<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment to application on Report filed pursuant
to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report: November 1, 1996
Anicom, Inc.
---------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-25364 36-3885212
- ---------------------------- ------------ -----------------
(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
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
<PAGE> 2
The undersigned registrant, in order to provide the financial statements
required to be included in the Current Report on Form 8-K dated August 30, 1996
in connection with the merger of Norfolk Wire & Electronics, Inc. into a wholly
owned subsidiary of Anicom, 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.
<PAGE> 3
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The following financial statements of the merged business, Norfolk Wire &
Electronics, Inc., are submitted herewith on the indicated pages.
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants 4
Balance Sheets as of August 31, 1996 and 1995 5-6
Statements of Income and Retained Earnings for the years ended
August 31, 1996 and 1995 7
Statements of Cash Flows for the years ended August 31, 1996 and 1995 8
Notes to Financial Statements 9
(b) Pro Forma Financial Information
The following unaudited pro forma condensed combined financial information
of Anicom, Inc. and Norfolk Wire & Electronics, Inc. are submitted herewith on
the indicated pages.
Pro forma Condensed Combined Financial Information 14
Pro forma Condensed Combined Balance Sheet at June 30, 1996 (Unaudited) 15
Notes to Pro forma Condensed Combined Balance Sheet at June 30, 1996
(Unaudited) 16
Pro forma Condensed Combined Statement of Operations for the six months
ended June 30, 1996 (Unaudited) 17
Notes to Pro forma Condensed Combined Statement of Operations for the
six months ended June 30, 1996 (Unaudited) 18
Pro forma Condensed Combined Statement of Operations for the year
ended December 31, 1995 (Unaudited) 19
Notes to Pro forma Condensed Combined Statement of Operations for the
year ended December 31, 1995 (Unaudited) 20
</TABLE>
<PAGE> 4
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: November 1, 1996 By:
--------------------------
Donald C. Welchko
Vice President, Chief Financial Officer
<PAGE> 5
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
<PAGE> 6
NORFOLK WIRE & ELECTRONICS, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED AUGUST 31, 1996 AND 1995
<PAGE> 7
CONTENTS
Pages
Report of Independent Accountants 1
Financial Statements:
Balance Sheets 2
Statements of Income and Retained Earnings 3
Statements of Cash Flows 4
Notes to Financial Statements 5-9
8
<PAGE> 8
Report of Independent Accountants
Board of Directors
Norfolk Wire & Electronics, Inc.:
We have audited the accompanying balance sheets of Norfolk Wire & Electronics,
Inc. as of August 31, 1996 and 1995, and the related statements of income and
retained earnings and cash flows for the years 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 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.
As discussed in Note 2 to the financial statements, the Company was merged with
and into Anicom-Southeast, Inc. on September 1, 1996.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Norfolk Wire & Electronics,
Inc. as of August 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.
Coopers & Lybrand L.L.P.
Virginia Beach, Virginia
October 1, 1996
9
<PAGE> 9
NORFOLK WIRE & ELECTRONICS, INC.
BALANCE SHEETS
August 31, 1996 and 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
<S> <C> <C>
Current assets:
Cash $ 120,918 $ 121,034
Trade accounts receivable, net of allowance for uncollectible
accounts of $149,100 in 1996 and $60,550 in 1995 4,677,321 2,967,069
Merchandise inventory, net of reserve for inventory obsolence
of $300,000 in 1996 3,340,046 2,505,691
Prepaid expenses and other current assets 147,158 145,098
Deferred income taxes 235,061 39,465
---------- ----------
Total current assets 8,520,504 5,778,357
---------- ----------
Property and equipment:
Furniture, fixtures and equipment 1,052,564 823,250
Automotive equipment 150,393 153,093
Leasehold improvements 189,980 147,420
---------- ----------
1,392,937 1,123,763
Less accumulated depreciation and amortization 582,804 532,036
---------- ----------
810,133 591,727
---------- ----------
Other assets 15,427 34,867
---------- ----------
$9,346,064 $6,404,951
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
Current liabilities:
Notes payable:
Bank $2,405,602 $2,205,498
Related party 135,000
Other 60,000
---------- ----------
2,405,602 2,400,498
Accounts payable 4,209,324 1,660,628
Other accrued liabilities 430,379 270,286
Current portion of long-term debt 77,960 56,585
---------- ----------
Total current liabilities 7,123,265 4,387,997
---------- ----------
Long-term debt, less current portion 219,341 228,053
Deferred income taxes 34,206 20,316
Commitments
Shareholders' equity:
Common stock, no par value:
Authorized shares - 5,000
Issued and outstanding shares - 1,000 437,390 437,390
Retained earnings 1,631,862 1,451,195
---------- ----------
2,069,252 1,888,585
Due from shareholders (100,000) (120,000)
---------- ----------
Total shareholders' equity 1,969,252 1,768,585
---------- ----------
Total liabilities and shareholders' equity $9,346,064 $6,404,951
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 10
NORFOLK WIRE & ELECTRONICS, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
for the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Net sales $ 27,196,192 $ 19,950,918
Cost of goods sold 20,271,262 14,173,757
------------ ------------
Gross profit 6,924,930 5,777,161
Selling, general and administrative expenses 6,445,962 4,961,946
------------ ------------
Operating income 478,968 815,215
------------ ------------
Other income (expense):
Interest expense (244,920) (263,380)
Interest income and other 17,751 23,412
------------ ------------
(227,169) (239,968)
------------ ------------
Income before income taxes 251,799 575,247
Income tax provision 71,132 230,099
------------ ------------
Net income 180,667 345,148
Retained earnings, beginning of year 1,451,195 1,106,047
------------ ------------
Retained earnings, end of year $ 1,631,862 $ 1,451,195
============ ============
</TABLE>
The accompanying notes are an integral part of the financial
statements.
11
<PAGE> 11
NORFOLK WIRE & ELECTRONICS, INC.
STATEMENTS OF CASH FLOWS
for the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Operating activities:
Net income $ 180,667 $ 345,148
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 194,714 159,517
Provision for bad debts 106,394 28,334
Provision for inventory obsolescence 300,000
Deferred income taxes (181,706)
Changes in operating assets and liabilities:
Trade accounts receivable (1,816,646) (122,417)
Merchandise inventory (1,134,355) (396,843)
Prepaid expenses and other (2,060) 16,996
Other assets 19,440
Accounts payable 2,548,696 (156,569)
Other accrued liabilities 160,093 19,311
--------------- ---------------
Net cash provided by (used in) operating activities 375,237 (106,523)
--------------- ---------------
Investing activities:
Acquisition of property and equipment (282,117) (246,633)
Payments from shareholders 20,000 30,000
--------------- ---------------
Net cash used in investing activities (262,117) (216,633)
--------------- ---------------
Financing activities:
Proceeds from bank notes 8,693,594 13,409,383
Payments on bank notes (8,371,085) (13,001,373)
Proceeds from related party note 35,000
Payments on related party note (135,000)
Proceeds from long-term debt 67,124
Payments on long-term debt (240,745) (113,382)
Payments on other notes (60,000)
--------------- ---------------
Net cash (used in) provided by financing activities (113,236) 396,752
--------------- ---------------
Net (decrease) increase in cash (116) 73,596
Cash at beginning of year 121,034 47,438
--------------- ---------------
Cash at end of year $ 120,918 $ 121,034
=============== ===============
Supplemental cash flow information:
Cash paid for interest $ 246,230 $ 258,047
=============== ===============
Cash paid for income taxes $ 281,846 $ 274,641
=============== ===============
Supplemental schedule of noncash activity:
Assets acquired through incurring directly related obligations $ 131,003
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
1. Description of Business and Accounting Policies
Description of Business: Norfolk Wire & Electronics, Inc. (the "Company")
is a distributor of computer networking wiring products. The Company
supplies wiring for telephones and computer systems. In addition, the
Company trains individuals in wiring terminations and connections.
Merchandise Inventory: Inventories of merchandise are stated at the lower
of cost or market using the average cost method.
Property and Equipment: Accounts include costs of assets constructed or
purchased, related delivery and installation costs and interest incurred on
significant capital projects during their construction periods.
Expenditures for renewals and betterments also are capitalized, but
expenditures for repairs and maintenance are expensed as incurred. The
cost and accumulated depreciation applicable to assets retired or sold are
removed from the respective accounts, and gains or losses thereon are
included in income. Depreciation, which includes amortization of leasehold
improvements, is computed using accelerated methods for income tax
reporting purposes and the straight-line method for financial reporting
purposes over the estimated useful lives of the assets.
Amortization of equipment acquired under a capital lease is computed by
the straight-line method over the term of the lease.
Income Taxes: Deferred income taxes are provided on temporary differences
between the financial statement and taxable income. Reclassifications:
Certain 1995 amounts have been reclassified to conform with the 1996
presentation.
Use of estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount 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.
Concentration of credit risk: Cash and trade accounts receivable
potentially subject the Company to significant concentrations of credit
risk. The Company maintains its cash with high credit quality financial
institutions in Virginia.
13
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS, Continued
2. Subsequent Event:
Effective September 1, 1996, the Company merged with and into Anicom -
Southeast, Inc., a wholly owned subsidiary of Anicom, Inc. ("Anicom"). The
merger is qualified as a reorganization under the provisions of Sections
368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code. Effectively,
Anicom - Southeast, Inc. acquired all of the assets and assumed all of the
liabilities of the Company and transferred Anicom stock and cash to the
shareholders of the Company in exchange for all of the Company's stock.
Anicom - Southeast, Inc. will continue the operations of the Company.
3. Notes Payable:
The Company has a $3,000,000 revolving line of credit with a financial
institution with interest payable monthly, at prime (8.25% at August 31,
1996) plus 1/4%. The line is personally guaranteed by two
shareholders of the Company. The amounts outstanding under this line
totaled $2,405,604 and $2,116,691 at August 31, 1996 and 1995,
respectively. The Company must meet certain restrictive covenants, the
more significant of which relate to minimum working capital and net worth
and a maximum debt to equity ratio.
The Company had a $150,000 revolving line of credit to purchase inventory
and equipment with the same institution with interest payable monthly, at
prime plus 3/4%, maturing April 1, 1996, collateralized by inventory and
equipment purchased. The agreement was rolled over to a term loan at
maturity (see Note 4). The balance outstanding on the line of credit at
August 31, 1995 was $88,807.
The line of credit and the $115,807 and $39,155 term loans (see Note 4) are
collateralized by all accounts receivable, inventory, furniture and
fixtures now owned or hereafter acquired by the Company. All of these
agreements were paid off and terminated by Anicom subsequent to year end
and the two shareholders were released from their personal guarantees.
In addition, the Company had unsecured demand notes with related and
unrelated parties totalling $135,000 and $60,000, respectively, at August
31, 1995. These notes were retired in 1996.
14
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. LONG-TERM DEBT:
At August 31, 1996 and 1995, long-term debt consists of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Capital lease payable in monthly installments of $2,791 which
includes interest at 10%, maturing July 2001, collateralized by
equipment with a net book value of $139,031 at August 31, 1996.
$ 128,211
Term loan payable in monthly installments of $2,525 which
includes interest at 8.6%, cross-collateralized with the
$3,000,000 line of credit, maturing April 2001.
115,807
Term loan payable in monthly installments of $1,865 plus
interest at prime plus 1/2%, cross-collateralized with the
$3,000,000 line of credit, maturing May 1998.
39,155 61,530
Notes payable in total monthly installments of $1,421 which
include interest ranging from 7.0% to 7.9%, with maturity dates
from May 1997 through November 1997, collateralized by equipment
with a net book value of $26,973 at August 31, 1996.
14,128 $ 29,551
Capital lease payable retired in 1996. 27,386
Unsecured notes payable to related parties, retired in 1996 166,171
----------- -----------
297,301 284,638
Less current portion 77,960 56,585
----------- -----------
$ 219,341 $ 228,053
=========== ===========
Maturities of long-term debt as of August 31, 1996 are as follows:
1997 $ 77,960
1998 63,903
1999 51,029
2000 56,132
2001 48,277
-----------
$ 297,301
===========
</TABLE>
The long-term debt and the notes payable (Note 3) have carrying
values which approximate market values.
15
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS, Continued
5. INCOME TAXES:
Significant components of the Company's deferred tax assets and
liabilities as of August 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Deferred tax assets - current:
Accounts receivable allowance $ 65,604 $ 24,220
Inventory cost 32,133
Inventory reserve 132,000
Accrued liabilities 5,324
Allowance for unrealized losses on marketable equity securities 15,245
-------------- --------------
Total deferred tax assets 235,061 39,465
Deferred tax liabilities - noncurrent:
Tax over book depreciation 34,206 20,316
-------------- --------------
Total deferred tax liabilities 34,206 20,316
-------------- --------------
Net deferred tax asset $ 200,855 $ 19,149
============== ==============
</TABLE>
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
AUGUST 31,
1996 1995
<S> <C> <C>
Current payable $ 252,838 $ 230,099
Deferred (181,706)
--------------- ---------------
$ 71,132 $ 230,099
=============== ===============
</TABLE>
The provision for income taxes varies from that computed using
federal statutory rates of 34%, as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
AUGUST 31,
1996 1995
<S> <C> <C>
Federal taxes at statutory rate $ 85,612 $ 195,584
State taxes, net of federal benefit 9,971 22,780
Other (24,451) 11,735
-------------- ---------------
$ 71,132 $ 230,099
============== ===============
</TABLE>
6. LEASE COMMITMENTS:
The Company leases, through an operating lease, its office facility from a
major shareholder. The lease expires in September 2000. Rent expense
for this related party lease was approximately $111,000 in 1996 and
$106,000 in 1995.
16
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS, Continued
6. LEASE COMMITMENTS, CONTINUED:
In addition, the Company leases various office and warehouse facilities
and equipment under various operating lease arrangements that expire over
the next four years.
Future minimum rental payments required under operating leases that have
initial or remaining noncancellable lease terms in excess of one year as of
August 31, 1996 are approximately as follows:
<TABLE>
<S> <C>
1997 $ 430,000
1998 326,000
1999 239,000
2000 181,000
---------------
$ 1,176,000
===============
</TABLE>
Rent expense was approximately $372,000 and $298,000 in 1996 and 1995,
respectively.
7. RETIREMENT PLAN:
The Company has a 401(k) retirement plan covering substantially all
full-time employees. The Company's contributions to the plan are to be
equal to 25% of the employees' contributions up to a maximum of 1% of
the employees' compensation. Contributions and plan expenses totaled
approximately $21,000 in 1996 and 1995.
8. COMMITMENTS:
During 1994, the Company entered into an employment contract with one of
the shareholders who is serving as the Company's president. The contract
is for five years and provides for a fixed annual compensation, plus
certain benefits. This contract remains effective under Anicom.
The Company is self insured for health insurance. The stop/loss provision
on the plan is $7,500, per individual, per year, with a maximum annual
exposure of $175,000.
17
<PAGE> 17
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
18
<PAGE> 18
Anicom, Inc., Norfolk Wire & Electronics, 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 Agreement and Plan of Reorganization
made and entered into as of August 31, 1996 by and among Anicom, Inc. and its
wholly owned subsidiary, Anicom-Southeast, Inc. (hereinafter referred to as
"Anicom"), Norfolk Wire & Electronics, Inc. ("Norfolk") and Ronald A. Hurley,
Robert H. Jennings, Stephen M. Mobley and Vonda M. Hall and certain other
acquisitions completed by Anicom during 1995 and 1996.
The unaudited pro forma condensed combined balance sheet at June 30, 1996
assumes that the merger of Norfolk occured on June 30, 1996. The unaudited pro
forma condensed combined statements of operations for the six months ended June
30, 1996 and the year ended December 31, 1995 assume that the merger of Norfolk
occurred on January 1, 1995 and that purchase price was provided by the
issuance of 258,062 shares (516,134 shares subsequent to the declaration of a
two-for-one stock split effected as 100% stock dividend to all holders of
record as of October 1, 1996) of Anicom's common stock, $.001 par value per
share, valued at $15.50 per share, and $4,000,039 in cash provided principally
by the liquidation of marketable securities. The unaudited pro forma condensed
combined statements of operations also assume that Anicom's acquisitions of
Northern Wire & Cable, Inc. ("Northern"), 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 unaudited pro forma combined statements assume that these
offerings 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 Norfolk
as of August 31, 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 Current Report on Form 10-QSB for the six months ended
June 30, 1996.
19
<PAGE> 19
Anicom, Inc. and Norfolk Wire & Electronics, Inc.
Notes to Pro Forma Condensed Combined Balance Sheet
at June 30, 1996
(Unaudited)
The unaudited balance sheets of Anicom and Norfolk as of June 30, 1996 have
been combined to reflect the pro forma impact of the merger of the two
companies as if the transaction had occurred on June 30, 1996.
The following is a summary of the adjustments reflected in the pro forma
condensed combined balance sheet:
(a) The purchase price, exclusive of related fees and expenses, of $8.0
million has been reflected based on the terms of the Agreement and Plan of
Reorganization by and among Anicom, Inc., Anicom-Southeast, Inc. and Norfolk
Wire & Electronics, Inc. and Ronald A. Hurley, Robert H. Jennings, Stephen M.
Mobley and Vonda M. Hall, dated as of August 30, 1996 and reflects the issuance
of 258,062 (516,134 shares subsequent to the declaration of a two-for-one stock
split effected as 100% stock dividend to all holders of record as of October 1,
1996) of Anicom's common stock, $.001 par value per share, at a value of $15.50
per share and cash paid of $4,000,039.
(b) To record the transaction costs incurred with the merger of Norfolk.
(c) To record the amount by which the purchase price exceeds the fair
market value of assets acquired, less liabilities assumed and transaction costs
associated with the merger.
(d) To record anticipated integration costs related to the merger of
Norfolk.
(e) Adjustment of historic cost of certain acquired assets to estimated
fair value.
(f) Adjustment to reflect the forgiveness of notes receivable due from the
former shareholders of Norfolk.
(g) Elimination of Norfolk's equity.
20
<PAGE> 20
Anicom, Inc., Norfolk Wire & Electronics, Inc. and Other Acquisitions
Notes to Pro Forma Condensed Combined Statement of Operations
for the six months ended June 30, 1996
(Unaudited)
The following is a summary of the adjustments reflected in the unaudited pro
forma condensed combined statement of operations:
(a) This column presents the historical results of Northern for the period
January 1, 1996 to March 12, 1996 (date of acquisition by Anicom).
(b) Earnings effect of Norfolk goodwill amortization using a 40 year
period.
(c) Earnings effect of Northern goodwill amortization not already included
in historical information, using a 40 year period.
(d) To adjust interest expense included in the historical results related
to the issuance of $400,000 (6.75%) and $500,000 (6.00%) promissory notes in
connection with the merger and stock purchase agreements of Pinnacle and Mogan
Hill, respectively, as if such transactions had occurred on January 1, 1995 and
assuming the payment of $200,000 and $166,667, respectively, one year after the
notes were issued as the actual terms provide.
(e) In connection with the asset purchase of Nothern, 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 debt as if such transactions had occurred on January 1,
1995.
(f) In connection with the merger of Norfolk, Anicom assumed approximately
$2.5 million of Norfolk's outstanding bank debt. Immediately after the closing
of this transaction, Anicom retired the outstanding bank debt assumed from
Norfolk. Interest expense has been adjusted to give effect to the retirement
of this debt as if such transactions had occurred on January 1, 1995.
(g) Adjustment of income tax provision to reflect the approximate effective
tax rate of Anicom to the combined results.
(h) Weighted average shares outstanding, reflecting the declaration of a
two-for-one stock split effected as a 100% stock dividend to all holders of
record as of October 1, 1996, assuming the issuance of 308,182 shares in
connection with the Northern asset purchase agreement 516,124 shares in
connection with the Norfolk merger agreement
21
<PAGE> 21
Anicom, Inc., Norfolk Wire & Electronics, 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:
(a) This column presents the combined historical results of Pinnacle for
the period January 1, 1995 to July 31, 1995 (date of merger with 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) and the historical results of Northern for the year
ended December 31, 1995.
(b) Earnings effect of Norfolk goodwill amortization using a 40 year
period.
(c) Earnings effect of Pinnacle, Morgan Hill and Northern goodwill
amortization not already included in historical information, using a 40 year
period.
(d) To adjust officer compensation to contracted amounts and to eliminate
certain professional fees related to the transaction expensed in 1995.
(e) 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. 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.
(f) 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.
(g) The cash issued in connection with the merger of Norfolk was provided
by a portion of the net proceeds of Anicom's follow-on offering.
In connection with the merger of Norfolk, Anicom assumed approximately
$2.5 million of Norfolk's outstanding bank debt. Immediately after the closing
of this transaction, Anicom retired the outstanding bank debt assumed from
Norfolk. 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.
22
<PAGE> 22
(h) 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 for Northern, 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.
(i) 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 of Pinnacle and Morgan Hill, 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.
(j) Adjustment of income tax provision to reflect the approximate effective
tax rate of Anicom on the combined results.
(k) Weighted average shares outstanding, reflecting the declaration of a
two-for-one stock split effected as a 100% stock dividend to all holders of
record as of October 1, 1996, and assuming the issuance of the following at
January 1, 1995:
2,760,000 shares in connection with the IPO
80,000 shares in connection with the Pinnacle merger agreement
72,728 shares in connection with the Morgan Hill stock
purchase agreement
6,900,000 shares in connection with the follow-on offering
308,182 shares in connection with the Northern asset purchase
agreement
516,124 shares in connection with the Norfolk merger agreement
23
