<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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): FEBRUARY 2, 1999
AMERILINK CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 0-24334 31-1409345
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
1900 E. DUBLIN-GRANVILLE ROAD, COLUMBUS, OHIO 43229
(Address of principal executive offices, including zip code)
(614) 895-1313
(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 2, 1999, AmeriLink Corporation (the "Company"), through a
wholly-owned subsidiary, MCC Acquisition Corp. ("MAC"), acquired Midwest
Computer Cable, Inc. ("MCCI"), a commercial cabling installation firm
headquartered in Des Moines, Iowa. The transaction was consummated pursuant
to an Agreement and Plan of Merger, dated February 2, 1999 (the "Merger
Agreement"), among the Company, MAC, MCCI, and the principal shareholders
of MCCI, Larry Kendall, Dayton Kendall and Linda Kendall. The Merger
Agreement was supplemented by a Short-Form Merger Agreement of even date
among the Company, MAC and certain management employees who were the
remaining shareholders of MCCI.
The consideration delivered to the shareholders of MCCI in connection with
the acquisition consisted of $4.4 million in cash and 500,000 common shares
(without par value) of the Company valued at $3,565,000.
For the year ended December 31, 1998, MCCI recorded net revenues of
$9,806,935 and income from operations of $1,741,039 before deducting
special compensation expense of $1,369,575 in connection with the
declaration of a non-cash bonus in the form of MCCI common stock payable to
certain management employees.
Pursuant to the Merger Agreement, MCCI was merged with and into MAC (the
"Merger") and the separate corporate existence of MCCI ceased. Following
the Merger, MAC changed its name to "Midwest Computer Cable, Inc." and will
continue to conduct business as a wholly-owned subsidiary of the
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<PAGE>
Company. The terms of the Merger Agreement and the consideration delivered
thereunder were established by arms-length negotiations among the parties.
The MCCI acquisition has been accounted for as a purchase. The excess of
the total cost over the fair value of the net assets acquired will be
amortized under the straight-line method for twenty-five years.
Also pursuant to the Merger Agreement, MCCI entered into three-year
employment agreements with Larry Kendall, who shall continue to serve as
the President of MCCI, and certain management employees of MCCI. The
Company has guaranteed the payment and performance of all obligations of
MCCI under those employment agreements. The Company issued a press release
on January 28, 1999, announcing imminent plans to consummate the Merger,
and issued another press release on February 2, 1999, announcing the
completion of the Merger.
MCCI provides network design, maintenance and installation services for
premises wiring cabling systems through six offices located in Iowa,
Kansas, Ohio and Texas. Upon completion of the Merger, the Company acquired
all the assets of MCCI, including leases, equipment and inventory. The
Company intends to continue to use the assets acquired pursuant to the
Merger as they were used prior to the Merger, subject to such changes as
the Company may deem appropriate in the future.
The foregoing description of the Merger is not intended to be complete and
is qualified in its entirety by reference to the Merger Agreement. A copy
of the Merger Agreement is incorporated by reference to exhibit 2 to the
Company's December 27, 1998 quarterly report on Form 10-Q dated February 2,
1999 which was filed on February 9, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Page
(a) Financial Statements of Business Acquired:
Audited financial statements of Midwest Computer Cable,
Inc., as of and for the year ended December 31, 1998. 4
(b) Pro Forma Financial Information:
Introduction to unaudited pro forma consolidated financial
statements. 14
Unaudited pro forma consolidated balance sheet as of
December 27, 1998. 15
Unaudited pro forma consolidated statement of income
for the thirty-nine weeks ended December 27, 1998. 16
Unaudited pro forma consolidated statement of income
for the fifty-two weeks ended March 29, 1998. 17
Notes to unaudited pro forma consolidated financial
statements. 18
(c) Exhibits: ( Exhibits marked " *" have been previously filed) 19
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<PAGE>
Exhibit No. Description
2 Agreement and Plan of Merger, dated February 2, 1999, among Larry
Kendall, Dayton Kendall, Linda Kendall, Midwest Computer Cable,
Inc., AmeriLink Corporation and MCC Acquisition Corp., a
wholly-owned subsidiary of AmeriLink Corporation, incorporated by
reference herein to Exhibit 2 to the Company's December 27, 1998
quarterly report Form 10-Q dated February 2, 1999 which was filed
on February 9, 1999. *
10 Employment Agreement of Larry Kendall, dated February 2, 1999
incorporated by reference herein to Exhibit 10 to the Company's
December 27, 1998 quarterly report Form 10-Q dated February 2, 1999
which was filed on February 9, 1999. *
99.1 Short-Form Merger Agreement incorporated by reference herein to
Exhibit 99.1 to the Company's December 27, 1998 quarterly report
Form 10-Q dated February 2, 1999 which was filed on February 9,
1999. *
99.2 Press Release dated January 28, 1999 incorporated by reference
herein to Exhibit 99.2 to the Company's December 27, 1998 quarterly
report Form 10-Q dated February 2, 1999 which was filed on February
9, 1999. *
99.3 Press Release dated February 2, 1999 incorporated by reference
herein to Exhibit 99.3 to the Company's December 27, 1998 quarterly
report Form 10-Q dated February 2, 1999 which was filed on February
9, 1999. *
23.01 Consent of McGladrey & Pullen, LLP., Certified Public Accountants
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.
AMERILINK CORPORATION
-------------------------------
(Registrant)
Date: April 9, 1999 By: /s/ Larry R. Linhart
------------- --------------------------------
Larry R. Linhart, Chairman , President
and Chief Executive Officer
Date: April 9, 1999 By: /s/James W. Brittan
------------- --------------------------------
James W. Brittan
Vice President of Finance
(Principal Financial and Accounting Officer)
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<PAGE>
ITEM 7(A) - FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
MIDWEST COMPUTER CABLE, INC.
FINANCIAL REPORT
DECEMBER 31, 1998
CONTENTS
- ----------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT 5
- ----------------------------------------------------------------------------
FINANCIAL STATEMENTS
Balance sheet 6
Statement of income 7
Statements of changes in stockholders' equity 8
Statement of cash flows 10
Notes to financial statements 11
- ----------------------------------------------------------------------------
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<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Midwest Computer Cable, Inc.
Des Moines, Iowa
We have audited the accompanying balance sheet of Midwest Computer Cable, Inc.,
as of December 31, 1998, and the related statements of income, changes in
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Midwest Computer Cable, Inc.,
as of December 31, 1998, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
/s/ McGladrey & Pullen, LLP
- ---------------------------
McGladrey & Pullen, LLP
Des Moines, Iowa
January 25, 1999
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<PAGE>
MIDWEST COMPUTER CABLE, INC.
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT ASSETS
Cash (Note 3) $ 339,054
Accounts receivable (Note 9) $ 991,811
Less allowance for doubtful accounts 40,000 951,811
----------
Inventories 401,016
Costs and estimated earnings in excess of billings on
uncompleted contracts (Note 8) 167,819
Prepaid expenses 36,018
-----------
TOTAL ASSETS 1,895,718
EQUIPMENT
Machinery and equipment $ 70,881
Furniture and fixtures 5,451
Office equipment 217,135
Vehicles 56,288
----------
349,755
Less accumulated depreciation 184,726 165,029
---------- -----------
$ 2,060,747
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable (Note 2) $ 2,411
Accounts payable, affiliate 126,569
Accounts payable, trade 201,932
Accrued payroll 170,159
Accrued sales tax 133,985
Other accrued expenses 94,356
Income taxes payable 17,405
-----------
TOTAL CURRENT LIABILITIES 746,817
STOCKHOLDERS' EQUITY (NOTE 10)
Common stock, no par value; authorized 1,000,000 shares:
Issued 101,000 shares $
To be issued for employee compensation 17,823.53 shares 1,369,575
Retained earnings (deficit) (55,645) 1,313,930
---------- -----------
$ 2,060,747
-----------
</TABLE>
See Notes to Financial Statements
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<PAGE>
MIDWEST COMPUTER CABLE, INC.
STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Net revenue (Note 9) $ 9,806,935
Cost of revenue:
Materials, trade $ 2,430,645
Materials, affiliate 506,204
Direct labor 1,571,871
Other costs 1,401,159 5,909,879
- --------- -------------
GROSS PROFIT 3,897,056
Selling, general and administrative expenses 2,156,017
Stock compensation expense (Note 7) 1,369,575 3,525,592
- --------- -------------
INCOME FROM OPERATIONS 371,464
Nonoperating income (expense):
Interest income 17,153
Interest expense (3,598) 13,555
- --------- -------------
INCOME BEFORE INCOME TAXES 385,019
Income taxes (Note 4) 286,437
- -------------
NET INCOME $ 98,582
-------------
-------------
</TABLE>
See Notes to Financial Statements.
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<PAGE>
MIDWEST COMPUTER CABLE, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Common Stock Issued
----------------------------------------------------------------------
Number of Shares Amount
-------------------------------- -------------------------------------
Class A Class B Class A Class B
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, January 1, 1998 100,000 1,000 $ 10,000 $ 133,549
Exchange of Class A stock for
Class B stock 1,000 (1,000) 133,549 (133,549)
Net income
Dividends on common stock (143,549)
Shares to be issued for
compensation
----------------------------------------------------------------------
Balance, December 31, 1998 101,000 $ $
----------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
-8-
<PAGE>
<TABLE>
<CAPTION>
Class A Common Stock
To Be Issued
- ------------------------------------
Number of Shares Retained
Amount Earnings Total
- -------------------------------------------------------------------------
<S> <C> <C> <C>
$ $ 227,452 $ 371,001
98,582 98,582
(381,679) (525,228)
17,823.53 1,369,575 1,369,575
- -------------------------------------------------------------------------
17,823.53 $ 1,369,575 $ (55,645) $ 1,313,930
- -------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
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<PAGE>
MIDWEST COMPUTER CABLE, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 98,582
Adjustments to reconcile net income to net cash
provided by operating activities:
(Gain) on sale of equipment (13,767)
Employee compensation 1,369,575
Depreciation 60,399
Change in assets and liabilities:
(Increase) in accounts receivable (101,099)
(Increase) in inventories (47,630)
(Increase) in costs and estimated earnings in excess of billings
on uncompleted contracts (167,819)
(Increase) in prepaid expenses (31,818)
Increase in accounts payable and accrued expenses 13,309
(Decrease) in billings in excess of costs and estimated earnings
on uncompleted contracts (80,879)
(Decrease) in income taxes payable (203,161)
-------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 895,692
-------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment 48,576
Purchase of equipment (85,208)
-------------
NET CASH (USED IN) INVESTING ACTIVITIES (36,632)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt (32,276)
Payments on notes payable, stockholders (44,823)
Cash dividends and capital return (525,228)
-------------
NET CASH (USED IN) FINANCING ACTIVITIES (602,327)
-------------
NET INCREASE IN CASH 256,733
CASH
Beginning 82,321
-------------
Ending $ 339,054
=============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash payments for income taxes $ 489,598
</TABLE>
See Notes to Financial Statements.
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<PAGE>
MIDWEST COMPUTER CABLE, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS: The Company is engaged primarily in the sale and
installation of computer cabling and connectivity products. The headquarters of
the company are in Clive, Iowa, with offices and sales throughout central United
States.
SIGNIFICANT ACCOUNTING POLICIES:
INVENTORIES: Inventories are valued at the lower of cost (first-in, first-out
method) or market, and consist primarily of purchased parts.
EQUIPMENT: Equipment is carried at cost. Depreciation is generally provided
for on the straight-line basis over the estimated useful lives of the assets.
REVENUE AND COST RECOGNITION: Revenues from contracts are recognized on the
percentage-of- completion method measured by the costs incurred to date to
estimated total costs for each contract commencing when progress reaches a
point where experience is sufficient to estimate final results with
reasonable accuracy. Contract costs include direct material and labor costs.
Selling, general and administrative costs are charged to expense as incurred.
Provisions for estimated losses on uncompleted contracts are made in the
period in which such losses are determined. Changes in job performance, job
conditions and estimated profitability, including those arising from contract
penalty provisions and final contract settlements, may result in revisions to
costs and income and are recognized in the period in which the revisions are
determined.
The asset, "Costs and estimated earnings in excess of billings on uncompleted
contracts," represents revenues recognized in excess of amounts billed.
ACCOUNTING ESTIMATES AND ASSUMPTIONS: 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 reporting period. Actual results could differ from
those estimates.
NOTE 2. NOTES PAYABLE AND LINE OF CREDIT AT DECEMBER 31, 1998 The Company has an
11.25% bank note payable with a balance of $1,776 and a related-party note
payable with a balance of $635 with interest at 10%.
The Company has a line of credit with Iowa State Bank bearing interest at 8.75%
and expiring in March 1999. At December 31, 1998, there were no borrowings
outstanding on this line of credit which is collateralized by substantially all
assets of the Company.
NOTE 3. CASH IN EXCESS OF FDIC LIMITS
The Company maintains cash in bank deposit accounts which, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts.
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<PAGE>
NOTE 4. INCOME TAX MATTERS
Effective July 1, 1998, the Company, with the consent of its stockholders, will
be taxed under sections of federal and state income tax law, which provide that,
in lieu of corporation income taxes, the stockholders will separately account
for their pro rata shares of the Company's income, deduction, losses and
credits. In connection with this change, the Company changed its corporate
year-end from June 30 to December 31.
A reconciliation of income tax expense for the year ended December 31, 1998, to
the amount computed at the Federal income tax rate of 34%, is as follows:
<TABLE>
<CAPTION>
<S> <C>
Computed Federal income taxes at 34% $ 130,906
Increase in tax expense resulting from:
Book loss after July 1, 1998 at 34% 77,459
State income taxes 33,591
Write off of deferred taxes 25,000
Other 19,481
---------
$ 286,437
---------
---------
</TABLE>
NOTE 5. LEASES
The Company leases office space under six noncancelable agreements which expire
between December 31, 1999 and February 28, 2001, and requiring monthly rentals
of between $525 and $3,600.
The Company also leases vehicles under noncancelable agreements which expire
between March 27, 1999 and April 8, 2001, and requiring monthly rentals of
between $287 and $398.
Future minimum lease payments, by year and in aggregate, under the noncancelable
operating leases with initial terms of one year or more are due as follows:
1999 $ 230,662
2000 99,060
2001 4,189
----------
$ 333,911
----------
----------
Rent expense under the operating leases was $248,567 for the year ended December
31, 1998.
NOTE 6. PENSION PLAN
The Company has a 401(k) pension plan covering employees over the age of 21
having at least one year of service and working over 1,000 hours. The Company is
required to contribute a matching contribution equal to 100% of the
contributions made by the employee up to a maximum of 3% of the respective
employee's salary. Contributions to the plan totaled $49,165 for the year ended
December 31, 1998.
NOTE 7. STOCK COMPENSATION EXPENSE
The Company declared a bonus to three key employees in the amount of $1,369,575
payable by issuance of 17,823.53 shares of common stock.
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<PAGE>
NOTE 8. CONTRACTS IN PROGRESS AT DECEMBER 31, 1998
Total amount of uncompleted contracts $ 260,876
---------
---------
Costs incurred on uncompleted contracts $ 136,154
Estimated earnings 115,276
---------
251,430
Less billings to date 83,611
---------
$ 167,819
---------
---------
NOTE 9. MAJOR CUSTOMER
Netcom Solutions owes 25% of the Company's accounts receivable balance at
December 31, 1998 and provided 35% of the Company's net revenues for the year
ended December 31, 1998.
NOTE 10. SUBSEQUENT EVENT
Current stockholders have reached an agreement to sell all their shares to a SEC
filing company. The transaction, which is scheduled to be completed in February
1999, will be treated as a merger with a subsidiary of the SEC filing company
being the surviving corporation.
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<PAGE>
ITEM 7(B) - PRO FORMA FINANCIAL INFORMATION
INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS.
On February 2, 1999, AmeriLink Corporation ("Amerilink" or the "Company"),
through a wholly-owned subsidiary, MCC Acquisition Corp., acquired Midwest
Computer Cable, Inc. ("MCCI"). The consideration delivered to the shareholders
of MCCI in connection with the Merger consisted of $4.4 million in cash and
500,000 common shares (without par value) of the Company valued at $3,565,000,
and the Company is accounting for the acquisition as a purchase. The following
unaudited proforma consolidated financial statements are based on the respective
historical financial statements of the Company and MCCI (the "Companies").
The unaudited pro forma consolidated balance sheet assumes that the acquisition
took place on December 27, 1998 and combines Amerilink's December 27, 1998
unaudited balance sheet with MCCI's December 31, 1998 audited balance sheet. The
unaudited pro forma consolidated statements of income assume that the
acquisition took place as of the beginning of the periods presented and combine
Amerilink's unaudited consolidated statements of income for the fifty-two weeks
ended March 29, 1998, and thirty-nine weeks ended December 27, 1998, with MCCI's
unaudited statement of income for the year ended March 31, 1998 and nine months
ended December 31, 1998, respectively.
The unaudited pro forma consolidated financial statements are based on the
estimates and assumptions set forth in the notes to the financial statements.
The pro forma adjustments made in connection with the pro forma consolidated
financial statements are preliminary and have been made solely for the purpose
of developing such pro forma financial information for illustrative purposes
necessary to comply with the disclosure requirements of the Securities and
Exchange Commission. The unaudited pro forma consolidated financial statements
are not necessarily indicative of what the results would have been if the Merger
had occurred on the dates indicated, and do not purport to be indicative of the
results of operations for future periods.
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<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 27, 1998
<TABLE>
<CAPTION>
AMERILINK MCCI PRO FORMA CONSOLIDATED
AS REPORTED AS REPORTED ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,822,853 $ 339,054 $ (4,637,500) $ 6,524,407
Accounts receivable - trade 11,875,678 951,811 12,827,489
Work-in-process 5,026,127 167,819 5,193,946
Materials and supply
inventories 1,468,651 401,016 1,869,667
Other receivables 232,556 ---- 232,556
Deferred income taxes 458,584 ---- 458,584
Other 317,504 36,018 353,522
------------- ------------ ------------ ------------
Total current assets 30,201,953 1,895,718 (4,637,500) 27,460,171
Property and equipment - net 6,047,060 165,029 6,212,089
Deposits and other assets 112,552 ---- 112,552
Goodwill ---- ---- 6,888,570 6,888,570
------------- ------------ ------------ ------------
Total assets $ 36,361,565 $ 2,060,747 $ 2,251,070 $ 40,673,382
------------- ------------ ------------ ------------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Trade accounts payable $ 1,716,721 $ 328,501 $ $ 2,045,222
Liability to subcontractors 1,488,951 ---- 1,488,951
Accrued compensation and
other current 1,874,192 415,905 2,290,097
liabilities
Notes payable ---- 2,411 ---- 2,411
------------- ------------ ------------ ------------
Total current liabilities 5,079,864 746,817 5,826,681
3,565,000
Shareholders' equity 31,281,701 1,313,930 (1,313,930) $ 34,846,701
------------- ------------ ------------ ------------
Total liabilities and
Shareholders' equity $ 36,361,565 $ 2,060,747 $ 2,251,070 $ 40,673,382
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
</TABLE>
See notes to unaudited pro forma consolidated financial statements
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<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THIRTY-NINE WEEKS ENDED DECEMBER 27, 1998
<TABLE>
<CAPTION>
AMERILINK MCCI PRO FORMA CONSOLIDATED
AS REPORTED AS REPORTED ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
Revenues $ 48,077,714 $ 7,441,732 $ ---- $ 55,519,446
Cost of sales 29,302,980 4,609,360 33,912,340
------------- ------------ ------------ -------------
Gross profit 18,774,734 2,832,372 ---- 21,607,106
Selling, general and
administrative expenses 17,355,944 1,635,672 206,657 19,198,273
Stock compensation expense ---- 1,369,575 (1,369,575) ----
------------- ------------ ------------ -------------
Income (loss) from operations 1,418,790 (172,875) 1,162,918 2,408,833
Interest income 404,866 16,632 (174,000) 247,498
------------- ------------ ------------ -------------
Income (loss) before taxes 1,823,656 (156,243) 988,918 2,656,331
Provision for income taxes 719,000 42,869 367,131 1,129,000
------------- ------------ ------------ -------------
Net income (loss) $ 1,104,656 $ (199,112) $ 621,787 $ 1,527,331
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
Earnings per share:
Basic $ 0.26 $ 0.32
------------- -------------
Diluted $ 0.25 $ 0.32
------------- -------------
Weighted average shares:
Basic 4,234,199 4,734,199
Diluted 4,340,677 4,840,677
</TABLE>
See notes to unaudited pro forma consolidated financial statements.
-16-
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE FIFTY-TWO WEEKS ENDED MARCH 29, 1998
<TABLE>
<CAPTION>
AMERILINK MCCI PRO FORMA CONSOLIDATED
AS REPORTED AS REPORTED ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C>
Revenues $ 85,645,991 $ 6,976,077 $ ----- $ 92,622,068
Cost of sales 52,615,969 3,208,995 55,824,964
------------ ----------- ---------- ------------
Gross profit 33,030,022 3,767,082 ----- 36,797,104
Selling, general and
administrative expenses 25,183,821 3,139,200 275,543 28,598,564
------------ ----------- ---------- ------------
Income from operations 7,846,201 627,882 (275,543) 8,198,540
Interest expense 187,633 35,191 231,875 454,699
------------ ----------- ---------- ------------
Income before income taxes 7,658,568 592,691 (507,418) 7,743,841
Provision for income taxes 3,073,000 237,000 (93,000) 3,217,000
------------ ----------- ---------- ------------
Net income $ 4,585,568 $ 355,691 $ (414,418) $ 4,526,841
------------ ----------- ---------- ------------
------------ ----------- ---------- ------------
Earnings per share:
Basic $ 1.20 $ 1.05
----------- ------------
Diluted $ 1.15 $ 1.01
----------- ------------
Weighted average shares:
Basic 3,805,866 4,305,866
Diluted 4,002,089 4,502,089
</TABLE>
See notes to unaudited pro forma consolidated financial statements.
-17-
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. PRO FORMA ADJUSTMENTS
The unaudited pro forma consolidated balance sheet as of December 27, 1998
reflects the following adjustments as if they had occurred at that date: (1) the
issuance of $ 4,637,500 of cash representing the $4,400,000 cash consideration
issued to the shareholders of MCCI, and an estimated $237,500 in related direct
transaction costs associated with the acquisition (2) the estimated goodwill
resulting from the acquisition, and (3) the issuance of 500,000 shares of Common
Stock valued at $3,565,000 to the shareholders of MCCI.
The unaudited pro forma consolidated statements of income for the fifty-two
weeks ended March 29, 1998, and thirty-nine weeks ended December 27, 1998
reflect the following pro forma adjustments: (1) amortization of goodwill on a
straight-line basis over 25 years, and (2) interest charges on the estimated
$4,637,500 of cash utilized in the acquisition. In December 1998 the
shareholders of MCCI declared special bonuses to three key employees in the
aggregate amount of $1,369,575 payable by issuing a total of 17,823.53 shares of
MCCI common stock. This bonus is not representative of the bonuses expected to
be paid to those key employees subsequent to the acquisition, and therefore, the
unaudited pro forma consolidated statement of income for the thirty-nine weeks
ended December 27, 1998 has been adjusted as if these special bonuses had not
been made.
NOTE 2. PRO FORMA PROVISION FOR INCOME TAXES ADJUSTMENTS
Effective July 1, 1998 MCCI elected under Subchapter S of the Internal
Revenue Code to have the shareholders recognize their proportionate share of
MCCI's taxable income on their personal income tax returns in lieu of paying
corporate income tax. The pro forma adjustments to the provision for income
taxes reflects adjustments to provide for income taxes as if MCCI were included
in Amerilink's federal and state income tax returns, including the associated
amortization of goodwill resulting from the acquisition which is not deductible
for income tax purposes.
NOTE 3. PRO FORMA NET INCOME PER SHARE
The unaudited pro forma and supplemental pro forma net income per common
share, basic and diluted, are based upon the weighted average common shares and
dilutive common stock options outstanding for each period presented adjusted for
the 500,000 shares of Amerilink common stock issued to the shareholders of MCCI.
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<PAGE>
EXHIBIT 23.1
CONSENT OF MCGLADREY & PULLEN, LLP
We consent to the incorporation by reference in the Registration Statements on
Form S-8 (No. 33-96424) and Form S-3 (No. 33-96422) of our report dated January
25, 1999, on the financial statements of Midwest Computer Cable, Inc., as of and
for the year ended December 31, 1998, included in the Current Report on Form 8-K
of AmeriLink Corporation, dated February 2, 1999.
McGladrey & Pullen, LLP
Des Moines, Iowa
April 7, 1999
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