<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended SEPTEMBER 30, 1998 Commission file number 0-7099
------------------ ------
CECO ENVIRONMENTAL CORP.
----------------------------------------------------------------------
NEW YORK 13-2566064
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
505 UNIVERSITY AVENUE, SUITE 1400, TORONTO, ONTARIO, CANADA M5G 1X3
- -------------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 416-593-6543
------------
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
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 and (2) has been subject to such filing requirements for
the past 90 days.
X Yes No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the close of the period covered by this report.
Class: COMMON, PAR VALUE $.01 PER SHARE
---------------------------------
OUTSTANDING at September 30, 1998 8,250,896
<PAGE>
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
SEPTEMBER 30, 1998
- -------------------------------------------------------------------------------
INDEX
Part I - Financial Information:
Condensed consolidated balance sheet as of
September 30, 1998 and December 31, 1997 2
Condensed consolidated statement of operations
for the three-month and nine-month periods ended
September 30, 1998 and 1997 3
Condensed consolidated statement of cash flows for the
nine-month periods ended September 30, 1998 and 1997 4
Notes to condensed consolidated financial statements 5 & 6
Management's discussion and analysis of the
financial condition and results of operations 7 to 11
Signature 12
1
<PAGE>
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- -----------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 223,051 $ 847,827
Marketable securities - trading 682,395 634,150
Accounts receivable 5,660,275 2,979,414
Inventories 554,776 771,068
Costs and estimated earnings in excess of
billings on uncompleted contracts 273,459 235,454
Prepaid expenses and other current assets 287,097 230,458
Prepaid and refundable income taxes -- 150,200
Due from former owners of Busch Co. 156,269 --
Deferred income taxes 33,477 33,477
----------- -----------
Total current assets 7,870,799 5,882,048
Property and equipment, net 2,042,599 1,947,482
Goodwill, net 5,019,585 5,834,858
Other intangible assets, at cost, net 1,348,268 272,696
Deferred income taxes 23,896 23,896
----------- -----------
Total assets $16,305,147 $13,960,980
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term obligations $ 1,200,000 $ --
Current portion of long-term debt 299,934 333,871
Current portion of capital lease obligation 4,797 5,554
Accounts payable and accrued expenses 4,002,482 1,873,965
Billings in excess of costs and estimated
earnings on uncompleted contracts 1,512,350 2,517,310
Due former owners of Busch Co. -- 502,592
Accrued income taxes 145,000 --
----------- -----------
Total current liabilities 7,164,563 5,233,292
Long-term debt, less current portion 1,520,770 1,732,993
Capital lease obligation, less current portion -- 3,821
----------- -----------
Total liabilities 8,685,333 6,970,106
----------- -----------
Minority interest 159,387 248,289
----------- -----------
Shareholders' equity:
Preferred stock, $.01 par value; 10,000,000
shares authorized, none issued -- --
Common stock, $.01 par value; 100,000,000
shares authorized, 8,388,816 and 8,107,048
shares issued, respectively 83,888 81,070
Capital in excess of par value 10,139,013 9,860,063
Accumulated deficit ( 2,413,805) ( 2,849,879)
----------- -----------
7,809,096 7,091,254
Less treasury stock, at cost ( 348,669) ( 348,669)
----------- -----------
Net shareholders' equity 7,460,427 6,742,585
----------- -----------
Total liabilities and shareholders' equity $16,305,147 $13,960,980
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
----------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Revenues:
Net sales - products $1,940,593 $2,016,388 $ 6,131,363 $ 7,435,355
Contract revenues 5,349,202 2,955,554 14,237,493 3,004,074
----------- ----------- ------------ -------------
Total revenues 7,289,795 4,971,942 20,368,856 10,439,429
----------- ----------- ------------ -------------
Costs and expenses:
Cost of revenues - products 803,882 979,556 2,907,091 3,749,583
Cost of revenues - contracts 4,306,582 1,847,116 10,850,034 1,874,116
Selling and administrative 1,743,192 2,300,143 5,219,618 4,275,904
Depreciation and amortization 140,820 127,845 364,395 367,634
----------- ----------- ------------ -------------
6,994,476 5,254,660 19,341,138 10,267,237
----------- ----------- ------------ -------------
Income (loss) from operations 295,319 ( 282,718) 1,027,718 172,192
Investment income (loss) ( 46,802) 37,350 ( 11,357) 107,926
Interest expense, net ( 68,059) ( 17,885) ( 180,848) ( 67,263)
----------- ----------- ------------ -------------
Income (loss) before provision
for (recovery of) income taxes 180,458 ( 263,253) 835,513 212,855
Provision for (recovery of) income taxes 79,000 ( 109,000) 355,000 52,000
----------- ----------- ------------ -------------
Income (loss) before minority interest 101,458 ( 154,253) 480,513 160,855
Minority interest ( 7,262) 52,793 ( 44,439) ( 21,455)
----------- ----------- ------------ -------------
Net income (loss) $ 94,196 ($ 101,460) $ 436,074 $ 139,400
========== =========== =========== ============
Net income per share,
basic and diluted $ .01 ($ .01) $ .05 $ .02
========== =========== =========== ============
Weighted average number of
common shares outstanding:
Basic 8,250,896 7,774,961 8,219,588 7,412,739
========= ========= ========= =========
Diluted 8,725,175 8,192,180 8,650,990 7,899,886
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1998 1997
----------- ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<S> <C> <C>
Cash flows from operating activities:
Net income $ 436,074 $ 139,400
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 278,673 367,634
Goodwill amortization - CECO Filters, Inc. 85,722 -
Minority interest 44,439 21,455
(Increase) decrease in operating assets:
Marketable securities trading ( 48,245) 309,145
Accounts receivable ( 2,111,154) ( 1,960,730)
Inventories 216,292 31,957
Costs and estimated earnings in excess of
billings on uncompleted contracts ( 14,119) ( 234,394)
Prepaid expenses and other current assets ( 38,898) ( 70,595)
Prepaid and refundable income taxes 150,200 ( 103,348)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses 1,631,896 1,037,331
Billings in excess of costs and estimated
earnings on uncompleted contracts ( 1,176,784) 1,873,918
Accrued income taxes 145,000 ( 276,976)
----------- ------------
Net cash provided by (used in) operating activities ( 400,904) 1,134,797
----------- ------------
Cash flows from investing activities:
Acquisition of IFM, net of cash acquired, comprised of the following:
Excess of current liabilities over current assets, net of cash acquired 169,756 -
Equipment ( 125,132) -
Goodwill ( 171,235) -
Acquisition of Busch Co. allocated to:
Goodwill - ( 670,421)
Inventory - ( 145,379)
Equipment - ( 131,818)
Patents - ( 1,139,323)
Prepaid expenses - ( 13,059)
Additions to property and equipment and intangible assets ( 171,678) ( 468,624)
Acquisition of additional shares of CECO Filters, Inc. ( 103,335) -
----------- ------------
Net cash (used in) investing activities ( 401,624) ( 2,568,624)
----------- ------------
Cash flows from financing activities:
Net borrowings of short-term obligations 1,200,000 640,576
Net (repayments) of long-term debt and capital lease obligation ( 363,387) ( 72,409)
Due to former owners of Busch Co. ( 502,592) 331,196
Due from former owners of Busch Co. ( 156,269) -
Increase in long-term debt - 1,000,000
----------- ------------
Net cash (used in) financing activities 177,752 1,899,363
----------- ------------
Net increase (decrease) in cash ( 624,776) 465,536
Cash at beginning of period 847,827 412,174
----------- ------------
Cash and cash equivalents at end of period $ 223,051 $ 877,710
=========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the quarter for:
Interest $ 218,348 $ 67,263
----------- ------------
Income taxes $ 118,000 $ 432,324
----------- ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
- --------------------------------------------------------------------------------
1. The condensed consolidated financial statements are unaudited (except
for the balance sheet information as of December 31, 1997, which is
derived from the Company's audited financial statements) and, in the
opinion of management, reflect all adjustments necessary to present
fairly the financial position as of September 30, 1998, the results of
operations for the three-month and nine-month periods ended September
30, 1998 and 1997 and cash flows for the nine-month periods ended
September 30, 1998 and 1997. The condensed consolidated financial
statements should be read in conjuntion with the consolidated financial
statements and notes thereto, together with management's discussion and
analysis of financial condition and results of operations, contained in
the Company's 1997 Annual Report to Stockholders. The results of
operations for the nine-month period ended September 30, 1998 are not
necessarily indicative of the results to be expected for the full year.
2. Acquisition of Businesses
During March 1998, pursuant to an Asset Purchase Agreement, the Company
acquired substantially all of the assets, and the business, of
Integrated Facilities Management, Inc. ("IFM") for $150,000 in cash.
IFM, located in Mesa, Arizona, provides a full range of services for
inter-facility general repair, preventive maintenance and inter-facility
construction needs exclusively for owners and users of industrial,
commercial, educational, healthcare and manufacturing facilities. The
acquisition was accounted for as a purchase. The Asset Purchase
Agreement provides that, notwithstanding the actual closing date, the
closing was deemed to be effective as of January 1, 1998. The condensed
consolidated statement of operations for the nine-month period ended
September 30, 1998, therefore, includes the operations of IFM since
January 1, 1998.
On September 25, 1997, the Company acquired substantially all of the
assets, and the business, of Busch Co. During April 1998, the Company
completed a valuation of certain patents acquired as part of this
acquisition, utilizing the services of an independent consultant. The
valuation resulted in the reclassification of $1,047,000 from goodwill
to other intangible assets.
On a pro forma basis, results of operations for the nine-month periods
ended September 30, 1998 and 1997, would have been as follows, if the
acquisitions had been made as of January 1, 1997.
NINE MONTHS ENDED
SEPTEMBER 30,
1998 1997
---- ----
Total revenues $20,368,856 $17,343,271
Income before provision for income taxes 835,513 388,450
Net income 436,074 215,950
Net income per share, basic and diluted .05 .03
3. Inventories consisted of the following:
SEPTEMBER 30, DECEMBER 31,
1998 1997
---- ----
Raw materials $375,042 $409,639
Work-in-process 2,646 157,911
Finished goods 177,088 203,518
-------- --------
$554,776 $771,068
======== ========
5
<PAGE>
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(unaudited)
- -------------------------------------------------------------------------------
4. Investment in CECO Filters, Inc.
In February 1998, the Company exchanged 281,768 additional shares of its
common stock for 281,768 shares of CECO common stock with an unrelated
third party. Also, during the nine months ended September 30, 1998, the
Company acquired 98,610 more shares of CECO's common stock on the open
market for cash. As of September 30, 1998, the Company owned 92.99% of
CECO's common stock.
Summarized financial information of CECO as of and for its nine months
ended September 30, 1998, is as follows:
Financial position:
Working capital $90,181
===========
Total assets $11,641,302
===========
Net shareholders' equity $2,530,770
===========
Results of operations:
Total revenues $20,368,856
===========
Income before income taxes $887,372
===========
Net income $532,372
===========
6
<PAGE>
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(unaudited)
- --------------------------------------------------------------------------------
Financial Condition, Liquidity and Capital Resources - The Company
The Company's consolidated cash and marketable securities position decreased
from $1,481,977 at December 31, 1997 to $905,446 at September 30, 1998. This
decrease of $576,531 is attributable to the use of cash in operating activities
of $352,659 and use of cash in investing activities of $401,624, offset by cash
provided by financing activities of $177,752. CECO Filters, Inc. ("CECO")
maintains a $2,000,000 line of credit with a commercial bank, of which
$1,200,000 was outstanding as of September 30, 1998.
Management believes that the expected revenues from the operations of CECO,
supplemented by the available line of credit, will be sufficient to provide
adequate cash to fund anticipated working capital and other cash needs during
the remainder of the year.
The Company and CECO entered into a five-year management and consulting
agreement during 1994 pursuant to which the Company provides management and
financial consulting services to CECO for a monthly fee of $20,000 through July,
1998 and $35,000 from August, 1998 until the agreement expires in December 1998.
The Company believes its consulting agreement with CECO and investment income
from its investments in marketable securities, should provide sufficient revenue
to meet its general and administrative expenses.
Results of Operations - The Company
The Company's consolidated statement of operations for the nine-month periods
ended September 30, 1998 and 1997 reflects the operations of the Company
consolidated with the operations of CECO. At September 30, 1998, the Company
owned approximately 93% of CECO. Minority interest in the consolidated statement
of operations has been presented as a reduction in net income.
The Company received $90,000 during this quarter for management and financial
consulting services provided to CECO. This amount is not reflected in the
consolidated results of operations since it is eliminated in consolidation.
Except as set forth above, the Company has no other income, revenues or expenses
other than as a result of its investment in CECO and its investment in
marketable securities, and except for its investment activities, the Company
does not engage in operations other than through its operating subsidiary, CECO.
CECO is comprised of CECO Filters, Inc., Air Purator Corporation ("APC"), U.S.
Facilities Management Company, Inc. ("USFM") and New Busch Co., Inc.
(collectively referred to as "the CECO Group"), which provide innovative
solutions to air quality problems through particle and chemical control
technologies and management services.
7
<PAGE>
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(unaudited)
- --------------------------------------------------------------------------------
Results of Operations - The Company - Continued
CECO manufactures and markets filters known as fiber bed mist eliminators,
designed to trap, collect and remove solid soluble and liquid particulate matter
suspended in an air or other gas stream whether generated from a point source
emission or otherwise. CECO offers innovative patented technologies, Catenary
Grid(R) and Narrow Gap Venturi(TM), designed for use with heat and mass
transfer operations and particulate control. APC designs and manufactures high
performance filter media and bags for use in high temperature pulse-jet
baghouses, the most effective type of baghouse for capturing submicron
particulate from gas streams. USFM provides facilities management and software,
as well as outsourced plant-wide maintenance management to help customers
achieve their performance goals. Busch is engaged in designing, manufacturing
and supplying equipment used to control the environment in and around industrial
plants with a variety of proprietary and patented technologies.
On March 16, 1998, CECO acquired substantially all of the assets of Integrated
Facilities Management ("IFM") of Mesa, Arizona in an all cash transaction,
effective January 1, 1998. IFM provides facility audits, preventative
maintenance, labor force augmentation, as-built warranty reconciliation,
pre-scheduled facility maintenance inspection, inter-facility construction
services and other trade services. IFM has been integrated into USFM. USFM will
continue to provide its unique environmental maintenance services. USFM also
includes a technology arm through its strategic alliance with Western VAR
Alliance. USFM can now offer complete facilities management and computerized
facility and maintenance management and co-sourced resources through a single
organization.
Results of Operations - CECO (Company's Subsidiary)
Comparison of Nine Months Ended September 30, 1998
to Nine Months Ended September 30, 1997
Revenues were approximately $20.4 million and $10.4 million for the nine months
ended September 30, 1998 and 1997, respectively, an increase of 95.1%. The
increase in revenues from 1997 to 1998 resulted from the acquisition of Busch
Co. in September, 1997 and IFM in March, 1998, adding revenues of $10.3 million
and $3.3 million, respectively.
The CECO Group's backlog of orders and services at September 30, 1998 was
approximately $9.8 million as compared to approximately $10 million at September
30, 1997, a decrease of $.2 million or 2.0%. There can be no assurance that
order backlog will be replicated, or increased, or translate into higher
revenues in the future. The success of the CECO Group's business depends on a
multitude of factors that are out of the CECO Group's control. The CECO Group's
operating results can be significantly impacted by the introduction of new
products and services, new manufacturing technologies, rapid change in the
demand for its product and services, decrease in the average selling price over
the life of a product as competition increases, and the CECO Group's dependence
on the efforts of middle men to sell a significant portion of its products and
services.
8
<PAGE>
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(unaudited)
- -------------------------------------------------------------------------------
Results of Operations - CECO (Company's Subsidiary)
Comparison of Nine Months Ended September 30, 1998
to Nine Months Ended September 30, 1997 - Continued
The CECO Group's overall cost of revenues increased as a percentage of revenues
for the nine months ended September 30, 1998 (67.5%) compared to the nine months
ended September 30, 1997 (53.9%). The increase is attributed to the impact of
Busch Co. where costs as a percentage of revenues amounted to 70.5%, and IFM,
now called USFM (Service), where costs as a percentage of revenues amounted to
96.2% both from January 1, 1998 through September 30, 1998. Without the impact
of Busch Co. and USFM (Service), the cost of revenues as a percentage of
revenues would have been 48.9%. The CECO Group continues to use the latest
technology available in an effort to reduce both cost of revenues (and the
maintenance of optimal inventory levels) and operating expenses, and ultimately
increase overall company profits.
The CECO Group's selling and administrative expenses amounted to $5,017,338 for
the nine-month period ended September 30, 1998 compared to $4,137,533 for the
nine-month period ended September 30, 1997, representing an increase of $879,805
or 21.3%. This increase is the direct result of selling and administrative
expenses of Busch Co. and IFM.
During 1994, the CECO Group entered into a management and consulting agreement
with the Company. The terms of the agreement require payment of monthly fees of
$20,000 through July, 1998 and $35,000 through December, 1998 in exchange for
management and financial consulting services involving corporate policies;
marketing; strategic and financial planning; mergers, acquisitions and related
matters. The CECO Group incurred management fees to the Company of $210,000
during the nine-month period ended September 30, 1998 and $180,000 during the
nine-month period ended September 30, 1997.
Interest expense increased by $151,085, or 224.6% during the nine-month period
ended September 30, 1998 as compared to the same period in 1997. The increase in
interest expense can be attributed to an increased utilization of the bank line
of credit during the nine months ended September 30, 1998 compared to the
previous year, as well as additional borrowings in the first half of 1998
incurred to fund the acquisition of IFM.
The CECO Group generated pre-tax income of $887,372 for the nine-month period
ended September 30, 1998 compared to pre-tax income of $131,118 for the
nine-month period ended September 30, 1997. This change is attributed
principally to the increase in revenues for the nine-month period ended
September 30, 1998 over the comparable period in 1997.
The provision for federal and state income taxes for the nine-month period ended
September 30, 1998 amounted to $355,000 compared to $52,000 for the nine-month
period ended September 30, 1997 and reflects an effective income tax rate of
approximately 40% for each period.
9
<PAGE>
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(unaudited)
- --------------------------------------------------------------------------------
Results of Operations - CECO (Company's Subsidiary)
Comparison of Three Months Ended September 30, 1998
to Three Months Ended September 30, 1997
Sales were approximately $7.3 million and $5.0 million for the three-month
periods ended September 30, 1998 and 1997, respectively. This represents an
increase of 47% compared to the three months ended September 30, 1997.
CECO's overall cost of revenues increased as a percentage of revenues for the
three months ended September 30, 1998 (70.1%) compared to the three months ended
September 30, 1997 (56.9%). The increase is attributed to the impact of Busch
Co. where cost as a percentage of revenues amounted to 71.8%, and IFM, now
called USFM (Service), where cost as a percentage of revenues amounted to 97.6%,
both from July 1, 1998 through September 30, 1998. Without the impact of Busch
Co. and USFM (Service), the cost of revenues as a percentage of revenues would
have been 49.6%. The CECO Group continues to use the latest technology available
in an effort to reduce both cost of revenues (and the maintenance of optimal
inventory levels) and operating expenses, and ultimately increase overall
company profits.
The CECO Group's selling and administrative expenses amounted to $1,698,398 for
the three-month period ended September 30, 1998 compared to $2,239,767 for the
three-month period ended September 30, 1997, representing a decrease of $541,369
or 24.2%. This decrease is the result of the $500,000 sign on bonus to a former
officer of Busch Co. incurred in 1997 and the additional expenses of newly
acquired IFM.
Interest expense increased by $62,673 or 350.4% during the three-month period
ended September 30, 1998 when compared to the same period in 1997. The increase
in interest expense can be attributed to an increased utilization of the bank
line of credit during the three months ended September 30, 1998 compared to the
previous year, as well as additional borrowings incurred related to the
acquisition of IFM.
The CECO Group earned pre-tax income of $198,543 for the three-month period
ended September 30, 1998 as compared to a loss of $272,938 for the three-month
ended September 30, 1997. This change is attributed principally to the increase
in revenues for the three-month period ended September 30, 1998 over the
comparable period in 1997.
The provision for federal and state income taxes for the three-month period
ended September 30, 1998 amounted to $79,000 compared to a credit of $109,000
for the three-month period ended September 30, 1997 and reflects an effective
income tax rate of approximately 40% for each period.
10
<PAGE>
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - CONTINUED
(unaudited)
- --------------------------------------------------------------------------------
Other Matters
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this document
and other materials filed or to be filed with the Securities and Exchange
Commission, as well as information included in oral or other written statements
made or to be made by the Company, contains statements that are forward-
looking. Such statements may relate to plans for future expansion, business
development activities, other capital spending, financing, or other effects of
regulation and competition. Such information involves important risks and
uncertainties that could significantly affect anticipated results in the future
and, accordingly, such results may differ from those expressed in any forward-
looking statements made by or on behalf of the Company. These risks and
uncertainties include, but are not limited to, those relating to product and
service development activities, dependence on existing management, global
economic and market conditions, and changes in federal or state laws.
11
<PAGE>
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
SIGNATURE
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CECO ENVIRONMENTAL CORP.
/s/ Phillip DeZwirek
-----------------------------
Phillip DeZwirek
Chief Financial Officer
Chief Executive Officer
Date: October 23, 1998
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES AS OF AND FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 223,051
<SECURITIES> 682,395
<RECEIVABLES> 5,660,275
<ALLOWANCES> 0
<INVENTORY> 554,776
<CURRENT-ASSETS> 7,870,799
<PP&E> 3,966,052
<DEPRECIATION> 1,923,453
<TOTAL-ASSETS> 16,305,147
<CURRENT-LIABILITIES> 7,164,563
<BONDS> 1,820,704
0
0
<COMMON> 83,888
<OTHER-SE> 7,376,539
<TOTAL-LIABILITY-AND-EQUITY> 16,305,147
<SALES> 6,131,363
<TOTAL-REVENUES> 20,368,856
<CGS> 2,907,091
<TOTAL-COSTS> 19,341,138
<OTHER-EXPENSES> 180,848
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 180,848
<INCOME-PRETAX> 835,513
<INCOME-TAX> 355,000
<INCOME-CONTINUING> 436,074
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 436,074
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
