
FINANCING ACTIVITIES
Increase in capital contributions -
Short term bank loans 4,888
Lease financing obtained 248,797
-----------
Cash from financing activities 253,685
-----------
Net cash (used) provided (4,078)
Effect of exchange rate changes on cash (46)
Cash and cash equivalents at January 1, 1995 4,680
Cash and cash equivalents at -----------
December 31, 1995 555
-----------
-----------
The accompanying Notes 1 to 6 are an integral
part of these financial statements
<PAGE>
HEWSTER S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
AT DECEMBER 31, 1995 AND 1994
NOTE 1 - THE COMPANY
Hewster S.A. is a telecommunication company incorporated on July 11, 1986 and
based in the Repulic of Chile. Hewster is principally engaged in providing
systems integration services including the sale of telephones, equipment and
private automatic branch exchanges (PABX's); telecommunication consulting
services; telecommunication equipment maintenance; equipment leasing and
installation of fiber optics and related equipment.
The shareholder's of the Company are Inversiones Druma S.A. (94%), Santiago
Boza (5%) and Mr. Heman Streeter (1%).
On July 31, 1996, 99% of the Company was acquired by Hewster Servicios
Intermedios S.A. (HSI S.A.) a Chilean corporation which is 99.97% owned by
InterAmericas Communications Corporation ("ICC"), a U.S. public company.
HSI S.A. paid US$1,500,000 for 99% of the shares held by Inversiones Druma
S.A. and Santiago Boza. ICC's stragetic objective for the purchase of
Hewster, through it's wholly owned subsidiary HSI, was related specifically
to Hewster's strong revenues base and existing contracts with companies such
as Xerox and Aetna.
On September 2, 1996, HSI purchased the remaining 1% of Hewster's capital
stock from Mr. Heman Streeter for US$15,000. The legal and tax proceedings
for Hewster S.A.'s full merger into the business operations of HSI S.A. are
currently underway. The combined entity has commenced to operate under the
name of Hewster Chile S.A.
Until the transaction date of July 31, 1996, the Company had recorded assets
at values existing at the acquisition date thereby not reflecting the sharp
decrease in market values of these assets due to technological obsolesencs.
As a result, the Company has had to make a series of out-of-book adjustments
in both the income statement and balance sheet, to fairly reflect the
financial condition of it's operations. Management has identified these
out-of-book adjustments at July 31, 1996 (the date of ICC's acquisition of
Hewster) and retroactively applied them to the prior periods of December 31,
1995 and December 31, 1994 to generate the attached sets of proforma
unaudited financial statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) General
The accounting records are maintained in Chilean pesos, but the accompanying
consolidated financial statements have been translated into United States
dollars. The US dollar consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States of America ("US GAAP").
The translation to United States dollars was done in accordance with the
provisions of Statement of Financial Accounting Standards (SFAS) No. 52,
using the Chilean peso as the functional currency. This statement establishes
standards of translating foreign currency financial statements.
The Chilean peso was used as the functional currency given that this is the
currency of the primary economic environment in which the Company operates.
Under this method, the assets and liabilities have been translated at the
closing exchange rate, which at December 31, 1995 was Ch$406.91 per US$1
(1994: Ch$402.92 per US$1). The statement of income was translated at the
average exchange rate and capital and the accumulated reserves at the
exchange rate on January 1, 1994 which at the date was Ch$428.47 per US$.
The resultant translation effect was taken directly to Shareholders' equity
and is presented in the balance sheet under the caption Cumulative
translation adjustment.
b) Consolidation of subsidiary
The consolidated financial statements include the assets, liabilities and
results of Comunicaciones, Integracion y Tecnologia S.A. ("Commit"), in which
as at December 31, 1995, the
<PAGE>
Company had an ownership interest of 70%. Commit is a Chilean corporation
incorporated in 1993 for the purpose of developing and providing computer
systems integration services.
c) Recoverable taxes
The recoverable taxes represent mostly Value Added Tax (VAT) originated in
the acquisition of fixed assets.
c) Plant and equipment
These assets are recorded at cost. Depreciation is calculated by the
straight-line method over the estimated useful lives of the assets.
d) Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period.
NOTE 3 - CHANGE IN ACCOUNTING PRINCIPLES
There were no changes in accounting principles during 1995 and 1994 which
could have a significant effect on the consolidated financial statements.
NOTE 4 - BALANCES WITH RELATED PARTIES
Amounts due from related parties at each year end were as follows:
<TABLE>
<CAPTION>
December 31
-----------
1995 1994
---- ----
US$ US$
<S> <C> <C>
H. Streeter 61,529 95,255
S. Boza - 3,472
HSI S.A. 37,670 30,983
------ -------
Total 99,199 129,710
------ -------
</TABLE>
Transactions with related parties had no effect on the results of operations
for 1995 and 1994.
NOTE 5 - LEASING OBLIGATIONS
At December 31, 1995 the Company had the following lease obligations:
<TABLE>
<CAPTION>
Institution Currency Gross Obligation Deferred Interest Total
- ----------- -------- ---------------------- ---------------------- ----------------------
Short Term Long Term Short Term Long Term Short Term Long Term
---------- --------- ---------- --------- ---------- ---------
US$ US$ US$ US$ US$ US$
<S> <C> <C> <C> <C> <C> <C> <C>
Banestado UF 120,354 154,079 16,513 9,123 103,841 144,956
</TABLE>
<PAGE>
NOTE 6 - STOCKHOLDERS' EQUITY
The changes in Stockholders' equity during the year were as follows:
<TABLE>
<CAPTION>
Accumulated
reserves and
cumulative Net Profit
translation for
Capital adjustment the yeer Total
------- ------------- ---------- -----
US$ US$ US$ US$
<S> <C> <C> <C> <C>
Balances at January 1, 1995 302,822 119,767 5,374 427,963
Capital increases - - - -
Cumulative translation adjustment (66,392) - (66,392)
Net profit for the year - - 79,499 79,499
------- ------- ------ -------
Balances at December 31, 1995 302,822 53,375 84,873 441,070
------- ------- ------ -------
</TABLE>
<PAGE>
HEWSTER S.A.
CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
JUNE 30, 1996
<PAGE>
HEWSTER S.A.
Consolidated Financial Statements - Unaudited
June 30, 1996
CONTENTS
Consolidated balance sheet (Unaudited)
Consolidated statement of income (Unaudited)
Consolidated cash flow statement (Unaudited)
Notes to the consolidated financial statements (Unaudited)
Ch$ - Chilean pesos
ThCh$ - Thousands of Chilean pesos
US$ - United States dollars
ThUS$ - Thousands of United States dollars
UF - Unidades de Fomento (a Chilean inflation - indexed, peso -
denominated monetary unit)
NOTE
Financial information for December 31, 1995 has been included with these
June 30, 1996 financial statements for comparison purposes.
<PAGE>
HEWSTER S.A.
CONSOLIDATED BALANCE SHEET
UNAUDITED
At June 30 At Dec 31
1996 1995
---- ----
US$ US$
CURRENT ASSETS
Cash 12.950 555
Accounts receivable - trade 11.743 37.597
Other accounts receivable 18.142 19.266
Due from related parties 72.521 99.199
Inventory 141.901 142.905
Taxes recoverable 19.596 19.648
Other current assets 1.702 2.023
---------- ----------
Total current assets 278.555 321.193
---------- ----------
FIXED ASSETS
Telecommunication equipment 351.638 325.618
Furniture and fixtures 42.083 37.799
Vehicles 49.585 11.537
Leased assets 320.638 305.344
Other fixed assets 51.029 47.682
---------- ----------
Subtotal 814.973 727.980
Accumulated depreciation (340.955) (254.568)
---------- ----------
Total fixed assets 474.019 473.412
---------- ----------
OTHER ASSETS
Intangible assets 17.158 15.079
Other 12.184 10.229
---------- ----------
Total other assets 29.342 25.308
---------- ----------
---------- ----------
Total assets 781.915 819.913
---------- ----------
---------- ----------
At June 30 At Dec 31
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
---- ----
US$ US$
CURRENT LIABILITIES
Bank Loans - Short Term 41.378 57.618
Accounts payable 8.743 16.516
Notes payable 456 11.761
Lease obligations - short term 195.602 103.841
Due to related parties 27.269 18
Other creditors 9.282 4.623
Withholdings and provisions 10.071 30.968
---------- ----------
Total current liabilities 292.801 225.345
---------- ----------
Long term portion of lease obligations - 144.956
Minority Interest in subsidiary company 2.127 8.542
STOCKHOLDERS' EQUITY
Capital 302.822 302.822
Accumulated reserves at beginning of year 175.896 96.397
Net profit for the year 21.563 79.499
Cumulative translation adjustment (13.294) (37.648)
---------- ----------
Total stockholders' equity 486.987 441.070
---------- ----------
Total liabilities and ---------- ----------
stockholders' equity 781.915 819.913
---------- ----------
---------- ----------
The accompanying Notes 1 to 7 are an integral
part of these financial statements
<PAGE>
HEWSTER S.A.
CONSOLIDATED STATEMENT OF INCOME
UNAUDITED
<TABLE>
<CAPTION>
For the period For the year
ended ended
June 30 December 31
1996 1995
---- ----
US$ US$
<S> <C> <C>
Revenues 408,023 969,104
Operating costs 201,820 551,654
------------- -------------
Gross margin 206,204 417,450
Administrative and selling expenses 170,563 274,473
------------- -------------
Operating profit 35,640 142,977
------------- -------------
OTHER INCOME (EXPENSES)
Interest expense (16,154) (51,179)
Other expenses (1,563) -
------------- -------------
Other income (expenses) - net (17,718) (51,179)
------------- -------------
Earnings (Loss) before taxes and minority interest 17,923 91,798
Minority interest in loss from subsidiary 6,640 3,419
Provision for income taxes (3,000) (15,718)
------------- -------------
NET INCOME FOR THE YEAR 21,563 79,499
------------- -------------
------------- -------------
</TABLE>
The accompanying Notes 1 to 7 are an integral part of these
financial statements
<PAGE>
HEWSTER S.A.
CONSOLIDATED CASH FLOW STATEMENT
UNAUDITED
For the period
ended
June 30
1996
----
US$
OPERATING ACTIVITIES
Net profit for the year 21,563
Adjustments to reconcile net income to cash
flows provided by operating activities:
Depreciation 95,747
Cash generated from net decrease in current
assets and liabilities 46,967
Minority interest (6,415)
-------------
Cash from operating activities 157,862
-------------
INVESTMENT ACTIVITIES
Fixed assets purchased (71,993)
Other (4,034)
-------------
Cash used in investment activities (76,027)
-------------
FINANCING ACTIVITIES
Increase in capital contributions -
Short term bank loans (16,240)
Leasing payments (53,195)
-------------
Cash from financing activities (69,435)
-------------
Net cash (used) provided 12,399
Effect of exchange rate changes on cash (5)
Cash and cash equivalents at January 1, 1995 555
Cash and cash equivalents at -------------
December 31, 1995 12,950
-------------
-------------
The accompanying Notes are an integral part of these
financial statements
<PAGE>
HEWSTER S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
AT JUNE 30, 1996
NOTES 1 - THE COMPANY
Hewster S.A. is a telecommunication company incorporated on July 11, 1986 and
based in the Repulic of Chile. Hewster is principally engaged in providing
systems integration services including the sale of telephones, equipment and
private automatic branch exchanges (PABX's); telecommunication consulting
services; telecommunication equipment maintenance; equipment leasing and
installation of fiber optics and related equipment.
The shareholder's of the Company are Inversiones Druma S.A. (94%), Santiago
Boza (5%) and Mr. Heman Streeter (1%).
On July 31, 1996, 99% of the Company was acquired by Hewster Servicios
Intermedios S.A. (HSI S.A.) a Chilean corporation which is 99.97% owned by
InterAmericas Communications Corporation ("ICC"), a U.S. public company.
HSI S.A. paid US$1,500,000 for 99% of the shares held by Inversiones Druma
S.A. and Santiago Boza. ICC's stragetic objective for the purchase of
Hewster, through it's wholly owned subsidiary HSI, was related specifically
to Hewster's strong revenues base and existing contracts with companies such
as Xerox and Aetna.
On September 2, 1996, HSI purchased the remaining 1% of Hewster's capital
stock from Mr. Heman Streeter for US$15,000. The legal and tax proceedings
for Hewster S.A.'s full merger into the business operations of HSI S.A. are
currently underway. The combined entity has already commenced to operate under
the name of Hewster Chile S.A.
Until the transaction date of July 31, 1996, the Company had recorded assets
at values existing at the acquisition date thereby not reflecting the sharp
decrease in market values of these assets due to technological obsolesence.
As a result, the Company has had to make a series of out-of-book adjustments
in both the income statement and balance sheet, to fairly reflect the
financial condition of it's operations. Management has identified these
out-of-book adjustments at July 31, 1996 (the date of ICC's acquisition of
Hewster) and retroactively applied them to the prior periods of December 31,
1995 and December 31, 1994 to generate the attached sets of proforma
unaudited financial statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) General
The accounting records are maintained in Chilean pesos, but the accompanying
consolidated financial statements have been translated into United States
dollars. The US dollar consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States of America ("US GAAP").
The translation to United States dollars was done in accordance with the
provisions of Statement of Financial Accounting Standards (SFAS) No. 52,
using the Chilean peso as the functional currency. This statement establishes
standards of translating foreign currency financial statements.
The Chilean peso was used as the functional currency given that this is the
currency of the primary economic environment in which the Company operates.
Under this method, the assets and liabilities have been translated at the
closing exchange rate, which at June 30, 1996 was Ch$410.73 per US$1. The
statement of income was translated at the average exchange rate and capital
and the accumulated reserves at the exchange rate on January 1, 1994 which at
the date was Ch$428.47 per US$.
The resultant translation effect was taken directly to Shareholders' equity
and is presented in the balance sheet under the caption Cumulative
translation adjustment.
b) Consolidation of subsidiary
The consolidated financial statements include the assets, liabilities and
results of Comunicaciones, Integracion y Tecnologia S.A. ("Commit"), in which
as at June 30, 1996, the
<PAGE>
Company had an ownership interest of 70%. Commit is a Chilean corporation
incorporated in 1993 for the purpose of developing and providing computer
systems integration services.
c) Recoverable taxes
The recoverable taxes represent mostly Value Added Tax (VAT) originated in
the acquisition of fixed assets.
c) Plant and equipment
These assets are recorded at cost. Depreciation is calculated by the
straight-line method over the estimated useful lives of the assets.
d) Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period.
NOTE 3 - CHANGE IN ACCOUNTING PRINCIPLES
There were no changes in accounting principles during the period ending June 30,
1996 which could have a significant effect on the consolidated financial
statements.
NOTE 4 - BALANCES WITH RELATED PARTIES
Amounts due from related parties at each year end were as follows:
<TABLE>
<CAPTION>
June 30
-------
1996
----
US$
<S> <C>
H. Streeter 32,989
S. Boza 2,213
HSI S.A. 37,319
------
Total 72,521
------
</TABLE>
Transactions with related parties had no effect on the results of operations
for the period ending June 30, 1996.
NOTE 5 - LEASING OBLIGATIONS
At June 30, 1996 the Company had the following lease obligations:
<TABLE>
<CAPTION>
Institution Currency Gross Obligation Deferred Interest Total
- ----------- -------- ---------------- ----------------- -----
Short Term Short Term Short Term
---------- ---------- ----------
US$ US$ US$
<S> <C> <C> <C> <C>
Banestado UF 212,650 17,048 195,602
</TABLE>
<PAGE>
NOTE 6 - STOCKHOLDERS' EQUITY
The changes in Stockholders' equity during the year were as follows:
<TABLE>
<CAPTION>
Accumulated
reserves and
cumulative Net Profit
translation for
Capital adjustment the yeer Total
------- ------------- ---------- -----
US$ US$ US$ US$
<S> <C> <C> <C> <C>
Balances at December 31, 1995 302,822 53,375 84,873 441,070
Capital increases - - - -
Cumulative translation adjustment 24,354 - 24,354
Net profit for the year - - 21,563 21,563
------- ------ ------- -------
Balances at June 30, 1996 302,822 77,729 106,436 486,987
------- ------- -------- -------
</TABLE>
NOTE 7 - SUBSEQUENT EVENTS
On July 1, 1996 Hewster S.A. purchased the remaining 30% of the common stock
of Comunicaciones, Integracion y Tecnologia S.A. ("Commit") for US$10,000.
