<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1999 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
(conformed) EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
____________ TO ____________
COMMISSION FILE NUMBER 0-13667
PDG ENVIRONMENTAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2677298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 OXFORD DRIVE, MONROEVILLE, PENNSYLVANIA 15146
(Address of principal executive offices) (Zip Code)
412-856-2200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
As of December 9, 1999, there were 8,387,796 shares of the registrant's common
stock outstanding.
<PAGE> 2
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Consolidated Financial Statements and Notes to Consolidated
Financial Statements
(a) Condensed Consolidated Balance Sheets as of October 31, 1999
(unaudited) and January 31, 1999 3
(b) Consolidated Statements of Operations for the Three Months
Ended October 31, 1999 and 1998 (unaudited) 4
(c) Consolidated Statements of Operations for the Nine Months
Ended October 31, 1999 and 1998 (unaudited) 5
(d) Consolidated Statements of Cash Flows for the Nine Months Ended
October 31, 1999 and 1998 (unaudited) 6
(e) Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 3. Defaults Upon Senior Securities 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31,
1999 1999*
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-term investments $ 748,000 $ 309,000
Accounts receivable - net 5,757,000 5,233,000
Costs and estimated earnings in excess of billings on
uncompleted contracts 864,000 1,058,000
Inventory 284,000 298,000
Other current assets 361,000 252,000
------------ ------------
TOTAL CURRENT ASSETS 8,014,000 7,150,000
PROPERTY, PLANT AND EQUIPMENT 5,667,000 5,207,000
Less: accumulated depreciation (4,311,000) (3,948,000)
------------ ------------
1,356,000 1,259,000
OTHER ASSETS 923,000 1,155,000
------------ ------------
TOTAL ASSETS $10,293,000 $ 9,564,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,779,000 $ 1,506,000
Accrued liabilities 1,521,000 1,290,000
Billings in excess of costs and estimated earnings
on uncompleted contracts 1,325,000 673,000
Current portion of long-term debt 163,000 174,000
------------ ------------
TOTAL CURRENT LIABILITIES 4,788,000 3,643,000
OTHER LONG-TERM LIABILITIES 316,000 404,000
LONG-TERM DEBT 419,000 716,000
STOCKHOLDERS' EQUITY
Cumulative convertible 2% preferred stock 14,000 14,000
Common stock 169,000 168,000
Additional paid-in capital 7,413,000 7,395,000
Less treasury stock (38,000) (25,000)
(Deficit) retained earnings (2,788,000) (2,751,000)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 4,770,000 4,801,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,293,000 $ 9,564,000
============ ============
</TABLE>
*Derived from audited financial statements.
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED OCTOBER 31,
---------------------------------
1999 1998
----------- -----------
<S> <C> <C>
CONTRACT REVENUES $7,496,000 $7,148,000
CONTRACT COSTS 6,055,000 6,317,000
----------- -----------
Gross margin 1,441,000 831,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,094,000 731,000
----------- -----------
Income from operations 347,000 100,000
OTHER INCOME (EXPENSE):
Interest expense (41,000) (29,000)
Interest income 4,000 2,000
Other income 1,000 4,000
----------- -----------
(36,000) (23,000)
----------- -----------
Income before income taxes and
minority interest 311,000 77,000
INCOME TAX PROVISION -- (20,000)
MINORITY INTEREST -- (12,000)
----------- -----------
NET INCOME $ 311,000 $ 45,000
=========== ===========
PER SHARE OF COMMON STOCK - BASIC: $ 0.04 $ 0.01
=========== ===========
PER SHARE OF COMMON SHARE - DILUTIVE $ 0.04 $ 0.01
=========== ===========
AVERAGE COMMON SHARES OUTSTANDING 8,388,000 7,820,000
AVERAGE DILUTIVE COMMON STOCK EQUIVALENTS
OUTSTANDING 209,000 712,000
----------- -----------
AVERAGE COMMON SHARES AND DILUTIVE COMMON STOCK
EQUIVALENTS OUTSTANDING FOR EARNINGS PER
SHARES CALCULATION 8,597,000 8,532,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED OCTOBER 31,
-----------------------------------
1999 1998
------------ ------------
<S> <C> <C>
CONTRACT REVENUES $20,517,000 $31,343,000
CONTRACT COSTS 17,162,000 27,175,000
------------ ------------
Gross margin 3,355,000 4,168,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,914,000 2,157,000
LITIGATION SETTLEMENT EXPENSE 379,000 --
------------ ------------
Income from operations 62,000 2,011,000
OTHER INCOME (EXPENSE):
Interest expense (109,000) (121,000)
Interest income 8,000 6,000
Other income 2,000 4,000
------------ ------------
(99,000) (111,000)
------------ ------------
Income (loss) before income taxes, minority interest
and discontinued operations (37,000) 1,900,000
INCOME TAX PROVISION -- (60,000)
MINORITY INTEREST -- (576,000)
------------ ------------
INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS (37,000) 1,264,000
DISCONTINUED OPERATIONS
Litigation settlement -- (200,000)
------------ ------------
NET INCOME (LOSS) $ (37,000) $ 1,064,000
============ ============
PER SHARE OF COMMON STOCK - BASIC:
INCOME BEFORE DISCONTINUED OPERATIONS $ 0.00 $ 0.18
DISCONTINUED OPERATIONS 0.00 (0.03)
------------ ------------
NET INCOME PER SHARE $ 0.00 $ 0.15
============ ============
PER SHARE OF COMMON STOCK - DILUTIVE:
INCOME BEFORE DISCONTINUED OPERATIONS $ 0.00 $ 0.16
DISCONTINUED OPERATIONS 0.00 (0.02)
------------ ------------
NET INCOME PER SHARE $ 0.00 $ 0.14
============ ============
AVERAGE COMMON SHARES OUTSTANDING 8,392,000 7,181,000
AVERAGE DILUTIVE COMMON STOCK EQUIVALENTS
OUTSTANDING -- 856,000
------------ ------------
AVERAGE COMMON SHARES AND DILUTIVE COMMON STOCK
EQUIVALENTS OUTSTANDING FOR EARNINGS PER
SHARE CALCULATION 8,392,000 8,037,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED OCTOBER 31,
----------------------------------
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (37,000) $ 1,064,000
ADJUSTMENTS TO RECONCILE NET
INCOME TO CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 615,000 453,000
Minority Interest -- 137,000
CHANGES IN ASSETS AND LIABILITIES
OTHER THAN CASH:
Accounts receivable (524,000) 1,181,000
Costs and estimated earnings in excess of billings
on uncompleted contracts 194,000 (341,000)
Inventory 14,000 (29,000)
Other current assets 268,000 272,000
Accounts payable (104,000) (2,145,000)
Billings in excess of costs and estimated earnings
on uncompleted contracts 652,000 (46,000)
Accrued liabilities 231,000 (252,000)
Other (17,000) (27,000)
----------- ------------
TOTAL ADJUSTMENTS IN ASSETS AND LIABILITIES 714,000 (1,387,000)
----------- ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,292,000 267,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (555,000) (450,000)
Proceeds from the sale of property, plant and equipment 4,000 --
----------- ------------
NET CASH USED BY INVESTING ACTIVITIES (551,000) (450,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and warrants 19,000 984,000
Purchase of common stock for treasury (13,000) --
Principal payments on debt (308,000) (1,069,000)
----------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES (302,000) (85,000)
----------- ------------
Net Increase in Cash and Short-Term Investments 439,000 (268,000)
Cash and Short-Term Investments, Beginning of Period 309,000 892,000
----------- -----------
CASH AND SHORT-TERM INVESTMENTS, END OF PERIOD $ 748,000 $ 624,000
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED OCTOBER 31, 1999
(UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The consolidated financial statements include PDG Environmental, Inc. (the
"Corporation") and its wholly-owned subsidiaries. Additionally, the results of
PDG/Philip, L.P. (the "Venture") in which the Corporation held a 60% interest,
are consolidated in the fiscal 1999 amounts, since the Corporation was the
majority owner of the Venture and exercised day-to-day operating control. The
contract was completed in the second quarter of fiscal 1999, and the Venture
ceased operations by January 31, 1999.
The accompanying financial statements of the Corporation are unaudited and
prepared in accordance with generally accepted accounting principles which
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates. In the opinion of management, the financial
statements include all adjustments necessary for a fair presentation of
financial position, results of operations and cash flows. All adjustments made
during the three and nine months ended October 31, 1999 were of a normal,
recurring nature. The amounts presented for the three and nine months ended
October 31, 1999 are not necessarily indicative of results of operations for a
full year. Additional information is contained in the Annual Report on Form
10-KSB of the Corporation for the year ended January 31, 1999 dated April 1,
1999 and Quarterly Reports on Form 10-QSB of the Corporation for the quarter
ended April 30, 1999 dated June 11, 1999 and for the quarter ended July 31, 1999
dated September 13, 1999, and should be read in conjunction with this quarterly
report.
The Corporation does not have any items which would require adjustments to
arrive at comprehensive income.
NOTE 2 - FEDERAL INCOME TAXES
No federal income taxes have been provided for the three and nine months ended
October 31, 1999 due to the existence of unused net operating loss
carryforwards. The Corporation has recorded a provision for state income taxes.
Income taxes paid by the Corporation for the nine months ended October 31, 1999
and 1998 totaled approximately $85,000 and $68,000, respectively.
NOTE 3 - DEBT
On August 25, 1997, the Corporation closed on a new $2 million credit facility
consisting of a 5-year $0.5 million equipment note and a 3-year revolving line
of credit with a maximum advance of $1.5 million. Both the equipment note and
the line of credit have an interest rate of prime plus 3.5%. As of October 31,
1999, the outstanding balance on the revolving line of credit was zero.
The Corporation paid interest costs totaling approximately $108,000 and $73,000
during the nine months ended October 31, 1999 and 1998, respectively.
NOTE 4 - PREFERRED STOCK
Cumulative dividends in arrears on the Corporation's 2% Series A Preferred Stock
were approximately $7,000 at October 31, 1999. At October 31, 1999, there were
6,000 shares of Series A Preferred Stock outstanding. The Series A Preferred
Stock is convertible into four shares of the Corporation's common stock at the
option of the preferred stockholder.
The conversion rate on the Series A Preferred Stock is also subject to
adjustment as a result of certain changes in the Corporation's capital structure
or distributions to common stockholders (except for cash dividends permissible
under law).
7
<PAGE> 8
NOTE 5 - NET EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share from continuing operations:
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED OCTOBER 31,
1999 1998
----------- -----------
NUMERATOR:
<S> <C> <C>
Income (loss) from continuing operations $ (37,000) $1,264,000
Preferred stock dividends (1,000) (1,000)
----------- -----------
Numerator for basic earnings per share--income available
to common stockholders (38,000) 1,263,000
Effect of dilutive securities:
Preferred stock dividends 1,000 1,000
----------- -----------
Numerator for diluted earnings per share--income (loss)
available to common stock after assumed conversions (37,000) 1,264,000
----------- -----------
DENOMINATOR:
Denominator for basic earnings per share--weighted average
shares 8,392,000 7,181,000
Effect of dilutive securities:
Employee stock options -- 796,000
Warrants -- 34,000
Convertible preferred stock -- 26,000
----------- -----------
Dilutive potential common shares -- 856,000
----------- -----------
Denominator for diluted earnings per share--adjusted
weighted-average shares and assumed conversions 8,392,000 8,037,000
=========== ===========
BASIC EARNINGS PER SHARE $ 0.00 $ 0.18
=========== ===========
DILUTED EARNINGS PER SHARE $ 0.00 $ 0.16
=========== ===========
</TABLE>
8
<PAGE> 9
The following table sets forth the computation of basic and diluted earnings per
share from continuing operations:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED OCTOBER 31,
1999 1998
--------- ----------
NUMERATOR:
<S> <C> <C>
Net Income $ 311,000 $ 45,000
Preferred stock dividends -- --
---------- ----------
Numerator for basic earnings per share--income available
to common stockholders 311,000 45,000
Effect of dilutive securities:
Preferred stock dividends -- --
---------- ----------
Numerator for diluted earnings per share--income available to
common stock after assumed conversions 311,000 45,000
---------- ----------
DENOMINATOR:
Denominator for basic earnings per share--weighted average
shares 8,388,000 7,820,000
Effect of dilutive securities:
Employee stock options 181,000 659,000
Warrants 1,000 27,000
Convertible preferred stock 27,000 26,000
---------- ----------
Dilutive potential common shares 209,000 712,000
---------- ----------
Denominator for diluted earnings per share--adjusted
weighted-average shares and assumed conversions 8,597,000 8,532,000
========== ==========
BASIC EARNINGS PER SHARE $ 0.04 $ 0.01
========== ==========
DILUTED EARNINGS PER SHARE $ 0.04 $ 0.01
========== ==========
</TABLE>
NOTE 6 - SUBSEQUENT EVENT
In October 1999, the Company announced the signing of a non-binding Letter of
Intent for the purchase of Metalclad Corporation's insulation contracting
subsidiaries. The Letter of Intent provides for the purchase by the Company of
all Metalclad's shares of its insulation subsidiaries in consideration of 3.4
million shares of the Company's common stock and warrants to purchase up to an
additional 4.4 million shares of the Company's common stock at an exercise price
of $.75 per share. The Corporation's common stock closed at $0.47 on October 20,
1999. The warrants will expire twelve months after the closing of the sale and
may be exercised for cash or shares of Metalclad Corporation common stock valued
at the lesser of 1.5 times Metalclad Corporation's book value per share or 90%
of the average of the closing bid and ask prices of Metalclad Corporation's
common stock for the ten trading days prior to the exercise.
9
<PAGE> 10
Both companies are completing due diligence and other requisite activities with
the objective of executing a definitive agreement and closing during the fourth
quarter of Fiscal 2000. The sale also requires the consent of the holder of
Metalclad Corporation zero coupon notes. There is no assurance that this
transaction will be completed.
10
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 1999 AND 1998
The Corporation's contract revenues increased by approximately 5% to $7.5
million during the three months ended October 31, 1999 ("Fiscal 2000") compared
to $7.1 million in the three months ended October 31, 1999 ("Fiscal 1999"). The
increase in revenues was due to the Corporation securing a number of new
contracts during the current fiscal year.
The Corporation's gross margin increased to $1.4 million in the third quarter of
Fiscal 2000 compared to $0.8 million in the third quarter of fiscal 1999. The
increase in gross margin in Fiscal 2000 was primarily attributable to the
following items in Fiscal 1999: 1) Significant additional cost overruns of $0.5
million at a major project in Philadelphia; and 2) Negative contract adjustments
totalling $0.4 million in Atlanta where the Company has closed its branch
office. These Fiscal 1999 items were partially offset by positive results at the
Company's other offices and a positive adjustment of $0.55 million in accrued
insurance costs based upon an analysis of the Company's open liabilities and an
improved safety record.
Selling, general and administrative expenses increased to $1.1 million in the
three months ended October 31, 1999 compared to $0.73 million in the three
months ended October 31, 1998. The increase is primarily attributable to the
Corporation operating two additional branch offices in the current quarter and
legal costs associated with the Mason Tenders litigation settled in the second
quarter of Fiscal 2000.
As a result of the factors described above, the Corporation reported income from
operations of $0.35 million in the current three month period compared to $0.1
million for the same three months of the prior fiscal year.
The Corporation's interest expense increased to $41,000 for the three months
ended October 31, 1999 from $29,000 for the three months ended October 31, 1998.
During the three months ended October 31, 1999 and 1998, the Corporation made no
provision for federal income taxes due to the utilization of net operating loss
carryforwards for financial reporting purposes. No state income tax provision
was made in the current quarter due to the loss on a year-to-date basis, while a
state income tax provision of $20,000 was made for the three months ended
October 31, 1998.
NINE MONTHS ENDED OCTOBER 31, 1999 AND 1998
The Corporation's contract revenues decreased to $20.5 million for the nine
months ended October 31, 1999 compared to $31.3 million for the nine months
ended October 31, 1998.
The decrease in revenues was due to the Corporation entering the prior fiscal
year with a greater backlog of contracts and the significant contribution to
revenue that the $12 million Keystone contract (completed in June 1998) made in
the prior period.
The gross margin reported by the Corporation in the nine months ended October
31, 1999 decreased to $3.4 million compared to $4.2 million for the nine months
ended October 31, 1998. The decrease in gross margin primarily related to the
aforementioned decrease in contract revenues. The prior period was negatively
impacted by a $0.75 million cost overrun on a major project in Philadelphia and
negative contract adjustments totalling $0.425 million in Atlanta where the
Company has closed its branch office. Also impacting the current period's gross
margin was a positive adjustment of $0.55 million in accrued insurance costs
based upon an analysis of the Company's open liabilities and an improved safety
record.
Selling, general and administrative expenses reported by the Corporation for the
nine months ended October 31, 1999 increased to $2.9 million as compared to $2.2
million in the same nine month period of the prior fiscal year. The increase is
primarily attributable to the addition of two branch offices in Fiscal 2000.
11
<PAGE> 12
In June 1999, the Corporation reached a settlement with the Mason Tenders
District Council Welfare Fund whereby the Corporation agreed to pay $500,000 to
resolve all claims concerning contributions owed for the period January 1, 1995
through May 31, 1996 and related claims for interest, statutory damages, costs
and attorneys' fees. The initial payment of $200,000 was made in June 1999 with
the remainder of $100,000 due by December 28, 1999 and $200,000 by June 28,
2000. This resulted in a $379,000 charge in the second quarter of Fiscal 2000
which was net of amounts previously accrued and recoveries from third parties.
The Corporation reported income from operations of $0.1 million in the nine
months ended October 31, 1999 as a result of the factors discussed above
compared to income from operations of $2.0 million in the same nine month period
last year.
Interest expense decreased to $0.11 million in the current nine month period
compared to $0.12 million in the nine months ended October 31, 1998 due to a
decrease in the balance of indebtedness as compared to the prior fiscal year.
Interest income totaled $8,000 for the current nine month period versus $6,000
in the same nine month period of the prior fiscal year due to higher invested
cash balances.
No provision for federal income taxes was made during the nine months ended
October 31, 1999 and 1998 due to the utilization of net operating loss
carryforwards for financial reporting purposes. No state income tax provision
was made in the current nine month period due to the loss, while a state income
tax provision of $60,000 was made during the nine months ended October 31, 1998.
The $200,000 loss from discontinued operations in the prior year relates to the
agreement in principle reached on June 8, 1998 with the plaintiffs in the
proported class action. The lawsuit was filed in 1995 asserting federal
securities law violations by the Corporation and others relative to the public
offering of shares of PDG Remediation, Inc., a wholly-owned subsidiary of the
Corporation. The Corporation's share of the settlement was $173,000. The
Corporation also incurred $27,000 of legal expenses in relation to the
litigation.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's cash liquidity increased during the nine months ended October
31, 1999 as cash and short-term investments increased by $0.4 million to $0.75
million.
The increase in cash during the current nine month period is principally
attributable to cash inflows from operating activities of $1.3 million. These
cash inflows were partially offset by cash outflows from investing activities of
$0.55 million and financing activities of $0.3 million.
Cash inflows provided by operating activities of $1.3 million in the nine months
ended October 31, 1999 included a $0.3 million reduction in other current
assets, a $0.2 million decrease in costs and estimated earnings in excess of
billings on uncompleted contracts, a $0.2 million increase in accrued
liabilities, a $0.65 million increase in billings in excess of costs and
estimated earnings on uncompleted contracts and $0.6 million of depreciation and
amortization. The aforementioned cash inflows from operating activities were
partially offset by a $0.5 million increase in accounts receivable and a $0.1
million decrease in accounts payable.
Cash outflows associated with financing activities during the current nine
months included $0.02 million of proceeds from the exercise of stock options and
warrants offset by $0.3 million of principal payments and reduction of the
outstanding balance of the line of credit and $0.01 million for the purchase of
common stock for the treasury.
The Corporation's investing activities of $0.55 million in the nine months ended
October 31, 1999 were for the purchase of property, plant and equipment.
The Corporation's cash liquidity decreased during the nine months ended October
31, 1998 as cash and short-term investments decreased by $0.3 million to $0.6
million.
12
<PAGE> 13
The decrease in cash during the nine month period was principally attributable
to cash outflows associated with investing activities of $0.45 million and
financing activities of $0.09 million. These cash outflows were partially offset
by cash inflows from operating activities of $0.27 million.
Cash inflows provided by operating activities of $0.27 million in the nine
months ended October 31, 1998 included $1.06 million of net income generated in
the period, a $1.2 million reduction in accounts receivable primarily due to the
completion of the Keystone project, a $0.3 million reduction in other current
assets and $0.45 million of depreciation and amortization. The aforementioned
cash inflows from operating activities were partially offset by a $2.15 million
decrease in accounts payable primarily due to the completion of the Keystone
project, $0.34 million increase in costs and estimated earnings in excess of
billings on uncompleted contracts related to the timing of contract billings and
a $0.25 million decrease in accrued liabilities.
Cash outflows associated with financing activities during the nine months
included $1.0 million of proceeds from the exercise of stock options and
warrants offset by $1.07 million of principal payments and reduction of the
outstanding balance of the line of credit.
The Corporation's investing activities of $0.45 million in the nine months ended
October 31, 1998 were for the purchase of property, plant and equipment.
At October 31, 1999, the Corporation's backlog associated with its asbestos
abatement business totaled $17.4 million ($8.4 million on fixed fee contracts
and $9.0 million of expected revenues on time and materials or unit price
contracts).
13
<PAGE> 14
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrant is subject to dispute and litigation in the ordinary course of
business. None of these matters, in the opinion of management, is likely to
result in a material effect on the Registrant based upon information available
at this time.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Registrant is currently in arrears with respect to the payment of dividends
on its Series A Preferred Stock. At October 31, 1999, the cumulative dividends
in arrears on the Series A Preferred Stock were approximately $7,000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT INDEX
EXHIBIT NO. AND DESCRIPTION
PAGES OF SEQUENTIAL
NUMBERING SYSTEM
27 Financial Data Schedule
(b) The Registrant filed the following reports on Form 8-K during the
three months ended October 31, 1999.
A Form 8-K was filed on September 28, 1999 to report the dismissal
of Ernst & Young, LLP as the Corporation's principal independent
accountants.
A Form 8-K was filed on October 5, 1999 to report the retention of
Stokes, Kelly & Hinds, LLC as the Corporation's principal
independent accountants to report upon the January 31, 2000
financial statements.
14
<PAGE> 15
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.
PDG ENVIRONMENTAL, INC.
By /s/ John C. Regan
------------------------------------
John C. Regan
Chairman and Chief Executive Officer
Date: December 13, 1999
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF OCTOBER 31, 1999 AND CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE NINE MONTHS ENDED OCTOBER 31, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-START> FEB-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 748,000
<SECURITIES> 0
<RECEIVABLES> 5,757,000
<ALLOWANCES> 0
<INVENTORY> 284,000
<CURRENT-ASSETS> 8,014,000
<PP&E> 5,667,000
<DEPRECIATION> 4,311,000
<TOTAL-ASSETS> 10,293,000
<CURRENT-LIABILITIES> 4,788,000
<BONDS> 419,000
0
14,000
<COMMON> 169,000
<OTHER-SE> 4,587,000
<TOTAL-LIABILITY-AND-EQUITY> 10,293,000
<SALES> 20,517,000
<TOTAL-REVENUES> 20,517,000
<CGS> 17,162,000
<TOTAL-COSTS> 17,162,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 109,000
<INCOME-PRETAX> (37,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (37,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (37,000)<F1>
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1>The nine months ended October 31, 1999 included a $379,000 charge related
to the settlement of a litigation.
</FN>
</TABLE>
