<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended AUGUST 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-14203
MERIDIAN NATIONAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 34-1470518
(State of Incorporation) (I.R.S. Employer
Identification Number)
805 CHICAGO STREET, TOLEDO, OH 43611
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number: (419) 729-3918
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
As of October 7, 1995, 2,714,506 shares of Meridian National Corporation common
stock were outstanding.
<PAGE> 2
MERIDIAN NATIONAL CORPORATION
PART I
FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
- ------ --------------------
The accompanying condensed consolidated financial statements of
Meridian National Corporation are unaudited but, in the opinion of management,
reflect all adjustments (including only normal recurring accruals) necessary to
present fairly such information for the periods and at the dates indicated.
The results of operations for the three months and six months ended August 31,
1995 may not be indicative of the results of operations for the year ending
February 29, 1996. Since the accompanying condensed consolidated financial
statements have been prepared in accordance with Article 10 of Regulation S-X,
they do not contain all information and footnotes normally contained in annual
consolidated financial statements; accordingly, they should be read in
conjunction with the consolidated financial statements and notes thereto
appearing in the Company's Annual Report on Form 10-K for fiscal year ended
February 28, 1995.
2
<PAGE> 3
<TABLE>
MERIDIAN NATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
AUGUST 31, February 28,
1995 1995
--------------- ---------------
<S> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents $ 347,347 $ 655,373
Accounts receivable - net 7,655,487 9,103,949
Inventories 9,796,258 9,308,691
Other current assets 328,340 191,876
--------------- ---------------
Total current assets 18,127,432 19,259,889
Property and equipment, at cost 10,378,833 9,642,984
Less accumulated depreciation and amortization 5,039,766 4,772,164
--------------- ---------------
5,339,067 4,870,820
Other assets 692,606 929,271
--------------- ---------------
$ 24,159,105 $ 25,059,980
=============== ===============
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Notes payable $ 9,690,805 $ 9,525,341
Accounts payable and accrued liabilities 7,212,025 7,590,476
Long-term debt due within one year:
Related parties 305,984 349,325
Other 550,020 540,104
--------------- ---------------
Total current liabilities 17,758,834 18,005,246
Long-term debt due after one year:
Related parties 596,822 895,233
Other 3,816,957 4,034,059
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized:
$100 Series A, 5,000 shares authorized,
4,000 shares outstanding 400,000 400,000
$3.75 Series B, 1,375,000 shares authorized,
206,752 shares outstanding 775,320 775,320
Common stock, $.01 par value, 20,000,000 shares authorized,
2,714,506 shares outstanding (2,534,639 at February 28, 1995) 27,145 25,346
Capital in excess of stated value 9,994,474 9,785,677
Deficit (9,210,447) (8,860,901)
--------------- ---------------
Total stockholders' equity 1,986,492 2,125,442
--------------- ---------------
$ 24,159,105 $ 25,059,980
=============== ===============
<FN>
See accompanying notes.
</TABLE>
3
<PAGE> 4
<TABLE>
MERIDIAN NATIONAL CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
AUGUST 31, AUGUST 31,
--------------------------------- ---------------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 12,880,309 $ 11,041,343 $ 28,216,549 $ 23,573,238
Costs of sales 11,298,252 9,125,901 24,849,725 19,578,797
------------- ------------- ------------- -------------
Gross margin 1,582,057 1,915,442 3,366,824 3,994,441
Other costs and expenses:
Selling, general and administrative 1,560,388 1,392,478 3,109,170 2,752,128
Interest expense 380,003 236,968 748,625 467,678
Miscellaneous - net (28,511) (25,948) (55,725) (43,518)
------------- ------------- ------------- -------------
1,911,880 1,603,498 3,802,070 3,176,288
------------- ------------- ------------- -------------
Income (loss) before income taxes and
extraordinary gain (329,823) 311,944 (435,246) 818,153
Provision for federal income taxes - current - 10,000 - 25,000
------------- ------------- ------------- -------------
Income (loss) before extraordinary gain (329,823) 301,944 (435,246) 793,153
Extraordinary gain - extinguishment of debt - 226,276 149,206 226,276
------------- ------------- ------------- -------------
Net income (loss) $ (329,823) $ 528,220 $ (286,040) $ 1,019,429
============= ============= ============= =============
Earnings (loss) applicable to common stock $ (359,128) $ 487,401 $ (349,543) $ 947,112
============= ============= ============= =============
Earnings (loss) per common and
comon equivalent share:
Income (loss) before extraordinary gain ($0.14) $0.10 ($0.20) $0.27
Extraordinary gain - 0.09 0.06 0.09
------------- ------------- ------------- -------------
Net Income (loss) ($0.14) $0.19 ($0.14) $0.36
============= ============= ============= =============
Weighted average common
shares outstanding 2,568,541 2,594,044 2,556,392 2,620,140
============= ============= ============= =============
Earnings (loss) per common share
assuming full dilution:
Income (loss) before extraordinary gain ($0.14) $0.10 ($0.20) $0.27
Extraordinary gain - 0.08 0.06 0.08
------------- ------------- ------------- -------------
Net Income (loss) ($0.14) $0.18 ($0.14) $0.35
============= ============= ============= =============
Weighted average common
shares outstanding 2,568,541 2,672,789 2,556,392 2,669,920
============= ============= ============= =============
<FN>
See accompanying notes.
</TABLE>
4
<PAGE> 5
<TABLE>
MERIDIAN NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED AUGUST 31, 1995
(UNAUDITED)
<CAPTION>
$100 $3.75 CAPITAL IN
SERIES A SERIES B EXCESS OF
PREFERRED PREFERRED COMMON STATED
STOCK STOCK STOCK VALUE DEFICIT TOTAL
--------- ---------- -------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT FEBRUARY 28, 1995 $400,000 $775,320 $25,346 $9,785,677 ($8,860,901) $2,125,442
NET INCOME (286,040) (286,040)
EXCHANGE OF 156,415 WARRANTS TO PURCHASE
COMMON STOCK FOR 156,415 UNITS, EACH
CONSISTING OF ONE SHARE OF COMMON STOCK AND
ONE WARRANT TO PURCHASE COMMON STOCK 1,564 163,593 165,157
DIVIDENDS:
CASH DIVIDENDS ON SERIES A PREFERRED STOCK (18,000) (18,000)
CASH DIVIDENDS ON SERIES B PREFERRED STOCK (67) (67)
23,452 SHARES OF COMMON STOCK ISSUED
TO HOLDERS OF SERIES B PREFERRED STOCK 235 45,204 (45,439)
--------- ---------- -------- ----------- ------------ -----------
BALANCE AT AUGUST 31, 1995 $400,000 $775,320 $27,145 $9,994,474 ($9,210,447) $1,986,492
========= ========== ======== =========== ============ ===========
<FN>
SEE ACCOMPANYING NOTES.
</TABLE>
5
<PAGE> 6
<TABLE>
MERIDIAN NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
SIX MONTHS ENDED
AUGUST 31,
---------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (286,040) $ 1,019,429
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary gain on extinguishment of debt (149,206) (226,276)
Depreciation and amortization 276,653 359,681
Amortization of intangible assets 3,074 240,678
Gain on disposal of assets (3,973)
Changes in operating assets and liabilities:
Accounts receivable 1,448,462 941,680
Inventories (487,567) (3,063,811)
Other current assets (136,464) (55,792)
Accounts payable and accrued liabilities (378,451) 2,236,463
-------------- --------------
Net cash provided by operating activities 290,461 1,448,079
INVESTING ACTIVITIES
Additions to property and equipment (735,848) (273,444)
Changes in other assets 85,560 (162,374)
Proceeds from disposal of assets - 28,308
-------------- --------------
Net cash used in investing activities (650,288) (407,510)
FINANCING ACTIVITIES
Payments on long-term debt (399,732) (228,465)
Proceeds from exchange of warrants 304,134 -
Changes in notes payable 165,464 (799,152)
Cash dividends paid (18,065) (12,600)
-------------- --------------
Net cash provided by (used in) financing activities 51,801 (1,040,217)
-------------- --------------
Increase (decrease) in cash and cash equivalents (308,026) 352
Cash and cash equivalents at beginning of period 655,373 307,077
-------------- --------------
Cash and cash equivalents at end of period $ 347,347 $ 307,429
============== ==============
<FN>
See accompanying notes.
</TABLE>
6
<PAGE> 7
MERIDIAN NATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
1. EXTINGUISHMENT OF DEBT
In March 1995, the Company negotiated an agreement with a stockholder
who holds less than 5% of the outstanding voting stock, whereby a convertible
note payable in an amount of $596,822 was settled, subject to certain
conditions, for $447,600 payable in 18 monthly payments commencing in March
1995, without interest. The early retirement of this obligation resulted in the
recording of an extraordinary gain of $149,000 or $.06 per share in the six
months ended August 31, 1995.
2. CAPITAL STOCK
The Company issued 1,265,000 common stock purchase warrants in 1989
(the "Original Warrants"). Each Original Warrant entitled the holder to
purchase one-tenth share of common stock at a per share exercise price of
$17.50, subject to adjustment under certain circumstances. The terms of the
Original Warrants have been modified by the Company during a special exercise
period which commenced January 20, 1995 and extended through September 29,
1995, at which time the Original Warrants expired. During this period holders
of the Original Warrants were able to purchase, at a purchase price of $2.25, a
unit consisting of one share of common stock and one common stock purchase
warrant ("1998 Warrant"). The 1998 Warrants entitle the holder to purchase one
share of common stock at any time commencing on May 1, 1996 and ending May 31,
1998, at a per share exercise price of $2.75. During the special exercise
period, 240,415 Original Warrants were exercised.
3. RELATED PARTY TRANSACTIONS
The Company leases property and equipment from affiliates of certain
officers and directors of the Company. Lease payments to these affiliates
during the three months and six months ended August 31, 1995 amounted to
$63,000 and $125,000 respectively, the same as for the three months and six
months ended August 31, 1994. The Company's management believes the terms of
the leases are at least as favorable as those that could have been obtained
from unrelated parties. One of these leases is a capital lease and is included
in property and equipment at $368,000 (net of accumulated depreciation of
$184,000) at August 31, 1995.
7
<PAGE> 8
4. BUSINESS COMBINATIONS
In fiscal 1986, the Company acquired all of the common stock of
certain subsidiaries for $4,600,000 (exclusive of acquisition costs of
$215,000), made up of $2,000,000 in cash and $2,600,000 in promissory notes.
The controlling interests in the subsidiaries were purchased from certain
present and former members of management who were also principal stockholders
of the Company. The acquisitions have been accounted for as purchases. The
SEC staff questioned the Company's accounting for the acquisitions and
indicated that the accounting differs from the staff's position on accounting
for similar transactions. Under the staff position, the transfer of assets and
liabilities to the Company would have been accounted for at historical cost,
i.e., at the carryover basis of the acquired companies. In the fourth quarter
of fiscal 1995, the Company wrote off, as part of a $2,286,000 pretax charge,
the majority of the goodwill and increased bases in other assets which had been
recorded under the purchase accounting method. As a result of the write-off,
for periods subsequent to February 28, 1995, the effect on net income due to
the difference in methods of accounting for the acquisitions is immaterial. If
the Company had applied the SEC staff's preferred accounting prior to March 1,
1995, the accompanying condensed consolidated statements of operations for the
three and six month periods ended August 31, 1994 would reflect a reduction of
costs of sales and other costs and expenses aggregating $106,000 and $213,000,
respectively. This reduction reflects the elimination of charges to amortize
the goodwill and increased bases in other assets which would not have been
recorded under the staff position. As a result, net income for the three month
and six month periods ended August 31, 1994 would increase to $634,000 ($0.24
per primary share and $0.22 per fully diluted share) and $1,232,000 ($0.44 per
primary share and $0.43 per fully diluted share), respectively.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------ ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
RESULTS OF OPERATIONS
---------------------
SECOND QUARTER ENDED AUGUST 31, 1995
COMPARED TO
SECOND QUARTER ENDED AUGUST 31, 1994
Second quarter sales of $12.9 million reflected a 17% increase over sales
reported in the same quarter in the prior year. This sales volume represented
the second highest quarterly sales volume for the second quarter in the
Company's history. The Company's acquisition of the assets of the Detroit,
Michigan steel service center and the development of this operation in the
latter half of fiscal 1995, principally contributed to the overall sales
increase.
In the second quarter of fiscal 1996, the Company reported a net loss of
$330,000 compared to net income of $528,000 in the comparable period last year.
Net income for the quarter ended August 31, 1994 included an extraordinary gain
of $226,000, net of income tax, from the early extinguishment of debt at less
than face value. The Company's earnings decline in the second quarter of
fiscal 1996 results from a number of factors, including the shutdown of the
automotive bumper stock pickling business in March 1995, a decrease in Steel
Segment gross margins as a percentage of net sales, a decline in Waste
Management Segment sales (specifically the acid recycling and disposal
operation) and a 60% increase in interest expense. These factors are further
discussed below.
STEEL DISTRIBUTION AND PROCESSING SEGMENT The Company's steel distribution
and processing operations reported net sales of $11.6 million for the second
quarter of fiscal 1996, an increase of $2.1 million or 22% over the second
quarter of the prior year. As previously mentioned, the development of the
business of the Company's steel service center in Detroit, Michigan largely
contributed to this sales increase. Operating profits for this segment
amounted to $231,000, a decrease of $339,000 from the second quarter of the
prior year. This decline in operating profits is attributable to the shutdown
of the bumper stock pickling business in March 1995 and a decrease in gross
margins as a percentage of net sales. The Company has converted the bumper
stock pickling operation to bar coil pickling. This new capability was
operational at the end of the second quarter of fiscal 1996. Excluding the
effects of the shutdown of the bumper stock pickling business, steel segment
gross margin (net sales less costs of operations) as a percentage of net sales
was 10% in the second quarter of fiscal 1996 compared to 13% in the comparable
quarter of the prior year. This gross margin decrease is attributable to an
increase in the availability of steel coupled with a decreasing demand for
steel products. As the economy gradually
9
<PAGE> 10
softens, market selling prices of steel products become highly competitive,
causing pressure on gross margins in our industry sector.
WASTE MANAGEMENT SEGMENT Net sales for this segment decreased to $1.3 million
in the second quarter of fiscal 1996 from $1.6 million in the second quarter of
the prior year. The segment's paint waste recycling operation reported net
sales of $910,000 in the second quarter of fiscal 1996, paralleling net sales
reported in the comparable period last year; however, the segment's waste acid
recycling and disposal operation reported a $300,000 net sales decrease in the
second quarter of fiscal 1996. This sales decrease was due to reduced sales
volume with a nearby primary steel producer (McLouth Steel), which, for the
quarter comprised about 55% of this operation's sales volume or about 15% of
the segment's sales. Recent discussions with this customer have revealed that
it is planning to construct in the near future its own acid waste recycling
operation, the details of which are unknown to the Company at this time. On
September 29, 1995, this customer filed a voluntary petition seeking
reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company
continues to conduct business with this customer, at approximately the same
volume levels, subsequent to the bankruptcy petition. If such business ceases
or substantially declines, the Company believes that it could successfully
replace a portion, but probably not all, of this customer's business and
therefore, the loss of this customer's business would not have a material
adverse effect on the Company's consolidated operations. No substantial
write-off of any assets would result from a loss of this customer's business.
This segment reported a $126,000 operating profit in the second quarter of
fiscal 1996 compared to $210,000 in the second quarter of the prior year. This
decline in operating profits is attributable to the segment's net sales
decrease.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES The $168,000 (or 12%) increase
in selling, general and administrative expenses is principally attributable to
the development of the Company's Detroit, Michigan steel service center in
fiscal 1995 as previously described.
INTEREST EXPENSE Interest expense increased $143,000 (or 60%) in the second
quarter of fiscal 1996. The Company's average outstanding borrowings rose as a
result of the increase in working capital requirements associated with the
expansion and growth of the business in fiscal 1995 and the first two quarters
of fiscal 1996.
INCOME TAXES The Company has, as of February 28, 1995, net operating loss,
business credit and alternative minimum tax credit carryforwards for federal
tax purposes of approximately $3,863,000 , $26,000 and $18,000, respectively,
available for the reduction of future federal income tax. Net operating loss
carryforwards begin expiring in fiscal 2005. As a result of taxable losses and
10
<PAGE> 11
valuation allowances, no provision for income taxes has been made in the
financial statements.
SIX MONTHS ENDED AUGUST 31, 1995
COMPARED TO
SIX MONTHS ENDED AUGUST 31, 1994
STEEL DISTRIBUTION AND PROCESSING SEGMENT The Company's steel distribution
and processing operations reported net sales of $25.7 million for the first six
months of fiscal 1996, an increase of $5.0 million or 24% over the same period
of the prior year. The development of the Company's steel service center
previously described largely contributed to this sales increase. Operating
profits for this segment amounted to $769,000, a decrease of $595,000 from the
first six months of the prior year. This decline in operating profits is
attributable to the shutdown of the bumper stock pickling business in March
1995 and a decrease in gross margins as a percentage of net sales. As
previously described, the Company converted the bumper stock pickling operation
to bar coil pickling effective at the end of the second quarter of fiscal 1996.
Excluding the effects of the bumper stock pickling business, steel segment
gross margin (net sales less costs of operations) as a percentage of net sales
was 10% in the first six months of fiscal 1996 compared to 12% in the
comparable period of the prior year. This decrease in gross margin is
attributable to an increase in the availability of the supply of steel coupled
with a decreasing demand for steel products.
WASTE MANAGEMENT SEGMENT Net sales for this segment decreased to $2.6 million
in the first six months of fiscal 1996 from $3.0 million in the same period of
the prior year. The segment's paint waste recycling operation reported net
sales of $1.7 million in the first six months of fiscal 1996 representing a
$100,000 increase over the comparable period last year; however, the segment's
waste acid recycling and disposal operation reported a $500,000 net sales
decrease in the first six months of fiscal 1996. The waste acid recycling and
disposal operation's net sales decreased due to declining sales to McLouth
Steel, which comprised for the six months ended August 31, 1995 about 65% of
this operation's sales volume or 20% of the segment's sales. Refer to Results
of Operations for the Second Quarters Ended August 31, 1995 and 1994 for
further discussion of the waste acid recycling and disposal operations.
This segment reported a $135,000 operating profit in the first six months of
fiscal 1996 compared to $382,000 in the comparable period of the prior year.
This decline in operating profits is attributable to the segment's net sales
decrease.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES The $357,000 (or 13%) increase
in selling, general and administrative expenses is principally
11
<PAGE> 12
attributable to the development of the Company's Detroit, Michigan steel
service center as previously described.
INTEREST EXPENSE Interest expense increased $281,000 (or 60%) in the first
six months of fiscal 1996. The Company's average outstanding borrowings rose
as a result of the increase in working capital requirements associated with the
expansion and growth of the business in fiscal 1995 and the first six months of
fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Working capital as of August 31, 1995 amounted to $369,000. The $886,000
decrease in the Company's working capital position from February 28, 1995 is
primarily a result of capital expenditures and payment of long-term debt during
the period offset by net proceeds from the exchange of common stock purchase
warrants. Certain components of working capital, including accounts
receivable, inventories, notes payable and accounts payable, historically may
fluctuate significantly based upon market conditions, sales volume and steel
purchasing strategies of the Company's steel operations.
The Company's primary sources of liquidity are its cash balances and a $12.0
million revolving credit line with a bank. The revolving credit line was
increased in May 1995 from $10.75 million to $12.0 million. Borrowing
availability under the revolving credit line is determined using a formula
based upon eligible accounts receivable and inventories. As of August 31,
1995, the outstanding balance of the revolving credit line amounted to
$9,691,000 and unused availability amounted to $669,000.
The revolving credit line agreement prohibits the payment of cash dividends on
the Company's common stock and allows the payment of cash dividends on the
Company's preferred stock issues only if the Company is not in default of any
provisions in the loan agreement and payment of such dividend would not result
in any defaults.
Violations of certain financial covenants contained in the revolving credit
line agreement during the first and second quarters of fiscal 1996 have been
waived by the bank. The Company currently projects it may be unable to meet
certain financial covenants during the third and fourth quarter of fiscal
1996. Management believes waivers, modification of the covenants, or both, as
necessary, will be negotiated with the bank.
In March 1995, the Company negotiated an agreement with a stockholder whereby a
convertible note payable in an amount of $597,000 was settled,
12
<PAGE> 13
subject to certain conditions, for $448,000 payable in eighteen monthly
payments commencing March 1995, without interest. The early retirement of this
obligation resulted in the recording of an extraordinary gain of $149,000 in
the first quarter of fiscal 1996.
As a result of federal environmental regulations issued in 1991, Environmental
Purification Industries Company ("EPI"), the Company's paint waste recycling
operation is required to and has submitted to the U.S. EPA an operating permit
application under the Resources Conservation Recovery Act of 1980. The final
approval for such a permit may take several years and require additional
outlays of funds. During the application and review process, EPI's operations
continue on interim status and are unaffected. EPI may be required to make
modifications to its operating procedures or equipment in the future, although
EPI's management believes its operations meet the requirements without
modification.
The former partner of EPI retained the right to receive 10% of the proceeds by
the Company from any sale, refinancing or similar transactions relative to the
Company's interests in EPI. The agreement specifically permits, without
payments to the former partner, the repayment of certain loans or distribution
of profits to the Company from the ordinary business operations of EPI. The
Company believes the likelihood of any such distribution to the former partner
is remote. Accordingly, the Company has not recorded any liability for the
contingent interest of the former partner in the Company's balance sheet.
The Company does not have any material capital expenditure commitments at this
time. Capital expenditures are limited under its loan agreement with the bank.
Historically, the Company's operations have been funded with cash generated
from operations and bank financing. The Company has also raised funds through
sale of equity securities and has used the proceeds to fund its investments in
EPI, among other items. Management believes its existing resources, including
available cash, cash provided by operating activities and the Company's credit
facilities will be sufficient to satisfy its working capital and other capital
requirements for fiscal 1996, except for any significant business acquisitions
which would require additional external financing.
OTHER MATTERS
-------------
On September 19, 1995 the Company reported on a Form 8-K the planned public
offering of approximately 50% of its Waste Management Segment, which includes
EPI and Meridian Environmental Services, Inc. (acid waste recycling and
disposal). The Company has signed a letter of intent with an underwriter
13
<PAGE> 14
and expects to raise approximately $6 million before expenses through a public
offering of approximately 1.2 million shares of common stock of a subsidiary to
be newly formed prior to the offering. Proceeds of the offering are expected
to be used principally to expand the environmental business through possible
additional plants, new processing technologies and acquisitions.
14
<PAGE> 15
MERIDIAN NATIONAL CORPORATION
PART II
OTHER INFORMATION
-----------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
Three reports on Form 8-K were filed during the quarter ended August 31,
1995. A July 26, 1995 report was filed to disclose under Item 5., Other
Events, the extension of the special offer relating to the Company's
Redeemable Common Stock Purchase Warrants and the reduction of the
exercise price. A report dated August 14, 1995 was filed to disclose an
additional extension of the special exercise period for the
above-mentioned warrants. The report dated August 16, 1995 was filed to
disclose under Item 5., Other Events, an agreement in principle to acquire
the business operations and certain assets of a steel service center.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MERIDIAN NATIONAL CORPORATION
(Registrant)
Date: October 19, 1995 By /s/ William D. Feniger
----------------------------
William D. Feniger
Chairman of the Board of Directors,
President and Chief Executive Officer
Date: October 19, 1995 By /s/ Joseph Klobuchar, Jr.
----------------------------
Joseph Klobuchar, Jr.
Vice President - Finance,
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<CASH> 347,347
<SECURITIES> 0
<RECEIVABLES> 7,655,487
<ALLOWANCES> 0
<INVENTORY> 9,796,258
<CURRENT-ASSETS> 18,127,432
<PP&E> 10,378,833
<DEPRECIATION> 5,039,766
<TOTAL-ASSETS> 24,159,105
<CURRENT-LIABILITIES> 17,758,834
<BONDS> 3,816,957
<COMMON> 27,145
0
1,175,320
<OTHER-SE> 784,027
<TOTAL-LIABILITY-AND-EQUITY> 24,159,105
<SALES> 28,216,549
<TOTAL-REVENUES> 28,216,549
<CGS> 24,849,725
<TOTAL-COSTS> 24,849,725
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 748,625
<INCOME-PRETAX> (435,246)
<INCOME-TAX> 0
<INCOME-CONTINUING> (435,246)
<DISCONTINUED> 0
<EXTRAORDINARY> 149,206
<CHANGES> 0
<NET-INCOME> (286,040)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
</TABLE>
