UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1997
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 0-12293
CANISCO RESOURCES, INC.
(Exact name of Registrant as Specified in its Charter)
Delaware 54-0952207
(State of Incorporation) (IRS Employer Identification
No.)
300 Delaware Avenue, Suite 714, Wilmington, Delaware
19801
(Address of Principal Executive Offices)
(Zip Code)
302-777-5050
(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 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 ( )
Common Stock, par value $.00025 per share 2,215,540 shares
outstanding as of September 30, 1997.
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc.)
PART I ITEM 1
FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of September 30, 1997 and
March 31, 1997
Consolidated Statements of Operations for the Three Month
Periods Ended September 30, 1997 and 1996
Consolidated Statements of Operations for the Six Month
Periods Ended September 30, 1997 and 1996
Consolidated Statements of Cash Flows for the Six Month
Periods Ended September 30, 1997 and 1996
PART I ITEM 2
Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II ITEM 6
Exhibits and Reports on Form 8-K
<PAGE>
PART I ITEM 1 FINANCIAL STATEMENTS
<TABLE>
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc.)
Consolidated Balance Sheets
Assets
<CAPTION>
Assets September 30, 1997 March 31, 1997
(Unaudited)
<S> <C> <C>
Current Assets:
Cash $340,032 $1,308,225
Accounts receivable, net
Billed 10,199,579 8,637,956
Unbilled 494,005 222,193
Other 198,942 209,885
Total accounts receivable 10,892,526 9,070,034
Inventory 385,971 407,166
Deferred income taxes 391,000 391,000
Other prepaid expenses and
current assets 412,180 1,590,187
Costs and estimated earnings
in excess of billings on
uncompleted contracts 1,734,632 924,075
Total current assets 14,156,341 13,690,687
Property and equipment
Land 954,100 954,100
Buildings and improvements 1,085,812 1,085,812
Machinery and equipment 2,408,275 2,378,759
Furniture and fixtures 390,339 374,803
Vehicles 419,921 419,921
Total property and equipment 5,258,447 5,213,395
Less accumulated depreciation 1,797,870 1,543,280
Property and equipment, net 3,460,577 3,670,115
Intangible pension asset 957,706 1,009,474
Deferred income taxes 2,297,000 2,297,000
Other assets 582,265 633,675
Total assets $21,453,889 $21,300,951
</TABLE>
<PAGE>
<TABLE>
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc.)
Consolidated Balance Sheets
Liabilities and Shareholders' Equity
Liabilities and Shareholders Equity
<CAPTION>
September 30, 1997 March 31, 1997
(Unaudited)
<S> <C> <C>
Current Liabilities:
Notes payable $ 0 $756,969
Current portion of long-term debt 2,053,314 2,053,314
Accounts payable 2,205,595 2,092,506
Other accrued expenses 2,546,302 3,002,626
Billings in excess of costs
and estimated earnings on
uncompleted contracts 505,815 516,617
Total current liabilities 7,311,026 8,422,032
Long-term debt, less current portion 2,756,413 3,808,314
Accrued pension cost 1,007,533 1,052,197
Notes payable to Bank 7,193,344 5,412,020
Total liabilities 18,268,316 18,694,563
Shareholders' equity:
Common stock, $.0025 par
value, authorized
10,000,000 shares, issued,
2,477,592 shares;
outstanding 2,215,540 shares 6,194 6,194
Additional paid-in capital 2,873,101 3,478,576
Retained earnings 4,257,815 3,751,755
Treasury stock, at cost (3,951,537) (4,630,137)
Total shareholders'equity 3,185,573 2,606,388
Total liabilities
and shareholders'equity $21,453,889 $21,300,951
</TABLE>
<TABLE>
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc.)
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended September 30,
1997 1996
<S> <C> <C>
Revenues from services $ 14,901,690 $14,505,968
Cost of services 12,115,416 11,600,563
Gross margin 2,786,274 2,905,405
General and administrative expenses 1,949,865 2,009,930
Income from continuing operations 836,409 895,475
Interest expense (264,538) (183,920)
Other income, net 3,985 10,218
Income from continiung operations
before income taxes 575,856 721,773
Income tax expense 230,343 288,708
Income from continuing operations 345,513 433,065
Loss from operations of discontinued
subsidiary 0 (29,228)
Net earnings 345,513 403,837
Earnings per share $0.16 $0.19
Weighted average common shares 2,193,040 2,169,190
</TABLE>
<TABLE>
CANISCO RESOURCES, INC.
(formerly Nuclear Support Services, Inc.)
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Six Months Ended September 30,
1997 1996
<S> <C> <C>
Revenues from services $27,709,523 $26,768,832
Cost of services 22,443,456 21,610,702
Gross margin 5,266,067 5,158,130
General and administrative expenses 3,883,960 3,921,941
Income from continuing operations 1,382,107 1,236,189
Interest expense (525,884) (417,966)
Other (expense)income, net (12,788) 1,115,836
Income before reorganization costs
and income taxes 843,435 1,934,059
Reorganization costs 0 (993,107)
Income from continuing operations
before income taxes 843,435 940,952
Income tax expense 337,375 376,381
Income from continuing operations 506,060 564,571
Loss from operations of discontinued
subsidiary 0 (42,401)
Net earnings 506,060 522,170
Earnings per share $0.23 $0.24
Weighted average common shares 2,193,040 2,169,190
</TABLE>
<TABLE>
CANISCO RESOURCES, INC.
(formerly Nuclear Support Service, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
Six Months Ended September 30,
1997 1996
<S> <C> <C>
Cash flows from operating
activities:
Net earnings $506,060 $522,170
Adjustments to reconcile to
net earnings to net cash
(used in) operating activities:
Depreciation and amortization 254,590 303,167
Deferred income taxes 0 766,157
Changes in assets and liabilities,
net of effects from purchases and
sales of subsidiaries:
Increase in accounts receivable (1,822,492) (2,150,734)
Decrease in inventory 21,195 40,309
(Increase) decrease in costs
and estimated earnings in
excess of billings on
uncompleted contracts (810,557) 661,482
Decrease in other assets 1,281,185 115,083
Decrease (increase) in
accounts payable (643,880) 216,544
Decrease in accrued expenses (500,988) (1,417,582)
(Decrease)increase in billings
in excess of costs and
estimated earnings
on uncompleted contracts (10,802) 354,399
Net cash (used in)
operating activities (1,725,689) (589,005)
Cash flows from investing
activities:
Proceeds from sale of Henze
subsidiary 0 1,200,000
Net purchase of property
and equipment (45,052) (18,640)
Net cash provided in (used in)
by investing activities (45,052) 1,181,360
Cash flows from financing activities:
Net borrowings on notes payable 1,781,324 1,118,178
Proceeds from long-term debt 0 3,900,000
Principal payments on
long-term debt (1,051,901) (5,781,524)
Proceeds from reissue
of Treasury Stock 73,125 0
Net cash provided by (used in)
financing activities 802,548 (763,346)
Net Decrease in cash (968,193) (170,991)
Cash at beginning of period 1,308,225 550,432
Cash at end of period $340,032 $379,441
</TABLE>
<PAGE>
PART I ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997
COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 1996
Revenues for the period were Fourteen Million Nine Hundred
Two Thousand ($14,902,000) compared to Fourteen Million
Five Hundred Six Thousand ($14,506,000) in the prior year,
an increase of 2.7%. The power generation market accounted
for twenty-eight percent (28%) of total revenues compared to
twenty-five percent (25%) of total revenues for the same
period last year. The petro-chemical business was unchanged
from a year ago at twenty-two percent (22%) of second
quarter revenues. The pulp and paper market declined to
twenty percent (20%) of second quarter 1997 revenues
compared to twenty-three percent (23%) for the same period a
year ago. The revenue contribution of all other businesses
collectively was thirty percent (30%) unchanged from the
same period last year.
The gross margin for the period was Two Million Seven
Hundred Eighty Six Thousand ($2,786,000) a reduction of One
Hundred Nineteen ($119,000) for the same period a year ago.
The decrease is attributable to competitive pressures in the
market place and completion of several capital projects
which were performed in the prior year. As a percent or
revenue , the gross margin for the current period was
nineteen percent (19%) compared to twenty percent (20%)
during the period ended September 30, 1996. The power
generation market margin contribution was thirty-three
percent (33%) versus thirty-five percent (35%) for the same
period last year. The margin contribution for the petro-
chemical business increased to nineteen percent (19%) from
fourteen percent (14%) a year ago. The pulp and paper
industry accounted for twenty-one percent (21%) of gross
margin down from twenty-eight percent (28%) during the same
period last year. All other markets contributed twenty-
seven percent (27%) of gross margin compared to twenty-three
percent (23%) in the comparable period a year ago.
General and administrative expenses for the quarter were One
Million Nine Hundred Fifty Thousand ($1,950,000) compared to
Two Million Ten Thousand ($2,010,000) in the same period
last year. As a percentage of revenue General &
Administrative expenses decreased to thirteen percent (13%)
from fourteen percent (14%) the prior year.
Income from continuing operations was Eight Hundred Thirty
Six Thousand ($836,000) compared to Eight Hundred Ninety-
Five Thousand ($895,000) for the same period last year.
The decrease is attributable to the slight reduction in
gross profit margins of one percent (1%) offset somewhat by
decrease in General & Administrative expenses.
Interest expense increased approximately Eighty-One Thousand
($81,000) or forty-four percent (44%) to Two Hundred Sixty
Five Thousand ($265,000) from the same period a year ago.
This increase was due to interest expense associated with
payments to the unsecured creditors. Other income, net of
expenses, was Four Thousand ($4,000) from Ten Thousand
($10,000) a year ago.
Income taxes of Two Hundred Thirty Thousand ($230,000) were
accrued for the period compared to Two Hundred Eighty-Nine
Thousand ($289,000) for the same period a year ago.
The net income from continuing operations was approximately
Three Hundred Forty-Six Thousand ($346,000) or $0.16/share
compared to Four Hundred Thirty-Three Thousand ($433,000) or
$0.20/share for the same period last year. There were no
losses attributable to discontinued operations for the
quarter ended September 30, 1997 compared to Twenty-Nine
Thousand ($29,000) for the same period a year ago. The
Company posted net earnings of Three Hundred Forty-Six
Thousand ($346,000) or $0.16/share compared to Four Hundred
Four Thousand ($404,000) or $0.19/share for the same period
in the prior year.
SIX MONTHS ENDED SEPTEMBER 30, 1997
COMPARED TO THE SIX MONTHS ENDED SEPTEMBER 30, 1996
Revenues for the period were Twenty-Seven Million Seven
Hundred Ten Thousand ($27,710,000) compared to Twenty-Six
Million Seven Hundred Sixty -Nine Thousand ($26,769,000) for
the prior year. The power generation market accounted for
thirty-three percent (33%) of total revenues compared to
thirty percent (30%) of total revenues for the same period
last year. The petro-chemical market provided revenues of
twenty-two percent (22%) compared to twenty-four percent
(24%) for the six months ended September 1996. The pulp and
paper market accounted for twenty-two percent (22%) of
revenues compared to twenty-three percent (23%) for the same
period last year. The revenue contribution of all other
businesses collectively was unchanged at twenty-three
percent (23%).
The gross margin for the period increased One Hundred Eight
Thousand ($108,000) to Five Million Two Hundred Sixty-Six
Thousand ($5,266,000) when compared to the same period a
year ago. As a percent of revenue, the gross margin for the
current period remained constant at nineteen percent (19%).
The power generation market margin contribution remained
constant with the prior year at thirty-eight percent (38%).
The margin contribution of the petro-chemical business
increased to nineteen percent (19%) from fourteen (14%) a
year ago. The pulp and paper industry accounted for twenty
three percent (23%) of gross margin, down from twenty-nine
percent (29%) during the same period last year. All other
markets contributed twenty percent (20%) of gross margin
compared to nineteen percent (19%) in the comparable period
a year ago.
General and administrative expenses for the first six months
decreased Thirty-Eight Thousand ($38,000) to Three Million
Eight Hundred Eighty-Four Thousand ($3,884,000) compared to
the same period last year. As a percentage of revenue
General & Administrative expenses decreased to fourteen
percent (14%) from fifteen percent (15%).
Income from continuing operations was One Million Three
Hundred Eighty Two Thousand ($1,382,000) compared to One
Million Two Hundred Thirty-Six Thousand ($1,236,000) for the
same period last year.
Interest expense increased approximately One Hundred Eight
Thousand ($108,000) or twenty-six percent (26%) to Five
Hundred Twenty Six Thousand ($526,000) compared to the same
period a year ago. The increase was due to interest expense
associated with payments to the unsecured creditors. The
Company had other expenses, net of income, of Thirteen
Thousand ($13,000) compared to other income, net of expense,
and reorganization costs of One Hundred Twenty Three
Thousand ($123,000) for the same period a year ago.
Significant items last year were reorganization expenses,
gain on the discount of compromised liabilities and
settlement of the litigation against Westinghouse.
Income taxes of Three Hundred Thirty Seven Thousand
($337,000) were accrued for the period compared to Three
Hundred Seventy-Six Thousand ($376,000) for the same period
a year ago.
Income from continuing operations for the first six months
of fiscal year 1997 was approximately Five Hundred Six
Thousand ($506,000) or $0.23/share compared to $0.26/share
or Five Hundred Sixty Five Thousand ($565,000) for the same
period last year. There were no losses attributable to
discontinued operations for the first six month period of
the current year compared to Forty-Two Thousand ($42,000)
for the same period a year ago. The Company posted net
earnings of Five Hundred Six Thousand ($506,000) or
$0.23/share compared to Five Hundred Twenty-Two Thousand
($522,000) or $0.24/share for the same period a year ago.
Current Trends
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 directs costs, taxes, purchase of
property and equipment and periodic repayment of the
Company's revolving lines of credit and long term debt.
The Company was operating as a Debtor-In-Possession under
the terms of Chapter 11 Reorganization of the United States
Bankruptcy Code, Case Number 1-95-01767 prior to its
emergency from bankruptcy on July 1, 1996. As of March 1,
1996 the Company entered into a cash collateral stipulation
allowing it to use its own cash for continued operations.
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.
At September 30, 1997, the Company had borrowed
approximately $7,200,000 on its revolving credit line of
$11,000,000 and had an outstanding principal balance of
$2,925,000 on its long term secured loan obligation. The
Company is in compliance with the debt covenants as amended
from time to time.
At September 30, 1997, the Company had working capital of
approximately $6,845,000 compared to working capital of
$5,269,000 at March 31, 1997. The increase in working
capital was due primarily to the increase in accounts
receivable.
The Company anticipates that working capital and available
bank credit will be sufficient to meet cash needs for the
coming year.
CAUTIONARY STATEMENT
Statements in this Report on Form 10Q which express the
"belief", "anticipation" or "expectation", as well as other
statements which are not historical fact, are forward-
looking statements within the meaning of the Private
Securities Litigation Reform Action of 1995 and involve
risks and uncertainties that could cause actual results to
differ materially from those projected.
PART III, ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 Financial Data Schedule for the Six Month Period
Ended September 30, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM CANISCO RESOURCES, INC.'S FORM 10-Q FOR THE PERIOD ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 340,0032
<SECURITIES> 0
<RECEIVABLES> 11,087,895
<ALLOWANCES> (195,369)
<INVENTORY> 385,971
<CURRENT-ASSETS> 14,156,341
<PP&E> 5,258,447
<DEPRECIATION> 1,797,870
<TOTAL-ASSETS> 21,453,889
<CURRENT-LIABILITIES> 7,311,026
<BONDS> 10,257,290
0
0
<COMMON> 6,194
<OTHER-SE> 3,179,379
<TOTAL-LIABILITY-AND-EQUITY> 21,453,889
<SALES> 27,709,523
<TOTAL-REVENUES> 27,709,523
<CGS> 22,443,456
<TOTAL-COSTS> 22,443,456
<OTHER-EXPENSES> 3,896,748
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 525,884
<INCOME-PRETAX> 843,435
<INCOME-TAX> 337,375
<INCOME-CONTINUING> 506,060
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 506,060
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.23
</TABLE>
