UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K / A
Amendment No. 2
Amendment to application on Report filed pursuant
to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report: May 23, 1996
Anicom, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-25364 36-3885212
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
incorporation)
6133 North River Road, Suite 410, Rosemont, IL 60018
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number,
including area code (847) 518-8700
The undersigned registrant, in order to provide the financial
statements required to be included in the Current Report on Form 8-
K dated March 12, 1996, in connection with the purchase of
substantially all of the assets and assumption of certain
liabilities of Northern Wire & Cable, Inc., hereby amends the
following item, or other portions of such Current Report on Form
8-K set forth in the pages attached hereto.
Item 7. Financial Statements and Exhibits
The financial statements and information in the following table of
contents and attached hereto are hereby filed with the Commission
in accordance with the above referenced item.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The following financial statements of the acquired business,
Northern Wire & Cable, Inc., are submitted herewith on the
indicated pages.
Page
Report of Independent Accountants.......................3
Balance Sheet as of December 31, 1995...................4
Statements of Operations for the years ended
December 31, 1995 and 1994..............................5
Statements of Stockholders' Equity for the years ended
December 31, 1995 and 1994..............................6
Statements of Cash Flows for the years ended
December 31, 1995 and 1994..............................7
Notes to Financial Statements...........................8
(b) Pro Forma Financial Information
The following unaudited pro forma condensed combined financial
information of Anicom, Inc. and Northern Wire & Cable, Inc. are
submitted herewith on the indicated pages.
Pro forma Condensed Combined Financial Information.....12
Pro forma Condensed Combined Statement of Operations
for the year ended December 31, 1995 (Unaudited).......13
Notes to Pro forma Condensed Combined Statement of
Operations for the year ended December 31, 1995
(Unaudited)............................................14
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
NORTHERN WIRE & CABLE, INC.
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
AND
REPORT OF INDEPENDENT ACCOUNTANTS
Report of Independent Accountants
Board of Directors of Anicom, Inc.
Chicago, Illinois
We have audited the accompanying balance sheet of Northern Wire &
Cable, Inc. as of December 31, 1995 and the related statements of
operations, stockholders' equity and cash flows for the years ended
December 31, 1995 and 1994. 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
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
Northern Wire & Cable, Inc. as of December 31, 1995 and the results
of its operations and its cash flows for the years ended December
31, 1995 and 1994 in conformity with generally accepted accounting
principles.
Chicago, Illinois
April 25, 1996
Northern Wire & Cable, Inc.
<TABLE>
Balance Sheets
<CAPTION>
as of
December 31, 1995
<S> <C>
ASSETS
Current assets:
Cash 282,369
Accounts receivable - trade,
(less allowances of $616,821) 7,661,291
Inventory 7,340,485
Prepaid expenses and other assets 47,215
Total current assets 15,331,360
Property and equipment:
Machinery and equipment 617,292
Transportation equipment 165,617
Office furniture and equipment 1,650,193
Leasehold improvements 133,128
2,566,230
Less accumulated depreciation 1,804,922
Net property and equipment 761,308
Other assets:
Deposits 78,109
Cash surrender value - officers'
life insurance 87,859
165,968
Total assets 16,258,636
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 8,083,674
Revolving credit facility and
current portion of long-term debt 5,255,823
Accrued liabilities 1,378,934
Total current liabilities 14,718,413
Long-term debt, net of current
portion 595,554
Total liabilities 15,313,985
Commitments and contingencies
Stockholders' equity:
Common stock, $1.00 par value
50,000 shares authorized,
7,221 shares issued and
outstanding 12,221
Additional paid-in capital 13,621
Advances to stockholders (240,902)
Retained earnings 3,159,711
Treasury stock, at cost; 5,000 shares (2,000,000)
Total stockholders' equity 944,651
Total liabilities and stockholders'
equity 16,258,636
</TABLE>
The accompanying notes are an integral part of these financial
statements.
Northern Wire & Cable, Inc.
<TABLE>
Statements of Operations
<CAPTION>
for the years ended December 31,
--------------------------------
1995 1994
<S> <C> <C>
Net sales 68,605,064 58,209,003
Cost of goods sold 52,383,460 44,611,829
Gross profit 16,221,604 13,597,174
Operating expenses:
Selling 8,299,449 8,254,130
General and administrative 7,472,890 4,737,235
Total operating expenses 15,772,339 12,991,365
Income from operations 449,265 605,809
Other income (expense):
Interest expense (614,777) (379,751)
Interest income 9,313 7,206
Other expense (42,128) (21,496)
Total other income (expense) (647,592) (394,041)
Net income (loss) (198,327) 211,768
</TABLE>
The accompanying notes are an integral part of these financial
statements.
Northern Wire & Cable, Inc.
<TABLE>
Statements of Stockholders' Equity for the years ended December 31, 1995 and 1994
<CAPTION>
Addi- Advances
tional to
Common Stock Paid-in Share Retained Treasury
Shares Amount Capital holder Earnings Stock Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January
1, 1994 50,000 12,221 13,621 (92,208) 3,146,270 (2,000,000) 1,079,904
Net increase in
advances to stock-
holders to
shareholders (104,812) (104,812)
Net income 211,768 211,768
Balance at
December 31, 1994 12,221 13,621 (197,020) 3,358,038 (2,000,000) 1,186,860
Net increase in
advances
to stockholders (43,882) (43,882)
Net loss (198,327) (198,327)
Balance at
December 31,
1995 50,000 12,221 13,621 (240,902) 3,159,711 (2,000,000) 944,651
</TABLE>
The accompanying notes are an integral part of these financial
statements.
Northern Wire & Cable, Inc.
<TABLE>
STATEMENTS OF CASH FLOWS
<CAPTION>
for the years ended December 31,
--------------------------------
1995 1994
<S> <C> <C>
Cash flows from
operating activities:
Net income (loss) (198,327) 211,768
Adjustments to reconcile
net income (loss) to net
cash used by
operating activities:
Depreciation 220,959 252,605
Provision for bad debts 823,037 127,000
(Gain) loss on sale of
fixed assets (657) 7,687
Increase in cash value of
officers' life insurance (23,535) (21,226)
Increase (decrease) in
cash attributable to
changes in assets and
liabilities:
Accounts receivable (245,879) (3,103,154)
Inventory (2,953,533) (209,687)
Prepaid expenses (7,605) (8,925)
Accounts payable 1,432,207 418,329
Accrued liabilities 618,652 193,553
Net cash used by
operating activities (334,681) (2,132,050)
Cash flows from
investing activities:
Purchase of equipment (208,963) (142,216)
Proceeds from sale
of equipment 13,958 10,845
Decrease in security
deposits 5,575 15,462
Net cash used by
investing activities (189,450) (115,909)
Cash flows from
financing activities:
Proceeds from line of
credit 623,445 2,529,967
Payments of line
of credit (171,667) (106,667)
Advances to shareholders,
net (43,882) (104,812)
Net cash provided by
financing activities 407,896 2,318,488
Net (decrease) increase
in cash (116,215) 70,529
Cash, beginning of year 398,584 328,055
Cash, end of year 282,369 398,584
Supplemental disclosure
of cash flow information:
Interest paid 603,260 360,270
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
Northern Wire & Cable, Inc.
Notes to the Financial Statements
1. Nature of Business and Basis of Presentation
Northern Wire & Cable, Inc. (NWC or the Company) is a specialist in
the sale and distribution of wire, cable, fiber optics and
connectivity products for structured wiring, power cables, cable
assemblies for automation, computers and robotics and value added
services for the Industrial Management and Technology (IMT) market.
The Company primarily sells to the U.S. and Canadian operations of
major manufacturing companies involved in the automotive and
computer industries. The Company generally grants credit to its
customers on an unsecured basis and requires no collateral. The
Company's sales to its twelve largest customers accounted for
approximately 35% of net sales for the year ended December 31, 1995
including sales to two of the "Big Three" automakers totaling
approximately 24% of net sales for the same period.
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.
2. Summary of Significant Accounting Policies
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents.
Property and Equipment
Property and equipment are recorded at cost. Normal maintenance
and repairs are charged to expense. Major repairs and betterments
that materially extend the lives of the properties are capitalized.
Depreciation and amortization are computed using the straight-line
method over the estimated useful lives of the assets.
Inventory
Inventories, consisting primarily of finished goods, are stated at
the lower of cost or market using the weighted average method.
Revenue Recognition
Sales and related cost of sales are recognized upon shipment of
products.
Income Taxes
The Company has elected to be treated as a Subchapter S Corporation
under the provisions of the Internal Revenue Code. Under those
provisions, the Company does not pay federal corporate income taxes
on its taxable income. Instead, the shareholders have elected to
be taxed on their proportionate share of the Company's taxable
income. Therefore, no provision or liability for federal income
taxes has been included in the financial statements.
3. Revolving Credit Facility and Long-Term Debt
In addition to certain promissory notes discussed below, the
Company has borrowings under a revolving credit facility with a
bank that provides for advances of up to $7,000,000 for the purpose
of funding working capital. Outstanding borrowings are
collateralized by accounts receivable and inventory and bear
interest at 1.0% over the prime rate of interest, as defined. Each
of the Company's three shareholders have personally guaranteed a
portion of the outstanding debt.
The revolving credit facility requires the maintenance of a
specific equity balance and requires the Company to maintain a debt
to equity ratio below a specified ratio.
The revolving credit facility and long-term debt consist of the
following:
<TABLE>
<CAPTION>
1995
<S> <C>
Borrowings under revolving
credit facility 5,149,155
Monthly installment promissory
note payable to former
stockholder, interest at prime,
final payment due
August, 2002 702,222
5,851,377
Less: Current portion 5,255,823
595,554
</TABLE>
The promissory note payable to former stockholder results from an
agreement between NWC and its former chief executive officer. On
June 10, 1987, the Company acquired 5,000 shares of its common
stock in exchange for an installment promissory note, cash and the
assignment of the cash surrender value of a life insurance policy.
Maturities of long-term debt outstanding at December 31, 1995 for
the next five years are as follows:
<TABLE>
Year Ended December 31,
<CAPTION>
Year Amount
<S> <C>
1996 5,255,823
1997 106,668
1998 106,668
1999 106,668
2000 106,668
Beyond 168,882
5,851,377
</TABLE>
4.Operating Leases
The Company is obligated under operating leases for equipment and
office and warehouse facilities. Future minimum lease payments
under noncancelable operating leases are approximately as follows:
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1996 543,179
1997 469,946
1998 253,052
1999 49,548
2000 3,750
1,319,475
</TABLE>
Rent expense for these operating leases was approximately
$1,130,000 and $1,007,000 in 1995 and 1994, respectively.
5. Employee Benefit Plan
The Company maintains a 401(k) retirement plan for all eligible
employees. A percentage of employee contributions is matched by
the Company. The plan covers substantially all full-time
employees. Company contributions are vested based upon years of
employment. Contributions by the Company for the years ended
December 31, 1995 and 1994 were approximately $58,000 and $39,000,
respectively.
6. Commitments and Contingencies
The Company is involved in certain other legal proceedings as a
defending party for which liability is reasonably possible. The
ultimate outcome of these matters is not expected to have a
material effect on the financial position or results of operations
in a future period.
7. Subsequent Events
On March 12, 1996 substantially all of the assets of the Company
were acquired by a wholly-owned subsidiary of Anicom, Inc. As a
part of the Asset Purchase Agreement, certain liabilities of the
Company were assumed.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
Anicom, Inc., Northern Wire & Cable, Inc. and Other Acquisitions
Pro Forma Condensed Combined Financial Information
(Unaudited)
The unaudited pro forma condensed combined financial information
give effect, on a purchase accounting basis, to the Asset Purchase
Agreement between Anicom, Inc. and its wholly owned subsidiary,
Northern Acquisition Corp. (hereinafter referred to as "Anicom")
and Northern Wire & Cable, Inc. ("Northern") and certain other
acquisitions completed by Anicom during 1995.
The unaudited pro forma condensed combined statement of operations
for the year ended December 31, 1995 (the "Statement") assumes that
the purchase of Northern occurred on January 1, 1995 and that
purchase price was provided by the issuance of a $3,000,000 non-
negotiable promissory note maturing in three equal annual
installments and bearing interest at 6.55% per annum, the issuance
of 209,091 shares of Anicom's common stock, $.001 par value per
share, valued at $11 per share, and $9,000,000 in cash provided
principally from the liquidation of marketable securities. The
Statement also assumes that Anicom's acquisitions of Pinnacle Wire
& Cable, Inc. ("Pinnacle") and Morgan Hill Supply Company, Inc.
("Morgan Hill") occurred on January 1, 1995. In addition, as these
acquisitions were possible as a result of Anicom's initial public
offering of 1,380,000 shares (including 180,000 shares for the
underwriters' overallotment) and its follow-on offering of
3,450,000 shares (including 450,000 shares for the underwriters'
overallotment), the Statement assumes that these offeringss
occurred on January 1, 1995.
The unaudited pro forma adjustments are based on preliminary
assumptions of the allocation of the purchase price and are subject
to revision upon final settlement of all purchase price adjustments
and the completion of evaluations and other studies of the fair
value of all assets acquired and liabilities assumed. Actual
purchase accounting adjustments may differ from the pro forma
adjustments presented herein.
The unaudited pro forma condensed combined statements are not
necessarily indicative of the results that actually would have
occurred if the transactions described above had been effective
since the assumed dates, nor are the statements indicative of
future combined financial position or earnings. Anicom's future
financial statements will reflect the asset purchase of Northern as
of March 12, 1996.
The pro forma condensed combined financial statements should be
read in conjunction with the consolidated financial statements of
Anicom as filed with the Securities and Exchange Commission in its
Form 10-KSB for the year ended December 31, 1995 and Quarterly
Report on Form 10-QSB for the quarterly period ended March 31,
1996.
Anicom, Inc. and Northern Wire & Cable, Inc.
Condensed Combined Balance Sheet
at December 31, 1995
(Unaudited)
<TABLE>
Condensed Combined Balance Sheet at December 31, 1995 (unaudited)
<CAPTION>
Historic Pro Forma
Anicom Northern Adjustments Combine
<S> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash
equivalents 3,250 282,369 285,619
Marketable securities 25,536,282 25,536,282
Accounts receivable,
net 6,647,632 7,661,291 14,308,923
Inventory, primarily
finished goods 5,245,893 7,340,485 12,586,378
Other current assets 304,390 47,215 351,605
Total current assets 37,737,447 15,331,360 0 53,068,807
Fixed assets, net 651,900 761,308 1,413,208
Other assets,
primarily goodwill, net 2,779,728 2,779,728
Other assets 165,968 165,968
Total Assets 41,169,075 16,258,636 0 57,427,711
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable 2,552,714 8,083,674 10,636,388
Accrued expenses 489,226 1,378,934 1,378,934
Current portion of
long-term debt and
capital lease obligations 409,679 5,255,823 5,745,049
Other current
liabilities 0
Total current liabilities 3,451,619 14,718,431 0 17,760,371
Long-term debt and
capital lease obligation,
net of current portion 576,529 595,554 1,172,083
Stockholders' Equity
Common stock 5,906 5,906
Paid-in capital 36,370,738 36,370,738
Retained earnings 764,283 764,283
Current (income)/loss 0
Company equity 944,651 944,651
Total Stockholders'
Equity 37,140,927 944,651 0 38,085,578
Total liabilities and
stockholders' equity 41,169,075 16,258,636 0 57,018,032
</TABLE>
Anicom, Inc. and Northern Wire & Cable, Inc.
Condensed Combined Statement of Operations
at December 31, 1995
(Unaudited)
<TABLE>
Condensed Combined Statement of Operations at December 31, 1995
(Unaudited)
<CAPTION>
Historic Pro Forma
Other
Acquisi-
Anicom Northern tions (Fa) Adjustments Combined
<S> <C> <C> <C> <C> <C>
Net sales 29,357,597 68,605,064 5,865,723 103,828,384
Cost of sales 22,404,331 52,383,460 4,643,673 79,431,464
Gross profit 6,953,266 16,221,604 1,222,050 24,396,920
Opterating expenses:
Selling 3,058,268 8,299,449 536,063 11,893,780
General and
administrative 2,821,938 7,472,890 598,332 421,200 (Fb) 10,124,760
47,400 (Fc)
(1,237,000) (Fd)
Total operating
expenses 5,880,206 15,772,339 1,134,395 (768,400) 22,018,540
Income (loss) from
operations 1,073,060 449,265 87,655 768,400 2,378,380
Other income (expense):
Interest expense (72,887) (614,777) (26,456) 74,714 (Fe) (308,604)
550,177 (Ff)
(196,500) (Fg)
(22,875) (Fh)
Interest income 256,310 9,313 5,544 770,000 (Fi) 1,041,167
Other (42,128) (42,128)
Total other
income (expense) 183,423 (647,592) (20,912) 1,175,516 690,435
Income (loss)
before income taxes 1,256,483 (198,327) 66,743 1,943,916 3,068,815
Provision for
income taxes (492,200) (735,326) (Fj) (1,227,526)
Net income (loss) 764,283 (198,327) 66,743 1,208,590 1,841,289
Earnings per
common share 0.29
Average number of
common shares
outstanding 6,314,455 (Fk)
Anicom, Inc., Northern Wire & Cable, Inc. and Other Acquisitions
Notes to Pro Forma Condensed Combined Statement of Operations
for the year ended December 31, 1995
(Unaudited)
The following is a summary of the adjustments reflected in the
unaudited pro forma condensed combined statement of operations:
<FN>
<Fa>
This column presents the combined historical results of
Pinnacle for the period January 1, 1995 to July 31, 1995 (date of
acquisition by Anicom) and the historical results of Morgan Hill
for the period January 7, 1995 to September 15, 1995 (the latest
information available prior to the October 2, 1995 acquisition by
Anicom).
<Fb>
Earnings effect of Northern goodwill amortization using a 40
year period.
<Fc>
Earnings effect of Pinnacle and Morgan Hill goodwill
amortization not already included in historical information, using
a 40 year period.
<Fd>
To adjust officer compenstation to contracted amounts and to
eliminate certain professional fees related to the transaction
expensed in 1995.
<Fe>
The cash issued in connection with the merger of Pinnacle and
the stock purchase of Morgan Hill was provided by a portion of the
net proceeds of Anicom's initial public offering ("IPO"). In
addition, the ability to issue promissory notes in each of these
transactions was due, at least in part, to the improved
capitalization of Anicom subsequent to the its initial public
offering ("IPO").
In connection with the Pinnacle and Morgan Hill transactions,
certain bank indebtedness was assumed. Immediately following the
close of these transactions, the assumed bank indebtedness was
retired with cash provided by a portion of the net proceeds of the
IPO. Interest expense has been adjusted to give effect to the
retirement of this bank debt as if such transactions had occurred
on January 1, 1995.
<Ff>
The cash issued in connection with the asset purchase of
Northern was provided by a portion of the net proceeds of Anicom's
follow-on offering. In addition, the ability to issue promissory
notes in the Northern transaction was due, at least in part, to
the improved capitalization of Anicom subsequent to the its
follow-on offering.
In connection with the asset purchase of Northern, Anicom assumed
up to $6.5 million of Northern's outstanding bank debt.
Immediately after the closing of this transaction, Anicom retired
the outstanding bank debt assumed from Northern. Interest expense
has been adjusted to give effect to the retirement of this bank
debt as if such transactions had occurred on January 1, 1995.
<Fg>
To adjust interest expense to give effect to the issuance of a
$3,000,000, 6.55% promissory note in connection with the Asset
Purchase Agreement, as if such transaction had occurred on January
1, 1995 and assuming no principal payments were made during the
year as the actual terms provide.
<Fh>
To adjust interest expense to give effect to the issuance of
$400,000 (6.75%) and $500,000 (6.00%) promissory notes in
connection with the merger and stock purchase agreements,
respectively, as if such transactions had occurred on January 1,
1995 and assuming payment of $200,000 and $166,667, respectively,
one year after the notes were issued as the actual terms provide.
<Fi>
Adjustment to give effect to additional interest income earned
on $14 million of residual follow-on offering proceeds at 5 1/2%
after giving effect to cash paid in connection with the Northern
transaction, as if such transactions had occurred on January 1,
1995.
<Fj>
Adjustment of income tax provision to reflect the approximate
effective tax rate of Anicom on the combined results.
<Fk>
Weighted average shares outstanding assuming the issuance of
1,380,000 shares in connection with the IPO
40,000 shares in connection with the Pinnacle merger agreement
36,364 shares in connection with the Morgan Hill stock purchase agreement
3,450,000 shares in connection with the follow-on offering
209,091 shares in connection with the Northern asset purchase agreement
</FN>
</TABLE>
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.
ANICOM, INC.
Dated: May 23, 1996
By: /s/ DONALD C. WELCHKO
_____________________________
Donald C. Welchko
Vice President, Chief Financial Officer
