UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _______________
Commission file number:1-13356
AMERIDATA TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1302103
(State or other jurisdiction (I.R.S.Employer Identification No.)
of incorporation)
700 Canal Street, Stamford, Connecticut 06902
(203) 357-1464
(Address, including zip code and telephone number, including area code, of
principal executive offices)
(Former name, former address and former fiscal year, if changed since
last report)
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.01 per share ("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 ____.
As of March 31, 1996, there were 22,310,509 shares of AmeriData Technologies,
Inc. Common Stock, par value $.01 per share outstanding.
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AMERIDATA TECHNOLOGIES, INC.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended March 31, 1996
INDEX
Part I Page
1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of
March 31, 1996 and December 31, 1995. . . . . . . . . . . . . . . . . 1
Condensed Consolidated Statements of Income for the
Three Month Periods Ended March 31, 1996 and 1995. . . . . . . . . . 2
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1996 and 1995 . . . . . . . . . . . . . 3
Notes to Condensed Consolidated Financial Statements . . . . . . . . 4
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . 7
Part II - Other Information . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports On Form 8-K
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AMERIDATA TECHNOLOGIES, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, December 31,
1996 1995
------------ ------------
(in thousands)
ASSETS
Current Assets:
Cash and cash equivalents $ 34,334 $ 39,201
Cash, restricted 1,218 2,236
Accounts receivable, net 300,900 287,977
Inventories, primarily finished goods 164,286 171,070
Deferred income taxes 8,599 8,685
Other current assets 30,445 27,576
----------- -----------
Total current assets 539,782 536,745
Property and equipment, net 50,932 46,828
Excess cost of businesses over fair value
of net assets acquired, net 113,147 110,472
Other intangible assets, net 1,311 1,514
Other assets 8,155 14,825
----------- ------------
$ 713,327 $ 710,384
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Revolving line of credit $ 253,167 $ 286,012
Current portion of long-term debt 48,731 39,432
Accounts payable 138,395 133,682
Accrued expenses 45,363 32,327
Other current liabilities 9,755 10,573
----------- -----------
Total current liabilities 495,411 502,026
Long-term debt 12,206 11,605
Other, principally deferred income taxes 9,847 8,922
AmeriData-obligated mandatorily redeemable
preferred securities of subsidiary
AmeriData Delaware, L.L.C. (Note 6)* 30,880 30,880
Stockholders' Equity:
Preferred stock:
Authorized, 10,000,000 shares,
par value $.01 per share, none issued
Common stock:
Authorized, 50,000,000 shares,
par value $.01 per share,
issued 22,310,509 shares and 21,592,507 shares 223 216
Additional paid-in capital 127,128 122,531
Retained earnings 38,319 34,868
Treasury stock at cost, 23,074 shares (387) (387)
Foreign currency translation adjustments (300) (277)
----------- ------------
Total stockholders' equity 164,983 156,951
----------- ------------
$ 713,327 $ 710,384
============ ============
See Accompanying Notes To Condensed Consolidated Financial Statements.
*As described in the footnotes to the financial statements, the sole asset of
AmeriData Delaware, L.L.C. consists of $30,880 principal amount of
8% convertable subordinated debentures of AmeriData Technologies, Inc.
due May 31, 2003
1
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AMERIDATA TECHNOLOGIES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share data)
Three Months Ended
March 31,
------------------------------
1996 1995
---- ----
Net revenues
Computer products $ 405,905 $ 249,472
Computer services 46,894 25,429
-------------- -------------
Total net revenues 452,799 274,901
-------------- -------------
Cost of revenues
Computer products 361,725 222,235
Computer services 28,330 16,415
-------------- -------------
Total cost of revenues 390,055 238,650
-------------- -------------
Gross margin 62,744 36,251
Selling, general and administrative expenses 47,857 28,112
Amortization of intangible assets 1,316 1,116
-------------- -------------
Operating income 13,571 7,023
Interest expense 8,007 4,349
-------------- -------------
Income before income taxes 5,564 2,674
Provision for income taxes 2,113 1,070
-------------- -------------
Net income $ 3,451 $ 1,604
============== =============
Net income per common and common equivalent share:
Primary $ 0.15 $ 0.08
============== =============
Fully Diluted $ 0.15 $ 0.08
============== =============
Weighted average number of shares used in computation:
Primary 22,584 21,013
============== =============
Fully diluted 26,566 21,013
============== =============
See Accompanying Notes to Condensed Consolidated Financial Statements
2
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AMERIDATA TECHNOLOGIES, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Three Months Ended
March 31,
1996 1995
---------- ---------
(in thousands)
Cash flows from operating activities:
Net income $ 3,451 $ 1,604
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Depreciation and amortization 4,702 3,313
Provision for deferred income taxes 1,084 141
Other non cash charges 823 858
Changes in operating assets and liabilities,
net of effects of acquisitions:
Accounts receivable (13,142) 26,206
Inventories 6,509 6,149
Other current assets 3,438 (866)
Other assets 99 (863)
Accounts payable and accrued expenses 17,993 (63,912)
Other liabilities (766) 32
---------- ---------
Cash provided by (used in) operating activities 24,191 (27,338)
---------- ---------
Cash flows from investing activities:
Acquisition of businesses (904)
Purchase of property and equipment (7,868) (7,064)
Other (100)
---------- ---------
Cash used in investing activities (8,872) (7,064)
----------- ---------
Cash flows from financing activities:
Net proceeds from issuance of common stock and
exercise of warrants and options 556 10,477
Proceeds from issuance of long-term debt 14,981 3,272
Revolving line of credit borrowings, net (32,859) 14,184
Repayment of debt (2,815) (1,509)
----------- ---------
Cash provided by (used in) financing activities (20,137) 26,424
----------- ---------
Effect of exchange rate changes on cash (49)
Net decrease in cash and cash equivalents (4,867) (7,978)
Balance at the beginning of the period 39,201 17,927
----------- ---------
Balance at the end of the period $ 34,334 $ 9,949
=========== =========
Supplementary cash flow information:
Interest paid $ 7,160 $ 3,738
Income taxes paid 582 18
See Accompanying Notes to Condensed Consolidated Financial Statements
3
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AMERIDATA TECHNOLOGIES, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Note 1 - The Company
AmeriData Technologies, Inc. is a leading international provider of
PC-based computer and networking products and services, and business and
technology consulting services, to commercial, governmental and educational
organizations. The Company operates in over 140 locations through four business
units: Systems and Services, AmeriData Global, AmeriData Consulting and
AmeriData Computer Rental. The Company's Systems and Services unit provides
product delivery, systems integration, networking services, technical support,
and maintenance and outsourcing services, principally through five regional
distribution centers throughout the United States. AmeriData Global provides
products and services in the United Kingdom, Canada, Mexico, Norway, Austria,
Portugal, Greece and Denmark, similar in nature to the Systems and Services
unit. AmeriData Consulting provides advanced systems consulting and application
development services. AmeriData Computer Rental provides short-term rental of PC
equipment and networks.
Since 1992, the Company has engaged in a program of acquiring the
stock or assets of other companies that provide computer products and services.
These companies have been acquired with cash, common stock, the assumption or
refinancing of existing indebtedness or combinations of the foregoing.
Substantially all of the Company's revenues, net income and assets are derived
from the numerous businesses acquired through this program.
The Company's financial information as of March 31, 1996, and for
the interim periods ended March 31, 1996 and 1995 included herein is unaudited;
however, such information reflects all adjustments consisting of normal
recurring accruals which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods. The results of operations
for the three month periods ended March 31, 1996 are not necessarily indicative
of the results to be expected for the full year. These unaudited financial
statements should be read in conjunction with the Company's most recent audited
financial statements from which the December 31, 1995 balance sheet included
herein is derived.
Certain 1995 amounts have been reclassified to conform to the
presentation used in 1996.
Note 2 - Intangible Assets
The excess cost of businesses over the fair value of net assets
acquired (goodwill) is being amortized using the straight-line method over
periods ranging from 20 to 40 years from the date of acquisition. The carrying
value of goodwill is reviewed for each entity acquired if the facts and
circumstances suggest that it may be impaired. If this review indicates that
goodwill will not be recoverable, as determined based on the undiscounted cash
flows from operating income of the entity acquired over the remaining
amortization period, the Company's carrying value of the goodwill will be
reduced by the estimated shortfall of cash flows.
Other intangible assets consist primarily of distribution rights
relating to emergency alerting products, covenants not-to-compete, and deferred
engineering costs. Distribution rights are amortized over the 10-year life of
the related agreement using the straight-line method and the covenants
not-to-compete are amortized over periods of two to four years. Deferred
engineering costs are amortized over earned revenues not to exceed a period of
five years.
Note 3 - Completed Acquisitions
In February 1996, the Company completed the acquisition of all of
the common stock of Brenner Technology, Inc. ("Brenner") in exchange for
approximately 450,000 shares of common stock of the Company, valued at $4.1
million. Approximately 132,000 shares are held in escrow and will be released to
the sellers over a three year period and charged to compensation expense upon
attainment of specified profit objectives as defined. The common stock issued in
connection with this acquisition is unrestricted stock and, accordingly, the
value of the stock as stated above reflects the market value at the time of
issuance. Brenner provides advanced business and technology consulting services
in the New York metropolitan market.
The following unaudited pro forma combined information shows the
results of the Company's operations for the three months ended March 31, 1996
and 1995 as though all of the acquisitions in 1996 and 1995 had occurred as of
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the beginning of the respective periods. The unaudited operating results of the
companies prior to the date of acquisition have been derived from the historical
financial statements of the acquired companies. The pro forma results are
presented for comparative and informational purposes and are not necessarily
indicative of the results that could have been achieved if the transactions had
occurred at the beginning of the respective periods or that may result in the
future and also do not reflect the results of operations which would be
anticipated under the Company's ownership.
Unaudited operating data:
Three Months Ended March 31,
1996 1995
(in thousands, except per share data)
Net revenues $ 453,645 $ 383,410
Gross margin 63,081 55,088
Operating expenses 49,173 44,544
Interest expense 8,003 5,346
Net income $ 3,508 $ 2,252
Net income per common and common
equivalent share (fully diluted) $ 0.15 $ 0.10
============ ============
Weighted average number of shares
used in computation (fully diluted) 26,725 21,740
============ ============
Note 4 - Pending Sale of Assets
The Company's radio stations in Waco, Texas are currently under
contract for sale. The approximate selling price is $3.5 million, which exceeds
the carrying value of the investment in the radio stations by approximately $1.7
million. The sale is subject to approval by the FCC and is expected to close in
the second quarter of 1996.
The Company's investment in Radio Equity Partners, Ltd. ("REP"), is
included in other current assets (carrying value $6.3 million). REP is currently
under contract for sale and the Company expects to receive approximately $11
million in cash upon closing. The sale is subject to approval by the FCC and is
expected to close by December 31, 1996.
Note 5 - Debt Transactions
The Company is financing its new management information system
("MIS") through IBM Credit Corporation ("ICC"). The Company has financed an
aggregate of $6.8 million, of which $6.0 million was outstanding as of March 31,
1996. The Company has been advised by ICC that they will finance the remaining
cost of the project.
On March 29, 1996, the Company borrowed $10 million from ICC
under a short-term note agreement. The note bears interest at the rate of prime
plus .625%. The note matures as follows: the greater of $2.5 million or the
proceeds from the sale of the radio stations in Waco, Texas on or before May 31,
1996; the greater of $4 million or the proceeds from the potential sale of
investment in REP by August 31, 1996; and the remaining balance, if any, by
December 31, 1996. The Company has given ICC a security interest in its
investment in REP and has pledged the stock of the Waco radio station subsidiary
to ICC.
Note 6 - AmeriData-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary AmeriData Delaware, L.L.C. ("Delaware")
In June 1995, Delaware, a special purpose limited liability company
which is a wholly owned subsidiary of the Company, completed the sale of
1,235,200 shares of 8% Convertible Fixed Life Aggregated Securities with a
liquidation preference of $25 per security ("Preferred Securities") for net
proceeds of approximately $28.2 million. The underwriting discount and other
5
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expenses of this offering approximated $2.7 million. The proceeds of the
offering were loaned to the Company in exchange for a subordinated debenture
with payment terms substantially similar to the Preferred Securities. The amount
loaned to the Company represents the sole asset of Delaware. Distributions on
the Preferred Securities are to be made monthly at the annual rate of 8% of the
liquidation preference and are included in interest expense in the consolidated
financial statements. Under the terms of the underlying agreements the Company
unconditionally guarantees the obligations of Delaware. The Company has the
option to defer distributions on the Preferred Securities for up to 18 months.
The Preferred Securities are guaranteed by the Company and are
convertible into shares of the Company's common stock at 2.851 shares for each
Preferred Security. The Preferred Securities are subject to mandatory redemption
on May 31, 2003 unless previously converted or redeemed by the Company. The
Company may call for the redemption of the Preferred Securities after June 10,
1998 and up to the maturity date at a redemption price of 105.0 percent of the
liquidation preference, declining on each subsequent annual anniversary date by
one percent to 100.0 percent of the liquidation preference on May 31, 2003.
Costs incurred in connection with the issuance of the Preferred Securities are
included in other assets and are being amortized over the 8 year life of the
issue; such amortization is included in interest expense.
Note 7 - Net Income Per Common Share and Common Equivalent Share
Net income per common share and common equivalent share is
calculated by dividing net income by the weighted average number of common and
common equivalent shares outstanding during the period. For primary earnings per
share, common equivalent shares are shares which would be issuable upon the
exercise of outstanding stock options and warrants, reduced by the number of
shares assumed to be purchased by the Company with the proceeds obtained thereby
at the average market price during the period. For the fully diluted earnings
per share calculation, shares are assumed to be purchased by the Company at the
higher of the average or period end market price and, therefore, this
calculation may include additional equivalent shares. In addition this
calculation includes the Preferred Securities on an "if converted" basis; net
income is increased by the net cost of the distribution and amortization of
issue costs and average shares outstanding increased to give effect to the
conversion of the Preferred Securities.
Note 8 - Supplemental Balance Sheet Information
During the three months ended March 31, 1996, the Company's net
investment in property and equipment increased by $7.9 million, consisting of
$2.9 million of additions to the rental portfolio, $2.0 million of additions
relating to the new management information system, and $3.0 million of additions
relating to equipment to support expanded operations
6
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Background
The Company is a leading international provider of computing
and networking products and services to commercial, governmental and educational
users. The Company was formed in 1990 to design, market and sell emergency
alerting products and systems to industrial and governmental users. In 1992, the
Company acquired several entities which provided computer products and services
to industrial and governmental users. During 1995, 1994 and 1993, the Company
completed the acquisition of numerous additional entities including the
acquisition in 1995 of certain computer products and services businesses from
Control Data in the United Kingdom, Canada, Mexico, Norway, Austria, Portugal,
Greece and Denmark. In addition, during 1994, the Company established AmeriData
Consulting, Inc. ("AmeriData Consulting" or "ACI"), and AmeriData Computer
Rental ("AmeriData Rental" or "ACR") which entities acquired businesses in the
consulting and computer and related equipment rental industries, respectively.
The results of operations of the acquired businesses are included in the
statements of income from their respective dates of acquisition. All of these
acquisitions were effected through the issuance of approximately 3.85 million
shares of Common Stock and the payment of approximately $106 million and have
resulted in approximately $121 million of excess cost of businesses over fair
value of net assets acquired (goodwill). The carrying value of goodwill is
reviewed for each entity acquired if facts and circumstances suggest that the
goodwill may be impaired. If this review indicates that goodwill may not be
recoverable, the Company's carrying value of goodwill will be reduced. In
connection with such acquisitions, subsidiaries of the Company assumed or
refinanced inventory and receivables-based credit facilities.
The Company derives its revenues primarily from the sale of computer
products and service offerings. The service offerings include, principally,
computer rental, consulting, maintenance contracts, network cabling, network
design and installation, systems integration and training. Cost of service
revenue includes, primarily, salaries and related costs of consultants and
technical support personnel, and depreciation of computer equipment used in
rental operations.
Results of Operations
Three Months ended March 31, 1996 Compared to Three Months Ended March 31, 1995.
(%)
1996 1995 Change Change
---- ---- ------ ------
Net Revenues ($000):
Computer products 405,905 249,472 156,433 63%
Computer services 46,894 25,429 21,465 84%
------------ ----------- ----------
Total net revenues 452,799 274,901 177,898 65%
Cost of revenues ($000):
Computer products 361,725 222,235 139,490 63%
Computer services 28,330 16,415 11,915 73%
------------ ----------- ----------
Total cost of revenues 390,055 238,650 151,405 63%
Gross margin ($000):
Computer products 44,180 27,237 16,943 62%
Computer services 18,564 9,014 9,550 106%
------------ ----------- ----------
Total gross margin 62,744 36,251 26,493 73%
============ =========== ==========
Gross margin percentage:
Computer products 10.9% 10.9%
Computer services 39.6% 35.4%
Total gross margin percentage 13.9% 13.2%
Operating income percentage 3.0% 2.6%
7
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For the three months ended March 31, 1996 total revenues
increased to $452.8 million from $274.9 million in the comparable period. The
increase in computer products revenue is attributable to acquisitions made in
the second and third quarters of 1995 and an internal growth rate of
approximately 18%. The increase in gross margin percentage for the computer
service business reflects the Company's emphasis on growing value added services
which carry higher margins.
Selling, General, and Administrative ("SG&A") expenses
increased to $47.9 million for the three months ended March 31, 1996 from $28.1
million for the three months ended March 31, 1995, as a result of the Company's
significantly increased business activities. SG&A expenses in the first quarter
of 1996 were 10.6% of revenues as compared to 10.2% of revenues for the
comparable 1995 period.
Amortization of intangible assets increased to $1.3 million
for the three months ended March 31, 1996 from $1.1 million in the comparable
1995 period. This increase is caused by the additional goodwill amortization of
the acquired businesses.
As a result of the above, operating income as a percent of
revenue increased to 3.0% for the three months ended March 31, 1996, from 2.6%
in the comparable 1995 period.
Interest expense for the three months ended March 31, 1996
increased to $8.0 million from $4.3 million for the comparable period in 1995.
The increase in interest expense in 1996 was caused mainly by increased advances
under the Company's working capital lines of credit utilized to finance the
Company's significantly increased business activities, financing for additional
capital expenditures, and financing associated with businesses acquired in the
second and third quarters of 1995.
The provision for income taxes for the three months ended
March 31, 1996, was $2.1 million as compared to $1.1 million for the comparable
1995 period. The Company's effective income tax rate in 1996 and 1995 was 38.0%
and 40.0%, respectively, which is greater than the statutory rate of 34%
primarily due to the effect of state income taxes, net of federal benefits, and
foreign income taxes.
Due to the changes noted above, net income increased $1.8
million to $3.4 million for the three months ended March 31, 1996 from $1.6
million in the comparable 1995 period.
Primary and fully diluted net income per share for the three
months ended March 31, 1996 was $.15, as compared to $.08 for the comparable
1995 period. Primary and fully diluted average shares used to compute earnings
per share were 22,584,000 and 26,566,000, respectively for the three months
ended March 31, 1996 and 21,013,000 and 21,013,000 respectively for the three
months ended March 31, 1995. The calculation of fully diluted shares for the
three months ended March 31, 1996 reflects the "if converted" method
attributable to the Preferred Securities.
Liquidity and Capital Resources
Three months ending March 31, 1996:
The Company's cash position was $34.3 million at March 31, 1996, a
decrease of $4.9 million as compared to the balance at December 31, 1995. Net
cash provided by operating activities was $24.2 million resulting mainly from
increases in accounts payable and accrued expenses of $18.0 million and a
decrease in inventories of $6.5 million, partially offset by an increase in
accounts receivable of $13.1 million. Net income plus other non-cash charges
totaling $10.0 million provided cash to fund the aforementioned operating
activities. In addition, other current assets decreased by $3.4 million
primarily related to net reductions in amounts due under vendor incentive
programs.
Cash used in investing activities totaled $8.9 million. Investing
activities include cash used for the acquisition of property and equipment
totaling $7.9 million, including $2.9 million for computer rental equipment,
$2.0 million for the new management information system, and $3.0 million for
equipment to support existing operations and acquired businesses.
These investing activities were financed by net proceeds of $15.0
million from the issuance of debt, and $.6 million from the exercise of warrants
and options. During the three months ended March 31, 1996, net revolving line of
credit repayments totaled $32.9 million, and repayments of debt amounted to $2.8
million.
During 1994 the Company entered into an agreement with IBM Credit
Corporation, as amended (the "ICC Facility"), pursuant to which the Company,
through its subsidiaries, may borrow, subject to available collateral up to $425
million, of which $20 million is to be used for acquisition of rental equipment.
Under the terms of this facility ICC gives the Company approximately 30 to 45
days interest-free to pay for inventory purchases. Thereafter, interest accrues
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at a rate of prime plus .375% and the obligation is reclassified from accounts
payable to revolving line of credit in the consolidated balance sheet. The ICC
Facility is guaranteed by the Company and contains financial covenants with
respect to consolidated tangible net worth, as defined, debt to tangible net
worth, working capital and net income to revenue tests. At March 31, 1996, the
Company was in compliance with such covenants and expects to continue to remain
in compliance. The ICC Facility limits the Company's subsidiaries' ability to
pay dividends or to make loans to the Company to amounts not to exceed 50% of
such subsidiaries' cumulative net income. At March 31, 1996, approximately $15.2
million of such subsidiaries' cumulative net income was available to pay
dividends or advance loans to the Company. Management believes that such
limitations will not have a material adverse effect on the Company's liquidity.
At March 31, 1996, utilization under the ICC Facility aggregated $304.0 million
of which $71.5 million is included in accounts payable and $232.5 million is
included in "revolving line of credit."
In connection with the expansion of the Company's operations outside
of the United States, the Company, in October 1995, entered into a financing
agreement with IBM Canada, Limited to provide working capital for the Canadian
operations of the Company. The facility permits the Company to borrow up to CDN
$10 million, subject to available collateral, and is secured by the assets of
the Canadian subsidiary. In addition, the Company has obtained a working capital
facility for the Company's United Kingdom operations which is secured by the
assets of the United Kingdom subsidiary. The facility is for $15 million,
subject to available collateral. The Canadian facility expires October 1997, and
the accounts receivable portion of the facility for the United Kingdom
subsidiary expires June 15, 1996 unless extended by ICC. The Company has been
informed by ICC that this facility is to be replaced with a comparable facility
from a new ICC finance affiliate in the United Kingdom. In the event ICC is
unable to replace this facility the Company believes that there are available
alternatives to finance the working capital needs of the United Kingdom
subsidiary. The remaining international operations are financed through
internally generated cash and local bank credit facilities which are not
significant in the aggregate.
At March 31, 1996 cash on hand, plus $12.3 million of available
collateral on the ICC facilities approximated $46.6 million, and $8.8 million
was available to finance future additions to the rental portfolio.
Although the ICC Facility matures in March 1997, all borrowings
thereunder have been classified as current liabilities at March 31, 1996. Based
on the projected revenue growth in 1996, the projected resulting increase in
inventories and accounts receivable levels will cause short-term borrowings to
be higher than the amounts outstanding at March 31, 1996. Management believes
that the existing ICC Facility together with available cash from operations will
be sufficient to fund this increased level of business.
In addition to the ICC Facility, the Company entered into an
agreement with NationsCredit Commercial Corporation ("NCC") with financial
covenants similar to those contained in the ICC Facility. The NCC facility
allows the Company to purchase up to a maximum of $50 million of inventory from
selected suppliers. Under the terms of this facility, NCC gives the Company from
30-60 days, interest free, to pay for inventory purchased and NCC has a lien on
such inventory purchased and certain accounts receivable. The NCC facility
matures in December 1996, and is automatically renewable unless canceled in
writing by either party giving 90 days written notification prior to the
termination date. At March 31, 1996, the aggregate liability under the NCC
facility was approximately $27.0 million and such amount is included in accounts
payable.
During 1995, AmeriData Consulting, Inc., a wholly owned subsidiary
of the Company, entered into a $6 million, three-year secured revolving credit
facility with Chemical Bank to finance working capital requirements necessary to
fund the revenue growth of the Company's consulting subsidiary. The Chemical
Bank agreement contains financial covenants with respect to tangible net worth,
debt to tangible net worth, debt coverage ratios, and limits the amount of
dividends and loans to the Company to 50% of the subsidiaries' cumulative net
income. At March 31, 1996 outstanding borrowings under this facility amounted to
$3.4 million; and $1.5 million was available for additional borrowings.
The Company has received a commitment from Heller Financial Company
pursuant to which the Company may borrow up to $4.5 million to finance capital
equipment acquired. The acquired assets will be the sole collateral for any such
borrowings. The Company has drawn down approximately $1.2 million through the
first quarter of 1996.
At March 31, 1996, total amounts outstanding under all ICC
facilities, the NCC agreement and Chemical agreement aggregated $367.5 million.
Subject to available collateral, the Company may borrow an additional $122.8
million under these facilities. Substantially all of the participating
subsidiary company assets are pledged as collateral for the ICC facilities, NCC
facility, and Chemical Bank facility and in addition to the Company's guaranty
of the ICC facility and the NCC facility, the Company also guarantees the
various other credit facilities of its subsidiaries.
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The Company is installing a new management information system
("MIS"), which installation is expected to be completed during 1997. The cost of
the MIS system is estimated to be between $14 million and $17 million, of which
$8.3 million was incurred as of March 31, 1996. The Company has financed
approximately $6.8 million of this project with ICC and has been advised by ICC
that it will finance the balance of this project.
During 1996, the Company's $26.9 million 7.5% subordinated debt will
mature. On March 29, 1996 the Company borrowed $10 million from ICC and paid
$11.9 million of the debt maturing March 31, 1996 on April 1, 1996. The balance
of the debt is payable on June 30, 1996. The $10 million borrowed from ICC on
March 29, 1996, bears interest at prime plus .625%. Under the terms of the note,
the greater of the net proceeds from the sale of the Company's radio station in
Waco, Texas or $2.5 million is due by May 31, 1996, the greater of the proceeds
from the sale of the Company's investment in Radio Equity Partners Limited
Partnership ("REP") or $4.0 million by August 31, 1996, and the balance on or
before December 31, 1996. The note also provides for repayment of the
outstanding balances upon the sale of equity or issuance of indebtedness by the
Company. The Company has given ICC a security interest in its investment in REP
and has pledged the stock of the Waco radio station subsidiary to ICC.
Management believes that the remaining obligation under the subordinated debt
will be satisfied through available cash flow from operations or borrowings
under the ICC Facility.
Management believes that cash on hand together with available
borrowings under the ICC Facility and cash flows from operations will be
sufficient to satisfy the Company's cash requirements for the next twelve months
and the ICC Facility for its rental unit will be sufficient to fund 1996
acquisitions of rental equipment. Thereafter, the Company will be required to
raise additional funds (debt or equity) to satisfy its increasing capital needs.
The Company intends to acquire additional companies to complete the
nationwide build-out of its Systems and Services Group, as well as the expansion
of AmeriData Consulting and AmeriData Computer Rental. The Company is also
exploring acquisitions of companies or businesses in foreign countries.
Additional acquisitions will require additional capital which the Company
intends to obtain through either additional equity or debt transactions. The
Company believes that such sources of funds will be available as required,
however, no assurances can be given that such funds will be obtained. The
inability to secure additional capital would slow the Company's acquisition
program.
Impact of Inflation and Seasonality
In the opinion of Management, seasonal variations are not
significant. Inflation has not had a material effect on the operations of the
Company.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
11
<PAGE>
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, on this 14 th day of May,
1996.
AMERIDATA TECHNOLOGIES, INC.
By: /s/ Gerald A. Poch
Gerald A. Poch
Co-Chairman of the Board and
Co- President
By:/s/ John L. Harvatine
John L. Harvatine,
Vice President-Chief Financial Officer
By:/s/ Richard H. McDevitt
Richard H. McDevitt,
Vice President
(Principal Accounting Officer)
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