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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
June 24, 1996 (June 5, 1996)
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A+ Network, Inc.
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(Exact name of registrant as specified in its charter)
Tennessee 0-22238 62-1225322
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(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification
Incorporation) Number)
40 South Palafox Street
Pensacola, Florida 32501
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(Address of principal executive offices) (Zip Code)
(904) 438-1653
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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Page 1 of ___ pages
Exhibit Index located on Page ___
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ITEM 5. Other Events.
On June 5, 1996, A+ Network, Inc. (the "Company") consummated the
acquisition of Page East, Inc. ("Page East"), an affiliate headquartered in
Windsor, North Carolina.
The Company acquired all of the outstanding stock of Page East for a
purchase price of $14,886,000 million, paid by delivery of cash and shares of
the Company's common stock. The consideration paid in the transaction was
determined through arm's-length negotiations between the management of the
Company and the sole shareholder of Page East. The cash portion of the
purchase price was provided by cash on hand.
The assets acquired by the Company in the transaction were used by Page
East to provide paging services, and the Company intends to continue such use of
the acquired assets.
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PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed financial information has been
prepared to present the effects of the merger (the "Merger") of A+
Communications Inc. and Network Paging Corporation to form A+ Network, Inc.
("A+ Network") and the sale of the $125,000,000, 11 7/8% Senior Subordinated
Notes due 2005 (the "Notes").
The accompanying unaudited pro forma condensed statement of operations for the
year ended December 31, 1995 combine the historical statements of operations of
A+ Network and Network Paging Corporation ("Network") as if the Merger and the
sale of the Notes, which actually occurred on October 24, 1995, had occurred on
January 1, 1995.
The unaudited pro forma condensed statement of operations gives effect to the
Merger using the purchase method of accounting, and is based upon the final
allocation of the acquisition costs and includes the adjustments described in
the notes attached hereto.
The unaudited pro forma condensed statement of operations does not purport to
represent what the Combined Company's results of operations would have been had
the Merger and the sale of the Notes occurred on January 1, 1995 or for any
future period or date. The unaudited pro forma condensed financial information
should be read in conjunction with A+ Network's historical consolidated
financial statements and the consolidated unaudited financial statements of
Network and the notes thereto included elsewhere herein.
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A+ NETWORK, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Historical
-------------------- Pro Forma Combined
A+ Network Network Adjustments Company
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(in thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues:
Mobile communication services $ 41,948 $24,390 $ - $ 66,338
Equipment sales 4,024 4,321 - 8,345
Telemessaging services 11,360 - - 11,360
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Total revenues 57,332 28,711 - 86,043
Cost of equipment sales 7,878 4,066 - 11,944
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49,454 24,645 - 74,099
Costs and expenses:
Operating expenses - exclusive
of depreciation and
amortization 11,584 5,533 (359) D 16,758
Depreciation & amortization 14,835 3,026 (304) A 25,052
7,495 B
Selling 10,937 7,401 (38) D 18,300
General & administrative 21,566 12,023 (1,498) D 27,572
147 E
(4,666) C
Reorganization 669 - (669) H -
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Total costs and expenses 59,591 27,983 108 87,682
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Operating loss (10,137) (3,338) (108) (13,583)
Interest expense (4,334) (936) 5,270 F (15,391)
(15,391) G
Interest income 626 176 - 802
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Loss before income taxes
and extraordinary item (13,845) (4,098) (10,229) (28,172)
Income taxes - (707) 707 I -
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Loss before extraordinary item (13,845) (4,805) (9,522) (28,172)
Extraordinary item (607) - - (607)
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Net income (loss) $(14,452) $(4,805) $(9,522) $(28,779)
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Weighted average shares
outstanding 10,228 10,228
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Loss per share $ (1.41) $ (2.81)
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</TABLE>
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A Adjustment to eliminate amortization expense for intangibles recorded by
Network before the Merger.
B To record amortization expense related to intangibles for the period from
January 1, 1995 to October 24, 1995.
C Adjustment to eliminate compensation costs that would not have been incurred
had the Merger occurred on January 1, 1995.
D Adjustment to eliminate specific operating and nonrecurring expenses that
would not have been incurred had the Merger occurred on January 1, 1995. Such
savings are specifically identified as follows:
<TABLE>
<S> <C>
Reduction in long distance telephone charges $ 267,000
Redundant paging terminals and related telephone expenses 92,000
Redundant yellow page advertising expense 38,000
Salary costs of personnel not to be retained by the Combined
Company based on analysis of Combined Company staffing
requirements 1,498,000
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Total $1,895,000
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</TABLE>
E Adjustment to provide for changes in compensation of certain executive
officers pertaining to employment contracts entered into at the time the
Merger closed.
F Adjustment to remove interest expense applicable to all existing long-term
debt which was repaid with the proceeds from the sale of the Notes.
G Reflects interest expense on the Notes at 11 7/8% (plus amortization of
debt issuance costs of approximately $4.6 million and discount of $907,500).
No adjustment has been made to reflect interest income on the net proceeds
from the sale of the Notes.
H To give effect to elimination of the non-recurring reorganization expenses
incurred by A+ Network, Inc. as a result of the Merger.
I Adjustment to reverse the income tax provision applicable to Network, as
its taxable income would be offset by A+ Network's net operating losses for
income tax purposes had the merger occurred on January 1, 1995.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS
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(c) Exhibits
<TABLE>
Exhibit
Number Description
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<S> <C>
2.1 Stock Purchase Agreement, dated November 9, 1995, by and among
Florida Network, U.S.A., Inc., Page East, Inc. and C.T. Spruill
(Incorporated by reference to Exhibit 10.1(q) filed with the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995)
</TABLE>
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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 hereunto duly authorized.
A+ NETWORK, INC.
By: /s/ Randy K. Schultz
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Randy K. Schultz, Vice President and
Chief Financial
Officer
Date: June 24, 1996
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
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<S> <C>
2.1 Stock Purchase Agreement, dated November 9, 1995, by and among
Florida Network, U.S.A., Inc., Page East, Inc. and C.T. Spruill
(Incorporated by reference to Exhibit 10.1(q) filed with the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995)
</TABLE>
