<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to ____________________
Commission File No. 0-4643
ROY F. WESTON, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1501990
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1 WESTON WAY, WEST CHESTER, PENNSYLVANIA 19380-1499
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code.....(610)-701-3000
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
As of June 30, 1996, the registrant had outstanding 7,515,827 shares of
Series A common stock and 2,111,634 shares of common stock.
<PAGE> 2
<TABLE>
<CAPTION>
Index Page
Part I - Financial Information
<S> <C> <C>
Item 1. Financial Statements:
Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 1-2
Consolidated Statements of Income (Loss) -
Three Months Ended June 30, 1996 and 1995 3
Consolidated Statements of Income (Loss) -
Six Months Ended June 30, 1996 and 1995 4
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7-8
Part II - Other Information 9
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
<PAGE> 3
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1996 1995
(Unaudited)
(Thousands of Dollars)
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents........................... $ 7,211 $ 12,980
Marketable securities............................... 12,697 2,813
Accounts receivable, trade, net of allowance
for doubtful accounts of $1,935 in 1996
and $1,800 in 1995................................. 74,911 78,374
Unbilled costs and estimated earnings on
contracts in process............................... 18,410 17,935
Prepaid and refundable income taxes................. 636 1,369
Deferred income taxes............................... 3,287 3,145
Other............................................... 3,351 2,602
--------- ---------
Total current assets....................... 120,503 119,218
--------- ---------
PROPERTY AND EQUIPMENT
Land................................................ 215 215
Buildings and improvements.......................... 11,317 11,308
Furniture and equipment............................. 58,697 58,348
Leasehold improvements.............................. 9,648 7,580
Construction in progress............................ 67 1,842
--------- ---------
Total property and equipment............... 79,944 79,293
Less accumulated depreciation and amortization...... 60,650 58,777
--------- ---------
Property and equipment, net................ 19,294 20,516
--------- ---------
OTHER ASSETS
Goodwill, net of accumulated amortization of
$1,278 in 1996 and $1,203 in 1995.................. 4,676 4,751
Deferred income taxes............................... 1,743 1,491
Other............................................... 17,255 17,430
--------- ---------
Total other assets......................... 23,674 23,672
--------- ---------
$ 163,471 $ 163,406
========= =========
</TABLE>
See notes to consolidated financial statements.
-1-
<PAGE> 4
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)
(Thousands of Dollars)
CURRENT LIABILITIES
<S> <C> <C>
Current maturities of long-term debt.............. $ 5,202 $ 2,261
Accounts payable and accrued expenses............. 12,218 12,444
Billings on contracts in process in excess of
costs and estimated earnings..................... 17,396 15,346
Employee compensation, benefits and
payroll taxes.................................... 12,353 11,348
Income taxes payable.............................. 204 208
Other ............................................ 9,292 9,736
---------- ---------
Total current liabilities................ 56,665 51,343
---------- ---------
LONG TERM DEBT.................................... 20,600 24,673
---------- ---------
OTHER LIABILITIES................................. 4,118 4,489
---------- ---------
CONTINGENCIES.....................................
STOCKHOLDERS' EQUITY
Common stock, $.10 par value, 10,500,000 shares
authorized; 3,192,909 shares issued in 1996;
3,193,059 shares issued in 1995.................. 319 319
Series A common stock, $.10 par value,
20,500,000 shares authorized; 8,165,832
shares issued in 1996; 8,028,082 shares
issued in 1995................................... 817 803
Unrealized gain on investments.................... 509 514
Additional paid-in capital........................ 54,680 54,143
Retained earnings................................. 30,276 30,929
---------- ---------
86,601 86,708
Less treasury stock at cost, 1,081,275 common
shares in 1996 and 1995; 650,005 Series A
common shares in 1996 and 513,105 Series A
common shares in 1995............................ 4,513 3,807
---------- ---------
Total stockholders' equity............... 82,088 82,901
---------- ---------
$ 163,471 $ 163,406
========== =========
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE> 5
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30,
1996 1995
(Thousands of Dollars)
<S> <C> <C>
Gross revenues..................................... $ 66,186 $ 76,403
Direct project costs............................... 19,936 23,772
---------- ----------
Net revenues.............................. 46,250 52,631
---------- ----------
Expenses:
Direct salaries and other operating costs. 40,509 44,219
General and administrative expenses....... 6,714 7,074
---------- ----------
47,223 51,293
---------- ----------
Income (loss) from operations............. (973) 1,338
---------- ----------
Other income (expense):
Investment income......................... 403 363
Interest expense.......................... (519) (605)
Other..................................... 42 407
---------- ----------
(74) 165
---------- ----------
Income (loss) before income taxes......... (1,047) 1,503
Provision (benefit) for income taxes............... (377) 541
---------- ----------
Net income (loss)......................... $ (670) $ 962
========== ==========
Net income (loss) per share............... $ (.07) $ .10
========== ==========
Weighted average shares outstanding 9,511,548 9,453,730
========== ==========
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE> 6
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
(Thousands of Dollars)
<S> <C> <C>
Gross revenues..................................... $ 133,772 $ 152,004
Direct project costs............................... 40,433 46,649
---------- ----------
Net revenues.............................. 93,339 105,355
---------- ----------
Expenses:
Direct salaries and other operating costs. 80,282 88,325
General and administrative expenses....... 14,049 14,572
---------- ----------
94,331 102,897
---------- ----------
Income (loss) from operations............. (992) 2,458
---------- ----------
Other income (expense):
Investment income......................... 903 735
Interest expense.......................... (1,044) (1,210)
Other..................................... 113 414
---------- ----------
(28) (61)
---------- ----------
Income (loss) before income taxes......... (1,020) 2,397
Provision (benefit) for income taxes............... (367) 863
---------- ----------
Net income (loss)......................... $ (653) $ 1,534
========== ==========
Net income (loss) per share............... $ (.07) $ .16
========== ==========
Weighted average shares outstanding 9,541,188 9,502,614
========== ==========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE> 7
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
(Thousands of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss)................................... $ (653) $ 1,534
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization............. 4,383 4,778
Provision for losses on accounts
receivable............................... 124 360
Other..................................... 408 927
Change in assets and liabilities:
Accounts receivable, trade................ 3,339 (8,651)
Unbilled costs and estimated earnings on
contracts in process..................... (475) 2,422
Other current assets...................... (749) 221
Accounts payable and accrued expenses..... (226) (629)
Billings on contracts in excess of costs
and estimated earnings................... 2,050 5,840
Employee compensation, benefits and
payroll taxes............................ 1,005 752
Income taxes.............................. 729 2,714
Deferred income taxes..................... (392) (1,645)
Other current liabilities................. (992) 536
Other assets and liabilities.............. (910) (97)
--------- ---------
Net cash provided by operating activities........ 7,641 9,062
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investments................... 5,823 12,770
Payments for purchase of investments................ (15,402) (7,041)
Purchase of property and equipment, net............. (2,249) (4,374)
Investments in other assets......................... (271) (2,392)
--------- ---------
Net cash used for investing activities........... (12,099) (1,037)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under long-term debt............. (1,132) (4,166)
Proceeds from issuance of Series A common stock..... 527 745
Purchase of Series A common treasury stock.......... (706) (766)
--------- ---------
Net cash used for financing activities....... (1,311) (4,187)
--------- ---------
Net increase (decrease) in cash and cash
equivalents.................................. (5,769) 3,838
Cash and cash equivalents:
Beginning of period.......................... 12,980 5,745
--------- ---------
End of period................................ $ 7,211 $ 9,583
========= =========
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE> 8
ROY F. WESTON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements reflect all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
financial position, results of operations and cash flows for the interim
periods. All such adjustments are of a normal recurring nature. Results for the
three months and six months ended June 30, 1996 are not necessarily indicative
of results for the full year 1996.
NOTE 2 - CONSOLIDATED STATEMENTS OF CASH FLOW
During the first six months of 1996 and 1995 there were net cash refunds for
income taxes of $709,000 and $184,000, respectively. Cash payments for interest
were $967,000 and $1,185,000 in the six months ended June 30, 1996 and 1995,
respectively.
No capital lease obligations were incurred in the six months ended June 30,
1996. Capital lease obligations of $55,000 were incurred in the six months ended
June 30, 1995.
-6-
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Material Changes in Financial Condition
Cash and cash equivalents decreased $5,769,000 in the first six months of 1996
to $7,211,000 from $12,980,000 at December 31, 1995. Marketable securities
increased $9,884,000 in the first six months of 1996 to $12,697,000 from
$2,813,000 at December 31, 1995.
Operating activities provided cash of $7,641,000 for the six months ended June
30, 1996, compared to $9,062,000 in the six months ended June 30, 1995. Net cash
investments in property and equipment and other assets were $2,520,000 in the
first six months of 1996, compared to $6,766,000 in the comparable 1995 period.
Net cash investments for the first six months of 1995 included a $2,000,000
investment for a minority interest in a bioremediation and infrastructure
engineering company. The Company used cash of $1,311,000 in financing activities
in the first six months of 1996, compared to $4,187,000 in the comparable 1995
period. Cash used for financing activities for the first six months of 1995
included the purchase of its 7% Convertible Subordinated Debentures in the
principal amount of $3,000,000.
Material Changes in Results of Operations
Net loss for the three months ended June 30, 1996 was $670,000 or $.07 per
share, compared to net income of $962,000 or $.10 per share, for the three
months ended June 30, 1995. Net loss for the six months ended June 30, 1996 was
$653,000 or $.07 per share, compared to net income of $1,534,000 or $.16 per
share, for the six months ended June 30, 1995.
Gross revenues decreased 13% to $66,186,000 for the three months ended June 30,
1996, and 12% to $133,772,000 for the six months ended June 30, 1996, compared
to the 1995 periods. Net revenues decreased 12% to $46,250,000 for the three
months ended June 30, 1996, and 11% to $93,339,000 for the six months ended June
30, 1996, compared to the 1995 periods. Net revenues from consulting projects
declined 13% and 9% in the three months and six months ended June 30, 1996,
respectively, due principally to a diminished level of available business as a
result of a lack of federal regulatory progress. Analytical laboratory services
net revenues declined 10% and 20% in the three months and six months ended June
30, 1996, respectively, due to reduced demand for the Company's services and
continued pricing pressure in the laboratory industry. Construction and
remediation net revenues declined 20% in both the three months and six months
ended June 30, 1996 due principally to government funding delays and the
recognition of $600,000 representing a refined estimate of contract realization
on a project in the three and six months ended June 30, 1995.
-7-
<PAGE> 10
Loss from operations for the three months ended June 30, 1996 was $973,000
compared to income from operations of $1,338,000 for the three months ended June
30, 1995. Loss from operations for the six months ended June 30, 1996 was
$992,000 compared to income from operations of $2,458,000 for the six months
ended June 30, 1995. The losses in the three months and six months ended June
30, 1996 were principally due to the lower 1996 net revenues. Results for the
six months ended June 30, 1996 include a provision of approximately $775,000
relating to severence benefits for the Company's former Chairman of the Board.
General and administrative expenses as a percentage of net revenues increased to
14.5% and 15.1% in the three months and six months ended June 30, 1996,
respectively, from 13.4% and 13.8% in the three months and six months ended June
30, 1995, respectively, due to lower net revenues.
Investment income increased $168,000, or 23%, for the six months ended June 30,
1996 due to gains realized on sale of investments held in the Company's captive
insurance subsidiary. Interest expense declined $86,000, or 14%, and $166,000,
or 14%, in the three months and six months ended June 30, 1996, respectively,
due to lower borrowings. Other income for the six months ended June 30, 1996
includes $89,000 in gains realized on equipment sales. Other income for the
three months and six months ended June 30, 1995, includes a $376,000 gain
realized on purchase of the Company's 7% Convertible Subordinated Debentures.
For the first six months of 1996 no purchase of the Company's 7% Convertible
Subordinated Debentures was made.
-8-
<PAGE> 11
PART II OTHER INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
On May 20, 1996, the Company held its Annual Meeting of
Shareholders. The shareholders approved an amendment
increasing by 400,000 the number of shares of Series A common
stock reserved for issuance under the Company's Employee
Stock Purchase Plan. There were 2,261,678 affirmative votes,
28,106 negative votes, 4,585 abstentions and 120,799 broker
non-votes.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits are numbered in accordance with the Exhibit
Table of Item 601 of Regulation S-K.
Exhibit No. Description
11 Statements of Computation
of Net Income (Loss) Per Share
27 Financial Data Schedule
(b) No reports on Form 8-K have been filed
during the quarter ended June 30, 1996.
</TABLE>
-9-
<PAGE> 12
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.
ROY F. WESTON, INC.
(Registrant)
Date: August 9, 1996 By:/s/ M. Christine Murphy
-----------------------
M. Christine Murphy
Executive Vice President
Quality Assurance/Finance
(Duly Authorized Officer)
(Principal Financial Officer)
Date: August 9, 1996 By:/s/ William G. Mecaughey
------------------------
William G. Mecaughey
Vice President and
Corporate Controller
(Chief Accounting Officer)
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description
<S> <C>
11 Statements of Computation of
Net Income (Loss) Per Share
27 Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit 11
ROY F. WESTON, INC. AND SUBSIDIARIES
STATEMENTS OF COMPUTATION OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
Three Months Ended June 30,
1996 1995
---- ----
(Thousands of Dollars)
PRIMARY
<S> <C> <C>
Net income (loss).................................. $ (670) $ 962
=========== ===========
Weighted average shares outstanding................ 9,511,548 9,453,730
=========== ===========
Net income (loss) per share........................ $ (.07) $ .10
=========== ===========
FULLY DILUTED
Net income (loss).................................. $ (670) $ 962
ADD:
Interest on 7% Convertible Subordinated
Debentures, net of applicable income
taxes.................................... 244 244
----------- -----------
Net income (loss) for fully diluted net income (loss)
per share......................................... $ (426) $ 1,206
=========== ===========
Weighted average number of shares used in
calculating primary net income (loss) per share... 9,511,548 9,453,730
ADD:
Shares issuable upon conversion of 7%
Convertible Subordinated Debentures...... 1,033,128 1,076,814
Stock options............................. - -
----------- -----------
Weighted average number of shares used in
calculating fully diluted net income (loss) per
share............................................ 10,544,676 10,530,544
=========== ===========
Fully diluted net income (loss) per share.......... $ (.04) $ .11
=========== ===========
</TABLE>
<PAGE> 2
Exhibit 11
ROY F. WESTON, INC. AND SUBSIDIARIES
STATEMENTS OF COMPUTATION OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
(Thousands of Dollars)
PRIMARY
<S> <C> <C>
Net income (loss).................................. $ (653) $ 1,534
=========== ===========
Weighted average shares outstanding................ 9,541,188 9,502,614
=========== ===========
Net income (loss) per share........................ $ (.07) $ .16
=========== ===========
FULLY DILUTED
Net income (loss).................................. $ (653) $ 1,534
ADD:
Interest on 7% Convertible Subordinated
Debentures, net of applicable income
taxes.................................... 489 489
----------- -----------
Net income (loss) for fully diluted net income (loss)
per share......................................... $ (164) $ 2,023
=========== ===========
Weighted average number of shares used in
calculating primary net income (loss) per share... 9,541,188 9,502,614
ADD:
Shares issuable upon conversion of 7%
Convertible Subordinated Debentures...... 1,033,128 1,125,689
Stock options............................. 1,492 -
----------- -----------
Weighted average number of shares used in
calculating fully diluted net income (loss) per
share............................................ 10,575,808 10,628,303
=========== ===========
Fully diluted net income (loss) per share.......... $ (.02) $ .19
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of June 30, 1996 and the consolidated statement of
income for the six months ended June 30, 1996 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,211
<SECURITIES> 12,697
<RECEIVABLES> 93,321<F1>
<ALLOWANCES> 1,935
<INVENTORY> 0
<CURRENT-ASSETS> 120,503
<PP&E> 79,944
<DEPRECIATION> 60,650
<TOTAL-ASSETS> 163,471
<CURRENT-LIABILITIES> 56,665
<BONDS> 20,600
0
0
<COMMON> 1,136
<OTHER-SE> 80,952
<TOTAL-LIABILITY-AND-EQUITY> 163,471
<SALES> 0
<TOTAL-REVENUES> 133,722
<CGS> 0
<TOTAL-COSTS> 134,704
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 124
<INTEREST-EXPENSE> 1,044
<INCOME-PRETAX> (1,020)
<INCOME-TAX> (367)
<INCOME-CONTINUING> (653)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (653)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> 0
<FN>
<F1> Includes $8,410 of unbilled costs and estimated earnings thereon.
</FN>
</TABLE>
