SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1996
Commission File Number: 0-25364
ANICOM, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 36-3885212
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6133 N. RIVER ROAD, SUITE 410, ROSEMONT, ILLINOIS 60018-5171
(Address of principal executive offices, including zip code)
847-518-8700
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
whether the issuer has been subject to such filing requirements for the past 90
days. Yes [ X ] No [ ].
As of July 31, 1996 there were 6,281,928 shares of common stock, par
value $.001, of the registrant outstanding.
<PAGE>
ANICOM, INC.
QUARTER ENDED JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Consolidated Balance Sheets as of June 30, 1996 (Unaudited)
and December 31, 1995.......................................................... 1
Consolidated Statements of Operations for the three and six months
ended June 30, 1996 and 1995 (Unaudited)....................................... 2
` Consolidated Statements of Cash Flows for the six months
ended June 30, 1996 and 1995 (Unaudited)....................................... 3
Notes to Consolidated Financial Statements..................................... 4
Item 2...Management's Discussion and Analysis of Financial Conditions
and Results of Operations......................................................11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..............................................................14
Item 2. Changes in Securities..........................................................14
Item 3. Defaults Upon Senior Securities................................................14
Item 4. Submission of Matters to a Vote of Security Holders............................14
Item 5. Other Information..............................................................14
Item 6. Exhibits and Reports on Form 8-K...............................................14
SIGNATURES..............................................................................15
</TABLE>
<PAGE>
Item 1. Financial Statements
ANICOM, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------------- -------------
(unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $7,533 $3,250
Marketable securities 5,012,439 25,536,282
Accounts receivable, less allowance for doubtful
accounts of $271,535 and $120,000 respectively 18,128,281 6,647,632
Inventories 16,311,371 5,245,893
Prepaid expenses 796,468 253,596
Other current assets, primarily deferred taxes 1,183,796 50,794
-------------- -------------
Total current assets 41,439,888 37,737,447
-------------- -------------
Property and equipment 2,017,591 906,372
Less: accumulated depreciation 403,416 254,472
-------------- -------------
1,614,175 651,900
Other assets, primarily goodwill-net 19,282,951 2,779,728
-------------- -------------
Total assets $62,337,014 $41,169,075
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $14,267,120 $2,552,714
Accrued expenses 2,481,112 489,226
Current portion of long-term debt and capital lease obligation 1,603,425 409,679
--------------- -------------
Total current liabilities 18,351,657 3,451,619
--------------- -------------
Non-current liabilities 667,638 -
Long-term debt and capital lease obligation, net of current portion 3,271,098 576,529
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.001 per share; 10,000,000 shares authorized
6,282,141 and 6,106,364 shares issued and outstanding respectively 6,082 5,906
Preferred stock, par value $ .01 per share, 1,000,000 shares authorized,
no shares issued and outstanding - -
Paid-in capital 38,251,560 36,370,738
Retained earnings 1,788,979 764,283
--------------- -------------
Total stockholders' equity 40,046,621 37,140,927
--------------- -------------
Total liabilities and stockholders' equity $62,337,014 $41,169,075
=============== =============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
ANICOM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
----------------------------- -----------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $28,675,219 $6,247,358 $43,211,344 $12,198,523
Cost of sales 21,492,041 4,766,456 32,551,123 9,349,642
------------- ------------- ------------- -------------
Gross profit 7,183,178 1,480,902 10,660,221 2,848,881
------------- ------------- ------------- -------------
Selling 3,382,079 623,689 5,036,855 1,190,920
General and administrative 2,872,102 627,247 4,306,640 1,183,945
------------- ------------- ------------- -------------
Total operating expenses 6,254,181 1,250,936 9,343,495 2,374,865
------------- ------------- ------------- -------------
Income from operations 928,997 229,966 1,316,726 474,016
------------- ------------- ------------- -------------
Other income (expense):
Interest expense (81,048) (1,579) (110,619) (49,754)
Interest income 95,725 56,451 351,089 74,892
------------- ------------- ------------- -------------
Total other income 14,677 54,872 240,470 25,138
------------- ------------- ------------- -------------
Income before income taxes 943,674 284,838 1,557,196 499,154
Provision for income taxes 332,300 116,500 532,500 201,398
------------- ------------- ------------- -------------
Net Income $611,374 $168,338 $1,024,696 $297,756
============= ============= ============= =============
Earnings per common share: $0.10 $0.07 $0.17 $0.14
============= ============= ============= =============
Average number of common shares
outstanding 6,267,683 2,580,000 6,203,957 2,149,392
============= ============= ============= =============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
ANICOM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------
1996 1995
------------ -------------
Cash flows from operating activities:
<S> <C> <C>
Net income $1,024,696 $297,756
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Provision for bad debts 203,584 19,385
Depreciation 148,944 34,307
Amortization 156,295 10,170
Changes in assets and liabilities:
Marketable securities 20,523,843 -
Accounts receivable (2,729,681) (1,201,910)
Inventories (1,953,350) (680,161)
Prepaid expenses (423,780) (25,435)
Other current assets (133,002) 24,379
Accounts payable 551,494 326,347
Accrued expenses (1,252,150) (83,168)
------------ -------------
Total adjustments 15,092,197 (1,576,086)
------------ -------------
Net cash (used in) provided by operating activities 16,116,893 (1,278,330)
------------ -------------
Cash flows from investing activities:
Property and equipment additions (336,361) (143,327)
Cash paid for acquisitions (10,039,605) -
------------ -------------
Net cash used in investing activities (10,375,966) (143,327)
------------ -------------
Cash flows from financing activities:
Payments on debt and capital lease obligations (5,672,644) (3,459,243)
Payments of S corporation distribution - (163,032)
Proceeds from issuance of long-term debt - 700,000
Proceeds (additional cost)from offering, net (74,502) 6,946,460
Stock options issued 10,502 -
------------ -------------
Net cash (used in) provided by financing activities (5,736,644) 4,024,185
------------ -------------
Net increase in cash 4,283 2,602,528
Cash beginning of period 3,250 2,750
------------ -------------
Cash end of period $7,533 $2,605,278
============ =============
Supplemental disclosure of cash flow information:
Cash paid for interest $22,956 $49,754
============ =============
Cash paid for income taxes $449,680 $199,802
============ =============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
ANICOM, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying consolidated condensed unaudited financial statements
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, the accompanying unaudited financial statements contain all
adjustments (consisting solely of normal recurring accruals) necessary to
present fairly the financial position of Anicom, Inc. (the "Company") as of June
30, 1996, the results of its operations and its cash flows for the six months
and three months ended June 30, 1996 and 1995. Reported interim results of
operations are based in part on estimates which may be subject to adjustment. In
addition, these interim quarterly results of operations are not necessarily
indicative of those expected at year end.
These financial statements should be read in conjunction with the
Company's audited consolidated financial statements included in the Company's
Annual Report on Form 10-KSB as filed with the Securities and Exchange
Commission on February 21, 1996.
2. Description of Business
The Company is a specialist in the sale and distribution of multimedia
wiring products. The Company sells to a wide array of businesses, including
contractors, systems integrators, security/fire alarm companies, regional Bell
operating companies, distributors, utilities, telecommunications and sound
companies, construction companies, universities and governmental agencies
throughout the United States and other parts of North America. The Company
generally sells to its customers on an unsecured basis.
3. Summary of Significant Accounting Policies
Consolidation
The accompanying consolidated financial statements consist of Anicom,
Inc. and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with
maturities of three months or less to be cash equivalents.
Marketable Securities
Management determines the appropriate classification of its investment
in debt securities at the time of purchase and reevaluates such
determination at each balance sheet date. At December 31, 1995 the
Company's portfolio of marketable securities is accounted for as
trading securities and is valued at fair value and consists primarily
of preferred stock and municipal bonds with varying maturities and
short term liquidity. At June 30, 1996, the portfolio consists
primarily of bonds. These securities are rated A1, P1 or AAA as the
Company attempts to reduce its credit risk. Based on the type of
investment, cost and fair value are the same at December 31,1995 and
June 30, 1996.
<PAGE>
ANICOM, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED
3. Summary of Significant Accounting Policies, continued
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined by the weighted average method.
Property and Equipment
Property and equipment are stated at cost. Depreciation and
amortization are computed using the straight-line method over the
estimated useful lives of the assets or terms of the lease for
leasehold improvements, generally 3 to 7 years.
Major renewals and improvements are capitalized. Expenditures for
maintenance and repairs are expenses as incurred. Upon retirement or
other disposition of property, the cost and related accumulated
depreciation are removed from the accounts and any gain or loss is
recognized.
Other Assets Primarily Goodwill
Goodwill arising from business combinations is amortized using the
straight-line method over forty years. The Company's criteria for
periodically evaluating the recoverability of goodwill includes
operating performance and undiscounted cash flows of the operating
business units.
Revenue Recognition
Sales and related cost of sales are recognized upon shipment of
products.
Income Taxes
The Company applies an asset and liability approach to accounting for
income taxes. Deferred tax assets and liabilities are established for
the expected future tax consequences of temporary differences between
the financial statement and tax bases of assets and liabilities, using
tax rates in effect for the year in which the differences are expected
to reverse.
Earnings Per Share
The computation of income per common share is based on the weighted
average number of common shares and common equivalents outstanding
during each period.
<PAGE>
ANICOM, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED
4. Stock Offerings
On March 1, 1995, the Company completed an initial public offering of
1,200,000 shares of its common stock at $6.00 per share. On March 15, 1995, the
underwriters exercised their over-allotment option to purchase 180,000
additional shares of the Company's common stock. Net proceeds to the Company
after underwriting discounts and other offering costs were approximately
$7,000,000. In connection with the offering, the Company reincorporated in the
State of Delaware. All references to the number of shares, per share information
and stockholders in the financial statements reflect the number of shares
authorized and issued after the reincorporation.
On November 27, 1995, the Company completed a follow-on public offering
of 3,000,000 shares of its common stock at $ 9.00 per share. On November 29,
1995, the underwriters exercised their overallotment option to purchase 450,000
shares of the Company's common stock. Net proceeds to the Company, after
underwriting discounts and other offering costs and expenses were approximately
$28,600,000.
5. Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------- --------------
Non-collateralized loans payable to former shareholders of acquired
companies:
<S> <C> <C>
6.75% due July 28, 1996 and 1997................................. $ 397,327 $ 397,327
6.5% due October 27, 1996 to 1998................................ 500,000 500,000
6.55% due March 12, 1997 to 1999................................. 3,000,000 --
8.50% due in annual installments of $106,656..................... 648,889 --
6% due May 30, 1997 to 1999...................................... 250,553 --
Capital lease obligation......................................... 51,789 64,265
Other............................................................ 25,965 24,616
------------- --------------
4,874,523 986,208
Less current portion............................................... 1,603,425 409,679
------------- --------------
$ 3,271,098 $ 576,529
============= ==============
</TABLE>
<PAGE>
ANICOM, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED
5. Long-Term Debt, continued
Maturities of long term debt are as follows:
1997................... $ 1,603,425
1998................... 1,582,315
1999................... 1,359,892
2000................... 106,667
Thereafter............. 222,224
---------------
$ 4,874,523
===============
At December 31,1995, the Company maintained a revolving line of credit
with a bank amounting to $4,000,000. The line of credit bore interest at the
bank's Base Rate. The credit agreement has been replaced with a new $10 million
credit facility dated February 6, 1996. This credit facility bears interest at
an annual rate to be determined from time to time based upon either LIBOR plus
1.00% or the bank's Base Rate minus .50%. The facility is unsecured and contains
customary financial covenants. The facility will expire on July 31, 1998.
6. Income Taxes
The following is a reconciliation of the provision for income taxes,
computed at the federal statutory rate to the reported provision for income
taxes for the three and six months ended June 30:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
------------------------- ------------------------
<S> <C> <C> <C> <C>
Computed income taxes at federal statutory rate..... $ 321,000 $ 96,900 $ 529,500 $ 169,700
State income tax, net of federal benefit............ 43,700 19,600 72,000 31,698
Non-deductible expenses............................. -- -- 2,500 --
Non-taxable income.................................. (32,400) -- (71,500) --
------------------------ ------------------------
$ 332,300 $ 116,500 $ 532,500 $ 201,398
========================= ========================
</TABLE>
<PAGE>
ANICOM, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED
7. Stock Options and Warrants
In January 1995, the Company adopted stock option plans that authorize
the granting of options to directors, officers and key employees to purchase
unissued common stock of the Company subject to certain conditions, such as
continued employment. The option price is equal to the fair market value at the
date of grant. These plans authorize the granting of options to purchase up to
650,000 shares of common stock. In February 1996, the Company amended the
Employee Stock Option Plan to increase the number of shares of common stock
available for grant from 600,000 shares to 1,200,000 shares. This amendment was
approved by stockholders in May 1996. In May 1996, the Company amended the
directors stock option plan to increase the number of shares of common stock
available for grant from 50,000 shares to 100,000 shares. This amendment will be
submitted for approval by stockholders at the next meeting of stockholders.
During 1995, the Company granted stock options to purchase 210,600
shares of common stock. During the first two quarters of 1996, stock options to
purchase 424,000 shares of common stock were granted.
In connection with the initial public offering, the Company issued
warrants to purchase up to 120,000 shares of common stock at an exercise price
of $7.20 to the representatives of the underwriters. The warrants are
exercisable for a five year period commencing February 22, 1996.
In connection with the purchase of Morgan Hill, warrants to purchase
18,182 shares were issued at an exercise price of $11.00 which vest equally over
three years beginning October 2, 1995.
8. Commitments
In January 1995, the Company entered into employment agreements with
certain officers. In the event of a change in control, as defined, the
employment agreements provide for severance payments if employment is
terminated. The aggregate base salary payable to these officers under the
employment agreements in 1996 is $544,000. In the event of a change in control,
the Company may become obligated to make payments to these officers of up to
approximately $3,600,000. In connection with the purchase of Northern Wire &
Cable, Inc., the Company entered into employment agreements with certain former
employees of Northern, two of whom became officers of the Company. The aggregate
base salary payable to these two officers under their employment agreements is
$440,000 in each of the years 1996 through 2000.
9. Acquisitions
On July 31, 1995, the Company acquired Pinnacle Wire and Cable, Inc.
("Pinnacle") of Columbus, Ohio, by a merger of Pinnacle into the Company. The
purchase price was $1.4 million payable in cash, notes and common stock.
On October 2, 1995, the Company acquired Morgan Hill Supply Co., Inc.
("Morgan Hill") of Kingston, New York, through the purchase of all issued and
outstanding shares of common stock of Morgan Hill. The purchase price was $1.5
million payable in cash, notes and common stock.
<PAGE>
ANICOM, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED
9. Acquisitions, continued
On February 22, 1996, the Company acquired substantially all of the
assets and assumed certain liabilities of Medisco, Inc. ("Medisco") of
Indianapolis, Indiana, a distributor of wire and cable products. The purchase
price was $837,000 payable in cash.
On March 12, 1996, the Company acquired substantially all of the assets
and assumed certain liabilities of Northern Wire & Cable, Inc. ("Northern") of
Troy, Michigan. Northern 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 market. Northern had
branches in Cleveland, Atlanta, Tampa and Las Vegas. The purchase price was
$14.3 million payable in cash, notes and common stock. In addition, the Company
assumed $5.6 million of bank indebtedness of Northern that was paid in full at
closing.
On May 30, 1996 the Company acquired substantially all of the assets
and assumed certain liabilities of Southern Alarm Supply Co., Inc. ("Southern")
of Nashville, Tennessee. Southern is a specialist in the sale and distribution
of ancillary security devices and wire. The purchase price was $350,000 payable
in cash and common stock.
All acquisitions have been accounted for under the purchase method. The
operating results of the acquisitions are included in the Company's consolidated
results of operations from the dates of acquisition. The following unaudited pro
forma consolidated financial information assumes the acquisitions occurred on
January 1, 1996. The results do not purport to be indicative of what would have
occurred had the acquisitions been made at the period presented, or of the
results which may occur in the future.
June 30,
1996
-------------------
Net sales.......................... $ 57,150,437
Operating income................... 1,257,468
Net income......................... 980,101
Earnings per common share.......... $ .16
<PAGE>
ANICOM, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED
10. Supplemental Disclosure of Noncash Investing and Financing Activities
A summary of the Acquisition of Medisco, Northern and Southern during
the Six Months Ended June 30, 1996, is as follows:
Assets acquired........................... $ 18,994,000
================
Liabilities assumed....................... $ 18,908,000
================
Business integration liabilities.......... $ 2,728,000
================
Deferred tax asset resulting from
business integration liabilities....... $ 1,000,000
================
Subordinated loans issued................. $ 3,000,000
================
Common stock issued....................... $ 1,560,000
================
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The following table sets forth selected income statement data of the
Company expressed as a percentage of net sales for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- ---------------------------
1996 1995 1996 1995
------------ ------------ ------------- ------------
Income Statement Data:
<S> <C> <C> <C> <C>
Net sales................................. 100.0% 100.0% 100.0% 100.0%
Cost of goods sold........................ 74.9 76.3 75.3 76.6
------------ ------------ ------------- ------------
Gross profit.............................. 25.1 23.7 24.7 23.4
Operating expenses:
Selling expenses........................ 11.8 10.0 11.6 9.8
General and administrative expenses..... 10.1 9.9 10.0 9.6
------------ ------------ ------------- ------------
Income from Operations.................... 3.2 3.8 3.1 4.0
Interest (expense)........................ ( .2) -- ( .3) ( .4)
Interest income........................... .3 .9 .8 .6
------------ ------------ ------------- ------------
Income before income taxes................ 3.3 4.7 3.6 4.2
Provision for Income taxes................ 1.2 1.9 1.2 1.8
------------ ------------ ------------- ------------
Net income................................ 2.1% 2.8% 2.4% 2.4%
============ ============ ============= ============
</TABLE>
Results Of Operations
Second Quarter and Six Months Ended June 30, 1996
The net sales of $28.7 million for the quarter ended June 30, 1996,
represented a 359% increase over net sales of $6.2 million for the quarter ended
June 30, 1995. Net sales of $43.2 million for six months ended June 30, 1996,
represented a 254% increase over net sales of $12.2 million for the six months
ended June 30, 1995. These increases reflect improved sales productivity per
sales person, expanded breadth and depth of the Company's product offering, and
increased sales attributable to acquisitions completed in the second half of
1995 and 1996. The most significant growth in the products offered by the
Company have continued to be voice and data communication products and fiber
optics.
The Company's gross profit increased by 385% to $7.2 million in the
second quarter of 1996, as compared to $1.5 million in the second quarter of
1995. Gross profit increased by 274% to $10.7 million in the first six months of
1996, as compared to $2.8 million in the first six months of 1995. These
improvements are the result of the Company's ongoing strategy to improve gross
profit. Gross profit as a percentage of net sales was 25.1% for the second
quarter of 1996, as compared to 23.7% for the second quarter of 1995. For the
six months ended June 30, 1996, gross profit as a percentage of net sales was
24.7%, as compared to 23.4% for the same six months in 1995. The margin
improvement was the result of expanding markets and economic efficiencies in
purchasing due primarily to higher net sales.
<PAGE>
Selling expenses for the three months ended June 30, 1996, were $3.4
million as compared to $624,000 for the three months ended June 30, 1995.
Selling expenses as a percentage of net sales for the second quarter of 1996,
increased to 11.8%, as compared to 10.0% in the second quarter of 1995. Selling
expenses as a percentage of net sales for the six months of 1996, increased to
11.6% as compared to 9.8% for the first six months of 1995. These increases
reflect the effect of historically higher sales expenses of Northern.
General and administrative expenses as a percentage of net sales
increased to 10.1% for the three months ended June 30, 1996, as compared to 9.9%
for the comparable period in 1995. For the six months ended June 30, 1996
general and administrative expenses as a percentage of net sales increased to
10.0%, as compared to 9.6% for the same period in 1995. The increase is
primarily due to higher warehouse and distribution costs at Northern,
amortization of goodwill from the acquisitions, and other costs that occurred in
connection with the Company's integrated growth strategy.
Interest expense for the second quarter of 1996, increased to $81,048
as compared to $1,579 in the second quarter of 1995. Net interest expense for
the first six months of 1996, increased to $110,619 as compared to $49,754 in
the first six months of 1995. The Company's issuance of subordinated notes and
assumption of certain liabilities for acquisitions, contributed to the increase
in interest expense. The Company paid off its revolving line of credit with the
bank in the first six months of 1995.
Interest income increased to $95,725 for the second quarter of 1996, as
compared to $56,451 for the same period in 1995. For the six months ended June
30, 1996, interest income increased to $351,089, as compared to $74,892, for the
same period in 1995. These increases are due primarily to interest from the
investment of funds from the follow-on offering.
Net income of $611,400 for the second quarter increased approximately
263% over the comparable 1995 period. Net income for the first six months
increased approximately 244% to $1,024,700 as compared to $297,800 for the
period ended June 30, 1995. The increases were due to higher sales volume and
improvements in the gross margin. Earnings per share for the three months ended
June 30, 1996 were $.10 per share (based on 6,267,683 average weighted shares
outstanding), as compared to $.07 per share (based on 2,580,000 average weighted
shares outstanding) for the comparable 1995 period. Earnings per share for the
six months ended June 30, 1996 were $.17 per share (based on 6,203,957 average
weighted shares outstanding), as compared to $.14 per share (based on 2,149,932
average weighted shares outstanding) for the comparable 1995 period. The average
weighted shares outstanding in the first six months of 1996 increased
significantly (approximately 189%) over the average weighted shares outstanding
in the first six months of the prior year. This increase was due to the issuance
of shares in the Company's follow-on offering in November 1995, and the
Company's acquisitions.
Liquidity and Capital Resources
As of June 30, 1996, the Company had working capital of approximately
$23.1 million as compared to working capital of $6.9 million on June 30, 1995.
The Company's primary ongoing cash requirements relate to the implementation of
Anicom's integrated growth strategy.
<PAGE>
The Company has available a $10.0 million unsecured revolving credit
facility with Harris Trust & Savings Bank. The credit agreement expires on July
31, 1998, with an interest rate of LIBOR plus 1.00% or the lender's Domestic
Base Rate (as defined) minus 0.50%. The credit agreement contains customary
representations, warranties and covenants by the Company. As of June 30, 1996,
the Company had no amount outstanding under the revolving credit.
On February 23, 1996, the Company acquired substantially all the assets
and assumed certain liabilities of Medisco, Inc. of Indianapolis, Indiana.
Anicom used $837,000 of cash to fund the transaction.
On March 12, 1996, the Company acquired substantially all the assets
and assumed certain liabilities of Northern Wire & Cable, Inc. of Troy,
Michigan. Anicom used $14.6 million of cash to fund the transaction, $9.0
million at closing and approximately $5.6 million to pay off Northern's bank
credit facility.
On May 30, 1996, the Company acquired substantially all the assets and
assumed certain liabilities of Southern Alarm Supply, Inc., of Nashville,
Tennessee. Anicom used $100,000 of cash to fund the transaction.
The Company believes that during the remainder of fiscal 1996, existing
cash and cash flows from operations supplemented, if necessary, by draws on the
line of credit will be sufficient to fund current operations and its planned
expansion program. The Company also believes that the financial flexibility will
allow the Company, if necessary, to further increase the revolving credit
facility for acquisitions that may occur in fiscal 1996 and 1997.
Inflation
Although the operations of the Company are influenced by general
economic conditions, the Company does not believe that inflation had a material
effect on the results of the operations during the six months, or the quarter
ended June 30, 1996.
Seasonality
The Company experienced, and the Company expects to experience in
future years, a modest decrease in the level of activity among many of its
customers in the fourth quarter (Thanksgiving and Christmas holidays).
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders At the Company's
annual meeting of stockholders held on May 23, 1996,
as described in the Company's proxy statement dated April 19, 1996, the
following proposals were submitted to a vote of the stockholders: (i) election
of three Class I directors of the Company; (ii) approval of the Second Amended
and Restated Anicom, Inc. 1995 Stock Incentive Plan; and (iii) approval of the
Anicom, Inc. 1996 Stock Incentive Plan.
With respect to the election of directors, Scott C. Anixter, Carl E.
Putnam and Lee B. Stern were elected as Class I directors to serve for three
year terms expiring at the annual meeting of stockholders in 1999. At least
5,609,911 votes were cast in favor of these directors, no more than 42,309 votes
were cast against these directors and there were zero abstentions. The following
directors' terms of office continued after the meeting: Alan B. Anixter (term
expiring in 1997), Donald C. Welchko (term expiring in 1997), Robert
Brzustewicz, Sr. (term expiring in 1998), William R. Anixter (term expiring in
1998), Ira J. Kaufman (term expiring in 1998) and Michael Segal (term expiring
in 1997).
In addition, at the annual meeting, the stockholders approved the
Second Amended and Restated Anicom, Inc. 1995 Stock Incentive Plan. 3,664,969
votes were cast in favor of the Second Amended and Restated Anicom, Inc. 1995
Stock Incentive Plan and 109,601 votes were cast against the Second Amended and
Restated Anicom, Inc. 1995 Stock Incentive Plan.
At the annual meeting, the stockholders also approved the Anicom, Inc.
1996 Stock Incentive Plan. 3,469,343 votes were cast in favor of the Anicom,
Inc. 1996 Stock Incentive Plan and 323,286 votes were cast against the Anicom,
Inc. 1996 Stock Incentive Plan.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K
Form 8-K/A, dated May 2, 1996 (Northern Wire & Cable, Inc.)
Form 8-K/A, dated May 23, 1996 (Northern Wire & Cable, Inc.)
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANICOM, INC.
------------
(Registrant)
Date: August 9, 1996 By: /s/ SCOTT C. ANIXTER
-----------------------------
Scott C. Anixter
Co-Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: August 9, 1996 By: /s/ DONALD C. WELCHKO
------------------------------
Donald C. Welchko
Chief Financial Officer
(Principal Financial and
Accounting Officer)
