<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 March 31, 1997
( ) 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 April 25, 1997, the registrant had outstanding 7,541,787 shares
of Series A common stock and 2,105,394 shares of common stock.
<PAGE> 2
<TABLE>
<CAPTION>
Index Page
----- ----
<S> <C> <C>
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996 1-2
Consolidated Statements of Operations -
Three Months Ended March 31, 1997 and 1996 3
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996 4
Notes to Consolidated Financial Statements 5-6
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
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited)
(Thousands of Dollars)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 15,699 $ 9,878
Marketable securities 6,512 7,616
Accounts receivable, trade, net of allowance for doubtful
accounts of $1,570 in 1997 and $1,510 in 1996 57,078 65,480
Unbilled costs and estimated earnings on contracts in process 18,803 18,151
Prepaid and refundable income taxes 2,643 2,719
Deferred income taxes 4,918 5,584
Other 4,585 2,438
-------- --------
Total current assets 110,238 111,866
-------- --------
PROPERTY AND EQUIPMENT
Land 215 215
Buildings and improvements 11,396 11,350
Furniture and equipment 54,426 55,763
Leasehold improvements 8,908 8,929
Construction in progress 11 17
-------- --------
Total property and equipment 74,956 76,274
Less accumulated depreciation and amortization 63,849 64,884
-------- --------
Property and equipment, net 11,107 11,390
-------- --------
OTHER ASSETS
Goodwill, net of accumulated amortization of $4,030 in
1997 and $4,014 in 1996 1,924 1,940
Deferred income taxes 3,164 3,168
Other 11,812 13,108
-------- --------
Total other assets 16,900 18,216
-------- --------
TOTAL ASSETS $138,245 $141,472
======== ========
</TABLE>
See notes to consolidated financial statements.
-1-
<PAGE> 4
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited)
(Thousands of Dollars)
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $ 2,140 $ 2,159
Accounts payable and accrued expenses 11,788 11,869
Billing on contracts in process in excess
of costs and estimated earnings 8,637 12,233
Employee compensation, benefits and payroll taxes 14,253 13,326
Income taxes payable 186 220
Other 13,262 13,103
-------- --------
Total current liabilities 50,266 52,910
-------- --------
LONG TERM DEBT 18,205 18,922
-------- --------
OTHER LIABILITIES 3,521 3,550
-------- --------
CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.10 par value, 10,500,000 shares
authorized; 3,186,669 shares issued in 1997;
3,192,909 shares issued in 1996 319 319
Series A common stock, $.10 par value, 20,500,000 shares
authorized; 8,325,592 shares issued in 1997;
8,319,352 shares issued in 1996 833 832
Unrealized gain on investments 329 541
Additional paid-in capital 55,139 55,130
Retained earnings 14,670 14,274
-------- --------
71,290 71,096
Less treasury stock at cost, 1,081,275 common shares
in 1997 and 1996; 777,805 Series A common shares
in 1997 and 769,805 Series A common shares in 1996 5,037 5,006
-------- --------
Total stockholders' equity 66,253 66,090
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $138,245 $141,472
======== ========
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE> 5
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
(Thousands of Dollars)
<S> <C> <C>
Gross revenues $ 61,480 $ 67,586
Direct project costs 21,862 20,497
----------- -----------
Net revenues 39,618 47,089
----------- -----------
Expenses:
Direct salaries and other operating costs 34,531 39,773
General and administrative expenses 5,741 7,335
Restructuring credit (1,071) --
----------- -----------
39,201 47,108
----------- -----------
Income (loss) from operations 417 (19)
----------- -----------
Other income (expense):
Investment income 547 500
Interest expense (430) (525)
Other 85 71
----------- -----------
202 46
----------- -----------
Income before income taxes 619 27
Provision for income taxes 223 10
----------- -----------
Net income $ 396 $ 17
=========== ===========
Net income per share $ .04 $ .00
=========== ===========
Weighted average shares outstanding 9,659,203 9,570,828
=========== ===========
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE> 6
ROY F. WESTON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
---- ----
(Thousands of Dollars)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 396 $ 17
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 1,201 2,115
Provision for losses on accounts receivable 89 56
Restructuring credit (1,071) --
Other 32 232
Change in assets and liabilities:
Accounts receivable, trade 8,313 10,816
Unbilled costs and estimated earnings on contracts in process (652) (563)
Other current assets (1,076) (585)
Accounts payable and accrued expenses (81) (855)
Billings on contracts in excess of costs and estimated earnings (3,596) (2,386)
Employee compensation, benefits and payroll taxes 927 3,008
Income taxes 42 188
Deferred income taxes 780 514
Other current liabilities 83 (527)
Other assets and liabilities 799 228
-------- --------
Net cash provided by operating activities 6,186 12,258
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investments 5,720 982
Payments for purchase of investments (4,602) (6,503)
Purchase of property and equipment, net (696) (1,435)
Investments in other assets (20) (134)
-------- --------
Net cash provided by (used for) investing activities 402 (7,090)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under long-term debt (736) (576)
Purchase of Series A common treasury stock (31) (561)
-------- --------
Net cash used for financing activities (767) (1,137)
-------- --------
Net increase in cash and cash equivalents 5,821 4,031
Cash and cash equivalents:
Beginning of period 9,878 12,980
-------- --------
End of period $ 15,699 $ 17,011
======== ========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE> 7
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. The unaudited consolidated financial statements do not include all of
the information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
and should be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's 1996 Annual Report to Shareholders which
is incorporated by reference in its Form 10-K filed with the Securities and
Exchange Commission. Results for the three months ended March 31, 1997 are not
necessarily indicative of results for the full year 1997.
NOTE 2 - LINE OF CREDIT AGREEMENT
On March 31, 1997 the Company agreed to an amendment to its uncollateralized
credit facility which extended the facility through March 27, 1998, reduced the
maximum amount of the facility to $25,000,000 and increased the amount available
for cash borrowings to $10,000,000. The Company is subject to a 3/8% annual
charge on the unused portion of the facility and must maintain covenants
including minimum net worth, adjusted leverage ratio, liquidity ratio and
minimum cash and cash equivalents and marketable securities.
NOTE 3 - RESTRUCTURING CREDIT
During the three months ended March 31, 1997, the Company completed the sale of
assets of its Weston Interactive, Inc. subsidiary. The book value of these
assets had been included in amounts reported as restructuring charges in 1996.
The net proceeds from the asset sale are included as restructuring credit in the
accompanying consolidated statement of operations for the three months ended
March 31, 1997.
NOTE 4 - CONSOLIDATED STATEMENTS OF CASH FLOW
Net cash refunds for income taxes were $628,000 and $696,000 in the first three
months of 1997 and 1996, respectively. Cash payments for interest were $69,000
and $106,000 in the three months ended March 31, 1997 and 1996, respectively.
No capital lease obligations were incurred in the three months ended March 31,
1997 or 1996.
-5-
<PAGE> 8
NOTE 5 - NEW ACCOUNTING STANDARD - EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share," which will replace
the current rules for earnings per share computations, presentation and
disclosure. Under the new standard, basic earnings per share excludes dilution
and is computed by dividing income available to common shareowners by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock. Statement No. 128 requires a dual presentation of basic and
diluted earnings per share on the face of the statement of operations.
The Company will be required to adopt Statement No. 128 in the fourth quarter of
1997 and, as required by the standard, will restate all prior period earnings
per share data. The new earnings per share amounts are not expected to be
materially different from those computed under the present accounting standard.
-6-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following information should be read in conjunction with the unaudited
interim consolidated financial statements and the notes thereto included in this
Quarterly Report and the audited financial statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the Company's Form 10-K filed with the Securities and Exchange
Commission for the fiscal year ended December 31, 1996.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Net income for the three months ended March 31, 1997 increased to $396,000 or
$.04 per share, compared to $17,000 or $.00 per share, for the three months
ended March 31, 1996.
Gross revenues decreased 9% to $61,480,000 for the three months ended March 31,
1997 compared to $67,586,000 in the 1996 period. Net revenues decreased 16% to
$39,618,000 for the three months ended March 31, 1997, compared to $47,089,000
for the comparable 1996 period. Net revenues in the three months ended March 31,
1997 included approximately $500,000 representing completion of a contract
negotiation. Overall personnel utilization declined sharply as a lack of federal
regulatory progress led to a diminished level of available business.
For the three months ended March 31, 1997, income from operations was $417,000.
The Company had a loss from operations of $19,000 for the three months ended
March 31, 1996. The three months ended March 31, 1997 included a restructuring
credit of $1,071,000 resulting from the sale of assets of Weston Interactive,
Inc. The 1996 results included a provision of approximately $775,000 relating to
severance benefits for the Company's former Chairman of the Board.
Investment income increased $47,000, or 9%, to $547,000 in 1997 due primarily to
gains realized on sales of investments in mutual funds. Interest expense
declined $95,000, or 18%, to $430,000 in 1997 principally due to the reduction
of 7% convertible subordinated debt outstanding.
MATERIAL CHANGES IN FINANCIAL CONDITION
Cash and cash equivalents increased $5,821,000 in the first three months of 1997
to $15,699,000 from $9,878,000 at December 31, 1996. Marketable securities
decreased $1,104,000 in the first three months of 1997 to $6,512,000 from
$7,616,000 at December 31, 1996.
Operating activities provided cash of $6,186,000 for the first three months of
1997, compared to $12,258,000 in the comparable 1996 period. Net cash
investments in property and equipment and other assets were $716,000 in the
first three months of 1997, compared to $1,569,000 in the comparable 1996
period. The Company used cash of $767,000 in financing activities in the first
three months of 1997, compared to $1,137,000 in the 1996 first quarter.
-7-
<PAGE> 10
FORWARD LOOKING STATEMENTS
From time to time, the Company may publish forward looking statements relating
to such matters as anticipated financial performance, business prospects,
technological developments and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward looking
statements. In order to comply with the terms of the safe harbor, the Company
notes that a number of factors could cause the Company's actual results and
experience to differ materially from anticipated results or other expectations
expressed in the Company's forward looking statements. Risks and uncertainties
that may affect the operations, performance, development and results of the
Company's business include, but are not limited to, the following:
- - The highly competitive marketplace for the Company's services.
- - Changes in and levels of enforcement of federal, state and local
environmental legislation and regulations.
- - The Company's ability to obtain new contracts from existing as well as new
clients.
- - The Company's ability to execute new projects and those currently in
backlog within reasonable cost estimates.
-8-
<PAGE> 11
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
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.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C> <C>
10.1 Fourth Amendment and Joinder to Credit
Agreement dated March 31, 1997
11 Statements of Computation of Net Income
Per Share
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K. On March 10, 1997 the Company filed
a Form 8-K under Item 5, Other Events, which incorporated
by reference the Company's News Release dated March 10,
1997 concerning its signing of an agreement to sell the
assets of its Environmental Metrics Division to Recra
Environmental, Inc.
-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: May 13, 1997 By:/s/ William J. Marrazzo
-------------------------------------
William J. Marrazzo
President and Chief Executive Officer
(Duly Authorized Officer)
Date: May 13, 1997 By:/s/ William G. Mecaughey
-------------------------------------
William G. Mecaughey
Vice President and
Corporate Controller
(Chief Accounting Officer)
<PAGE> 1
EXHIBIT 10.1
FOURTH AMENDMENT AND JOINDER TO CREDIT AGREEMENT
This Fourth Amendment and Joinder to Credit Agreement ("Amendment")
dated as of March 31, 1997 by and among Roy F. Weston, Inc. ("Weston"); the
Subsidiaries of Weston listed on the signature pages hereto (Weston and such
Subsidiaries are sometimes referred to individually as a "Borrower" and
collectively as the "Borrowers"); CoreStates Bank, N.A. ("CoreStates"), First
Union National Bank, successor by merger to First Fidelity Bank, N.A. ("First
Union") and PNC Bank, National Association ("PNC") (CoreStates, First Union and
PNC are each referred to individually as a "Bank" and collectively as the
"Banks"); and CoreStates Bank, N.A., as agent for the Banks hereunder (the
"Agent").
BACKGROUND
A. Borrowers, Banks and Agent are currently parties to a
certain Credit Agreement dated March 18, 1994, as amended from time to time
("Credit Agreement") whereby Banks established a credit facility under which
loans and letters of credit were made available from time to time for the
benefit of Borrowers. All capitalized terms used herein without further
definition shall have the meanings ascribed thereto in the Credit Agreement.
<PAGE> 2
B. Pursuant to the terms of the Credit Agreement, the Commitments of
the Banks expire on March 30, 1997 with all Loans to be repaid by March 18, 1998
(unless sooner due pursuant to the terms of the Credit Agreement).
C. Borrowers have asked Banks to amend the Credit Agreement to, among
other things, extend the Commitment Termination Date and reduce the Total
Commitments of the Banks, which the Banks have agreed to do on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, intending to be legally bound, the parties promise and
agree as follows:
Section 1. Status of Current Facility. Borrowers and Banks
acknowledge and agree that as of the date hereof there are no outstanding Loans
and the aggregate outstanding face amount of all Letters of Credit is
$7,538,791.53.
Section 2. Joinder of Additional Borrowers. Weston has created two
new subsidiaries, Weston of New Jersey, Inc. and Weston Interactive, Inc. ("New
Subsidiaries"). Pursuant to Section 5.22 of the Credit Agreement, each of the
New Subsidiaries hereby joins in and becomes a Borrower under the
2
<PAGE> 3
Credit Agreement and assumes and adopts the liabilities and obligations of a
Borrower thereunder with respect to the credit facility established pursuant
thereto, all Loans thereunder and all other obligations and liabilities related
thereto (including, without limitation, liabilities and obligations related to
Letters of Credit). All references to Borrower or Borrowers contained in the
Credit Agreement and each agreement, document or instrument related thereto are
hereby deemed to include New Subsidiaries as Borrowers and New Subsidiaries
agree to comply with all of the terms and conditions thereof as if they were
original signatories thereto. Each New Subsidiary hereby becomes jointly and
severally liable, along with all of the other Borrowers, for all existing and
future obligations and liabilities of Borrowers to Banks and/or Agent under the
terms of the Credit Agreement and any agreement, document or instrument related
thereto.
Section 3. Amendments.
3.1 The Credit Agreement is amended by deleting the chart
appearing in Section 2.01 thereof and replacing such chart with the following:
3
<PAGE> 4
<TABLE>
<CAPTION>
Banks Amount Commitment Percentage
----- ------ ---------------------
<S> <C> <C>
CoreStates $15,000,000 60%
First Union $ 5,000,000 20%
PNC $ 5,000,000 20%
----------- ---
TOTAL $25,000,000 100%
</TABLE>
3.2 The Credit Agreement is amended by deleting the
definition of "Commitment Termination Date" contained in Section 1.01 thereof
and replacing such definition in its entirety with the following:
"Commitment Termination Date" means the earlier of (A) March
27, 1998 or (B) the date on which the Commitments are fully
terminated pursuant to Section 2.05(C) or Section 6.02(A)
hereof.
3.3 The Credit Agreement is amended by deleting the
definition of "Maturity Date" contained in Section 1.01 thereof and replacing
such definition in its entirety with the following:
"Maturity Date" means the earlier of (A) March 27, 1998 or (B)
the date on which the Commitments are fully terminated
pursuant to Section 2.05(C) or the obligations of the
Borrowers hereunder are accelerated pursuant to Section
6.02(A) hereof.
3.4 The Credit Agreement is amended by deleting the
definition of "Margin" contained in Section 1.01 thereof and replacing such
definition in its entirety with the following:
4
<PAGE> 5
"Margin" means (A) in the case of each Base Rate Loan, 0%; (B)
in the case of each LIBOR Loan, 1%; provided, however, that in
each such case, upon notice from the Agent to the Borrowers
of the existence of an Event of Default and until full payment
of the Borrower's obligations hereunder (or until such Event
of Default is cured or waived to the satisfaction of Banks),
each of the foregoing margins shall be the sum of such Margin
plus 2%.
3.5 The Credit Agreement is amended by deleting the
definition of "Total Commitments" contained in Section 1.01 thereof and
replacing such definition in its entirety with the following:
"Total Commitments" means $25,000,000.00.
3.6 The Credit Agreement is amended by deleting
subsection 2.02(A) thereof and replacing such subsection in its entirety with
the following:
(A) Each Line Advance made as a LIBOR Loan shall be in an
aggregate amount of $2,000,000.00 and multiples of $500,000.00
in excess thereof. Each Line Advance made as a Base Rate Loan
shall be in an aggregate amount of $1,000,000.00 and multiples
of $250,000.00 in excess thereof. Within the limits of the
Commitments, the Borrowers may borrow, repay and reborrow
under this Section 2.02 until the Commitment Termination Date,
provided, however, that at no time shall the aggregate
outstanding Line Advances exceed $10,000,000 provided,
further, however, that such limit shall not restrict or impair
the right and obligation of the Banks to make Line Advances
pursuant to Section 2.15 below.
5
<PAGE> 6
3.7 The Credit Agreement is amended by deleting the
percentage "1/4%" in the fourth line of Section 2.04 thereof and replacing such
percentage with the percentage "3/8%".
3.8 The Credit Agreement is amended by adding the
following sentence to the end of subsection 2.07(B):
No LIBOR Loan shall have a LIBOR Interest Period which extends
beyond the Maturity Date.
3.9 The Credit Agreement is amended by deleting Section 2.16
thereof and replacing such Section in its entirety with the following:
SECTION 2.16. Letter of Credit Fees. In addition to the
customary fees of the Issuing Bank (for its own account) for
the opening, amendment, transfer, maintenance and cancellation
of Letters of Credit (a schedule of which will be furnished to
the Borrowers from time to time), the Borrowers will pay to
the Agent, in respect of each Letter of Credit, a fee
calculated at the annual rate of 1 1/4% (1 3/4% after the
Commitment Termination Date), of which 1% (1 1/2% after the
Commitment Termination Date) is to be distributed among the
Banks in accordance with their respective Commitment
Percentages and 1/4% is to be remitted to the Issuing Bank for
its sole account, on the face amount of such Letter of Credit
from the date it is opened until its stated expiry date or the
day on which it is paid in full, payable quarterly in arrears
on the day such Letter of Credit is opened and on the first
Business Day of each January, April, July, and October on
which it is outstanding.
3.10 The Credit Agreement is amended by deleting the
phrase "If any Event of Default or event that would with the
6
<PAGE> 7
passage of time or the giving of notice or both, be such an Event of Default
shall then exist or arise therefrom," beginning in the first line of Section
5.13 thereof.
3.11 The Credit Agreement is amended by deleting Section
5.17 thereof and replacing such section in its entirety with the following:
Section 5.17. Net Worth. Weston will not permit its Net
Worth, to be calculated at the end of each fiscal quarter
commencing with the fiscal quarter ending March 31, 1997, to
be less than the following amounts during the following
periods:
<TABLE>
<CAPTION>
Period Minimum Net Worth
------ -----------------
<S> <C>
March 31, 1997 - June 29, 1997 $64,000,000
June 30, 1997 - September 29, 1997 $65,000,000
September 30, 1997 - December 30, 1997 $67,000,000
December 31, 1997 and thereafter $66,000,000
</TABLE>
3.12 The Credit Agreement is amended by deleting Section
5.18 thereof and replacing such section in its entirety with the following:
Section 5.18. Adjusted Leverage Ratio. Weston will not permit
the ratio of (A) Total Liabilities plus Contingent Liabilities
(including Borrowers' reimbursement obligations for Letters of
Credit, which for purposes of this covenant shall be
calculated on the stated amount of Letters of Credit that have
not been drawn upon plus any unpaid reimbursement obligations
for Letters of Credit that have been drawn upon) to (B)
Tangible Net Worth, to be calculated at the end of each fiscal
quarter, to be greater than 1.75 to 1.0 as of and from
December 31, 1996 and at all times thereafter.
7
<PAGE> 8
3.13 The Credit Agreement is amended by deleting Section
5.20 thereof and replacing such section in its entirety with the following:
SECTION 5.20. Cash, Cash Equivalents and Marketable
Securities. Weston and its Subsidiaries will not permit the
sum of its cash, Cash Equivalents and Marketable Securities to
be less than $10,000,000 at any time. Cash, Cash Equivalents,
and Marketable Securities held by Cardinal Indemnity shall be
excluded from this calculation. This covenant is to be tested
on the last day of each month commencing March 31, 1997.
3.14 The Credit Agreement is amended by deleting Section
5.21 thereof in its entirety and replacing such section in its entirety with
the following:
SECTION 5.21. Change of Control. Neither Weston nor any of
its Subsidiaries shall permit or suffer a Change of Control.
3.15 The Credit Agreement is amended by adding a new
Section 5.25 as follows:
SECTION 5.25. Sale of Environmental Metrics Division. If
any of the following three events should occur: 1) the
Environmental Metrics Division of the Borrower is not sold on
or before July 31, 1997 pursuant to the Asset Acquisition
Agreement dated March 7, 1997 by and between Roy F. Weston,
Inc. and Recra Environmental, Inc. (the "Acquisition
Agreement"), 2) Weston and Recra Environmental, Inc., cease
moving in good faith toward a final closing of the Acquisition
Agreement at any time prior to July 31, 1997, or 3) the
pre-tax loss attributable to the Environmental Metrics
Division on a contribution level without any allocation of
overhead or general and administrative expenses exceeds
$1,750,000 since January 1, 1997; then the Borrower
8
<PAGE> 9
must provide to Agent, within 10 Business Days of any of the
such events specified above, a written plan for the
disposition of the Environmental Metrics Division. Such plan
must be acceptable to Banks as to the proposed disposition, be
it through a sale, liquidation, continued operation, or
otherwise, and the timing of such disposition. If such a plan
is not delivered to Agent within the time frame established
above or is so delivered but is not acceptable to Banks as
required by the immediately preceding sentence, such failure
shall constitute an immediate Event of Default (as defined
herein) which shall entitle Agent and/or Banks to exercise any
and all rights and remedies they are entitled to exercise
hereunder upon the occurrence of an Event of Default.
3.16 The Credit Agreement is amended by adding a new
Section 5.26 as follows:
SECTION 5.26. Debt. No Borrower shall create, incur, assume
or suffer to exist any indebtedness of any kind or nature,
except: (1) debt under this Agreement or the Restated Line
Notes; (2) debt of Borrowers disclosed in Borrower's financial
statements most recently delivered to Agent and Banks prior to
March 30, 1997; (3) trade indebtedness arising in the ordinary
course of Borrower's business; and (4) indebtedness created to
finance the acquisition of property hereafter acquired by any
Borrower and secured by purchase money liens permitted
pursuant to Section 5.05(A)(5) hereof provided the aggregate
amount of all such indebtedness incurred during the period
from March 30, 1997 through the Maturity Date shall not exceed
$2,000,000.00.
3.17 The Credit Agreement is amended by adding the
following definitions to Section 1.01 thereof in their appropriate alphabetical
order:
"Cash Equivalents" means as to any Person, (a) commercial
paper maturing in one (1) year or less from the date of
issuance rated either A-1 by Standard & Poor's Corporation
("S&P"), P-1 by Moody's Investors Service, Inc. ("Moody's") or
other similar rating by a nationally recognized credit rating
agency of similar
9
<PAGE> 10
standing; (b) direct obligations of, or obligations the
principal of and interest on which are unconditionally
guaranteed by, the United States of America, or any agency or
instrumentality thereof, maturing in twelve (12) months or
less from the date of acquisition thereof; (c) certificates of
deposit maturing within ninety (90) days from the date of
origin issued by, or money market funds held by, a Federal
Reserve Bank or a commercial bank with capital, surplus and
undivided profits of not less than Two Hundred Fifty Million
Dollars ($250,000,000.00), (d) repurchase agreements secured
by direct obligations of the United States of America, or any
agency thereof, maturing in twelve (12) months or less and
having a market value at the time such repurchase agreement is
entered into at least equal to the amount of the repurchase
obligations thereunder, entered into with a Federal Reserve
Bank or a commercial bank with capital, surplus and undivided
profits of not less than Two Hundred and Fifty Million Dollars
($250,000,000.00), and (e) mutual funds having at least
seventy five percent (75%) of their investments in cash and/or
investments included in (a) (b) (c) and (d) above.
"Change of Control" means, (a) with respect to Weston, (i) if
any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), excluding Roy F. Weston
and/or any member(s) of his immediate family, and/or any trust
under which Roy F. Weston and/or any member(s) of his
immediate family hold the legal and equitable interests, is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a person shall also
be deemed to have "beneficial ownership" of all securities
that such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 20% of the total voting
power of the issued and outstanding voting stock of Weston
normally entitled to vote in the election of directors of
Weston or acquires the power, directly or indirectly, to
direct the management or policies of Weston, or (ii) if during
any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors
(together with any new directors whose election by the Board
of Directors or whose nomination for election by the
stockholders of
10
<PAGE> 11
Weston was approved by a vote of a majority of the directors
then still in office who were either directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in
office, or (iii) a change in control of Weston of a nature
that would be required to be reported in response to Item 6
(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act, as enacted and enforced on the date hereof,
whether or not Weston is subject to such reporting
requirement, and (b) with respect to any other Borrower, if at
any time Weston ceases to own one-hundred (100%) percent of
the outstanding capital stock of such Borrower.
"Marketable Securities" means all securities that would, in
accordance with GAAP, be classified as marketable securities.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, together with all rules and regulations promulgated
in connection therewith.
3.18 Notwithstanding anything to the contrary contained in
the Credit Agreement, the Banks and Agent agree that the Credit Agreement shall
not, without the written consent of all Banks, be amended in a manner which
would (nor shall any waiver or consent be granted to) permit Borrowers to, at
any time, have outstanding Line Advances in excess of the minimum amount of
cash, Cash Equivalents and Marketable Securities then required pursuant to the
Credit Agreement.
11
<PAGE> 12
Section 4. Notes. The Borrowers shall, contemporaneously
herewith, jointly and severally execute and deliver to each Bank a restated
promissory note (each, a "Restated Line Note"), in form and substance
satisfactory to Banks, payable to the order of each Bank in a principal amount
equal to the amount of such Bank's Commitment. The Restated Line Notes shall
evidence the unconditional obligation of Borrowers to repay the Line Advances.
The Restated Line Notes shall amend and replace (but not extinguish the
obligations evidenced by or cause a novation of) those certain Line Notes
executed by Borrowers in favor of Banks, each dated March 18, 1994. All
references to the Notes or the Line Notes contained in the Credit Agreement or
any of the other Loan Documents shall hereinafter be deemed to refer to the
Restated Line Notes.
Section 5. Amendment Fee. In consideration of the amendments
set forth herein, Borrowers shall pay to Agent, for the ratable benefit of each
Bank according to each Bank's respective Commitment Percentage, a fully earned,
non-refundable amendment fee of $37,500 ("Amendment Fee"), due and payable
contemporaneously with the execution hereof.
Section 6. Miscellaneous.
12
<PAGE> 13
6.1 Each Borrower represents and warrants to the Banks
and Agent that it has taken all necessary corporate action to authorize the
execution, delivery and performance of this Amendment and the Restated Line
Notes. This Amendment and the Restated Line Notes are, or when executed by the
Borrowers and delivered to the Agent will be, fully executed and constitute
valid and legally binding obligations of the Borrowers, enforceable against
each Borrower in accordance with their respective terms. Each Borrower hereby
ratifies, confirms and restates each of the representations and warranties of
the Borrowers set forth in Article IV of the Credit Agreement as being true and
correct on the date hereof except for those contained in Section 4.04 thereof.
6.2 As a condition to the effectiveness of this
Amendment, the Borrowers shall cause to be delivered to Agent, (for the benefit
of Banks) the following (all to be in form and substance satisfactory to Agent
and its counsel);
(a) this Amendment, fully executed by each of the
Borrowers, Banks and Agent;
(b) the Restated Line Notes, each fully executed by
the Borrowers;
(c) a certificate from the secretary of each Borrower
certifying true and correct copies of the applicable
13
<PAGE> 14
Borrower's (i) corporate resolutions authorizing the execution, delivery and
performance of this Amendment and the Restated Line Notes, (ii) Articles of
Incorporation and (iii) Bylaws;
(d) Good Standing Certificates for each Borrower
issued by the Secretary of State of the state where each such Borrower was
incorporated;
(e) Incumbency Certificates for each Borrower;
(f) an opinion of counsel from counsel to each of the
Borrowers; and
(g) payment of the Amendment Fee in good cleared
funds.
6.3 This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and all of which taken together shall constitute one and the same agreement.
6.4 This Amendment and the documents, instruments and
agreements executed and delivered pursuant hereto constitute the entire
agreement among the parties relating to the specific subject matter contained
in this Amendment.
6.5 This Amendment shall amend and is incorporated into
the Credit Agreement. In the event of any express inconsistency between the
terms hereof and the terms of the
14
<PAGE> 15
Credit Agreement, the terms hereof shall control. Except as expressly amended
by this Amendment, all of the terms and conditions of the Credit Agreement
remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Fourth Amendment and
Joinder to Credit Agreement to be executed by their respective duly authorized
officers as of the date first above written.
ROY F. WESTON, INC.
<TABLE>
<S> <C>
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
ROY F. WESTON OF NEW YORK, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
</TABLE>
(SIGNATURES CONTINUED ON NEXT PAGE)
(SIGNATURES CONTINUED FROM PREVIOUS PAGE)
<TABLE>
<S> <C>
ROY F. WESTON (DELAWARE), INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C>
ROY F. WESTON (IPR), INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
TRANS-THERMAL SYSTEMS, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
ROY F. WESTON OF MISSOURI, INC.
(f/k/a Roy F. Weston of Idaho, Inc.)
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
WESTON (A BUSINESS TRUST)
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
</TABLE>
(SIGNATURES CONTINUED ON NEXT PAGE)
(SIGNATURES CONTINUED FROM PREVIOUS PAGE)
<TABLE>
<S> <C>
WESTON ENVIRONMENTAL METRICS, INC.
(f/k/a Weston-Gulf Coast, Inc.)
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
WESTON INTERNATIONAL HOLDINGS, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
WESTON OF NEW JERSEY, INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
WESTON INTERACTIVE, INC.
(A Delaware corporation)
Attest:___________________ By:_______________________________
Name:_____________________________
Title:____________________________
WESTON INTERNATIONAL INC.
Attest:___________________ By:_______________________________
Name:_____________________________
Title:_____________________________
</TABLE>
(SIGNATURES CONTINUED ON NEXT PAGE)
(SIGNATURES CONTINUED FROM PREVIOUS PAGE)
17
<PAGE> 18
PNC BANK NATIONAL ASSOCIATION
By:_______________________________
Name:_____________________________
Title:____________________________
FIRST UNION NATIONAL BANK
By:_______________________________
Name:_____________________________
Title:____________________________
CORESTATES BANK, N.A.,
(individually and as Agent)
By:_______________________________
Name:_____________________________
Title:____________________________
18
<PAGE> 1
EXHIBIT 11
ROY F. WESTON, INC. AND SUBSIDIARIES
STATEMENTS OF COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
---- ----
(Thousands of Dollars)
<S> <C> <C>
PRIMARY
Net income $ 396 $ 17
=========== ===========
Weighted average shares outstanding 9,659,203 9,570,828
=========== ===========
Net income per share $ .04 $ .00
=========== ===========
FULLY DILUTED
Net income $ 396 $ 17
ADD:
Interest on 7% Convertible Subordinated Debentures, net
of applicable income taxes 209 244
----------- -----------
Net income for fully diluted net income per share $ 605 $ 261
=========== ===========
Weighted average number of shares used in calculating
primary net income per share 9,659,203 9,570,828
ADD:
Shares issuable upon conversion of 7% Convertible Sub-
ordinated Debentures 856,725 1,033,128
Stock options -- 2,985
----------- -----------
Weighted average number of shares used in calculating fully
diluted net income per share 10,515,928 10,606,941
=========== ===========
Fully diluted net income per share $ .06 $ .02
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of March 31, 1997 and the consolidiated statement of
income for the three months ended March 31, 1997 and is qualified in its
entirety by references to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 15,699
<SECURITIES> 6,512
<RECEIVABLES> 75,881<F1>
<ALLOWANCES> 1,570
<INVENTORY> 0
<CURRENT-ASSETS> 110,238
<PP&E> 74,956
<DEPRECIATION> 63,849
<TOTAL-ASSETS> 138,245
<CURRENT-LIABILITIES> 50,266
<BONDS> 18,205
0
0
<COMMON> 1,152
<OTHER-SE> 65,101
<TOTAL-LIABILITY-AND-EQUITY> 138,245
<SALES> 0
<TOTAL-REVENUES> 61,480
<CGS> 0
<TOTAL-COSTS> 61,063
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 89
<INTEREST-EXPENSE> 430
<INCOME-PRETAX> 619
<INCOME-TAX> 223
<INCOME-CONTINUING> 396
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 396
<EPS-PRIMARY> .04
<EPS-DILUTED> 0
<FN>
<F1>Includes $18,803 of unbilled costs and estimated earnings thereon.
</FN>
</TABLE>
