FORM 10-K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended March 31, 1996
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File #0-12293
CANISCO RESOURCES, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE No. 54-0952207
(State of Incorporation) IRS Employer Identification
300 Delaware Avenue, Wilmington, Delaware 19801
(Address of Principal Executive Offices and Zip Code)
Registrant's Telephone Number, Including Area Code
(215) 729-4600
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 $.0025 Per Share
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of the
registrant's knowledge, in the definitive proxy or
information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value held by non-affiliates of the
registrant as of March 31, 1996:
Common Stock, par value $.0025 per share $4,599,108
The number of shares outstanding as of the close of business
on March 31, 1996, was 2,169,190 shares of Common Stock,
par value $.0025 per share.
CANISCO RESOURCES, INC.
1996 Form 10-K Annual Report
Table of Contents
PART I
Item 1. Business 3
Item 2. Properties 10
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters 12
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 8. Financial Statements and Supplementary Data 18
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure 39
PART III
Item 10. Directors and Executive Officers of the Registrant 39
Item 11. Executive Compensation 39
Item 12. Security Ownership of Certain Beneficial Owners and
Management 39
Item 13. Certain Relationships and Related Transactions 39
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 40
DOCUMENTS INCORPORATED BY REFERENCE
Portions of registrant's definitive Proxy Statement for
the Annual Meeting of Shareholders on August 13, 1996, are
incorporated into Part III as set forth herein.
PART I
ITEM 1 BUSINESS
Canisco Resources, Inc. (stock symbol "CANR"), a Delaware
corporation was founded in 1996 as the successor by merger
to Nuclear Support Services, Inc. (NSSI or the Company) and
NSS of Delaware, Inc. Shareholder approval for the merger of
NSSI and NSS of Delaware into Canisco Resources, Inc. was granted
at a special meeting of shareholders held March 29, 1996. This
merger was also effected pursuant to the Company's Amended Joint
Plan of Reorganization which was confirmed by the United States
Bankruptcy Court for the Middle District of Pennsylvania,
Harrisburg on April 24, 1996.
Nuclear Support Services, Inc. was organized in 1973 as a
Virginia business corporation. It provided a variety of
services to power generation, pulp and paper, petro-chemical,
refining and other industries. The Company's principal
business was providing technical support personnel on an
"as needed" basis to assist in the maintenance and operation
of power generation facilities, and to a lesser extent,
providing valve repair and maintenance services to power
generation, pulp and paper and petro-chemical customers.
NSSI's servicing capabilities were expanded in fiscal
1994 with addition of surface preparation, specialty coatings
industrial cleaning services which were provided to
the Company's traditional markets and other industries.
From 1987 through 1989, the Company acquired companies
which provided valve services to power generation, petro-
chemical and refining industries, including maintenance of
valves and valve actuators and diagnostic testing of motor-
operated valves. These operations were consolidated under
Henze-Movats, Incorporated (Henze-Movats) in order to provide
a total range of valve services for the operability and
reliability of valves in power plants and processing facilities.
Effective December 31, 1990, the Company sold to Westinghouse
Electric Corporation (Westinghouse) the nuclear portion of the
valve diagnostic, actuator and valve maintenance operations of
its subsidiary, Henze-Movats, in exchange for cash and portions
of Westinghouse's staff augmentation businesses (Numanco and the
nuclear field services operations of WISCO). As part of this
transaction, the Company entered into a Supply Agreement with
Westinghouse by which the Company, among other things, was
designated preferred supplier for certain staff augmentation
services to Westinghouse's Nuclear Service Division.
Numanco supplied nuclear staff augmentation services,
primarily in the areas of radiation protection and
decontamination. The WISCO operations supplied nuclear
instrumentation, electrical and mechanical staff augmentation
services through the Company's traditional manpower operations.
In April 1992, those operations and Numanco were consolidated
and renamed NSS Numanco, Inc. (NSS Numanco), headquartered in
Hershey, Pennsylvania which provided all these services as a
single unit. As part of the restructuring and reorganization,
NSS Numanco, Inc. was sold to Nuvest, L.L.C. of Tulsa, Oklahoma
pursuant to the Company's Amended Joint Plan of Reorganization.
The sale was effective February 25, 1996.
The non-nuclear valve and actuator operations, renamed
Henze Services, Inc., (Henze) remained part of the Company
until June of 1996 when substantially all the assets of
Henze Services, Inc. were sold to Harley Industries, Inc.
of Tulsa, Oklahoma. This divestiture was also effected pursuant
to the Company's Amended Joint Plan of Reorganization.
In June 1993, the Company created a new subsidiary,
IceSolv, Inc. (IceSolv) to provide dry ice blasting
services to nuclear, electrical, commercial and other
general industries. IceSolv utilizes state of the art
equipment for decontamination, cleaning and preparation
of surfaces. Icesolv, Inc. remains an operating subsidiary
under the reorganization and restructuring plans.
Effective October 1, 1993, NSSI acquired two companies, Oliver B.
Cannon & Son, Inc. and Sline Industrial Painters, Inc., marketed
together as Cannon Sline. Cannon Sline provides surface
preparation, specialty coatings and related services to power
generation, pulp and paper, marine and other general industries
across the United States. These two companies were merged in May
of 1996 pursuant to the Company's Amended Joint Plan of Reorganization.
The surviving entity is Cannon Sline, Inc. a Pennsylvania corporation
Cannon Sline, Inc. remains an operating subsidiary under the
reorganization and restructuring plans.
In March 1995, the Company commenced a restructuring plan
which included increased emphasis on its more profitable
lines of business and a shift in focus from staff augmentation
to contract services.
In the first week of September 1995, the Company and its
subsidiaries filed voluntary bankruptcy petitions under
Chapter 11 Reorganization in the U.S. Bankruptcy Court for
the Middle District of Pennsylvania in Harrisburg which are
jointly administered at Case Number 1-95-1767. This action
became necessary to gain access to the Company's own cash for
continued operations when its participant lender refused to
continue funding its working capital line. The Company
obtained debtor in possession financing with its agent lender
and continued to operate as debtor in possession.
On January 31, 1996, the Company filed its Joint Plan of
Reorganization. An Amended Joint Plan of Reorganization
was filed and confirmed by the Court on April 24, 1996.
On June 28, 1996 the Company met all the requirements of
the Amended Plan by executing the necessary banking documents
for securing exit financing. The Effective Date for the Company's
exit from bankruptcy was July 1, 1996.
The current structure of Canisco Resources, Inc. reflects
these changes that were effected pursuant to the restructuring
plan initiated in 1995 and the reorganization in bankruptcy.
MARKETS AND SERVICES FOR CANISCO RESOURCES
Canisco Resources, Inc. is an integrated service company
which provides a range of maintenance services on an as-
needed basis to power generation and process industries,
government facilities and major industries in the United
States through the Company's operating subsidiaries.
Services are provided on a contract service basis.
Contract services involve contracting for the accomplishment
of defined tasks for the customer with supervision retained
by the Company's operating subsidiary. Staff augmentation
services entail providing qualified manpower to work under the
direction of the customer. For fiscal year 1996,
contract services accounted for seventy-three percent (73%) of
revenue compared to sixty-five percent (65%) in fiscal year
1995 and fifty-eight percent (58%) in fiscal year 1994.
Power Generation Market
The power generation industry was the primary market for
the Company's services in fiscal year 1996. Forty-seven
percent (47%) of consolidated revenues was attributable
to nuclear, fossil fuel, hydro-electric and other customers
whose operations involve the production of electricity.
This is a reduction from fifty-one percent (51%) in fiscal
year 1995 and sixty-three percent (63%) in fiscal year 1994.
Much of the business performed in this market occurs during
scheduled or unscheduled shutdowns of commercial power
generation facilities. The Company provides a wide range
of services to this industry including: staff augmentation
in areas of radiological protection; decontamination;
mechanical, instrumentation and electrical maintenance;
professional services and contract services which includes
cleaning, surface preparation, decontamination, painting,
specialty coatings and linings and identification systems.
Petro-chemical and Refining Market
Twenty-one percent (21%) of the Company's revenues in fiscal
year 1996 was generated from clients in the petro-chemical
and refining industry which includes chemical, crude oil and
natural gas processing compared to eighteen percent (18%) in
fiscal year 1995 and fifteen percent (15%) in fiscal year 1994.
The Company provides contract services to this industry primarily
consisting of specialty cleaning, surface preparation, painting,
specialty coating and linings and identification systems services.
Pulp and Paper Market
Pulp and paper facilities serviced by the Company include
mills and production plants whose primary operations involve
the production of paper, paperboard and pulp. Of the Company's
consolidated revenues in fiscal year 1996, eighteen percent (18%)
was generated from customers in this industry compared to fifteen
percent (15%) in fiscal year 1995 and thirteen percent (13%) in
fiscal year 1994. The Company provides contract services to this
industry, substantially the same as provided to the Petro-chemical
and Refining Industry.
Other Markets Served
The Company provides services to government-owned and operated
facilities as well as automotive, metals and mining, textiles,
marine and printing industries. No one of these industries is
a significant part of the Company's business. The Company
provides contract services and staff augmentation in these
industries similar to those offered in the power, pulp and
paper and petro-chemical industries. Fourteen percent (14%)
of the Company's consolidated revenues during fiscal year 1996
were generated from services provided to this group of
industries compared to sixteen percent (16%) in fiscal year
1995 and nine percent (9%) in fiscal year 1994.
The Company's business is impacted by seasonal sensitivity.
Historically, spring through fall are the busiest time with
the winter months being slowest. The Company's assets are
not assigned to a particular market.
COMPETITION
In the contract services area the Company's subsidiaries
compete with approximately one hundred (100) national and/or
regional competitors. Price, quality and customer service are
the governing factors. The major competitive factors in staff
augmentation services are price, quality of service, flexibility,
and availability and capability of a company's personnel. The
Company competes for contracts with approximately twenty-five
specialized engineering and service firms, several of which have
greater financial resources than the Company. Additionally,
there are numerous smaller regional competitors.
CLIENTS
The Company's clients consist primarily of electric utilities,
major oil companies, paper companies and other suppliers.
Because of the nature of the services offered by the Company
and the size of the projects in which the Company is engaged,
a small number of clients often account for a significant
percentage of the Company's revenues in a given fiscal year.
In addition, cross-marketing of Canisco Resources service
capabilities has increased the potential of multiple
subsidiaries servicing the same client.
No client represented more than ten percent (10%) of
revenues in fiscal 1996. For fiscal years ended September
30, 1995 and 1994, Westinghouse Electric Corporation
accounted for sixteen percent(16%) and (12%) twelve percent
of consolidated revenues, respectively.
The Company operates primarily within the United States.
The Company has or is performing contracts in Alabama,
Arkansas, Arizona, California, Colorado, Connecticut,
Delaware, Florida, Georgia, Illinois, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts,
Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska,
New Hampshire, New Jersey, New Mexico, New York, North Carolina,
Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina,
Tennessee, Texas, Utah, Vermont, Virginia, Washington,
West Virginia, Wisconsin and Wyoming.
The Company's contracts with its clients provide for charges
for services on a time and material, fixed-price and/or
modified fixed-price basis. The time and materials contracts
generally permit the client to control the amount, type and
timing of services to be performed by the Company, and most
of the contracts permit the client to terminate the contract
at any time. The Company's clients often modify the nature
and timing of services to be performed. The fixed-price and
modified fixed-price contracts are recognized on the
percentage of completion method and are measured by the
cost to cost method.
Revenues from time and material contracts are recognized
as work progresses. Provisions for estimated losses on
uncompleted contracts are made in the period in which
losses are determined.
The Company's uncompleted contracts include both undetermined
and specific dollar contracts for services. The Company has
found that the undetermined dollar contracts are longer term
and give it more flexibility in being responsive to customers'
needs. Due to the number and nature of undetermined dollar
contracts and customer scheduling changes which may effect the
timing of contract initiation and completion, it is difficult
for management to place an exact dollar value on its present
uncompleted contracts.
INSURANCE
In addition to insurances required by statute, the Company
maintains insurance coverage for general liability. Based
on scope of operations, subsidiaries maintain environmental
and pollution liability insurance as may be applicable.
PERSONNEL
The seasonality of the business causes the employment of
the Company to vary widely throughout the year. During
the fiscal year ended March 31, 1996, the number of
personnel employed at one time by the Company fluctuated
between approximately 600 and 1,500.
Cannon Sline utilizes non-union managerial and clerical employees
and supplies union labor from the International Brotherhood of
Painters and Allied Trades (IBPAT) on an as-needed, project
by project basis. Pertinent collective bargaining agreements
between IBPAT, its district and/or its local unions and Cannon
Sline are: Collective bargaining agreements between District
Council No. 21 Brotherhood of Painters and Allied Trades, and
the Associated Master Painters and Decorators of Philadelphia
and Vicinity and Cannon Sline (expires 04/30/98); National
Power Generating Facilities Agreement between IBPAT,
AFL-CIO-CFL and Cannon Sline; Corrosion Control Agreement
in Industrial Plants between IBPAT, AFL-CIO-CFL and Cannon Sline;
Agreement between Houston Chapter Painting and Decorating
Contractors of America, Houston, Texas and the IBPAT
Local Union No. 130 and Cannon Sline; Fire-Retardant
Coatings Agreement between IBPAT, AFL-CIO-CFL and Cannon Sline;
National Tank Agreement between IBPAT, AFL-CIO-CFL and Cannon
Sline; National Rubberlining Agreement between the
International Brotherhood of Boilermakers, Iron Shipbuilders,
Blacksmiths, Forgers and Helpers, AFL-CIO and Cannon Sline;
National Bridge & Tunnel Agreement between IBPAT, AFL-CIO-
CFL and Bridge Painting Contractors and National Erectors
Association National Maintenance Agreement between IBPAT,
AFL-CIO-CFL and Cannon Sline.
Unless otherwise noted, the foregoing agreements provide
for annual renewal absent written notice. Cannon Sline
does not expect any significant difficulty in renewal of
its agreements with IBPAT or its associates.
In fiscal year 1996, Henze primarily utilized non-union
employees at all plant locations with the exception of
the Portage, Indiana facility which was subject to a
collective bargaining agreement with the United Steelworkers
Union, AFL-CIO-CLC (expires August 1996).
The following table sets forth the number of the Company's
union and non-union employees for the period indicated.
<TABLE>
<CAPTION>
Description At Fiscal Year End
<S> <C> <C> <C>
1994 1995 1996
Union Professional
and Technical Personnel 612 630 454
Non-Union Professional
and Technical Personnel 653 754 215
Clerical, Administrative,
Sales, and Management
Personnel 176 172 130
Total Personnel 1,441 1,556 799
</TABLE>
ITEM 2 PROPERTIES
The Company and its subsidiaries maintained approximately
300,000 square feet for office and shop/storage facilities.
The list below identifies facilities used by the Company and
its subsidiary companies to support contract service and staff
augmentation operation activities in all industries during
fiscal year 1996:
Many of the leases identified below are in the process of
being assigned and/or rejected pursuant to the Reorganization
plan.
5600 Woodland Ave., Philadelphia, PA, 19143 (owned)
5308 Greenway Ave., Philadelphia, PA, 19143 (parking lot-owned)
5935 South Florida Ave., Lakeland, FL, 33813 (owned)
1851 Old Bermuda Hundred Road, Chester, VA, 23831 (owned)
3200 Elliswood Road, Lake Charles, LA (owned)
6900 North Loop East, Houston, TX, 77028 (owned)
1154 South River Road, Longview, WA, 99302
(lease-expires (6/1997)
4208 West Clearwater Street, Kennewick, WA, 99302
(month to month lease)
1130 West Avenue, Cartersville, GA, 30120
(lease-expires 12/2003)
2124 East Bakerview Drive, Bellingham, WA, 98226
(lease-expires 12/1999)
1447 West 27th Street, Norfolk, VA, 23508
(lease-expires 08/1997)
4780 South 23rd Street, Beaumont, TX, 77705
(lease-expires 10/1996)
407 Old Mill Road, Cartersville, GA, 30120
(lease-expires 12/2003)
State Road 149, Burns Harbor Industrial Park, Portage, IN, 46368
(lease-expires 08/1997)
2007 East Stewart Street, Tacoma, WA, 98421
(lease-expires 01/1998)
4133 North Canal Street, Jacksonville, FL, 32209
(building owned-closed)
160 N. Forge Street, Palmyra, PA, 17078
(month to month lease)
l902 Taylors Lane, Suite C, Cinnaminson, NJ, 08077
(month to month)
22 Northeast Drive, Hershey, PA, 17033 (lease-expires 01/2005)
124 Route 6A, Sandwich, MA, 02563 (lease - month to month)
109 East Jefferson Ave., Suite 18, Oak Ridge, TN, 37830
(month to month lease)
12401 Folsom Blvd., Suite 305, Rancho Cordova, CA 95742
(month to month lease)
140 Sheldon Road, Berea, OH 44017 (month to month)
33731 Northcrest Rd., Suite 5, Atlanta, GA 30340
(month to month lease)
There are no major encumbrances on the real properties
with the exception of liens granted to the lenders on
the Philadelphia, PA; Lakeland, FL; Houston, TX; Lake
Charles, LA; Chester, VA and Jacksonville, FL properties.
ITEM 3 LEGAL PROCEEDINGS
The Company or its subsidiaries are involved in various
claims and legal actions arising in the ordinary course
of business. In the opinion of management, the ultimate
disposition of these matters will not have a material
adverse effect on the Company's consolidated financial position.
On November 25, 1994, NSSI filed suit against Westinghouse
Electric Corporation in the Dauphin County, Pennsylvania
Court of Common Pleas alleging the breach by Westinghouse
of various terms of the Asset Purchase Agreement and related
Supply Agreement dated January 7, 1991. Westinghouse
subsequently filed a separate action seeking declaratory
judgment regarding interpretation of the provisions of the
Supply Agreement. On or about May 31, 1996, the parties
entered into a settlement agreement as to all claims
in both these actions. Pursuant to the terms of the
settlement agreement, both parties are in the process
of filing dismissals with prejudice.
On September 1, 1995, Oliver B. Cannon & Son, Inc., a
wholly owned subsidiary of the Company (Nuclear Support
Services, Inc.), filed a voluntary petition under Chapter
11 of the Bankruptcy Code. On September 5, 1995, the
Company and its other subsidiaries also filed for protection
under Chapter 11. Those subsidiaries are Sline Industrial
Painters, Inc., NSS Numanco, Inc., NSS of Delaware, Inc.,
IceSolv, Inc., and Henze Services, Inc. All cases were
filed in the United States Bankruptcy Court for the Middle
District of Pennsylvania in Harrisburg. A number of first
day orders were presented to the Court, including
an order allowing joint administration under the style
and case of the parent, Nuclear Support Services, Inc. at
case number 1-95-01767. From the dates of the petitions,
all of the debtors continued to operate their business as
debtors in possession under Section 1107 (a) of the
Bankruptcy Code. On January 31, 1996, the Company filed
its Joint Plan of Reorganization.
An Amended Joint Plan of Reorganization was filed and
confirmed by the Court on April 24, 1996. On June 28, 1996
the Company met all the requirements of the Amended Plan by
executing the necessary banking documents for securing exit
financing. The Effective Date for the Company's exit from
bankruptcy was July 1, 1996.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Stock Highlights as of Fiscal Year End
Nuclear Support Services, Inc. had 2,169,190 shares of
common stock outstanding and 462 known shareholders of
record at the end of fiscal year 1996. The Company's
common stock traded on the Nasdaq Stock Market under the
symbol of "NSSI" during fiscal year 1996. Effective
May 20, 1996, the Company commenced trading on the Nasdaq
SmallCap Market under its new name, Canisco Resources, Inc.
and new stock symbol "CANR". The number of shares of common
stock and shareholders of record did not change.
<TABLE>
<CAPTION>
1996 1995 1994
High Low High Low High Low
Quarter Trade Trade Trade Trade Trade Trade
<S> <C> <C> <C> <C> <C> <C>
First 1 5/8 1 1/4 4 1/8 2 1/4 4 3/4 2 1/2
Second 3 1/8 1 1/4 2 3/4 1 7/8 6 3 3/4
Third 2 3/8 1 1/2 5 1/2 3 5/8
Fourth 2 3/4 3/4 4 1/4 3 1/4
</TABLE>
ITEM 6 SELECTED FINANCIAL DATA
Financial Highlights
For the Fiscal Year End
(In thousands except per share amounts)
<TABLE>
<CAPTION>
1996(1) 1995(2) 1994(3)* 1993(4)* 1992(5)*
<S> <C> <C> <C> <C> <C>
Revenues $32,931 83,116 83,729 49,405 63,813
Earnings (loss)
before
reorganization
costs and income
taxes $(411) (1,015) (236) (2,250) 1,272
Net earnings
(loss) $(1,508) (2,849) (642) (2,997) 685
Net earnings
(loss)
per share $(.69) (1.31) (.30) (1.38) .32
Total assets $26,101 39,389 35,489 22,780 28,090
Total long-
term debt $5,587 5,587 15,946 8,935 2,214
Liabilities
subject
to compromise $5,262 8,146 - - -
Equity per share $.99 1.69 3.00 3.29 4.68
Return on
average equity - - - - 7%
Weighted average
common and common
equivalent shares 2,169 2,169 2,169 2,167 2,171
</TABLE>
(1)Fiscal year end change from September 30th to March 31st
and reflects the discontinuance of Henze operations and
includes approximately $1.1 million in reorganization costs.
(2) Reflects the discontinuance of Henze operations, a one-
time write-off of approximately $3.4 million for business
restructuring activities and an accrual of $750,000 for
Federal income tax relating to a prior year.
(3) Purchased Oliver B. Cannon & Son, Inc. and Sline
Industrial Painters, Inc. (Cannon Sline)
(4) Reflects a one-time goodwill and intangibles write-off
of approximately $2.4 million.
(5) Includes one-time tax credit of $103,000 or $.05 per
share reflecting the adoption of FASB No. 109 relative to
income taxes.
* These years have been restated to present Henze as
discontinued operations.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations 1996 Compared to 1995
Pursuant to the Company's Plan of Reorganization the fiscal
year has been changed to end on March 31st versus September 30th.
All results reported herein are for an interim period of six
months compared to prior year data of a full year.
During 1995, the Company determined that the valve repair
business as then currently conducted by its Henze subsidiary,
did not fit the Company's future strategy. Steps have been
taken to divest of this activity and it is identified in the
financial statements as a discontinued operation. As a result,
the line items on the Company's Consolidated Statement of
Operations from "Revenues from services" through "Loss from
continuing operations" (inclusive) are presented absent the
effects of Henze's operations (which are identified as
discontinued operations and presented as a separate
line item on a new basis). Results from continuing and
discontinued operations are then combined to produce net income.
Effective February 25, 1996, the Company divested the
nuclear manpower staff augmentation business as operated
by its NSS Numanco subsidiary.
Fiscal 1996 revenues were $32,931,000 compared to
$83,116,000 for fiscal year 1995. The power generation
market contributed $15,596,000` or forty-seven percent
(47%) of 1996 total revenues compared to $44,255,000 or
fifty-three percent (53%) of fiscal year 1995 revenues.
The petro-chemical business accounted for twenty-one percent
(21%) of revenues compared to seventeen percent (17%) in fiscal
year 1995.
The pulp and paper market contributed eighteen percent
(18%) of revenue in 1996 versus fifteen percent (15%) in
fiscal year 1995. The revenue contribution of all other
markets collectively was fourteen percent (14%) compared
to fifteen percent (15%) in fiscal year 1995. The
contribution of the various markets reflect the
diversification strategy of the Company.
The gross margin of the Company was $4,987,000
compared to $12,901,000 for fiscal year 1995.
As a percent of revenue, gross margin was consistent
at approximately fifteen percent (15%).
General and administrative expenses decreased to
$4,579,000 from $12,177,000 the prior year. This
decrease was due to the abbreviated fiscal year,
deletion of prior year one-time expenses and reduced
expenses as a result of the Reorganiation.
Income from operations decreased to $407,000 from
$724,000 primarily due to the abbreviated fiscal year.
Interest Expense decreased to $670,000 from $1,554,000
in fiscal year 1995 as a result of the abbreviated fiscal
year and reduction of debt.
Gain on the sale of NSS Numanco and miscellaneous income
totaled approximately $1,000,000. These gains were offset
by reorganization expenses of $1,147,000.
Net loss from continuing operations for fiscal year 1996
was $357,000 compared to $844,000 the prior year. Losses
attributable to discontinued operations were $586,000 from
operations and $565,000 for disposal of assets, both net of
income tax benefits. Combining the losses from continuing
and discontinued operations, the Company posted a net loss
of $1,508,000 or $0.69 per share versus $2,169,000 or $1.31
per share loss for the prior year.
Results of Operations 1995 Compared to 1994
Fiscal year 1995 revenues were $83,116,000 compared to
$83,729,000 for fiscal year 1994. The power generation
market contributed $44,255,000 or fifty-three percent (53%)
of 1995 total revenues compared to $54,361,000 or sixty-five
percent (65%) of fiscal year 1994 revenues. The petro-
chemical business accounted for seventeen percent (17%)
of revenues compared to fourteen percent (14%) in fiscal
year 1994. The pulp and paper industry contributed fifteen
percent (15%) of revenue in 1995 versus eleven percent (11%)
in fiscal year 1994. The revenue contribution of all other
businesses collectively was fifteen
percent (15%) compared to ten percent (10%) in fiscal year 1994.
These shifts in market contribution reflect the effectiveness
of the Company's diversification strategy.
The consolidated gross margin increased nine percent
(9%) in 1995 to $12,901,000 attributable to the Company's
focus on its more profitable lines of business. Margin
contribution from the power generation industry decreased
fourteen percent (14%) to $6,376,000. These were more
than offset by gains from the petro-chemical, pulp and
paper and other industries combined which contributed
$6,525,000 compared to $4,460,000 the prior year.
Consolidated general and administrative expenses increased
to $12,177,000 from $10,932,000 in fiscal year 1994.
The increase in 1995 included one time business
restructuring expenses of $2,209,000. Net of these
expenses, general and administrative expenses decreased
to $9,968,000 or twelve percent (12%) of revenues compared
to thirteen percent (13%) in fiscal year 1994.
Income from operations decreased to $724,000 from $909,000
in fiscal year 1994 as gains made in gross margin and
reduction of ongoing general and administrative expenses
were offset in 1995 by the one-time business restructuring expenses.
Interest expenses increased from the prior year by $313,000
to $1,554,000. This increase was attributable to higher
interest rates for 1995 over 1994.
As a result of recognizing an income tax accrual of $750,000
related to prior years, offset somewhat by a reduction in its
valuation allowance, the Company's income tax benefit was only
$171,000. Fiscal year 1994 had an income tax benefit of $111,000.
Net loss from continuing operations in 1995 was $844,000
compared to a loss of $125,000 for fiscal year 1994 primarily
due to the restructuring expenses of $2,209,000 noted above.
Losses attributable to discontinued operations were $2,005,000
versus $518,000 a year ago. Combining the loss from continuing
operations and discontinued operations, the Company posted a
net loss of $2,849,000 or $1.31 per share loss for the year
compared to a loss of $642,000 or $0.30 per share loss in fiscal
year 1994. Absent business restructuring and prior year
tax accruals the net income was $1,491,000 or $0.69 per share.
Liquidity and Capital Resources
The Company's ability to generate cash adequate to
meet its needs depends primarily upon payments for
its services and periodic bank borrowings. These
sources of liquidity are reduced by the payment of
direct costs, taxes, purchase of property and equipment
and periodic repayment of the Company's revolving line of
credit and term debt.
As a result of losses recognized during fiscal year 1995,
the Company, as reported, was not in compliance with
certain debt covenants under its lending arrangement.
At the end of August 1995, the participating lender and,
in turn, its agent lender under the Company's financing
agreement refused to continue funding the Company's working
capital line. This resulted in a cessation of cash flow
necessary to fund operations. In the first week of
September 1995, the Company and its subsidiaries filed
voluntary bankruptcy petitions under Chapter 11 reorganization
in the U.S. Bankruptcy Court for the Middle District
of Pennsylvania in Harrisburg which were jointly administered
at Case Number 1-95-1767. This action became necessary for
the Company to gain access to its own cash for continued operations.
Subsequently, the Company obtained a $3,500,000 debtor-in-
possession revolving credit and continued operations as
debtor-in-possession.
The Company's debtor-in-possession revolving credit
agreement was paid in full and expired on February 28, 1996,
and on March 1, 1996, the Company entered into a cash
collateral stipulation that allowed the use of the Company's
own cash for continued operations.
At March 31, 1996, the Company had paid down its balance
on its revolving credit line of $18,000,000 to approximately
$3,683,000 with the proceeds from the divestiture of Numanco.
The Company had an outstanding principal balance of $5,586,524
on its long term secured loan obligation. The Company was in
compliance with the covenants of its cash collateral order.
At March 31, 1996, the Company had working capital of
approximately $4,050,000 compared to working capital of
$7,435,000 for fiscal year end 1995. The decrease in
working capital was due primarily to the decrease in
accounts receivables of approximately $9,000,000 offset
somewhat by the decrease of the Company's revolving loan
notes payable to the bank.
On April 24, 1996, the Company's Amended Joint Plan of
Reorganization was confirmed by the Court. The Plan
anticipates full payment to the Company's creditors
consistent with its terms.
The use of cash collateral continued through July 1, 1996,
when the Company secured financing with a new lender,
BNY Financial Corporation. This refinancing consists of
a five year commitment for an $11,000,000 revolving credit
line and $3,900,000 in long term debt.
The Company anticipates that working capital and available
bank credit will be sufficient to meet cash needs for the
coming year. Capital expenditures of approximately $300,000
are budgeted for fiscal year 1997 for upgrading equipment to
support existing and expected future contract work.
Looking Forward
On April 24, 1996, the Court confirmed the Company's
Plan of Reorganization in substantially the format filed
in January. The Plan became effective July 1, 1996. The
delay was attributable to the disposition of the Henze
assets and subsequent execution of the new long term credit
facility.
We have accomplished the corporate consolidation anticipated
by the Plan. The administrative details involved with the
bankruptcy proceedings continue to absorb management's time,
however, this distraction should subside within the next
thirty days.
The delay in exiting bankruptcy has increased Reorganization
costs over previous estimates. Some of this cost will carry
over into the first half of fiscal year 1997. We anticipate
these costs to be offset by the positive impact of the
settlement of the Westinghouse litigation.
Independent Auditors' Report
The Board of Directors and Shareholders
Canisco Resources, Inc.:
We have audited the accompanying consolidated balance
sheets of Canisco Resources, Inc. (formerly Nuclear
Support Services, Inc.) and subsidiaries as of March 31, 1996
and September 30, 1995, and the related consolidated statements
of operations, shareholders' equity, and cash flows for the
six-month period ended March 31, 1996 and the years ended
September 30, 1995 and 1994. These consolidated financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these
consolidated 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 consolidated 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 consolidated financial statements
referred to above present fairly, in all material respects,
the financial position of Canisco Resources, Inc. and
subsidiaries at March 31, 1996 and September 30, 1995,
and the results of their operations and their cash flows
for the six-month period ended March 31, 1996 and the years
ended September 30, 1995 and 1994, in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK LLP
June 28, 1996, except as to note 14,
which is as of July 1, 1996
Atlanta, Georgia
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc.)
(Debtor-in-Possession)
Consolidated Balance Sheets
March 31, 1996 and September 30, 1995
<TABLE>
<CAPTION>
March 31, September 30,
Assets 1996 1995
<S> <C> <C>
Current assets:
Cash $ 550,432 1,849,267
Accounts receivable,
net (notes 3 and 5):
Billed 10,567,409 19,990,695
Unbilled 1,159,966 333,723
Other 378,436 939,755
Total accounts
receivable 12,105,811 21,264,173
Inventory (note 5) 1,177,691 1,206,417
Deferred income
taxes (note 6) 2,005,000 2,078,000
Prepaid insurance 563,457 920,177
Other prepaid expenses
and current assets 977,198 760,270
Costs and estimated
earnings in excess
of billings
on uncompleted
contracts (note 3) 1,837,958 2,760,439
Total current assets 19,217,547 30,838,743
Property and equipment
(note 5):
Land 964,100 964,100
Buildings and improvements 1,422,687 1,986,786
Machinery and equipment 7,573,640 7,688,132
Furniture and fixtures 1,213,809 2,173,200
Vehicles 707,995 689,284
11,882,231 13,501,502
Less accumulated
depreciation 6,277,851 6,828,442
5,604,380 6,673,060
Deferred income
taxes (note 6) 1,007,000 419,000
Excess of cost
over net assets
of business acquired,
net of amortization of
$532,868 in 1995 - 1,127,663
Other assets 272,370 330,799
Total assets $ 26,101,297 39,389,265
</TABLE>
See accompanying notes to consolidated financial statements.
Liabilities and Shareholders Equity
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
<S> <C> <C>
Liabilities not subject
to compromise:
Current liabilities:
Notes payable (note 5) $ 1,190,007 3,540,512
Notes payable to
bank (note 5) 3,683,354 9,440,147
Current portion
of long-term debt
(note 5) 2,062,524 1,402,524
Accounts payable 1,857,874 3,193,796
Accrued payroll
and employee benefits 1,795,679 2,737,211
Billings in excess
of costs and estimated
earnings on uncompleted
contracts (note 3) 784,278 779,721
Other accrued expenses 3,793,400 2,309,903
Total current
liabilities 15,167,116 23,403,814
Liabilities subject
to compromise under
reorganization
proceedings (note 4) 5,262,285 8,145,734
Note payable to
bank (note 5) - -
Long-term debt,
less current
portion (note 5) 3,524,000 4,184,000
Total liabilities 23,953,401 35,733,548
Shareholders' equity
(note 9):
Common stock,
$.0025 par value,
authorized
10,000,000 shares,
issued 2,476,242 shares;
outstanding 2,169,190
shares 6,190 6,190
Additional paid-
in capital 3,472,506 3,472,506
Retained earnings 3,299,337 4,807,158
Treasury stock,
at cost (4,630,137) (4,630,137)
Total shareholders'
equity 2,147,896 3,655,717
Commitments
and contingencies
(notes 7 and 11)
Total liabilities and
stockholders' equity $ 26,101,297 39,389,265
</TABLE>
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc.)
(Debtor-in-Possession)
Consolidated Statements of Operations
Six months ended March 31, 1996 and
years ended September 30, 1995 and 1994
<TABLE>
<CAPTION>
Six months Years ended
ended September 30,
March 31, 1996 1995 1994
<S> <C> <C> <C>
Revenues from
services (note 8) $ 32,930,854 83,115,904 83,729,024
Cost of services 27,944,340 70,215,224 71,887,234
Gross margin 4,986,514 12,900,680 11,841,790
General and
administrative
expenses 4,579,371 12,176,557 10,932,301
Income from
operations 407,143 724,123 909,489
Interest expense (670,457) (1,554,135) (1,241,150)
Gain on sale of
Numanco subsidiary
(note 10) 883,232 - -
Other income
(expense), net 116,364 (190) 96,133
(Income) loss
before
reorganization
costs and income
taxes 736,282 (830,202) (235,528)
Reorganization costs (1,147,074) (185,019) -
Loss from
continuing
operations
before income
taxes (410,792) (1,015,221) (235,528)
Income tax
benefit (note 6) (54,000) (171,000) (111,000)
Loss from
continuing
operations (356,792) (844,221) (124,528)
Discontinued
operations
(note 10):
Loss from operations
of discontinued
subsidiary (net
of income tax
benefit of
$243,069, $1,080,000,
and $424,000
in 1996, 1995, and
1994, respectively) (586,029) (2,004,755) (517,765)
Loss from disposal
of discontinued
subsidiary (net of
income tax benefit
of $335,000) (565,000) - -
Loss from
discontinued
operations (1,151,029) (2,004,755) (517,765)
Net loss $(1,507,821) (2,848,976) (642,293)
Loss per share:
Continuing
operations $ (.16) (.39) (.06)
Discontinued
operations $( .53 ) (.92) (.24)
Net loss $ (.69) (1.31) (.30)
Weighted average
common and
common equivalent
shares 2,169,190 2,169,190 2,169,190
</TABLE>
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc.)
(Debtor-in-Possession)
Consolidated Statements of Shareholders' Equity
Six months ended March 31, 1996 and
Years ended September 30, 1995 and 1994
<TABLE>
<CAPTION
Common stock Treasury stock
Addl. Number
Number paid -in Retained of
# shares Amount capital earnings shares Amount Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
09/30/93 2,476,242 $6,190 3,494,542 8,298,427 309,022 (4,659,843) 7,139,316
Excercise
of
options - - (22,036) - (1,970) 29,706 7,670
Net Loss - - - (642,293) - - (642,293)
Balance at
09/30/94 2,476,242 6,190 3,472,506 7,656,134 307,052 (4,630,137) 6,504,693
Net loss - - - (2,848,976) - - (2,848,976)
Balance at
09/30/95 2,476,242 6,190 3,472,506 4,807,158 307,052 (4,630,137) 3,655,717
Net loss - - - (1,507,821) - - (1,507,821)
Balance at
03/31/96 2,476,242 $6,190 3,472,506 3,299,337 307,052 (4,630,137) 2,147,896
</TABLE>
See accompanying notes to consolidated finanacial statements.
CANISCO RESOURCES, INC.
(Formerly Nuclear Support Services, Inc.)
(Debtor-in-Possession)
Consolidated Statements of Cash Flows
Six months ended March 31, 1996 and
years ended September 30, 1995 and 1994
<TABLE>
<CAPTION>
Six months Years ended
ended September 30,
March 31, 1996 1995 1994
<S> <C> <C> <C>
Cash flows
from operating
activities:
Net loss $ (1,507,821) (2,848,976) (642,293)
Adjustments
to reconcile
net loss
to net cash
provided by
operating
activities:
Depreciation
and
amortization 837,393 1,441,179 1,493,619
Deferred income
taxes (515,000) (1,197,000) (583,000)
Gain on sale of
Numanco subsidiary (883,232) - -
Loss accrued on
disposal of
discontinued
subsidiary 900,000 - -
Other 116,080 1,640 373
Change in assets
and liabilities net
of effects from
purchases and sales
of subsidiaries:
Decrease
(increase) in
accounts receivable 8,997,213 (4,774,332) 2,700,422
Decrease (increase)
in inventory 28,726 428,734 (290,808)
Decrease (increase)
in prepaid expenses
and other current
assets 38,190 2,118,394 (442,617)
Decrease (increase)
in costs and
estimated earnings
in excess of
billings on
uncompleted
contracts 922,481 (1,399,176) 1,054,379
(Increase) decrease
in other assets (267,495) 129,100 139,357
(Decrease) increase
in accounts payable (2,521,433) 4,853,357 994,149
(Decrease) increase
in accrued payroll
and employee
benefits (1,230,826) 248,683 (413,328)
(Decrease) increase
in accrued expenses (775,286) 1,304,819 734,420
Increase (decrease)
in billings
in excess of
costs and
estimated
earnings on
uncompleted
contracts 4,557 411,140 (1,929,331)
Net cash provided
by operating
activities 4,143,547 717,562 2,815,342
Cash flows from
investing activities:
Purchase of property
and equipment (22,686) (534,809) (986,975)
Sale of property
and equipment 44,019 5,887 45,348
Purchase of marketable
securities - (218,427) -
Sale of marketable
securities 325,924 37,232 -
Acquisition of
businesses, net of
cash acquired - - (8,315,335)
Proceeds from sale
of Numanco
subsidiary 2,350,000 - -
Net cash
provided (used)
by investing
activities 2,697,257 (710,117) (9,256,962)
Cash flows from
financing activities:
Net borrowings
(payments) on
notes payable (8,107,298) 1,086,033 1,568,162
Proceeds from
long-term debt - - 7,000,000
Principal payments
on long-term debt (32,341) (1,155,158) (455,283)
Exercise of stock
options - - 7,670
Net cash
provided
(used) by
financing
activities (8,139,639) (69,125) 8,120,549
Net (decrease)
increase in
cash (1,298,835) (61,680) 1,678,929
Cash at beginning
of period 1,849,267 1,910,947 232,018
Cash at end of
period $550,432 1,849,267 1,910,947
Cash paid during
the period for:
Interest $ 738,566 1,861,850 1,247,760
Income taxes $ 10,407 123,113 363,798
</TABLE>
See accompanying notes to consolidated financial statements.
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc.)
(Debtor-in-Possession)
Notes to Consolidated Financial Statements
Six Months ended March 31, 1996 and Years
ended September 30, 1995 and 1994
(1) Plan of Reorganization and Basis of Presentation
On September 5, 1995 (the "Petition Date"), Canisco
Resources, Inc. (formerly Nuclear Support Services, Inc.)
(the "Debtor") filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code (Chapter 11)
in the United States Bankruptcy Court for the Middle District
of Pennsylvania in Harrisburg. Under Chapter 11, certain
claims against the Debtor in existence prior to the filing
of the petition for relief under the federal bankruptcy laws
are stayed while the Debtor continues business operations as
Debtors-in-possession. These claims are reflected in
the consolidated balance sheet as "Liabilities subject to
compromise under reorganization proceedings". Additional
liabilities subject to compromise may arise subsequent
to the filing date resulting from rejection of executory
contracts, including leases, and from the determination by the
court (or agreed to by parties-in-interest) of allowed claims
for contingencies and other disputed amounts. Claims
secured against the Debtors assets ("secured claims") also
are stayed, although the holders of such claims have the
right to move the court for relief from the stay. Secured claims
are secured primarily by liens on the Debtors accounts
receivable, inventory and property and equipment.
(2) Summary of Significant Accounting Policies
(a) Basis of Consolidation
The consolidated financial statements include the accounts
of Canisco Resources, Inc. and its wholly owned subsidiaries
(together referred to as the "Company"). All significant
intercompany transactions and balances have been eliminated
in consolidation. The results of operations of the Company's
Henze Services, Inc. subsidiary are shown as discontinued
operations for all periods presented. In 1996, the Company
changed its name from Nuclear Support Services, Inc. to
Canisco Resources, Inc. and changed its fiscal year-end
from September 30 to March 31.
(b) Accounting Estimates
In preparing the consolidated financial statements, management
is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the dates of
the consolidated balance sheets and income and expenses for
the periods. Actual results could differ from those estimates.
(c) Revenue and Cost Recognition
Revenues from fixed-price and modified fixed-price
construction contracts are recognized on the percentage-of-
completion method, measured by the cost-to-cost method.
Revenues from cost-plus-fee contracts are recognized on the
basis of costs incurred during the period plus the fee earned,
measured by the cost-to-cost method. Revenues from time and
material contracts are recognized as the work progresses.
Contract costs include all direct material and labor
costs and those indirect costs related to contract
perrformance, such as indirect labor, supplies and depreciation.
General and administrative costs are charged to expense as
incurred. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined.
The asset, "Cost and estimated earnings in excess of billings
on uncompleted contracts", represents revenues recognized in
excess of amounts billed. The liability, "Billings in excess
of costs and estimated earnings on uncompleted contracts",
represents billings in excess of revenues recognized.
(d) Inventory
Inventory consists primarily of replacement parts and
operating supplies and is stated at cost determined on the
first-in, first-out (FIFO) basis.
(e) Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation is provided using
the straight-line method over the estimated useful lives of the
assets ranging from three to 40 years. Capital leases are
included at the capitalized amount less accumulated amortization.
Amortization of capital leases is included in depreciation expense.
Leasehold improvements are amortized over the shorter of their
estimated useful lives or the terms of the respective leases.
Maintenance and repairs are expensed when incurred, and
expenditures for improvements are capitalized. Any gains or
losses from the disposal of assets are recorded in the year
of disposal.
(f) Excess of Cost Over Net Assets of Businesses Acquired
The excess of cost over net assets of businesses acquired
(goodwill) was being amortized using the straight-line method
over 20 years until the operations to which the goodwill related
were sold in February 1996.
(g) Income Taxes
Deferred income taxes result primarily from temporary
differences between the financial statement carrying amounts
and the tax basis of assets and liabilities.
(h) Loss Per Share
The computation of net loss per share was based on the
weighted average number of outstanding common shares. The
inclusion of additional shares assuming the exercise of stock
options would have been antidilutive. The computation of fully
diluted net loss per share was antidilutive in each of the periods
presented; therefore, the amounts reported for primary and fully
diluted loss are the same.
(i) Reclassifications
Certain reclassifications were made to the 1995 and 1994
consolidated financial statements to conform to classifications
adopted in 1996.
(3) Costs and Estimated Earnings on
Uncompleted Contracts and Retainage
Costs and estimated earnings on uncompleted contracts are
summarized as follows:
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
<S> <C> <C>
Costs incurred on
uncompleted contracts $ 58,747,846 44,574,622
Estimated earnings 11,905,167 9,880,804
70,653,013 54,455,426
Less billings to date 69,599,333 52,474,708
$ 1,053,680 1,980,718
Included in the
accompanying
consolidated
balance sheets under
the following captions:
Costs and estimated
earnings in excess of
billings on
uncompleted
contracts $ 1,837,958 2,760,439
Billings in excess of
costs and estimated
earnings on
uncompleted contracts (784,278) (779,721)
$ 1,053,680 1,980,718
</TABLE>
Accounts receivable billed include amounts retained by
customers, in accordance with contract provisions, of
approximately $660,000 and $835,000 at March 31, 1996 and
September 30, 1995, respectively.
(4) Liabilities Subject to Compromise Under
Reorganization Proceedings
Certain pre-petition liabilities were approved by the
Bankruptcy Court for payment. Such liabilities are included
in accounts payable, accrued payroll and employee benefits,
and other accrued expenses. Additionally, secured debt which
is expected to be paid in full in accordance with the original
terms is included in notes payable to bank. The remainder of
the Company's pre-petition liabilities whose disposition is
dependent upon the outcome of the Chapter 11 proceedings are
classified as liabilities subject to compromise under
reorganization proceedings in the accompanying
consolidated balance sheets.
These liabilities are summarized as follows:
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
<S> <C> <C>
Unsecured capital lease
obligations $ 31,308 63,649
Trade accounts payable
and other unsecured
liabilities 5,230,977 8,082,085
$ 5,262,285 8,145,734
</TABLE>
(5) Long-Term Debt and Notes Payable
Long-Term Debt
The Company's long term debt is expected to be settled in
accordance with the terms of the Plan. The secured term
loan is expected to be paid in full in accordance with its
original terms. The Company's unsecured capital lease obligations
have also been classified as liabilities subject to compromise
under reorganization proceedings.
Long-term debt, based on original terms, is summarized as follows:
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
<S> <C> <C>
Term loan payable to
bank, collateralized
by the Company's
accounts receivable,
inventory,machinery
and equipment, real
estate, general
intangibles and
stock of all
subsidiaries. The
note bears interest
at prime + 3%
(11.25% at March 31,
1996) and is payable
in monthly installments
through December 1, 1999. $5,586,524 5,586,524
Capital lease obligations 31,308 63,649
5,617,832 5,650,173
Less current maturities 2,062,524 1,402,524
Less liabilities
subject to compromise
under reorganization
proceedings 31,308 63,649
$ 3,524,000 4,184,000
</TABLE>
At March 31, 1996, future long-term debt payments are as follows:
<TABLE>
<S> <C>
1997 $ 2,062,524
1998 1,320,000
1999 1,320,000
2000 884,000
Thereafter -
$ 5,586,524
</TABLE>
Based on the borrowing rates currently available to the
Company for debt with similar terms and average maturities,
the fair value of long-term debt approximates its carrying value.
Notes Payable
The Company has installment notes payable for insurance
premiums of $329,383 and $629,286 at March 31, 1996 and
September 30, 1995, respectively. The notes are secured
by unearned premiums, dividends, and loss payments under
policies in force. The note at March 31, 1996 bears interest
at 6.99% with payments due in four remaining equal monthly
installments of $85,925. Also included in notes payable at
March 31, 1996 and September 30, 1995 are cash overdrafts of
$860,624 and $2,911,226, respectively.
Notes Payable to Bank
The Company has a revolving loan agreement with two
participating financial institutions under which there
is no current availability to the Company and under which
the Company is currently in default. Amounts outstanding
under this revolving loan agreement were $3,683,354 and
$8,477,305 at March 31, 1996 and September 30, 1995,
respectively. The amount outstanding under the agreement
is classified as a current liability in the accompanying
consolidated balance sheets due to the events of default.
Borrowings bear interest generally at the prime rate
plus 3% (11.25% at March 31, 1996 and 11.75% at September
30, 1995), are evidenced by demand notes, and are secured
by the Company's accounts receivable, inventory, machinery
and equipment, real estate, general intangibles and stock
of all subsidiaries. This agreement, among other things,
requires the Company to meet various covenants including
minimum levels of working capital and net worth and expires
November 1997. Commitment fees during the revolving loan
period are 1/4 of one percent of the average daily unused
amount of the revolving loan commitment, payable on a
quarterly basis. The Company is also required to pay
an annual collateral monitoring fee of $115,000,
payable in advance in quarterly installments. The
Company's revolving loan agreement is expected to be
paid in full in accordance with its original terms.
On September 20, 1995, the Company entered into a
debtor-in-possession revolving credit and security
agreement with a bank which provided financing of up
to $3,500,000 for working capital needs and general
corporate purposes. At September 30, 1995, $962,842
was outstanding under this agreement and is included
in notes payable to bank in the accompanying consolidated
balance sheet. The credit facility was paid in full in
February 1996.
(6) Income Taxes
Income tax benefit relating to continuing operations
consists of the following:
<TABLE>
<CAPTION>
Six months Years ended
ended September 30,
March 31, 1996 1995 1994
<S> <C> <C> <C>
Current:
Federal $ - 579,000 325,000
State - (88,000) 62,000
Total current - 491,000 387,000
Deferred - Federal
and state (54,000) (662,000) (498,000)
Total income tax benefit $(54,000) (171,000) (111,000)
</TABLE>
The reconciliation between the tax benefit computed by
multiplying pretax loss from continuing operations by
the U.S. Federal statutory tax rate and the reported amounts
of income tax benefit is as follows:
<TABLE>
<CAPTION>
Six months Years ended
ended September 30,
March 31, 1996 1995 1994
<S> <C> <C> <C>
Computed at U.S.
statutory tax rate $(140,000) (345,000) (80,000)
State income taxes,
net of Federal
income tax effect (14,000) (26,000) (29,000)
Federal income taxes
relating to prior year
net of available
carryback - 534,000 -
Amortization of goodwill 12,000 29,000 34,000
Decrease in beginning-
of-year
balance of valuation
allowance - (613,000) -
Other, net 88,000 250,000 (36,000)
Total income tax benefit $ (54,000) (171,000) (111,000)
</TABLE>
SFAS 109 requires the recognition of deferred tax assets
and liabilities for both the expected future tax impact of
differences between the financial statement and tax basis of
assets and liabilities, and for the expected future tax benefit
to be derived from tax loss and tax credit carryforwards. SFAS
109 additionally requires the establishment of a valuation
allowance to reflect the likelihood of realization of deferred
tax assets. The tax effects of temporary differences that give
rise to significant portions of the deferred tax assets
and liabilities are as follows:
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
<S> <C> <C>
Deferred tax assets:
Allowance for
doubtful accounts $ 276,000 128,000
Inventory valuation
allowance 293,000 293,000
Capital loss
carryforwards - 567,000
Operating loss
carryforwards 778,000 458,000
Accruals not
deducted for tax
purposes 1,479,000 1,082,000
Other 277,000 226,000
Total gross
deferred tax
assets 3,103,000 2,754,000
Less valuation
allowance 71,000 71,000
Net deferred
tax assets 3,032,000 2,683,000
Deferred tax
liabilities:
Fixed asset
depreciation - 166,000
Other 20,000 20,000
Net deferred
tax asset $ 3,012,000 2,497,000
</TABLE>
The Company's operating loss carryforwards expire beginning
in 2010. The valuation allowance for deferred tax assets
as of October 1, 1995 was $71,000 and did not change for the six
months ended March 31, 1996. In assessing the realizability of
deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary
differences become deductible. Management considers the
reversal of deferred tax liabilities, projected future
taxable income and tax planning strategies in making
this assessment. Based upon the level of historical
taxable income and projections for future taxable income
over the periods which the deferred tax assets are deductible
management believes it is more likely than not the Company
will realize the benefits of these deductible differences,
net of the existing valuation allowances at March 31, 1996.
In 1995, the Internal Revenue Service (IRS), completed an
audit of the Company's income tax returns for the years
ended September 30, 1993, 1992, 1991, and 1990. As a result
of the audit, the IRS challenged the write-off for tax
purposes of certain intangible assets made during the year
ended September 30, 1993. The Company has accrued $750,000
relating to the settlement of this matter. The Company is
vigorously contesting the audit findings.
(7) Employee Benefit Plans
Effective February 1, 1990, the Company established
the Nuclear Support Services, Inc. Retirement Savings
Plan (401(k) Plan) for qualified NSSI employees. The
Plan was amended effective January 1, 1991 to provide
for participation by all nonbargaining employees. The
Plan allows participants to contribute to the Plan by
salary reduction and is qualified pursuant to Section
401(k) of the Internal Revenue Code. Participants may
defer up to 15% of their base compensation or $9,500 per
year, whichever is the lesser amount. The Company,
at its discretion, can make contributions to the Plan.
No Company contributions
were made during 1996, 1995, or 1994. The Company
terminated the Plan effective March 31, 1996.
The Company established an Employee Stock Purchase
Plan in 1988 for substantially all of its employees.
The Plan offers employees the opportunity to purchase
Company common stock through regular payroll deductions.
Participation in this Plan is voluntary, and the Company
pays transaction fees for purchases made under this Plan.
During 1994, the Company acquired 100% of the outstanding
stock of Oliver B. Cannon & Son, Inc. and subsidiary and
Sline Industrial Painters, Inc. (collectively referred to
as Cannon Sline). As a result of this acquisition described
in note 10, the Company is obligated under the terms of a
thrift plan for substantially all employees of Cannon Sline
not covered by union-sponsored plans. The Plan allows
participants to contribute after-tax earnings up to a
maximum of 10% of annual compensation. The Plan provides
for Company matching and additional discretionary
contributions as defined in the Plan document. Cannon
Sline expensed approximately $48,000, $74,000, and $135,000
in matching and discretionary contributions to the Plan
during the six months ended March 31, 1996 and the years
ended September 30, 1995 and 1994, respectively.
Cannon Sline is required to contribute to pension plans
(defined contribution) administered by collective
bargaining organizations. Contributions are based on
hours worked, as specified in the various contracts.
Information regarding these plans is not currently made
available by the union administrators or trustees.
The Company implemented a Senior Executive Compensation
Program for fiscal years 1992 through 1994. Under the terms
of the program, incentive bonuses could be earned in the
form of cash, stock options, or other perquisites. During
1995, cash of $42,915 was awarded under this program as
incentive bonuses for the previous fiscal year.
(8) Major Customers
In 1996, 1995 and 1994, one customer accounted for 6%,
16% and 12%, respectively, of consolidated revenues.
Some of the Company's contracts with its clients provide
for charges on a time and materials basis. The time and
materials contracts generally permit the client to control
the amount, type, and timing of services to be performed by
the Company, and most of the contracts permit the client to
terminate the contract at any time.
(9) Stock Option Plan
On February 6, 1990, the Board of Directors adopted the
Nuclear Support Services, Inc. 1990 Stock Option Plan
(the "1990 Plan") to provide incentive to key full-time
employees and consultants of the Company. Under the 1990
Plan, stock options could be granted for up to 416,897
shares of common stock. The options could be incentive
stock options, which qualify for certain tax benefits,
or options which do not qualify as incentive stock options.
Incentive stock options were granted at not less than the fair
e stock on the date granted and non qualified stock options
were granted at not less than one-half of the fair market
value of the stock on the date granted. The 1990 Plan
became effective January 1, 1990 and expired December 31, 1994.
Options outstanding under the Plan remain exercisable by
their terms after expiration of the Plan.
On February 8, 1991 the Board of Directors adopted the
Directors Stock Option Program wherein Directors, at
their election made in advance, could accept non
qualified stock options in lieu of cash for all or a
portion of Director compensation. Such options could
be acquired at the rate of 17% of the market value of
the stock as of the date such compensation was payable.
Options granted under this program are included in the
1990 Plan and are exercisable at the fair market value
of the stock on the date each Directors compensation
becomes payable.
Following is a summary of activity in the 1990 Plan for
the six months ended March 31, 1996 and the years ended
September 30, 1995 and 1994:
<TABLE>
<CAPTION>
Option Total
price option
Shares per share price
<S> <C> <C> <C>
Options outstanding
at 09/30/93 193,497 $3.25-9.00 1,067,407
Issued 221,746 3.38-5.50 912,556
Exercised (1,970) 3.75 (7,388)
Canceled or expired (15,641) 3.75-6.88 (82,424)
Options outstanding
at 09/30/94 397,632 3.25-9.00 1,890,151
Issued 11,258 3.75-4.13 46,403
Canceled or expired (76,292) 3.25-7.13 (335,743)
Options outstanding
at 09/30/95 332,598 3.38-9.00 1,600,811
Canceled or expired (43,805) 3.75-6.13 (194,767)
Options outstanding
at 03/31/96 288,793 $3.38-9.00 1,406,044
</TABLE>
(10) Acquisitions, Dispositions and Discontinued Operations
In February 1996, the Company sold certain operations of
its NSS Numanco subsidiary. The sale resulted in proceeds
to the Company of $2,350,000 and a pretax gain of approximately
$883,000.
During September 1995, the Company adopted plans to sell
the operations of its Henze Services subsidiary. Revenues
from this subsidiary were $4,964,000, $14,567,000 and
$l2,661,000 for the six months ended March 31, 1996 and
the years ended September 30, 1995 and 1994, respectively.
Certain expenses have been allocated to discontinued operations,
including interest expense, which was allocated based on the
ratio of Henze net assets to the sum of total net assets of
the consolidated Company plus consolidated debt. Interest
expense allocated to discontinued operations for the years
ended September 30, 1995 and
1994 was $183,937, $255,702, and $187,673, respectively.
The assets and liabilities of Henze are included in the
Company's consolidated balance sheet as of March 31, 1996
and September 30, 1995 and are summarized as follows:
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
<S> <C> <C>
Current Assets $ 3,018,000 4,621,000
Property and
Equipment, net 1,620,000 2,104,000
Other Assets 35,000 32,000
Current Liabilities 2,207,000 2,559,000
$ 2,466,000 4,198,000
</TABLE>
On June 4, 1996, the Company completed the sale of Henze
which resulted in proceeds to the Company of $1,350,000
and a pretax loss of approximately $900,000.
Effective October 1, 1993, the Company acquired 100% of
the outstanding stock of Cannon Sline for approximately
$4,483,000 in cash and a note of $2,376,000. Cannon Sline
supplies surface preparation and specialty coatings services
to power generation, pulp and paper, marine and other industries.
The acquisition was accounted for using the purchase method of
accounting with the results of operations of the business
acquired included from the effective date of the acquisition.
There was no excess of cost over net assets of business acquired.
The following is a summary of assets acquired and liabilities
assumed in the Cannon Sline acquisition:
<TABLE>
<S> <C>
Assets acquired, net of cash $ 14,161,000
Liabilities assumed (5,846,000)
Net assets acquired $ 8,315,000
</TABLE>
(11) Commitments and Contingencies
(a) Insurance Coverage
The Company has contracts to provide radiation protection
personnel, instrument, electrical and mechanical maintenance
personnel, and professional personnel at several nuclear
powered electric generating facilities. The Company maintains
$11,000,000 general liability insurance coverage.
Federal legislation affecting the nuclear power industry
includes a liability protection system for certain damages
caused by nuclear incidents. However, certain types of risks
(for example, on-site property damage) are not covered by
this system and are not otherwise insurable by the Company.
Few of the Company's contracts with its clients contain
waivers of liability or an overall limitation of liability;
thus, to the extent that it is neither insured nor protected
by an enforceable waiver or an enforceable limitation
of liability, the Company could be materially adversely
affected by a nuclear incident.
To the extent possible, the Company requests being listed as
a named insured on its clients' insurance policies in an
effort to reduce risk.
(b) Legal Matters
The Company or its subsidiaries are involved in
various claims and legal actions arising in the
ordinary course of business. In the opinion of
management, the ultimate disposition of these matters
will not have a material adverse effect on the Company's
consolidated financial position.
In November 1994, the Company filed suit against
Westinghouse Electric Corporation alleging the breach
of various terms of a certain Asset Purchase Agreement
and the related Supply Agreement. The lawsuit was settled
in June 1996.
(c) Rental Agreements
The Company leases office space and various equipment
under operating leases which provide for minimum rentals
as follows:
<TABLE>
<S> <C>
March 31,
1997 $ 231,171
1998 157,260
1999 103,520
2000 4,084
2001 and thereafter -
Total minimum lease payments $ 496,035
</TABLE>
Rental expense under all agreements for the six months
ended March 31, 1996 and the years ended September 30,
1995 and 1994 was approximately $465,000, $1,019,000,
and $890,000, respectively.
The Company leases land and buildings under operating
leases from an individual who was a member of the Company's
board of directors during fiscal year 1994. Rent expense
included above under these leases for 1994 was approximately
$57,000.
(12) Comparable Consolidated Statements of
Operations Data (Unaudited)
Consolidated statements of operations data for the
six-month periods ended March 31, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Revenues from services $ 37,117,738 42,598,661
Gross margin 5,854,480 5,839,688
Income tax benefit (976,780) (292,000)
Earnings (loss) from
continuing
operations (1,465,170) 53,965
Earnings (loss) from
discontinued
operations (1,319,023) 235,335
Net earnings (loss) (2,784,193) 289,300
Earnings (loss)
per share $(1.28) .13
</TABLE>
(13) Quarterly Financial Data (Unaudited)
The Company's quarterly financial data for the six
months ended March 31, 1996 and the year ended
September 30, 1995 is as follows:
<TABLE>
<CAPTION>
Fourth Third Second First
quarter quarter quarter quarter
<S> <C> <C> <C> <C>
1996
Revenues
from
services $ - - 11,874,845 21,056,009
Gross margin - - 1,821,794 3,164,720
Earnings
(loss) from
continuing
operations
before income
taxes - - (934,700) 523,908
Net earnings
(loss) - - (1,678,985) 171,164
Earnings
(loss) per
share - - (.77) .08
</TABLE>
<TABLE>
<S>
1995: <C> <C> <C> <C>
Revenues from
services $ 23,154,693 22,843,473 8,541,023 18,576,715
Gross margin 3,603,611 3,442,589 3,070,006 2,784,474
Earnings (loss)
from continuing
operations
before income
taxes 929,032 497,697 (2,208,664) (233,286)
Net earnings
(loss) (166,671) 101,888 (2,444,566) (339,627)
Earnings (loss)
per share $ (.08) .05 (1.12) (.16)
</TABLE>
The first and second quarter of 1996 include approximately
$67,000 and $1,080,000, respectively, of reorganization costs
related to Chapter 11.
The second quarter of 1995 includes pre-tax adjustments of
approximately $400,000 for uncollectible receivables, $500,000
to write down inventory to its estimated net realizable value
and $2,546,000 of provisions for business restructuring activities.
The fourth quarter of 1995 includes an accrual of $750,000 for a
Federal income tax assessment relating to prior years and $185,000
of reorganization costs related to Chapter 11.
(14) Subsequent Events
On July 1, 1996, the Company executed a $14.9 million credit
facility with a new lender, completing the final requirements
to exit its bankruptcy reorganization.
ITEM 9 CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES
None
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 is presented under
captions "Election of Directors," "Executive Officers,"
and "Compliance with Section 16(a)" in the Company's
Proxy Statement for the Annual Meeting of Shareholders
to be held August 13, 1996 and is incorporated herein by reference.
ITEM 11 EXECUTIVE COMPENSATION
The information required by Item 11 presented under
the caption "Committees and Meetings, and under several
captions commencing with "Executive Compensation" and
continuing through and including "Performance Graph,"
in the Company's Proxy Statement for the Annual Meeting
of Shareholders to be held August 13, 1996 and is
incorporated herein by reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 is presented under
the caption "Security Ownership of Certain Beneficial
Owners and Management," in the Company's Proxy Statement
for the Annual Meeting of Shareholders to be held August
13, 1996 and is incorporated herein by reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is presented under
captions, "Compensation Committee Interlocks and Insider
Participation," and "Certain Transactions," in the Company's
Proxy Statement for the Annual Meeting of Shareholders to
be held August 13, 1996 and is incorporated herein by reference.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
A. Reports on Form 8-K and other forms
Form 8-K filed September 20, 1995 relating to the Bankruptcy.
Form 8-K filed May 9, 1996 related to Confirmation
of Plan of Reorganization Change of Fiscal Year.
Form 8-B filed May 25, 1996 related to Registration of
Securities of Certain Successor Issuers
Form 10-C filed June 3, 1996 related to Name Change
B. Exhibits
Exhibit Number Description of Document
2.1 Plan and Agreement of Merger by and among Nuclear
Support Services, Inc., NSS of Delaware, Inc. and
Canisco Resources, Inc. (filed as exhibit 2.1 to the
Company's form 8-B filed May 24, 1996 and incorporated
herein by reference).
2.2 Agreement for purchase of stock of Oliver B.
Cannon & Son, Inc. and Sline Industrial Painters,
Inc. (filed as Exhibit 2.1 to the Company's form 8-K
dated November 19, 1993 and incorporated herein by reference).
3.1 Articles of Incorporation of the Company, as amended
(filed as Exhibit 3.1 to Form 8-B filed May 24, 1996
and incorporated herein by reference).
3.2 By-laws of the Company (filed as Exhibit 3.2 to Form 8-B
filed May 24, 1996 and incorporated herein by reference).
4.1 Specimen Certificate Representing Common Stock of
Canisco Resources, Inc.
10.1 1990 Stock Option Plan (filed as Exhibit 28.2 to
Registration Statement on Form S-8 (No. 33-33180) and
incorporated herein by reference)
INDEX TO EXHIBITS
Exhibit No. Description
Sequential Pg#
4.1 Specimen Certificate Representing
Common Stock of Canisco Resources, Inc.
22 Subsidiaries of the Registrant.
23 Accountants' Consent
27 Financial Data Schedule
99.1 Index to Financial Statement Schedule.
99.2 Independent Auditors' Report - Schedule.
99.3 Schedule II - Valuation and Qualifying Accounts.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, Registrant has duly caused
this Annual Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATE: July 12, 1996 CANISCO RESOURCES, INC.
/s/ Ralph A. Trallo
Ralph A. Trallo
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1934,
this report has been signed below by the following persons,
on behalf of the Registrant and in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
<S> <C> <C>
/s/ Joe C. Quick Chairman of the Board July 12, 1996
Joe C. Quick
Director
/s/Robert A. Hess Director July 12, 1996
Robert A. Hess
/s/Dale L. Ferguson Director July 12, 1996
Dale L. Ferguson
Director July 12, 1996
/s/Wm. Lawrence
Petcovic
Wm. Lawrence
Petcovic
Heath L. Allen Director July 12, 1996
Thomas P. McShane Director July 12, 1996
Director July 12, 1996
/s/Donald E. Lyons
/s/Ralph A. Trallo President, CEO July 12, 1996
Ralph A. Trallo Director
/s/ Michael J.
Olson Chief Financial July 12, 1996
Michael J. Olson and Accounting Officer
</TABLE>
SUBSIDIARIES OF THE REGISTRANT
Icesolv, Inc. - a Pennsylvania corporation which was
formed in June, 1993
Cannon Sline, Inc. - a Pennsylvania corporation formed by
merger of Oliver B. Cannon & Son, Inc. & Sline
Industrial Painters, Inc.
Other notes:
(1) Canisco Resources, Inc. is the survivor by merger of
Canisco Resources, Inc., a Delaware corporation, Nuclear
Support Services, Inc., a Virginia corporation and NSS
of Delaware, Inc. a Delaware corporation. Shareholder
approval of the merger of these entities was received
at a Special Meeting of Shareholders held March 29, 1996.
The merger was effective May 24, 1996.
(2) NSS Numanco, Inc. - The stock of NSS Numanco, Inc.
was sold to Nuvest, L.L.C. of Tulsa, Oklahoma effective
February 25, 1996.
(3) Henze Services, Inc. - Substantially all the assets
of Henze were sold to Harley Industries, Inc. of Tulsa,
Oklahoma in June, 1996.
ACCOUNTANT'S CONSENT
We consent to incorporation by reference in the Registration
Statement (No. 33-33180) on Form S-8 of Canisco Resources, Inc.
of our report dated June 28, 1996, except as to note 14 which
is as of July 1, 1996, relating to the consolidated balance
sheets of Canisco Resources, Inc. and subsidiaries as of
March 31, 1996 and September 30, 1995, and the related
consolidated statements of operations, shareholders' equity,
and cash flows and related schedule for the six month period
ended March 31, 1996 and the years ended September 30, 1995
and 1994, which report appears in the March 31, 1996 annual
report on Form 10-K of Canisco Resources, Inc.
Atlanta, Georgia
July 12, 1996
Exhibit 23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM CANISCO RESOURCES, INC.'S FORM 10-K FOR THE PERIOD ENDED
MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 550,432
<SECURITIES> 0
<RECEIVABLES> 12,867,776
<ALLOWANCES> (761,965)
<INVENTORY> 1,177,691
<CURRENT-ASSETS> 19,217,547
<PP&E> 11,882,231
<DEPRECIATION> (6,277,851)
<TOTAL-ASSETS> 26,101,297
<CURRENT-LIABILITIES> 15,167,116
<BONDS> 3,524,000
<COMMON> 6,190
0
0
<OTHER-SE> 2,141,706
<TOTAL-LIABILITY-AND-EQUITY> 26,101,297
<SALES> 0
<TOTAL-REVENUES> 32,930,854
<CGS> 27,944,340
<TOTAL-COSTS> 4,579,371
<OTHER-EXPENSES> 147,478
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 670,457
<INCOME-PRETAX> (410,792)
<INCOME-TAX> (54,000)
<INCOME-CONTINUING> (356,792)
<DISCONTINUED> (1,151,029)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,507,821)
<EPS-PRIMARY> (.69)
<EPS-DILUTED> 0
</TABLE>
INDEX TO FINANCIAL STATEMENT SCHEDULE
FOR CANISCO RESOURCES, INC.
March 31, 1996, September 30, 1995 and 1994
SCHEDULE II Valuation and Qualifying Accounts
EXHIBIT 99.1
COMMON STOCK
CANISCO RESOURCES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP 137587 10 1
THIS CERTIFIES THAT _________________________
IS THE OWNER OF _______________
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
CANISCO RESOURCES, INC.
transferable on the books of the Corporation by the holder
hereof in person or by duly authorized attorney upon
surrender of this certificate properly endorsed.
This certificate is not valid unless countersigned and
registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the
facsimile signatures of its duly authorized officers.
COUNTERSIGNED AND REGISTERED:
CHEMICAL MELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR
AUTHORIZED SIGNATURE s/President s/Secretary
Executive Offices
COMMON STOCK
CANISCO RESOURCES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP 137587 10 1
The Board of Directors and Stockholders
Canisco Resources, Inc.
Under date of June 28, 1996, except as to note 14 which
is as of July 1, 1996, we reported on the consolidated
balance sheets of Canisco Resources, Inc. and subsidiaries
as of March 31, 1996 and September 30, 1995, and the related
consolidated statements of operations, shareholders' equity,
and cash flows for the six month period ended March 31, 1996
and the year ended September 30, 1995 and 1994, as contained
in the 1996 annual report on Form 10-K. In connection with
our audits of the aforementioned consolidated
financial statements, we also audited the related
financial statement schedule as listed in the
accompanying index. This financial statement schedule is
the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial
statement schedule based on our audits.
In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material
aspects, the information set forth therein.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
June 28, 1996, except as to note 14,
which is as of July 1, 1996
Exhibit 99.2
CANISCO RESOURCES, INC.
March 31, 1996, September 30, 1995 and 1994
SCHEDULE II Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Additions
Balance at Charged to Deductions Balance
beginning of operating at end of
period expense Other period
Decription
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful
accounts
deducted from
accounts
receivable in
the consolidated
balance sheets:
September 30, 1996 585,941 233,121 58,097 760,965
September 30, 1995 784,330 572,096 770,485(1) 585,941
September 30, 1994 107,606 1,359,415 276,434 959,125(1) 784,330
(2)
Inventory reserves
deducted from
inventories in the
consolidated balance
sheets:
September 30, 1996 800,000 800,000
September 30, 1995 300,000 500,000 800,000
September 30, 1994 150,000 100,000 50,000 - 300,000
(1) Write-off of uncollectible accounts.
(2) Increase from acquisition of subsidiary.
Exhibit 99.3
</TABLE>
