UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended: December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to __________
Commission File No. 2-30680
AMETECH, INC.
____________________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Oklahoma 73-0766924
_____________ ___________________
(State of (I.R.S. Employer
Incorporation) 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
______________
Securities Registered Pursuant to Section 12(b) of the Act:
None
_______
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.01
____________________________
<PAGE>
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (229.405) of this chapter is
not contained herein and will not be contained, to the best of
Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]
As of April 9, 1996, the aggregate market value of the
2,592,662 shares of voting stock of the Registrant held by non-
affiliates of the Company equaled approximately $ 648,166 based on
the mean between the closing bid and ask price for the common stock.
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 April 9, 1996, the Registrant had 13,785,032 shares of
common stock issued and outstanding (excluding 115,000 shares of
common stock held as treasury stock).
Documents Incorporated by Reference
None.
<PAGE>
FORM 10-K OF AMETECH, INC.
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
Page
____
<S> <C>
Item 1. Business
General................................... 1
Subsequent Events......................... 2
Segment Information and Foreign and
Domestic Operations and Export
Sales.................................. 2
Item 2. Properties...................................... 7
Item 3. Legal Proceedings............................... 8
Item 4. Submission of Matters to a Vote of
Security Holders.......................... 9
Item 4A. Executive Officers of the Company.............. 9
PART II
Item 5. Market for Registrant's Common Stock and
Related Security Holders Matters........... 10
Item 6. Selected Financial Data......................... 11
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations........ 20
Item 8. Financial Statements and Supplementary Data...... 20
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure...... 21
PART III
Item 10. Directors and Executive Officers of the
Company.................................... 22
Item 11. Executive Compensation......................... 25
Item 12. Security Ownership of Certain Beneficial
Owners and Management..................... 25
Item 13. Certain Relationships and Related Transactions.. 28
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K..................... 28
</TABLE>
<PAGE>
PART I
Item 1. BUSINESS
General.
AMETECH, Inc. (the "Company") is an Oklahoma corporation and
was formed in 1967.
Moorpark Holdings, Inc., a Delaware corporation ("Moorpark"),
and its parent company, Bank of America of Illinois, would be
considered to beneficially own 10,367,122 shares, or approximately
75.2% of the 13,785,032 shares of voting securities of the Company
issued and outstanding as of April 9, 1996. As a result, Moorpark
and its parent companies would be considered to be the controlling
persons of the Company. Moorpark has advised the Company that it
has acquired such shares as a passive investor and will hold such
shares for investment purposes only. See "Security Ownership of
Certain Beneficial Owners and Management -- Security Ownership of
Certain Beneficial Owners".
On August 17, 1995, the Company, through a wholly-owned
subsidiary, Environmental Transportation Services, Inc., an Oklahoma
corporation ("ETS"), acquired all of the outstanding capital stock
of Dwight Trucking, Inc., a California corporation ("Dwight
Trucking"). Dwight Trucking is a transporter of hazardous and non-
hazardous waste, with its principal offices and transportation
terminal located in Bakersfield, California. In February, 1996, the
Company merged Dwight Trucking into ETS and the Company intends to
continue to operate the business of transporting hazardous waste and
non-hazardous waste from the Bakersfield, California terminal
through its subsidiary, ETS. The accompanying combined financial
statements for the year ended December 31, 1995, aggregates the
results of operations for the Company and Dwight Trucking as if such
transaction has occurred on July 1, 1995.
On July 20, 1995, the Company's wholly-owned subsidiary, ETS,
acquired substantially all of the assets of Arthur E. Smith & Son
Trucking, Inc., a Nebraska corporation ("Smith Trucking"). The
assets acquired from Smith Trucking are used in the transportation
of hazardous waste from a terminal located in Denver, Colorado. The
City of Denver requires a special use permit in order to operate a
hazardous waste transportation terminal and to transfer such waste
from one truck to another at such terminal. ETS is currently
operating its terminal in Denver without having obtained such a
special use permit. Failure to obtain such permit will require ETS
to relocate its Denver terminal to another city in Colorado in which
such a special use permit may be obtained.
<PAGE>
Subsequent Events
In March, 1996, the Company's subsidiary, Environmental
Transportation Services, Inc. ("ETS"), began leasing from Sullivan
Trucking Company, Inc. ("Sullivan"), a certain number of hazardous
waste tractors and trailers and has begun to utilize such equipment
to transport waste for Sullivan's and ETS' customers. In connection
with such lease, ETS is to pay Sullivan approximately $35,000 a
month to lease from Sullivan such tractors and trailers and a
certain number of roll-off boxes.
In connection with the transaction with Sullivan, the Company
has reached a tentative agreement to acquire from Sullivan its
customer list, good will, inventory, and other business aspects of
Sullivan's hazardous waste transportation business. The Company
believes that, in addition to the above-described lease arrangement,
the Company will pay Sullivan approximately 1.4 million shares of
the Company's common stock and will lease from Sullivan its
transportation terminal in Ponca City, Oklahoma, for a term of
approximately four (4) years at a rental of $3,800 per month. The
Company and Sullivan are in the process of finalizing definitive
agreements relating to these transactions.
Segment Information and Foreign and Domestic Operations and Export
Sales.
The Company's principal business is providing environmental-
related activities consisting primarily of transporting hazardous
and non-hazardous waste, and, as a result, the Company believes that
it is in only one business segment.
Other than its minority ownership (approximately 10%) in a
waste company in Mexico, the Company had no foreign operations or
export sales in 1995.
(a) Environmental Business
The Company's principal business (through its subsidiaries) is
the transportation of hazardous and non-hazardous waste.
The Company's transportation business is provided primarily to
generators and brokers of and disposal companies handling hazardous
and non-hazardous waste. The Company's transportation subsidiary
generally transports waste from the generator's location to
disposal, storage or treatment sites operated and owned by others.
The Company currently has transportation terminals in California,
Colorado, Florida, Kansas, Ohio, Oklahoma, Tennessee, Texas, Utah,
Virginia, and Washington. See "PROPERTIES". In 1995, approximately
95% of the Company's consolidated revenues were related to its
transportation operations.
<PAGE>
The Company and its subsidiaries own or lease specifically
constructed multi-purpose vehicles which are used in the collection
and transportation of hazardous and non-hazardous waste. The
vehicles used to transport hazardous waste are specially designed
tractors and semi-trailers to comply with applicable regulations of
the U. S. Department of Transportation ("DOT") relating to the
transportation of hazardous waste. The transportation of hazardous
waste requires the Company to annually increase and/or update its
fleet of these specially designed vehicles.
In the past, the Company, through subsidiaries, also performed
brokerage services for certain generator-customers. These services
required the Company to act as an intermediary for the generator-
customer with the disposal facility. In 1994, the Company decided
to deemphasize its brokering services due to the low margins and the
potential liability related to such business. As a result, less
than 1% of the Company's consolidated revenues for 1995 were related
to the Company's brokerage activities.
A subsidiary of the Company operates a non-RCRA storage,
bulking and transfer facility located in Green Cove Springs,
Florida, under a permit granted by the State of Florida. This
facility began operation in May, 1994, and is used to collect,
store, and treat solid and semi-solid wastes which are non-hazardous
in nature. The waste is then separated, processed and shipped to
suitable disposal facilities. In connection with this permit, the
Company owns a building on four acres of land. See "PROPERTIES".
In addition to business explained above, this subsidiary also
brokers non-hazardous waste. Revenues from this subsidiary
accounted for approximately 3% and 1% of consolidated revenues in
1995 and 1994, respectively.
(b) Customers
The major customers of the Company in the environmental related
business are hazardous waste management companies and hazardous
waste brokers. For 1995, approximately 31% of the Company's
consolidated revenues were derived from transportation-related
activities for Laidlaw Environmental Services, Inc. and its
affiliates, as compared to approximately 34% for 1994.
(c) Competition
The environmental services industry is highly fragmented and
competition is intense. Competition is based on, among other
factors, work quality and timeliness of performance, safety and
efficiency, availability of personnel and equipment, and pricing.
The Company believes that its expertise and its reputation within
the industry for providing timely services allow it to compete
effectively. The industry, however, is, and is likely to continue
to be, dominated by much larger and better capitalized companies
than the Company. Many of the major companies that own disposal
<PAGE>
facilities for hazardous and non-hazardous waste, which the Company
does not, compete with the Company's transportation subsidiary by
offering to their customers transportation services of such waste
from the site of generation to their disposal facilities.
(d) Environmental Damages and Personal Injury
The environmental activities involve significant risks inherent
in the management of hazardous waste. Although the Company believes
that its operations are conducted in a safe and prudent manner,
spillage, uncontrolled release or mishandling of hazardous waste
could create liability for the Company as the result of
environmental damage or personal injury. Such an occurrence could
have a material adverse effect on the business and financial
condition of the Company.
(e) Regulation and Permits
The transportation business is subject to extensive and
increasing federal, state, and local laws and regulations. In
addition to imposing requirements on the Company's activities
regarding hazardous waste, these regulations require the Company to
maintain various permits in order to conduct its current
transportation business. Permits are generally required by most,
if not all, states for the transportation of hazardous waste in such
states. These permits need to be renewed periodically and may be
subject to revocation, modification, denial or nonrenewal for
various reasons, including failure of the Company's transportation
subsidiary to satisfy regulatory concerns. Regulations will require
the Company to obtain additional permits in the future to expand its
transportation business into new states.
In addition, the State of Florida requires the Company's
subsidiary conducting the non-hazardous waste activities in Florida
to obtain and maintain a permit to store and process non-hazardous
waste at its facility in Florida. See "BUSINESS--Environmental
Business".
The City of Denver, Colorado requires a special use permit to
operate a hazardous waste terminal to transfer such waste from one
truck to another at such terminal. ETS is currently operating its
terminal in Denver without having obtained such a special use
permit. Failure to obtain such permit will require ETS to relocate
its Denver terminal to another city in Colorado in which such a
special use permit may be obtained.
Failure by the Company to obtain and maintain necessary permits
would have a material adverse effect on its business and financial
condition. The Company believes it is in substantial compliance
with existing regulatory requirements; however, the Company cannot
predict what impact future laws, rules or regulations will have on
its business or financial condition. Further, sometimes justifiable
<PAGE>
differences in interpretations of laws and regulations could result
in unforeseen liabilities. A failure to comply with such laws,
rules and regulations could subject the Company to fines and
penalties and/or revocation of permits issued by a state, which
could have a material adverse effect on the Company.
A discussion of the principal environmental laws affecting the
Company's Environmental Business is set forth below.
(i) RCRA and Federal Transportation Laws. The Resource
Conservation and Recovery Act, as amended ("RCRA"), provides a
comprehensive framework to regulate the generation, transportation,
disposal, storage and treatment of hazardous waste. The purpose of
RCRA is to control hazardous waste from the time such is generated
to the time of disposal. RCRA requires that the Environmental
Protection Agency's ("EPA") regulations as to the transportation of
hazardous waste be consistent with the federal Department of
Transportation ("DOT") regulations under the Hazardous Materials
Transportation Act ("HWTA").
RCRA and HMTA regulate any party who transports hazardous
waste, whether in interstate or intrastate commerce. These laws and
the regulations promulgated thereunder regulate, among other things,
the transportation of hazardous waste and provide that such is
subject to a manifest system, regulates the record keeping
concerning the source and deliver points of hazardous waste, the
proper labeling of transported waste, equipment specifications and
insurance requirements. In addition, these laws and the regulations
promulgated thereunder require that a transporter must deliver waste
in accordance with the manifest prepared by the generator of the
waste and may only deliver such to a disposal, treatment or storage
facility having a RCRA permit or interim status under RCRA.
Demand for the Company's transportation services is
substantially dependent upon the continuation of the regulation of
the treatment, disposal and transportation of hazardous waste under
federal and state laws and regulations. The repeal of these laws
or any significant relaxation of their requirements as to the
transportation of hazardous waste could significantly reduce the
demand for the transportation services offered by the Company and
could have a material adverse effect on its business and financial
condition.
(ii) Non-Hazardous Waste Management Activities in Florida.
The State of Florida has adopted the Florida Solid and Hazardous
Waste Management Act ("Florida Act"), which provides, among other
things, that no non-hazardous waste management facility shall be
constructed, operated, maintained, modified or closed in Florida
without first obtaining a permit issued by the Florida Department
of Environmental Regulations ("Florida Department"), with certain
limited exceptions. In March, 1994, and before the Company's
subsidiary began construction or operation of the facility in
<PAGE>
Florida, such subsidiary was granted a permit by the Florida
Department to construct and operate the non-hazardous waste storage,
bulking and transfer facility in Florida. This law and the
regulations promulgated thereunder regulate non-hazardous waste
management facilities, such as the non-hazardous waste facility
being operated by the Company's subsidiary in Florida.
(iii) Health and Safety Regulations. The operations of the
Company's Environmental Business are subject to the requirements of
the Occupational Safety and Health Act ("OSHA") and comparable state
laws. Regulations promulgated under OSHA and the Department of
Labor require employers of persons in the transportation and
environmental industries, including independent contractors, to
implement work practices and personal protection programs in order
to protect employees from equipment safety hazards and exposure to
hazardous chemicals. It is also anticipated that oversight of the
Company's operations by regulatory agencies charged with protecting
health and safety will increase, resulting in increased cost and a
greater potential for imposition of penalties for noncompliance.
The Company has used its best efforts to establish programs for
complying with health and safety regulations. While the Company
believes it operates safely and prudently, there can be no assurance
that accidents will not occur or that the Company will not incur
substantial liability in connection with the operation of its
business. The Company could, for example, be subjected to
litigation in the event of an accident, such as a traffic accident
or inhalation of harmful chemicals. To the extent that any such
claim was not covered or only partially covered by insurance, the
Company could be materially adversely affected.
(iv) Superfund. In 1980, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, commonly known as
"Superfund" or "CERCLA", was enacted.
Superfund provides for EPA-coordinated response and removal
actions to releases of hazardous substances into the environment,
and authorizes the federal government either to clean up facilities
at which hazardous substances have created actual or potential
environmental hazards or to order persons responsible for the
situation to do so. Superfund also provides for the recovery of
cost in connection with the clean-up of a site where hazardous
substances have been released. Superfund attempts to allocate these
responses and other related costs among parties involved in the
generation, transportation and disposal of such hazardous
substances. Superfund has been interpreted as creating among liable
parties strict, joint and several liability for costs of removal and
remediation, other necessary response costs and damage to natural
resources. Liability under Superfund extends to four categories of
parties: (i) owners and operators of a facility from which a release
occurs, (ii) persons who owned or operated a facility at the time
the hazardous substances were disposed of at such a facility, (iii)
persons who arranged for disposal or treatment of a hazardous
<PAGE>
substance at or transportation of a hazardous substance to such
facility (i.e., generators of such hazardous substances), and (iv)
transporters who selected such facility for treatment or disposal
of hazardous substances.
Superfund also authorizes (i) private litigants who have
incurred response costs in the clean-up of a site contaminated with
hazardous substances to bring an action, under certain conditions,
for contribution against other parties who may be liable under
Superfund, and (ii) authorizes citizens suits under certain
conditions against any person, including the United States, who is
alleged to be in violation of any standard, regulation, condition
or order which has become effective under Superfund.
In addition to Superfund, certain individual states have
enacted their own statutory schemes to respond to release of
hazardous substances, to order responsible parties to conduct
removal action from liable parties. Parties who could be liable
under the states' mini-Superfund statutes are generally the same
parties that are liable under Superfund.
(f) Insurance
The Company is required to maintain specified types and amounts
of insurance in order to conduct its current business of
transportation of hazardous and non-hazardous waste. The
availability of adequate insurance is a problem faced by the
hazarded waste industry as a whole due to the limited number of
insurers and the increasing cost of coverage. To the best of the
Company's knowledge, the Company currently has insurance sufficient
to satisfy all applicable regulatory requirements. Although the
Company believes that it will be able to obtain renewals of, or
replacements for its existing coverage, there can be no assurance
that the Company will be able to maintain insurance in compliance
with regulatory requirements. Failure to satisfy these regulatory
insurance requirements could have a material adverse effect on the
Company's business and financial condition.
(g) Employees
As of December 31, 1995, the Environmental Business of the
Company had approximately 150 full-time employees, none of whom were
represented by a union.
Item 2. PROPERTIES
The Company's environmental business is conducted through both
owned and leased facilities. The Company and/or one of its
subsidiaries owns a six-acre tract of land in Oklahoma City,
Oklahoma, subject to a mortgage, which contains an office building
of approximately 15,000 square feet. This facility is being used
by the Company as its executive office, as well as the Company's
<PAGE>
Oklahoma City transportation terminal. In addition, the Company
owns approximately 7.2 acres of land in LaPorte, Texas, subject to
a mortgage, on which the Company's subsidiary has constructed a
14,000 square foot truck terminal. The Company's subsidiary
completed construction of the LaPorte terminal in February, 1994.
In addition, the Company and/or its subsidiaries leases
transportation terminals in Bakersfield, California; Denver,
Colorado; Jacksonville, Florida; Chanute, Kansas; Atoka, Tennessee;
Salt Lake City, Utah; Martinsville, Virginia; and, Centralia,
Washington. The Company's subsidiary also owns a terminal in
Chattanooga, Tennessee, subject to a mortgage. The facilities in
Bakersfield, California; Elyria, Ohio; Chattanooga, Tennessee; and
LaPorte, Texas, contain office facilities. See "Business--
Regulations and Permits".
Additionally, a subsidiary of the Company owns approximately
four acres of land and a 12,000 square foot building in Green Cove
Springs, Florida. This facility is used for the bulking and
transfer of non-hazardous waste under a permit granted by the State
of Florida.
The Company believes that the above properties are suitable and
adequate for the Company's presently anticipated needs.
Item 3. LEGAL PROCEEDINGS
In March, 1993, the Company was advised that its insurance
carrier had denied coverage relating to a lawsuit filed by seven (7)
individuals against Dyna-Turn of Oklahoma Incorporated ("Dyna-Turn")
and a subsidiary of the Company, Environmental Transportation
Services, Inc. ("ETS"), styled Darrell Stafford, et al. v. Dyna-Turn
of Oklahoma Incorporated, et al., pending in the District Court of
Oklahoma County, Oklahoma (the "Lawsuit"). The Lawsuit was filed
in January, 1992. The plaintiffs were employees of a waste
incineration facility and allege that (i) Dyna-Turn generated
certain waste contaminated with toxic and hazardous chemicals; (ii)
that the waste was transported by ETS, and (iii) that Dyna-Turn was
negligent in the generation and ETS was negligent in the
transportation of such waste and in failing to warn these plaintiffs
of the hazardous nature of the waste. In the Lawsuit, the
plaintiffs are alleging that they sustained certain personal
injuries and are seeking unspecified damages in excess of $10,000
and punitive damages. The Lawsuit is presently in the discovery
stage. The Company believes that it has defenses to the Lawsuit,
but at this stage is unable to determine the amount of any potential
exposure that it may incur as a result thereof. The Company intends
to vigorously defend itself in the Lawsuit. At this time, the
Company does not anticipate that the Lawsuit will have a material
adverse effect on the Company or its financial condition, but there
are no assurances to that effect.
<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
Item 4A. EXECUTIVE OFFICERS OF THE COMPANY
The following are the executive officers of the Company:
<TABLE>
<CAPTION>
Name and Position Date Elected
with Company(1) Age to Office
<S> <C> <C>
Carl B. Anderson, Jr.(2) 74 January 10, 1991
Chairman of the Board,
President, and Chief
Executive Officer
Bill Baker(3) 48 June 8, 1995
Vice President - Operations
and Secretary
______________________
<FN>
(1) There is no familial relationship between any of the executive
officers.
(2) Mr. Anderson served as Chairman of the Board and Chief
Executive Officer of American Environmental Technologies, Inc.
("AET") from June, 1986, until AET's merger with and into the
Company in January, 1991 (the "Merger"). Since the Merger,
Mr. Anderson has served as Chairman of the Board and Chief
Executive Officer of the Company. In addition, for a period
in excess of five years, Mr. Anderson served as a general
partner of AnSon Partners Limited Partnership. Mark Helm
served as the President of the Company from April, 1995, until
his resignation in October, 1995. Upon Mr. Helm's resignation
from the Company, Mr. Anderson assumed the position of
President.
(3) Mr. Baker was employed by the Company in January, 1995, and
was elected Vice President-Operations and Secretary of the
Company on June 8, 1995. From 1988 to January, 1995,
Mr. Baker served as the Western Regional Manager for Clean-Up
Transport, Inc. ("Clean-Up") and then for J. B. Hunt
Transport, Inc. following its acquisition of Clean-Up. Prior
to 1988, Mr. Baker was a driver trainer for American Resource
and Recovery, Inc. and owned and operated Baker Trucking
Company.
</FN>
<PAGE>
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
As of February 24, 1994, the Company's common stock began
trading on the OTC Bulletin Board. Prior to that time the Company's
common stock was traded on the NASDAQ Small Cap Market. The
Company's common stock was removed from the NASDAQ Small Cap Market
as a result of the per share bid price of its common stock being
below the minimum required by NASDAQ. The following table gives the
range of inter-dealer bid and asked quotations during each calendar
quarter of 1995 and 1994, according to information supplied by a
market maker. These quotations are among dealers, do not include
markups, markdowns, or commissions, and may not represent actual
sales.
</TABLE>
<TABLE>
<CAPTION>
BID ASKED
High Low High Low
1995
<S> <C> <C> <C> <C>
1st Quarter $ .13 $ .06 $ .38 $ .13
2nd Quarter .40 .13 .75 .31
3rd Quarter .31 .13 .67 .25
4th Quarter .38 .13 .50 .25
1994
1st Quarter $ .34 $ .09 $ .56 $ .31
2nd Quarter .38 .19 .63 .31
3rd Quarter .38 .25 .63 .44
4th Quarter .38 .13 .63 .38
</TABLE>
At April 9, 1996, there were 1,143 holders of record of the
Company's common stock, par value $.01.
The Company did not declare a cash dividend on its common stock
in 1995 or 1994. It is anticipated that for the foreseeable future
any earnings which may be generated from the operations of the
Company will be used to finance its growth and that cash dividends
will not be paid to holders of the common stock of the Company. Any
decision by the Board of Directors of the Company to pay cash
dividends in the future will depend upon, among other factors, the
Company's earnings, financial condition and capital requirements.
Pursuant to the terms of the loan agreement between ETS, the
principal operating subsidiary of the Company, and its lender, ETS
is prohibited from, among other things, (i) declaring and paying any
dividends, (ii) making any distributions on account of its stock,
(iii) making any loans to the Company, or (iv) invest in the
Company. Since the Company is a holding company, it is dependent
upon its subsidiaries to pay dividends and make distributions to the
Company before the Company is able to pay any dividends.
<PAGE>
Item 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
(In thousands except per share amounts)
<S> <C> <C> <C>
Revenues $ 17,650 $ 14,945 $ 14,377
Operating Earnings 11 573 878
Net Earnings (Loss)
Before change in
Accounting Principle (494) 80 (184)
Net earnings (loss) $ (362) $ 80 $ (184)
Earnings (Loss)Per
Common Share:
Net earnings (loss)
before change in
accounting principle $ (0.04) $ 0.01 $ (0.01)
Net earnings (loss) $ (0.03) $ 0.01 $ (0.01)
Weighted Average Number
of Common Shares
Outstanding 13,735,203 13,655,901 13,585,191
Total Assets $ 16,726 $ 13,559 $ 11,887
Long-term Obligations
(excluding deferred
taxes)
Current portion 2,126 2,579 1,903
Long-term portion 6,242 3,717 2,897
Cash Dividends
per Share $ - $ - $ -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1992 1991
----------- -----------
(In thousands except
per share amounts)
<S> <C> <C>
Revenues $ 15,918 $ 17,212
Operating Earnings 1,103 1,079
Net Earnings (Loss)
Before Change in
Accounting Principle 771 376
Net Earnings (Loss) 771 376
Earnings (Loss)Per
Common Share:
Net earnings (loss)
before change in
accounting principle $ 0.06 $ 0.03
Net earnings (loss) $ 0.06 $ 0.03
Weighted Average Number
of Common Shares
Outstanding 13,647,567 13,666,108
Total Assets $ 12,424 $ 15,841
Long-term Obligations
(excluding deferred
taxes)
Current portion 2,034 1,643
Long-term portion 3,242 3,755
Cash Dividends
per Share $ - $ -
</TABLE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis should be
read in conjunction with a review of the Company's December 31,
1995, Consolidated Financial Statements included elsewhere in this
Form 10-K.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis should be
read in conjunction with a review of the Company's December 31,
1995, Consolidated Financial Statements included elsewhere in this
Form 10-K.
Results of Operations
Year Ended December 31, 1995 Compared to Year Ended December 31,
1994.
The net loss for 1995 was $362,000, as compared to net income
in 1994 of $80,000. This decrease was due primarily to a decrease
in the gross margin (revenues less operating costs) of $423,000,
increased general and administrative costs of $245,000 and higher
interest expense of $272,000.
Total revenues were $17,650,000 and $14,945,000 for 1995 and
1994, respectively, an increase of $2,705,000 or 18%. Revenues from
transportation and related activities increased $2,325,000 while
waste brokerage revenue decreased $160,000. Additionally, revenues
related to BMH Materials, Inc. ("BMH"), the Company's subsidiary
involved in the processing, brokering, and disposal of non-hazardous
waste in Florida increased $341,000 over 1994. BMH began operations
in May 1994. Other revenues consisting of site remediation and
training services increased from $174,000 in 1994 to $377,000 in
1995, due to one remediation project.
Transportation and related revenues were $16,751,000 and
$14,426,000 for 1995 and 1994, respectively; comprising 95% and 97%
of total revenues. This increase is primarily attributable to an
increase in transportation revenue of $2,398,000 resulting from the
purchase of additional tractors, the purchase of Dwight Trucking,
Inc.,("Dwight"), and the addition of tractors owned by
owner/operators. The Company's transportation fleet logged
9,700,000 miles for 1995 as compared to 7,400,000 miles for 1994.
This increase in miles was partially offset by a decrease in the
running mile rate of $0.06.
Waste brokerage revenue decreased $160,000 from 1994 to 1995
as the Company continues to de-emphasize its brokerage business due
to the lower margins and the potential liability related to the
brokerage business.
<PAGE>
Total operating costs increased from $10,082,000 in 1994 to
$13,210,000 in 1995. This translates to an increase of 7.3
percentage points when expressed as a percentage of total revenue.
Operating costs related to transportation services increased
$3,002,000 from 1994 to 1995. When expressed as a percentage of
transportation and related revenues, operating costs were 75% and
66% of revenues for 1994 and 1995, respectively. This increase of
nine percentage points is primarily attributable to the lower
running mile rate as discussed earlier and to increased
owner/operator and trailer rental expenses.
Operating costs for 1995 and 1994 related to waste brokerage
services were $8,000 and $133,000, respectively, a decrease of
$125,000, as a result of the Company de-emphasizing its brokerage
activity as discussed above.
Operating costs related to the Company's non-hazardous waste
facility in Florida increased $167,000 from 1994 to 1995. This
facility began operations in May, 1994, and the increase is due
principally to such facility being in operation a full year for
1995, as compared to seven months in 1994.
Operating costs related to site remediation increased $218,000
due to the project mentioned earlier.
General and administrative expenses increased $245,000, from
1994 to 1995 due primarily to increased travel and contract labor
expenses and also to the general and administrative expenses
incurred by Dwight.
Other expense decreased $49,000 due primarily to lower
consulting fees.
Depreciation expense decreased $106,000 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
$408,000.
Interest expense increased $272,000 due to higher interest
rates and increased debt.
Results of Operations
Year Ended December 31, 1994 Compared to Year Ended December 31,
1993.
The net income for 1994 was $80,000, as compared to a net loss
of $184,000 for 1993. This increase of $264,000 was largely attrib-
utable to a decrease in bad debt expense from 1993 to 1994 of
$595,000, partially offset by a decrease in the gross margin
(revenues less operating costs) of $208,000 from 1993 to 1994.
<PAGE>
Total revenues were $14,945,000 and $14,377,000 for 1994 and
1993, respectively, an increase of $568,000. Revenues from
transportation and related activities increased $997,000 while waste
brokerage revenue decreased $752,000. Additionally, revenues
related to BMH Materials, Inc. ("BMH"), the Company's subsidiary
involved in the processing, brokering, and disposal of non-hazardous
waste increased $176,000 over 1993. Other revenues consisting of
site remediation and training services increased from zero in 1993
to $147,000 in 1994, due to one remediation project.
Transportation and related revenues were $14,426,000 and
$13,429,000 for 1994 and 1993, respectively. These amounts
represent 97% and 93% of total revenues for 1994 and 1993. This
increase of $997,000 is attributable to 1) an increase in
transportation revenue of $322,000; 2) an increase in subcontract
and trip-leasing revenue of $518,000; and 3) an increase in other
accessorial revenues of $212,000. These increases were partially
offset by a decrease in roll-off box rental of $55,000. The
Company's transportation fleet logged 7,400,000 miles for 1994, as
compared to 7,200,000 for 1993. However, the running mile rate
decreased $.01 per mile, partially offsetting the increase in
volume.
Waste brokerage revenue decreased $752,000 from 1993 to 1994
as the Company continues to de-emphasize its brokerage business due
to the lower margins and the potential liability related to the
brokerage business.
Total operating costs were $10,082,000 and $9,306,000 for 1994
and 1993, respectively, an increase of $776,000 which translates to
an increase of 2.7 percentage points when expressed as a percentage
of sales.
Operating costs related to transportation activities were
$9,573,000 in 1994 and $8,439,000 in 1993, an increase of
$1,134,000. These costs were 66.4% and 62.8% of transportation
revenues in 1994 and 1993, respectively. These costs increased due
to increased volume as well as higher operating costs. Some of the
higher operating costs include 1) drivers' wages; 2) repair and
maintenance costs; 3) owner/operator expenses; and 4) communications
costs. Additionally, transportation related operating costs were
higher in 1994 due to increased sub-contracting and trip-leasing
expenses. The Company anticipates that drivers' wages will continue
to increase, and it is unknown at this time whether such increased
cost can be offset by increases in transportation revenues.
Operating costs for 1994 and 1993 related to waste brokerage
services were $133,0000 and $794,000, respectively, a decrease of
$661,000, as a result of the Company de-emphasizing its brokerage
activity as discussed above.
<PAGE>
Operating costs related to BMH were $215,000 and $7,000 for
1994 and 1993, respectively. This increase is primarily a result
of the opening of the Florida non-hazardous waste facility in 1994.
See "BUSINESS -- Environmental Business"..
Operating costs related to site remediation and training
services were $193,000 and $68,000 for 1994 and 1993, respectively.
This increase was largely due to the one remediation project
mentioned earlier.
General and administrative expenses decreased $19,000, from
$2,304,000 in 1993 to $2,285,000 in 1994. When expressed as a
percentage of sales, this results in a decrease of one percentage
point from 1993 to 1994. While general and administrative expenses
related to transportation activities actually decreased by $123,000,
this was offset by BMH's general and administrative costs which
increased in 1994 by $104,000, as a result of the start up of the
Florida non-hazardous waste facility.
Other expense decreased $688,000 from 1993 to 1994 as shown in
the schedule below:
<TABLE>
<CAPTION>
Other (Income) Expense For
Years Ended December 31,
_____________________________
1994 1993
__________ _________
<S> <C> <C>
Bad Debt Expense $ 37,000 $ 632,000
Gain on Sale of Subsidiary (35,000) (26,000)
Interest Income (77,000) (111,000)
(Gain) Loss on Sale of Assets (96,000) (3,000)
Termination Costs 77,000 99,000
Other 61,000 64,000
__________ _________
$(33,000) $ 655,000
</TABLE>
Bad debt expense was higher in 1993 than in 1994, due to the
write-off of the loans and accounts receivable related to Green
Alternatives, Inc. Additionally, the Company sold some older
tractors in 1994, resulting in a gain on sale of equipment of
approximately $96,000.
Recently, several major waste management companies have
eliminated, or are in the process of eliminating, their trans-
portation operations. As a result, it is expected that those waste
management companies that have eliminated, or will eliminate, their
transportation operations will be employing the services of com-
panies, such as the Company, to transport their hazardous and non-
hazardous waste. The Company expects that such will have a favor-
<PAGE>
able impact on the Company, but there are no assurances to that
effect.
Subsequent Events
In March, 1996, the Company's subsidiary, Environmental
Transportation Services, Inc. ("ETS"), began leasing from Sullivan
Trucking Company, Inc. ("Sullivan"), a certain number of hazardous
waste tractors and trailers and has begun to utilize such equipment
to transport waste for Sullivan's and ETS' customers. In connection
with such lease, ETS is to pay Sullivan approximately $35,000 a
month to lease from Sullivan such tractors and trailers and a
certain number of roll-off boxes.
In connection with the transaction with Sullivan, the Company
has reached a tentative agreement to acquire from Sullivan its
customer list, good will, inventory, and other business aspects of
Sullivan's hazardous waste transportation business. The Company
believes that, in addition to the above-described lease arrangement,
the Company will pay Sullivan approximately 1.4 million shares of
the Company's common stock and will lease from Sullivan its
transportation terminal in Ponca City, Oklahoma, for a term of
approximately four (4) years at a rental of $3,800 per month. The
Company and Sullivan are in the process of finalizing definitive
agreements relating to these transactions.
Liquidity and Capital Resources
Working capital increased from $192,000 at December 31, 1994
to $508,000 at December 31, 1995. This increase resulted primarily
from decreased current maturities of long-term debt but was
partially offset by cash used to fund certain capital expenditures
that were not financed through the Company's existing equipment
financing sources and to unprofitable operations. Additionally,
working capital increased due to an increase in prepaid expenses of
$200,000 related to capitalizing tires (see Note 3 of Notes to
Consolidated Financial Statements).
In February 1996, the Company entered into a new credit
Agreement, (the "Agreement") with a new lender which provides for
a $3,000,000 line of credit for working capital purposes. This line
of credit 1) is collateralized by accounts receivable, deposit
accounts and certain intangible assets, 2) bears interest at the
prime rate published by The Chase Manhattan Bank, N.A. plus 1.875%,
and 3) provides for advances at 80% of eligible receivables. The
note is due February 6, 1998 and there are no financial covenants
associated with the Agreement. The interest on the note is payable
monthly and principal payments are made as accounts receivable are
collected. At December 31, 1995 and 1994, the Company had borrowed
$1,549,000 and $1,559,000, respectively, under the former credit
line. At April 10, 1996, the Company had borrowed $2,206,000 under
the new line and had $96,000 of unused available borrowing capacity.
<PAGE>
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 December 31, 1995, the
Company had borrowed $1,846,000 under this agreement. At
December 31, 1995, the Company was not in compliance with certain loan
covenants contained in the loan agreement. The Company has since
renegotiated the loan covenants to accommodate the lower earnings
expected in 1996 and is now in compliance with the loan covenants.
Additionally, the lender has increased the interest rate by one percentage
point. In 1996, The Company paid only the interest portion of the February
and March loan payments due to a temporary cash flow shortage. The lender
has agreed to let the Company pay the February and March principal payments
in September and October 1996.
The Company made capital expenditures of $2,803,000 in 1995,
which consisted primarily of transportation equipment. Additionally
the Company purchased Dwight and certain assets of SST which
required expenditures of $1,626,000 (net of cash acquired).
Effective July 20, 1995, the Company, 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
<PAGE>
$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 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 form commencement of the initial five-year lease
term.
In February 1996, Carl Anderson, Jr., CEO and acting President,
loaned the Company $195,000 bearing interest at 10% per annum. The
loan is payable upon demand and the interest is payable monthly.
The loan was for the Company's working capital purposes and is
unsecured. The current outstanding balance on the loan is $195,000.
In order to generate additional liquidity, the Company is
attempting to sell certain assets. With its present working capital
line of credit and the anticipated proceeds resulting from the sale
of certain assets, together with the collection of its receivables
and expected income tax refund, the Company believes that it will
be able to meet its presently foreseeable working capital
requirements. This is a forward-looking statement and involves a
number of uncertainties that could cause actual results regarding
the Company's ability to meet its presently foreseeable working
capital requirements to differ materially, including, but not
limited to, the inability of the Company to sell such assets, the
Company not being able to return to profitability in 1996 or its
revenues materially decreasing from that anticipated in 1996, the
<PAGE>
Company's inability to generate sufficient eligible receivables in
order to fully utilize its present working capital line of credit,
a material amount of receivables are not collected when anticipated
and/or the Company does not receive the tax refund as expected.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company has included the financial statements and
supplementary financial information required by this item
immediately following Part IV of this report and hereby incorporates
by reference the relevant portions of those statements and
information into this Item 8.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
Directors.
The Certificate of Incorporation of the Company provides that
the number of directors shall be as set forth in the Bylaws, and the
Bylaws provide for no less than four (4) nor more than nine (9)
directors. Pursuant to the Bylaws, the Board of Directors has set
the number of directors at four (4). Each director serves for a
term of one (1) year or until their respective successors are duly
elected and qualified.
<TABLE>
<CAPTION>
Name Age Position
- ----------------------- --- ----------------------
<S> <C> <C>
Carl B. Anderson, Jr.(1) 74 Chairman of the
Board, President
and Chief Executive
Officer
James E. Brown(2) 44 Director
Jay T. Edwards(3) 64 Director
Allen G. Poppino(4) 70 Director
___________
<FN>
(1) Mr. Anderson has served as Chairman of the Board and Chief
Executive Officer of the Company since January, 1991. See
"Executive Officers of the Company" and footnote (1)
thereunder for a discussion as to Mr. Anderson.
(2) Mr. Brown served as director of the Company from 1986 to
August, 1990, whereupon he resigned to avoid a conflict of
interest relative to the merger of AET with and into the
Company. He was reelected to the Board in January, 1991, upon
consummation of such merger. Mr. Brown is currently the Vice
President of Finance for AnSon Gas Corporation, where he has
been employed since 1982.
(3) In November, 1993, General Edwards became the General
Administrator of the Oklahoma Corporation Commission. Prior
to taking this position, he was a senior management consultant
for Tennessee Associates, specializing in total quality
management programs from April, 1991, to November, 1993. From
January, 1986, to April, 1991, he served as President of CMI
Corporation, a publicly held manufacturer of road construction
equipment. Prior to January, 1986, General Edwards served as
Executive Director of the University of Oklahoma Energy Center
and as Commander of the United States Air Force Air Logistics
Center in Oklahoma City. He is a retired Air Force Major
General.
(4) Mr. Poppino, currently is a consultant to The Benham Group and
is President and Chief Executive Officer of Poppino, Inc.
Mr. Poppino was formerly Vice Chairman of the Board of
Directors of the Benham Companies, where he was employed
(including its predecessors) from 1951 to 1990.
</FN>
</TABLE>
Family Relationships. There are no family relationships
between the members of the Board of Directors of the Company.
Compliance with Section 16(a) of the Exchange Act. Based
solely on review of copies of the Forms 3, 4 and 5 and amendments
thereto furnished to the Company with respect to 1995, or written
representations that no such reports were required to be filed with
the Securities and Exchange Commission, the Company believes that
during 1995 all directors and officers of the Company and beneficial
owners of more than ten percent (10%) of any class of equity
securities of the Company registered pursuant to Section 12 of the
Securities Exchange Act of 1934 (the "Exchange Act") filed timely
all Forms 3, 4, or 5, as required by Section 16(a) of the Exchange
Act, except (i) Jay T. Edwards filed one late Form 3 to report his
election to the Company's Board of Directors, and (ii) Mark Helm and
Craig Schroder each filed one late Form 3 to report their election
as officers of the Company.
Item 11. EXECUTIVE COMPENSATION
The following table shows the aggregate cash compensation which
the Company and its subsidiaries paid or accrued to the Chief
Executive Officer of the Company. None of the four most highly paid
executive officers of the Company received total compensation,
including salary and bonus, for the last completed fiscal year in
excess of $100,000. The table below includes cash distributed for
services rendered during 1995, plus any cash distributed during 1995
for services rendered in a prior year, plus amounts deferred at the
election of the named executive officer, less any amount relating
to those services previously included in the cash compensation table
for a prior year.
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------
Other Annual
Name and Salary Bonus Compensation
Principal Position Year ($) ($) ($)
- ------------------ ---- ------- ----- -------------
<S> <C> <C> <C> <C>
Carl B. Anderson 1995(1) 12,000(1) - 3,000(1)
Chairman of the 1994(1) 12,000(1) - -
Board, President 1993(1) 13,330(1) - -
and Chief Executive
Officer
Mark Helm(2) 1995 30,750
President
Long-term
Compensation
Awards
- -------------
All Other
Stock Options Compensation ($)
- ------------- ----------------
<C> <C>
- -
- -
- -
______________
<FN>
(1) The amount shown represents the compensation paid to
Mr. Anderson in his capacity as Chairman of the Board. The
Company does not compensate Mr. Anderson for his service as
CEO and President. In addition, beginning July, 1995,
Mr. Anderson received a monthly automobile allowance of
$500.00.
(2) Mr. Helm served as President of the Company from April, 1995,
until his resignation in October, 1995. During his tenure,
Mr. Helm performed many of the same functions as a chief
executive officer, and, therefore, is included in the Summary
Compensation Table.
</FN>
</TABLE>
<PAGE>
401-K. The Company has adopted an Employee Savings Plan ("401-
K Plan") for its employees of the Company and its subsidiaries, with
certain exceptions. The 401-K Plan provides for employee
contribution, and further provides the Company may, in the Company's
sole discretion, contribute to the 401-K Plan matching contributions
in an amount determined by the Company. Under the 401-K Plan the
Company may choose not to make matching contributions. For an
employee to be eligible to participate under the 401-K Plan, the
employee must complete six months of service, attain the age of 21
years and enter into a written salary reduction agreement with the
Company. An employee may not contribute more than 15% of his annual
compensation into the 401-K Plan. If the Company, in its sole
discretion, decides to make any matching contribution in a
particular year, such match will be allocated only to employee
participants who make a salary reduction contribution to the 401-K
Plan of at least 5% of their compensation during the plan year based
on a formula set forth in the 401-K Plan. The employee partici-
pants' contributions to the 401-K Plan are 100% vested when made,
and any match made by the Company becomes 100% vested when
allocated. The employee participant may, at his election, allocate
his contribution and the contributions of the Company among one or
more of four (4) investment alternatives, including the Company
common stock. The Company did not make matching contributions to
the 401-K Plan during 1995.
Compensation Pursuant to Stock Option Plans. The Company has
adopted an incentive stock option plan (the "Plan") in order to
attract, retain and motivate, and to encourage stock ownership by
key employees and officers of the Company and its subsidiaries. A
Stock Option Committee of the Board of Directors administers the
Plan and selects the officers and employees to whom options may be
granted and determines the number of shares to be governed by each.
None of the executive officers of the Company named in the above
Summary Compensation Table were granted options in 1995.
The total number of shares of Company common stock for which
options may be granted under the Plan shall be 400,000 shares, less
the number of shares subject to options outstanding as of October 3,
1989, and granted on or after June 12, 1980, and prior to October 3,
1989, under the stock option plan then in effect. In the event that
options granted under the Plan, or options outstanding on October 3,
1989, under the predecessor to the Plan, shall lapse without being
exercised in whole or in part, other options may be granted covering
the shares not purchased under such lapsed options. The aggregate
fair market value of shares as of the date of the grant with respect
to which options are exercisable for the first time may not exceed
$100,000. The exercise price of each option granted under the Plan
may not be less than 100% of the fair market value of the common
stock on the date of the grant (110% in the case of options granted
to employees owning more than 10% of common stock of the Company).
Each option granted under the Plan will not be exercisable more than
5 years from the date the option is granted.
<PAGE>
In addition, the Company has adopted a stock option plan for
non-employee directors of the Company ("Non-Employee Director
Plan"). Under the Non-Employee Director Plan the Company may grant
options to non-employee directors of the Company to purchase up to
100,000 shares of the Company's common stock. The maximum aggregate
number of shares of Company common stock which may be subject to
options granted under the Non-Employee Director Plan to any one non-
employee director may not exceed 20,000 shares. Any option granted
under the Non-Employee Director Plan may not exceed a term of five
(5) years and the exercise price of such option may not be less than
the fair market value of the Company's common stock on the date of
the grant. Under the Non-Employee Director Plan, a Stock Option
Committee of the Board of Directors supervises the administration
of such plan and determines the number of shares to be subject to
each option granted under the Non-Employee Director Plan. No
options were granted under the Non-Employee Director Plan in 1995.
Compensation of Directors. In 1995, the Company compensated
the non-employee directors of the Company in the amount of $500.00
for each meeting of the Board of Directors attended, and compensated
Mr. Anderson $1,000.00 per month for his services as Chairman of the
Board. Directors that also are employees of the Company or its sub-
sidiaries are not paid for serving as a director. The Board of
Directors held five (5) meetings during 1995.
Compensation Committee Interlocks and Insider Participation.
The compensation of all officers of the Company is set by the Board
of Directors. As noted, Carl B. Anderson, Jr. is both a director
and an officer of the Company.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following persons or entities are known to the Company to
be beneficial owners of more than 5% of the Company's common stock
as of April 9, 1996. Due to the requirements of the Securities and
Exchange Commission as to the method of determining the amount of
shares an individual or entity may beneficially own, the amounts
shown below for an individual or entity may also include shares also
considered beneficially owned by others.
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership(1)
Shared
Name and Sole Voting Voting
Title Address of and and Percent
of Beneficial Investment Investment of
Class Owner Owner Power Class
- ------ ----------------- ------------ ---------- --------
<S> <C> <C> <C> <C>
Common Moorpark Holdings, 10,367,122(2) (2) 75.9%
Inc.
______________
<FN>
(1) Information with respect to beneficial ownership is based on
information furnished by the named entity or contained in
filings made with the Securities and Exchange Commission by
such entity.
(2) The Schedule 13D filed by this group shows Moorpark Holdings,
Inc., a Delaware corporation ("Moorpark"), owns of record and
has sole voting and dispositive power of the 10,367,122 shares
of Company common stock. However, the Schedule 13D further
notes that Moorpark is a wholly-owned subsidiary of
Continental Bank, National Association ("Continental Bank").
Continental Bank is a wholly-owned subsidiary of Bank of
America of Illinois. As a result, Bank of America of Illinois
may be considered to have voting and dispositive power over
the 10,367,122 shares owned of record by Moorpark. The
address of Moorpark Holdings, Inc. and Bank of America of
Illinois is 231 South LaSalle Street, Chicago, Illinois
60697.
</FN>
</TABLE>
Security Ownership of Directors and Executive Officers. The
following table sets forth the number and percentage of the
outstanding shares of the Company's common stock beneficially owned
by each current director, each of the officers named in the "Summary
Compensation Table" and by all directors and officers as a group as
of April 9, 1996. Because of the requirements of the Securities and
Exchange Commission as to the method of determining the amount of
shares an individual or entity may beneficially own, the amounts
shown below for an individual or entity may include shares also
considered beneficially owned by others.
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
Name of of Amount
Individual Beneficial Ownership of Class(1)
-------------------- -------------------- ----------
<S> <C> <C>
Carl B. Anderson, Jr.(2) 572,433 (2) 4.2%
James E. Brown(3) 196,815 (3) 1.4%
Jay T. Edwards(4) - *
Allen G. Poppino(5) 56,000 (5) *
Officers and directors 829,248(6) 6.0%
as a group (6 persons)
______________
<FN>
(1) Percent of Class is rounded to the nearest one-tenth. Any
shares which an individual has a right to acquire within sixty
(60) days after the record date are considered to be
outstanding for purposes of computing such individual's
percentage of shares beneficially owned and the percentage
ownership of officers and directors as a group. No percentage
(*) is indicated if less than one percent.
(2) Mr. Anderson's address is 1813 Southeast 25th Street, Oklahoma
City, Oklahoma 73128. The amount shown includes 571,433
shares for which Mr. Anderson has sole voting and investment
power and 1,000 shares owned by his wife.
(3) Mr. Brown's address is 3814 North Santa Fe, Oklahoma City,
Oklahoma 73118. Mr. Brown shares voting and investment power
over 188,815 shares held by Santa Fe Investment Company, which
is wholly owned by Mr. Brown. The amount shown includes 8,000
shares held by Mr. Brown as custodian for his children.
(4) General Edwards' address is 2101 North Lincoln Boulevard, Room
311, Oklahoma City, Oklahoma 73105.
(5) Mr. Poppino's address is 9400 North Broadway, Post Office Box
20400, Oklahoma City, Oklahoma 73156-0400. Mr. Poppino has
sole voting and investment power over the shares noted as
beneficially owned by him.
(6) The amount shown includes 4,000 shares of common stock that
officers and directors of the Company have the right to
acquire within sixty (60) days.
</FN>
</TABLE>
<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the Company's course of business, the Company purchased
20 roll-off boxes in 1995 at an aggregate purchase price of $120,844
from 5-Star Fabrication, Inc. ("5-Star"). In addition, the Company
utilizes the services of 5-Star in the repair of the Company's roll-off
boxes. Mr. Anderson is the owner of approximately 50% of 5-Star. The
The Company believes that its transactions with 5-Star are on a basis
which is favorable to the Company.
In February 1996, Carl Anderson, Jr., CEO and acting President,
loaned the Company $195,000 bearing interest at 10% per annum. The
loan is payable upon demand and the interest is payable monthly.
The loan was for the Company's working capital purposes and is
unsecured. The current outstanding balance on the loan is $195,000.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,AND REPORTS ON
FORM 8-K
(a)(1) Financial Statements. The following consolidated
financial statements of the Company appear immediately following
this Part IV:
<TABLE>
<CAPTION>
Pages
_____
<S> <C>
AMETECH, Inc.
Auditors' Report - 1995, 1994, and 1993............. 29
Balance Sheets, December 31, 1995 and 1994.......... 30
Statements of Operations, Years ended December 31,
1995, 1994, and 1993........................... 32
Statements of Stockholders' Equity, Years ended
December 31, 1995, 1994, and 1993............... 34
Statements of Cash Flows, Years ended December 31,
1995, 1994 and 1993............................. 36
Notes to Financial Statements........................ 38
</TABLE>
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors
AMETECH, Inc.
We have audited the accompanying consolidated balance sheets of
AMETECH, Inc. (an Oklahoma corporation) and subsidiaries, as of
December 31, 1995 and 1994, and the related consolidated statements
of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of AMETECH, Inc. and subsidiaries, as of December 31, 1995
and 1994, and the consolidated results of their operations and their
consolidated cash flows for each of the three years in the period
ended December 31, 1995 in conformity with generally accepted
accounting principles.
As discussed in Note 3 to the consolidated financial statements, the
Company changed its method of accounting for tires in service in
1995.
GRANT THORNTON LLP
Oklahoma City, Oklahoma
February 9, 1996 (except for the penultimate paragraph of Note 6,
as to which the date is April 12, 1996)
<PAGE>
<TABLE>
<CAPTION>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
________________________
1995 1994
________ ________
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 74,000 $ 45,000
Accounts receivable 3,538,000 3,420,000
Prepaid expenses 429,000 144,000
Other 646,000 245,000
___________ ___________
Total Current Assets 4,687,000 3,854,000
___________ ___________
PROPERTY AND EQUIPMENT, at cost,
net of accumulated depreciation
of $9,742,000 and $8,203,000
at December 31, 1995 and 1994,
respectively:
Transportation equipment 9,479,000 7,446,000
Buildings and other 2,061,000 1,995,000
___________ ___________
11,540,000 9,441,000
___________ ___________
OTHER ASSETS, net of accumulated
amortization of $325,000 and
$263,000 at December 31, 1995
and 1994, respectively 499,000 264,000
___________ ___________
$16,726,000 $13,559,000
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
December 31,
_________________________
1995 1994
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities $ 2,053,000 $ 1,083,000
Current maturities of long-term
obligations 2,126,000 2,579,000
___________ ___________
Total Current Liabilities 4,179,000 3,662,000
___________ ___________
DEFERRED INCOME TAXES 1,365,000 894,000
___________ ___________
LONG-TERM OBLIGATIONS, net of current
maturities 6,242,000 3,717,000
___________ __________
STOCKHOLDERS' EQUITY:
Common stock of $.01 par value;
13,874,206 and 13,806,382
shares issued at December 31,
1995 and 1994, respectively. 139,000 138,000
Additional paid-in capital 2,985,000 2,970,000
Retained earnings 1,925,000 2,287,000
___________ _________
5,049,000 5,395,000
Less - Treasury Stock (115,000 shares at
December 31, 1995 and 1994), at cost 109,000 109,000
___________ ___________
Total Stockholders' Equity 4,940,000 5,286,000
___________ __________
$16,726,000 $13,559,000
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
_______________________________________
1995 1994 1993
___________ ___________ ___________
<S> <C> <C> <C>
REVENUES $17,650,000 $14,945,000 $14,377,000
___________ ___________ ___________
COSTS AND EXPENSES:
Operating costs 13,210,000 10,082,000 9,306,000
General and administrative
expense 2,530,000 2,285,000 2,304,000
Depreciation and
amortization 1,899,000 2,005,000 1,889,000
Interest expense 725,000 453,000 434,000
Other expense (income), net (82,000) (33,000) 655,000
___________ ___________ ___________
18,282,000 14,792,000 14,588,000
___________ ___________ ___________
EARNINGS (LOSS) BEFORE INCOME
TAXES AND CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING
METHOD (632,000) 153,000 (211,000)
____________ __________ __________
INCOME TAX EXPENSE (BENEFIT):
Current (288,000) 68,000 (93,000)
Deferred 150,000 5,000 62,000
____________ ___________ __________
(138,000) 73,000 (31,000)
____________ ___________ __________
EARNINGS (LOSS)BEFORE CUMU-
LATIVE EFFECT OF CHANGE
IN ACCOUNTING METHOD (494,000) 80,000 (180,000)
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING METHOD 132,000 - (4,000)
____________ ___________ __________
NET EARNINGS (LOSS) $ (362,000) $ 80,000 $(184,000)
============ ============ =========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(CONTINUED)
Years Ended December 31,
_______________________________________
1995 1994 1993
___________ ___________ ___________
<S> <C> <C> <C>
EARNINGS (LOSS) PER
COMMON SHARE:
Earnings (loss) before
cumulative effect of
change in accounting
method $ (0.04) $ 0.01 $ (0.01)
Cumulative effect of
change in accounting
method 0.01 0.00 0.00
___________ ___________ ___________
Earnings (loss)
per common share $ (0.03) $ 0.01 $ (0.01)
=========== =========== ===========
Weighted average shares
outstanding 13,735,203 13,655,901 13,585,191
=========== =========== ===========
PRO FORMA AMOUNTS ASSUMING
RETROACTIVE APPLICATION OF
THE ACCOUNTING CHANGE
Earnings (loss) before
accounting change $ (494,000) $ 105,000 $ (169,000)
============ =========== ============
Earnings (loss) per
share before
accounting change $ (0.04) $ 0.01 $ (0.01)
============ =========== ============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Additional
Common Paid-in Retained
Stock Capital Earnings
___________ ___________ ___________
<S> <C> <C> <C>
Balance at January 1, 1993 $ 137,000 $ 2,919,000 $ 2,391,000
Net loss - - (184,000)
Sale of 53,444 shares of
common stock - 30,000 -
___________ ___________ ___________
Balance at December 31, 1993 137,000 2,949,000 2,207,000
Net earnings - - 80,000
Sale of 76,662 shares of
common stock 1,000 21,000 -
___________ ___________ ___________
Balance at December 31, 1994 138,000 2,970,000 2,287,000
Net loss (362,000)
Sale of 67,824 shares of
common stock 1,000 15,000 -
___________ ____________ __________
$ 139,000 $ 2,985,000 $ 1,925,000
=========== ============ =========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(CONTINUED)
Treasury
Stock Total
___________ __________
<S> <C> <C>
Balance at January 1, 1993 $ (109,000) $5,338,000
Net loss - (184,000)
Sale of 53,444 shares of
common stock - 30,000
___________ ___________
Balance at December 31, 1993 (109,000) 5,184,000
Net earnings - 80,000
Sale of 76,662 shares of
common stock - 22,000
___________ __________
Balance at December 31, 1994 (109,000) 5,286,000
Net loss (362,000)
Sale of 67,824 shares of
common stock - 16,000
___________ __________
$ (109,000) $4,940,000
============ ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
________________________________________
1995 1994 1993
_____________ ____________ ___________
<S> <C> <C> <C>
Cash Flows From Operating
Activities:
Cash collected from customers $ 17,670,000 $ 13,925,000 $ 14,094,000
Interest paid (731,000) (447,000) (459,000)
Interest received 60,000 94,000 99,000
Cash paid to employees and
other suppliers of goods
and services (14,972,000) (12,373,000) (11,779,000)
Income taxes refunded (paid) (101,000) 130,000 (222,000)
____________ ___________ ___________
Net Cash Provided by Operating
Activities 1,926,000 1,329,000 1,733,000
____________ ___________ ___________
Cash Flows From Investing
Activities:
Additions to property and
equipment (2,803,000) (3,172,000) (1,262,000)
Proceeds from disposal of
equipment 212,000 174,000 3,000
Permit costs - (20,000) -
Purchase of businesses, net
of cash acquired (1,626,000) - -
Proceeds from sale of Academy
Computing Corporation 18,000 7,000 3,000
Payments received on notes
receivable 214,000 190,000 170,000
Advances to Green Alternatives,
Inc. - - (255,000)
____________ ___________ __________
Net Cash Used in Investing
Activities (3,985,000) (2,821,000) (1,341,000)
____________ __________ __________
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
________________________________________
1995 1994 1993
_____________ ____________ ___________
<S> <C> <C> <C>
Cash Flows From Financing
Activities:
Proceeds of long-term debt $ 4,065,000 $ 2,921,000 $ 5,083,000
Payments on long-term debt (1,993,000) (1,425,000) (5,559,000)
Sale of unissued stock 16,000 22,000 30,000
___________ ___________ ___________
Net Cash Provided by (Used in)
Financing Activities 2,088,000 1,518,000 (446,000)
___________ ___________ ___________
Net Increase (Decrease) in
Cash and Cash Equivalents 29,000 26,000 (54,000)
Cash and Cash Equivalents at
Beginning of Year 45,000 19,000 73,000
___________ ___________ ___________
Cash and Cash Equivalents at
End of Year $ 74,000 $ 45,000 $ 19,000
=========== =========== ============
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the year ended December 31, 1994, the Company acquired property and
equipment at $62,000 through trade accounts payable.
The Company purchased businesses in the year ended December 31, 1995. In
conjunction with the acquisitions, liabilities were assumed as follows:
<TABLE>
<S> <C>
Assets acquired $ 2,053,000
Cash paid, net of cash acquired (1,626,000)
___________
Liabilities assumed $ 427,000
===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994, and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF
OPERATIONS
AMETECH, Inc., an Oklahoma corporation, and its subsidiaries
(the Company) are engaged primarily in the transportation of
hazardous and non-hazardous waste on a nation-wide basis. The
Company is a majority owned subsidiary of Moorpark Holding,
Inc., a Delaware Corporation. The Company's accounting
policies are described below.
Basis of Consolidation - The consolidated financial statements
include the accounts of the Company and its wholly owned
subsidiaries, Environmental Transportation Services, Inc.
(ETS), Environmental Field Services, Inc. (EFS), BMH
Materials, Inc. (BMH), Dwight Trucking, Inc. (Dwight), and
Compliance Training Services, Inc. (CTS), after elimination of
significant intercompany transactions and balances.
Accounts Receivable - The Company provides reserves on
specific accounts based upon whether the Company reasonably
believes that collection of a specific account is questionable
plus a general reserve on uncollected balances based on the
aging of accounts receivable. If the Company reasonably
believes that the collection of a specific account, or a
portion thereof, is questionable, after examination of that
account, then the Company will reserve that portion on which
it feels collection is questionable. The Company provides a
bad debt reserve each month based on historically
uncollectible amounts as adjusted for current economic
conditions. The allowance for estimated uncollectible amounts
was $79,000 and $58,000 at December 31, 1995 and 1994,
respectively. The Company grants credit to various customers,
primarily hazardous waste management companies and hazardous
waste brokers, under customary trade terms. To mitigate the
risk of credit loss, the Company performs a credit review of
new customers and establishes credit limits before extending
credit.
Major Customers - At December 31, 1995, one customer accounted
for 19% of the accounts receivable balance. During 1995, one
customer accounted for 31% of the total revenue. During 1994,
one customer accounted for 34% of total revenue and during
1993, one customer accounted for 28% of total revenue.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF
OPERATIONS (Continued)
Property and Equipment - Depreciation of transportation and
other equipment is computed using the straight-line method
over the estimated useful lives of the respective assets,
which range from three to ten years.
Buildings are depreciated on the straight-line method over 30
years. Expenditures for repairs and maintenance are charged
to expense when incurred, whereas major betterments are
capitalized.
Inventories - Supply inventory is priced at cost, not in
excess of market. Supplies are charged to expense when
utilized for repair or maintenance of equipment. Supply
inventory of $220,000 and $177,000 at December 31, 1995 and
1994, respectively, are included in other current assets on
the Consolidated Balance Sheets.
Income Taxes - Effective January 1, 1993, the Company adopted
the Statement of Financial Accounting Standards No. 109 (SFAS
109), "Accounting for Income Taxes." SFAS 109 required a
change from the deferred method to the liability method of
accounting for income taxes. Under the liability method,
deferred taxes are recognized for the tax consequences of
temporary differences by applying enacted statutory tax
rates applicable to future years to differences between the
carrying amounts and the tax bases of existing assets and
liabilities. See note 8.
Earnings (Loss) Per Share - Earnings (Loss) per common share
for 1995, 1994, and 1993 are based upon the weighted average
number of common shares and dilutive common share equivalents
outstanding during the respective years.
Cash Equivalents - The Company considers all highly liquid
investments with original maturities of three months or less
to be cash equivalents.
Intangible Assets - Cost in excess of net assets of businesses
acquired is amortized on the straight line basis over a
fifteen year period. The Company assesses the recoverability
of costs in excess of net assets of businesses acquired by
determining whether the amortization of the asset balance over
its remaining life can be recovered through the undiscounted
future operating cash flows of the acquired operation. The
amount of impairment, if any, is based on projected future
operating cash flows. The Company believes that no impairment
has occurred and that no reduction in the estimated useful
life is warranted.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF
OPERATIONS (Continued)
Tires in Service - The cost of new and replacement tires is
capitalized and included in prepaid assets and amortized on a
straight-line basis over the estimated useful life of the
tires of one to two years.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
2. FINANCIAL INSTRUMENTS
The following table includes various estimated fair value
information as of December 31, 1995 as required by Statement
of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments" (SFAS 107). Such
information, which pertains to the Company's financial
instruments, is based on the requirements set forth in SFAS
107 and does not purport to represent the aggregate net fair
value of the Company. The carrying amounts in the table are
the amounts at which the financial instruments are reported in
the consolidated financial statements.
All of the Company's financial instruments are held for
purposes other than trading.
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments:
1. Cash and Cash Equivalents
The carrying amount approximates fair value because the
Company has the contractual right to receive immediate payment
on the deposit accounts.
2. Notes Receivable
The discounted amount of future cash flows using the rate that
the Company would expect to obtain on similar transactions is
used to estimate fair value.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. FINANCIAL INSTRUMENTS (Continued)
3. Fixed Rate Long-Term Debt
The discounted amount of future cash flows using the Company's
current incremental rate of borrowing for similar liabilities
is used to estimate fair value.
4. Floating Rate Long-Term Debt
The carrying amount approximates fair value because interest
rates adjust to market rates.
The carrying amounts and estimated fair values of the
Company's financial instruments are as follows:
<TABLE>
<CAPTION>
Carrying Estimated
Amount Fair value
___________ ____________
<S> <C> <C>
Financial assets
Cash and cash
equivalents $ 74,000 $ 74,000
Notes Receivable 328,000 319,000
Financial liabilities
Fixed rate long-term debt (2,452,000) (2,548,000)
Floating rate long-term debt (5,916,000) (5,916,000)
</TABLE>
3. CHANGES IN ACCOUNTING PRINCIPLE AND ESTIMATE
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting
for Income Taxes." SFAS 109 required a change from the
deferred method to the liability method of accounting for
income taxes. Prior years were not restated and the
cumulative effect of the change, which is $4,000, is shown as
a charge to earnings in the 1993 Statement of Operations.
Additionally, the Company changed its method of accounting for
replacement tires effective January 1, 1995. The Company now
capitalizes the cost of replacement tires to more closely
approximate their useful lives. The capitalized cost of the
tires is included in prepaid assets and is amortized over the
estimated useful life of the tires of one to two years.
Prior years were not restated and the cumulative effect of the
change is to decrease the net loss for 1995 by $132,000, net
of income taxes of $42,000, or $.01 per share. The pro forma
amounts on the income statement show the net earnings (loss)
and net earnings (loss) per share as if the new accounting
method had been in effect for the periods presented.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. CHANGES IN ACCOUNTING PRINCIPLE AND ESTIMATE (Continued)
Effective January 1, 1995, the Company changed the estimated
useful life for tractors from seven to ten years to more
closely approximate the useful lives of such assets. The
effect of this change was to decrease the net loss for 1995 by
$319,000 ($.02 per share), summarized as follows:
<TABLE>
<S> <C>
Effect of life of tractors $408,000
Less: Tax effect of change 89,000
________
Decrease in net loss $319,000
========
</TABLE>
4. DISPOSITION OF SUBSIDIARY
In January 1992, the Company sold its wholly owned subsidiary
which operated the "One-Call Business." The transaction was
valued at approximately $900,000 which included $200,000 in
cash, a note receivable for $485,000 payable in monthly
installments over seven years, 60,000 shares of the Company's
common stock, and an agreement requiring the purchaser to pay
an additional $125,000 in the future. The transaction
resulted in an approximate gain of $192,000 which is being
recognized over the term of the note (through February 1998).
$50,000, $27,000 and $23,000 of such gain was recognized in
1995, 1994 and 1993, respectively. The balance of the note
receivable and the additional amount due in the future was
$290,000 and $388,000 at December 31, 1995 and 1994,
respectively. The long-term portion of such amounts are
included in Other Assets on the Consolidated Balance Sheets
($197,000 and $288,000 at December 31, 1995 and 1994,
respectively) and the current portion of such amounts are
included in Accounts Receivable ($93,000 and $100,000 at
December 31, 1995 and 1994, respectively).
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31,
___________________________
1995 1994
_____________ ____________
<S> <C> <C>
Transportation equipment $ 18,336,000 $ 14,919,000
Land and buildings 1,952,000 1,938,000
Furniture and fixtures 712,000 591,000
Other 282,000 196,000
____________ ____________
$ 21,282,000 $ 17,644,000
============ ============
Less: Accumulated depreci-
ation and
amortization 9,742,000 8,203,000
____________ ___________
$ 11,540,000 $ 9,441,000
============ ===========
</TABLE>
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LONG-TERM OBLIGATIONS
Long-term obligations consist of the following:
<TABLE>
<CAPTION>
December 31,
_________________________
1995 1994
___________ ___________
<S> <C> <C>
Series of notes payable, collateralized
by transportation equipment, due in
monthly installments totaling $33,058
through November 11, 2000, including
interest at fixed rates between 8.50%
and 10% $ 1,313,000 $ 540,000
Series of notes payable, collateralized
by transportaion equipment, due in
monthly installments through August 31,
2000, totaling $55,698 plus interest at
the London Interbank Offering Rate plus
3.60% (9.41% at December 31, 1995) 2,748,000 1,409,000
Note payable due in monthly installments
of $3,106 including interest at 1.25%
over Chase Manhattan Bank's prime rate
of interest, collateralized by real
estate - 21,000
Note payable, collateralized by real
estate, due in monthly installments
of $5,354 through March 18, 1999,
including interest at 8.04% 509,000 529,000
Note payable due in monthly install-
ments of $3,187 through February 21,
1996, including interest at 10%,
collateralized by real estate 3,000 39,000
</TABLE>
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LONG-TERM OBLIGATIONS (continued):
<TABLE>
<CAPTION>
December 31,
_________________________
1995 1994
___________ ___________
<S> <C> <C>
Note payable, collateralized by
transportation equipment, due in
montly instalments through
September 30, 1997, of $83,333 plus
interest at the London Interbank
Offering Rate plus 3.55% (9.36%
at December 31, 1995) 1,532,000 2,578,000
Series of notes payable, collateralized
by transportation equipment, due in
monthly installments totaling $6,622
through February 28, 1997, including
interest at 8.01% 83,000 153,000
Note payable, collateralized by trans-
portation equipment, due in monthly
installments through November 6, 2000,
of $5,164, including interest at 10.50% 191,000 -
Notes payable, uncollateralized, due
in monthly installments of $987
through October 4, 1995, bearing no
interest - 10,000
Note payable due in monthly install-
ments of $3,608 through February 1,
1995, including interest at 9% - 7,000
Series of notes payable, collater-
alized by equipment, due in monthly
installments totaling $664 through
May 10, 1997, including interest at
12.02% and 12.39% 10,000 16,000
Note payable collateralized by trans-
portation equipment, due in monthly
installments of $2,202 through
March 13, 2000, including interest
of prime plus 2.5% (11.50% at
December 31, 1995) 87,000 -
Note payable collateralized by trans-
portation equipment, due in monthly
installments of $8,189 through
April 10, 2000, including interest
at 9.50% 343,000 -
</TABLE>
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LONG-TERM OBLIGATIONS (continued):
<TABLE>
<CAPTION>
December 31,
_________________________
1995 1994
___________ ___________
<S> <C> <C>
Note payable to bank under Credit
Agreement, collateralized by inven-
tories, receivable and contract
rights due April 30, 1996, with
monthly interest payments at the
national prime rate of interest
plus 3% (11.50% at December 31,
1995). Subsequently refinanced
(see below)
1,549,000 994,000
___________ ___________
$ 8,368,000 $ 6,296,000
Less: Current maturities 2,126,000 2,579,000
___________ ___________
$ 6,242,000 $ 3,717,000
=========== ===========
</TABLE>
At December 31, 1995, the aggregate yearly maturities due on long-
term obligations are as follows:
<TABLE>
Year Ending
December 31, Total
___________ ___________
<S> <C>
1996 $ 2,126,000
1997 1,716,000
1998 2,721,000
1999 1,469,000
2000 336,000
___________
$ 8,368,000
===========
The Company's Credit Agreement (The "Agreement") provides for a
$2,000,000 line of credit for working capital purposes and letters
of credit. The note underlying this portion of the credit facility
bears interest at the national prime rate of interest (as published
in the Wall Street Journal), plus 1% to 3%, depending on certain
cash flow ratios (11.50% at December 31, 1995). The interest on
this note is payable monthly. No principal payment on this note is
required unless the outstanding amount of the loan exceeds the
defined borrowing base. The note is due April 30, 1996. At
December 31, 1995, there was $1,549,000 borrowed on this note.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LONG-TERM OBLIGATIONS (continued):
The terms of the Agreement include, among other things, a
minimum working capital requirement for ETS of $1,500,000
(excluding current maturities of long-term debt), cash flow
coverage of not less than 1.10 to 1, and limitations on
additional debt, capital expenditures, and payment of
dividends. At December 31, 1995 the Company was not in
compliance with the covenants and restrictions of the
Agreement, but had secured a new line of credit with another
lender (see discussion below). The balance is reflected with
the maturities of the new credit line.
At December 31, 1995, the Company had a net cash overdraft at
a bank of $608,000. This overdraft was paid by the Company's
line of credit in January, 1996. This amount is included in
Accounts Payable on the Consolidated Balance Sheet.
Information regarding the Company's borrowings under the
Agreement for 1995, 1994, and 1993 is as follows:
* Balance outstanding at December 31, 1995, 1994 and 1993
was $1,549,000, $994,000, and $235,000, respectively.
* The weighted average interest rate during each year ended
December 31, 1995, 1994, and 1993 was 11.21%, 8.58%, and
8.69%, respectively.
* The maximum outstanding during 1995, 1994, and 1993 was
$1,784,000, $1,095,000, and $931,000, respectively.
* The average amount outstanding for 1995, 1994, and 1993
was $944,000, $666,000, and $411,000, respectively.
* The weighted average interest rate at December 31, 1995,
1994, and 1993 was 11.50%, 10.50%, and 7%, respectively.
In September 1993, the Company refinanced substantially all of
its transportation equipment with one lender. The amount of
the refinancing was $4,000,000 to be paid in 48 monthly
installments beginning on September 30, 1993. The loan is
collateralized by the Company's transportation equipment and
is guaranteed by the Company. Pursuant to the covenants
contained in the loan agreement, the Company must maintain
certain financial ratios. The Company was not in compliance
with all covenants in the loan agreement at December 31, 1995.
On April 12, 1996, the Company negotiated such loan covenants
and is now in compliance therewith.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LONG-TERM OBLIGATIONS (continued):
In February 1996, the Company entered into a new Credit
Agreement (the "New Agreement"), with a new lender which
provides for a $3,000,000 line of credit for working capital
purposes and letters of credit. The note underlying this
portion of this credit facility bears interest at the prime
rate announced by The Chase Manhattan Bank, N.A. plus 1.875%
and is collateralized by accounts receivable, deposit accounts
and certain intangible assets. The interest on this note is
payable monthly, and principal payments are made as accounts
receivable are collected. The note is due February 6, 1998
and there are no financial covenants associated with the New
Agreement.
7. STOCK OPTIONS
Under the Company's stock option plan, options to purchase up
to 400,000 common shares may be granted for exercise through
1999. The options are exercisable in whole or in part in
equal annual installments and to the extent not exercised,
accumulate, provided all options must be exercised prior to
the expiration date which is five years after the execution
date of the individual stock option agreements. The Company
has also established a non-qualified stock option plan for
outside members of the Board of Directors. This plan has
100,000 shares of common stock available and the term of the
plan runs to 1999. No options under the non-qualified plan
have been granted.
On February 21, 1991, options for the purchase of 175,000
shares of common stock were granted to certain key employees
of the Company at a price of $.50 per share. These options
become exercisable in equal installments between the first
anniversary date and the expiration date of the options
(February 21, 1996). Options for 160,000 shares have been
canceled due to employees' termination and options for 5,000
shares were exercised in August 1992. At December 31, 1995,
options for 8,000 shares are exercisable.
Options for 141,500 shares of common stock were granted to
certain employees at an exercise price of $.46 per share.
These options were granted on May 3, 1994 and become
exercisable in equal installments between the first
anniversary date and the expiration date of the options
(May 3, 1999). Options for 96,000 shares have been canceled
due to employee terminations. At December 31, 1995, options
for 13,000 shares are exercisable.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. STOCK OPTIONS (continued):
The Company is required to keep a sufficient number of shares
available to meet the requirements of the option agreement in
the form of either treasury stock or authorized and unissued
stock.
A summary of transactions of the incentive stock option plan
is as follows:
</TABLE>
<TABLE>
<CAPTION>
Number of Shares
___________________________
1995 1994 1993
_______ _______ _______
<S> <C> <C> <C>
Outstanding at beginning of year 111,500 132,500 182,500
Granted - 141,500 20,000
Exercised - - -
Canceled 56,000 162,500 70,000
_______ _______ _______
Outstanding at end of year 55,500 111,500 132,500
======== ======== =======
</TABLE>
In October, 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 123
("SFAS No. 123"), "Accounting for Stock-Based Compensation".
Application of SFAS 123 will require the Company to make an
election to value stock options under a fair value based
method as prescribed by SFAS No. 123 or continue using the
method as prescribed by APB Opinion No. 25, "Accounting For
Stock Issued to Employees". Initial adoption is required in
1996. The Company has not yet decided on which valuation
method will be elected.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. INCOME TAX EXPENSE
Tax expense consists of the following:
<TABLE>
<CAPTION>
Years Ended December 31,
_______________________________
1995 1994 1993
__________ ________ _________
<S> <C> <C> <C>
Current Expense (Benefit)
Federal $(191,000) $ 41,000 $(73,000)
State (55,000) 27,000 (20,000)
__________ ________ ________
Total Current (246,000) 68,000 (93,000)
Deferred Expense (Benefit)
Federal 69,000 21,000 52,000
State 81,000 (16,000) 10,000
_________ _________ _______
Total Deferred 150,000 5,000 62,000
_________ ________ _______
Total $ (96,000) $ 73,000 $(31,000)
========== ========= ========
</TABLE>
The income tax provision reconciled to the tax computed at the
statutory Federal rate was:
<TABLE>
<CAPTION>
Years Ended December 31,
_______________________________
1995 1994 1993
__________ ________ _________
<S> <C> <C> <C>
Tax expense (benefit) at
statutory rate $(155,000) $ 52,000 $ (74,000)
State income taxes 25,000 11,000 (13,000)
Other (19,000) - 14,000
Non-deductible items 11,000 10,000 13,000
Graduated rate differential 42,000 - 29,000
_________ ________ ________
$ (96,000) $ 73,000 $ (31,000)
========= ======== =========
</TABLE>
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. INCOME TAX EXPENSE (continued)
Amounts of deferred tax assets, valuation allowance, and
deferred tax liabilities at December 31, 1995 and December 31,
1994 are as follows:
<TABLE>
<CAPTION>
December 31,
________________________
1995 1994
__________ ________
<S> <C> <C>
Deferred Tax Assets
Alternative minimum tax
credit carryforward $ 61,000 $ 21,000
Excess financial account-
ing basis over tax
basis 21,000 79,000
Excess financial account-
ing over tax bad debt
expense 34,000 22,000
Accrued items not currently
deductible for tax 79,000 36,000
_________ ________
195,000 158,000
Less valuation allowance - -
________ ________
Deferred tax assets 195,000 158,000
Deferred Tax Liabilities
Excess financial account-
ing basis over tax basis
of fixed assets (624,000) (425,000)
Excess tax over financial
accounting depreciation (936,000) (627,000)
Deferred tax liabilities (1,560,000) (1,052,000)
___________ ___________
Net deferred tax liabilities $(1,365,000) $ (894,000)
=========== ===========
</TABLE>
At December 31, 1995, the Company has income tax refunds of
$312,000 for amounts paid for estimated income taxes and taxes
paid in prior years, primarily resulting from the net operating
loss carryback provisions of the Internal Revenue code. These
amounts are included in Other Current Assets on the Consolidated
Balance Sheet.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. RECONCILIATION OF NET EARNINGS (LOSS) TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
The reconciliation of net earnings (loss) to net cash provided
by operating activities for the years ended December 31, 1995,
1994, and 1993, is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
___________________________________
1995 1994 1993
__________ _________ __________
<S> <C> <C> <C>
Net Earnings (Loss) $ (362,000) $ 80,000 $ (184,000)
Adjustments to reconcile
net earnings (loss)to
net cash provided by
operating activities:
Depreciation and
amortization $1,899,000 $2,005,000 $1,889,000
Gain on sale of property (3,000) (96,000) (3,000)
Gain on sale of subsidiaries (50,000) (34,000) (26,000)
Write-off of uncollectible
accounts 41,000 38,000 632,000
Change in assets and
liabilities, net of
effects of purchases
of busineses:
(Increase) decrease
in accounts
receivable 20,000 (1,003,000) (295,000)
(Increase) decrease
in prepaid
expenses (250,000) 73,000 (108,000)
(Increase) decrease
in other current
assets (393,000) 61,000 (265,000)
Increase in accounts
payable and accrued
liabilities 874,000 196,000 27,000
Deferred income taxes 150,000 5,000 66,000
Other - 4,000 -
__________ __________ _________
$1,926,000 $1,329,000 $1,733,000
=========== =========== =========
</TABLE>
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. COMMITMENTS AND CONTINGENCIES
At December 31, 1995, the Company had outstanding letters of
credit of $216,000. The letters of credit serve as security
to obtain licenses in certain states, for uninsured workman's
compensation deposits and for performance of services. Such
letters of credit reduce the amounts which can be drawn under
the Company's $2,000,000 line of credit (Note 6).
The Company is partially uninsured on its workers'
compensation insurance for Oklahoma employees. The Company s
retention under this plan is $500,000, after which coverage
under the excess workers' compensation insurance plan becomes
effective. The Company accrues estimated losses monthly based
on a review of claims filed and claims incurred but not
reported. The claim and premium expense incurred under the
partially uninsured workers' compensation plan was $133,000,
$58,000 and $48,000 for 1995, 1994 and 1993, respectively.
The Company is also partially uninsured for its employee group
health insurance coverage. Under this program, the Company is
liable for up to of $35,000 per covered person per year with
an aggregate liability not to exceed $450,000 per year for the
total group. The excess insurance coverage becomes effective
when the aforementioned limits are reached. The Company
accrues estimated losses monthly based on a review of claims
filed and claims incurred but not reported. The claim and
premium expense incurred under the Company's partially
uninsured group health insurance plan was $233,000, $250,000
and $218,000 for 1995 1994 and 1993, respectively.
The Company leases transportation terminals and office space
under operating lease arrangements. The following is a
schedule by year of future minimum lease payments under these
operating leases.
Year Ending
December 31, Total
___________ ___________
1996 $ 85,000
1997 51,000
1998 30,000
1999 25,000
2000 10,000
___________
$201,000
===========
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. COMMITMENTS AND CONTINGENCIES (Continued)
Total lease expense for the years ended December 31, 1995,
1994, and 1993 was approximately $135,000, $113,000, and
$128,000, respectively.
The Company provides an employee savings plan ("401-K Plan")
for its employees. The 401-K Plan provides for employee
contributions, and further provides the Company may, at its
discretion, make a matching contribution to the 401-K Plan in
an amount determined by the Company. If the Company decides
to make any matching contribution, such match will be
allocated only to employee participants who make a salary
reduction contribution of at least 5% of their compensation.
Under the Company's Plan, up to 10% of the fair market value
of the Plan's assets may be used to purchase company stock.
The Plan purchased 67,824, 76,662, and 53,444, shares for
$16,000, $22,000, and $30,000 in 1995, 1994, and 1993,
respectively. There was no Company contribution to the 401-K
Plan for 1995, 1994, or 1993.
The Company has employment agreements with certain of its key
employees which provide for salary continuation for a
specified number of months upon a change of control of the
Company. In addition, certain stock options to those
employees immediately vest upon a change of control.
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
10. 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, and while
the ultimate resolution is unknown, management believes the
final outcome will not have a material adverse impact on the
Company's financial position or results of operations.
The Company is involved in various other legal actions arising
in the normal course of business. After taking into
consideration available insurance coverage, legal counsel s
evaluation of such actions, and other relevant information,
management is of the opinion that their outcome will not have
a significant effect on the Company s consolidated financial
position or results of operations
11. RELATED PARTY TRANSACTIONS
During 1995, 1994 and 1993, the Company purchased certain
fixed assets totaling approximately $147,000, $187,000, and
$34,000, respectively from a company partially owned by a
director and officer of the Company.
12. ACQUISITION OF ASSETS OF SMITH SYSTEMS TRANSPORTATION, INC.
Effective July 20, 1995, the Company 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 the Company and SST, the Company 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. In the purchase transaction, the
Company did not assume any of the liabilities of SST and the
operations of the acquisition have been included since
July 20, 1995. Such operations do not constitute a
significant business acquisition and pro forma results are not
presented.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. ACQUISITION OF DWIGHT TRUCKING, INC.
Effective July 1, 1995, the Company acquired a hazardous and
non-hazardous waste transporter, Dwight Trucking, Inc.
("Dwight"), located in Bakersfield, California. The purchase
price was approximately $1,204,000 and has been accounted for
as a purchase transaction. As a result the Company has
allocated the total cost of the acquisition to the acquired
assets and assumed liabilities, based on their relative fair
values. The results of operations of Dwight have been
included in the Company s consolidated financial statements
since July 1, 1995. Cost in excess of the net assets acquired
was approximately $323,000 which is included in other assets
at December 31, 1995.
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 following summarized pro forma unaudited information
assumes the acquisition had occurred on January 1, 1994:
<TABLE>
<CAPTION>
Years Ended December 31,
_________________________
1995 1994
___________ ___________
<S> <C> <C>
Revenues $ 18,604,000 $ 16,883,000
============ ============
Net earnings (loss) before
cumulative effect of
change in accounting method (508,000) 9,000
============ ============
Net earnings (loss) (376,000) 9,000
============ ============
Earnings (loss) per share
before cumulative effect of
change in accounting method $ (0.04) $ 0.00
============ ============
Earnings (loss) per share $ (0.03) $ 0.00
============ ============
<PAGE>
(a)(3) Exhibits. The Company files the following exhibits
with this report:
2(a). Stock Purchase Agreement, dated August 17, 1995,
between Environmental Transportation Services, Inc. and Dale Dwight
and Sam Dwight was filed as Exhibit 2.2 to the Company's Form 10-Q
for the quarter ended June 30, 1995, and is incorporated herein by
reference.
2(b). Asset Purchase Agreement, dated July 20, 1995,
between Environmental Transportation Services, Inc. and Arthur E.
Smith & Son Trucking, Inc., Monte Smith and Mary C. Smith was filed
as Exhibit 2.1 to the Company's Form 10-Q for the quarter ended
June 30, 1995, and is incorporated herein by reference.
3(i). Amended Articles of Incorporation of the Company,
together with Certificate of Merger, was filed as Exhibit 2(b) to
the Company's Form 8-K, Date of Report (date of earliest event
reported): January 9, 1991, and is incorporated herein by
reference.
3(ii). Bylaws, as amended, of the Company, which have been
previously filed as Exhibit 2(c) to the Company's Form 8-A
Registration Statement No. 000-19009, and is incorporated herein by
reference.
4. Specimen copy of the Company's common stock certificate,
which has been previously filed as Exhibit 1 to the Company's Form
8-A Registration Statement No. 000-19009, and is incorporated
herein by reference.
10(a). Company Stock Option Plan (Employee), which has been
filed as Exhibit 10(a) to the Company's Form 10-K for the year
ended December 31, 1990, and is hereby incorporated by reference.
10(b). Specimen copy of Option Agreement (Employees), which
has been filed as Exhibit 10(b) to the Company's Form 10-K for the
year ended December 31, 1990, and is hereby incorporated by
reference.
10(c). Company Stock Option Plan (Non-Employee Directors),
which has been filed as Exhibit 10(c) to the Company's Form 10-K
for the year ended December 31, 1990, and is hereby incorporated by
reference.
10(d). Specimen copy of Option Agreement (Non-Employee
Directors), which has been filed as Exhibit 10(d) to the Company's
Form 10-K for the year ended December 31, 1990, and is hereby
incorporated by reference.
<PAGE>
10(e). Non-Competition Agreement, dated December 2, 1992,
between the Company and Laidlaw which has been filed as Exhibit 2.3
to the Company's 8-K dated December 2, 1992, and is incorporated
herein by reference.
10(f). Loan and Security Agreement, dated August 27, 1993,
between the CIT Group/Equipment Financing, Inc. and Environmental
Transportation Services, Inc., which has been filed as Exhibit
10(i) to the Company's Form 10-K for the year ended December 31,
1993, and is hereby incorporated by reference.
10(g). Guaranty Agreement dated August 27, 19983, between
the CIT Group/Equipment financing, Inc. and AMETECH, Inc., which
has been filed as Exhibit 10(j) to the Company's Form 10-K for the
year ended December 31, 1993, and is hereby incorporated by
reference.
10(h). First Amendment to Loan and Security Agreement dated
March 22, 1994, between the CIT Group/Equipment Financing, Inc. and
Environmental Transportation Services, Inc. has been filed as
Exhibit 10(k) to the Company's Form 10-K for the year ended
December 31, 1994, and is hereby incorporated by reference.
10(i). Second Amendment to Loan and Security Agreement
dated September 22, 1994, between the CIT Group/Equipment
Financing, Inc. and Environmental Transportation Services, Inc. has
been filed as Exhibit 10(l) to the Company's Form 10-K for the year
ended December 31, 1994, and is hereby incorporated by reference.
10(j). Third Amendment to Loan and Security Agreement dated
March 7, 1995, between the CIT Group/Equipment Financing, Inc. and
Environmental Transportation Services, Inc. has been filed as
Exhibit 10(m) to the Company's Form 10-K for the year ended
December 31, 1994, and is hereby incorporated by reference.
10(k). Promissory note between the CIT Group/Equipment
Financing, Inc. and Environmental Transportation Services, Inc.,
which has been filed as Exhibit 10(l) to the Company's Form 10-K
for the year ended December 31, 1993, and is hereby incorporated by
reference.
10(l). Promissory note dated May 16, 1994, between the CIT
Group/Equipment Financing, Inc. and Environmental Transportation
Services, Inc. has been filed as Exhibit 10(o) to the Company's
Form 10-K for the year ended December 31, 1994, and is hereby
incorporated by reference. Substantially the same agreements have
been entered into by Environmental Transportation Services, Inc.
with the CIT Group/Equipment Financing, Inc. for the purpose of
financing other transportation equipment. Such omitted documents
will be filed with the Commission upon the Commission's request.
<PAGE>
10(m). Note and Security Agreement between NationsBanc
Leasing Corporation and Environmental Transportation Services,
Inc., dated December 17, 1992, which has been filed as Exhibit
10(m) to the Company's Form 10-K for the year ended December 31,
1993, and is hereby incorporated by reference.
10(n). Security Agreement between Associates Commercial
Corporation and Environmental Transportation Services, Inc. dated
July 20, 1994, has been filed as Exhibit 10(r) to the Company's
Form 10-K for the year ended December 31, 1994, and is hereby
incorporated by reference. Substantially the same agreements have
been entered into by Environmental Transportation Services, Inc.
with Associates Commercial Corporation for the purpose of financing
other transportation equipment. Such omitted documents will be
filed with the Commission upon the Commission's request.
10(o). Agreement between Associates Commercial Corporation
and Environmental Transportation Services, Inc. dated July 20,
1994, has been filed as Exhibit 10(s) to the Company's Form 10-K
for the year ended December 31, 1994, and is hereby incorporated by
reference. Substantially the same agreements have been entered into
by Environmental Transportation Services, Inc. with Associates
Commercial Corporation for the purpose of financing other
transportation equipment. Such omitted documents will be filed
with the Commission upon the Commission's request.
10(p). Continuing Guaranty between AMETECH, Inc. and
Associates Commercial Corporation dated July 20, 1994, has been
filed as Exhibit 10(t) to the Company's Form 10-K for the year
ended December 31, 1994, and is hereby incorporated by reference.
Substantially the same agreements have been entered into by
AMETECH, Inc. with Associates Commercial Corporation for the
purpose of financing other transportation equipment. Such omitted
documents will be filed with the Commission upon the Commission's
request.
10(q). Change in Terms Agreement between First Interstate
Bank of Texas, N.A. and Environmental Transportation Services,
Inc., dated March 25, 1994, has been filed as Exhibit 10(u) to the
Company's Form 10-K for the year ended December 31, 1994, and is
hereby incorporated by reference.
10(r). Transportation Accounts Financing and Security
Agreement, dated February 6, 1996, between Associates Commercial
Corporation and Environmental Transportation Services, Inc.
21. Subsidiaries of the Company.
23. Consent of Experts.
27. Financial Data Schedule
<PAGE>
(b) Reports on Form 8-K. One report on Form 8-K
was filed on September 8, 1996, to report under Item 2 of
the Form 8-K the acquisition by the Company's subsidiary
od Dwight Trucking, Inc. on August 17, 1996. The related
Form 8-K/A filed on October 31, 1996, set forth the
following financial statements under Item 7 of the Form
8-K:
(i) Financial statements of Dwight Trucking, Inc.
(a) Balance Sheet: June 30, 1995;
(b) Statement of Operations, Year Ended June 30,
1995;
(c) Statement of Stockholders' (Deficit) Equity;
(d) Statement of Cash Flows, Year Ended June 30,
1995;
(e) Notes to Financial Statements;
(ii) Unaudited Pro Forma Financial Statements:
(a) Pro Forma Condensed Consolidated Balance Sheet,
June 30, 1995;
(b) Pro Forma Condensed Consolidated Statement of
Operations, Year Ended December 31, 1994;
(c) Pro Forma Condensed Consolidated Statement of
Operations, Six Months Ended June 30, 1995;
(d) Notes to Pro Forma Condensed Consolidated
Financial Statements.
<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 this 12th day of April, 1996.
AMETECH, Inc.
By: /s/ Carl B. Anderson, Jr.
_____________________________
Carl B. Anderson, Jr.
President
(Chief Executive Officer)
By: /s/ Kerry Willingham
_____________________________
Kerry Willingham
Controller
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the undersigned has signed this report on behalf
of the Company, in the capacities and on the dates indicated:
Dated: April 12, 1996 By: /s/ Carl B. Anderson, Jr.
_____________________________________
Carl B. Anderson, Jr.
Chairman of the Board
Dated: April 12, 1996 By: /s/ James E. Brown
_____________________________________
James E. Brown, Director
Dated: April 12, 1996 By: /s/ Jay Edwards
_____________________________________
Jay Edwards, Director
Dated: April 12, 1996 By: /s/ Allen G. Poppino
_____________________________________
Allen G. Poppino, Director
MBEN:\A-C\AMETECH\10K\10K95.3
</TABLE>
TRANSPORTATION ACCOUNTS FINANCING AND SECURITY AGREEMENT
This Transportation Accounts Financing and Security Agreement dated as
of February 6, 1996 is by and between Associates TransCapital Services, a
division of ASSOCIATES COMMERCIAL CORPORATION ("Associates"), a Delaware
corporation having a place of business at 300 E. Carpenter Freeway, Irving,
Texas 75062 and Environmental Transportation Services, Inc. ("Borrower"), an
Oklahoma corporation having its chief executive office at 1813 S.E. 25th
Street, Oklahoma City, Oklahoma 73129.
ARTICLE I - Definitions
1.01 As used in this Agreement, the words and phrases defined in this
Article I shall have the meanings so ascribed to them.
1.02 "Account" shall mean and refer to all of Borrower's accounts,
contract rights, instruments, documents, chattel paper, notes, drafts and
other forms of obligations owing to Borrower, however created.
1.03 "Agreement" shall mean and refer to this Accounts Financing and
Security Agreement and any supplement or amendment thereto.
1.04 "Applicable Jurisdiction" shall mean and refer to that jurisdiction
in which this Agreement is accepted by Associates.
1.05 "Business Day" shall mean calendar days other than Saturdays,
Sundays and legal holidays in the Applicable Jurisdiction.
1.06 "Collateral" shall mean and refer to all of Borrower's Accounts,
General Intangibles, acceptances, deposits, Deposit Accounts, and Records,
whether now existing or hereafter arising or acquired, and all cash and non-
cash proceeds of any of the foregoing, including, without limitation,
proceeds of insurance including returned and unearned premiums. There is also
included within the term "Collateral" all guaranties, liens and security
granted to or held by Borrower with respect to an Account or any other
obligation owing to Borrower.
1.07 "Deposit Accounts" shall mean and refer to any demand, time,
savings, passbook or like account maintained by Borrower with a bank, savings
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and loan association, credit union or like organization other than an account
evidenced by a certificate of deposit.
1.08 "Eligible Accounts" shall mean and refer to those Accounts which
in the sole discretion of Associates are eligible for loans made by
Associates under this Agreement. Without limiting Associates' discretion,
the following Accounts are not Eligible Accounts and shall be ineligible for
loans made by Associates under this Agreement: (a) Accounts which are
sixty (60) days or more past due; (b) Accounts which are more than ninety
(90) days old; (c) Accounts owing by a single account debtor if twenty
percent (20%) or more of such Accounts are sixty (60) days or more past due;
(d) Accounts owing by a single account debtor in excess of an amount equal
to thirty percent (30%) of all Accounts owing by all account debtors; (e)
Accounts with respect to which the account debtor is a subsidiary of, related
to, or affiliated with Borrower or has common shareholders, officers or
directors with Borrower; (f) Accounts in which Borrower is or may become
liable to the account debtor thereof for goods sold or services rendered by
such account debtor; (g) Accounts owing by the United States Government
unless the amounts due thereunder are to be paid to Associates under
appropriate notifications under the Assignment of Claims Act; (h) Accounts
in which the account debtor has raised any dispute or defense to payment of
any kind; or (i) Accounts owing by any account debtors not deemed by
Associates to be credit worthy.
1.09 "General Intangibles" shall mean and refer to Borrower's general
intangibles, including, without limitation, all tax refunds of every kind
and nature to which Borrower is now or hereafter may be come entitled, no
matter however arising, all other refunds, goodwill, trade secrets, computer
programs, customer lists, trade names, trademarks, licenses and patents.
1.10 "Obligations" shall mean and refer to all loans from time to time
made by Associates to Borrower and to others at the request of or for the
account of or for the benefit of Borrower, all other debts, liabilities and
obligations of Borrower to Associates of every kind and description (whether
or not evidenced by a note or other instrument and whether or not for the
payment of money), direct or indirect, absolute or contingent, joint or
several, primary or secondary, due or to become due, now existing or here-
after arising, including, without limiting the generality of the foregoing,
any liability of Borrower to Associates as a guarantor of indebtedness or
liabilities of others and all interest, fees, charges and expenses payable
by Borrower hereunder, or any supplement or amendment hereto or any other
agreement between Borrower or Associates or any instrument evidencing any of
the foregoing.
1.11 "Person" or "Party" shall include individuals, firms, corporations
and all other entities, including, without limitation, governments, govern-
mental agencies and instrumentalities.
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1.12 "Prime Rate" shall mean the per annum lending rate publicly
announced from time to time by The Chase Manhattan Bank, N.A. as its prime
rate, base rate or reference rate for unsecured loans of the shortest
maturity to corporate borrowers.
1.13 "Records" shall mean and refer to all of Borrower's books of
account of every kind and nature, including, without limitation, all
electronically recorded data relating to Borrower or its business and all
receptacles and containers for such records and all of Borrower's files and
correspondence.
1.14 "Receivable Loan Balance" shall mean and refer to that portion of
the Obligations which, on Associates' book of account, reflects the principal
and other charges owing from Borrower to Associates by reason of loans made
under this Agreement, or pursuant to any supplement hereto, or under any
other agreement which provides that loans thereunder shall constitute a
portion or the Receivable Loan Balance.
1.15 All words and terms used in this Agreement and in any supplement
or amendment hereto other than those specifically defined in this Agreement
or such supplement or amendment shall be deemed to have the meanings accorded
to them in the Uniform Commercial Code as amended from time to time (herein
the "Code"), as in force in the Applicable Jurisdiction.
ARTICLE II - Loans, Fees and Interest
2.01 Subject to the terms and conditions of this Agreement, Associates
may from time to time lend to Borrower at Associates' sole discretion up to
80% of the face amount of Eligible Accounts outstanding from time to time or
such greater or lesser percentage as Associates may, from time to time,
establish; provided however, the aggregate amount of such outstanding loans
shall not exceed $3,000,000 ("Maximum Advance") at any time.
2.02 All loans made by Associates to Borrower pursuant to this Agreement
and all other Obligations which do not have a specific time for payment shall
be payable on demand at any time and for any reason with or without the
occurrence of any Event of Default (as hereinafter defined).
2.03 If the Receivable Loan Balance shall at any time exceed the then
effective percentage (as determined under Section 2.01) of the face amount
of Eligible Accounts, Borrower shall, on Associates' demand, either (as
specified in such demand) pay to Associates such excess or grant and deliver
to Associates such additional security as may be satisfactory to Associates.
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2.04 Until all Obligations of Borrower to Associates are fully paid and
performed, Borrower shall pay to Associates monthly, as of the last day of
each calendar month, interest at a rate which shall be equal to the lesser of
(i) the sum of (x) the Prime Rate, plus (y) 1.875% per annum, or (ii) the
lawful maximum, if any, in effect from time to time in the Applicable
Jurisdiction for loans to borrowers of the type, in the amount, for the
purposes and otherwise of the kind herein contemplated. Such rate of
interest shall be computed on the daily Receivable Loan Balance from the
date accrued until the date of payment and calculated on the basis of a 360-
day year for the actual number of days elapsed. The rate of interest pay-
able hereunder shall not be less than 8.0% per annum.
Notwithstanding any other provision to the contrary set forth herein, if at
any time implementation of any provision hereof shall raise the interest
rate herein above the lawful maximum rate of interest, if any, in effect from
time to time in the Applicable Jurisdiction which may be charged by
Associates for loans to borrowers of the type, in the amount, for the
purposes and otherwise of the kind herein contemplated, then such interest
rate shall be limited to such lawful maximum and any excess interest
inadvertently collected shall be deemed to be a partial prepayment of
principal and so applied.
2.05 Any increase or decrease in the Prime Rate shall be effective as
of the next Business Day following such adjustment and such adjusted Prime
Rate shall be the applicable Prime Rate in determining the rate of interest
payable hereunder.
2.06 All payments to be made by Borrower hereunder shall be paid to
Associates at its office designated above or at such other address as
Associates may designate in writing and Borrower unconditionally promises
to repay all loans and other obligations to Associates in the manner set
forth in this Agreement without the necessity on Associates' part of
resorting to or having recourse to the Collateral.
2.07 Associates shall furnish to Borrower monthly an extract or a
statement of Borrower's account with Associates, prepared from Associates'
records showing all applicable credits and debits, including all loans,
other charges and payments since the last statement. Each such statement
shall be considered true and correct and to have been accepted by Borrower
and shall be conclusively binding upon Borrower with respect to all matters
contained therein, unless Borrower notifies Associates in writing of any
discrepancy or exception within thirty (30)) days from the mailing by
Associates to Borrower of any such monthly statement.
2.08 In the event Associates shall so request, Borrower agrees to
execute and deliver to Associates such promissory notes, an example of which
is attached hereto as Exhibit A, as Associates shall request in order to
evidence the loans. Notwithstanding the issuance of any such note, the
monthly statements of Borrower's account with Associates shall constitute
prima facie evidence of the loans and other amounts owing from Borrower to
Associates.
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2.09 Borrower shall pay Associates on the date of this Agreement a
closing fee of $15,000.
2.10 Borrower shall pay Associates a wire transfer fee of $10.00 for
each wire transfer Associates initiates under this Agreement and reimburse
Associates for exchange on checks, charges for returned items and all other
bank charges.
ARTICLE III - Grant of Security interest
3.01 As security for the payment and performance of all Obligations,
Borrower hereby assigns to Associates and grants to Associates a continuing
security interest in all Collateral.
3.02 Until all Obligations have been fully paid and performed, whether
or not this Agreement has been terminated as hereinafter provided, Associates
shall have and retain its security interest in and assignment of all
Collateral, whether or not any of such Collateral is deemed by Associates to
be eligible for loan purposes.
3.03 To the extent Borrower has heretofore granted or may hereafter
grant to Associates a security interest in or mortgage of any other real or
personal property, then such property shall, for the purposes of this
Agreement, be deemed to be "Collateral".
ARTICLE IV - Representations and Warranties
4.01 To induce Associates to enter into this Agreement and to make loans
hereunder, Borrower makes the representations and warranties contained in
this Article IV, each of which is acknowledged by Borrower to be a material
representation and warranty and each of which shall be deemed to be renewed
by Borrower upon each request to Associates to make a loan hereunder.
4.02 Borrower and each of its subsidiaries, if any, is a corporation
duly organized and existing under the laws of the state of its incorporation
and is in good standing thereunder and is qualified to do business in every
other state or jurisdiction in which the nature of the business conducted or
the property owned therein requires it so to qualify.
4.03 The execution and delivery by Borrower of this Agreement and the
performance by Borrower of its Obligations hereunder are within Borrower's
corporate powers.
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4.04 The execution and delivery of this Agreement has been duly
authorized by Borrower's Board of Directors and, to the extent required by
the laws of the state of its incorporation, by its stockholders.
4.05 There is no provision in the Articles of Organization, Agreement
of Association, Articles of Incorporation or the by-laws of Borrower or in
any indenture, contract or agreement to which Borrower is a party or by
which Borrower or Borrower's property is bound, which prohibits the execution
and delivery by Borrower of this Agreement or the payment and performance
by Borrower of the Obligations or pursuant to which such execution, delivery
or performance would, upon the giving of notice or the passage of time, or
both, result in a default thereunder.
4.06 Borrower has (or as to Collateral arising or acquired hereafter
will have) good, clear record and marketable title to the Collateral, free
and clear of all liens, pledges, charges, encumbrances and security interests
of every kind and nature.
4.07 All financial statements and information relating to Borrower and
each of its subsidiaries, if any, which have been furnished by Borrower to
Associates are true and correct, have been prepared in accordance with
generally accepted accounting principles consistently applied, and there has
been no material adverse change in the condition, financial or otherwise, of
Borrower or any of its subsidiaries, if any, since such submission.
4.08 There are no actions, suits, proceedings or investigations pending
or, to the knowledge of Borrower, its agents, servants or employees,
threatened against Borrower or any of its properties in any court, before any
other tribunal or before any federal, state, municipal or other governmental
authority. Neither Borrower nor any of its subsidiaries, if any, is in
default with respect to any order of any court, other tribunal or govern-
mental authority. The execution, delivery and performance of this Agreement
will not be a default under any order of any court, any other tribunal or
any governmental authority.
4.09 Borrower and each of its subsidiaries, if any, has duly filed all
federal, state and other governmental tax returns which it is required by law
to file and has fully paid all taxes now due to be paid and Borrower and each
of its subsidiaries, if any, now has and shall hereafter maintain reserves
adequate in amount to fully pay all such tax liabilities which may hereafter
accrue.
4.10 Borrower and each of its subsidiaries, if any, is now solvent and
able to pay its debts as they mature.
4.11 All Accounts (i) are and will be bona fide existing obligations of
the account debtor thereof created by the rendition of services to the named
account debtor in the ordinary course of business, free of liens,
encumbrances and security interests and unconditionally owed in the face
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amount thereof unless otherwise indicated in the schedule relating thereto,
to Borrower by the account debtor thereof without right of rejection or
return or defense, offset or counterclaim, or claim of discount or deduction,
(ii) are and will be valid, legal, enforceable obligations of the account
debtor thereof; and (iii) do not and will not arise out of transactions
with an employee, officer, agent, director, stockholder, affiliate or
subsidiary of Borrower.
4.12 Borrower's chief executive office is at the address set forth in
the preamble to this Agreement, and Borrower has no other place of business,
except as follows: 3143 Petrol Road, Bakersfield, California 93380. If
Borrower's books and records concerning the Accounts are not at its chief
executive office, such books and records are at 3143 Petrol Road, Bakersfield,
California 93380. Except as set forth herein, Borrower conducts business and
will continue to conduct business under no names or tradestyles other than
the name set forth above Borrower's execution of this Agreement: Dwight
Trucking a division of Environmental Transportation Services, Inc.,
3143 Petrol Road, Bakersfield, California 93380.
ARTICLE V - Affirmative Covenants
5.01 Borrower shall:
(a) duly and punctually, pay and perform all of the Obligations;
(b) at all times keep proper books of account in which full, true
and correct entries will be made of its transactions in accordance with
generally accepted accounting principles consistently applied;
(c) at all reasonable times, make its books and records available,
in its offices, for inspection, examination and copying by Associates and
Associates' representatives and will, at all reasonable times, permit
inspection of its properties by Associates and Associates' representatives;
(d) from time to time, furnish Associates with such information
and statements as Associates may reasonably request and with copies of all
financial statements and reports that Borrower sends or makes available to
its stockholders or to any governmental authority;
(e) furnish Associates, within twenty (20) days after the close of
each monthly period of its fiscal year, a consolidated and consolidating
balance sheet of Borrower and its affiliates, if any, and statement of profit
and loss reflecting the financial condition of Borrower at the end of such
period and the results of its operations during each such period, with a
certificate by Borrower's president or treasurer to the effect that such
balance sheet and statement of profit and loss fairly present the financial
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conditions at the end of such period and the results of its operation during
such period in accordance with generally accepted accounting principles
consistently applied;
(f) furnish Associates annually, within ninety (90) days after the
close of each fiscal year, a consolidated and consolidating balance sheet of
Borrower and its affiliates, if any, and statement of profit and loss
reflecting the financial condition of Borrower and its affiliates, if any, at
the end of such fiscal year and the results of its operations during each
such fiscal year. Each such balance sheet and statement of profit and loss
is to be certified by an independent certified public accountant satisfactory
to Associates and such certification shall be in form and substance
satisfactory to Associates;
(g) maintain its corporate existence and the corporate existence
of any and all subsidiaries in good standing and comply with all laws and
regulations of the United States or of any state or states thereof or of any
political subdivision thereof, or any governmental authority which may be
applicable to its or their business;
(h) maintain insurance at all times covering such risks and in
such amounts as Associates may require and all such insurance shall be in
such form, for such period and written by such companies as shall be accept-
able by Associates;
(i) annually, at the time of delivery to Associates of the reports
referred to in Section 5.01(f) above, deliver to Associates certificates
signed by Borrower's president and treasurer certifying that each such
officer has reviewed the provisions of this Agreement and stating in his
opinion, if such be the fact, that Borrower has not been nor is then in
default as to any of the covenants contained in this Agreement or, in the
event of any such defaults, setting forth the details thereof;
(j) promptly notify Associates in writing of (i) any change of its
officers, directors, key employees, location of its chief executive office or
any other office or location where any books and records regarding any
Accounts are held, name or trade style, and (ii) any sale or purchase out of
the regular course of Borrower's business and any other material change in
the business or financial affairs of Borrower;
(k) pay or reimburse Associates on demand for all expenses
(including, without limitation, reasonable attorney fees and legal expenses)
incurred or paid by Associates (i) in connection with the preparation,
execution, interpretation or amendment of this Agreement and any instrument,
agreement, or document executed and delivered pursuant thereto or in
connection therewith; (ii) for appraisers, examiners, auditors or similar
persons and reimburse Associates for all out-of-pocket expenses incurred by
such auditor(s)) whom Associates may engage with respect to rendering
opinions concerning Borrower's financial condition or the condition and/or
value of the Collateral; (iii) in connection with the enforcement by
Associates of its rights against Borrower or any other person primarily or
secondarily liable to Associates in respect to any Obligation; (iv) in
connection with the administration, supervision, protection of or realization
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on any Collateral held by Associates as security for any Obligation, whether
such security interest was granted by Borrower or any other person primarily
or secondarily liable respect to any Obligation, the Collateral or this
Agreement; (v) in connection with the filing and recording of all documents
required by Associates to perfect the security interests granted to
Associates in this Agreement or in any other security interests granted to
Associates, including, without limitation, any documentary stamp tax or other
taxes incurred by Associates because of any related filing or recording;
(vi) in connection with the forwarding to Borrower or any other Person on
Borrower's behalf by Associates of proceeds of loans made by Associates to
Borrower pursuant to this Agreement and the depositing for collection by
Associates of any check or item of payment delivered to Associates on
account of the Obligations and for any claims asserted by any bank at which
a blocked account or lock box is established for the deposit of proceeds of
Collateral in connection with such blocked account or lock box or any
returned or uncollected checks received by such bank as proceeds of the
Collateral; and (vii) in establishing, maintaining and using any blocked
account or lock box for the deposit of checks and other items of payment
from Borrower's customers and account debtors under the Accounts, and
(l) use the proceeds of all loans made by Associates to Borrower
under this Agreement for business purposes.
5.02 Borrower will and will cause each of its subsidiaries, if any, to
pay all real and personal property taxes, assessments and charges and all
franchise, income, unemployment, FICA, withholding, sales and other taxes
assessed against it or payable by it at such times and in such manner to
prevent any penalty from accruing or any lien or charge from attaching to its
properties. The provisions of this section, however, shall not preclude
Borrower or its subsidiaries from contesting in good faith any such tax by
appropriate proceedings, provided an adequate book reserve, determined in
accordance with generally accepted accounting practices, is set aside; nor
shall Borrower be in default under this section by reason of the existence of
a lien for taxes not then due.
5.03 Borrower will put and maintain, and will cause each of its
subsidiaries, if any, to put and maintain, its properties in good repair,
working order and condition and from time to time make all needful and
proper repairs, renewals and replacements.
5.04 Borrower and each of its subsidiaries, if any, will comply with all
laws and all acts, rules, regulations and orders of any legislative,
administrative or judicial body or official, applicable to any Collateral or
to the operation of the business or Borrower or its subsidiaries.
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ARTICLE VI - Negative Covenants
6.01 Borrower will not, without the prior written consent of Associates,
(a) guaranty or otherwise become liable in any way with respect to the
obligations of any Person, except for endorsement of items of payment for the
purpose of collection thereof; (b) pay dividends, either in cash or in kind
on any class of its stock nor make any distribution on account of its stock,
nor redeem, purchase or otherwise acquire directly or indirectly any of its
stock; (c) make any loans to any individual, firm or corporation, including,
without limitation, its officers and employees; provided, that Borrower may
make loans to its employees, including its officers, with respect to expenses
incurred by such employees, which expenses are reimbursable by Borrower; (d)
invest in or purchase any stock or securities of any person; (e) merge or
consolidate or be merged or consolidated with or into any other corporation;
(f) sell or dispose of any of its assets except for sales of inventory in
the ordinary and usual course of its business; provided, that so long as
Borrower has not granted Associates a security interest in Borrower's
equipment, Borrower may dispose of equipment which is no longer required for
the conduct of Borrower's business so long as Borrower receives therefor a
sum substantially equal to such equipment's fair value; (g) grant or suffer
to exist in the favor of any party other than Associates any mortgage,
pledge, title retention agreement, security interest, lien, charge or
encumbrance with respect to the Collateral or subject the Collateral to the
payment of any indebtedness, or transfer in any manner any of such assets
with the intent or purpose, directly or indirectly, of subjecting the
Collateral to the payment of indebtedness; and (h) engage in any business
other than the business in which it is currently engaged or a business
reasonably allied thereto.
6.02 Borrower will not, except on thirty (30) days prior written notice
to Associates, change either its principal place of business or its chief
executive office or establish any additional places of business.
ARTICLE VII - Operating Procedures
7.01 From time to time at intervals designated by Associates, Borrower
shall provide Associates with schedules describing all Accounts created or
acquired by Borrower and shall execute and deliver written assignments of
such Accounts to Associates; provided however, that Borrower's failure to
execute and deliver such schedules and/or Borrower assignments shall not
affect or limit Associates' security interest or other rights in and to the
Accounts. If requested by Associates, Borrower shall furnish copies of
customers' invoices or an equivalent writing that is acceptable to
Associates, and Borrower warrants the genuineness thereof. On demand of
Associates, Borrower shall furnish to Associates the original shipping or
delivery receipts of all services rendered.
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7.02 Upon the occurrence of any Event of Default and at any time
thereafter so long as the default continues, Associates or its designee may
at its sole discretion (a) notify Borrower's customers or account debtors
that Accounts have been assigned to Associates or of Associates' security
interest therein; (b) collect the Accounts directly and charge the collection
costs and expenses to the Receivable Loan Balance but, unless and until
Associates so notifies or gives Borrower other instructions, Borrower shall
collect all Accounts for Associates; provided however, Borrower shall direct
its customers and account debtors to send all payments thereon to such lock
box or blocked account as Associates may establish and designate in writing
to Borrower; (c) verify the validity and amount or any other matter relating
to any Account by mail, telephone, telecopy, telegraph or otherwise; (d) in
the name of Associates, Borrower or otherwise, enforce payment and collect by
legal proceedings or otherwise the Accounts and take control in any manner of
any cash or non-cash items of payments or proceeds of Accounts; and (e)
require Borrower to give notice of Associates' security interest in the
Accounts or any other obligation owing to Borrower to the account debtor or
other obligor with notice requiring such account debtor or other obligor to
pay the Account or other obligation directly to Associates.
7.03 All checks and other instruments received by Associates as proceeds
of Accounts will be credited (conditional upon final collection) upon receipt
to the Receivable Loan Balance; provided, however, that for purposes of
calculation of interest, such conditional credit will be made after allowing
three (3) Business Days for collection.
7.04 Borrower appoints any person Associates may from time to time
designate as Borrower's attorney with power to (a) endorse Borrower's name
on any checks, notes, acceptances, money orders, drafts or other forms of
payment or security that may come into Associates' possession; (b) sign
Borrower's name on any invoice or bill of lading relating to any Account, on
drafts against customers, on schedules and assignments of Accounts, on
notices of assignment, financing statements and other public records, on
verifications of Accounts and on notices to customers; (c) sign Borrower's
name to the proof of claim against any account debtor on behalf of Borrower;
(d) notify the post office authorities to change the address for delivery
of Borrower's mail to an address designated by Associates; (e) receive, open
and dispose of all mail addressed to Borrower; and (f) send requests for
verification of Accounts to customers or account debtors and to do all things
necessary to carry out this Agreement. Borrower ratifies and approves all
acts of the attorney. Neither Associates nor the attorney will be liable for
any acts or omissions nor for any error of judgment or mistake of fact or law.
This power, being coupled with an interest, is irrevocable so long as any
Accounts assigned to Associates or in which Associates has a security
interest remain unpaid or until the Obligations have been fully satisfied.
Associates may file one or more financing statements disclosing Associates'
security interest without Borrower's signature appearing thereon. If
permitted by law, Borrower agrees that a carbon, photographic or other
reproduction of this Agreement or of a financing statement may be filed as
a financing statement.
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7.05 Until Borrower's authority to do so is terminated by written notice
from Associates, which notice Associates may give at any time when Borrower's
selling or collection results are not reasonably satisfactory to Associates,
or at any time after the occurrence of any Event of Default specified in
Section 8.01 herein, Borrower may grant such allowances or other adjustments
to account debtors as Borrower may reasonably deem to accord with sound
business practice; provided, however, no extension of time for payment shall
be granted without Associates' prior written consent. Borrower shall give
Associates immediate written notice of the grant of any such allowance or
other adjustment.
7.06 Associates may at all times settle Accounts or other obligations
owing to Borrower or adjust disputes and claims directly with customers or
account debtors or other obligors for such amounts and upon terms which
Associates considers advisable, and in all cases Associates will credit the
Receivable Loan Balance with only the net amounts received by Associates
in payment of Accounts.
7.07 Any and all sums at any time credited by or due from Associates to
Borrower shall at all times constitute additional security of all Obligations
of Borrower to Associates and may be setoff against any Obligation at any
time whether or not other security held by Associates is deemed to be
adequate whether or not such Obligations are then due. Any and all
instruments, documents, policies and certificates of insurance, securities,
goods, accounts receivable, choses in action, chattel paper, cash, property
and the proceeds thereof owned by Borrower or in which Borrower has an
interest, which now or hereafter are at anytime in possession or control of
Associates or in transit by mail or carrier to or from Associates or in the
possession of any third party acting in Associates' behalf, without regard
to whether Associates received the same in pledge, for safe keeping, as agent
for collection or transmission or otherwise or whether Associates has
conditionally released the same, shall constitute additional security for
such Obligations, and may be applied at any time to such Obligations
whether due or not. Associates shall have the unrestricted right from time
to time to apply (or to change any application already made of) the proceeds
of any of the Collateral to any of the Obligations, as Associates in its sole
discretion may determine. Unless otherwise agreed to in writing by
Associates, no credits or cash in which Borrower has an interest which are
in the possession or control of Associates, or any sums otherwise due from
Associates to Borrower, shall bear interest or otherwise accrue profits.
7.08 In the event that Borrower at any time or times hereafter shall
become liable to, or any lien against Borrower shall arise in favor of, any
taxing authority, whether or not the amount of such liability shall have
been assessed against Borrower and whether or not notice of such lien shall
have been filed or recorded as may be required by law, or if Borrower shall
fail to discharge any lien, claim or encumbrance, or fail to obtain or
maintain any of the policies of insurance required hereunder, or to pay any
premium, in whole or in part relating thereto, then Associates shall have
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the right, but not the obligation, to pay the amount of such liability
(including interest and/or penalties thereon) and also to pay any tax or
liability by virtue of which such lien shall have arisen, or obtain and
maintain such policies of insurance and pay such premiums and any amount or
amounts paid for the discharge of any such liability or lien shall be
charged to the Receivable Loan Balance.
7.9 Borrower will furnish Associates sworn statements of the value of
the Collateral in such form and as often as Associates requires.
7.10 Borrower will deliver to Associates, duly endorsed or assigned,
all instruments, chattel paper, guaranties or security agreements immediately
upon receipt by Borrower as evidence of, in payment of or as security for
any of the Collateral.
7.11 Borrower shall furnish Associates with an aging of accounts and an
aging of Borrower's accounts payable in such form and as often as Associates
may require.
ARTICLE VIII - Remedies
8.01 Any one or more of the following events shall constitute an event
of default ("Event of Default") under this Agreement: (a) If Borrower fails
to make payment of any of the Obligations when required of Borrower, or fails
to make any remittance required by this Agreement or commits any breach of
this Agreement, or any present or future supplement hereto, or any other
agreement between Borrower and Associates or any affiliate of Associates;
(b) any default by Borrower or Borrower's subsidiaries exists under any
agreement between Borrower or any of Borrower's subsidiaries, affiliates or
parents and Associates or any affiliate of Associates, whether such
agreements are now existing or are hereafter entered into; (c) any
representative covenant or warranty made by Borrower or in connection with
this Agreement is breached; (d) any statement or data furnished by or for
Borrower relating to the Collateral or to the operation or financial
condition or business affairs of Borrower proves to be false in any
material respect; (e) Borrower becomes insolvent or is unable to meet debts
as they mature, suspends operations as presently conducted, or discontinues
doing business as an ongoing concern; (f) if any of the Collateral or any of
Borrower's other assets is attached, seized, subject to a writ or distress
warrant or levied upon or if a petition under any section or chapter of the
Bankruptcy Code or any similar law or regulation shall be filed by or against
Borrower or Borrower makes an assignment for the benefit of its creditors or
if any case or proceeding is filed by Borrower for its dissolution or
liquidation; (g) if Borrower is enjoined, restrained, or in any way prevented
by court order from (or voluntarily ceases) conducting all or any material
part of its business affairs or if a petition under any section or chapter
of the Bankruptcy Code or any similar law or regulation is filed against
Borrower or if any case or proceeding is filed against Borrower for its
dissolution or liquidation; (h) if a notice of lien, levy or assessment is
filed of record with respect to all or any of Borrower's assets by the
United States or any departments agency, or instrumentality thereof or by
<PAGE>
any state, county, municipal or other governmental agency, including, without
limitation, the Pension Benefit Guaranty Corporation, or if any taxes or
debts owing at any time or times hereafter to any one of them becomes a lien
or encumbrance upon the Collateral or any other of Borrower's assets unless
Borrower, in good faith, shall be contesting the same in an appropriate
proceeding and Borrower has given Associates such additional collateral and
assurances as Associates deems necessary under the circumstances; (i) if a
custodian, trustee, receiver or assignee for the benefit of creditors is
appointed to take possession of any of the Collateral or any of Borrower's
other assets; (j) if there shall be a material change in the stockholders or
management of Borrower; or (k) if for any reason the guaranty of any Person
primarily or secondarily liable with respect to any of the Obligations shall
terminate without the consent of Associates.
8.02 Upon the occurrence of any Event of Default and at any time
thereafter so long as the default continues, Associates may, at its option,
with or without notice to Borrower, (a) declare this Agreement to be in
default; (b) declare all Obligations of Borrower to be immediately due and
payable; (c) cease advancing money or extending credit to or for the benefit
of Borrower under this Agreement or any other agreement; (d) cancel any
insurance and credit any refund to the Obligations; and/or (e) exercise all
of the rights and remedies of a secured party under the Code and any other
applicable laws, including, without Imitation, the right to require Borrower
to assemble the Collateral and deliver it to Associates at a place to be
designated by Associates which is reasonably convenient to both parties, and
to lawfully enter any premises where the Collateral is located without
judicial process and take possession thereof. Associates may sell and deliver
any or all Accounts and any or all other Collateral at public or private sale
for each, upon credit or otherwise, at such prices and upon such terms as
Associates deems advisable. Any requirement of reasonable notice shall be
met if such notice is mailed postage prepaid to Borrower at Borrower's
address as set forth herein at least five (5) days before the time of sale
or other disposition. The proceeds of sale shall be applied first to all
costs and expenses of sale, including attorneys' fees, and second to the
payment (in whatever order Associates elects) of all Obligations. Associates
shall dispose of any excess as required by law and Borrower shall remain
liable to Associates for any deficiency. Failure by Associates to exercise
any right, remedy or option under this Agreement or any present or future
supplement hereto or under any other agreement between Associates and
Borrower, or delay by Associates in exercising the same, will not operate as
a waiver thereof.
8.03 Associates' rights and remedies under this Agreement shall be
cumulative and not alternative and shall not limit any other right or remedy
which Associates may have.
8.04 Associates shall not be required to have recourse to any Collateral
before enforcing its rights or remedies against Borrower or any other Person
primarily or secondarily liable with respect to any of the Obligations.
<PAGE>
8.05 Associates shall not, under any circumstances or in any event
whatsoever, have any liability for any error or omission or delay of any kind
occurring in the liquidation of any Collateral, including the settlement,
collection or payment of any Account, or for any damage resulting therefrom.
8.06 Borrower waives and releases all rights of redemption from any sale
of the Collateral and the benefit of all evaluation, appraisal and exemption
laws.
8.07 BORROWER AND ASSOCIATES EACH WAIVE THEIR RESPECTIVE RIGHT
TO TRIAL BY JURY IN ANY SUIT OR PROCEEDING ARISING UNDER OR RELATING
TO THIS AGREEMENT.
ARTICLE IX-Termination
9.01 This Agreement shall have an initial term of two (2) years from the
effective date hereof (the "Original Term"), and shall be automatically
extended for successive periods of one (1) year ("Renewal Term") effective
on each annual anniversary of the effective date of this Agreement, unless
sooner terminated as hereinafter provided.
9.02 Upon the termination date, all Obligations shall immediately be due
and payable.
9.03 No termination hereunder shall in any way affect or impair any
right of Associates arising prior thereto or by reason thereof nor shall any
such termination relieve Borrower or any other party primarily or secondarily
liable as to the Obligations until all of the Obligations are fully paid.
9.04 Notwithstanding the provisions of Section 9.01, Borrower may
terminate this Agreement at any time upon ninety (90) days prior written
notice and by payment to Associates on the effective date of such termination
of an amount equal to the sum of (a) all Obligations, plus (b)(i) in the
event of such termination during the Original Term, two percent (2%) of the
Maximum Advance, or (b)(ii) in the event of such termination during any
Renewal Term, one percent (1%) of the Maximum Advance.
<PAGE>
ARTICLE X - Miscellaneous
10.01 NOTWITHSTANDING THE FACT THAT THE CREDIT OF AN ACCOUNT
DEBTOR MUST BE SATISFACTORY TO ASSOCIATES, BORROWER RECOGNIZES AND
AGREES THAT BORROWER WILL MAKE ALL CREDIT DECISIONS WITH RESPECT
TO BORROWER'S EXTENSION OF CREDIT TO AN ACCOUNT DEBTOR; BORROWER
WILL NOT RELY ON ASSOCIATES IN ANY WAY FOR SUCH CREDIT
DETERMINATION; NO REPRESENTATION OR AGREEMENT HAS BEEN MADE BY
ASSOCIATES THAT ASSOCIATES WILL PROVIDE CREDIT DECISIONS TO BORROWER
AND ALL REFERENCES TO CREDIT DECISIONS BY ASSOCIATES WITH RESPECT TO
AN ACCOUNT OR AN ACCOUNT DEBTOR REFER SOLELY TO ASSOCIATES' OWN
DETERMINATION AS TO THE ELIGIBILITY OF SUCH ACCOUNT OR SUCH ACCOUNT
DEBTOR FOR THE PURPOSE OF TREATING AN ACCOUNT AS AN ELIGIBLE
ACCOUNT.
10.02 All loans made by Associates to Borrower under this Agreement
and under any other agreement between Associates and Borrower shall
constitute one loan secured by all of the Collateral and all other security
granted to Associates.
10.03 Borrower irrevocably (a) waives the right to direct the
application of any and all payments at any time or times hereafter which may
be received by Associates from or for the benefit of Borrower, and (b) agrees
that Associates shall have the continuing exclusive right to apply and
reapply any and all such payments received at any time or times hereafter in
such manner as Associates may deem advisable, notwithstanding any entry by
Associates upon any of its books and records.
10.04 To the extent that Borrower makes a payment(s) to Associates
or Associates enforces its security interest and lien or exercises its right
of setoff and such payment(s) or the proceeds of such enforcement or setoff
or any part thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such recovery, the
liability or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not
been made or such enforcement or setoff had not occurred and shall be
Obligations secured by the Collateral.
10.05 This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs and representatives or
successors and assigns. Borrower may not, however, without the prior written
consent of Associates, assign this Agreement to any other person.
10.06 In the event that any provision hereof shall be deemed to be
invalid by reason of the operation of any law or by reason of the interpreta-
tion placed thereon by any court, this Agreement shall be construed as not
containing such provision and the invalidity of such provision shall not
affect the validity of any other provision hereof and any and all other
provisions hereof which are otherwise lawful and valid shall remain in full
<PAGE>
force and effect. The captions herein contained are for convenience only,
do not form a part of this Agreement and shall not be utilized in the
construction thereof.
10.07 Borrower will, from time to time, execute and deliver all
instruments, documents or other writings, and take or cause to be taken such
other and further action as Associates may request in order to effect and
confirm or vest more securely in Associates all rights contemplated in this
Agreement.
10.08 This Agreement may be amended and Borrower may take any action
herein prohibited or omit to perform any act herein required to be performed
by it, if Borrower shall obtain Associates' prior written consent to each
such amendment, action or omission to act. No waiver on the part of
Associates on any one occasion shall be deemed a waiver on any subsequent
occasion. No waiver by Associates will be effective unless it is in writing
and then only to the extent specifically stated.
10.09 If any of the Collateral shall at any time consist of
instruments or documents, Associates shall have no obligation to preserve
rights against prior parties.
10.10 Associates may, at any time(s) pay, acquire, satisfy, or
discharge any security interest, lien, encumbrance or claim asserted by any
Person against the Collateral. Associates shall have no obligation to
determine the validity thereof. All sums paid by Associates under the
provisions of this section and any existing or other charges relating
thereto shall be repaid by Borrower on demand and shall be a charge to the
Receivable Loan Balance.
10.11 Except as otherwise provided for in this Agreement, Borrower
expressly waives presentment, demand and protest and notice of presentment,
protest, default, non-payment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract
rights, documents, instruments, chattel paper and guaranties at any time held
by Associates on which Borrower may in any way be liable and hereby ratifies
and confirmswhatever Associates may do in this regard.
10.12 This Agreement shall be governed, construed and enforced in
accordance with the laws of the Applicable Jurisdiction and applicable
Federal laws. This Agreement shall take effect as an instrument under seal.
10.13 Any notice hereunder to Borrower or to Associates shall be in
writing and, if mailed, shall be deemed to be given four (4) Business Days
after deposit in the mail, postage prepaid, and addressed to Borrower or
Associates at its address set forth in the preamble to this Agreement or at
such address as the Borrower or Associates may, by written notice, designate
its address for purposes of notice hereunder.
10.14 This Agreement has been signed and delivered to Associates on
the day and year first above written. This Agreement shall become effective
<PAGE>
only upon the written acceptance hereof by Associates under the signature of
its duly authorized officer. When so accepted, this Agreement shall
supersede all prior verbal or written agreements, commitments or
understandings relating to Associates' loans to Borrower measured and
secured by this Agreement.
10.15 Borrower authorizes Associates to disclose such financial,
credit and other information regarding Borrower and Borrower's business as
Associates may deem appropriate to Heller Financial, Inc. and any of
Associates' assignees, participants or other persons making credit inquiries
about Borrower.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers duly authorized thereto.
Environmental Transportation Services, Inc.
Borrower
By: /s/ Carl B. Anderson, Jr.
_______________________________________
Title: President
___________________________________
Date: 2-6-96
___________________________________
Accepted at __________________ this _____ day of _____________, 19___
ASSOCIATES TRANSCAPITAL SERVICES, a
division of ASSOCIATES COMMERCIAL
CORPORATION
By:
___________________________________
Title: Senior Vice President
_______________________________
Date:
________________________________
SUBSIDIARIES OF THE COMPANY
Name of Subsidiary State of Incorporation
__________________ ______________________
Environmental Transportation Oklahoma
Services, Inc.
Environmental Field Services, Inc. Oklahoma
BMH Materials, Inc. Texas
Compliance Training Services, Inc. Tennessee
(formerly E.T.S. Drivers, Inc.)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 29, 1996 (except for the
penultimate paragraph of Note 6, as to which date is April 12,
1996) accompanying the consolidated financial statements of AMETECH,
Inc. and subsidiaries included in the Annual Report on Form 10-K for
the year ended December 31, 1995, which are incorporated by reference
in the Registration Statement on Form S-8. We consent to the
incorporation by reference in the Registration Statement of the
aforementioned report.
GRANT THORNTON LLP
Oklahoma City, Oklahoma
April 12, 1996
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> $ 74,000
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<RECEIVABLES> 3,538,000
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0
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