-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N4vl+YZ/xlbfpyDoEb0DW/m2/WoW+Ugt+GQs0seN1nEhR8Rhxo6KSkN7Uv854Ch9 6EKENRBm6x9mFzgO4Yi9LQ== 0000828828-97-000011.txt : 19970716 0000828828-97-000011.hdr.sgml : 19970716 ACCESSION NUMBER: 0000828828-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19970715 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATC ENVIRONMENTAL INC CENTRAL INDEX KEY: 0000828828 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TESTING LABORATORIES [8734] IRS NUMBER: 460399408 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10583 FILM NUMBER: 97641086 BUSINESS ADDRESS: STREET 1: 104 E 25TH ST 10TH FLR CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 2123538280 MAIL ADDRESS: STREET 1: 104 EAST 25TH STREET STREET 2: 10TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10010 10-Q 1 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended May 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-10583 ATC GROUP SERVICES INC. ----------------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 46-0399408 - ---------------------------------------- ----------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 104 East 25th Street, 10th Floor New York, New York 10010 - ---------------------------------------- ---------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 353-8280 None ---- (Former name, former address and former fiscal year if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares outstanding of the Registrant's Common Stock as of July 14, 1997 was 7,804,207. ATC GROUP SERVICES INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MAY 31, 1997
PART I - FINANCIAL INFORMATION: Item 1 - Financial Statements: Consolidated Balance Sheets February 28, 1997 and May 31, 1997 (Unaudited).......................................................... F-3 Consolidated Statements of Operations Three months ended May 31, 1996 and 1997 (Unaudited).................................................... F-4 Consolidated Statements of Stockholders' Equity Three months ended May 31, 1996 and 1997 (Unaudited).................................................... F-5 Consolidated Statements of Cash Flows Three months ended May 31, 1996 and 1997 (Unaudited).................................................... F-6 Notes to Consolidated Financial Statements (Unaudited).................................................... F-7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations................... F-13 PART II - OTHER INFORMATION: Items 1-6........................................................................................................ F-16 Signatures....................................................................................................... F-17 Exhibit 11 - Computation of Earnings Per Share Three months ended May 31, 1996 and 1997 (Unaudited)........................................................... F-18 Exhibit 27 - Financial Data Schedule May 31, 1997 (Unaudited)....................................................................................... F-19
F-2 ATC GROUP SERVICES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS FEBRUARY 28, 1997 AND MAY 31, 1997 (Unaudited)
February 28, May 31, 1997 1997 --------------- -------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents.............................................................. $ 2,003,890 $ 8,207,157 Trade accounts receivable, less allowance for doubtful accounts ($1,455,716 at February 28, 1997 and $1,340,549 at May 31, 1997)..................... 34,406,026 34,412,368 Costs in excess of billings on uncompleted contracts................................... 5,191,569 6,538,290 Prepaid expenses and other current assets.............................................. 2,934,193 2,581,101 Deferred income taxes.................................................................. 790,400 790,400 Refundable income taxes................................................................ 118,340 - ------------- ------------ Total current assets................................................................. 45,444,418 52,529,316 PROPERTY AND EQUIPMENT, Net (Note C)...................................................... 3,784,633 3,772,795 GOODWILL, net of accumulated amortization ($1,478,876 at February 28, 1997 and $1,858,160 at May 31, 1997) (Note B)............... 35,587,076 43,376,477 COVENANTS NOT TO COMPETE, net of accumulated amortization ($455,316 at February 28, 1997 and $501,631 at May 31, 1997) (Note B)................... 632,184 585,869 OTHER ASSETS.............................................................................. 845,346 3,957,547 ------------- ------------ $ 86,293,657 $104,222,004 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt......................................................................... $ 300,000 $ 300,000 Current maturities of long-term debt.................................................... 1,986,730 1,538,642 Accounts payable ....................................................................... 7,440,024 6,728,488 Income taxes payable.................................................................... - 458,132 Accrued compensation.................................................................... 3,789,233 4,883,954 Accrued payment obligations - ATEC acquisition (Note B) ................................ 1,721,594 3,827,301 Other accrued expenses.................................................................. 2,505,143 2,533,279 ------------- ------------- Total current liabilities............................................................. 17,742,724 20,269,796 LONG-TERM DEBT, less current maturities................................................... 22,123,344 33,631,454 OTHER LIABILITIES, including non-current payment obligations (Note B)..................... 270,386 2,989,781 DEFERRED INCOME TAXES..................................................................... 717,900 717,900 ------------- ------------- Total liabilities..................................................................... 40,854,354 57,608,931 ------------- ------------- COMMITMENTS AND CONTINGENCIES (Notes B and D) STOCKHOLDERS' EQUITY (Note D): Common stock, par value $.01 per share; authorized 20,000,000 shares; issued and outstanding 7,800,187 shares at February 28, 1997 and 7,802,987 shares at May 31, 1997................................................................ 78,002 78,030 Additional paid-in capital.............................................................. 28,996,627 28,994,053 Retained earnings....................................................................... 16,364,674 17,540,990 -------------- ------------- Total stockholders' equity......................................................... 45,439,303 46,613,073 -------------- ------------- $ 86,293,657 $ 104,222,004 ============== =============
See notes to consolidated financial statements. F-3 ATC GROUP SERVICES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MAY 31, 1996 AND 1997 (Unaudited) - --------------------------------------------------------------------------------
Three Months Ended May 31, --------------------------------- 1996 1997 --------------- -------------- REVENUES................................................................................... $ 16,645,983 $ 31,374,666 Reimbursable Costs...................................................................... 2,621,578 4,455,833 --------------- -------------- NET REVENUES............................................................................... 14,024,405 26,918,833 COST OF NET REVENUES....................................................................... 6,742,393 14,661,621 --------------- -------------- Gross profit.......................................................................... 7,282,012 12,257,212 --------------- -------------- OPERATING EXPENSES: Selling................................................................................. 542,582 999,995 General and administrative.............................................................. 3,918,015 8,477,336 Provision for bad debts................................................................. 132,635 377,439 --------------- -------------- 4,593,232 9,854,770 --------------- -------------- Operating income...................................................................... 2,688,780 2,402,442 NON-OPERATING EXPENSE (INCOME): Interest expense........................................................................ 57,326 498,408 Interest income......................................................................... (130,035) (51,783) Other................................................................................... (10,814) 9,501 --------------- -------------- (83,523) 456,126 --------------- -------------- Income before income taxes............................................................ 2,772,303 1,946,316 INCOME TAX EXPENSE......................................................................... 1,054,000 770,000 --------------- -------------- NET INCOME ................................................................................ $ 1,718,303 $ 1,176,316 =============== ============== EARNINGS PER COMMON SHARE AND DILUTIVE COMMON EQUIVALENT SHARE: Primary............................................................................... $ .20 $ .14 =============== ============== Fully diluted......................................................................... $ 20 $ .14 =============== ============== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: Primary............................................................................... 8,581,643 8,400,722 =============== ============== Fully diluted......................................................................... 8,680,339 8,517,991 =============== ==============
See notes to consolidated financial statements. F-4 ATC GROUP SERVICES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY THREE MONTHS ENDED MAY 31, 1996 AND 1997 (Unaudited) - -------------------------------------------------------------------------------
Notes Additional Receivable- Common Stock Paid-in Common Retained Shares Amount Capital Stock Earnings Total ------------ ------------ ------------ ------------ ------------ ------------ BALANCE, February 29, 1996.............. 7,796,577 $ 77,966 $ 29,030,189 $ (45,000) $ 10,129,259 $ 39,192,414 Sale of common stock at $4.13 per share, upon exercise of stock options and warrants........... 400 4 1,646 - - 1,650 Continuing registration costs applied against additional paid in capital... - - (1,415) - - (1,415) Stock received as consideration for sale of assets....................... (12,320) (123) (51,990) - (72,319) (124,432) Net income.............................. - - - - 1,718,303 1,718,303 ------------ ------------ ------------ ------------ ------------ ------------ BALANCE, May 31, 1996................... 7,784,657 $ 77,847 $ 28,978,430 $ (45,000) $ 11,775,243 $ 40,786,520 ============ ============ ============ ============ ============ ============ Notes Additional Receivable- Common Stock Paid-in Common Retained Shares Amount Capital Stock Earnings Total ------------ ------------ ------------ ------------ ------------ ------------ BALANCE, February 28, 1997.............. 7,800,187 $ 78,002 $ 28,996,627 $ - $ 16,364,674 $ 45,439,303 Sale of common stock at $1.88 to $10.00 per share, upon exercise of stock options and warrants........... 2,800 28 23,910 - - 23,938 Continuing registration costs applied against additional paid in capital... - - (26,484) - - (26,484) Net income.............................. - - - - 1,176,316 1,176,316 ------------ ------------ ------------ ------------ ------------ ------------ BALANCE, May 31, 1997................... 7,802,987 $ 78,030 $ 28,994,053 $ - $ 17,540,990 $ 46,613,073 ============ ============ ============ ============ ============ ============
See notes to consolidated financial statements. F-5 ATC GROUP SERVICES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MAY 31, 1996 AND 1997 (Unaudited) - -------------------------------------------------------------------------------
Three Months Ended May 31, --------------------------------- 1996 1997 ---------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income............................................................................ $ 1,718,303 $ 1,176,316 Adjustments to reconcile net income to net cash from operating activities: Depreciation and leasehold amortization............................................. 198,728 239,580 Amortization of goodwill and covenants.............................................. 162,704 425,599 Provision for bad debts............................................................. 132,635 377,439 Other............................................................................... (30,074) (16,338) Changes in operating assets and liabilities, net of amounts acquired in acquisitions: Receivables..................................................................... (2,849,887) (2,062,365) Prepaid expenses and other assets............................................... (453,025) (115,701) Accounts payable and other liabilities.......................................... (3,149,254) (2,678,862) Income taxes payable............................................................ 712,252 458,132 -------------- --------------- Net cash flows from operating activities............................................ (3,557,618) (2,196,200) -------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of American Testing and Engineering Corp, net of cash acquired............... (8,965,952) (2,420,766) Purchase of 3D Information Services, Inc., net of cash acquired....................... (2,926,681) - Purchase of property and equipment.................................................... (429,435) (256,753) Other................................................................................. 49,910 19,510 -------------- --------------- Net cash flows from investing activities............................................ (12,272,158) (2,658,009) -------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt and notes payable............................ 20,919,941 33,000,000 Proceeds from issuance of common stock, net of expenses............................... 1,650 23,938 Principal payments on long-term debt and notes payable, including capital lease obligations........................................................... (11,814,927) (21,939,978) Payments for continuing registration costs............................................ (1,415) (26,484) -------------- --------------- Net cash flows from financing activities............................................ 9,105,249 11,057,476 -------------- --------------- Net change in cash and cash equivalents............................................. (6,724,527) 6,203,267 CASH AND CASH EQUIVALENTS, Beginning of period............................................. 13,469,443 2,003,890 -------------- --------------- CASH AND CASH EQUIVALENTS, End of period................................................... $ 6,744,916 $ 8,207,157 ============== =============== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash payments for: Interest.............................................................................. $ 58,190 $ 559,751 ============== =============== Income taxes.......................................................................... $ 356,969 $ 193,529 ============== ===============
See notes to consolidated financial statements. F-6 ATC GROUP SERVICES INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MAY 31, 1997 (Unaudited) - -------------------------------------------------------------------------------- A. GENERAL Principles of Consolidation - The consolidated financial statements include the accounts of ATC Group Services Inc. and its wholly-owned subsidiaries ("ATC" or the "Company"). In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly, in all material respects, the financial position, the results of operations and the cash flows for the periods presented herein. These results of operations are not necessarily indicative of the results to be expected for the full year due to certain seasonality factors and the effects and timing of large service projects. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. These condensed financial statements should be read in conjunction with the consolidated financial statements and the notes included in the Company's financial statements for the fiscal year ended February 28, 1997, which are included in the Company's Annual Report on Form 10-K. Nature of Business - ATC is a national business services firm providing technical and project management services relating to environmental consulting (the "environmental consulting and engineering" segment) and information technology consulting services (the "information technology consulting" segment). The Company's environmental consulting and engineering segment provides environmental and geotechnical engineering services, architectural engineering services, construction materials testing and analytical testing. The Company's information technology consulting segment provides analysis and design services and system programming services to assist clients in building new or modifying existing computer systems. This business unit also provides support to clients in maintaining computer systems. Senior Secured Notes - On May 29, 1997, the Company issued $32,500,000 of 8.18% Senior Secured Notes due in annual installments beginning May, 2000, through May, 2004, to a group of financial institutions. Interest on the Senior Secured Notes is payable semi-annually on May 31, and November 30, commencing on November 30, 1997. The Senior Secured Notes are collateralized by accounts receivable, work-in-process, intangible assets and the Company's primary depository accounts. The proceeds from the Senior Secured Notes have in part been utilized to repay the Company's outstanding bridge credit facility. Accordingly, at February 28, 1997, the Company classified its $20,850,000 outstanding bridge credit facility as long-term debt. The bridge facility was entered into in May, 1996, to provide capital in connection with the Company's acquisition of American Testing and Engineering Corporation and 3D Information Services, Inc. Bank Credit Agreement - In connection with the Senior Secured Note offering, the Company executed a credit agreement with the Chase Manhattan Bank and Atlantic Bank of New York. The credit agreement provides for a $15,000,000 revolving line of credit maturing on November 30, 1999. The borrowings under the line of credit are collateralized by the Company's cash, accounts receivable, work in process, and intangible assets on a pari passu basis with the Senior Secured Note holders. Under the terms of the Note and Credit Agreements, the Company is required to comply with certain financial and business covenants including maintaining minimum working capital levels, fixed charge and interest ratios and restrictions on dividend payments. Statement of Financial Accounting Standards No. 121 - On March 1, 1996, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets to be Disposed Of. The adoption of SFAS No. 121 did not have a material effect on the Company's financial statements. Earnings Per Share Data - Earnings per common share and dilutive common equivalent share have been computed by using the weighted average number of shares outstanding during each period. Outstanding dilutive stock warrants and options are included in the computation of weighted average number of shares. In February 1997, the Financial Accounting Standards Board issued SFAS No. 128, Earnings Per Share. SFAS No. 128, which becomes effective for financial statements of the Company issued for fiscal years ending after December 15, 1997, replaces primary and fully diluted earnings per share, as disclosed under certain pronouncements, with basic and diluted earnings per share. Pro forma basic earnings per share for the three months ended May 31, 1996 and 1997 are $.22 and $.15, respectively. Pro forma diluted earnings per share for the three months ended May 31, 1996 and 1997 are $.20 and $.14, respectively. F-7 Reclassifications - Certain reclassifications have been made to the prior period's financial statements to conform to the current years presentation. B. BUSINESS ACQUISITIONS AND MERGER Business Acquisitions - The following acquisitions have been accounted for as purchases. The acquired company's assets and liabilities are included in the accompanying consolidated balance sheets at fair value at the date of purchase. The acquired company's operations subsequent to the acquisition are included in the accompanying consolidated statements of operations. Fiscal 1997 American Testing and Engineering Corporation - On May 24, 1996 ATC purchased certain assets and assumed certain liabilities of American Testing and Engineering Corporation ("ATEC"), a national environmental consulting firm. ATEC provides environmental engineering and consulting services through a large network of branch and regional offices. Under the original purchase agreement, the Company was contingently liable to ATEC for additional purchase consideration up to $10,750,000 if certain conditions were met. The seller since met certain of these contingent consideration requirements in the quarter ended May 31, 1997 and the Company began to amortize the associated goodwill in this period. The Company's obligation for these payments of $3,883,000 is included in short-term liabilities at May 31, 1997. In addition, in connection with the issuance of the Senior Secured Notes on May 29, 1997, the Company and the seller executed an amendment to the original purchase agreement and agreed to remove or modify the remaining contingent consideration requirements. As a result of the foregoing, the Company paid $2,420,766 on May 30, 1997 and expects to be obligated to pay $2,745,234 in fiscal 1999 and therefore has included this obligation in other long-term liabilities at May 31, 1997. Additionally, the Company has the option to purchase certain properties from the seller for $1,700,000 in fiscal 2002. The purchase price as amended was comprised of the following consideration: Amounts paid to seller and a majority owner: Cash.......................................................... $ 9,000,000 Payment obligations, for property and facility rentals and non-compete consideration..................... 6,001,000 Contingent/additional consideration under amended purchase agreement................................................. 9,049,000 Liabilities assumed: Current liabilities.......................................... 15,731,076 Bank debt.................................................... 10,750,000 Direct expenses related to acquisition.......................... 139,438 ------------ $ 50,670,514 ============ The payment obligations to seller/majority owner are payable monthly through February 1999 and are included in accrued payment obligations - ATEC acquisition in the accompanying consolidated balance sheet. The purchase price allocation reflecting the additional consideration is summarized as follows: Accounts receivable and work in process, net of allowances...... $ 18,957,768 Other current assets............................................ 2,023,996 Other assets.................................................... 1,428,617 Covenants not to compete........................................ 430,000 Goodwill ....................................................... 27,830,133 ------------ $ 50,670,514 ============ As a result of sellers warranties of purchased trade receivables and work in process that were not realized, the Company is entitled to set-offs of $618,835 against the option price to acquire certain properties in fiscal 2002. If the Company does not exercise its option, the set-offs will be refunded by the seller. Amounts are included in other non-current assets in the accompanying consolidated balance sheet. In connection with the purchase agreement, the Company has issued an irrevocable letter of credit in the amount of $500,000 to secure the Company's performance of its payment obligations. The letter of credit is renewable by the seller until such time the Company has paid the purchase obligations in full. No amounts have been drawn against the letter of credit. F-8 3D Information Services, Inc. - On May 28, 1996, ATC purchased certain assets and assumed certain liabilities of 3D Information Services, Inc. ("3D"), a New Jersey based information services company providing technical information consulting services in all phases of information system design, development, maintenance and management in client server and mainframe based environments. The purchase price was comprised of the following consideration: Amounts paid to seller: Cash......................................................... $ 3,000,000 Note payable................................................. 2,500,000 Assumed liabilities............................................. 247,905 Direct expenses related to acquisition.......................... 23,149 ------------ $ 5,771,054 ============ The initial purchase price allocation is summarized as follows: Accounts receivable............................................. $ 1,163,981 Work in process................................................. 279,047 Property and equipment.......................................... 77,381 Other current assets............................................ 77,560 Covenant not to compete......................................... 100,000 Goodwill ....................................................... 4,073,085 ------------ $ 5,771,054 Fiscal 1996 ============ Hill Businesses - In November 1995, ATC purchased certain assets and assumed certain liabilities of Kaselaan & D'Angelo Associates, Inc., Hill Environmental, Inc. (formerly the environmental division of Gibbs & Hill, Inc.) and Particle Diagnostics, Inc., wholly owned subsidiaries of Hill International, Inc. (collectively the "Hill Businesses"). The Hill Businesses provide environmental consulting and engineering services, including asbestos management, industrial hygiene and indoor air quality consulting, environmental auditing and permitting, environmental regulatory compliance, water and wastewater engineering, solid waste landfill management and analytical laboratory services. The purchase price was comprised of the following consideration. Amounts paid to seller: Cash........................................................ $ 2,517,949 Letter of credit, net of imputed interest (Note E)..... 700,000 Note payable at 8.75% interest (Note E)................ 300,000 Liabilities assumed............................................. 907,884 Direct expenses related to acquisition.......................... 885,538 ------------ $ 5,311,371 ============ Direct expenses related to acquisition includes costs incurred in order to obtain proper title to the assets from Sellers bank as described further in Note D. In addition, the Company issued to certain selling shareholders, 50,000 stock options to purchase restricted common stock at $13.875 per share as consideration for non compete agreements. The purchase price allocation is summarized as follows: Costs in excess of billings on uncompleted contracts, net of unrealizable amounts.................................. $ 620,000 Property and equipment.......................................... 175,000 Other assets.................................................... 30,572 Covenants not to compete........................................ 37,500 Goodwill........................................................ 4,448,299 ------------ $ 5,311,371 ============ The Company is contingently liable to reimburse up to $150,000 of certain facility lease costs if incurred by Hill International, Inc. The payment of the contingent liability, which the Seller claims is now due, certain other liabilities and the $300,000 note is being withheld pending the outcome of the litigation (Note D). F-9 Applied Geosciences, Inc. - Effective February 29, 1996, ATC purchased certain assets and assumed certain liabilities of Applied Geosciences, Inc. ("AGI"), a California based environmental consulting company having offices in San Diego, Tustin and San Jose, California. The purchase price was comprised of the following consideration. In addition, AGI will receive contingent consideration of up to $190,000 subject to actual collections of the purchased trade receivables in excess of a minimum amount established under the agreements. As of February 28, 1997 $22,324 of contingent consideration had been earned and paid. Cash to seller.................................................. $ 147,546 Contingent consideration earned to date......................... 22,324 Cash to secured creditors of seller............................. 441,514 Liabilities assumed............................................. 225,538 Direct expenses related to acquisition.......................... 31,246 ------------ $ 868,168 ============ The purchase price allocation is summarized as follows: Accounts receivable, net........................................ $ 474,973 Property and equipment.......................................... 115,060 Covenants not to compete........................................ 30,000 Goodwill........................................................ 248,135 ------------ $ 868,168 ============ Pro Forma Financial Information (Unaudited) - The following unaudited pro forma information sets forth the results of operations of ATC as if ATC's purchase of significant subsidiaries including ATEC and 3D had occurred on March 1, 1996:
PRO FORMA Three Months Ended May 31, ------------------------------- 1996 1997 ------------- ------------- Revenues............................................................................ $ 34,768,116 $ 31,374,666 Net income.......................................................................... 2,615,757 1,176,316 Earnings per share (fully diluted).................................................. $ .30 $ .14 Weighted average shares............................................................. 8,680,339 8,517,991
C. PROPERTY AND EQUIPMENT Property and equipment is comprised of the following:
February 28, May 31, 1997 1997 ------------- ------------- Office equipment.................................................................... $ 3,339,049 $ 3,436,139 Laboratory and field equipment...................................................... 3,335,721 3,356,402 Transportation equipment............................................................ 207,857 294,701 Leasehold improvements.............................................................. 849,700 864,138 ------------- ------------- 7,732,327 7,951,380 Less accumulated depreciation....................................................... 3,947,694 4,178,585 ------------- ------------- Property and Equipment, net......................................................... $ 3,784,633 $ 3,772,795 ============= =============
F-10 D. COMMITMENTS AND CONTINGENCIES Litigation - First Fidelity Bank, N.A., et al v. Hill International, Inc. et al, Superior Court of New Jersey, Law Division, Burlington County, Docket No. Bur-L-03400-95, filed December 19, 1995. Irvin E. Richter, et al v. ATC Group Services Inc., et al, United States District Court, District of New Jersey, Civ. No. 96 CV 5818 (JBS) filed December 6, 1996. On December 19, 1995, a second amended complaint was filed in the above-entitled action which joined the Company as a defendant and included a count against the Company seeking recovery of certain assets purchased from Hill International, Inc. ("Hill") on the grounds that plaintiff banks hold security interests in the assets and that Hill is in default under the security agreement creating such alleged security interests. The original plaintiffs in this action were First Fidelity Bank, N.A. and United Jersey Bank, N.A. The primary defendants were Hill and certain of its subsidiaries, and Irvin Richter, David Richter, Janice Richter and William Doyle. Irvin Richter and David Richter are officers and stockholders of Hill. In April 1996, the Company filed a cross-claim against Hill, Irvin Richter and David Richter alleging breach of contract, fraud, among other allegations and seeking unspecified damages, including punitive damages and equitable relief. In August, 1996, Hill and the Richters filed an answer denying ATC's cross claims, a cross-claim against ATC and a third party claim against certain members of ATC's management and an employee. The cross claim and third party claim seek unspecified damages, including punitive damages, for defamation, breach of the Richters' non-competition agreements and securities fraud. The defamation claim is based on plaintiff banks' allegation of fraud against Hill and the Richters in their amended complaint, which Hill and the Richters allege was based on defamatory statements made by ATC in settlement discussions with the plaintiff banks. In its answer, the Company both denies that it made defamatory statements and asserts that the defamation allegations fail to state a legally valid claim. The breach of contract and securities claims are based on allegations that ATC made representations concerning a registration rights agreement to be provided in connection with options issued to the Richters as consideration for their non-competition agreements. In its answer, the Company denies that an agreement concerning registration rights was ever reached and asserts that the Richters forfeited any such rights in any case as a result of their conduct in connection with the asset purchase. These related cases are in their early stages with discovery yet to take place. In January, 1997, the plaintiff banks dismissed their claim against ATC. On December 6, 1996, Hill and the Richters commenced an action against ATC and the same officers and employees of ATC alleging essentially the same claims in federal court as in the state action. This action is entitled Irvin E. Richter et al. v. ATC Group Services, et al., Civ. No. 96-5818(JBS), U.S. District. Court for the District of New Jersey, December 6, 1996. ATC has answered, raising the same defenses and additional defenses related to the timeliness of the federal claim. This is essentially the same action as in federal court as the pending state action. The case is currently in the discovery phase. It does not create a risk of double recovery. In the Company's opinion, the outcome of this matter will not have a significant effect on the Company's financial position or future results of operations, although no assurances can be given in this regard. Commonwealth of Massachusetts v. TLT Construction Corp. et al, Civ. Action No. 96-02281 F, Superior Court of Middlesex County, Massachusetts. This is an action brought by the Commonwealth of Massachusetts in April 1996, against the architects and general contractor on a renovation and construction project on the Suffolk County Courthouse in Massachusetts. The basis of the lawsuit is that one or more damp-proofing products specified by the architect defendants and installed by the contractor defendant made employees in the courthouse ill because of the off-gassing of harmful vapors. Dennison Environmental Services Inc., ("Dennison") an ATC subsidiary, was joined on August 13, 1996, as a third party defendant by TLT Construction Corporation, the general contractor, because Dennison performed some air quality testing of the air in the courthouse for the Commonwealth of Massachusetts during the construction process. The contractor alleges that it acted in reliance on these tests in continuing to install the material after the test report was given to it by the state. This case is in the discovery stage. At this point, ATC considers the case to be totally without merit, and ATC intends to vigorously defend the action. The Company currently has in force a professional liability insurance policy covering this claim in the amount of $10,000,000 with a deductible of $250,000. Notice of claim has been made regarding this action and the insurer has agreed to assume the defense. In the Company's opinion, the outcome of this matter will not have a significant effect on the Company's financial position or future results of operations, although no assurances can be given in this regard. State of New York Department of Taxation and Finance- The Company has received a notice of audit from the New York State Department of Taxation and Finance for the three fiscal years 1993, 1994, and 1995. The agent has issued a preliminary audit report, which is expected to be the basis of a formal assessment estimated to be approximately $200,000. The Company is disputing the agents positions and intends to appeal any assessment if rendered. No assurances can be given regarding the ultimate liability, if any, which may result. The Company has been named or has claims pending arising out of the conduct of its business. In the opinion of management, these matters are adequately covered by insurance, are without merit, or are not material. F-11 E. INDUSTRY SEGMENT DATA The Company provides services through its environmental consulting and engineering segment and its information technology consulting segment. Industry segment data for fiscal 1998 and 1997 are as follows:
Environmental Information Adjustments & & Engineering Technology Elimination's Total ------------------ ----------------- ------------------ --------------- Fiscal 1998 Quarter Ended May 31, 1997 -------------------------- Revenues.............................. $ 29,361,911 $ 2,240,299 $ (227,544) $ 31,374,666 Operating income...................... 2,231,443 170,999 - 2,402,442 Depreciation and amortization......... 230,735 8,845 - 239,580 Capital expenditures.................. 236,266 20,487 - 256,753 Identifiable Assets as of May 31, 1997 $ 101,676,015 $ 5,751,650 $ (3,205,661) $ 104,222,004 -------------------------------------- Fiscal 1997 Quarter Ended May 31, 1996 -------------------------- Revenues.............................. $ 16,498,022 $ 147,961 $ - $ 16,645,983 Operating income...................... 2,670,264 18,516 - 2,688,780 Depreciation and amortization......... 194,766 3,962 - 198,728 Capital expenditures.................. 383,116 - - 383,116 Identifiable Assets as of May 31, 1996 $ 87,209,636 $ 5,845,164 $ (3,001,500) $ 90,053,300 --------------------------------------
F-12 ATC GROUP SERVICES INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- Recent Developments Senior Debt Offering & Bank Credit Agreement - On May 29, 1997 the Company issued $32,500,000 of 8.18% Senior Secured Notes in a private placement offering. The notes are payable in five installments beginning May 31, 2000; interest is payable semi-annually commencing November 30, 1997. The Company has the right to prepay the loans at a premium over the outstanding principal. In connection with the note offering, the Company executed a credit agreement with the Chase Manhattan Bank and Atlantic Bank of New York. The credit agreement provides for a $15,000,000 revolving line of credit maturing on November 30, 1999. A portion of the proceeds of the Senior Secured Notes were used to repay the outstanding borrowings of $21,350,000 as of May 29, 1997 under the Company's bridge credit facility. The bridge facility was entered into in May, 1996 to provide capital in connection with the Company's acquisition of American Testing and Engineering Corporation and 3D Information Services, Inc. Acquisitions Fiscal 1997 American Testing and Engineering Corporation - On May 24, 1996, ATC purchased certain assets and assumed certain liabilities of American Testing and Engineering Corporation ("ATEC"), a national environmental consulting firm. ATEC provides environmental consulting and engineering services including risk assessments, compliance audits, environmental remediation consulting, geotechnical, materials testing, industrial hygiene and analytical services through a large network of branch and regional offices. In the three months ended May 31, 1997, the seller met certain contingent consideration requirements. Additionally, in connection with the issuance of the Senior Secured Notes, the Company and seller amended the original purchase agreement. As a result of these events, additional purchase consideration of $9,049,000 was recorded (Note B). 3D Information Services, Inc. - Effective May 28, 1996, ATC purchased certain assets and assumed certain specified liabilities of 3D Information Services, Inc. ("3D"), a New Jersey based information services company providing technical information system consulting services in all phases of information system design, development, maintenance and management in client server and mainframe based environments. 3D provides analysis and design services and system programming services to help clients in building new computer systems and modifying existing computer systems. 3D also provides support to clients in maintaining computer systems and in areas such as help desk management and other system support services. Employees of 3D typically work full-time at a client's work site. Its clients include major companies in the telecommunications, financial services and pharmaceutical industries. Fiscal 1996 Hill International Inc. Environmental Subsidiaries - On November 10, 1995, ATC purchased certain assets and assumed certain liabilities of the subsidiary companies at Hill International, Inc. that provided environmental consulting and engineering services (collectively the "Hill Businesses"). These services include asbestos management, industrial hygiene and indoor air quality consulting, environmental auditing and permitting, environmental regulatory compliance, water and wastewater engineering, solid waste and landfill management, hazardous waste management and analytical laboratory services. The Hill Businesses operated from facilities located in New York City, Boston and Willingboro, New Jersey. The Boston and New York offices have been integrated with ATC's existing operations, and ATC has benefited from other cost-saving measures taken, including the elimination of certain employees previously with the Hill Businesses. Applied Geosciences, Inc. - Effective February 29, 1996, ATC purchased certain assets and assumed certain liabilities of Applied Geosciences, Inc. ("AGI"). AGI services included environmental and hazardous waste site assessments, remediation design, air quality management, asbestos services, litigation support and engineering geology through its offices located in San Diego, Tustin, and San Jose, California. F-13 Results of Operations Three Months Ended May 31, 1997 Compared with Three Months Ended May 31, 1996 Revenues in the three months ended May 31, 1997 increased 88.5% to $31,374,666, compared with $16,645,983 in the three months ended May 31, 1996. This increase was primarily attributable to the positive effect of the acquisition of ATEC and 3D in May 1996. Revenues in the three months ended May 31, 1997 from ATC's branch offices having comparable operations in the three months ended May 31, 1996, when adjusted to eliminate the effect of a large project, remained apporximately the same. Actual comparable revenues decreased 11.3% to $11,864,392 compared with $13,369,254 in the three months ended May 31, 1996 as the prior year revenues includes $1,430,000 from a large government project. Revenues in the three months ended May 31, 1997 attributable to the acquisitions of certain assets of ATEC and 3D totaled $19,509,734. Reimbursable costs represent direct project expenses billed to environmental and engineering segment clients. For the three months ended May 31, 1997, reimbursable costs increased 70% to $4,455,833, compared with $2,621,578 in the three months ended May 31, 1996. Reimbursable costs as a percentage of revenues decreased to 14.2% for the three months ended May 31, 1997 compared with 15.7% in the three months ended May 31, 1996. The reimbursable cost percentage for the prior year was higher than normal due to outside services used to complete the large government project referred to above. Direct project costs were over 40% of this projects revenues. Excluding reimbursable costs of this project, reimbursable costs as a percentage of revenues would have been approximately 13.2%. However, reimbursable costs have averaged 15.4% following the acquisition of ATEC as ATEC's traditional consulting services, consisting of drilling and materials testing and engineering services, utilize higher amounts of outside services and direct project expenses compared to those consulting services being provided prior to the acquisition. Gross profit in the three months ended May 31, 1997 increased 68.3% to $12,257,212, compared with $7,282,012 in the three months ended May 31, 1996. Gross margin decreased to 45.5% in the three months ended May 31, 1997, compared with 51.9% in the three months ended May 31, 1996. ATC's gross margin decreased because the gross margin for the first quarter of fiscal 1997 benefited from increased revenue levels and improved employee utilization resulting from the large project above and from work deferred from the fourth quarter of fiscal 1996 which was adversely impacted from severe winter weather conditions. ATC's gross profit margin for the last three quarters of fiscal 1997 averaged 42.6%. Operating expenses in the three months ended May 31, 1997 increased 114.5% to $9,854,770, compared with $4,593,232 in the three months ended May 31, 1996. In the first quarter of fiscal 1997, operating expenses as a percentage of net revenues was 32.8% which compares favorably to fiscal 1996 where operating expenses as a percentage of net revenues averaged 36.5%. This improvement was due to the increased net revenue levels caused by the large government project and weather factors referred to above without corresponding increases in fixed and administrative costs. In addition, the acquisition of ATEC completed on March 24, 1996 changed the Company's operating cost structure, further reducing operating expenses as a percentage of net revenues. However, since the ATEC acquisition, the Company has experienced operating cost increases without corresponding net revenue increases. As a result, for the three months ended May 31, 1997 operating expenses as a percentage of net revenues was 36.6%. Of total operating expenses, the largest component is employee payroll and related costs. Employee costs for the three months ended May 31, 1997 were $4,187,830 or 15.6% of net revenues, up from an average of 12.4% for the first three quarters following the ATEC acquisition. Other operating costs have increased including travel, facility, and general administrative costs. Additionally, in the three months ended May 31, 1997, amortization of goodwill and intangibles increased to $425,599, compared with $162,704 in the three months ended May 31, 1996 reflecting the additional goodwill amortization resulting from the ATEC and 3D acquisitions. Operating income in the three months ended May 31, 1997 decreased 10.6% to $2,402,442 compared with $2,688,780 in the three months ended May 31, 1996. Operating income decreased as a percentage of net revenues to 8.9% in the three months ended May 31, 1997, compared with 19.2% in the three months ended May 31, 1996. Nonoperating expense in the three months ended May 31, 1997 increased to $456,126 compared with nonoperating income of $83,523 in the three months ended May 31, 1996. The change in nonoperating expense (income) is primarily attributable to increased interest expense due to bank debt outstanding during the quarter. Income tax expense in the three months ended May 31, 1997 was $770,000, compared with $1,054,000 in the three months ended May 31, 1996. During the three months ended May 31, 1997 and 1996, the Company's effective tax rates were 39.6% and 38.0%, respectively. As a result of the foregoing, net income in the three months ended May 31, 1997 decreased 31.5% to $1,176,316, or $.14 per share on a fully diluted F-14 basis, compared with $1,718,303 or $0.20 per share on a fully diluted basis, in the three months ended May 31, 1996. The fully diluted weighted average number of shares outstanding decreased 162,348 shares to 8,517,991 shares primarily due to lower common stock equivalents resulting from lower common stock prices off-set by an increase in shares issued from the exercise of options and warrants. Net income decreased as a percentage of net revenues to 4.4% in the three months ended May 31, 1997 compared with 12.3% in the three months ended May 31, 1996. Liquidity and Capital Resources At May 31, 1997, working capital was $32,259,520 compared with working capital of $27,701,694 at February 28, 1997, an increase of $4,557,826. This increase in working capital is primarily a result of increased cash from the issuance of the Senior Secured Notes, increases in accounts receivable and unbilled receivables, offset by increases in accrued payment obligations in connection with the ATEC acquisition. Primarily as a result of the additional purchase consideration incurred in May 1997 in connection with the acquisition of ATEC, the Company's tangible net worth decreased to $2,650,727 at May 31, 1997 from $9,220,043 at February 28, 1997. During the three months ended May 31, 1997, net cash flows used in operating activities were $2,196,200 primarily due to the decrease in accounts payable and other liabilities, a portion of which was related to payments of liabilities from acquisitions, and an increase in billed and unbilled receivables. Net cash flows used in investing activities were $2,658,009, resulting from the additional purchase consideration paid for ATEC and purchases of property and equipment. Net cash flows provided by financing activities were $11,057,476, primarily representing the proceeds of the Senior Secured Notes, less repayment of the outstanding bridge credit facility. During the three months ended May 31, 1996, net cash flows used in operating activities were $3,557,618, primarily due to the decrease in accounts payable and other liabilities, a portion of which was related to payments of assumed liabilities from acquisitions, and an increase in billed and unbilled receivables. Net cash flows used in investing activities were $12,272,158, resulting from the acquisitions of ATEC and 3D and purchases of property and equipment. Net cash flows provided by financing activities were $9,105,249, primarily representing the proceeds of the bridge credit facility, less payments made on long-term debt and notes payable. Management of the Company believes the proceeds from the issuance of the Senior Secured Notes after repayment of the bridge credit facility, funds available from its unused $15,000,000 bank line of credit and cash provided from operations are adequate to fund current operations including liabilities incurred in connection with the Company's acquisitions of ATEC and 3D. The Company may seek to obtain additional public or private equity financing in the future in order to expand operations, provide funds for future acquisitions or reduce debt, however no assurance can be given as to the Company's ability to obtain funds on acceptable terms and conditions. F-15 PART II - OTHER INFORMATION Item 1. Legal Proceedings: First Fidelity Bank, N.A., et al v. Hill International, Inc. et al, Superior Court of New Jersey, Law Division, Burlington County, Docket No. Bur-L-03400-95, filed December 19, 1995. Irvin E. Richter, et al v. ATC Group Services Inc., et al, United States District Court, District of New Jersey, Civ. No. 96 CV 5818 (JBS) filed December 6, 1996. On December 19, 1995, a second amended complaint was filed in the above-entitled action which joined the Company as a defendant and included a count against the Company seeking recovery of certain assets purchased from Hill International, Inc. ("Hill") on the grounds that plaintiff banks hold security interests in the assets and that Hill is in default under the security agreement creating such alleged security interests. The plaintiffs in this action are First Fidelity Bank, N.A. and United Jersey Bank, N.A. The primary defendants were Hill and certain of its subsidiaries, and Irvin Richter, David Richter, Janice Richter and William Doyle. Irvin Richter and David Richter are officers and stockholders of Hill. In April 1996, the Company filed a cross-claim against Hill, Irvin Richter and David Richter alleging breach of contract, fraud, among other allegations and seeking unspecified damages, including punitive damages and equitable relief. In August, 1996, Hill and the Richters filed an answer denying ATC's cross claims, a cross-claim against ATC and a third party claim against certain members of ATC's management. The cross claim and third party claim seek unspecified damages, including punitive damages, for defamation, breach of the Richters' non-competition agreements and securities fraud. The defamation claim is based on plaintiff banks' allegation of fraud against Hill and the Richters in their amended complaint, which Hill and the Richters allege was based on defamatory statements made by ATC in settlement discussions with the plaintiff banks. In its answer, the Company both denies that it made defamatory statements and asserts that the defamation allegations fail to state a legally valid claim. The breach of contract and securities claims are based on allegations that ATC made representations concerning a registration rights agreement to be provided in connection with options issued to the Richters as consideration for their non-competition agreements. In its answer, the Company denies that an agreement concerning registration rights was ever reached and asserts that the Richters forfeited any such rights in any case as a result of their conduct in connection with the asset purchase. These related cases are in their early stages with discovery yet to take place. In January, 1997, the plaintiff bank dismissed their claim against ATC. On December 6, 1996, Hill and the Richters commenced an action against ATC and the same officers and employees of ATC alleging essentially the same claims in federal court as in the state action. ATC has answered, raising the same defenses and additional defenses related to the timeliness of the federal claim. This is essentially the same action as in federal court as the pending state action. It does not create a risk of double recovery. In the Company's opinion, the outcome of this matter will not have a significant effect on the Company's financial position or future results of operations, although no assurances can be given in this regard. Commonwealth of Massachusetts v. TLT Construction Corp. et al, Civ. Action No. 96-02281 F, Superior Court of Middlesex County, Massachusetts. This is an action brought by the Commonwealth of Massachusetts in April 1996, against the architects and general contractor on a renovation and construction project on the Suffolk County Courthouse in Massachusetts. The basis of the lawsuit is that one or more damp-proofing products specified by the architect defendants and installed by the contractor defendant made employees in the courthouse ill because of the off-gassing of harmful vapors. Dennison Environmental Services Inc., ("Dennison") an ATC subsidiary, was joined on August 13, 1996, as a third party defendant by TLT Construction Corporation, the general contractor, because Dennison performed some air quality testing of the air in the courthouse for the Commonwealth of Massachusetts during the construction process. The contractor alleges that it acted in reliance on these tests in continuing to install the material after the test report was given to it by the state. Dennison has just recently been served and has not yet answered the complaint. At this point, ATC considers the case to be totally without merit, and ATC intends to vigorously defend the action. The Company currently has in force a professional liability insurance policy covering this claim in the amount of $10,000,000 with a deductible of $250,000. Notice of claim has been made regarding this action and the insurer has agreed to assume the defense. These related cases are in their early stages with discovery yet to take place. In the Company's opinion, the outcome of this matter will not have a significant effect on the Company's financial position or future results of operations, although no assurances can be given in this regard. 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: Not Applicable F-16 Item 5. Other Information: Not Applicable Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits: 11 - Computation of Earnings Per Share Three months ended May 31, 1997 (Unaudited) 27 - Financial Data Schedule May 31, 1997 (Unaudited) (b) Reports on Form 8-K: Not Applicable 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 thereunto duly authorized. ATC GROUP SERVICES INC. ---------------------- (Registrant) Dated: July 15 1997 /s/ MORRY F.RUBIN ------------------- ---------------------- MORRY F. RUBIN, President and Chief Executive Officer Dated: July 15, 1997 /s/ RICHARD L. PRUITT -------------------- ---------------------- RICHARD L. PRUITT, Vice President and Principal Accounting Officer F-17 ATC GROUP SERVICES INC. AND SUBSIDIARIES EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE THREE MONTHS ENDED MAY 31, 1997 (Unaudited) - --------------------------------------------------------------------------------
Three Months Ended May 31, ------------------------------- 1996 1997 ------------- ------------- Primary earnings per share: Weighted average number of shares of common stock outstanding...................... 7,788,586 7,801,181 Additional shares assuming exercise of dilutive stock options and stock warrants... 793,057 599,541 ------------- ------------- Total average common and common equivalent shares outstanding.................... 8,581,643 8,400,722 ============= ============= Net income......................................................................... $ 1,718,303 $ 1,176,316 ============= ============= Earnings per common and dilutive common equivalent share........................... $ .20 $ .14 ============= ============= Fully diluted earnings per share: Weighted average number of shares of common stock outstanding...................... 7,788,586 7,801,181 Additional shares assuming exercise of dilutive stock options and stock warrants... 891,753 716,810 ------------- ------------- Total average common and common equivalent shares outstanding.................... 8,680,339 8,517,991 ============= ============= Net income......................................................................... $ 1,718,303 $ 1,176,316 ============= ============= Earnings per common and dilutive common equivalent share........................... $ .20 $ .14 ============= =============
F-18 ATC GROUP SERVICES INC. AND SUBSIDIARIES EXHIBIT 27 FINANCIAL DATA SCHEDULE MAY 31, 1997 (Unaudited) - --------------------------------------------------------------------------------
As of Item Number Item Description May 31, 1997 ----------------------- 5-02(1) Cash and cash items.......................................................... $ 8,207,157 5-02(2) Marketable securities and short-term investments............................. - 5-02(3)a(1) Notes and accounts receivable - trade........................................ 35,752,917 5-02(4) Allowances for doubtful accounts............................................. (1,340,549) 5-02(6) Inventory.................................................................... - 5-02(9) Total current assets......................................................... 52,529,316 5-02(13) Property, plant and equipment................................................ 7,951,380 5-02(14) Accumulated depreciation..................................................... 4,178,585 5-02(18) Total assets................................................................. 104,222,004 5-02(21) Total current liabilities.................................................... 20,269,796 5-02(22) Bonds mortgages and similar debt............................................. 35,470,096 5-02(28) Preferred stock - mandatory redemption....................................... - 5-02(29) Preferred stock - no mandatory redemption.................................... - 5-02(30) Common stock................................................................. 78,030 5-02(31) Other stockholders' equity................................................... 46,535,043 5-02(32) Total liabilities and stockholders' equity................................... 104,222,004 Three months ended May 31, 1997 ----------------------- 5-03(b)1(a) Net sales of tangible products...............................................$ - 5-03(b)1 Total revenues............................................................... 31,374,666 5-03(b)2(a) Cost of tangible goods sold.................................................. - 5-03(b)2 Total costs and expenses applicable to sales and revenues.................... 19,117,454 5-03(b)3 Other costs and expenses..................................................... 9,435,049 5-03(b)5 Provision for doubtful accounts and notes.................................... 377,439 5-03(b)(8) Interest and amortization of debt discount................................... 498,408 5-03(b)(10) Income before taxes and other items.......................................... 1,946,316 5-03(b)(11) Income tax expense........................................................... 770,000 5-03(b)(14) Income continuing operations................................................. 1,176,316 5-03(b)(15) Discontinued operations...................................................... - 5-03(b)(17) Extraordinary items.......................................................... - 5-03(b)(18) Cumulative effect - changes in accounting principles......................... - 5-03(b)(19) Net Income................................................................... 1,176,316 5-03(b)(20) Earning per share - primary.................................................. .14 5-03(b)(20) Earnings per share - fully diluted........................................... .14
F-19 EX-27 2 EXHIBIT 27
5 3-MOS FEB-28-1998 MAR-01-1997 MAY-30-1997 8,207,157 0 35,752,917 1,340,549 0 52,529,316 7,951,380 4,178,585 104,222,004 20,269,796 35,470,096 0 0 78,030 46,535,043 104,222,004 0 31,374,666 0 19,117,454 9,435,049 377,439 498,408 1,946,316 770,000 1,176,316 0 0 0 1,176,316 .14 .14
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