SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8
------------------
AMENDMENT TO APPLICATION OR REPORT
Filed Pursuant to Section 12, 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
P-COM, INC.
AMENDMENT NO. 1
The undersigned Registrant hereby amends the following
items, financial statements, exhibits or other portions of its
Current Report on Form 8-K, originally filed with the Securities
and Exchange Commission on March 21, 1997, as set forth in the
pages attached hereto:
Item 7. Financial Statements and Exhibits.
-------------------------------------------
The following financial statements and pro forma financial
information are filed as a part of this report (Pro
forma consolidated balance sheet is not being filed
pursuant to Rule 11-02 of Regulation S-X. The balance
sheet of P-COM, Inc. filed in connection with the P-
COM, Inc. Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 reflects balance sheet
data for Columbia Spectrum Management, LP.):
(a) Financial Statements of Business Acquired.
------------------------------------------
Columbia Spectrum Management, LP, a Delaware limited partnership.
(1) Report of Independent Auditors (Ernst & Young LLP);
(2) Balance Sheets as of December 31, 1996 and 1995;
(3) Statements of Income and Partners' Capital for the
fiscal years ended December 31, 1996 and 1995;
(4) Statements of Cash Flows for the fiscal years ended
December 31, 1996 and 1995
(5) Notes to Financial Statements for the fiscal years
ended December 31, 1996 and 1995.
(b) Pro forma Financial Information P-COM, Inc. and Columbia
Spectrum Management, LP.
(1) Pro forma Combined Condensed Statements of Operations
for the year ended December 31, 1996 (unaudited);
(2) Pro forma Combined Condensed Statements of Operations
for the three (3) months ended March 31, 1997
(unaudited); and
(3) Unaudited Notes to Pro Forma Combined Statements of
Operations.
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this amendment to be
signed on its behalf by the undersigned, thereunto duly authorized.
P-COM, INC.
-----------------------------
(Registrant)
By: /s/ Michael J. Sophie
-----------------------------
Name: Michael J. Sophie
-----------------------------
Title: Chief Financial Officer
-----------------------------
Date: May 20, 1997
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EXHIBIT INDEX
Sequentially
Item 7. Financial Statements and Exhibits Numbered Page
- ------------------------------------------------------------------------------
(a) Financial Statements of Business Acquired.
------------------------------------------
Columbia Spectrum Management LP, a Delaware Limited
Partnership.
(1) Report of Independent Auditors
(Ernst & Young LLP); ........................ 4
(2) Balance Sheets as of December 31,
1996 and 1995; .............................. 5
(3) Statements of Income and Partners'
Capital for the fiscal years ended
December 31, 1996 and 1995 .................. 6
(4) Statements of Cash Flows for the
fiscal years ended December 31,
1996 and 1995 ............................... 8
(5) Notes to Financial Statements for
the fiscal years ended December 31,
1996 and 1995 ............................... 9
(b) Pro forma Financial Information
-------------------------------
P-COM, Inc. and Subsidiaries.
(1) Pro forma Combined Condensed
Statements of Operations for the
year ended December 31, 1996
(unaudited); ................................ 14
(2) Pro forma Combined Condensed
Statements of Operations for the
three (3) months ended March 31,
1997 (unaudited); and ....................... 16
(3) Unaudited Notes to Pro Forma
Combined Statements of Operations ........... 17
Exhibit 7(a)(1)
Report of Independent Auditors
To the Partners of
Columbia Spectrum Management, L.P.
We have audited the accompanying balance sheets of Columbia
Spectrum Management, L.P. as of December 31, 1996 and 1995, and
the related statements of income, partners' capital, and cash
flows for the years then ended. These financial statements are
the responsibility of the partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Columbia Spectrum Management, L.P. at December 31, 1996 and
1995, and the results of its operations and its cash flows for
the years then ended in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
- ------------------------------
Vienna, Virginia
April 14, 1997
Exhibit 7(a)(2)
Columbia Spectrum Management, L.P.
Balance Sheets
<TABLE>
December 31,
1996 1995
---- ----
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 367,757 $ 89,282
Accounts receivable (net of $159,000
allowance for doubtful accounts at
December 31, 1996) 8,935,827 4,830,964
Prepaid expenses 62,957 41,500
----------- -----------
Total current assets 9,366,541 4,961,746
Property and equipment, net 238,164 194,459
Other assets, net 136,579 60,327
----------- -----------
Total assets $ 9,741,284 $ 5,216,532
=========== ===========
Liabilities and Partners' Capital
Current liabilities:
Accounts payable $ 6,361,462 $ 533,043
Accrued liabilities and other 793,335 375,966
Deferred revenue 317,820 83,000
Due to partner -
subcontracting services 139,332 559,536
Notes payable to partners -- 450,000
----------- -----------
Total current liabilities 7,611,949 2,001,545
Partners' capital:
General partner 17,043 27,037
Limited partners (136,784 limited
partnership units issued at
December 31, 1996 and 1995) 2,112,292 3,187,950
----------- -----------
Total partners' capital 2,129,335 3,214,987
----------- -----------
Total liabilities and partners'
capital $ 9,741,284 $ 5,216,532
=========== ===========
</TABLE>
Exhibit 7(a)(3)
Columbia Spectrum Management, L.P.
Statements of Income
<TABLE>
Year ended December 31,
1996 1995
---- ----
<S> <C> <C>
Revenue:
Service $ 9,061,103 $ 5,875,326
Equipment sales, subcontractor
services and other 17,787,557 3,615,821
----------- -----------
Total revenues 26,848,660 9,491,147
Cost of revenues:
Services 2,662,907 855,993
Equipment sales, subcontractor
services and other 17,422,053 3,012,568
----------- -----------
Total cost of revenues 20,084,960 3,868,561
Gross profit 6,763,700 5,622,586
Expenses:
Sales and marketing 272,988 227,073
General and administrative 2,176,591 1,640,176
----------- -----------
Income from operations 4,314,121 3,755,337
Other income (expense):
Interest income 83,659 10,910
Interest expense (3,270) (101,908)
----------- -----------
Net income 4,394,510 3,664,339
=========== ===========
Net income allocation:
Limited partners 4,350,565 3,121,700
General partner 43,945 542,639
----------- -----------
$ 4,394,510 $ 3,664,339
=========== ===========
Limited partners - net income
per unit $ 31.81 $ 22.82
=========== ===========
</TABLE>
Columbia Spectrum Management, L.P.
Statements of Partners' Capital
For the year ended December 31, 1996 and 1995
<TABLE>]
Limited General
Partners Partner Total
----------------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1994 $ -- $ (516,439) $ (516,439)
Issuance of 8,981 limited
partnership units 66,250 -- 66,250
Investment by general
partner -- 837 837
Net income - 1995 3,121,700 542,639 3,664,339
------------ ----------- -----------
Balance, December 31,
1995 3,187,950 27,037 3,214,987
Net income - 1996 4,350,565 43,945 4,394,510
Distribution of earnings (5,426,223) (53,939) (5,480,162)
----------- ----------- -----------
Balance, December 31,
1996 $ 2,112,292 $ 17,043 $ 2,129,335
=========== =========== ===========
</TABLE>
Exhibit 7(a)(4)
Columbia Spectrum Management, L.P.
Statements of Cash Flows
<TABLE>
Year ended December 31,
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,394,510 $ 3,664,339
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 111,567 74,596
Changes in operating assets
and liabilities:
Accounts receivable (4,104,863) (4,610,359)
Prepaid expenses (21,457) 20,069
Other assets (80,046) (46,140)
Accounts payable 5,828,419 456,207
Deferred revenue 234,820 83,000
Accrued liabilities and other 417,369 348,099
Due to partners - sub-
contracting services (420,204) 559,536
------------ -----------
Net cash provided by operating
activities 6,360,115 549,347
Cash flows from investing activities:
Purchase of property and equipment (151,478) (155,564)
Cash flows from financing activities:
Issuance of notes payable -- 152,500
Repayment of notes payable (450,000) (500,000)
Distribution of earnings (5,480,162) --
------------ ------------
Net cash used in financing activities (5,930,162) (347,500)
Net increase in cash and cash equivalents 278,475 46,283
Cash and cash equivalents at beginning of year 89,282 42,999
------------ ------------
Cash and cash equivalents at end of year $ 367,757 $ 89,282
============ ============
Supplemental disclosures of cash
flow information:
Cash paid during the year for interest $ 52,555 $ 79,427
============ ============
</TABLE>
Exhibit 7(a)(5)
Columbia Spectrum Management, L.P.
Notes to Financial Statements
December 31, 1996 and 1995
1. Business and Organization
Columbia Spectrum Management, L.P. ("CSM" or the "Partnership"),
was formed as a Delaware partnership in 1994. It is a limited
partnership comprised of a one percent general partner and six
limited partners. Four of such limited partners were admitted in
an amendment to the partnership agreement effective January 1,
1995.
The Partnership was organized to provide turnkey microwave
relocation services to personal communications services ("PCS")
licensees in the United States. CSM services include
engineering, negotiation, program management, legal review and
contract preparation, and cost accounting.
CSM expects to provide substantially all of its relocation
services to PCS licensees over five years, beginning in 1995.
Management is currently evaluating other telecommunications
related business opportunities. Also, further rule making by the
Federal Communications Commission for mobile satellite services
could increase the number of microwave paths to be relocated in
addition to those currently being relocated for PCS services.
CSM intends to pursue opportunities for telecommunications
services in international markets.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect amounts reported in
the financial statements and accompanying notes. Actual results
could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
Property and Equipment, net
Property and equipment is recorded at cost less accumulated
depreciation. Depreciation is computed primarily on the straight-
line method over the estimated useful lives of the related assets
(5 to 7 years).
Revenue Recognition
Service revenues are recorded upon delivery or milestone billing
points generally consistent with work performed. Management
believes this method of revenue recognition is not materially
different from percentage of completion accounting. Revenues for
equipment sales, subcontractor services and other non-service
revenues are recognized when billed.
Income Taxes
No provision for federal or state income taxes is recorded in
these financial statements as such tax liabilities accrue to the
individual partners.
Fair Value of Financial Instruments
The Company considers the carrying values of its financial
instruments, consisting primarily of accounts receivable,
accounts payable and notes payable, to approximate their
respective fair values at December 31, 1996 and 1995.
Reclassification
Certain amounts in the December 31, 1995, financial statements
have been reclassified to conform to the method of presentation
adopted for 1996.
3. Accounts Receivable and Concentration of Credit Risk
Accounts receivable as of December 31, 1996 and 1995, includes
$1,056,353 and $230,925, respectively, of subcontracting and
other costs to be billed to clients.
At December 31, 1995, $67,087 of capital contributions receivable
from partners were included in accounts receivable. These
amounts were paid in February and March 1996.
The Partnership has three clients which comprise 94% and 97% of
CSM's revenues for the years ended December 31, 1996 and 1995,
respectively. Such companies accounted for 73% and 94% of the
Partnership's accounts receivable balances at December 31, 1996
and 1995, respectively.
Financial instruments which potentially subject the Partnership
to concentrations of credit risk consist of trade receivables.
CSM provides services to clients in the telecommunications
industry within the United States. CSM performs ongoing credit
assessments of its clients and does not require collateral. The
Partnership evaluates it accounts receivable on a regular basis
and records an allowance for doubtful accounts to the extent
necessary.
4. Property and Equipment, net
Property and equipment, net consists of the following at December
31:
<TABLE>
1996 1995
<S> <C> <C>
Office furniture and equipment $ 101,006 $ 88,007
Computer equipment 330,014 202,455
---------- ----------
431,020 290,462
Accumulated depreciation (192,856) (96,003)
---------- ----------
Property and equipment, net $ 238,164 $ 194,459
========== ==========
</TABLE>
5. 401(k) Plan
The Partnership sponsors a defined contribution plan under
Section 401(k) of the Internal Revenue Code (the "Plan") which
covers substantially all employees. Employees can contribute a
maximum of 20% of their salaries to the Plan, up to the federal
maximum allowable limit. Contributions by the Partnership to the
Plan are discretionary, and CSM has made no contributions to
date.
6. Related Party Transactions
One of the Partnership's limited partners is a subcontractor to
CSM and provides engineering services to CSM on behalf of certain
clients. For the years ended December 31, 1996 and 1995,
payments to this limited partner for subcontracting services
amounted to $361,802 and $1,633,756, respectively. Included in
the balance sheets are amounts due to this partner of $139,332 at
December 31, 1996, and $559,536 at December 31, 1995.
Notes payable to partners as of December 31, 1995, amounted to
$450,000, accrued interest at 8% per annum and were unsecured.
Such notes were repaid in 1996.
In 1994 CSM incurred other indebtedness to partners. The notes
totaled $350,000, bore interest at 20% per annum, and were repaid
during the year ended December 31, 1995. The Partnership also
borrowed a total of $150,000 during 1995 from Columbia Capital
Corporation ("CCC"), a company owned by several of the principals
of CSM's general partner and one of its limited partners. CCC
was also paid management fees of $2,356 in 1995 for services
performed by certain of its employees. There were no management
fees paid to CCC in 1996.
7. Commitments
The Partnership leases its office premises and substantially all
of its office furniture. In August 1996, the Partnership entered
into a five year lease agreement for office space the new lease
commences on or about April 1, 1997, has a 5 year renewal option
and includes a termination clause which may be exercised at the
end of the 36th month of the lease. Minimum rental payments
increase 2% per year.
Rent expense under operating leases was $215,241 in 1996 and
$168,608 in 1995.
Future minimum rental payments under noncancelable lease
obligations, including the office lease commencing April 1, 1997,
are as follows:
<TABLE>
<S> <C>
Year ended December 31,
-----------------------
1997 $ 271,864
1998 320,471
1999 326,898
2000 333,476
2001 340,204
-----------
$ 1,592,913
===========
</TABLE>
8. Net income Per Unit
Net income per unit has been calculated based on the weighed
average number of units outstanding of 136,784 for the years
ended December 31, 1996 and 1995, respectively.
9. Subsequent Event
Effective March 7, 1997, the Partnership sold its operations
(including certain of its assets and liabilities) to P-COM Field
Services, Inc., a wholly-owned subsidiary of P-COM, Inc. ("P-
COM") for $22,500,000, with proceeds paid in the form of cash and
P-COM common stock. Such proceeds were received by the
Partnership during March 1997, subject to certain indemnification
obligations as set forth in the Purchase Agreement filed as an
exhibit to the Current Report on Form 8-K filed on March 21,
1997, and were paid to the partners through a special
distribution. Management intends to liquidate the Partnership
following collection of certain outstanding receivables and the
payment of related liabilities.
Exhibit 7(b)(1)
ITEM 7(b) FINANCIAL STATEMENTS AND EXHIBITS
Effective March 7, 1997, P-COM Field Services, Inc., a Delaware
corporation and a wholly owned subsidiary of P-COM, Inc. ("P-
COM"), completed its acquisition of certain assets of Columbia
Spectrum Management, L.P. ("CSM"), a Vienna, Virginia-based
company, for $8.0 million in cash and 398,306 shares of P-COM's
Common Stock valued at $14.5 million. The transaction was
accounted for using the purchase method; accordingly, the
purchase price was allocated to the assets acquired and
liabilities assumed based on their estimated fair market values
at the date of acquisition.
The following unaudited pro forma financial information gives
effect to the acquisition as if the transaction had taken place
at the beginning of 1996 for the pro forma condensed statements
of operations.
The unaudited pro forma statements of operations are not
necessarily indicative of the operating results that would have
been achieved if the transaction had occurred on the dates
indicated and should not be construed as representative of future
operations. The historical financial statements of CSM are
included elsewhere in this filing, and the unaudited pro forma
financial information presented herein should be read in
conjunction with those financial statements and related notes.
P-COM, INC.
PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS - Unaudited
For the year ended December 31, 1996
(in thousands except per share data)
<TABLE>
P-COM CSM Adjustments Pro Forma
<S> <C> <C> <C> <C>
Net Sales $ 97,515 $ 26,849 $ -- $ 124,364
Cost of sales 56,274 20,085 -- 76,359
---------- ---------- ---------- ----------
Gross profit 41,241 6,764 -- 48,005
---------- ---------- ---------- ----------
Operating expenses:
Research and
development 17,477 -- -- 17,477
Sales and marketing 5,529 273 -- 5,802
General and
administrative 4,344 2,177 1,111(a) 7,632
---------- ---------- ---------- ----------
Total operating
expenses 27,350 2,450 1,111 30,911
---------- ---------- ---------- ----------
Income from operations 13,891 4,341 (1,111) 17,094
Non-operating income
Interest income net 1,310 81 -- 1,391
Other income, net (71) -- -- (71)
---------- ---------- ---------- ----------
Income before taxes 15,130 4,395 (1,111) 18,414
Provision for income
taxes 1,062 -- -- 1,062
---------- ---------- ---------- ----------
Net income $ 14,068 $ 4,395 $ (1,111) $ 17,352
========== ========== ========== ==========
Net income per share $ 0.74 -- -- $ 0.89
========== ========== ========== ==========
Weighted average
common and common
equivalent shares 19,092 -- -- 19,490
</TABLE>
Exhibit 7(b)(2)
P-COM, INC.
PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS - Unaudited
For the three months ended March 31, 1997
(in thousands except per share data)
<TABLE>
P-COM CSM Adjustments Pro Forma
<S> <C> <C> <C> <C>
Net Sales $ 38,144 $ 739 $ -- $ 38,883
Cost of sales 22,736 365 -- 23,101
---------- ---------- ---------- ----------
Gross profit 15,408 374 -- 15,782
---------- ---------- ---------- ----------
Operating expenses:
Research and
development 6,014 -- -- 6,014
Sales and marketing 2,556 38 -- 2,594
General and
administrative 2,261 258 278(a) 2,797
---------- ---------- ---------- ----------
Total operating
expenses 10,831 296 278 11,405
---------- ---------- ---------- ----------
Income from operations 4,577 78 (278) 4,377
Non-operating income
(expense)
Interest income 344 13 -- 357
Other income
(expense), net (354) -- -- (354)
---------- ---------- ---------- ----------
Income before taxes 4,567 91 (278) 4,380
Provision for
income taxes 1,553 -- -- 1,553
---------- ---------- ---------- ----------
Net income $ 3,014 $ 91 $ (278) $ 2,827
========== ========== ========== ==========
Net income per share $ 0.15 $ -- $ -- $ 0.14
========== ========== ========== ==========
Weighted average
common and common
equivalent shares 20,260 20,658
</TABLE>
Exhibit 7(b)(3)
Unaudited Notes to Pro Forma Combined Statements of Operations
- --------------------------------------------------------------
1. PERIOD PRESENTED
The unaudited pro forma combined condensed statement of
operations for the year ended December 31, 1996 combines the
results of operations of P-COM with the results of operations of
CSM for the same period. The results of operations of P-COM
reported in its Quarterly Report on Form 10-Q ("Form 10-Q") for
the three month period ended March 31, 1997 include the results
of operations of CSM for the period from the date of the
acquisition (March 7, 1997) through March 31, 1997. The
unaudited pro forma combined condensed statement of operations
for the three months ended March 31, 1997 combines the results of
operations of P-COM as reported in its Form 10-Q with the results
of operations of CSM for the period from January 1, 1997 through
the day prior to the acquisition.
2. THE ACQUISITION
The total purchase price aggregates $22.6 million and
includes $128,000 of direct acquisition costs. The purchase
price was allocated to the assets acquired and liabilities
assumed based on the estimated fair market values for all other
identifiable tangible and intangible assets at the acquisition
date. The allocation of the purchase price is as follows (in
thousands):
<TABLE>
<S> <C>
Cash and cash equivalents $ 330
Other current assets 53
Property and equipment 222
Non-current assets 5
Intangible assets 22,228
Customer advances (210)
----------
$ 22,628
==========
</TABLE>
3. ADJUSTMENTS TO STATEMENTS OF OPERATIONS
To reflect the amortization of intangible assets over
the estimated lives (in thousands):
Value at Estimated
Acquisition Lives Quarter Year
----------- --------- ------- ----
Goodwill 22,228 20 278 1,111
