SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number 1-7037
ENVIRONMENT ONE CORPORATION
(Name of small business issuer in its charter)
NEW YORK 14-1505298
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation of organization)
2773 Balltown Road, Schenectady, New York 12309-1090
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (518) 346-6161
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Title of each class
Common Stock $.10 par value
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to filing requirements for the past 90 days.
Yes [ X ] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosures will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X ]
Revenue for the year ended December 31, 1995: $17,340,432
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of January 30, 1996: $14,279,394
The number of shares of Common Stock, par value $.10 outstanding as of January
30, 1996: 4,113,709
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's definitive proxy statement for its 1996 Annual Meeting
of Shareholders (to be filed no later than April 30, 1996) are incorporated by
reference in response to Items 10 and 11 of Part III of this report.
<PAGE>
Environment One Corporation
Form 10-KSB
Part I
Item 1. Business
The Environment One Corporation (EONE) is an environment-oriented product and
service company which started operations in January 1969. The Company operates
in two business segments: (A) Sewer Systems Business and (B) Detection Systems
Business. In January, 1996, the Company sold its Cirrus Incipient Fire Detector
product line to PROTEC Fire Detection, plc of Nelson, Lancashire, England. In
the second quarter of 1994 the assets of the Measurements Services Business,
formerly a component of the Detection Systems Business, were sold to the General
Testing Corporation of Rochester, NY. Information regarding the sale of both
businesses is set forth below in Item 6. Information regarding the percentages
of total sales attributable to the two business segments for the past two fiscal
years is set forth below in Item 6.
Sewer Systems
Today's low pressure, contour following collection system was pioneered by EONE.
It has proven to be an economical and effective method of sewering otherwise
difficult land developments including: waterfront, hilly terrain, very flat
lands and areas with high water tables. As more and more communities are looking
for cost effective solutions to waste water collection problems, Environment One
Corporation's pressure sewer systems (known as "EONE Sewers"), are increasingly
used in mainstream municipal and developer applications.
Grinder pumps developed by the Company make the pressure sewer system feasible.
These units accept waste water from point sources, grind it into a fine slurry,
and pressurize it to permit transport through small diameter pipes. This small
diameter pressurized pipe can follow the contour of the terrain, resulting in
reduced costs of installation compared to conventional gravity lines. Several
models of the grinder pump are manufactured with and without storage tanks. More
than 75,000 units have been manufactured at the Company's plant.
The manufacture of the grinder pump involves use of independent suppliers for
several of the components. Fabrication, assembly and testing of the assembled
units are completed at the Company's plant.
The principal markets served by the pressure sewer systems are city and county
sewer districts, builders, land developers and individual homeowners. Products
are sold to these markets from regional sales offices across the United States
and through a network of more than 30 representatives throughout the United
States, Canada, Europe and Japan. There are other pump manufacturers offering
grinder pumps for these markets. All but one offers a centrifugal type of pump.
Environment One's positive displacement pump and tank are unique, offering
several distinct advantages over the centrifugal pump. The Company is well known
in the marketplace.
During 1994, the Company introduced two new products. A new grinder pump station
(GP2000) is a redesign of the model GP200 and is establishing new standards for
the industry. A second product, the After Market Grinder Pump (AMGP), is the
industry's first drop-in upgrade unit. The AMGP is engineered to fit into
virtually any other competitor designed grinder pump tank.
<PAGE>
Detection Systems
The Company's Detection Systems' products include: (1) Generator Condition
Monitor; (2) Cirrus Incipient Fire Detector and (3) Hydrogen Control Cabinet.
These detection instruments are based on the Company's expertise in the
detection of sub-microscopic particles and gas monitoring.
Generator Condition Monitor (GCM)
The GCM is designed to provide early warning of certain thermal failure
conditions which could lead to shutdown of hydrogen cooled electric power
generators. The monitor also facilitates preventative maintenance of such
equipment. The principal market served is electric utility companies, both
domestic and international. Customers are served by direct sales from the
Company's marketing function or by manufacturers' representatives in certain
parts of the world. There are only two other manufacturers of this equipment
worldwide and the Company is believed to be the leader in this market.
As a companion to the GCM, the Company also manufactures and sells an instrument
for air-cooled electric generators (GCM-A). This extends the marketing of
condition monitors to include hydroelectric and gas turbine driven generating
stations.
As an ancillary product to the GCM, the Company sells tagging compounds under
the name GEN-TAGS that are applied to critical areas of large electric power
generator units. The tagging compounds will assist utilities to quickly locate
"hot spots" developing in generators causing the GCM to alarm at which time a
sample of the overheated tagging compound (pyrolysate) is collected. Analysis of
the sample determines the location of the "hot spot" area. Depending on the area
of overheating, a different "fingerprint" or "chemical signature" will identify
each area for location of potential trouble.
Cirrus Incipient Fire Detector (IFD)
The Cirrus IFD provides unique capabilities which allow for area fire detection
often not attainable by any other means, such as operational stability in
adverse ambient conditions, an air-sampling system which allows for small, low
maintenance, electrically inert sample heads which can be located and used in a
wide variety of physical arrangements and high and adjustable sensitivity to a
wide variety of fire conditions resulting in a low false alarm rate.
The Company's Cirrus IFD represents the new generation of early warning fire
detectors. The product utilizes a basic detection mechanism developed by the
Company. The Company is believed to be the leading manufacturer of this type of
fire detection equipment. The Cirrus IFD employs a miniaturized cloud chamber
providing extremely rapid detection of the invisible particles created by
overheating and combustion. Cloud chamber technology is considered to be the
most sensitive fire detection method due to its capability of detecting
sub-micron particles produced during the earliest stage of a fire.
The micro-controller based Cirrus IFD is fully supervised and virtually immune
to false alarms caused by high air velocity, dust, humidity, and temperature
variation. An advanced air-sampling system continuously delivers samples back to
the Cirrus IFD detector for analysis.
<PAGE>
The Cirrus IFD is sold by direct sales from the Company's marketing function and
through an independent network of distributors in the United States, Canada and
a few countries overseas. There are several manufacturers who offer similar
early warning fire detection equipment using different principles to the same
market.
Hydrogen Control Cabinet (HCC)
In 1995, the HCC was added to the detection systems product offerings. The HCC
continuously analyzes the purity of hydrogen and controls the rate of scavenging
in hydrogen cooled turbine generators. It is vital to maintain the purity of the
hydrogen because it directly affects both efficiency and safety. To maintain a
hydrogen purity of approximately 98% in the generator casing, a small quantity
of hydrogen gas is continuously scavenged from the generator's end seals and
discharged to the atmosphere.
The HCC is designed and manufactured to satisfy the requirements of the General
Electric Company's Industrial and Power Systems group, located in Schenectady,
NY. The HCC will be used by both domestic and international electric utility
companies.
The major components of the HCC are two completely independent, interactive
hydrogen sensors and associated electronics which were designed by Environment
One. The micro-controller based system and explosion proof design represents a
new generation of hydrogen purity analyzer.
The HCC is sold direct by the Detection Systems marketing function and has the
potential for sale to the same customer base as the GCM.
Financial Data - 2 Year Summary
Industry segment information is included in Note 9 to the Company's consolidated
financial statements included in Item 7.
Net Sales Backlog
The backlog of unshipped orders by industry segment is shown below. Generally,
all orders in the backlog at year-end are shipped during the following year. The
backlog has been calculated by EONE's normal practice of including only orders
that are to be delivered within twelve months. While these orders are firm,
they could be subject to change or cancellation in the future. In the past, the
effect of changes and cancellations had been minimal.
Net Sales Backlog as of December 31, 1995:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Sewer Systems $3,385,871 1,516,188
Detection Systems 249,925 203,297
---------- ---------
$3,635,796 1,719,485
========== =========
</TABLE>
<PAGE>
Sources of Supply
Principal components used in the manufacture of the Company's grinder pump
include a motor, high density polyethylene parts, cast iron parts, fabricated
stainless steel and solid state controls. For the Cirrus IFD, principal
components include printed circuit boards, fabricated sheet metal, a vacuum
pump, electric motors, miscellaneous electronics and formed plastics. The
principal components of the GCM and HCC include fabricated aluminum, sheet metal
and stainless steel, assembled miscellaneous electronics, printed circuit boards
and mechanical gauges.
The Company does not believe that it is dependent on any one supplier or
subcontractor to the extent that termination of the supplier or subcontractor
would have a material adverse effect on the Company's business.
Patents
Since inception, the Company has been issued numerous U.S. and foreign patents
and it has filed numerous patent applications relating to product features. The
Company believes that patent protection is important and materially strengthens
its competitive position with respect to all the specific products that it now
markets. The Company, however, does not depend on any single patent or group of
patents.
Research and Development
All research and development costs including license development costs are
charged directly to operations as incurred. Research and development costs were
approximately $266,000 and $328,000 in 1995 and 1994, respectively.
Environmental
Compliance by the Company with federal, state and local environmental protection
laws during 1995 and 1994 had no material effect upon capital expenditures,
earnings or the competitive position of the Company.
Employees
At December 31, 1995, the Company had 104 full-time employees.
Principal Customers
The Company had sales equaling 14% and 15% of total company revenues to one
customer in 1995 and 1994, respectively.
Foreign Operations and Export Sales
The Company has entered into foreign markets and license agreements with respect
to certain products. In December 1990, Environment One Corporation Japan Co.
Ltd. was founded in Tokyo, Japan as a 70% owned subsidiary of the Company. The
purpose of this corporation is to promote the adaptation and sales of low
pressure sewer systems in Japan.
Export sales of low pressure sewer systems were approximately 3.7% and 5.7% of
total Company sales in 1995 and 1994, respectively. Export sales of detection
instruments were approximately 7.2% and 8.4% of total Company sales in 1995 and
1994, respectively.
<PAGE>
Item 2. Property
The Company's headquarters in Schenectady, New York is located in a modern,
concrete and steel frame, electrically and gas heated and air conditioned
building on approximately 35 acres of wooded land owned in fee. This facility is
subject to a mortgage as described in Note 2 to the Company's consolidated
financial statements included in Item 7. All segments of the business are
operated from the Company's headquarters. Additional manufacturing and office
space were leased during 1994 at Hillside Commerce Park in Schenectady, New York
to support expanded product service and warehousing requirements.
Management believes that the Company's facilities are well maintained, in good
operating condition, adequately covered by insurance and are well adapted to its
present needs.
Item 3. Legal Proceedings
The Company is not involved in any material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
None
<PAGE>
Environment One Corporation
Form 10-KSB
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Price Range of Common Stock
The Company's common stock is traded on the National Association of Securities
Dealers Automated Quotation System (NASDAQ) under the trading symbol EONE. The
following table sets forth the high and low sales prices of the common stock for
the calendar quarters indicated, as reported by the NASDAQ:
High Low
---- ---
1995
----
Quarter 1 3 1/4 2 1/4
Quarter 2 4 1/4 2 3/8
Quarter 3 4 7/8 3 7/8
Quarter 4 5 1/2 4 5/8
1994
----
Quarter 1 3 1/4 2 3/8
Quarter 2 2 1/2 2
Quarter 3 2 5/8 2
Quarter 4 2 1/2 1 7/8
Approximate Number of Security Holders
Title of Class: Approximate Number of Holders at 12/31/95:
--------------- ------------------------------------------
Common Stock $.10 par value 2283 (1)
(1) Includes shareholders of record in "nominee" or "street" name held by
brokers and others.
Dividends
The Company paid no dividends on its common stock during 1995 and 1994. The
Company's policy with regard to payment of dividends is evaluated annually with
consideration given to future growth and operating fund requirements. Currently,
Company policy is not to pay dividends.
<PAGE>
Item 6. Management's Discussion and Analysis and Results of Operations
Cash provided from operations, as shown by the statement of cash flows (Item 7),
for 1995 was $987,749. This represented an increase of $742,847 when compared to
1994. The major component of the operating cash flow increase from 1994 was the
net income in 1995. Other significant changes in operating cash flow were
recognized in receivables and inventory, both showing increases in asset
balances from 1994 year-end levels due to the higher levels of shipments and
backlog in the fourth quarter of 1995 versus 1994. Investment in capital
expenditures for 1995 amounted to $482,000 and represented a decrease of
$542,455 over 1994. The reduction in capital expenditures was a result of
significant expenditures in 1994 for tooling and equipment required to produce
the new grinder pump station (GP2000) and the AMGP. The major components of
capital expenditures in 1995 related to the installation of a new roof and
heating, ventilation and air-conditioning equipment at the Company's
headquarters.
In January, 1996, the Company concluded an agreement with PROTEC Fire Detection,
plc of Nelson, Lancashire, England for the sale of its Cirrus IFD product line.
In a two-stage transaction with an approximate value of $750,000, the Company
transferred all Cirrus IFD assets and operations to PROTEC and simultaneously
entered into a product technology development contract to be concluded during
1996.
In the second quarter of 1994, the Company entered into an asset purchase
agreement with the General Testing Corporation, a Rochester, New York based
laboratory, for the purchase of certain assets owned by EONE used in its
Measurements Services Business. The selling price was $271,458 comprised of
$130,000 paid in cash and EONE financing the remaining amount of $141,458 over
five years at an annual interest rate of 7.25%. In 1995, the Company agreed to a
delay of one year, from 1995 to 1996, for General Testing Corporation to begin
repayment of principal. A non-compete agreement for a period of five years was
entered into at the time of the sale with consideration in the amount of $20,000
paid to EONE by General Testing Corporation. The pre-tax impact of the sale net
of certain expenses was $214,590 and is recorded as miscellaneous income in the
statement of operations for the year ended December 31, 1994.
The following table shows selected balance sheet information for 1995 and 1994
expressed in thousands of dollars:
<TABLE>
<CAPTION>
1995 1994
--------- -------
<S> <C> <C>
Current Assets $ 4,896 4,447
Current Liabilities 2,465 2,840
Working Capital 2,431 1,607
Total Assets 8,722 8,379
Long-Term Debt 1,839 2,023
Shareholders' Equity 4,348 3,481
</TABLE>
<PAGE>
Summary
The following table shows a summary of operating results for the years 1995 and
1994 expressed as a percentage of sales:
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Net Sales
Sewer Systems 87.7 81.9
Detection Systems 12.3 18.1
Total Sales 100.0 100.0
Cost of Sales 66.7 76.2
Gross Margin 33.3 23.8
Selling, Marketing and G&A 24.0 30.5
Income (Loss) from Operations 9.3 (6.7)
Other Income (Expenses) (1.7) (.1)
Income (Loss) Before Income Taxes 7.6 (6.8)
Income Tax (Expense) Benefit 2.9 (2.0)
Net Income (Loss) 4.7 (4.8)
</TABLE>
Notes: Amounts referred to below are set forth in Item 7.
Gross changes between years include all businesses.
Detailed revenue and cost analyses omit the effect of the sale of the
Measurement Services Business.
Twelve Months Ended December 31, 1995 and 1994
Revenues for the period increased by $4,976,000 or 40.2% when compared to 1994.
Sewer Systems sales increased by $5,083,000 while Detection Systems sales
decreased $36,000. The increase in sales in Sewer Systems is attributable to
three main factors. The first factor is the roll out of the new GP2000 Grinder
Pump in October, 1994 resulting in $3.5 million in orders shortly after the roll
out. The second factor is the increased bidding activity for the small municipal
and community sewer projects. Lastly, a strong sales and marketing team has
provided the catalyst to winning key bids on large projects.
As part of the Detection Systems revenue decrease, sales of the Cirrus IFD fell
$249,000. This decrease is attributable to a large, international shipment in
the first half of 1994 which boosted sales for that period. With that sale
factored out, the market for the IFD remained flat during 1995. Sales of the GCM
increased slightly in 1995 from 1994 with sales increasing $76,000 as the market
for the GCM remained sluggish throughout 1995. In the fourth quarter of 1995,
the Company shipped the first units of the new HCC to the General Electric
Company's Industrial and Power Systems group resulting in $137,000 in new sales.
<PAGE>
Costs of Sales increased by $2,148,000 when compared to 1994. However, as a
percent of sales, costs of sales decreased by 9.5% to 66.7%. Direct material and
direct labor costs expressed as a percent of sales fell by approximately .5%.
Indirect manufacturing costs decreased $98,000 due to a reserve for slow moving
and obsolete inventory of $224,000 recorded in 1994. The majority of the reserve
related to writing down GP200 and IFD II inventory as a result of the
introduction of the GP2000 and the Cirrus IFD products. Offsetting this decrease
were increases in incoming freight of $70,000, consumable tooling of $12,000 and
miscellaneous expenses of $13,000.
Incremental cost of sales as a percent of incremental sales was 43.2% The lower
incremental percent when compared to total percent is attributable to the
Company being past break-even sales levels whereby fixed indirect costs and
corporate allocations have been fully absorbed. As a result, gross margins
reflect a nine point gain over the same period last year.
Selling and Marketing costs increased $205,000 when compared to 1994. Sewer
Systems costs in this category increased $390,000 while costs in Detection
Systems decreased $133,000. Planned expenditures in advertising, promotion and
sales literature resulting from the roll out of the GP2000, increased expenses
for the district offices (which included the opening of Florida and Minnesota
district offices), increases in miscellaneous other expenses along with
increased salaries and salespersons' commissions (as a result of the sales
increase) accounted for the increase in Sewer Systems selling and marketing
costs. The Detection Systems decrease resulted from reductions in advertising
and sales literature expenditures as well as reduced travel and living and
internal salespersons' commission expenditures.
General and Administrative costs, including research and development (R&D)
expenses, increased $183,000 over 1994. Excluding R&D, general and
administrative costs rose $245,000 while R&D costs decreased $62,000.
Significant contributors to the increase in general and administrative expenses
were $236,000 for bonuses and profit sharing, $47,000 for legal fees, $66,000
for directors' fees (which included a $45,000 expense associated with a stock
grant of 15,000 shares for Mr. Ardia), and $20,000 for investor relations.
Offsetting these increases were reductions of $23,000 for consultants, $46,000
for sales taxes, $15,000 for outside storage rental, and $14,000 for accounting
fees.
Research and development labor costs decreased $21,000 while non-labor costs
decreased $41,000. R&D costs in Sewer Systems decreased $143,000 while costs in
Detection Systems increased $81,000. The reduction in Sewer Systems costs is
attributable to non-recurring expenses in 1994 pertaining to the development of
the GP2000 Grinder Pump. The increase in Detection Systems costs is a result of
expenditures related to the development of the HCC of $101,000 offset by
reductions in Cirrus IFD R&D expenses.
Interest expense increased to $328,000 in 1995 when compared to $274,000 in
1994. The Company borrowed $154,000 on the building and equipment loan in 1995
while paying back $338,000 in principal payments. Borrowing on the line of
credit decreased by $450,000 at year-end. As a result of non-compliance with
certain loan covenants at the end of 1994, the Company's borrowing rate over
bank prime rate was increased in the first half of 1995. This increased
borrowing rate along with a higher bank prime rate account for the increased
interest expense. However, the Company complied with revised covenants for 1995
thereby reducing the rate in the second half of the year.
<PAGE>
Income taxes during 1995 were $507,134, for an effective tax rate of 38.2%,
compared to a tax benefit during 1994 of $250,152, for an effective tax benefit
rate of 29.7%. Although 1994 resulted in a tax benefit due to the Company's loss
before income taxes of $843,055, the effective tax rates differ due to the
inability to carryback the state tax benefit and utilize available research and
experimentation credits.
Liquidity
With sources of cash from operations, bank loan financing and the operating line
of credit, the Company was able to meet its working capital needs and capital
expenditure requirements in 1995. The Company's line of credit remains at $2.5
million, of which the Company had borrowed $550,000 as of December 31, 1995. At
December 31, 1994, the Company was not in compliance with certain covenants of
the line of credit and building and equipment loan, specifically, total working
capital, debt service coverage ratio and total net worth. The bank waived the
Company's non-compliance with these covenants and established new covenant
requirements to be met at certain interim dates in 1995. The Company met and
exceeded all applicable covenants throughout 1995. In addition, the revised
terms of the bank loan provided for a reduction in rate over bank prime if the
covenants were met, thereby reducing the cost of borrowing in the second half of
1995. It is the opinion of management that the Company will comply with all loan
covenants in 1996.
Management believes that the Company will be able to meet its cash requirements
in 1996 as a result of cash generated from operations and amounts available
under the line of credit and building and equipment loan.
Effects of Inflation and Changing Prices
The impact of general inflation on the Company's operations has not been
significant to date and the Company believes inflation will continue to have an
insignificant impact. In response to the limited effect of inflation and
changing prices on the Company's manufacturing and operating costs, the Company
has historically used selling price adjustments, cost containment programs and
improved operating efficiencies to offset the otherwise negative impact on its
operations.
New Accounting Standards
In March, 1995, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment
of Long-Lived Assets and Long-Lived Assets to be disposed of", which is
effective for the Company in 1996. SFAS 121 establishes accounting standards for
the impairment of long-lived assets and certain intangibles related to those
assets. Management of the Company does not believe that the implementation of
this new accounting standard will have a material effect on the Company's
consolidated financial statements.
In October, 1995, the FASB issued SFAS No. 123 "Accounting for Stock-Based
Compensation", which establishes a fair value based method of accounting for
employee stock options or similar equity instruments. Under SFAS No. 123,
entities can recognize stock-based compensation expense in the basic financial
statements using either (i) the intrinsic value based approach set forth in APB
Opinion No. 25 or (ii) the fair value based method introduced in SFAS No. 123.
Entities electing to remain with the accounting in APB Opinion 25 must make
proforma disclosures of net income and earnings per share, as if the fair value
based method of accounting defined in SFAS No. 123 had been applied. Management
has not yet determined which method the Company will use to measure stock-based
compensation.
<PAGE>
Item 7. Financial Statements
Index to Financial Statements:
Independent Auditors' Report
Consolidated Balance Sheet as of December 31, 1995
Consolidated Statements of Operations for the Years Ended
December 31, 1995 and 1994
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1995 and 1994
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995 and 1994
Notes to Consolidated Financial Statements
<PAGE>
Independent Auditors' Report
The Shareholders and Board of Directors
Environment One Corporation:
We have audited the consolidated financial statements of Environment One
Corporation and subsidiary as listed in the accompanying index. 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 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 Environment One
Corporation and subsidiary as of December 31, 1995, and the results of their
operations and their cash flows for each of the years in the two-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
Albany, New York
February 23, 1996
<PAGE>
ENVIRONMENT ONE CORPORATION
AND SUBSIDIARY
Consolidated Balance Sheet
December 31, 1995
<TABLE>
<CAPTION>
Assets
------
<S> <C>
Current assets:
Cash ..................................................... $ 91,115
Receivables:
Trade (note 2) ....................................... 2,718,141
Federal and state income tax refunds ................. 1,145
Other ................................................ 28,435
----------
2,747,721
Less allowance for doubtful accounts ................. 31,926
----------
Net receivables ................................. 2,715,795
Current portion of note receivable (note 5) .............. 16,041
Inventories (note 2):
Finished products .................................... 259,869
Work in process ...................................... 387,165
Raw materials and supplies ........................... 1,202,527
----------
Total inventories ............................... 1,849,561
Prepaid expenses and other current assets ................ 223,018
----------
Total current assets ............................ 4,895,530
----------
Property, plant and equipment (notes 2 and 3):
Land and land improvements ............................... 334,491
Building and building improvements ....................... 2,271,832
Machinery and equipment .................................. 4,563,072
Equipment under capital leases ........................... 10,762
Construction in progress ................................. 109,343
----------
7,289,500
Less accumulated depreciation and amortization ........... 3,752,410
----------
Net property, plant and equipment ............... 3,537,090
Note receivable (note 5) ...................................... 125,417
Patents and other assets, net ................................. 163,878
----------
$8,721,915
==========
</TABLE>
(Continued)
<PAGE>
ENVIRONMENT ONE CORPORATION
AND SUBSIDIARY
Consolidated Balance Sheet, Continued
December 31, 1995
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity
------------------------------------
<S> <C>
Current liabilities:
Current installments of long-term debt (note 2) .......... $ 338,100
Note payable - bank (note 2) .............................. 550,000
Current installments of obligations under capital leases
(note 3) .............................................. 145
Accounts payable .......................................... 1,144,408
Accrued expenses:
Payroll ............................................... 249,199
Taxes, other than on income ........................... 5,067
Interest .............................................. 20,410
Other current liabilities (note 7) ........................ 157,937
-----------
Total current liabilities ........................ 2,465,266
Long-term debt, excluding current installments (note 2) ........ 1,838,594
Deferred income taxes (note 6) ................................. 21,716
-----------
Total liabilities ................................ 4,325,576
-----------
Minority interest .............................................. 48,530
-----------
Shareholders' equity (note 4):
Common stock of $.10 par value per share. Authorized
6,000,000 shares; issued 4,127,612 shares ............ 412,761
Additional paid-in capital ................................ 7,295,115
Accumulated deficit ....................................... (3,330,851)
-----------
4,377,025
Less cost of common shares in treasury (11,328 shares) .... (29,216)
-----------
Total shareholders' equity ....................... 4,347,809
-----------
Commitments and contingencies (notes 3 and 10)
$ 8,721,915
===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ENVIRONMENT ONE CORPORATION
AND SUBSIDIARY
Consolidated Statements of Operations
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Sales of products and contract revenues ........ $ 17,340,432 12,364,574
Cost of sales and contract services ............ 11,565,534 9,417,825
------------ ------------
Gross margin .......................... 5,774,898 2,946,749
------------ ------------
Operating expenses:
Selling and marketing ..................... 2,108,320 1,903,520
General and administrative ................ 2,052,664 1,869,190
------------ ------------
Total operating expenses .............. 4,160,984 3,772,710
------------ ------------
Income (loss) from operations ......... 1,613,914 (825,961)
------------ ------------
Other income (expense):
Interest expense .......................... (328,176) (274,203)
Miscellaneous income (note 5) ............. 29,765 238,370
Minority interest in loss of subsidiary ... 13,008 18,739
------------ ------------
(285,403) (17,094)
------------ ------------
Income (loss) before income taxes ..... 1,328,511 (843,055)
Income tax expense (benefit) (note 6) .......... 507,134 (250,152)
------------ ------------
Net income (loss) ..................... $ 821,377 (592,903)
============ ============
Per share amounts:
Net income (loss) per common share ... $ .20 (.15)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ENVIRONMENT ONE CORPORATION
AND SUBSIDIARY
Consolidated Statements of Shareholders' Equity
Years ended December 31, 1995 and 1994
Total
Additional share-
Common paid-in Accumulated Treasury holders'
stock capital deficit stock equity
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993 .................... $ 410,801 7,265,316 (3,559,325) (56,482) 4,060,310
Exercise of options (6,000 shares
of common stock) ........................... 600 2,775 -- -- 3,375
Issuance of 5,000 shares of common
stock from treasury ........................ -- 370 -- 9,630 10,000
Net loss - 1994 ................................. -- -- (592,903) -- (592,903)
---------- ---------- ---------- ---------- ----------
Balance at December 31, 1994 .................... 411,401 7,268,461 (4,152,228) (46,852) 3,480,782
Exercise of options (13,600 shares
of common stock) ........................... 1,360 10,540 -- (11,250) 650
Issuance of 15,000 shares of common
stock from treasury ........................ -- 16,114 -- 28,886 45,000
Net income - 1995 ............................... -- -- 821,377 -- 821,377
---------- ---------- ---------- ---------- ----------
Balance at December 31, 1995 .................... $ 412,761 7,295,115 (3,330,851) (29,216) 4,347,809
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ENVIRONMENT ONE CORPORATION
AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ........................................ $ 821,377 (592,903)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization ...................... 570,412 578,003
Gain on sale of equipment .......................... -- (233,663)
Minority interest in loss of subsidiary ............ (13,008) (18,739)
Non-cash compensation expense ...................... 45,000 10,000
Deferred income taxes .............................. 54,921 (68,226)
Decrease (increase) in receivables ................. (426,498) 58,835
Decrease (increase) in inventories ................. (154,823) 314,416
Decrease in uncompleted contract work in process ... -- 28,637
Decrease (increase) in prepaid expenses ............ (14,543) 17,922
Increase (decrease) in accounts payable ............ (34,960) 41,096
Increase in accrued expenses ....................... 99,904 43,254
Increase in other current liabilities .............. 39,967 66,270
---------- ----------
Net cash provided by operating activities ...... 987,749 244,902
---------- ----------
Cash flows from investing activities:
Capital expenditures, including patents .................. (482,000) (1,024,455)
Proceeds from sale of equipment .......................... -- 130,000
---------- ----------
Net cash (used in) provided by
investing activities ....................... (482,000) (894,455)
---------- ----------
Cash flows from financing activities:
Net (decrease) increase in note payable - bank ........... (450,000) 200,000
Proceeds from issuance of common stock ................... 650 3,375
Capital contribution by minority interest ................ 25,722 46,395
Proceeds from issuance of long-term debt ................. 153,967 810,490
Principal payments on long-term debt ..................... (338,100) (210,000)
Principal payments on capital lease obligations .......... (29,688) (77,186)
Loan financing fees ...................................... (886) --
---------- ----------
Net cash (used in) provided by
financing activities ....................... (638,335) 773,074
---------- ----------
Net (decrease) increase in cash and cash equivalents ......... (132,586) 123,521
Cash at beginning of year .................................... 223,701 100,180
---------- ----------
Cash at end of year .......................................... $ 91,115 223,701
========== ==========
</TABLE>
<PAGE>
ENVIRONMENT ONE CORPORATION
AND SUBSIDIARY
Consolidated Statements of Cash Flows -- Continued
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid (received) during the year for:
Interest .............................................. $ 334,407 286,613
Income taxes, net of refunds .......................... 275,378 (65,933)
========== ==========
Supplemental disclosure of non-cash financing activity:
Exchange of 2,000 shares of common stock in partial
payment of exercise price on options .................. $ 11,250 --
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ENVIRONMENT ONE CORPORATION
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1995 and 1994
(1) Summary of Significant Accounting Policies
(a) Description of Business
Environment One Corporation (the "Company") is an
environment-oriented product and service company, which started
operations in January of 1969. The Company operates in two
business segments: (1) low pressure sewer systems, and (2)
detection systems.
The Sewer Systems business primarily manufactures and services
grinder pumps pioneered by the Company to make low pressure
sewer systems feasible. The low pressure sewer system has proven
to be an economical and effective method of sewering otherwise
difficult land developments including: waterfront, hilly
terrain, very flat lands and areas with high water tables. As
more and more communities are looking for cost effective
solutions to waste water collection problems, Environment One
Corporation's solution, EONE Sewers, is increasingly used in
mainstream municipal and developer applications. The principal
markets served by the Company are city and county sewer
districts, builders, land developers, and individual homeowners.
Products are sold by direct sales from the Company's marketing
function and through dealer networks across the United States,
Canada, Europe, and Japan. There are other pump manufacturers
offering grinder pumps for these markets. All but one of the
Company's competitors offer a centrifugal type of pump.
The Detection Systems business manufactures the Generator Condition
Monitor, the Cirrus Incipient Fire Detector ("IFD"), and the
Hydrogen Control Cabinet. The Generator Condition Monitor is
designed to provide early warning of certain thermal failure
conditions, which could lead to shutdown of hydrogen cooled
electric power generators. The Cirrus IFD provides unique
capabilities that allow for area fire detection often not
attainable by any other means, such as operational stability in
adverse ambient conditions, an air sampling system that allows
for small, low maintenance, electrically inert sample heads that
are adjustable to different levels of sensitivity resulting in
low false alarm rates. During 1995, the Hydrogen Control Cabinet
was added to the Detection Systems product offerings. The
Hydrogen Control Cabinet continuously analyzes the purity of
hydrogen and controls the rate of scavenging in hydrogen cooled
turbine generators. The Detection Systems products are sold by
direct sales from the Company's marketing function and through
an independent network of distributors in the United States,
Canada, and a few countries overseas. There are believed to be
only two other manufacturers of this type of detection systems
equipment worldwide.
<PAGE>
(b) Principles of Consolidation
The consolidated financial statements include the financial
statements of Environment One Corporation and its majority-owned
foreign subsidiary, which was incorporated in 1990. All
significant intercompany balances and transactions have been
eliminated in consolidation.
(c) Net Income (Loss) Per Common Share
Net income (loss) per common share is based upon 4,090,065 weighted
average outstanding shares in 1995 and 4,082,563 shares in 1994.
Fully diluted net income (loss) per common share is not
materially different from primary net income (loss) per common
share.
(d) Revenues, Costs and Inventories
Sales and related cost of sales are recognized when products are
shipped to customers. Inventories are valued at the lower of
cost or market (net realizable value), costs being determined
principally on the basis of standards which approximate average
current production costs.
(e) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Equipment under
capital leases is stated at the present value of minimum lease
payments at the inception of the lease.
Depreciation on property, plant and equipment is computed using the
straight-line method for financial reporting purposes, and
accelerated methods for income tax purposes. Equipment under
capital leases is amortized straight-line over the shorter of
the lease term or estimated useful life of the asset. For
financial reporting purposes, the Company provides for
depreciation of property, plant and equipment over the following
estimated useful lives:
Land improvements 5-20 years
Building and building improvements 3-45 years
Machinery and equipment 2-20 years
(f) Patents and Other Assets
The costs of patents covering products expected to be viable are
deferred and amortized on a straight-line basis over twenty
years from the date of filing or seventeen years from the date
of grant, whichever is greater. The deferred costs of specific
patent applications are written off if a patent application is
rejected. Loan financing fees are amortized over the term of the
loan to which they relate.
(g) Research and Development
All research and development costs are charged directly to
operations as incurred. Research and development costs of
approximately $266,000 and $328,000 during 1995 and 1994,
respectively, are included in general and administrative
expense.
<PAGE>
(h) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.
(i) Foreign Currency Translation
Accounts of the foreign subsidiary have been translated into U.S.
dollars substantially in accordance with Statement of Financial
Accounting Standards No. 52.
(j) Use of Estimates
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities to
prepare these financial statements in conformity with generally
accepted accounting principles. Actual results could differ from
those estimates.
(2) Short-term and Long-term Debt
The Company has available a $2,500,000 line of credit of which $1,950,000
is available at December 31, 1995. The line is secured by trade
accounts receivable and inventories. The Company had $550,000
outstanding on this line of credit at December 31, 1995. The Company
must pay a commitment fee of 1/4 of 1% annually on the unused portion
of the line of credit. The interest rate on this short-term borrowing
at December 31, 1995 was based on the bank's prime rate plus 3/4%, and
was 9.25%. The line of credit, unless extended or renewed, expires on
April 30, 1996.
The Company's long-term debt consisted of the following at December 31,
1995:
<TABLE>
<S> <C>
Construction note, payable in installments of $28,175 monthly
beginning January 1, 1995, plus interest based on the bank's
prime rate plus 1% (9.5% at December 31, 1995), secured by
real property .................................................. $2,176,694
Less installments due within one year ............................. 338,100
----------
Long-term debt, excluding current installments ............ $1,838,594
==========
</TABLE>
The line of credit and construction loan agreements require compliance
with certain financial loan covenants related to minimum current, debt
service coverage and debt-to-worth ratios, as well as minimum working
capital, net worth, and limitations on capital expenditures. At
December 31, 1995, the Company was in compliance with these covenants.
<PAGE>
Future principal payments on long-term debt are as follows:
1996 $ 338,100
1997 338,100
1998 338,100
1999 338,100
2000 338,100
Thereafter 486,194
---------
$2,176,694
==========
The Company is not required to maintain compensating balances pursuant to
the credit terms under its line of credit with the bank.
(3) Leases
The Company has entered into capital lease arrangements for certain
machinery and equipment. The Company is also a party to noncancellable
operating leases for the rental of equipment and office space. Total
rent expense incurred by the Company under operating leases during
1995 and 1994 was $17,679 and $37,304, respectively.
The present value of future minimum capital lease payments and the future
minimum lease payments under noncancellable operating leases as of
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Capital Operating
Leases Leases
------ ---------
<S> <C> <C>
1996 $ 150 16,940
1997 - 8,832
1998 - 7,004
1999 - 3,052
------ ------
Total future minimum lease payments 150 35,828
======
Less amount representing interest 5
------
Present value of minimum lease payments $ 145
======
</TABLE>
(4) Shareholders' Equity
During 1995 and 1994, 13,600 and 6,000 shares of the Company's common
stock were issued upon exercise of stock options for $11,900 and
$3,375, respectively. During 1995, 15,000 shares of common stock held
in treasury were issued as compensation and valued in the amount of
$45,000 to the Company's Chairman. In addition, during 1994, 5,000
shares of common stock held in treasury were issued as compensation
and valued in the amount of $10,000 to an outside consultant.
The Company has reserved 190,350 shares of its common stock for the
exercise of stock options. The options were granted pursuant to a plan
approved by the shareholders in 1971 authorizing 100,000 shares for
option grants. During 1991, the shareholders approved an amendment to
the plan, authorizing 400,000 shares for option grants. The option
price is equal to the fair market value of the stock at date of grant.
<PAGE>
The following table summarizes, by date of grant, the number of options
issued and exercise price per share. Unless otherwise noted, options
are exercisable 20% per year beginning one year from date of grant and
expire ten years from date of grant:
<TABLE>
<CAPTION>
Date of Grant Number of Options Issued Option Price
------------- ------------------------ ------------
<S> <C> <C>
December 1986 19,500 $0.3750
====== =======
June 1987 30,000 (a) $0.9375
====== =======
June 1988 22,500 $0.9375
====== =======
May 1990 19,000 $2.3750
====== =======
July 1991 16,500 $1.4375
====== =======
July 1992 30,000 $2.8750
====== =======
April 1993 47,000 $2.6250
====== =======
May 1994 41,000 $2.3750
====== =======
May 1995 48,500 $3.0000
====== =======
</TABLE>
(a) Exercisable at 10,000 shares per year beginning one year
from the date of grant.
<PAGE>
The following table summarizes stock option transactions during 1995 and
1994:
<TABLE>
<CAPTION>
Option shares
-------------
1995 1994
-------- --------
<S> <C> <C>
Outstanding at beginning of year ............. 155,450 144,450
Granted ...................................... 48,500 41,000
Exercised .................................... (13,600) (6,000)
Expired ...................................... -- (24,000)
-------- --------
Outstanding at end of year ................... 190,350 155,450
======== ========
Exercisable at end of year ................... 73,350 56,250
======== ========
</TABLE>
(5) Sale of Measurements Division
During April 1994, the Company sold its measurements division and related
assets to an outside party for a total of $271,458. The consideration
received for the sale was $130,000 in cash and a five-year promissory
note receivable of $141,458, payable in monthly installments of
interest only through April, 1996. BBeginning May 1, 1996, payments
are to be made in sixty consecutive equal monthly installments of
principal and interest in the amount of $2,818. Interest on the note
is 7.5% per annum, and the Company has a secondary security interest
in the assets in the event of default. The machinery and equipment
involved in the transaction had a net book value at the date of sale
of $37,795, for a realized gain of $233,663. The gain, net of certain
other expenses, is included in miscellaneous income in the
accompanying consolidated financial statements.
(6) Income Taxes
Income tax expense (benefit) for the years ended December 31, 1995 and
1994 consists of:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Current:
Federal ...................... $382,213 (182,351)
State ........................ 70,000 425
-------- --------
452,213 (181,926)
Deferred .......................... 54,921 (68,226)
-------- --------
$507,134 (250,152)
======== ========
</TABLE>
<PAGE>
The following table reconciles the expected tax expense (benefit) at the
Federal statutory rate to the effective tax rate.
<TABLE>
<CAPTION>
1995 1994
---- ----
Amount % Amount %
--------- ---- --------- ----
<S> <C> <C> <C> <C>
Computed expected tax expense (benefit) $ 451,694 34.0% $(286,639) (34.0)%
State taxes, net of Federal benefit .... 46,200 3.5 281 --
Research and experimentation credit .... (38,433) (2.9) -- --
Nondeductible loss of foreign subsidiary 10,320 0.8 14,866 1.8
Nondeductible expenses ................. 12,322 0.9 11,809 1.4
Other .................................. 25,031 1.9 9,531 1.1
--------- ---- --------- ----
$ 507,134 38.2% $(250,152) (29.7)%
========= ==== ========= ====
</TABLE>
For the year ended December 31, 1995, the deferred income tax expense of
$54,921 results from the changes in temporary differences. The tax
effects of temporary differences that give rise to deferred tax assets
and deferred tax liabilities as of December 31, 1995 are presented
below:
<TABLE>
<S> <C>
Deferred tax assets:
Accounts receivable, due to allowance
for doubtful accounts ...................................... $ 10,855
Inventories, principally due to additional costs
inventoried for tax purposes pursuant to the Tax Reform
Act of 1986 and inventory reserves ......................... 47,999
Capital lease obligations ..................................... 48
Pension accrual ............................................... 53,699
---------
Total gross deferred tax assets ........................ 112,601
Less valuation allowance ............................... --
---------
112,601
Deferred tax liabilities:
Property, plant and equipment, due to differences
in depreciation lives and methods ........................... (21,716)
---------
Net deferred tax asset ................................ $ 90,885
=========
</TABLE>
At December 31, 1994, the net deferred tax asset was $145,806 and there
was no recorded valuation allowance.
At December 31, 1995, the Company has New York State investment tax
credit carryforwards of approximately $154,000.
<PAGE>
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 projected
future taxable income and tax planning strategies in making this
assessment. In order to fully realize the deferred tax assets, the
Company will need to generate future taxable income of approximately
$268,000. The Company had federal taxable income of approximately
$1,200,000 in 1995 and a federal taxable loss of approximately
$512,000 in 1994. Based upon the level of historical taxable income
and projections for future taxable income over the periods in 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. The amount of the deferred tax asset
considered realizable, however, could be reduced in the near term if
estimates of future taxable income are reduced.
At December 31, 1995, $112,601 of deferred tax assets are included in
other current assets.
(7) Employee Benefit Plans
The Company has a defined benefit pension plan available to all
employees. Effective January 1, 1993, the Plan was amended to be
non-contributory. The benefits are based on years of service and the
employees' earnings history during the years of employment. The
Company's funding policy is to contribute annually the maximum amount
that can be deducted for Federal income tax purposes. Contributions
are intended to provide not only for benefits attributed to service to
date but also for those expected to be earned in the future. Plan
assets consist of group annuity contracts which represent investments
in mortgages and bonds.
The following table sets forth the Plan's funded status and amounts
recognized in the Company's consolidated balance sheet at December 31,
1995:
<TABLE>
<S> <C>
Accumulated benefit obligation, including vested benefits of
$785,355 ............................................... $ (825,385)
===========
Projected benefit obligation for service rendered to date .. (1,358,546)
Plan assets at fair value .................................. 746,995
-----------
Deficiency of plan assets over projected benefit obligation (611,551)
Unrecognized prior service cost ............................ 195,171
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions ...... 287,897
Unrecognized net asset at January 1, 1987 being recognized
over 15 years ........................................... (29,454)
-----------
Accrued pension cost .................................... $ (157,937)
===========
</TABLE>
<PAGE>
Net pension cost included the following components:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Service cost - benefits earned during the period ... $ 134,772 141,379
Interest cost on projected benefit obligation ...... 86,818 76,860
Actual return on plan assets ....................... (60,310) (60,677)
Net amortization and deferral ...................... 19,083 9,107
--------- ---------
Net periodic pension cost ....................... $ 180,363 166,669
========= =========
</TABLE>
Assumptions used in accounting for the pension plan as of December 31,
1995 and 1994 were:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Discount rate .......................................... 7.25% 8.00%
Rate of increase in compensation levels ................ 6.00% 6.00%
Expected long-term rate of return on assets ............ 8.00% 8.00%
</TABLE>
During 1990, the Company established a profit sharing plan that covers
substantially all employees of Environment One Corporation. Profit
sharing expense was $132,852 in 1995 and $0 in 1994.
During 1992, the Company established a 401(k) savings plan that is
available to all employees who meet certain eligibility requirements.
The Company does not contribute to this plan.
(8) Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is
practicable to estimate that value.
(a) Cash, Accounts Receivable, Note Receivable, Accounts Payable and
Accrued Expenses
The carrying amount of cash, accounts receivable, accounts payable
and accrued expenses approximates fair value because of the
short maturity of these instruments. The carrying amount of the
note receivable approximates fair value because the note bears
interest that approximates the market rate.
(b) Note Payable and Long-term Debt
The interest rates on the Company's note payable and long-term debt
are reset according to changes in the current market (see note
2). Consequently, the carrying value of the note payable and
long-term debt approximates fair value.
<PAGE>
(9) Industry Segment Information
The Company's operations consist of two segments that are concerned with
the development, production and marketing of products and services.
Sewer Systems consists of products designed to transport and treat
sanitary sewer waste. Operations of the Detection Systems segment
include the production and sale of products designed to protect
equipment and facilities, and until April 1994 also included the
Measurements Division. Total revenue includes sales to unaffiliated
customers; there are no intersegment sales.
<TABLE>
<CAPTION>
Sales to unaffiliated customers Income (loss) from operations
------------------------------- -------------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sewer Systems ... $15,212,914 10,130,271 1,734,186 (69,822)
Detection Systems 2,127,518 2,234,303 (97,370) (731,238)
Corporate ....... -- -- (22,902) (24,901)
----------- ----------- ----------- -----------
$17,340,432 12,364,574 1,613,914 (825,961)
=========== =========== =========== ===========
<CAPTION>
Total assets
------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Sewer Systems ... $6,446,760 5,760,390
Detection Systems 1,113,824 1,187,932
Corporate ....... 1,161,331 1,431,046
---------- ----------
Total $8,721,915 8,379,368
========== ==========
<CAPTION>
Property, plant and equipment
---------------------------------------------------------------------
Additions Depreciation and amortization
------------------------------ -------------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sewer Systems ... $ 349,518 812,349 397,584 294,614
Detection Systems 18,157 45,949 28,577 72,503
Corporate ....... 80,424 143,612 126,577 180,525
----------- ----------- ----------- -----------
$ 449,099 1,001,910 552,738 547,642
=========== =========== =========== ===========
<PAGE>
<CAPTION>
Amortization and abandonment
of intangible assets
------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Sewer Systems ... $ 16,721 27,560
Detection Systems 953 2,801
----------- -----------
Total ........ $ 17,674 30,361
=========== ===========
</TABLE>
Export sales of low pressure sewer systems were approximately 3.7% and
5.7% of total Company sales in 1995 and 1994, respectively. Export sales
of detection instruments were approximately 7.2% and 8.4% of total
Company sales in 1995 and 1994, respectively.
(10) Business and Credit Concentrations
(a) Concentration of Credit Risk and Sales to Major Customers
Financial instruments which potentially subject the Company to a
concentration of credit risk principally consist of trade and
note receivables. The Company sells products to customers
primarily in the United States. The Company's top eight
customers comprised approximately 53% of trade accounts
receivable at December 31, 1995. To reduce credit risk, the
Company performs ongoing credit evaluations of customers but
generally does not require collateral. Allowances are maintained
for potential credit losses, and such losses have been within
management's expectations.
In addition, during the years ended December 31, 1995 and 1994,
sales to a single customer amounted to 14% and 15% of
consolidated sales, respectively.
The note receivable represents the financed portion of the
Measurement Division sale (see note 5). The Company maintains a
security interest in the equipment sold.
(b) Concentration of Purchasing Risk
At December 31, 1995, approximately 51% of the Company's purchases
were made from ten vendors. No individual vendor comprises more
than 9% of total purchases in 1995.
<PAGE>
(11) Subsequent Event
In January 1996, the Company concluded an agreement with PROTEC Fire
Detection, plc of Nelson, Lancashire, England for the sale of its
Cirrus IFD product line. During 1995, sales of the Cirrus IFD product
line amounted to approximately $1.2 million or 53% of the Detection
Systems business. In a two-stage transaction with an approximate value
of $.75 million, the Company transferred all Cirrus IFD assets, with
an approximate book value of $6,200, and operations to PROTEC and
simultaneously entered into a product technical development contract
to be concluded during 1996.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
None
Environment One Corporation
Form 10-KSB
Part III
Item 9. Directors and Executive Officers of the Company
<TABLE>
<CAPTION>
Date
Name Position Office Began Age
---- -------- ------------ ---
<S> <C> <C> <C>
Walter W. Aker Director Dec 1968 77
John L. Allen Director May 1993 52
Stephen V. Ardia Chairman May 1995 54
Director
Robert H. Brooks Director May 1990 **
David M. Doin Vice President Sept 1991 40
Angelo Dounoucos President, CEO May 1988 63
Director
Lars Grenback Director May 1993 52
Robert G. James Director May 1984 71
Volker A. Mohnen Director May 1984 59
Rolf E. Soderstrom Director May 1991 63
Frank W. Van Luik, Jr. Director Dec 1968 73
Philip W. Welsh Treasurer May 1995 38
** Deceased January, 1996
</TABLE>
<PAGE>
All executive officers of the Corporation are included in the preceding table.
Executive officers serve until the Board of Directors' meeting immediately
following the Annual Meeting of Shareholders or until their successors are
elected.
Directors elected at the Company's Annual Meeting serve until the next Annual
Meeting. All of the above directors were elected by the Shareholders at the
Annual Meeting held May 25, 1995.
Business Experience During the Past Five Years:
Walter W. Aker
He was vice president of the Company from 1968 to 1975 and from 1982 to 1993. He
was elected corporate secretary from 1976 to 1993.
John L. Allen
He is managing partner for the Financial Services Practice, North America, for
Heidrick & Struggles, Inc., a global executive search firm. He is located in the
Boston, MA office and is also a director of the firm. Prior to his joining the
firm in 1991, he had 24 years in banking including nearly thirteen as a chief
executive officer of Amoskeag Bank Shares, Inc. and Key Bank of Southeastern New
York. He has a bachelor of science degree in business administration from
Rochester Institute of Technology, a master of public administration from the
Graduate School of Public Affairs, State University of New York (SUNY) Albany,
and is a graduate of the Harvard Business School Program for Management
Development.
Stephen V. Ardia
He received his master of business administration from Rutgers University and a
bachelor of science degree from the U.S. Merchant Marine Academy. After working
with Goulds Pumps, Inc. since 1965, he became their president in 1985. He
retired in 1994 joining Environment One Corporation as chairman in May, 1995. He
presently serves as a member of the board of directors of Blue Cross / Blue
Shield of Rochester, New York and MaxTec Holdings of Dallas, Texas.
Robert H. Brooks
He received his bachelor of science degree from Rensselaer Polytechnic Institute
in 1952. He had extensive experience in manufacturing services and industrial
engineering on a worldwide basis. The Company was saddened by Mr. Brook's death
in January, 1996. Mr. Brooks contributed a considerable amount of time and
effort to Environment One and will be truly missed.
David M. Doin
He was elected vice president in September, 1991 and also serves as the general
manager of the Detection Systems Business. He received his bachelor of science
degree in business from the State University of New York at Albany in 1983. He
joined the Company in 1977 in Measurement Services sales and was appointed
product manager, Scientific Instuments, in 1981.
Angelo Dounoucos
He was vice president and director of Environment One Corporation from 1969 to
1976. He rejoined the Company in 1986 after eight years as a project marketing
manager at the General Electric Corporate Research and Development Center. He
was elected president on January 1, 1989 and chief executive officer on March
14, 1990.
<PAGE>
Lars Grenback
He received his bachelor of economics and business administration degree from
Uppsala University, Sweden in 1969 and his university certificate in marketing,
advertising and public relations in 1970. Since 1975, he has been working with
the low pressure sewer system in the Scandinavian countries and has been
president of Skandinavisk Kommunalteknik AB since 1980.
Robert G. James
He received his bachelor of science degree from Northwestern University, his
master's degree in business administration from Harvard Business School in 1948
and his doctorate in economics from the Harvard Graduate School in 1952. Since
1970 he has been president and managing partner of Enterprise Development
Associates (Real Estate and Development). He is also a Certified Public
Accountant.
Volker A. Mohnen
He studied at the Technical University at Karlsruhe, Germany majoring in
physics. He continued at the University of Munich where he received his master
of science degree in 1963 and his doctorate in physics in 1966. Since May, 1967,
he has been associated with the State University of New York (SUNY) Albany and
served as the director of the Atmospheric Sciences Research Center from 1975 to
1986. He is currently a full professor in SUNY's Department of Atmospheric
Sciences.
Rolf E. Soderstrom
He received his bachelor of science degree in engineering from Tufts University
and his master's degree from Northeastern University. He has thirty-five years
of line management experience as vice president of Motorola, executive vice
president of Codex Corporation and assistant general manager of the Systems
Division of the Foxboro Company. He is president of the TCS Group, a management
consulting firm; vice president of Meta Media, a software company; a director of
Walpole Massachusetts Cooperative Bank; and a managing director of the Nassau
Group, a private investment banking company.
Frank W. Van Luik, Jr.
He was elected president and chief executive officer in March 1984. He served as
executive vice president and chief executive officer since June 1982 having
previously served as vice president since 1968. He was elected chairman and
chief executive officer effective January 1, 1989. He retired from the chief
executive officer position on January 1, 1990 and as chairman May 25, 1995.
Philip W. Welsh
He was elected treasurer in May, 1995 and also serves as the director of
finance. He received his bachelor of science degree in business from the
Pennsylvania State University in 1979 and his master of business administration
from the California State University at Long Beach in 1987. Before joining the
Company in 1992, he had worked for Hughes Aircraft Company in Los Angeles,
California as a finance and accounting manager.
Item 10. Executive Compensation
Information required by this item is contained in the Company's Proxy Statement
for its May 23, 1996 Annual Meeting, which is incorporated herein by reference.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Information required by this item is contained in the Company's Proxy Statement
for its May 23, 1996 Annual Meeting, which is incorporated herein by reference.
<PAGE>
Item 12. Certain Relationships and Related Transactions
None
Item 13. Exhibits and Reports of Form 8-K
Exhibits
- --------
3.1 Registrant's Certificate of Incorporation, as amended, incorporated by
reference to Exhibit 3.1 to Form 10-Q Report for the period ending 6/30/88.
(File No. 1-7037)
3.2 Registrant's by-laws, as amended, incorporated by reference to Exhibit 3.2
to Form 10-Q Report for the period ending 6/30/88. (File No. 1-7037)
4.1 Specimen of Registrant's Common Stock Certificate incorporated by reference
to Exhibit 4.0 of Registration Statement. (File No. 2-38321)
4.2 $2,500,000 Secured Working Capital Revolving Line of Credit Loan dated
August 19, 1992 between the Registrant and Fleet Bank of New York.
4.3 $3,000,000 Loan and Security Agreement dated December 30, 1992 between the
Registrant and Fleet Bank of New York.
4.4 Note and Secured Revolving Line of Credit Agreement Modification Agreement
No. 2 dated March 20, 1995 between the Registrant and Fleet Bank of New
York.
4.5 Note and Loan and Security Agreement Modification Agreement No. 2 dated
March 20, 1995 between the Registrant and Fleet Bank of New York.
4.6 Note and Secured Revolving Line of Credit Agreement Modification Agreement
No. 3 dated March 30, 1995 between the Registrant and Fleet Bank of New
York.
4.7 Note and Loan and Security Agreement Modification Agreement No. 3 dated
March 30, 1995 between the Registrant and Fleet Bank of New York.
4.8 Note and Secured Revolving Line of Credit Agreement Modification Agreement
No. 4 dated October 18, 1995 between the Registrant and Fleet Bank of New
York.
4.9 Note and Loan and Security Agreement Modification Agreement No. 4 dated
October 18, 1995 between the Registrant and Fleet Bank of New York.
4.10 Building Loan Agreement Modification Agreement dated November 15, 1995
between the Registrant and Fleet Bank of New York.
4.11 $2,500,000 Secured Working Capital Revolving Line of Credit Note dated
October 18, 1995 between the Registrant and Fleet Bank of New York.
10.1 Registrant's 1972 Stock Option Plan incorporated by reference to Exhibit
10.1 to Form 10-K Report for the year ended 12/31/88. (File No. 1-7037)
Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter ended December 31,
1995.
<PAGE>
Environment One Corporation
Form 10-KSB
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.
Environment One Corporation
(Registrant)
- --------------------------------- ------------------------
Stephen V. Ardia. Date
Chairman and Director
Pursuant to the requirements of the Securities Exchange Act of 1934 this report
has been signed by the following persons, which included the chairman, chief
executive officer, director of finance and a majority of the Board of Directors
on behalf of the Registrant and in the capacities and on the dates indicated.
- --------------------------------- ---------------------------------
Stephen V. Ardia. Date Lars Grenback Date
Chairman and Director Director
- --------------------------------- ---------------------------------
Angelo Dounoucos Date Robert G. James Date
President, CEO and Director Director
- --------------------------------- ---------------------------------
Philip W. Welsh Date Volker A. Mohnen Date
Director of Finance and Treasurer Director
- --------------------------------- ---------------------------------
Walter W. Aker Date Rolf E. Soderstrom Date
Director Director
- --------------------------------- ---------------------------------
John L. Allen Date Frank W. Van Luik, Jr Date
Director Director
NOTE AND SECURED REVOLVING LINE OF
CREDIT AGREEMENT MODIFICATION AGREEMENT NO. 4
THIS AGREEMENT, made this 18 day of October, 1995, by and between FLEET
BANK f/k/a FLEET BANK OF NEW YORK, a bank organized and existing under the laws
of the State of New York, and having its principal banking house located at 69
State Street, Albany, New York 12201 (herein called the "Bank") and
ENVIRONMENT-ONE CORPORATION, a New York corporation with its principal place of
business at P.O. Box 773, 2773 Balltown Road, Schenectady, New York 12309
(herein called the "Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower did execute and deliver to the Bank a Business
Purpose Promissory Note (Demand Line of Credit) in the face amount of Two
Million Five Hundred Thousand and no/100 Dollar ($2,500,000.00) dated as of
October 2, 1992 (herein called the "Note"); and
WHEREAS, the Note is subject to the terms and conditions of a Secured
Revolving Line of Credit Agreement also dated as of October 2, 1992 by and
between the Bank and the Borrower (the "Line of Credit Agreement"); and
WHEREAS, the Note and the Line of Credit Agreement were modified by the
parties pursuant to the terms of a Note and Line of Credit Agreement
Modification Agreement by and between the Borrower and the Bank dated the 23rd
day of March, 1994 and a Letter Agreement dated May 10, 1994 (collectively the
"Modification Agreement"); and
WHEREAS, the Note and the Line of Credit Agreement were further
modified by the parties pursuant to the terms of a Note and Line of Credit
Agreement Modification Agreement No. 2 by and between the Borrower and the Bank
dated the 20th day of March, 1995 (the "Modification Agreement No. 2"); and
WHEREAS, the Note and the Line of Credit Agreement were further
modified by the parties pursuant to the terms of a Note and Line of Credit
Agreement Modification Agreement No. 3 by and between the Borrower and the Bank
dated the 30th day of March, 1995 (the "Modification Agreement No. 3"); and
WHEREAS, the Borrower and the Bank desire to further modify certain
terms of the Note and the Line of Credit Agreement, but only pursuant to the
terms and conditions of this Note and Line of Credit Agreement Modification
Agreement No. 4.
NOW, THEREFORE, in pursuance of said agreement and in consideration of
the mutual promises, covenants and agreements herein contained and other good
and valuable consideration, receipt of which is acknowledged by the parties
hereto, the Borrower and the Bank mutually agree and covenant as follows:
<PAGE>
1. The Note is hereby modified, replaced and restated in its entirety
by a Line of Credit Note in the face amount of $2,500,000.00 dated of even date
herewith from the Borrower to the Lender (the "New Note"), a copy of which New
Note is attached hereto as Exhibit "A" and made a part hereof. All the terms and
conditions of the Line of Credit Agreement, as previously modified by the
Modification Agreement, Modification Agreement No. 2 and Modification Agreement
No. 3, and as further modified hereunder, shall continue to apply to the New
Note.
2. The last sentence in paragraph 1. (a) of the Line of Credit
Agreement, as previously modified by the Modification Agreement, Modification
Agreement No. 2 and Modification Agreement No. 3, is hereby modified in its
entirety to read as follows:
"Advances under the Note shall be limited to (i) seventy-five
percent (75%) of the Borrower's "Acceptable Domestic Accounts
Receivable" (as hereinafter defined), plus (ii) seventy-five percent
(75%) of the Borrower's bonded municipal job retainages, plus (iii)
seventy-five percent (75%) of the Borrower's "Acceptable Foreign
Accounts Receivable" (as hereinafter defined) not to exceed Two Hundred
Fifty Thousand Dollars ($250,000.00) or ten percent of the Borrowing
Base (as hereinafter defined), whichever is less."
3. Paragraph 1. (e) of the Line of Credit Agreement, as previously
modified by the Modification Agreement, Modification Agreement No. 2 and
Modification Agreement No. 3, is hereby modified in its entirety to read as
follows:
"Advances under the Note by the Bank to the Borrower shall be
at the discretion of the Bank based upon the Aging Schedule of Accounts
Receivable referred to in subparagraph (c) and the Retainage Report
referred to in subparagraph (d); except that the total loans
outstanding at any one time made in connection with this loan shall not
exceed (i) seventy-five percent (75%) of the Borrower's "Acceptable
Domestic Accounts Receivable" (as hereinafter defined), plus (ii)
seventy-five percent (75%) of the Borrower's bonded municipal job
retainages, plus (iii) seventy-five percent (75%) of the Borrower's
"Acceptable Foreign Accounts Receivable" (as hereinafter defined) not
to exceed Two Hundred Fifty Thousand Dollars ($250,000.00) or ten
percent of the Borrowing Base (as hereinafter defined), whichever is
less. Acceptable Domestic Accounts Receivable shall be defined as those
accounts receivable of the Borrower due from account debtors with a
billing address located within the United States of America that are
due ninety (90) days or less, whichever is less, that are free and
clear of all liens, and are unconditionally owed to the Borrower
without a defense, offset or counterclaim, and which would not be
classified as contra accounts. Acceptable Foreign Accounts Receivable
shall be defined as those accounts receivable of the Borrower that are
either (i) due from account debtors with a billing address located
outside of the United States of America or (ii) that are due from the
Borrower's subsidiaries created by sales by said subsidiaries to
unrelated third parties, and in either case, that are due ninety (90)
days or less, whichever is less, that are free and clear of all liens,
and are unconditionally owed to the Borrower without a defense, offset
or counterclaim. Borrowing Base is defined in the Loan Formula
Certificate attached to this Line of Credit Agreement as Exhibit A."
<PAGE>
4. All the other terms and conditions of the Line of Credit Agreement,
as previously modified pursuant to the terms of the Modification Agreement, the
Modification Agreement No. 2 and the Modification Agreement No. 3, remain in
full force and effect, with the exception of the modifications set forth in
paragraphs 2 and 3 above.
5. The Borrower hereby warrants and covenants to the Bank that as of
the date of this Agreement, there are no disputes, offsets, claims or
counterclaims of any kind or nature whatsoever under the Note, the New Note, the
Line of Credit Agreement, the Modification Agreement, the Modification Agreement
No. 2, the Modification Agreement No. 3 or any of the documents executed in
connection therewith or herewith or the obligations represented or evidenced
thereby or hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Note and Line
of Credit Agreement Modification Agreement No. 4 as of the 16th day of October,
1995.
FLEET BANK ENVIRONMENT-ONE CORPORATION
By: /s/ Kevin P. Harrigan By: /s/ Angelo Dounoucos
---------------------- ------------------------------
Kevin P. Harrigan, Angelo Dounoucos, President
Vice President and Chief Executive Officer
By: /s/ Philip Welsh
-----------------------------
Philip Welsh, Treasurer
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF Schenectady )
On this 18th day of October, 1995 before me personally appeared Angelo
Dounoucos, to me known, who being by me duly sworn, did depose and say that he
resides at 720 St. Davids Lane, Schenectady, New York 12309, that he is the
President and Chief Executive Officer of ENVIRONMENT-ONE CORPORATION, the
corporation described in and which executed the above instrument; and that he
signed his name thereto by order of the Board of Directors of said corporation.
/s/ Carol J. Hicks
------------------
Notary Public
CAROL J. HICKS
Notary Public, State of New York
No. 5022470
Qualified in Schenectady County
Commission Expires January 10, 1996
STATE OF NEW YORK )
) ss.:
COUNTY OF Schenectady )
On this 18th day of October, 1995, before me personally appeared Philip
Welsh, to me known, who being by me duly sworn, did depose and say that he
resides at 13 Nottingham Way South, Clifton Park, New York 12065, that he is the
Treasurer of ENVIRONMENT-ONE CORPORATION, the corporation described in and which
executed the above instrument; and that he signed his name thereto by order of
the Board of Directors of said corporation.
/s/ Carol J. Hicks
------------------
Notary Public
CAROL J. HICKS
Notary Public, State of New York
No. 5022470
Qualified in Schenectady County
Commission Expires January 10, 1996
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF Albany )
On this 16th day of Ocotber, 1995, before me personally appeared Kevin
P. Harrigan, to me known, who being by me duly sworn, did depose and say that he
resides at 201 Autumn Run, Schenectady, New York 12309, that he is a Vice
President of FLEET BANK, the corporation described in and which executed the
above instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
/s/ Oriana J. Farella
-----------------------
Notary Public
ORIANA J. FARELLA
Notary Public, State of New York
Qualified in Schenectady County
Commission Expires April 3, 1997
NOTE AND LOAN AND SECURITY
AGREEMENT MODIFICATION AGREEMENT NO. 4
This Agreement dated this 18 day of October, 1995, between
ENVIRONMENT-ONE CORPORATION, a New York corporation with its principal place of
business at P. O. Box 773, 2773 Balltown Road, Schenectady, New York 12301
(hereinafter called the "Borrower"), and FLEET BANK f/k/a FLEET BANK OF NEW
YORK, a bank organized and existing under the laws of the State of New York
having its principal banking house located at 69 State Street, Albany, New York
12207 (hereinafter called the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower did execute and deliver to the Lender a Three
Million and no/100 Dollar ($3,000,000.00) Business Promissory Note dated
December 30, 1992 (hereinafter called the "Note"); and
WHEREAS, the Note was subject to the terms and conditions in a Loan and
Security Agreement also dated the 30th day of December, 1992 between the
Borrower and the Lender (hereinafter called the "Loan and Security Agreement");
and
WHEREAS, the Note and the Loan and Security Agreement were modified by
the parties pursuant to the terms of a Note and Loan and Security Agreement
Modification Agreement by and between the Borrower and the Lender dated the 23rd
day of March, 1994 (the "Modification Agreement"); and
WHEREAS, the Note and the Loan and Security Agreement were modified by
the parties pursuant to the terms of a Note and Loan and Security Agreement
Modification Agreement No. 2 by and between the Borrower and the Lender dated
the 20th day of March, 1995 (the "Modification Agreement No. 2"); and
WHEREAS, the Note and the Loan and Security Agreement were modified by
the parties pursuant to the terms of a Note and Loan and Security Agreement
Modification Agreement No. 3 by and between the Borrower and the Lender dated
the 30th day of March, 1995 (the "Modification Agreement No. 3"); and
WHEREAS, the Borrower and the Lender desire to further modify certain
terms of the Note and the Loan and Security Agreement, but only pursuant to the
terms and conditions of this Note and Loan and Security Agreement Modification
Agreement No. 4.
NOW, THEREFORE, in pursuance of said agreement and in consideration of
the mutual promises, covenants and agreements herein contained and other good
and valuable consideration, receipt of which is acknowledged by the parties
hereto, the Borrower and the Lender mutually agree and covenant as follows:
<PAGE>
1. The interest rate set forth in the first paragraph of the Note is
hereby modified as follows:
"The Borrower agrees to pay interest on the disbursed, unpaid
principal from the date hereof, computed on a 360 day basis, but
chargeable on actual days, at a per annum rate equal to 1.25% above the
"Fleet Bank Prime Rate", adjusted as of the date said "Fleet Bank Prime
Rate" is changed at the Lender. The "Fleet Bank Prime Rate" is that
rate announced from time to time by the Lender as a reference point for
determining interest rates charged on certain loans and is not
necessarily the lowest rate at which the Lender lends. Upon receipt by
the Lender of the Borrower's internally prepared financial statements
for the period ending September 30, 1995, which financial statements
must evidence Borrower's compliance with all financial covenants set
forth in Schedule A to that certain Loan and Security Agreement
executed by the Borrower in favor of the Lender on December 30, 1992,
as modified, the interest rate chargeable hereunder shall decrease to
1.00% above the "Fleet Bank Prime Rate", adjusted as of the date said
"Fleet Bank Prime Rate" is changed at the Lender. Upon receipt by the
Lender of the Borrower's audited financial statements for the period
ending December 31, 1995, which financial statements must evidence
Borrower's compliance with all financial covenants set forth in
Schedule A to that certain Loan and Security Agreement executed by the
Borrower in favor of the Lender on December 30, 1992, as modified, the
interest rate chargeable hereunder shall decrease to .75% above the
"Fleet Bank Prime Rate", adjusted as of the date said "Fleet Bank Prime
Rate" is changed at the Lender."
2. Per agreement between the Borrower and the Lender, the advance
period for all Note draws expired on December 31, 1994. Pursuant to the terms
hereof, as long as the Borrower is not in default pursuant to the terms of the
Note and/or the Loan Agreement, as previously modified, the Lender agrees to
reopen the advance period for the remaining $329,086.91 left to be advanced
under the Note until June 30, 1996.
3. Except as expressly modified hereunder, all the terms and conditions
of the Note, as previously modified pursuant to the terms of the Modification
Agreement, the Modification Agreement No. 2 and Modification Agreement No. 3,
remain in full force and effect, with the exception of the modifications set
forth in paragraph 1 above. All the terms and conditions of the Loan and
Security Agreement, as previously modified pursuant to the terms of the
Modification Agreement, the Modification Agreement No. 2 and Modification
Agreement No. 3, shall continue to apply to the Note as further modified
hereunder.
4. The Borrower hereby warrants and covenants to the Lender that as of
the date of this Agreement, there are no disputes, offsets, claims or
counterclaims of any kind or nature whatsoever under the Note, the Loan and
Security Agreement, the Modification Agreement, the Modification Agreement No.
2, the Modification Agreement No. 3 or any of the documents executed in
connection therewith or herewith or the obligations represented or evidenced
thereby or hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Note and Loan
and Security Agreement Modification Agreement No. 4 as of the 18 day of October,
1995.
FLEET BANK ENVIRONMENT-ONE CORPORATION
By: /s/ Kevin P. Harrigan By: /s/ Angelo Dounoucos
---------------------- ------------------------------
Kevin P. Harrigan, Angelo Dounoucos, President
Vice President and Chief Executive Officer
By: /s/ Philip Welsh
-----------------------------
Philip Welsh, Treasurer
STATE OF NEW YORK )
) ss.:
COUNTY OF Schencetady )
On this 18th day of October, 1995, before me personally appeared Angelo
Dounoucos, to me known, who being by me duly sworn, did depose and say that he
resides at 729 St. Davids Lane, Schenectady, New York 12309, that he is the
President and Chief Executive Officer of ENVIRONMENT-ONE CORPORATION, the
corporation described in and which executed the above instrument; and that he
signed his name thereto by order of the Board of Directors of said corporation.
/s/ Carol J. Hicks
------------------
Notary Public
CAROL J. HICKS
Notary Public, State of New York
No. 5022470
Qualified in Schenectady County
Commission Expires January 10, 1996
STATE OF NEW YORK )
) ss.:
COUNTY OF Schenectady )
On this 18th day of October, 1995, before me personally appeared Philip
Welsh, to me known, who being by me duly sworn, did depose and say that he
resides at 13 Nottingham Way South, Clifton Park, New York 12065, that he is the
Treasurer of ENVIRONMENT-ONE CORPORATION, the corporation described in and which
executed the above instrument; and that he signed his name thereto by order of
the Board of Directors of said corporation.
/s/ Carol J. Hicks
------------------
Notary Public
CAROL J. HICKS
Notary Public, State of New York
No. 5022470
Qualified in Schenectady County
Commission Expires January 10, 1996
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF Albany )
On this 16th day of October, 1995, before me personally appeared Kevin
P. Harrigan, to me known, who being by me duly sworn, did depose and say that he
resides at 201 Autumn Run, Schenectady, New York 12309, that he is a Vice
President of FLEET BANK, the corporation described in and which executed the
above instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
/s/ Oriana J. Farella
-----------------------
Notary Public
ORIANA J. FARELLA
Notary Public, State of New York
Qualified in Schenectady County
Commission Expires April 3, 1997
BUILDING LOAN AGREEMENT MODIFICATION AGREEMENT
AGREEMENT dated as of this 15th day of November, 1995 by and between
FLEET BANK f/k/a FLEET BANK OF NEW YORK, a bank organized and existing under and
by virtue of the laws of the State of New York and having its principal banking
house located at 69 State Street, City and County of Albany, New York 12201
(herein referred to as the "Lender") and ENVIRONMENT-ONE CORPORATION, a New York
corporation with an office and principal place of business at P. O. Box 773,
2273 Balltown Road, Schenectady, New York 12309 (herein called the "Borrower").
W I T N E S S E T H:
WHEREAS, on December 30, 1992, the Lender loaned to the Borrower Three
Million and no/100 Dollars ($3,000,000.00) pursuant to a Business Purpose Note
(herein called the "1992 Note") dated said 30th day of December, 1992, executed
by the Borrower in favor of the Lender; and
WHEREAS, One Million Two Hundred Thousand and no/100 Dollars
($1,200,000.00) of the 1992 Note proceeds were to be advanced to the Borrower
pursuant to the terms of a Building Loan Agreement also dated as of December 30,
1992, executed by the Borrower in favor of the Lender and duly filed in the
Office of the Schenectady County Clerk (the "Building Loan Agreement"). As at
the date hereof, Seventy-Five Thousand Four Hundred Ninety-Eight and 11/100
Dollars ($75,498.11) remains unadvanced pursuant to the terms of the Building
Loan Agreement; and
WHEREAS, One Million Eight Hundred Thousand and no/100 Dollars
($1,800,000.00) of the 1992 Note proceeds were to be advanced to the Borrower
pursuant to a Loan and Security Agreement (herein called the "1992 Loan
Agreement") also dated December 30, 1992, executed by the Borrower in favor of
the Lender; and
WHEREAS, the 1992 Note and the 1992 Loan Agreement were modified by the
parties pursuant to the terms of a Note and Loan and Security Agreement
Modification Agreement by and between the Borrower and the Lender dated the 23rd
day of March, 1994 (the "Modification Agreement"), were further modified by the
parties pursuant to the terms of a Note and Loan and Security Agreement
Modification Agreement No. 2 by and between the Borrower and the Lender dated
the 20th day of March, 1995 (the "Modification Agreement No. 2"); were further
modified by the parties pursuant to the terms of a Note and Loan and Security
Agreement Modification Agreement No. 3 by and between the Borrower and the
Lender dated the 30th day of March, 1995 (the "Modification Agreement No. 3");
and were further modified pursuant to the terms of a Note and Loan and Security
Modification Agreement No. 4 by and between the Borrower and the Lender dated
the 18th day of October, 1995 (the "Modification Agreement No. 4"). The 1992
Note, as modified pursuant to the Modification Agreement, the Modification
Agreement No. 2, the Modification Agreement No. 3 and the Modification Agreement
No. 4 is hereinafter referred to as the "Note", and the 1992 Loan Agreement, as
modified pursuant to the terms of the Modification Agreement, the Modification
Agreement No. 2, the Modification Agreement No. 3 and the Modification Agreement
No. 4 is hereinafter referred to as the "Loan Agreement";
<PAGE>
WHEREAS, the Borrower, as additional collateral security for the
repayment of the Note, including interest, executed and delivered to the Lender
on December 30, 1992 a mortgage (herein called the "Mortgage") covering those
premises described on Schedule A, as well as other property; and
WHEREAS, the Borrower and the Lender wish to modify the terms and
conditions of the Building Loan Agreement to allow the Lender to advance to the
Borrower the remaining Seventy-Five Thousand Four Hundred Ninety-Eight and
11/100 Dollars ($75,498.11) of Note proceeds to be advanced pursuant to the
terms of the Building Loan Agreement.
NOW, THEREFORE, in pursuance of said agreement and in consideration of
the mutual promises, covenants and agreements herein contained and other good
and valuable consideration, the receipt of which is hereby respectfully
acknowledged by the parties, the Borrower and the Lender agree as follows:
1. Paragraph 8 of the Building Loan Agreement is modified and replaced
in its entirety as follows:
"8. In the case the Project is not completed on or before the 30th day
of June, 1996, or if the Borrower is in default pursuant to any of the
terms and conditions of this Building Loan Agreement, the Note, the
Loan Agreement, the Mortgage or any other instrument of credit or
lending between the Borrower and the Lender - the Lender may enter and
complete the Project or protect it from whether and from any injury or
damage in such manner as it shall deem best, with any expense incurred
by the Lender to be and continue as a part of the money to be advanced
and secured by the Mortgage; or Lender, at its option, may deem said
Mortgage and the amount advanced thereof under and by virtue of this
Agreement and the Loan Agreement, to be immediately due and payable;
and the determination of said Lender that there has been such failure
to proceed diligently with the construction and completion of the
Project shall be final for all intents and purposes, as between the
parties hereto. Lender shall have no obligation to complete the
construction, but if it does, the terms of this paragraph shall apply."
2. Except as expressly modified hereunder, all the other terms and
conditions of the Building Loan Agreement remain in full force and effect.
3. The undersigned hereby warrants and covenants to the Lender that as
of the date of this Agreement, there are no disputes, offsets, claims or
counterclaims of any kind or nature whatsoever under the Note, the Mortgage, the
Building Loan Agreement, the Loan Agreement or any of the documents executed in
connection herewith or therewith or the obligations represented or evidenced
hereby or thereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
year and date above written.
ENVIRONMENT-ONE CORPORATION
By: /s/ Angelo Dounoucos
---------------------------
Angelo Dounoucos, President
and Chief Executive Officer
By: /s/ Philip Welsh
---------------------------
Philip Welsh, Treasurer
FLEET BANK
By: /s/ Kevin P. Harrigan
---------------------------
Kevin P. Harrigan
Vice President
STATE OF NEW YORK )
) ss.:
COUNTY OF SCHENECTADY )
On this 15th day of November, 1995, before me personally appeared
Angelo Dounoucos, to me known, who being by me duly sworn, did depose and say
that he resides at 720 St. David's Lane, Schenectady, New York 12309, that he is
the President and Chief Executive Officer of ENVIRONMENT-ONE CORPORATION, the
corporation described in and which executed the above instrument; and that he
signed his name thereto by order of the Board of Directors of said corporation.
/s/ Susan H. Gisotti
------------------------
Notary Public
SUSAN H. GISOTTI
Notary Public, State of New York
No. 4990816
Qualified in Schenectady County
Commission Expires January 13, 1998
STATE OF NEW YORK )
) ss.:
COUNTY OF SCHENECTADY )
On this 15th day of November, 1995, before me personally appeared
Philip Welsh, to me known, who being by me duly sworn, did depose and say that
he resides at 13 Nottingham Way South, Clifton Park, New York 12065, that he is
the Treasurer of ENVIRONMENT-ONE CORPORATION, the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the Board of Directors of said corporation.
/s/ Susan H. Gisotti
------------------------
Notary Public
SUSAN H. GISOTTI
Notary Public, State of New York
No. 4990816
Qualified in Schenectady County
Commission Expires January 13, 1998
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF SCHENECTADY )
On this 15th day of November, 1995, before me personally appeared Kevin
P. Harrigan, to me known, who being by me duly sworn, did depose and say that he
resides at 201 Autumn Run, Schenectady, New York 12306, that he is a Vice
President of FLEET BANK, the corporation described in and which executed the
above instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
/s/ Susan H. Gisotti
------------------------
Notary Public
SUSAN H. GISOTTI
Notary Public, State of New York
No. 4990816
Qualified in Schenectady County
Commission Expires January 13, 1998
REVOLVING LINE OF CREDIT NOTE
Albany, New York
18 October , 1995 $2,500,000.00
FOR VALUE RECEIVED, the undersigned, ENVIRONMENT-ONE CORPORATION (the
"Borrower") promises to pay to the order of FLEET BANK, a bank organized and
existing under the laws of the State of New York (herin called the "Bank"), at
the office of the Bank, 69 State Street, Albany, New York, 12201, or at any such
other place as may be designated from time to time by the Bank the sum of TWO
MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000.00), or such lesser sum as may
be disbursed by the Bank to the Borrower pursuant to the terms of the Secured
Revolving Line of Credit Agreement (as hereinafter defined), lawful money of the
United States of America, plus interest on the unpaid principal balance computed
from the date hereof, at the per annum rates set forth below, based on a year of
360 days but chargeable on actual days.
As used herein, the following terms shall have the following meanings:
Advance - Any disbursement of proceeds under this Note made by the Bank to or
for the benefit of the Borrower.
Event of Default - Any of those events defined as an Events of Default under
this Note, the Secured Revolving Line of Credit Agreement, or any other
instruments or documents executed in connection herewith.
Fleet Bank Prime Rate - That rate announced from time to time by the Bank as a
reference point for determining interest rates charged on certain loans and is
not necessarily the lowest rate at which the Bank lends. Any change in this
interest rate shall be effective on the day the change in such rate occurs,
whether or not notice has been given to the Borrower.
Floating Rate - The Fleet Bank Prime Rate, as such rate changes from time to
time, plus one percent (1.00%). Upon receipt by the Bank of the Borrower's
internally prepared financial statements for the period ending September 30,
1995, which financial statements must evidence Borrower's compliance with all
financial covenants set forth in the Secured Revolving Line of Credit Agreement,
the interest rate chargeable hereunder shall decrease to three quarters of one
percent (.75%) above the Fleet Bank Prime Rate, as such rate changes from time
to time. Upon receipt by the Bank of the Borrower's audited financial statements
for the period ending December 31, 1995, which financial statements must
evidence Borrower's compliance with all financial covenants set forth in the
Secured Revolving Line of Credit Agreement, the interest rate chargeable
hereunder shall decrease to one-half of one percent (.50%) above the Fleet Bank
Prime Rate, as such rate changes from time to time.
Interest Period - The time period selected by the Borrower during which interest
is to accrue on any Advance at the Libor Fixed Rate or the Floating Rate, as
selected by the Borrower. An interest period during which interest is to accrue
at the Libor Fixed Rate shall be for a term of thirty (30), sixty (60) or ninety
(90) days, as selected by the Borrower. In no event shall any Interest Period on
any Advance extend beyond the Maturity Date.
<PAGE>
Interest Rate Election - An election on the part of the Borrower to choose the
Libor Fixed Rate or the Floating Rate to be charged on any Advance.
Interest Rate Election Notice/Request for Advance - A written notice,
substantially in the form of Exhibit A attached to this Note, given by the
Borrower to the Bank in which the Borrower requests and Advance and indicates an
Interest Rate Election and an Interest Period for said Advance.
Libor Rate - A rate per annum (rounded to the nearest one-hundredth of one
percent) equal to the rate as determined on the basis of the offered rates for
deposits in United States dollars for a period of time closest to the maturity
of the Interest Period chosen by the Borrower which appears on the Reuter's LIBO
page as of 11:00 a.m. London time as of the first day of any Interest Period
during which interest is to accrue at the Libor Fixed Rate. If such rate does
not appear on the Reuter's LIBO page, the rate for that date will be determined
on the basis of the offered rates for deposits in United States dollars closest
to the maturity of the Interest Period chosen by the Borrower which are offered
by four major banks in the London Interbank Market at approximately 11:00 a.m.
London time as of the first day of the Interest Period in question. The
principal London office of each of the four major London banks will be requested
to provide a quotation of its United States dollar deposit offered rate. If at
lease two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that date will be determined on the basis of the rates
quoted for loans in United States dollars to leading European banks for a period
of time closest to the maturity of the Interest Period chosen by the Borrower
offered by major banks in New York City at approximately 11:00 a.m. New York
City time as of the first day of the Interest Period in question. In the event
the Bank is unable to obtain any such quotation as provided above, it will be
deemed that a Libor Rate cannot be determined. In the event the Board of
Governors of the Federal Reserve System shall impose a reserve percentage with
respect to Libor deposits of the Bank, then for any period during which such
reserve percentage shall apply, the Libor Rate shall be equal to the amount
determined above divided by an amount equal to one (1) minus such reserve
percentage.
Libor Fixed Rate - A per annum rate fixed at the Libor Rate, plus three percent
(3.00%). Upon receipt by the Bank of the Borrower's internally prepared
financial statements for the period ending September 30, 1995, which financial
statements must evidence Borrower's compliance with all financial covenants set
forth in the Secured Revolving Line of Credit Agreement, the interest rate
chargeable hereunder shall decrease to two and three-quarters of one percent
(2.75%) above the Libor Rate. Upon receipt by the Bank of the Borrower's audited
financial statements for the period ending December 31, 1995, which financial
statements must evidence Borrower's compliance with all financial covenants set
forth in the Secured Revolving Line of Credit Agreement, the interest rate
chargeable hereunder shall decrease to two and one-half of one percent (2.50%)
above the Libor Rate.
<PAGE>
Maturity Date - April 30, 1996.
Secured Revolving Line of Credit Agreement - The Secured Revolving Line of
Credit Agreement executed by the Borrower and the Bank on October 2, 1992, as
modified by the parties pursuant to the terms of a Note and Line of Credit
Agreement Modification Agreement by and between the Borrower and the Bank dated
the 23rd day of March, 1994 and a Letter Agreement dated May 10, 1994
(collectively the "Modification Agreement"); and as further modified by the
parties pursuant to the terms of a Note and Line of Credit Agreement
Modification Agreement No. 2 by and between the Borrower and the Bank dated the
20th day of March, 1995 (the "Modification Agreement No. 2"); and as further
modified by the parties pursuant to the terms of a Note and Line of Credit
Modification Agreement No. 3 by and between the Borrower and the Bank dated the
30th day of March, 1995 (the "Modification Agreement No. 3"); and as further
modified by the parties pursuant to the terms of a Note and Line of Credit
Agreement Modification Agreement No. 4 by and between the Borrower and the Bank
dated of even date herewith.
The bank shall make Advances to the Borrower as the Borrower my from
time to time request; provided, however, such Advances shall not exceed in the
aggregate at any one time the maximum principal amount of Two Million Five
Hundred Thousand Dollars ($2,500,000.00). Interest on each Advance shall accrue
at the Libor Fixed Rate or the Floating Rate, as selected from time to time by
the Borrower. Upon requesting an Advance, the Borrower shall deliver to the Bank
a Request for Advance specifying the amount of the Advance, an Interest Rate
Election and an Interest Period for the Advance. Each Request for Advance shall
be irrevocable upon its receipt by the Bank and shall be effective the day of
such receipt if such day is a business day and if not, the next succeeding
business day. If an Advance is still outstanding at the end of a selected
Interest Period, the Borrower shall deliver to the Bank an Interest Rate
Election Notice specifying the next successive Interest Period and the Interest
Rate Election to apply to the Advance during such Interest Period. No Request
for Advance shall be honored if an Event of Default has occurred.
The Bank is hereby authorized to record on its internal records the
amount and date of each Advance and the amount and date of any repayment. Absent
manifest error, the information so recorded by the Bank shall be prima facie
evidence of the existence and amounts of the Borrower's obligations recorded
therein. As the Borrower makes repayments of principal, it shall be permitted to
reborrow, up to the maximum amount available hereunder. No Request for Advance
shall be honored after the Maturity Date.
In the event the Borrower fails to deliver an Interest Rate Election
Notice at the times set forth above, interest shall accrue at the Floating Rate
until the Borrower again makes an Interest Rate Election. Once chosen, the
Interest Rate Election shall remain in effect until expiration of the selected
Interest Period.
If an Event of Default has occurred and is continuing, the Borrower
shall not be permitted to make any Interest Rate Election unless and until the
Event of Default is cured, and interest shall accrue at the Floating Rate after
the expiration of any Interest Period in effect at the time of the occurrence of
the Event of Default.
Each Interest Rate Election shall become effective on the first day of
the corresponding Interest Period, and shall remain in effect for the duration
of the Interest Period.
<PAGE>
Interest and principal shall be paid as follows:
(a) Interest on the outstanding principal amount of each
Advance shall accrue from the date the Advance is made and shall be
payable monthly commencing October 1, 1995, and on the same day of each
successive month during the term hereof;
(b) The entire outstanding principal balance, plus accrued
interest, shall be paid in any event on the Maturity Date.
All payments made hereunder shall be applied first to the
payment of late charges, if any, then to costs and expenses of the Bank, if any,
then to accrued interest to the date of payment and then to principal.
In the event the Borrower makes a prepayment of all or any portion of
the principal of any Advance, a yield maintenance fee will be assessed as
follows:
(a) If the prepayment is made while interest is accruing at
the Floating Rate on the portion being prepaid, there shall be no yield
maintenance fee;
(b) If the prepayment is made at the expiration of an Interest
Period for the portion being prepaid, there shall be no yield
maintenance fee;
(c) If the prepayment is made during any Interest Period in
which the Libor Fixed Rate is being charged, such prepayment shall be
subject to the Bank's determination, in its sole discretion, that
current market conditions can accommodate the prepayment request. If
the Bank so determines that the prepayment can be made, the Borrower
shall pay to the Bank a yield maintenance fee in an amount computed as
follows: The latest published rate preceding the date of prepayment for
United States Treasury Notes or Bills (Bills on a discounted basis
shall be converted to a bond equivalent) as published weekly in the
Federal Reserve Statistical Release with a maturity date closest to the
last day of the applicable Interest Period shall be subtracted from the
Libor Fixed Rate in effect at the time of prepayment. If the result is
zero or a negative number, there shall be no yield maintenance fee. If
the result is a positive number, then the resulting percentage shall be
multiplied by the amount being prepaid. The resulting amount will be
divided by 360 and multiplied by the number of days remaining in the
applicable Interest Period. Said amount shall be reduced to present
value calculated by using the number of days remaining in the
applicable Interest Period and using the above referenced United States
Treasury or Bill rate and the number of days remaining in said Interest
Period as of the date of prepayment. The resulting amount shall be the
yield maintenance fee due to the Bank upon the prepayment.
If by reason of an Event of Default the Bank elects to declare
this Note to be immediately due and payable, then any yield maintenance
fee with respect to this Note shall become due and payable in the same
manner as though the Borrower has exercised such right of prepayment.
The Borrower acknowledges that this Note is secured, in part, and is
subject to the provisions of the Secured Revolving Line of Credit Agreement.
<PAGE>
In the event that any payment shall become overdue for a period in
excess of ten (10) days, a "Late Charge" of five cents ($0.05) for each dollar
($1.00) so overdue will be charged by the Bank for the purpose of defraying the
expense incident to handling such delinquent payment.
Upon the occurrence of one or more events of default as provided below,
the entire disbursed and unpaid principal, and the interest on this Note shall,
upon written demand of the Bank, become immediately due and payable without
presentment or protest or other notice or demand, all of which are expressly
waived by the Borrower. Any one or more of the following shall constitute an
event of default ("Event of Default"):
(a) Upon the failure of the Borrower to pay any part of the
interest or principal on this Note when due and payable and continuance
of such failure for ten (10) days;
(b) Any event of default pursuant to the terms and conditions
of the Secured Revolving Line of Credit Agreement after the expiration
of any grace periods, if applicable;
(c) Any event of default pursuant to the terms and conditions
of any other loan by the Bank to the Borrower after notice and the
expiration of any grace period, if applicable.
The powers and remedies given hereby and by the Loan Agreement shall
not be exclusive of any other powers and remedies available to the Bank. No
course of dealings between the Borrower and the Bank and no delay on the part of
the Bank in exercising any rights with respect to any Event of Default shall
operate as a waiver of any rights of the Bank. Failure on the part of the Bank
to exercise any rights with respect to any Event of Default shall not operate as
a waiver of any rights with respect to any other Event of Default. The Borrower
agrees to pay all costs and expenses incurred by the Bank in enforcing this
Note, including, without limitation, reasonable attorneys' fees and legal
expenses.
If any provisions of this Note or the application of it to any person
or circumstance, shall be invalid or unenforceable, the remainder of this Note
or the application of those provisions to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected and
every other provision of this Note shall be valid and fully enforceable.
This Note may not be waived, changed, modified or discharged orally,
but only by agreement in writing signed by the party against whom any
enforcement of any waiver, change, modification or discharge is sought.
This Note and all rights of the Bank hereunder, may be assigned by the
Bank without notice to the Borrower, but this Note may not be assigned by the
Borrower.
The purchaser, assignee, transferee, or pledgee of this Note shall be
entitled to all rights of the Bank hereunder as if said purchaser, assignee,
transferee, or pledgee were originally named in this Note.
<PAGE>
IN WITNESS WHEREOF, the Borrower has duly executed this Note the day
and year first above written.
ENVIRONMENT-ONE CORPORATION
BY: /s/ Angelo Dounoucos
-------------------------------
Angelo Dounoucos, President
and Chief Executive Officer
By: /s/ Philip Welsh
-------------------------------
Philip Welsh,
Treasurer
STATE OF NEW YORK )
) ss.:
COUNTY OF Schenectady )
On this 18th day of October, 1995, before me personally appeared Angelo
Dounoucos, to me known, who being by me duly sworn, did depose and say that he
resides at 720 St. Davids Lane, Schenectady, New York 12309, that he is the
President and Chief Executive Officer of ENVIRONMENT-ONE CORPORATION, the
corporation described in and which executed the above instrument; and that he
signed his name thereto by order of the Board of Directors of said corporation.
/s/ Carol J. Hicks
------------------
Notary Public
CAROL J. HICKS
Notary Public, State of New York
No. 5022470
Qualified in Schenectady County
Commission Expires January 10, 1996
STATE OF NEW YORK )
) ss.:
COUNTY OF Schenectady )
On this 18th day of October, 1995, before me personally appeared Philip
Welsh, to me known, who being by me duly sworn, did depose and say that he
resides at 13 Nottingham Way South, Clifton Park, New York 12065, that he is the
Treasurer of ENVIRONMENT-ONE CORPORATION, the corporation described in and which
executed the above instrument; and that he signed his name thereto by order of
the Board of Directors of said corporation.
/s/ Carol J. Hicks
------------------
Notary Public
CAROL J. HICKS
Notary Public, State of New York
No. 5022470
Qualified in Schenectady County
Commission Expires January 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 91,115
<SECURITIES> 0
<RECEIVABLES> 2,763,762
<ALLOWANCES> 31,926
<INVENTORY> 1,849,561
<CURRENT-ASSETS> 4,895,530
<PP&E> 7,289,500
<DEPRECIATION> 3,752,410
<TOTAL-ASSETS> 8,721,915
<CURRENT-LIABILITIES> 2,465,266
<BONDS> 1,838,594
0
0
<COMMON> 412,761
<OTHER-SE> 3,935,048
<TOTAL-LIABILITY-AND-EQUITY> 8,721,915
<SALES> 17,340,432
<TOTAL-REVENUES> 17,340,432
<CGS> 11,565,534
<TOTAL-COSTS> 11,565,534
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 328,176
<INCOME-PRETAX> 1,328,511
<INCOME-TAX> 507,134
<INCOME-CONTINUING> 821,377
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 821,377
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
