FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended: September 30, 1995
or
[ ] 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. 0-19009
AMETECH, Inc.
_____________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Oklahoma 73-0766924
_______________________ __________________________________
(State of Incorporation) (I.R.S. Employer Identification No.)
1813 Southeast 25th
Oklahoma City, Oklahoma 73129
________________________ ________
(Address of Principal (Zip Code)
Executive Offices)
Registrant's Telephone Number, Including Area Code:
(405) 677-8781
______________
Indicate by check mark whether the Registrant (1) has filed
all reports required by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for the
shorter period of that the Registrant has had to file the reports),
and (2) has been subject to the filing requirements for the past 90
days. YES X NO
____ _____
As of November 17, 1995, the Registrant had 13,754,935 shares
of common stock issued and outstanding (excluding 115,000 shares of
common stock held as treasury stock).
<PAGE>
FORM 10-Q OF AMETECH, INC.
TABLE OF CONTENTS
PART I
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Page
<S> <S> <C>
Item 1. Financial Statements.................... 1
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations......................... 11
PART II
Item 6. Exhibits and Reports on Form 8-K........ 17
SIGNATURES ........................................ 18<PAGE>
PART I
</TABLE>
<PAGE>
FINANCIAL INFORMATION
The accompanying Consolidated Balance Sheet as of
September 30, 1995, and the related Statements of Operations and
Retained Earnings and Statements of Cash Flows for the three and
nine month periods ended September 30, 1995, and 1994, are
unaudited. In the opinion of management, all adjustments
necessary for a fair presentation of such financial statements have
been included. Such adjustments consisted of normal, recurring
items. Interim results are not necessarily indicative of results
for a full year. The financial statements and notes are presented
as permitted by Form 10-Q and do not contain certain information
included in the Company's annual financial statements and notes;
therefore, these financial statements should be read in conjunction
with the notes to the financial statements contained in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994, which are incorporated herein by reference.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
September 30, December 31,
1995 1994
____________ ___________
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 28,000 $ 45,000
Accounts receivable 4,266,000 3,420,000
Prepaid expenses 612,000 144,000
Other 361,000 245,000
___________ ___________
Total Current Assets 5,267,000 3,854,000
___________ ___________
PROPERTY AND EQUIPMENT, at cost,
net of accumulated depreciation of
$9,364,000 and $8,203,000 at
September 30, 1995 and December 31,
1994, respectively:
Transportation equipment 9,807,000 7,446,000
Buildings and other 2,087,000 1,995,000
___________ ___________
11,894,000 9,441,000
___________ ___________
OTHER ASSETS, net of accumulated
amortization of $308,000 and
$263,000 at September 30, 1995
and December 31, 1994,
respectively 458,000 264,000
___________ ___________
$17,619,000 $13,559,000
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
<TABLE>
September 30, December 31,
1995 1994
____________ ___________
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 2,080,000 $ 1,083,000
Current maturities of long-term obligations 3,706,000 2,579,000
___________ ___________
Total Current Liabilities 5,786,000 3,662,000
___________ ___________
DEFERRED INCOME TAXES 1,312,000 894,000
___________ ___________
LONG-TERM OBLIGATIONS, net of current
maturities 5,109,000 3,717,000
___________ ___________
STOCKHOLDERS' EQUITY:
Common stock of $.01 par value at
September 30, 1995, and December 31,
1994; 25,000,000 shares authorized
at September 30, 1995, and December 31,
1994; 13,865,409 and 13,806,382 shares
issued at September 30, 1995, and
December 31,1994, respectively 139,000 138,000
Additional paid-in capital 2,983,000 2,970,000
Retained earnings 2,399,000 2,287,000
___________ ___________
5,521,000 5,395,000
Less - Treasury Stock (115,000 shares at
September 30, 1995 and December 31,
1994), at cost 109,000 109,000
___________ ___________
Total Stockholders' Equity 5,412,000 5,286,000
___________ ___________
$17,619,000 $13,559,000
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
Three Months Ended
September 30,
___________________________
1995 1994
___________ ___________
<S> <C> <C>
REVENUES $ 4,966,000 $ 3,971,000
COSTS AND EXPENSES:
Operating costs 3,466,000 2,747,000
General and administrative expense 734,000 615,000
Depreciation and amortization 506,000 496,000
Interest expense 208,000 122,000
Other expense (income), net (28,000) 18,000
___________ ___________
4,886,000 3,998,000
___________ ___________
EARNINGS (LOSS) BEFORE INCOME TAXES 80,000 (27,000)
___________ ___________
INCOME TAX EXPENSE (BENEFIT):
Current (102,000) (5,000)
Deferred 140,000 6,000
___________ ___________
38,000 1,000
___________ ___________
NET EARNINGS (LOSS) 42,000 (28,000)
RETAINED EARNINGS AT BEGINNING
OF PERIOD 2,357,000 2,183,000
___________ ___________
RETAINED EARNINGS AT END OF PERIOD $ 2,399,000 $ 2,155,000
=========== ===========
LOSS PER COMMON SHARE:
Loss per common share $ 0.00 $ (0.00)
=========== ===========
Weighted average shares outstanding 13,745,429 13,672,122
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
Nine Months Ended
September 30,
___________________________
1995 1994
___________ ___________
<S> <C> <C>
REVENUES $13,263,000 $10,784,000
___________ ___________
COSTS AND EXPENSES:
Operating costs 9,365,000 7,359,000
General and administrative expense 1,872,000 1,785,000
Depreciation and amortization 1,381,000 1,478,000
Interest expense 507,000 302,000
Other expense (income), net (61,000) (45,000)
___________ ___________
13,064,000 10,879,000
___________ ___________
EARNINGS (LOSS) BEFORE INCOME TAXES 199,000 (95,000)
___________ ___________
INCOME TAX EXPENSE (BENEFIT):
Current (119,000) 23,000
Deferred 206,000 (66,000)
___________ ___________
87,000 (43,000)
___________ ___________
NET EARNINGS (LOSS) 112,000 (52,000)
RETAINED EARNINGS AT BEGINNING
OF PERIOD 2,287,000 2,207,000
___________ ___________
RETAINED EARNINGS AT END OF PERIOD $ 2,399,000 $ 2,155,000
=========== ===========
EARNINGS (LOSS) PER COMMON SHARE:
Earnings per common share $ 0.01 $ (0.00)
=========== ===========
Weighted average shares outstanding 13,728,389 13,646,509
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
Nine Months Ended
September 30,
___________________________
1995 1994
___________ ___________
<S> <C> <C>
Cash Flows From Operating Activities:
Cash collected from customers $12,314,000 $10,331,000
Interest paid (513,000) (302,000)
Interest received 47,000 61,000
Cash paid to employees and other
suppliers of goods and services (10,563,000) (8,892,000)
Income taxes refunded (paid) (80,000) 124,000
___________ ___________
Net Cash Provided by Operating
Activities 1,205,000 1,322,000
___________ ___________
Cash Flows From Investing Activities:
Additions to property and equipment (3,950,000) (2,529,000)
Proceeds from disposal of equipment 126,000 156,000
Proceeds from sale of subsidiary 18,000 7,000
Payments received on notes receivable 158,000 140,000
Permit acquisition costs - (20,000)
Acquisition Costs (107,000) -
___________ ___________
Net Cash Used in Investing Activities (3,755,000) (2,246,000)
___________ ___________
Cash Flows From Financing Activities:
Proceeds of long-term debt 3,918,000 1,931,000
Payments on long-term debt (1,399,000) (1,044,000)
Sale of unissued stock 14,000 18,000
___________ ___________
Net Cash Provided by Financing
Activities 2,533,000 905,000
___________ ___________
Net Increase (Decrease) in Cash and
Cash Equivalents (17,000) (19,000)
___________ ___________
Cash and Cash Equivalents at Beginning
of Year 45,000 19,000
___________ ___________
Cash and Cash Equivalents at End
of Period $ 28,000 $ 0
=========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash portion of acquisition of
Dwight Trucking, Inc. $ 204,000 $ -
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
1. The financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly-owned. All
significant intercompany transactions are eliminated.
2. EARNINGS PER SHARE
Earnings per common share is based upon the weighted average
number of common shares outstanding during the respective
three and nine-month periods. All outstanding stock options
are considered anti-dilutive and are not included in the
calculation for earnings per share.
3. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
The reconciliation of net earnings (loss) to net cash provided
by operating activities for the nine months ended
September 30, 1995 and 1994, is as follows:
<TABLE>
Nine months ended September 30,
______________________________
1995 1994
__________ __________
<S> <C> <C>
Net Earnings (Loss) $ 112,000 $ (52,000)
Adjustments to reconcile net income
(loss) to cash provided by operating
activities
Depreciation and amortization 1,381,000 1,478,000
Deferred income taxes 146,000 (66,000)
Increase in accounts receivable (949,000) (452,000)
Increase in prepaid expenses (468,000) (64,000)
(Increase) Decrease in other assets (48,000) 68,000
Gain on sale of property (17,000) (85,000)
Gain on sale of subsidiary (44,000) (27,000)
Increase in accounts payable
and accrued liabilities 1,043,000 482,000
Write-off of bad debts 41,000 36,000
Other 8,000 4,000
__________ __________
Net Cash Provided by Operating Activities $1,205,000 $1,322,000
========== ==========
</TABLE>
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
4. CHANGE IN ACCOUNTING ESTIMATE
Effective January 1, 1995, the Company elected to change the
estimated useful life for tractors from seven to ten years and
to capitalize the cost of new and replacement tires to more
closely approximate the useful life of such assets. The
capitalized cost of the tires is included in prepaid assets
and is amortized over the estimated useful life of the tires.
The effect of these changes was to increase net income for the
nine months ended September 30, 1995 by $310,000 ($.02 per
share), summarized as follows:
<TABLE>
<S> <C>
Effect of life of tractors $316,000
Effect of tires 233,000
Less: Tax effect of change 239,000
________
Increase in net income $310,000
========
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
On January 3, 1992, seven individual plaintiffs filed a
Petition against the Company's transportation subsidiary,
Environmental Transportation Services, Inc. ("ETS"), and Dyna-
Turn of Oklahoma Incorporated ("Dyna-Turn"), in the District
Court of Oklahoma County. The seven plaintiffs, who were
employees at a waste incineration facility in Miami, Oklahoma,
claim that Dyna-Turn generated solid waste which was
contaminated with toxic and hazardous chemicals, and that this
solid waste was transported by ETS to the incineration
facility for disposal. The plaintiffs claim that Dyna-Turn
and ETS were engaged in ultra-hazardous activities during the
generation and transportation of the waste, were negligent
during the generation and transportation of the waste, and
failed to warn the plaintiffs of the hazardous nature of the
waste or of its harmful side effects.
The plaintiffs claim they sustained personal injuries and lost
earnings and are seeking unspecified actual damages in excess
of $10,000 and punitive damages.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
5. COMMITMENTS AND CONTINGENCIES -- Continued
In March 1993, the Company learned that its insurance carrier
had denied coverage for the plaintiffs' claims. The Company
has instructed its attorneys to vigorously defend the
litigation. The case is in its early stages and involves
facts yet unknown to the Company. The Company believes that
ETS has valid defenses to the plaintiffs' claims, but at this
stage of litigation, the Company is unable to determine the
amount of its potential exposure to loss, if any.
At September 30, 1995, the Company had purchase commitments
totaling approximately $157,000 relating to equipment for
which delivery will take place in the fourth quarter of 1995.
6. ACQUISITION OF ASSETS OF SMITH SYSTEMS TRANSPORTATION, INC.
Effective July 20, 1995, the Company's wholly-owned
transportation subsidiary, Environmental Transportation
Services, Inc. ("ETS"), purchased from Smith Systems
Transportation, Inc. ("SST") certain of SST's transportation-
related assets, which consisted primarily of assets comprising
the hazardous waste transportation activities of SST, for
approximately $519,000. Pursuant to the agreement between ETS
and SST, ETS is to also pay to SST an amount equal to 4% of
net revenues collected and received by ETS from certain of
SST's existing customers at time of closing, with certain
limited exceptions, during the period of the first three years
from the date of the agreement. ETS did not assume any of the
debts, liabilities or obligations of SST as a result of the
purchase of the assets.
7. ACQUISITION OF DWIGHT TRUCKING, INC.
On August 17, 1995, the Company, through its wholly-owned
transportation subsidiary, ETS, consummated the acquisition of
all of the outstanding capital stock of Dwight Trucking, Inc.
("Dwight"), located in Bakersfield, California. Dwight is a
hazardous and non-hazardous waste transporter. Although the
transaction was consummated on August 17, 1995 (the "Closing
Date"), the parties contracted that the transaction was to be
deemed effective as of July 1, 1995, for all purposes. The
purchase price for the stock of Dwight was approximately
$1,272,029 ("Purchase Price"), which consisted of (i)
$973,000, (ii) approximately $160,657, which represented the
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
7. ACQUISITION OF DWIGHT TRUCKING, INC. - Continued
aggregate amount of cash held by Dwight as of the closing, less
cash (a) relating to services rendered or performed by Dwight on or
after July 1, 1995, and (b) which constitutes deposits for future
services, trust funds, escrow accounts or which is owned by parties
other than Dwight,(iii) approximately $108,244, which represented
an amount equal to ordinary and necessary business expenses of
Dwight paid by Dwight after June 30, 1995, to the Closing Date,
(iv) approximately $55,229, which represented an amount equal to
the outstanding receivables of Dwight as of June 30, 1995, not
collected by Dwight as of the Closing Date (the "Receivables"),
less (v) the liabilities of Dwight set forth on Dwight's balance
sheet dated June 30, 1995. At the Closing Date the Company paid
approximately $1,216,800 of the Purchase Price, with approximately
$55,229 of the Purchase Price, being an amount equal to the
Receivables, to be paid in installments on or before the fifth
business day of each month following the Closing Date. The amount
of each installment shall be equal to the Receivables actually
collected, in good funds, after the Closing Date by Dwight during
the previous month. If any Receivables have not been collected by
July 31, 1996, Dwight is to assign, without recourse and any
representations or warranties, the unpaid Receivables in full
satisfaction of the Company's obligation to pay the balance of the
Purchase Price.
In addition, the Company leased from the sellers of the stock
of Dwight the transportation terminal located in Bakersfield,
California, utilized by Dwight, for a period of five years, at
a rental of $2,900 per month, with an option to extend for
another five-year term at a rental of $2,900 per month
adjusted for cumulative increase in the consumer price index
for the Southern California Region from commencement of the
initial five-year lease term.
The acquisition of Dwight has been accounted for as a purchase
under generally accepted accounting principles. As a result,
the Company has allocated the total cost of the acquisition to
the acquired assets, based on their relative fair values. The
results of operations of Dwight have been included in the
Company's consolidated financial statements from the effective
date, since the results of operations for July, 1995, were
immaterial.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Quarter Ended September 30, 1995 Compared to Quarter Ended
September 30, 1994
The net income for the quarter ended September 30, 1995, was
$42,000. This compares to a net loss of $28,000 for the same
quarter of last year. This increase in net income was primarily
attributable to an increase in the gross margin of $276,000, which
was primarily due to the Company's election to capitalize cost of
tires over the useful life of the tires. See Note 4 to
Consolidated Notes to Financial Statements. This was partially
offset by an increase in general and administrative expenses of
$119,000, and in interest expense of $86,000.
Total revenues were $4,966,000 and $3,971,000 for the quarters
ended September 30, 1995 and 1994, respectively. This increase was
largely attributable to an increase in transportation and related
revenues of $1,056,000 due, in part, to the revenues generated by
Dwight and the assets acquired by SST in July, 1995.
Transportation and related revenues were $4,844,000 and $3,788,000
for the third quarters of 1995 and 1994, respectively. This
increase was attributable to an increase in miles generated during
the third quarter of 1995 by the Company's transportation
subsidiary, ETS, as well as revenues of Dwight Trucking, Inc.
("Dwight") that was acquired effective July 1, 1995. (See
"Liquidity and Capital Resources" section below for a further
discussion of the acquisition). This increase in miles was
accomplished by an increase in the average number of tractors the
Company ran in the third quarter of 1995 versus the same quarter
last year due, in part, to the acquisition of Dwight and certain
assets from SST. However, this increase in volume was partially
offset by a decrease in the running mile rate of $.03 per mile due
to increased competitive pressures. Other transportation revenues
decreased $6,000 from 1994 to 1995.
Project and other non-transportation revenues decreased by $61,000
primarily due to no waste brokering revenues generated in the third
quarter of 1995, as a result of the Company deciding to eliminate
its waste brokering activity because the profits in this activity
could not justify the potential liability of the Company in acting
as a broker.
Operating costs increased $719,000 from $2,747,000 in the third
quarter of 1994 to $3,466,000 in the third quarter of 1995. This
represents an increase of 1 percentage point when expressed as a
percentage of total revenues.
<PAGE>
Operating costs related to transportation services were $3,408,000
and $2,563,000 for the quarters ended September 30, 1995 and 1994,
respectively. These amounts represent 70% and 68% of
transportation and related revenues for the respective third
quarters of 1995 and 1994. This increase in the percentage of
operating costs to revenues resulted from the lower running mile
rate as discussed earlier and to increased operating costs for
trailer rental and owner/operator expenses. However, these
increases were partially offset by decreased tire costs due to the
change in the way the Company accounts for tractor and trailer
tires. The effect of this accounting change was to reduce tire
expense by $233,000 for 1995. (See Note 4 in Notes to Consolidated
Financial Statements.)
General and administrative expenses increased $119,000 due largely
to increased personnel costs, travel and entertainment expenses and
general and administrative costs for Dwight.
Depreciation expense increased $10,000 from 1994 to 1995. However,
the Company changed the useful life on tractors from seven to ten
years, which reduced depreciation expense in the third quarter of
1995 by $99,000.
Interest expense increased $86,000 from 1994 to 1995 due to
increased debt and higher interest rates.
Nine Months Ended September 30, 1995, compared to Nine Months Ended
September 30, 1994.
Net income for the nine-month period ended September 30, 1995, was
$112,000, as compared to a $52,000 loss for the same period of
1994. This increase in net income was attributable to an increase
in the gross margin of $473,000 due primarily to the Company's
decision to capitalize the cost of tires over the useful life of
the tires (see Note 4 to Consolidated Notes to Financial
Statements), but was partially offset by increases in general and
administrative expenses and interest expense of $87,000 and
$205,000, respectively.
Total revenues increased $2,479,000 from 1994 to 1995. This
increase is due to an increase in transportation and related
revenues of $2,025,000 and an increase in other non-transportation
revenues of $454,000.
Transportation and related revenues were $12,422,000 and
$10,397,000 for the nine-month period ended September 30, 1995 and
1994, respectively. This increase was due largely to an increase
in transportation revenues of $1,880,000 and to increased trailer
rental revenue of $275,000, which is due, in part, to revenues
generated by Dwight and the assets acquired from SST since their
acquisitions in July, 1995. These increases in revenue were
partially offset by decreases in subcontract/trip-lease revenues of
$411,000.
<PAGE>
Transportation revenues increased from $8,122,000 in 1994 to
$10,002,000 in 1995. This increase was attributable to increased
miles in 1995, and the acquisition of Dwight, effective July 1,
1995, and certain transportation assets from SST in July, 1995, but
was partially offset by a $.03 per mile decrease in the running
mile rate.
Waste brokerage revenue decreased $150,000 from 1994 to 1995 due to
the Company eliminating its brokerage business because of the
potential liability in connection therewith.
Project and other revenues increased by $604,000 due largely to an
increase in revenues generated by the Company's remediation
subsidiary on a single remediation project started in March, 1995,
and to an increase in revenues generated by the Company's
nonhazardous waste processing facility located in Florida, which
began operation in May, 1994.
Operating costs were $9,365,000 and $7,359,000 for 1994 and 1995,
respectively. This increase of $2,006,000 relates to an increase
of 3 percentage points when expressed as a percentage of total
revenues.
Operating costs related to transportation services increased
$1,812,000 from 1994 to 1995. When expressed as a percentage of
transportation and related revenues, operating costs were 67% and
71% of revenues for 1994 and 1995, respectively. This increase of
4 percentage points is attributable to the lower running mile rate
as discussed earlier and to increased owner/operator and trailer
rental expenses. However, these increases were partially offset by
the change in the way the Company accounts for tractor and trailer
tires. The effect of this accounting change was to reduce tire
expense by $233,000 for 1995 (see Note 4 of Notes to Consolidated
Financial Statements).
Operating costs attributable to waste brokerage services decreased
$118,000 due to the reason mentioned earlier and the Company's
remediation subsidiary incurred increased costs of $218,000 due to
the project mentioned earlier.
Operating costs related to the Company's nonhazardous waste
facility in Florida increased $221,000 from 1994 to 1995, which did
not begin operation until May, 1994.
General and administrative expenses increased $87,000 from 1994 to
1995 due primarily to increased travel expenses and Dwight's
general and administrative expenses. These were partially offset
by decreased personnel costs.
Depreciation expense decreased $97,000 from 1994 to 1995. This
decrease was due to increasing the useful life on tractors from
seven to ten years which decreased depreciation for 1995 by
$316,000.
<PAGE>
Interest expense increased $205,000 due to increased debt and
higher interest rates.
Liquidity and Capital Resources
Working capital decreased from $192,000 at December 31, 1994, to a
negative $519,000 at September 30, 1995. This decrease resulted
from cash used to fund certain capital expenditures that were not
financed through the Company's existing equipment financing sources
and to increased current maturities of long-term debt. The
decrease in working capital was partially offset by an increase in
prepaid expenses of $233,000 related to capitalizing tires (see
Note 4 of Notes to Consolidated Financial Statements).
In April 1995, the Company renewed its revolving line of credit
with a bank. This line of credit is (1) collateralized by accounts
receivable, inventories and contract rights; (2) limited to
$2,000,000; and (3) expires in April, 1996. The revolving line of
credit provides for advances at 80% of eligible receivables and
bears an annual interest rate of the national prime rate plus 1%,
2% or 3%, depending on cash flow ratio. The amounts borrowed under
this line of credit were $1,559,000 and $994,000 at September 30,
1995, and December 31, 1994, respectively. As of September 30,
1995, the Company had approximately $225,000 of unused available
borrowing capacity, based on eligible collateral, under its
revolving line of credit and was in compliance with all material
loan covenants. The bank has requested that the Company move its
credit facility to another lending institution by the expiration
date of the current line of credit. Management is currently
pursuing other lenders and expects that it will be able to secure
a new line of credit by April 30, 1996, although there are no
assurances that the Company will be successful in securing a new
line of credit. If the Company is not successful in finding a new
lender, such would have a material adverse effect on the Company's
liquidity.
In March 1995, the Company entered into a third amended agreement
with an equipment lender which was made a part of an existing
agreement between the Company and this lender. Under the original
agreement, the Company had refinanced a majority of its
transportation equipment with this lender in September, 1993. The
third amended agreement provides for additional equipment financing
for up to approximately $2,200,000 of equipment purchases. The
terms under this third amendment are substantially the same as
those contained in the original agreement. At September 30, 1995,
the Company had borrowed $1,843,000 under this agreement and was in
compliance with all material loan covenants.
The Company made capital expenditures of $3,950,000 in the first
nine months of 1995, which consisted primarily of transportation
equipment and the purchase of certain assets from SST and the
purchase of Dwight. (See Notes 6 and 7 to Notes to Consolidated
Financial Statements.) These purchases were funded with the above
lender, as well as other equipment lenders which have done business
with the Company in the past.
Effective July 20, 1995, the Company, through its wholly-owned
transportation subsidiary, Environmental Transportation Services,
Inc. ("ETS"), purchased from Smith Systems Transportation, Inc.
("SST") certain of SST's transportation-related assets, which
consisted primarily of assets comprising the hazardous waste
transportation activities of SST. The Company paid approximately
$519,000 for such assets, with approximately $495,000 borrowed by
the Company under its equipment line of credit and the balance paid
from working capital. In addition, ETS agreed that for a period of
three years from July 20, 1995, to pay SST an amount equal to 4% of
the net revenues collected and received by ETS from certain of
SST's existing customers at the time of such acquisition, with
certain limited exceptions, which will be paid from ETS' working
capital. ETS did not assume any of the debts, obligations or
liabilities of SST in connection with the acquisition of the
assets. ETS leased a terminal previously utilized by SST, located
in Denver, Colorado.
On August 17, 1995, ETS, the Company's wholly-owned transportation
subsidiary, acquired all of the outstanding capital stock of
Dwight, located in Bakersfield, California. Dwight is a hazardous
waste transporter. Although the transaction was consummated on
August 17, 1995 (the "Closing Date"), the parties agreed that for
all purposes the transaction was to be deemed effective as of
July 1, 1995 ("Effective Date"). The purchase price for the stock
of Dwight was approximately $1,272,029 ("Purchase Price"), which
consisted of (i) $973,000, (ii) approximately $160,657, which
represented the aggregate amount of cash held by Dwight as of the
closing, less cash (a) relating to services rendered or performed
by Dwight on or after July 1, 1995, and (b) which constitutes
deposits for future services, trust funds, escrow accounts or which
is owned by parties other than Dwight, (iii) approximately
$108,244, which represented an amount equal to ordinary and
necessary business expenses of Dwight paid by Dwight from
July 1, 1995, to the closing, (iv) 55,229, which represented an
amount equal to the outstanding receivables of Dwight as of
June 30, 1995, not collected as of the Closing Date (the
"Receivables"), less (v) the liabilities of Dwight set forth on
Dwight's balance sheet, dated June 30, 1995. At the Closing Date
the Company paid approximately $1,216,800 of the Purchase Price,
with approximately $160,651 being from cash held by Dwight,
$233,144 from working capital and the balance through borrowings
under the Company's equipment line of credit. Approximately
$55,229 of the Purchase Price, being an amount equal to the
<PAGE>
Receivables, is to be paid in installments on or before the fifth
business day of each month following the Closing Date. The amount
of each installment shall be equal to the Receivables actually
collected, in good funds, after the Closing Date by Dwight during
the previous month. If any Receivables have not been collected by
July 31, 1996, Dwight is to assign, without recourse and any
representations or warranties, the unpaid Receivables in full
satisfaction of the Company's obligation to pay the balance of the
Purchase Price. In addition, the Company leased from the sellers
of the stock of Dwight the transportation terminal located in
Bakersfield, California, for a period of five years, at a rental of
$2,900 per month, with an option to extend for another five-year
term, at a rental of $2,900 per month adjusted for cumulative
increase in the consumer price index for the Southern California
Region from commencement of the lease to the termination of the
initial five-year lease term.
Management expects these acquisitions to have a positive impact on
the financial condition of the Company, but there are no assurances
to that affect.
The Company currently has executed purchase orders totaling
approximately $156,000 for transportation equipment and will take
delivery of this equipment in the fourth quarter of 1995. The
Company has obtained financing for this equipment through a lender
with which it has had a favorable relationship in the past. This
equipment is being purchased in anticipation of increased customer
demand for the Company's services. If the demand for the Company's
services does not materialize, such could have an adverse effect on
the Company's liquidity.
The Company believes that its present revolving line of credit and
collection of receivables may not be sufficient to enable the
Company to meet all of its presently foreseeable working capital
and capital expenditures requirements. As discussed above, the
Company is attempting to replace its existing $2,000,000 revolving
line of credit with a new lender and with such new revolving line
of credit to be approximately $3,000,000. If the Company is
successful in replacing its existing revolving line of credit with
a new $3,000,000 credit facility, the Company believes that such,
together with its receivables, should enable the Company to meet
its presently foreseeable and working capital expenditure
requirements. If the Company is unable to increase the revolving
line of credit to $3,000,000, the Company may be required to reduce
certain of its presently anticipated capital expenditures and/or
extend the term of its payables beyond their normal payment terms.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
27 Financial Data Schedule
(b) Reports on Form 8-K
A current report on Form 8-K (Item 2 - Acquisition
or Disposition of Assets and Item 7 - Financial
Statements and Exhibits) was filed on September 8,
1995, reporting that on August 17, 1995, the
Company, through its wholly-owned transportation
subsidiary, Environmental Transportation Services,
Inc. ("ETS"), acquired all of the issued and
outstanding capital stock of Dwight Trucking, Inc.,
a California corporation, located in Bakersfield,
California. An amended current report on Form 8-
K/A (Item 7(a) - Financial Statements of Business
Acquired and Item 7(b) - Pro Forma Financial
Information) was filed on October 31, 1995, to
provide the financial information with respect to
the foregoing acquisition.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Company has caused
the undersigned, duly-authorized, to sign this report on its behalf
on the 20th day of November, 1995.
AMETECH, Inc.
By /s/ Carl B. Anderson, Jr.
______________________________
Carl B. Anderson, Jr.
Chief Executive Officer
By /s/ Kerry Willingham
______________________________
Kerry Willingham
Vice President of Finance
ISTE:\A-C\AMETECH\10Q\995\10Q.3
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> $ 28,000
<SECURITIES> 0
<RECEIVABLES> 4,266,000
<ALLOWANCES> 0
<INVENTORY> 218,000
<CURRENT-ASSETS> 5,267,000
<PP&E> 21,258,000
<DEPRECIATION> 9,364,000
<TOTAL-ASSETS> 17,619,000
<CURRENT-LIABILITIES> 5,786,000
<BONDS> 5,109,000
0
0
<COMMON> 139,000
<OTHER-SE> 5,273,000
<TOTAL-LIABILITY-AND-EQUITY> 17,619,000
<SALES> 0
<TOTAL-REVENUES> 13,263,000
<CGS> 0
<TOTAL-COSTS> 9,365,000
<OTHER-EXPENSES> 3,151,000
<LOSS-PROVISION> 41,000
<INTEREST-EXPENSE> 507,000
<INCOME-PRETAX> 199,000
<INCOME-TAX> 87,000
<INCOME-CONTINUING> 112,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,000
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
