<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended July 31, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition Period from ___ to___
Commission File Number 1-9467
DAVIS WATER & WASTE INDUSTRIES, Inc.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-0959907
------------------------ ------------------
(State of incorporation) (I.R.S. Employer
Identification No.)
1820 Metcalf Avenue, Thomasville, Georgia 31792
--------------------------------------------------------------
(Address of principal executive offices, including zip code)
(912) 226-5733
________________________________________________________
(Registrant's telephone number, including area code)
___________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
Indicate the number of shares of each of the issuer's classes of
common stock outstanding as of the latest practicable date.
Class Outstanding at September 8, 1995
----------------------------- ---------------------------------
Common Stock, $0.01 Par Value 3,228,594 Shares
Page 1 of 33
index of exhibits on Page 16
<PAGE> 1
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended July 31, 1995
<TABLE>
<CAPTION>
Table of Contents
Item ----------------- Page
Number PART I -- FINANCIAL INFORMATION Number
------ ------
<S> <C> <C>
1 Financial Statements:
Condensed Consolidated Balance
Sheet--July 31, 1995, April 30, 1995 and
July 31, 1994 3
Condensed Consolidated Statement of
Operations--Three Months Ended July 31,
1995 and 1994 5
Condensed Consolidated Statement of
Changes in Stockholders' Equity--July
31, 1995, April 30, 1995 and July 31,
1994 6
Condensed Consolidated Statement of Cash
Flows--Three Months Ended July 31, 1995
and 1994 7
Notes to Condensed Consolidated
Financial Statements 8
2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
PART II--OTHER INFORMATION
4 Submission of Matters to a Vote of
Security Holders 13
6 Exhibits and Reports on Form 8-K 14
SIGNATURES 15
INDEX OF EXHIBITS 16
</TABLE>
<PAGE> 2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DAVIS WATER & WASTE INDUSTRIES, Inc.
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
July 31, April 30, July 31,
1995 1995 1994
-------- --------- -------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 3,188 $ 3,746 $ 2,398
------- ------- -------
Accounts receivable, less allowance for doubtful
accounts ($1,165 at July 31, 1995, $1,135 at April
30, 1995, and $1,376 at July 31, 1994) 38,364 39,795 38,404
------- ------- -------
Inventories:
Finished goods and products purchased for resale 17,092 16,137 19,223
Work-in-process 2,521 2,073 2,854
Raw materials and purchased components 887 568 189
------- ------- -------
Total inventories 20,500 18,778 22,266
------- ------- -------
Prepaid expenses 1,213 631 779
------- ------- -------
Cost and estimated earnings in excess of billings
on uncompleted contracts 1,099 1,097 1,094
------- ------- -------
Deferred income taxes 5,270 5,634 5,595
------- ------- -------
Total current assets 69,634 69,681 70,536
------- ------- -------
Property, plant and equipment 20,831 20,701 21,483
Less-accumulated depreciation (14,646) (14,407) (14,077)
------- ------- -------
6,185 6,294 7,406
------- ------- -------
Other assets 5,579 5,561 5,129
------- ------- -------
$81,398 $81,536 $83,071
======= ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 3
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
CONDENSED CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
July 31, April 30, July 31,
1995 1995 1994
<S> <C> <C> <C>
-------- --------- --------
Current liabilities:
Current portion of long-term debt $ 253 $ 249 $ 207
Accounts payable 21,230 24,158 21,572
Accrued salaries and commissions 3,118 3,735 2,768
Other accrued liabilities 8,934 9,497 10,355
Billings in excess of costs and estimated earnings
on uncompleted contracts 1,235 1,449 2,477
------- ------- -------
Total current liabilities 34,770 39,088 37,379
------- ------- -------
Long-term debt, less current portion 18,582 14,787 20,163
------- ------- -------
Deferred income taxes 119 265 749
------- ------- -------
Other accrued liabilities 2,139 2,064 1,928
------- ------- -------
Stockholders' equity:
Common stock, $0.01 par value, 50,000,000 shares
authorized and 3,265,308 shares issued 33 33 33
Capital in excess of par value 9,788 9,788 9,788
Retained earnings 16,409 15,705 13,051
------- ------- -------
26,230 25,526 22,872
Treasury stock at cost - 36,714 shares at July 31,
1995, 19,379 shares at April 30, 1995 and 2,525
shares at July 31, 1994 (442) (194) (20)
------- ------- -------
Total stockholders' equity 25,788 25,332 22,852
------- ------- -------
$81,398 $81,536 $83,071
======= ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 4
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
July 31,
---------------------
1995 1994
---- ----
<S> <C> <C>
Net sales $ 59,684 $ 50,914
Cost of products sold 50,867 43,664
-------- --------
Gross profit margin 8,817 7,250
Selling, general and administration 6,509 6,067
Interest expense 359 352
Other income, net 25 50
-------- --------
Income before income taxes 1,974 881
-------- --------
Provision (benefit) for income taxes:
Current 594 456
Deferred 218 (93)
-------- --------
812 363
-------- --------
Net income $ 1,162 $ 518
======== ========
PER SHARE INFORMATION:
Net income per share $ 0.36 $ 0.16
======== ========
Dividends per share $ 0.14 $ 0.00
======== ========
Weighted average shares outstanding 3,242,456 3,260,292
========= =========
</TABLE>
The results of operations for the three month periods ended July 31, 1995 and
1994 are not necessarily indicative of the results of operations on an annual
basis. See accompanying notes to condensed consolidated financial statements.
<PAGE> 5
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
CONDENSED CONSOIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
EQUITY
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Capital
in excess Total
Common of par Retained Treasury stockholders'
stock value earnings stock equity
-------------------------------- ------ --------- -------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance, April 30, 1994 $ 33 $9,788 $12,539 ($ 51) $22,309
Issuance of common stock in
connection with employee
benefit plans (6) 31 25
Net income 518 518
----- ------ ------- ------- -------
Balance, July 31, 1994 33 9,788 13,051 (20) 22,852
Issuance of common stock in
connection with employee
benefit plans (15) 91 76
Purchase of treasury stock (265) (265)
Dividends paid, $.08 per share (261) (261)
Net income 2,930 2,930
----- ------ ------- ------- -------
Balance, April 30, 1995 33 9,788 15,705 (194) 25,332
Issuance of common stock in
connection with employee
benefit plans (4) 25 21
Purchase of treasury stock (273) (273)
Dividends paid, $.14 per share (454) (454)
Net income 1,162 1,162
------ ------ ------- ------- -------
Balance, July 31, 1995 $ 33 $9,788 $16,409 ($442) $25,788
====== ====== ======= ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 6
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months
Ended July 31,
--------------------------
1995 1994
OPERATING ACTIVITIES -------- --------
<S> <C> <C>
Net income $1,162 $ 518
Adjustments to reconcile net income
to net cash (used in) operating activities:
Depreciation and amortization 375 578
(Decrease) in reserve for Taulman shutdown (800) (752)
Provision for doubtful accounts 154 194
Loss on sale of assets 16 27
Deferred income taxes 218 93
Decrease in accounts receivable 1,277 559
(Increase) in inventories (1,722) (1,740)
(Increase) in cost and estimated earnings
in excess of billings (2) (123)
(Increase) in other assets (601) (47)
(Decrease) increase in billings in excess
of cost and estimated earnings (214) 275
(Decrease) increase in accounts payable and
accrued expenses (3,233) 339
------- --------
Net cash (used in) operating activities (3,370) (79)
------- --------
INVESTING ACTIVITIES
Purchases of property, plant and equipment (282) (388)
Proceeds from sale of property, plant and
equipment 1 10
------- --------
Net cash (used in) investing activities (281) (378)
------- --------
FINANCING ACTIVITIES
Proceeds from revolving and long-term debt 17,474 15,215
Principal payments made on debt (13,675) (14,485)
Proceeds from sale of stock 21 25
Purchase of treasury stock (273) 0
Dividends paid (454) 0
------- --------
Net cash provided by financing activities 3,093 755
------- --------
CASH
(Decrease) increase in cash during period (558) 298
Cash and cash equivalents at beginning of
period 3,746 2,100
------- --------
Cash and cash equivalents at end of period $3,188 $2,398
======= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 7
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
Notes to Condensed Consolidated Financial Statements
July 31, 1995 (Unaudited)
Note A - Basis of Presentation
The accompanying unaudited interim condensed consolidated
financial statements reflect all adjustments, consisting only of
normal recurring accruals, which, in the opinion of management,
are necessary to present fairly the Company's financial position
as of July 31, 1995 and 1994, and the results of its operations
and its cash flows for the three month periods ended July 31,
1995 and 1994. The consolidated financial statements included
herein should be read in conjunction with the consolidated
financial statements and notes thereto, the Report of Independent
Accountants and the Statement of Management's Responsibility for
Financial Statements included in the Company's 1995 Annual
Report.
Note B - Accounting Policies
Reference is made to the accounting policies of the Company
described in the Notes to Consolidated Financial Statements
contained in the Company's 1995 Annual Report. The Company has
consistently followed those policies in preparing this report.
Note C - Provision for Taulman Shutdown and Related Intangible
Assets
During the fourth quarter of fiscal 1994, the Company adopted a
plan to shutdown or reorganize the operations of its wholly-owned
subsidiary, The Taulman Company (Taulman). Substantially all of
Taulman's operations are contained within its Turbitrol
Instrumentation and Controls division; these operations will be
shutdown following the completion over the next two years of its
obligations under current contracts. Taulman Composting Systems,
an immaterial component of Taulman's operations, now operates as
a part of the Company's Process division. The pre-tax loss
provision for these actions included the write-off of intangible
assets totalling $2,908,000 associated with Taulman and the
accrual of $5,987,000 to provide for anticipated losses during
the shutdown period.
For the first quarters of fiscal 1996 and fiscal 1995, Taulman's
net sales were $1,183,000 and $2,120,000, respectively, while
cost of products sold were $1,396,000 and $1,930,000, respec-
tively. Selling, general and administration expenses for the
first quarters of fiscal 1996 and fiscal 1995 were $592,000 and
$1,076,000, respectively. Taulman recorded net losses of
$799,349 and $751,638 for the first quarters of fiscal 1996 and
fiscal 1995, respectively.
<PAGE> 8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Overview
The Company reported net income of $1,162,000, or $.36 per share,
during the three month period ended July 31, 1995, compared with
a net income of $518,000, or $.16 per share, during the
comparable period of 1994. Net sales increased 17.2% to
$59,684,000 for the three month period ended July 31, 1995 from
$50,914,000 for the three month period ended July 31, 1994 due to
improvement in the national economy, which increased the demand
for the Company's products. As a result of the increased net
sales, the Company reduced its selling, general and
administrative expenses as a percentage of net sales by 8.5% in
the first quarter of fiscal 1996 as compared to the first quarter
of fiscal 1995. Management is cautiously optimistic that sales
will continue to increase over comparable periods for the
previous fiscal year during the remainder of fiscal 1996 due to
the expected continued improvement in the national economy.
The results for the three month periods ended July 31, 1995 and
July 31, 1994 do not include the cost of the Taulman shutdown,
which was reserved during the fiscal year ended April 30, 1994.
All sales and costs associated with completion of Taulman's
contractual obligations are applied against this reserve.
Net sales
Net sales for the three month period ended July 31, 1995
increased 17.2% as compared to the corresponding period of the
prior year. Sales by the Company's distribution business
increased 15.0% for the three month period ended July 31, 1995 as
compared to the corresponding period of the prior year and sales
of water and wastewater treatment and pumping equipment and
process material and supplies increased by 23.0% as compared to
the corresponding period of the prior year. Distribution
equipment represented 78.2% of the Company's total net sales for
the three month period ended July 31, 1995, and water and
wastewater treatment and pumping equipment and process material
and supplies represented 21.8% of the Company's total net sales
for the three month period ended July 31, 1995. The increases in
net sales was due to the improvement in the economy, which
increased the volume of products sold. The increases in net sales
of the Company's products is due to increased activity in the
commercial and residential land development and construction
markets as a result of the improvement in the national economy,
which increased the demand for the Company's products. The
increased net sales reflect a higher volume of products shipped
in response to the increased demand rather than to any
significant price increases. For the remainder of fiscal 1996,
management believes that the Company's overall sales will
continue at improved levels over comparable periods for the prior
fiscal year if the economy continues to improve or remains at its
present position.
Cost of products sold
The gross profit margin (the difference between net sales and
cost of products sold expressed as a percentage of net sales) was
14.8% and 14.2% for the three month periods ended July 31, 1995
and July 31, 1994, respectively. The gross profit margin for the
distribution business was 11.8% and 11.4% for the three month
periods ended July 31, 1995 and July 31, 1994, respectively. The
gross profit margin for the water and wastewater treatment and
pumping equipment and process material and supplies business was
25.3% and 25.5% for the three month periods ended July 31, 1995
and July 31, 1994, respectively.
<PAGE> 9
The increase in the Company's gross margin is attributed to
the increased sales volume which enabled the Company to spread
their fixed cost over a larger sales base.
Selling, general and administrative expenses
When measured as a percentage of net sales, selling, general and
administrative expenses were 10.9% and 11.9% for the three month
periods ended July 31, 1995 and July 31, 1994, respectively. The
dollar amount of selling, general and administrative expenses
increased by 7.3% in the first quarter of fiscal 1996 as compared
to the corresponding period of the prior year, due primarily to
the increased costs associated with the increased sales and
profits such as employee incentive awards. The decrease in
selling, general and administrative expenses as a percentage of
net sales was due to the 17.2% increase in the Company's net
sales.
Interest expense
Interest expense increased 1.9% for the three month period ended
July 31, 1995 as compared to the corresponding three month period
of fiscal 1995. This was due primarily to an increase of 150
basis points in the Company's weighed average borrowing rate for
the three month period ended July 31, 1995 when compared to the
corresponding period of the prior year. The average borrowings
outstanding decreased by $3,148,000 or 15.5% for the three month
period ended July 31, 1995 as compared to the corresponding three
month period of fiscal 1995. Management anticipates that
interest expense will decrease during the remainder of fiscal
1996 if the average borrowings remain at present levels. As a
result of the second amendment to the Sun Bank, National
Association ("SBNA") loan agreement, the Company has the option
to change between the then current prime rate or the then current
LIBOR rate plus 200 basis points.
Provision for income tax expense
The effective tax rates for the three month periods ended July
31, 1995 and July 31, 1994 were 41.1% and 41.2%, respectively.
These rates reflect the Company's estimated effective rates for
the related fiscal years and do not include any unusual
adjustments or credits.
LIQUIDITY AND CAPITAL RESOURCES
The primary sources of liquidity for the Company are funds
generated internally from operations and bank borrowings. Set
forth below is information regarding the sources and amounts of
internally generated funds:
<TABLE>
<CAPTION>
July 31
----------------------- Fiscal Year Ended
(In thousands) 1995 1994 April 30, 1995
----------------------------------- ------ ------ -----------------
<S> <C> <C> <C>
Net income $1,162 $518 $3,448
Depreciation and amortization 375 578 2,110
Deferred taxes 218 93 (430)
Taulman reserve (800) (752) (1,480)
------ ----- ------
$ 955 $437 $3,648
====== ===== ======
</TABLE>
When internally generated funds are insufficient to support
operations and capital expenditures, the Company has been able to
borrow funds to meet its needs. At July 31, 1995, the Company had
<PAGE> 10
approximately $13,030,000 available under a $30,000,000 bank
line of credit. These available funds, together with a cash
balance of approximately $3,200,000, placed the Company's
potential cash availability in excess of $16,200,000 at July 31,
1995, which is believed by management to be sufficient to support
operations for the foreseeable future.
During the first quarter of fiscal 1996, The Company and SBNA
entered into a second amendment to the October 13, 1992 loan
agreement. The second amendment extended the loan maturity
through April 30, 1997, reduced the principal amount that the
Company can borrow to $30,000,000, provides specific guidelines
that the Company must meet to eliminate the security interest
that SBNA has on the Company's accounts receivable and inventory,
eliminates the working capital requirement and limits the amount
of cash that the Company may spend in connection with
acquisitions without the prior consent of SBNA to $2,500,000 per
year during the term of the loan agreement. The second amendment
permits the Company to choose between the then current prime rate
or the then current LIBOR rate plus 200 basis points for advances
under the revolving term loan. The Company was in compliance
with the financial covenants of the loan agreement as of July 31,
1995.
The payment of cash dividends is subject to approval by the Board
of Directors and depends on, among other factors, earnings,
capital requirements, and the operating and financial condition
of the Company. The payment of cash dividends also requires the
prior approval of SBNA unless certain financial requirements are
met. During the first quarter of fiscal 1996, the Company's
Board of Directors authorized a cash dividend of $0.14 per share,
which was paid on July 3, 1995 to shareholders of record on June
26, 1995.
The Company's working capital position improved by 14.0% at July
31, 1995 as compared to April 30, 1995 and by 5.1% when compared
to July 31, 1994. The improvement in the Company's working
capital position at July 31, 1995 as compared to April 30, 1995
was due primarily to an increase in inventories of $1,721,000 and
a decrease in accounts payable of $2,900,000 which was partially
offset by a $558,000 decrease in cash and a $1,431,000 decrease
in accounts receivable. The primary reasons for the improvement
in the working capital position at July 31, 1995 when compared to
July 31, 1994 were the increase in cash of $790,000 and a
decrease in accounts payable and accrued expenses of $1,413,000,
partially offset by a $1,766,000 decrease in inventories. Set
forth below is the Company's working capital position and certain
liquidity comparisons as of the dates indicated:
<TABLE>
<CAPTION>
July 31,
-------------------------
(In thousands) 1995 1994 April 30, 1995
------------------------------------------ -------- -------- --------------
<S> <C> <C> <C>
Working capital $34,864 $33,157 $30,593
======= ======= =======
Cash $ 3,188 $ 2,398 $ 3,746
Accounts receivable, net 38,364 38,404 39,795
Inventories 20,500 22,266 18,778
------- ------- -------
62,052 63,068 62,319
Accounts payable (21,230) (21,572) (24,158)
Notes payable and current portion of long-
term debt (253) (207) (249)
------- ------- -------
$40,569 $41,289 $37,912
======= ======= =======
</TABLE>
<PAGE> 11
The Company's two most significant assets are its accounts
receivable and inventories. The Company measures the
effectiveness of its accounts receivable management program by a
calculation designed to estimate the number of days which it
takes the Company to collect accounts receivable. This
calculation excludes the effect of any retainage. Average days to
collect accounts receivable declined by 9.5 days or 14.8% at July
31, 1995 when compared to July 31, 1994 due to increased
collection efforts by the Company.
The Company measures the effectiveness of its inventory
management program by a calculation using average quarterly
inventory amounts to estimate the number of times which inventory
turns on an annual basis. Inventory turns increased by 2.2 turns
or 26.8% and 1.2 turns or 13.0% during the three month period
ended July 31, 1995 compared to the corresponding period ended
July 31, 1994 and the fiscal year ended April 30, 1994,
respectively. The increase in inventory turns occurred because
the Company decreased relative inventory levels through more
efficient management of distribution product inventories. The
table below sets forth the results for the periods shown:
<TABLE>
<CAPTION>
July 31,
----------------------- Fiscal Year Ended
1995 1994 April 30, 1995
------------------------------------------- ------ ------ -----------------
<S> <C> <C> <C>
Average days to collect accounts receivable 54.8 64.3 61.0
Inventory turns 10.4 8.2 9.2
</TABLE>
Average long-term and short term borrowings decreased by
$3,148,000 or 15.5% and $523,000 or 3.0%, during the three month
period ended July 31, 1995 when compared to the three month
period ended July 31, 1994 and the year ended April 30, 1995,
respectively. The Company has increased its efforts to improve
collection of accounts receivable and minimize inventory levels
in an effort to reduce bank debt, which is illustrated by
maintaining a lower level of borrowings despite the 17.2%
increase in net sales.
<TABLE>
<CAPTION>
Three Months Ended
July 31,
------------------------- Fiscal Year Ended
(Dollars in thousands) 1995 1994 April 30, 1994
-------------------------------- -------- -------- --------------
<S> <C> <C> <C>
Average long-term debt $16,171 $19,337 $17,146
Weighted average interest rate 8.7% 7.2% 7.9%
Average short-term debt $ 981 $ 963 $ 529
Weighted average interest rate 6.4% 5.2% 6.7%
</TABLE>
<PAGE> 12
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
The 1995 Annual Meeting of Stockholders of the Company was held
on September 8, 1995, and proxies were solicited under Regulation
14A of the Securities Exchange Act of 1934. Set forth below is a
brief description of each matter voted upon at the Annual Meeting
and the results of the voting on each such matter.
(a) Election of two nominees to serve as directors until
the 1998 Annual Meeting of Stockholders and one nominee
to serve as director until the 1996 Annual Meeting.
There was no solicitation in opposition to any of the
nominees listed in the proxy statement, and all of the
nominees were elected.
<TABLE>
<CAPTION>
VOTES
---------------------
NOMINEE FOR WITHHELD
----------------------------------------
<S> <C> <C>
Robert P. Crozer 3,007,405 17,274
Thomas R. Pledger 3,006,405 18,274
R. R. Davis 3,006,870 17,809
(term of one year)
</TABLE>
(b) Approval of the Davis Water & Waste Industries, Inc.
1994 Employees Stock Option Plan.
<TABLE>
<CAPTION>
BROKERS
VOTES NON-VOTES
----------------------------------------------
FOR AGAINST ABSTAIN
------------------------------
<C> <C> <C> <C>
2,122,148 175,800 18,761 931,885
</TABLE>
(c) Approval of the Davis Water & Waste Industries, Inc.
1994 Directors Stock Option Plan.
<TABLE>
<CAPTION>
BROKERS
VOTES NON-VOTES
----------------------------------------------
FOR AGAINST ABSTAIN
------------------------------
<C> <C> <C> <C>
2,217,949 77,342 21,418 931,885
</TABLE>
(d) Ratification of the appointment of Price Waterhouse LLP
as independent accountants of the Company for the
fiscal year ending April 30, 1996.
<TABLE>
<CAPTION>
VOTES
------------------------------
FOR AGAINST ABSTAIN
------------------------------
<C> <C> <C>
3,016,762 4,199 3,718
</TABLE>
<PAGE> 13
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is filed as part of this report:
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
--------- ----------------------
<C> <S>
10(t)(ii) Second Amendment to Loan Agreement and First
Amendment to security Agreement dated as of
May 8, 1995 between the Company and Sun Bank,
N.A.
11 Computation of Net Income Per Share
</TABLE>
(b) No Current Reports on Form 8-K were filed by the
Company during the quarter ended July 31, 1995.
<PAGE> 14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
DAVIS WATER & WASTE INDUSTRIES, Inc.
------------------------------------
(Registrant)
Date September 8, 1995 /s/ Stan White
____________________________________
Stan White, Secretary-Treasurer
(Duly Authorized Officer and Chief
Financial Officer)
<PAGE> 15
<PAGE>
DAVIS WATER & WASTE INDUSTRIES, Inc.
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Table
Item No. Description of Exhibit Page
------------------------------------------------ ----
<C> <S> <C>
10(t)(ii) Second Amendment to Loan Agreement and 17
First Amendment to Security Agreement
dated as of May 8, 1995 between the
Company and Sun Bank, N.A.
11 Computation of Net Income Per Share 33
</TABLE>
<PAGE> 16
<PAGE>
SECOND AMENDMENT TO LOAN AGREEMENT
AND
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT AND FIRST AMENDMENT
TO SECURITY AGREEMENT (the "Second Amendment") dated as of the
8th day of May, 1995, is entered into by and between DAVIS WATER
& WASTE INDUSTRIES, INC., a Georgia corporation, Post Office Box
1419, Thomasville, Georgia 31799-1419 (the "Borrower") and SUN
BANK, NATIONAL ASSOCIATION (the "Bank"), a national banking
association, 200 South Orange Avenue, Orlando, Orange County,
Florida.
WITNESSETH:
WHEREAS, the Borrower and the Bank heretofore entered into
that certain Amended and Restated Loan Agreement dated as of
October 13, 1992, as amended by a First Amendment dated as of
July 20, 1994 (as amended, the "Agreement"), pursuant to which
the Bank agreed, among other things, to extend to the Borrower a
revolving line of credit loan in the maximum principal amount of
$35,000,000.00 (the "Loan") for the purposes set forth in the
Agreement; and
WHEREAS, the Borrower has requested the Bank to renew and
extend the Loan through April 30, 1997, to modify certain of the
financial covenants set forth in the Agreement and to otherwise
modify the Agreement and the Bank has agreed to do so subject to
the additional conditions, limitations and requirements as set
forth in this Second Amendment; and
WHEREAS, in connection with securing the obligations of the
Borrower provided for in the Agreement, the Borrower and the Bank
heretofore entered into that certain Security Agreement dated
October 13, 1992 (the "Security Agreement"); and
WHEREAS, the Borrower and the Bank desire and have agreed to
modify the provisions of the Security Agreement in order to
modify the definitions of "Loan Agreement" and "Promissory Note"
contained in the Security Agreement and to confirm and reaffirm
their respective obligations under the Security Agreement.
NOW, THEREFORE, for and in consideration of the mutual
premises contained herein and for other good and valuable
consideration, the receipt and sufficiency whereof are hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendments to the Agreement. The Agreement is hereby
amended as follows:
(a) The definition of the term "Borrowing Base
Certificate" is hereby added to Section 1.01 of the Agreement, as
follows:
<PAGE> 17
"'Borrowing Base Certificate' shall mean a
certificate, in form and content satisfactory to the
Bank, setting forth the calculation of the Borrowing
Base for the applicable period, and certified to the
Bank by an authorized financial officer of the
Borrower."
(b) The definition of the term "Cash Flow Ratio"
contained in Section 1.01 of the Agreement is hereby deleted in
its entirety.
(c) The definition of the term "Commitment" contained
in Section 1.01 of the Agreement shall be deleted in its entirety
and the following substituted in lieu thereof:
"'Commitment' shall mean the maximum principal
amount which the Bank may be obligated to loan to the
Borrower pursuant to this Agreement, which amount shall
be $30,000,000.00."
(d) The definition of the term "Current Ratio" is
hereby added to Section 1.01 of the Agreement, as follows:
"'Current Ratio' shall mean the Borrower's Current
Assets divided by the sum of Borrower's Current
Liabilities plus its indebtedness to the Bank."
(e) The definition of the term "Interest Payment Date"
contained in Section 1.01 of the Agreement shall be deleted in
its entirety and the following substituted in lieu thereof:
"'Interest Payment Date' shall mean (a) with
respect to Prime Rate Loans, the last Banking Day of
each calendar month during the term of this Agreement,
and (b) with respect to LIBOR Loans, the end of the
applicable Interest Period, but not less often than
quarterly."
(f) The definitions of the terms "Interest Period",
"Interest Rate" and "Interest Rate Determination Date" are hereby
added to Section 1.01 of the Agreement, as follows:
"'Interest Period' shall mean (i) 30 Days for any
Prime Rate Loan or (ii) 1 Day, 1 month or 3 months, or
any other period approved by the Bank in its sole and
absolute discretion as selected by the Borrower, with
regard to any LIBOR Loan, as determined pursuant to
Section 2.03 hereof.
'Interest Rate' shall mean the interest rate per
annum selected by the Borrower for each Loan or
Advance, from time to time, with reference to either
the Prime Rate or LIBOR, as determined in accordance
with Section 2.03 hereof, except when the Default Rate
is in effect.
'Interest Rate Determination Date' shall mean each
date for calculating LIBOR or the Prime Rate, as the
case may be, for purposes of determining the Interest
Rate in respect of an Interest Period. The Interest
Rate Determination Date shall be (i) the Banking Day
prior to the first Day of the related Interest Period
for a Prime Rate Loan
<PAGE> 18
and (ii) the second Banking Day prior to the first Day
of the Related Interest Period for a LIBOR Loan."
(g) The definitions of the terms "LIBOR" and "LIBOR
Loans" are hereby added to Section 1.01 of the Agreement, as
follows:
"'LIBOR' shall mean, with respect to any Interest
Period for any LIBOR Loan, the LIBOR rate per annum (in
accordance with the length of the designated Interest
Period) in effect on the Interest Rate Determination
Date as published from time to time on Telerate or such
substitute publication as may be mutually agreed upon
from time to time by the Borrower and the Bank.
'LIBOR Loan' or 'LIBOR Loans' shall mean loans
made by the Bank to the Borrower during the Revolving
Period pursuant to the terms of this Agreement which
bear interest at rates determined by reference to LIBOR
as provided in Section 2.03 hereof."
(h) The definition of the term "Loan" contained in
Section 1.01 of the Agreement shall be deleted in its entirety
and the following substituted in lieu thereof:
"'Loan' or 'Loans' shall mean individually or
collectively, as the context may require, the Prime
Rate Loans and the LIBOR Loans extended to the Borrower
by the Bank pursuant to the terms hereof in the maximum
aggregate principal amount of $30,000,000.00."
(i) The definition of the term "Loan Agreement"
contained in Section 1.01 of the Agreement shall be deleted in
its entirety and the following substituted in lieu thereof:
"'Loan Agreement' shall mean this Amended and
Restated Loan Agreement and any and all amendments,
modifications, restatements or replacements thereof."
(j) The definition of the term "Prime Rate Loan" is
hereby added to Section 1.01 of the Agreement, as follows:
"'Prime Rate Loan' shall mean loans made by the
Bank to the Borrower during the Revolving Period
pursuant to the terms of this Agreement which bear
interest at rates determined by reference to the Prime
Rate as provided in Section 2.03 hereof."
(k) The definition of the term "Revolving Period"
contained in Section 1.01 of the Agreement shall be deleted in
its entirety and the following substituted in lieu thereof:
"'Revolving Period' shall mean the period during
the term of the Loan, commencing on the date hereof and
ending on the occurrence of (i) an Event of Default or
(ii) April 30, 1997 (subject to annual review as set
forth in Section 2.01 hereof) or (iii) such later date
as the Bank may in its absolute discretion agree to in
writing, whichever first occurs."
<PAGE> 19
(l) The definition of the term "Working Capital Ratio"
contained in Section 1.01 of the Agreement is hereby deleted in
its entirety.
(m) Section 2.01 of the Agreement shall be amended by
the addition at the end thereof of the following additional
paragraph:
"At the option of the Bank, in its sole and
absolute discretion, the Revolving Period shall
terminate on April 30, 1997. The Borrower may,
however, request an extension of the Revolving Period
for twelve (12) additional months by submitting a
written request therefor to the Bank no later than
February 29, 1997. The Bank will give written notice
to the Borrower not more than forty-five (45) Days
after receipt of the request for extension from the
Borrower stating whether the Bank has consented to the
extension and, if it has, specifying the new
termination date of the Revolving Period."
(n) Section 2.02 of the Agreement shall be deleted in
its entirety and the following substituted in lieu thereof:
"SECTION 2.02 Advances on the Loan. On the
Initial Advance Date, the Initial Advance was disbursed
by the Bank on behalf of the Borrower. After the date
hereof, upon continued satisfaction of the conditions
precedent set forth in Article V hereof, the Borrower
shall be entitled to obtain Subsequent Advances
hereunder. The Borrower shall give the Bank written
notice (or facsimile transmission, fax number (407)
237-4076, immediately confirmed by telephone, telephone
number (407) 237-6788 and further confirmed by sending
the original notice to the Bank so that the same is
received by the Bank no later than three (3) Banking
Days after the date of the facsimile transmission) (a
"Notice of Borrowing"), such Notice of Borrowing to be
given prior to 11:00 a.m. Orlando, Florida time and
such Notice of Borrowing to be in the form as set forth
in Exhibit "C" attached hereto or in such other form as
may be acceptable to the Bank in its sole and absolute
discretion and which shall specify (i) the proposed
date of the Advance (which shall be a Banking Day),
(ii) the amount of the proposed borrowing, (iii)
whether the proposed borrowing shall be a LIBOR Loan or
a Prime Rate Loan, (iv) the requested Interest Period
for a LIBOR Loan and (v) that on the date of the Notice
of Borrowing, there has been no material adverse change
in the financial condition of the Borrower from that
set forth on the most recent annual financial
statements furnished to the Bank as provided in Section
4.01(a). The Notice of Borrowing shall be irrevocable
by the Borrower on or after the related Interest Rate
Determination Date and the Borrower shall be bound to
make a borrowing in accordance therewith. The Bank
shall have no duty or obligation to verify or confirm
the authority of the representative of the Borrower
requesting such Advance as long as said person
identifies himself/herself as an employee or
representative of the Borrower. The Bank shall make
each Subsequent Advance hereunder in such manner as may
be mutually agreed by the Bank and the Borrower and on
the date proposed by the Borrower therefor. Each
request for an Advance shall be deemed to restate and
verify all representations of the Borrower made herein
as of the date of such request.
Loans consisting of LIBOR Loans which are unpaid
upon the expiration of the Interest Period applicable
thereto and with respect to which Borrower has not advised
<PAGE> 20
Bank in writing (a "Notice of Conversion/
Continuation") as provided in Section 2.05 hereof and
received by the Bank within the times provided in
Section 2.05 prior to the expiration of such Interest
Period that it has elected to continue such Loans as
LIBOR Loans or continue the Interest Period applicable
to such Loans shall, effective as of the first Day
after the expiration of such Interest Period, accrue
interest at the rate determined by reference to the
Prime Rate, determined in accordance with Section 2.03
hereof. Thereafter, subject to the limitations set
forth in Section 2.05 hereof, the Borrower may, by
giving Bank an appropriate Notice of Conversion/
Continuation, together with the requested Interest
Period, elect to convert such Loans to LIBOR Loans for
the selected Interest Period at a date designated by
the Borrower which date shall be no earlier than a date
two (2) Banking Days after the receipt by the Bank of
such Notice of Conversion/Continuation."
(o) Section 2.03 of the Agreement shall be deleted in
its entirety and the following substituted in lieu thereof:
"SECTION 2.03 Interest on the Loan.
(a) Rate of Interest. Loans shall bear interest
on the unpaid principal amount thereof from the date
made through maturity (whether by acceleration or
otherwise), except when the Default Rate is in effect,
at a rate determined by reference to the Prime Rate or
LIBOR and shall be payable as set forth in Section 2.08
hereof. The applicable basis for determining the rate
of interest shall be selected by Borrower, at the time
the Notice of Borrowing is given pursuant to Section
2.02 hereof or at the time a Notice of Conversion/
Continuation is given pursuant to Section 2.05 hereof.
If on any Day a Loan is outstanding with respect to
which such a notice has not been delivered to Bank in
accordance with the terms of this Agreement specifying
the basis for determining the rate of interest, then
for that Day that Loan shall bear interest at the rate
determined by reference to the Prime Rate, determined
in accordance with this Section 2.03. The Loans shall
bear interest at a rate per annum which shall fluctuate
based on the Borrower's EBIT Ratio ("EBIT") and Total
Liability to Tangible Net Worth Ratio ("TL/TNW"), as
determined by the Bank quarterly, as follows:
(i) if a Prime Rate Loan, then at a
fluctuating rate per annum equal to the Prime Rate
plus or minus the number of basis points indicated
on the following interest rate grid; or
(ii) if a LIBOR Loan, then at a rate per
annum equal to the sum of LIBOR plus the number of
basis points indicated on the following interest
rate grid:
<TABLE>
<CAPTION>
T L/T NW
----------------------------------------
<S> <C> <C> <C> <C>
E >2.5:1 .5:1 TO 2.0: <2.0:1
================================================
B >3.5:1 L + 225 L + 200 L + 150
I P + 25 P + 0 P - 50
================================================
T <=3.5:1 L + 250 L + 225 L + 175
P + 50 P + 25 P - 25
================================================
</TABLE>
<PAGE> 21
Notwithstanding the foregoing, however, until June 30,
1995, so long as no Event of Default has occurred
hereunder or under any of the other Loan Documents,
the interest rate on LIBOR Loans shall be LIBOR plus
200 basis points (2.00%). For purposes of determining
the applicable Interest Rate, the Borrower's EBIT Ratio
and Total Liability to Tangible Net Worth Ratio shall
be calculated by the Bank quarterly, on a rolling four
(4) quarter basis based upon the Borrower's quarterly
financial statements, beginning with the Borrower's
statement for the period ending June 30, 1995, with any
change in the applicable Interest Rate to be effective
as of the first Day of the second quarter following the
date of the financial statements reflecting such change
in the Borrowers' EBIT Ratio or Total Liability to
Tangible Net Worth Ratio, as the case may be.
From and after the Due Date, interest shall accrue
on the unpaid principal balance of the Loan and on all
accrued but unpaid interest thereon, or on such
defaulted payment, from the Due Date at the Default
Rate. Such interest shall continue to accrue until the
date of payment in full of all principal and accrued
but unpaid interest of such defaulted payment, if
applicable.
(b) Calculation of Interest. Any interest due
on the Loan or any other Obligation shall be calculated
on the basis of a year containing 360 Days. The
interest due on any date for payment of interest
hereunder shall be that interest to the extent accrued
as of midnight on the last Day immediately prior to
that Interest Payment Date. Notwithstanding anything
herein or in any Loan Document to the contrary, the sum
of all interest and all other amounts deemed interest
under Florida or other applicable law which may be
collected by the Bank hereunder shall not exceed the
maximum lawful interest rate permitted by such law from
time to time. The Bank and the Borrower intend and
agree that under no circumstance shall the Borrower be
required to pay interest on the Loan or on any other
Obligations at a rate in excess of the maximum interest
rate permitted by applicable law from time to time, and
in the event any such interest is received or charged
by the Bank in excess of that rate, the Borrower shall
be entitled to an immediate refund of any such excess
interest by a credit to and payment toward the unpaid
balance of the Loan (such credit to be considered to
have been made at the time of the payment of the excess
interest) with any excess interest not so credited to
be immediately paid to the Borrower by the Bank."
(p) Section 2.05 of the Agreement shall be deleted in
its entirety and the following substituted in lieu thereof:
"SECTION 2.05 Interest Payments. Interest shall
be payable on each Loan on each Interest Payment Date
applicable to that Loan, upon any permitted prepayment
(of that Loan to the extent accrued on the amount being
prepaid) and at maturity. The Bank will endeavor to
notify the Borrower of interest due prior to any
Interest Payment Date.
Borrower shall deliver a Notice of Conversion/
Continuation to Bank no later than 11:00 A.M. Orlando,
Florida time, at least one Banking Day prior to the
proposed date of such conversion/continuation for a
Prime Rate Loan or at least two Banking Days prior to
the proposed date of such conversion/continuation for a
LIBOR Loan. A Notice of
<PAGE> 22
Conversion/Continuation shall
be in the form of Exhibit "D" attached hereto or such
other form and content as may be acceptable to the Bank
in its sole and absolute discretion and shall be
delivered to the Bank and shall specify (i) the
proposed conversion/continuation date (which shall be a
Banking Day), (ii) the amount of the Loan to be
converted/continued, (iii) the nature of the proposed
conversion/continuation, and (iv) in the case of a
conversion to, or continuation of, a LIBOR Loan the
requested Interest Period. In lieu of delivering the
above-described Notice of Conversion/Continuation,
Borrower may give Bank such notice by facsimile
transmission, fax number (407) 237-4076, by the
required time of any proposed conversion/continuation
under this Section 2.05; provided, however, that such
facsimile transmission is immediately confirmed by
telephone, telephone number (407) 237-6788 and further
confirmed by sending the original Notice of Conversion/
Continuation to the Bank so that the same is received
by the Bank no later than three (3) Banking Days after
the date of the facsimile transmission; and further
provided that no outstanding Loan may be continued as,
or be converted into, a LIBOR Loan when any Event of
Default has occurred and is continuing.
The Bank shall incur no liability to Borrower in
acting upon any telephonic notice referred to above or
for otherwise acting under this Section 2.05 and upon
conversion/continuation by Bank in accordance with this
Agreement pursuant to any telephonic notice, Borrower
shall have effected Loans hereunder.
Any Notice of Conversion/Continuation for
conversion to, or continuation of, a LIBOR Loan (or
telephonic notice in lieu thereof) shall be irrevocable
by Borrower on or after the related Interest Rate
Determination Date and Borrower shall be bound to
convert or continue in accordance therewith."
(q) Section 2.08 of the Agreement shall be deleted in
its entirety and the following substituted in lieu thereof:
"SECTION 2.08 Payments on the Note. Accrued
interest shall be payable on the Loans on each Interest
Payment Date, upon any prepayment (of the Loan to the
extend accrued on the amount being prepaid) and at
maturity (whether by acceleration or otherwise). The
entire unpaid principal balance, together with accrued
interest, shall mature and be due and payable in full
at the end of the Revolving Period. If any payment of
principal or interest on the Note shall become due on a
Saturday, Sunday or a Day which is not a Banking Day,
such payment shall be due on the next succeeding
Banking Day and such extension of time shall in such
case be included in computing interest in connection
with such payment."
(r) Section 2.10 is hereby added to the Agreement, as
follows:
"SECTION 2.10 Release of Collateral. The Bank
shall release its Security Interest in the Collateral
when (a) the Borrower's Total Liability to Tangible Net
Worth Ratio is less than 1.9:1 and (b) the Borrower's
EBIT Ratio exceeds 3.5:1, as reflected in Borrower's
audited fiscal year end financial statements for any
fiscal year provided to the Bank pursuant to Section
4.01(a) hereof. At such time as the Bank releases its
lien on such Collateral, (a) the Borrower shall grant a
"negative pledge" as to such Collateral to
<PAGE> 23
the Bank and shall promptly execute any documents requested
by the Bank to evidence such negative pledge and (b) the Total
Liability to Tangible Net Worth Ratio requirement shall
be changed to 2.0:1 for the remaining term of this
Agreement."
(s) Section 2.11 is hereby added to the Agreement, as
follows:
"SECTION 2.11 Special Provisions Governing LIBOR
Loans. Notwithstanding other provisions of this
Agreement, the following provisions shall govern with
respect to LIBOR Loans as to the matters covered:
(a) Determination of Interest Period. By giving
notice as set forth in Sections 2.03 and/or 2.05
Borrower shall have the option, subject to the other
provisions of this Section 2.11, to specify the
Interest Period commencing on any such date, provided,
that:
(i) in the case of immediately successive
Interest Periods, each successive Interest Period
shall commence on the Day on which the next
preceding Interest Period expires;
(ii) if any Interest Period would otherwise
expire on a Day which is not a Banking Day, that
Interest Period shall be extended to expire on the
next succeeding Banking Day; provided, that if any
such Interest Period would otherwise expire on a
Day which is not a Banking Day but is a Day of the
month after which no further Banking Day occurs in
that month, that Interest Period shall expire on
the next preceding Banking Day; and
(iii) any Interest Period which begins on
the last Banking Day of a calendar month (or on a
Day for which there is no numerically
corresponding Day in the calendar month at the end
of such Interest Period) shall end on the last
Banking Day of a calendar month.
(b) Determination of Interest Rate. As soon as
practicable after 11:00 A.M. Orlando, Florida time, on
the Interest Rate Determination Date, Bank shall
determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all
parties) the Interest Rate which shall apply to the
LIBOR Loans for which an Interest Rate is then being
determined for the applicable Interest Period and shall
promptly give notice thereof (in writing or by
telephone confirmed in writing) to Borrower."
(t) Section 2.13 of the Agreement is hereby deleted in
its entirety and the Borrower shall not have the right to request
any overline credit Advance in excess of the Commitment for the
remaining term of the Agreement.
(u) Section 4.01(a) is hereby amended by the addition
at the end thereof of the following paragraphs (v) and (vi):
"(v) as soon as practicable and in any event
within thirty (30) Days after the end of each calendar
month, or more often, if requested by the Bank, a
Borrowing Base Certificate.
<PAGE> 24
(vi) as soon as practicable and in any event
within seventy-five (75) Days after the end of each
quarter of the Borrower's fiscal year, an accounts
receivable aging report, in reasonable detail and in
form and substance satisfactory to the Bank and
certified to the Bank by an authorized financial
officer of the Borrower."
(v) Section 4.01(q) of the Agreement shall be deleted
in its entirety and the following substituted in lieu thereof:
"(q) EBIT Ratio. During the term of this
Agreement, the Borrower's EBIT Ratio shall equal or
exceed 2.5:1, tested quarterly."
(w) Section 4.01(s) of the Agreement shall be deleted
in its entirety and the following substituted in lieu thereof:
"(s) Total Liability to Tangible Net Worth Ratio.
During the term of this Agreement, the Borrower's Total
Liability to Tangible Net Worth Ratio shall not exceed
(i) 2.5:1 until such time as the Bank releases its lien
on the Collateral, and (ii) 2.0:1 at all times
thereafter, tested annually."
(x) Section 4.01(t) of the Agreement shall be deleted
in its entirety and the following substituted in lieu thereof:
"(t) RESERVED."
(y) Section 4.01(u) of the Agreement shall be deleted
in its entirety and the following substituted in lieu thereof:
"(u) Minimum Tangible Net Worth. During the term
of this Agreement, the Borrower's Tangible Net Worth
shall be at least $24,500,000.00 through April 30,
1995, tested annually, which minimum requirement shall
increase each fiscal year thereafter during the term of
this Agreement by an amount at least equal to thirty-
three percent (33%) of the Borrower's net profit as at
the conclusion of such fiscal year."
(z) Section 4.01(v) of the Agreement shall be deleted
in its entirety and the following substituted in lieu thereof:
"(v) RESERVED."
(aa) Section 4.01(z) of the Agreement shall be deleted
in its entirety and the following substituted in lieu thereof:
"(z) Current Ratio. During the term of this
Agreement, the Borrower's Current Ratio shall be equal
to or greater than 1.15:1, tested quarterly."
2. Amendments to the Security Agreement. The Security
Agreement is hereby amended as follows:
<PAGE> 25
(a) The definition of "Loan Agreement" contained in
Section 1 of the Security Agreement shall be deleted in its
entirety and the following substituted in lieu thereof:
"'Loan Agreement' shall mean that certain
Amended and Restated Loan Agreement dated October
13, 1992 entered into by and between the Debtor
and the Secured Creditor, and any and all
amendments, modifications, restatements or
replacements thereof."
(b) The definition of "Promissory Note" contained in
Section 1 of the Security Agreement shall be deleted in its
entirety and the following substituted in lieu thereof:
"'Promissory Note' shall mean that certain Second
Reduced Renewal Promissory Note executed by the Debtor
in favor of the Secured Creditor dated May 8, 1995, in
the face amount of $30,000,000.00, and any and all
amendments, supplements, renewals or replacements
thereof."
3. Capitalized Terms. All capitalized terms contained,
but not otherwise defined herein, shall have the meanings
assigned to them in the Agreement or the Security Agreement, as
the case may be, unless the context hereof clearly dictates
otherwise.
4. Representations and Warranties. The Borrower hereby
reaffirms all of the representations and warranties contained in
the Agreement and the Security Agreement as though made and given
in connection with the execution and delivery of this Second
Amendment and further certifies that all such representations and
warranties are true and correct on and as of the date hereof.
5. Ratification. Except for any modification of and/or
amendment to the Agreement and the Security Agreement as herein
provided, no other term, condition or provision of the Agreement
or the Security Agreement shall be considered to be altered or
amended, the Agreement and the Security Agreement, as amended
hereby, shall remain in full force and effect and this Second
Amendment shall not be considered a novation. The Borrower and
the Subsidiary acknowledge and agree that the amounts extended by
the Bank to the Borrower hereunder are absolutely and
unconditionally due and owing to the Bank and are not subject to
any claims, counterclaims, defenses or other rights of offset
whatsoever. The Borrower and the Subsidiary further acknowledge
and agree that the Agreement, the Security Agreement and the
other Loan Documents are, as of the date hereof, valid and
enforceable in accordance with their respective terms and are not
subject to any claims, counterclaims, defenses or other rights of
offset whatsoever.
6. Complete Agreement. This Second Amendment constitutes
the complete agreement between the parties hereto and
incorporates all prior discussions, agreements and
representations made in regard to the matters set forth herein.
7. Conflict with Agreement. In the event of conflict
between the terms of the Agreement and the terms of any of the
other Loan Documents, the terms of the Agreement shall govern in
all instances.
IN WITNESS WHEREOF, the Bank and the Borrower have caused
this Second Amendment to be executed by their respective duly
authorized officers as of the date first above written.
<PAGE> 26
ATTEST DAVIS WATER & WASTE INDUSTRIES, INC.
/s/ Stan White By:/s/ R. Doyle White
--------------------- ---------------------
Stan White Name: R. Doyle White
---------------------, ---------------------
Secretary Title: President
(CORPORATE SEAL)
SUN BANK, NATIONAL ASSOCIATION
By: /s/ J. Anthony Ross
__________________________
J. Anthony Ross
Vice President
<PAGE> 27
<PAGE>
JOINDER AND CONSENT OF SUBSIDIARY
The undersigned Subsidiary of the Borrower, by execution of
this Joinder, hereby joins in and consents to all matters set
forth in the foregoing Second Amendment to Loan Agreement
pertaining to or otherwise affecting such Subsidiary under the
Agreement and does hereby ratify and affirm its duties and
obligations under the Agreement, as amended, and agrees to be
bound by the terms thereof.
DATED as of this 8th day of May, 1995.
ATTEST THE TAULMAN COMPANY
/s/ Stan White By:/s/ R. Doyle White
------------------------------ ----------------------
Stan White Name: R. Doyle White
------------------------------ ----------------------
Secretary Title: President
(CORPORATE SEAL)
<PAGE> 28
<PAGE>
EXHIBIT "C"
Notice of Borrowing
Sun Bank, National Association
Corporate Banking/Florida Division
200 So. Orange Avenue
Orlando, Florida 32801
Attn: Mr. Tony Ross
Vice President
Re: Advances under that certain Amended and Restated Loan
Agreement by and between Davis Water & Waste Industries, Inc.
(the "Borrower") and Sun Bank, National Association (the "Bank")
The undersigned, duly authorized officer of the Borrower
hereby furnishes the Bank a "Notice of Borrowing" and specifies
that:
1. The date the Advance is requested (which shall be a
Banking Day) is _________________.
2. The amount of the proposed borrowing is $__________.
3. This is a request for a _____________ Loan (insert
"LIBOR" or "Prime Rate"). If a LIBOR Loan, the requested
Interest Period is _______________ (insert 1 Day, 1 month or 3
months).
4. The Advance requested hereby under the above referenced
Loan Agreement shall be made by the Bank
______________________________________.
5. That as of the date hereof there has been no material
adverse change in the financial condition of the Borrower from
that set forth in the most recent annual financial statements
furnished to the Bank.
As used herein, the terms "Advance," "Banking Day," "Day,"
"Interest Period," "LIBOR" and "Prime Rate" shall have the
respective meanings assigned to such terms in the above-
referenced Loan Agreement.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Notice of Borrowing as of the 8th day of May,
1995.
DAVIS WATER & WASTE INDUSTRIES, INC.
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE> 29
<PAGE>
EXHIBIT "D"
Notice of Conversion/Continuation
Sun Bank, National Association
Corporate Banking/Florida Division
200 So. Orange Avenue
Orlando, Florida 32801
Attn: Mr. Tony Ross
Vice President
Re: Advances under that certain Amended and Restated Loan
Agreement by and between Davis Water & Waste Industries, Inc.
(the "Borrower") and Sun Bank, National Association (the "Bank")
The undersigned duly authorized officer of the Borrower,
hereby furnishes the Bank a "Notice of Conversion/Continuation"
and specifies that:
1. The requested conversion/continuation date (which shall
be a Banking Day) is ____________________.
2. (a) This is a request for a conversion to a
__________________ Loan (insert "LIBOR" or "Prime Rate") or (b)
This is a requested continuation of a ________________________
Loan (insert "LIBOR" or "Prime Rate"). (Complete only
subparagraph (a) or (b), whichever is applicable)
3. If this request is a conversion to, or a continuation
of a LIBOR Loan, the requested Interest Period is _______________
(insert 1 Day, 1 month or 3 months).
4. The amount of the borrowing subject to the Notice of
Conversion/Continuation is $______________.
As used herein, the terms "Banking Day," "LIBOR," "Prime Rate,"
"Interest Period" and "Day" shall have the respective meanings
assigned to such terms in the above-referenced Loan Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Notice
of Conversion/Continuation as of the ____ day of _________, 199_.
DAVIS WATER & WASTE INDUSTRIES, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE> 30
<PAGE>
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT (the "First
Amendment") dated as of the 8th day of May, 1995, is entered into
by and between THE TAULMAN COMPANY, a Georgia corporation, 415 E.
Paces Ferry Road, N.E., Atlanta, Georgia 30335 (the "Debtor")
and SUN BANK, NATIONAL ASSOCIATION, a national banking
association, 200 South Orange Avenue, Orlando, Florida 32801
(the "Secured Creditor").
WITNESSETH:
WHEREAS, the Debtor and the Secured Creditor heretofore
entered into that certain Security Agreement dated October 13,
1992 (the "Security Agreement"), pursuant to which the Debtor
pledged certain collateral to the Secured Creditor as security
for a certain revolving line of credit loan (the "Loan") extended
to DAVIS WATER & WASTE INDUSTRIES, INC., a Georgia corporation
(the "Borrower") pursuant to that certain Amended and Restated
Loan Agreement dated October 13, 1992, as amended by a First
Amendment dated as of July 20, 1994 and as further amended by a
Second Amendment dated the date hereof, all by and between the
Borrower and the Bank (as amended, the "Loan Agreement"); and
WHEREAS, the Borrower has requested the Bank to renew,
extend and modify the Loan secured by the Security Agreement and
to amend the Loan Agreement; and
WHEREAS, the Bank is unwilling to so renew, extend and
modify the Loan and amend the Loan Agreement unless the Loans
continue to be secured by the Security Agreement; and
WHEREAS, it is in the best interests of the Debtor that the
Loan be so renewed, extended and modified and the Loan Agreement
be so amended; and
WHEREAS, in connection therewith the Debtor and the Secured
Creditor desire and have agreed to amend certain provisions of
the Security Agreement;
NOW, THEREFORE, for and in consideration of the mutual
premises contained herein and for other good and valuable
consideration, the receipt and sufficiency whereof are hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Amendments to the Security Agreement. The Security
Agreement is hereby amended as follows:
(a) The definition of the term "Loan Agreement" contained in
Section 1 of the Security Agreement, is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"'Loan Agreement' shall mean that certain Amended and
Restated Loan Agreement dated October 13, 1992 by and between the
Borrower and the Bank, and any and all future amendments,
modifications, restatements or replacements thereof."
<PAGE> 31
<PAGE>
(b) The definition of the term "Promissory Note" contained in
Section 1 of the Security Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"'Promissory Note' shall mean that certain Second
Reduced Renewal Promissory Note executed by the Debtor in favor
of the Secured Creditor dated May 8, 1995, in the face amount of
$30,000,000.00, and any and all amendments, supplements, renewals
or replacements thereof."
2. Representations and Warranties. The Debtor hereby reaffirms
all of the representations and warranties contained in the
Security Agreement as though made and given in connection with
the execution and delivery of this First Amendment and further
certifies that all such representations and warranties are true
and correct on and as of the date hereof.
3. Ratification. Except for any modification of and/or
amendment to the Security Agreement as herein provided, no other
term, condition or provision of the Security Agreement shall be
considered to be altered or amended, and this First Amendment
shall not be considered a novation. The Debtor agrees that the
amounts extended by the Secured Creditor to the Borrower under
the Loan Agreement are absolutely and unconditionally due and
owing to the Secured Creditor, and are not subject to any claims,
counterclaims, defenses or other rights of offset whatsoever and
continue to be secured by the Security Agreement.
4. Complete Agreement. This First Amendment constitutes the
complete agreement between the parties hereto and incorporates
all prior discussions, agreements and representations made in
regard to the matters set forth herein.
5. Capitalized Terms. Capitalized terms used in this First
Amendment shall have the meanings assigned to them in the
Security Agreement unless the context hereof clearly dictates
otherwise.
IN WITNESS WHEREOF, the Debtor has executed this First
Amendment as of the date first above written.
ATTEST THE TAULMAN COMPANY
/s/ Stan White By:/s/ R. Doyle White
----------------------------- ----------------------
Stan White Name: R. Doyle White
-----------------------------, ----------------------
Secretary Title: President
SUN BANK, NATIONAL ASSOCIATION
By:/s/ J.Anthony Ross
____________________________
J. Anthony Ross,
Vice President
<PAGE> 32
<PAGE>
EXHIBIT 11
DAVIS WATER & WASTE INDUSTRIES, INC.
COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
July 31,
---------------------------
1995 1994
---------- ----------
<S> <C> <C>
Net income $1,162,298 $ 517,618
========== ==========
Number of shares used in calculation of per
share data:
Weighted average number of common shares
outstanding during the period 3,242,456 3,260,292
Add common equivalent shares (determined by
the treasury stock method) composed of
shares issuable upon award of performance
shares or exercise of stock options -0- -0-
--------- ---------
Weighted average number of shares used in
calculating net income per share 3,242,456 3,260,292
========= =========
Net income $ 0.36 $ 0.16
======= =======
</TABLE>
<PAGE> 33
