8-K/A 1 a8-ka.txt 8-K/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A AMENDMENT TO APPLICATION OR REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 TRC COMPANIES, INC. (Exact name of registrant as specified in its charter) Delaware 1-9947 06-0853807 ------------------------------- ---------------- ---------------------------- (State or other jurisdiction of (Commission File (IRS Employer Identification incorporation) Number) Number) 5 Waterside Crossing Windsor, Connecticut 06095 ------------------------------------------------ ---------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (860) 289-8631 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, dated June 2, 2000, as set forth in the pages attached hereto: ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TRC COMPANIES, INC. Dated: August 3, 2000 By: /s/ Harold C. Elston, Jr. -------------------------------- Harold C. Elston, Jr. Senior Vice President and Chief Financial Officer (Chief Accounting Officer) TRC COMPANIES, INC. AMENDMENT NO. 1 TO CURRENT REPORT, DATED JUNE 2, 2000 ON FORM 8-K On May 23, 2000, the registrant completed the acquisition of Lowney Associates, a geotechnical and environmental services firm headquartered in Mountain View, California. The acquisition has been accounted for using the purchase method of accounting. This transaction was reported in Item 2 of the Current Report, dated June 2, 2000, on Form 8-K. The purpose of the amendment is to provide the financial statements of the business acquired and the pro forma financial information required pursuant to Item 7. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS Page A. Financial statements of business acquired: Lowney Associates for the year ended March 31, 2000 (with Independent Auditors' Report) 3 B. Unaudited pro forma financial information: TRC Companies, Inc. unaudited pro forma consolidated financial statements: 15 Unaudited Pro Forma Consolidated Statements of Operations for the fiscal year ended June 30, 1999 16 Unaudited Pro Forma Consolidated Statements of Operations for the nine months ended March 31, 2000 17 Unaudited Pro Forma Consolidated Balance Sheet at March 31, 2000 18 Notes to Unaudited Pro Forma Financial Information 19
2 LOWNEY ASSOCIATES FINANCIAL STATEMENTS YEAR ENDED MARCH 31, 2000
Page Independent Auditors' Report 4 Balance Sheet 5 Statement of Income 6 Statement of Cash Flows 7 Statement of Changes in Shareholders' Equity 8 Notes to Financial Statements 9
3 INDEPENDENT AUDITORS' REPORT To the Board of Directors LOWNEY ASSOCIATES We have audited the accompanying balance sheet of Lowney Associates as of March 31, 2000 and the related statements of income, cash flows and changes in stockholders' equity for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lowney Associates as of March 31, 2000, and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. /s/ Seiler & Company, LLP Redwood City, California May 4, 2000, except for Note 1A, as to which the date is July 27, 2000 4 LOWNEY ASSOCIATES BALANCE SHEET MARCH 31, 2000 ASSETS CURRENT ASSETS: Cash $ 10,352 Accounts receivable, less allowance for doubtful accounts of $35,131 2,726,156 Work-in-process 853,149 Other assets 68,421 ------------ Total current assets 3,658,078 PROPERTY AND EQUIPMENT, NET 482,627 NOTE RECEIVABLE 50,000 OTHER ASSETS 29,741 ------------ Total assets $4,220,446 ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 176,081 Cash overdraft 139,484 Accounts payable 165,524 Accrued expenses 179,010 Deferred income taxes 529,988 ----------- Total current liabilities 1,190,087 LONG-TERM LIABILITIES: Notes payable 125,683 Deferred income taxes 818,989 ----------- Total liabilities 2,134,759 ----------- STOCKHOLDERS' EQUITY: Common stock - par value $.01 per share; 750,000 authorized shares, 106,800 shares issued and outstanding 1,068 Retained earnings 2,084,619 ----------- Total stockholders' equity 2,085,687 ----------- Total liabilities and stockholders' equity $4,220,446 ============
See accompanying notes. 5 LOWNEY ASSOCIATES STATEMENT OF INCOME FOR THE YEAR ENDING MARCH 31, 2000 REVENUE $9,056,946 ------------ LESS DIRECT COSTS: Salaries 1,662,956 Engineering and consulting services 1,397,967 Laboratories 790,358 Other costs 261,851 ------------ TOTAL DIRECT COSTS 4,113,132 ------------ GROSS PROFIT 4,943,814 GENERAL AND ADMINISTRATIVE EXPENSES 3,933,781 ------------ INCOME FROM OPERATIONS 1,010,033 ------------ OTHER INCOME AND (EXPENSE): Interest income 24,307 Other income 12,872 Interest expense (24,210) ------------ TOTAL OTHER INCOME AND (EXPENSE) 12,969 ------------ INCOME BEFORE PROVISION FOR TAXES ON INCOME 1,023,002 PROVISION FOR TAXES ON INCOME 422,366 ------------ NET INCOME $ 600,636 ============
See accompanying notes. 6 LOWNEY ASSOCIATES STATEMENT OF CASH FLOWS FOR THE YEAR ENDED MARCH 31, 2000 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 600,636 Noncash items included in net income: Depreciation and amortization 173,570 Deferred income taxes 395,107 Gain on retirement of property (1,127) Net (increase) decrease in assets: Accounts receivable (1,141,210) Work-in-process 107,782 Other current assets (19,822) Other noncurrent assets 201 Net increase (decrease) in liabilities: Cash overdraft 139,484 Accounts payable 72,558 Accrued expenses 35 -------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 327,214 -------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (134,231) Proceeds from sale of property and equipment 2,400 -------------- NET CASH USED IN INVESTING ACTIVITIES (131,831) -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net repayments under line of credit (176,000) Proceeds from long-term debt 34,053 Repayments of long term debt (75,024) -------------- NET CASH USED IN FINANCING ACTIVITIES (216,971) -------------- NET DECREASE IN CASH (21,588) Cash, beginning of year 31,940 -------------- CASH, END OF YEAR $ 10,352 ============== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the year for: Interest $ 26,621 ============== Taxes $ 29,604 ==============
See accompanying notes. 7 LOWNEY ASSOCIATES STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEAR ENDED MARCH 31, 2000
Common Retained Stock Earnings Total ------------------ ------------------ ------------------ Balance, March 31, 1999 $1,068 $1,483,983 $1,485,051 Net income - 600,636 600,636 ------------------ ------------------ ------------------ Balance, March 31, 2000 $1,068 $2,084,619 $2,085,687 ================== ================== ==================
See accompanying notes. 8 LOWNEY ASSOCIATES NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 NOTE 1. ACCOUNTING POLICIES A. NATURE OF BUSINESS Lowney Associates is an environmental and geotechnical engineering consulting firm, founded in Santa Clara County in 1969 and incorporated in 1971. The Corporation provides environmental engineering, hydrogeologic, hazardous waste, asbestos and geotechnical consulting services to clients in California. On May 23, 2000, all of the issued and outstanding shares of stock were acquired by TRC Companies, Inc. B. 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 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. C. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Major improvements that significantly add to the productive capacity or extend the life of an asset are capitalized. Maintenance and repair costs are charged to income currently. Depreciation and amortization are computed on the straight-line or declining balance methods over the useful lives of the assets which range from three to thirty-nine years. D. INCOME TAXES Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The Company uses the accrual method of accounting for financial reporting purposes and the cash method for income tax reporting purposes. The differences relate primarily to accounts receivable, accounts payable, prepaid and accrued expenses. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Effective May 1, 2000, the Company will be required to change to the accrual method of accounting for tax reporting purposes. 9 E. CONCENTRATION OF CREDIT RISK The Company's bank accounts are insured up to $100,000. The Company had balances in excess of the insurance amount during the period ended March 31, 2000. Financial instruments which potentially expose the Company to concentrations of credit risk include accounts receivable. The Company performs ongoing evaluations of customers' financial condition and generally does not require collateral. F. REVENUE AND COST RECOGNITION The Company recognizes revenue from fixed-fee and modified fixed-fee construction contracts on the percentage-of-completion method. Contract costs include all direct material and labor costs, related payroll and employee costs, and proposal expense. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and income which are recognized in the period in which the revisions are determined. The asset "work-in-process" represents revenue recognized in excess of amounts billed on uncompleted contracts. NOTE 2. UNCOMPLETED PROJECTS Costs, estimated gross profit, and billings on uncompleted contracts are summarized as follows: Costs incurred on uncompleted contracts $3,587,939 Estimated gross profit 4,297,641 ---------- 7,885,580 Less billings to date 7,032,431 ---------- Work in process $ 853,149 ========== NOTE 3. NOTE RECEIVABLE The Company loaned an employee $50,000 in August 1996. The note bears interest at prime plus 1%. Interest only is due each year for five years on August 29, the anniversary of the note. Thereafter, principal of $16,667, plus interest on the note, is due each year for 3 years. All accrued interest and principal is due by August 29, 2004. The employee resigned effective July 17, 1998. 10 NOTE 4. NOTES PAYABLE Notes payable consist of the following:
Due Date Interest Rate Collateral Current Long-term Total -------- ------------- ---------- ------- --------- ----- Secured notes: Line of credit 09/14/00(1) Prime + 1.250% All assets $100,000 $ - $100,000 Note payable 06/01/00(2) Prime + 1.5% Fixed assets 882 - 882 Note payable Various Prime + 1.5% All assets 18,416 8,109 26,525 --------- --------- --------- Total secured notes 119,298 8,109 127,407 --------- --------- --------- Unsecured notes: Note payable 04/29/01 Prime + 1.5% 13,867 216 14,083 Note payable 02/22/03 10.0% 11,361 22,692 34,053 Note payable 08/21/03(3) Prime + 1.0% 31,555 94,666 126,221 --------- --------- --------- Total unsecured notes 56,783 117,574 174,357 --------- --------- --------- Total notes payable $176,081 $125,683 $301,764 ========= ========= =========
(1) The total line of credit available is $750,000. (2) The loan is with an entity which is owned by two shareholders of the Company. (3) Note payable to purchase stock. (Note 10) Maturities of notes payable for each of the next five years consist of the following: Fiscal Year Ending March 31, Amount ---------------------------- ------ 2001 $176,081 2002 51,243 2003 42,885 2004 31,555 2005 - 11 NOTE 5. PROPERTY AND EQUIPMENT Property and equipment consist of the following: Office equipment $ 453,887 Furniture and fixtures 247,806 Automobiles and trucks 466,783 Equipment 249,678 Leasehold improvements 187,985 ---------- Total 1,606,139 Less accumulated depreciation 1,123,512 ---------- Net book value $ 482,627 ========== Certain property and equipment are pledged as collateral for notes payable (Note 4). Depreciation and amortization expense was $173,570 for the year ended March 31, 2000. NOTE 6. COMMITMENTS The Company leases office facilities located in Mountain View and San Ramon, California from an entity in which certain shareholders and officers have an equity ownership. Effective May 1, 2000, the Company renegotiated the terms of both leases. The addenda to the leases provide for a four-year lease period which expires on April 30, 2004 and an option for one three-year extension. Rent expense for these facilities for the year ended March 31, 2000 was $298,173. In addition, the Company leases office space in Oakland and Pasadena, California. The leases expire on October 31, 2000 and January 31, 2001, respectively. Rent expense for these offices for the year ended March 31, 2000 was $38,007. The following is a schedule of future minimum payments of the real property leases discussed above, exclusive of maintenance, insurance, property taxes and cost of living increases: Real property Fiscal year ending March 31, leases ------------------------------------- --------------- 2001 $ 320,368 2002 345,371 2003 404,124 2004 462,882 2005 38,981 ----------- Total $1,571,726 =========== 12 The Company leases certain equipment under various operating leases. Rent expense for this equipment for the year ended March 31, 2000 was $54,991. The following is a schedule of the future commitments under the operating leases: Fiscal year ending March 31, Amount ------------------------------------- --------------- 2001 $ 55,886 2002 48,511 2003 10,854 NOTE 7. EMPLOYEE BENEFIT PLANS All full-time employees are eligible to contribute up to 15% of their salary to the Company's 401(k) plan, subject to certain Internal Revenue Code limitations. The Company matches 100% of an employee's contribution up to 2% of annual salary. The 401(k) matching contribution for the year ended March 31, 2000 was $43,272. NOTE 8. PROVISION FOR TAXES ON INCOME The provision for taxes on income consists of the following: Current taxes $ 27,259 Deferred 395,107 ------------ Total provision for income taxes $ 422,366 ============ The Company's total deferred tax assets, deferred tax liabilities, and deferred tax asset valuation allowances are as follows: Total deferred tax liabilities $1,348,977 Less valuation allowance - ------------ Net deferred tax liabilities $1,348,977 ============ Those amounts have been presented in the Company's financial statements as follows: Deferred income taxes - current $ 529,988 Deferred income taxes - noncurrent 818,989 ------------ Net deferred tax liabilities $1,348,977 ============ The Company's provision for income taxes differs from applying the statutory U.S. and state income tax rates to income before income taxes. The following reconciles income taxes reported in the financial statements to taxes that would be obtained by applying regular tax rates to income before taxes: Expected tax provision $419,606 Tax effect of nondeductible expenses 2,760 ------------ Tax provision $422,366 ============ 13 NOTE 9. MAJOR CUSTOMER The Company entered into contracts representing a substantial portion of its sales with one customer. During the year ended March 31, 2000, sales to this customer aggregated approximately $974,443. At March 31, 2000, the amount due from this customer, included in trade accounts receivable, was approximately $270,473. NOTE 10. STOCK PURCHASE Due to the resignation of an employee-shareholder effective July 17, 1998, the Company redeemed 5,700 shares held by the shareholder according to the terms of the Agreement among Shareholders of Lowney Associates, dated December 5, 1997. The related note payable in the amount of $157,776 is to be paid in five equal annual installments plus accrued interest at prime plus 1% on August 21, 1999 and each August 21st thereafter. 14 TRC COMPANIES, INC. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENT INFORMATION The accompanying unaudited pro forma consolidated statements of operations for the fiscal year ended June 30, 1999 and for the nine months ended March 31, 2000, and the balance sheet at March 31, 2000, reflect the historical results of operations and financial position of TRC Companies, Inc. (TRC) adjusted to reflect the acquisition of Lowney Associates (Lowney) using the purchase method of accounting, as if the acquisition had occurred at the beginning of the most recent fiscal year presented. The pro forma adjustments are described in the notes following the unaudited pro forma consolidated financial statement information. The unaudited pro forma consolidated financial statement information is presented for informational purposes only. The pro forma results from operations and financial position are not necessarily indicative of what would have resulted had the acquisition occurred on the dates indicated, nor does the pro forma financial information purport to be indicative of results of operations or the financial position which may occur in the future. The Company believes that it has used reasonable methods in the preparation of this financial statement information. 15 TRC COMPANIES, INC. PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE FISCAL YEAR ENDED JUNE 30, 1999 (unaudited)
As reported Pro forma ------------------------ -------------------------------- TRC Lowney Adjustments Notes Combined ---------- ----------- ------------- ----- --------- (in thousands, except per share data) GROSS REVENUE $ 78,223 $ 7,531 $ - $ 85,754 Less subcontractor costs and direct charges 20,890 1,372 - 22,262 ---------- ----------- ------------- --------- NET SERVICE REVENUE 57,333 6,159 - 63,492 ---------- ----------- ------------- --------- OPERATING COSTS AND EXPENSES: Direct labor and fringe benefit costs 26,075 1,514 - 27,589 Indirect costs and expenses 21,998 3,651 (900) (a) 24,749 General and administrative expenses 2,462 - - 2,462 Depreciation and amortization 2,468 148 181 (b) 2,797 ---------- ----------- ------------- --------- 53,003 5,313 (719) 57,597 ---------- ----------- ------------- --------- INCOME FROM OPERATIONS 4,330 846 719 5,895 Interest expense 507 30 308 (c) 845 ---------- ----------- ------------- --------- INCOME BEFORE TAXES 3,823 816 411 5,050 Federal and state income tax provision 1,376 333 109 (d) 1,818 ---------- ----------- ------------- --------- NET INCOME $ 2,447 $ 483 $ 302 $ 3,232 ========== =========== ============= ========= EARNINGS PER SHARE: Basic $ .36 $ .47 Diluted .36 .46 ========== ========= AVERAGE SHARES OUTSTANDING: Basic 6,782 165 (e) 6,947 Diluted 6,839 165 (e) 7,004 ========== ============= =========
See accompanying pro forma notes. 16 TRC COMPANIES, INC. PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2000 (unaudited)
As reported Pro forma ------------------------ -------------------------------- TRC Lowney Adjustments Notes Combined ---------- ----------- ------------- ----- --------- (in thousands, except per share data) GROSS REVENUE $ 81,635 $ 7,277 $ - $ 88,912 Less subcontractor costs and direct charges 23,443 2,099 - 25,542 ---------- ----------- ------------- --------- NET SERVICE REVENUE 58,192 5,178 - 63,370 ---------- ----------- ------------- --------- OPERATING COSTS AND EXPENSES: Direct labor and fringe benefit costs 26,079 1,228 - 27,307 Indirect costs and expenses 22,311 3,163 (715) (a) 24,759 General and administrative expenses 2,162 - - 2,162 Depreciation and amortization 1,984 141 135 (b) 2,260 ---------- ----------- ------------- --------- 52,536 4,532 (580) 56,488 ---------- ----------- ------------- --------- INCOME FROM OPERATIONS 5,656 646 580 6,882 Interest expense 686 15 231 (c) 932 ---------- ----------- ------------- --------- INCOME BEFORE TAXES 4,970 631 349 5,950 Federal and state income tax provision 1,789 261 92 (d) 2,142 ---------- ----------- ------------- --------- NET INCOME $ 3,181 $ 370 $ 257 $ 3,808 ========== =========== ============= ========= EARNINGS PER SHARE: Basic $ .47 $ .55 Diluted .45 .52 ========== ========= AVERAGE SHARES OUTSTANDING: Basic 6,800 165 (e) 6,965 Diluted 7,116 165 (e) 7,281 ========== ============ =========
See accompanying pro forma notes. 17 TRC COMPANIES, INC. PRO FORMA CONSOLIDATED BALANCE SHEET MARCH 31, 2000 (unaudited)
As reported Pro forma ------------------------ -------------------------------- TRC Lowney Adjustments Notes Combined ---------- ----------- ------------- ----- --------- (in thousands) ASSETS CURRENT ASSETS: Cash $ 399 $ 10 $ - $ 409 Accounts receivable, less allowance for doubtful accounts 37,375 3,579 - $ 40,954 Deferred income tax benefits 1,438 - - 1,438 Prepaid expenses and other current assets 1,107 69 - 1,176 --------- --------- ----------- ----------- 40,319 3,658 - 43,977 --------- --------- ----------- ----------- PROPERTY AND EQUIPMENT, AT COST 21,735 1,606 (1,106) (f) 22,235 Less accumulated depreciation and amortization 16,806 1,123 (1,123) (f) 16,806 --------- --------- ----------- ----------- 4,929 483 17 5,429 --------- --------- ----------- ----------- COSTS IN EXCESS OF NET ASSETS OF ACQUIRED BUSINESSES, NET OF ACCUMULATED AMORTIZATION 29,044 - 3,563 (g) 32,607 --------- --------- ----------- ----------- OTHER ASSETS 1,351 80 - 1,431 --------- --------- ----------- ----------- $ 75,643 $ 4,221 $ 3,580 $ 83,444 ========= ========= =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of debt and borrowings under line of credit $ 12,700 $ 316 $ 3,850 (h) $ 16,866 Accounts payable 4,745 166 - 4,911 Accrued compensation and benefits 3,736 76 100 (i) 3,912 Other accrued liabilities 2,500 632 (193) (j) 2,939 --------- --------- ----------- ----------- 23,681 1,190 3,757 28,628 --------- --------- ----------- ----------- NONCURRENT LIABILITIES: Long-term debt 200 126 - 326 Deferred income taxes 1,224 819 193 (j) 2,236 --------- --------- ----------- ----------- 1,424 945 193 2,562 --------- --------- ----------- ----------- SHAREHOLDERS' EQUITY Common Stock 747 1 (1) (k) 764 17 (l) Additional paid-in capital 39,084 - 1,699 (l) 40,783 Retained earnings 13,604 2,085 (2,085) (k) 13,604 --------- --------- ----------- ----------- 53,435 2,086 (370) 55,151 Less treasury stock, at cost 2,897 - - 2,897 --------- --------- ----------- ----------- 50,538 2,086 (370) 52,254 --------- --------- ----------- ----------- $ 75,643 $ 4,221 $ 3,580 $ 83,444 ========= ========= =========== ===========
See accompanying pro forma notes. 18 TRC COMPANIES, INC. NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS: a. Adjustment to reflect elimination of non-recurring indirect costs and expenses in connection with the acquisition. b. Adjustment to reflect amortization of costs in excess of the fair value of the net assets acquired on a straight-line basis over twenty years and additional depreciation expense related to the write-up of certain assets to estimated fair value using estimated lives of five to seven years. c. Adjustment to record additional interest expense resulting from additional bank borrowings in connection with the acquisition. d. Adjustment to income tax provision to reflect tax effect of foregoing adjustments and reduction in effective income tax rate. e. Adjustment to record issuance of 165,000 shares of TRC common stock in connection with the acquisition. PRO FORMA CONSOLIDATED BALANCE SHEET: f. Adjustment to record assets at estimated fair value. g. Adjustment to record incremental costs in excess of the fair value of the net assets acquired. h. Adjustment to record additional bank borrowings in connection with the acquisition. i. Adjustment to record costs associated with the acquisition. j. Adjustment to reclassify long-term portion of deferred income taxes. k. Adjustment to eliminate Lowney's shareholders' equity account. l. Adjustment to record issuance of 165,000 shares of TRC common stock in connection with the acquisition. 19