<PAGE> 1
(conformed)
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 JULY 31, 2000 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
____________ TO ____________
COMMISSION FILE NUMBER 0-13667
PDG ENVIRONMENTAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2677298
(State or other jurisdiction of incorporation (I.R.S. Employer
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 September 3, 2000, there were 8,782,644 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 July 31, 2000
(unaudited) and January 31, 2000 3
(b) Consolidated Statements of Operations for the Three Months
Ended July 31, 2000 and 1999 (unaudited) 4
(c) Consolidated Statements of Operations for the Six Months
Ended July 31, 2000 and 1999 (unaudited) 5
(d) Consolidated Statements of Cash Flows for the Six Months
Ended July 31, 2000 and 1999 (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 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
PDG ENVIRONMENTAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
2000 2000*
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and short-term investments $ 173,000 $ 282,000
Accounts receivable - net 6,715,000 6,101,000
Costs and estimated earnings in excess of billings on
uncompleted contracts 2,021,000 1,055,000
Inventory 363,000 291,000
Other current assets 517,000 329,000
----------- -----------
TOTAL CURRENT ASSETS 9,789,000 8,058,000
PROPERTY, PLANT AND EQUIPMENT 6,265,000 5,845,000
Less: accumulated depreciation (4,791,000) (4,462,000)
----------- -----------
1,474,000 1,383,000
OTHER ASSETS 1,247,000 912,000
----------- -----------
TOTAL ASSETS $12,510,000 $10,353,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,290,000 $ 2,263,000
Accrued liabilities 1,647,000 1,299,000
Billings in excess of costs and estimated earnings
on uncompleted contracts 1,019,000 1,015,000
Current portion of long-term debt 161,000 173,000
----------- -----------
TOTAL CURRENT LIABILITIES 5,117,000 4,750,000
OTHER LONG-TERM LIABILITIES 184,000 166,000
LONG-TERM DEBT 1,755,000 376,000
STOCKHOLDERS' EQUITY
Cumulative convertible 2% preferred stock 14,000 14,000
Common stock 177,000 169,000
Additional paid-in capital 7,767,000 7,421,000
(Deficit) retained earnings (2,466,000) (2,505,000)
Less treasury stock (38,000) (38,000)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 5,454,000 5,061,000
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $12,510,000 $10,353,000
=========== ===========
</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 JULY 31,
-----------------------------
2000 1999
---------- ----------
<S> <C> <C>
CONTRACT REVENUES $8,770,000 $7,869,000
CONTRACT COSTS 7,451,000 6,723,000
---------- ----------
Gross margin 1,319,000 1,146,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,027,000 861,000
LITIGATION SETTLEMENT -- 379,000
---------- ----------
Income (loss) from operations 292,000 (94,000)
OTHER INCOME (EXPENSE):
Interest expense (63,000) (39,000)
Interest income 9,000 2,000
Other income 14,000 1,000
---------- ----------
(40,000) (36,000)
---------- ----------
Income (loss) before income taxes 252,000 (130,000)
INCOME TAX PROVISION (20,000) --
---------- ----------
NET INCOME (LOSS) $ 232,000 $ (130,000)
========== ==========
PER SHARE OF COMMON STOCK:
BASIC $ 0.03 $ (0.02)
========== ==========
DILUTIVE $ 0.03 $ (0.02)
========== ==========
AVERAGE COMMON SHARES OUTSTANDING 8,783,000 8,398,000
AVERAGE DILUTIVE COMMON STOCK EQUIVALENTS OUTSTANDING 265,000 --
---------- ----------
AVERAGE COMMON SHARES AND DILUTIVE COMMON
EQUIVALENTS OUTSTANDING FOR EARNINGS PER
SHARE CALCULATION 9,048,000 8,398,000
========== ==========
</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 SIX MONTHS
ENDED JULY 31,
-------------------------------
2000 1999
----------- -----------
<S> <C> <C>
CONTRACT REVENUES $16,837,000 $13,022,000
CONTRACT COSTS 14,495,000 11,108,000
----------- -----------
Gross margin 2,342,000 1,914,000
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,962,000 1,820,000
LITIGATION SETTLEMENT -- 379,000
----------- -----------
Income (loss) from operations 380,000 (285,000)
OTHER INCOME (EXPENSE):
Interest expense (101,000) (68,000)
Interest income 11,000 4,000
Other income 27,000 1,000
----------- -----------
(63,000) (63,000)
----------- -----------
Income (loss) before income taxes 317,000 (348,000)
INCOME TAX PROVISION (24,000) --
----------- -----------
NET INCOME (LOSS) $ 293,000 $ (348,000)
=========== ===========
PER SHARE OF COMMON STOCK:
BASIC $ 0.03 $ (0.04)
=========== ===========
DILUTIVE $ 0.03 $ (0.04)
=========== ===========
AVERAGE COMMON SHARES OUTSTANDING 8,678,000 8,394,000
AVERAGE DILUTIVE COMMON STOCK EQUIVALENTS OUTSTANDING 408,000 --
----------- -----------
AVERAGE COMMON SHARES AND DILUTIVE COMMON
EQUIVALENTS OUTSTANDING FOR EARNINGS PER
SHARE CALCULATION 9,086,000 8,394,000
=========== ===========
</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 SIX MONTHS
ENDED JULY 31,
-------------------------------
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 293,000 $ (348,000)
ADJUSTMENTS TO RECONCILE NET
INCOME (LOSS) TO CASH:
Depreciation and amortization 538,000 388,000
CHANGES IN ASSETS AND LIABILITIES
OTHER THAN CASH:
Accounts receivable (597,000) (1,618,000)
Costs and estimated earnings in excess of billings
on uncompleted contracts (966,000) (366,000)
Inventory (34,000) 34,000
Other current assets 188,000 168,000
Accounts payable (332,000) 899,000
Billings in excess of costs and estimated earnings
on uncompleted contracts 4,000 599,000
Accrued liabilities 226,000 13,000
Other -- (12,000)
----------- -----------
TOTAL ADJUSTMENTS IN ASSETS AND LIABILITIES (1,511,000) (283,000)
----------- -----------
NET CASH USED BY OPERATING ACTIVITIES (680,000) (243,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (236,000) (358,000)
Acquisition of businesses (560,000) --
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (796,000) (358,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and warrants -- 19,000
Proceeds from debt 1,444,000 619,000
Purchase of common stock for treasury -- (13,000)
Principal payments on debt (77,000) (91,000)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,367,000 534,000
----------- -----------
Net Decrease in Cash and Short-Term Investments (109,000) (67,000)
Cash and Short-Term Investments, Beginning of Period 282,000 309,000
----------- -----------
CASH AND SHORT-TERM INVESTMENTS, END OF PERIOD $ 173,000 $ 242,000
=========== ===========
</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 SIX MONTHS ENDED JULY 31, 2000
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements include PDG Environmental, Inc. (the
"Corporation") and its wholly-owned subsidiaries.
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 six months ended July 31, 2000 were of a normal, recurring
nature. The amounts presented for the three and six months ended July 31, 2000
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, 2000 dated May 15, 2000 and Quarterly
Report on Form 10-QSB of the Corporation for the quarter ended April 30, 2000
dated June 13, 2000, 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 six months ended
July 31, 2000 due to the existence of unused net operating loss carryforwards.
The Company has provided a provision for state income taxes during the current
six month period. No state income taxes were provided during the prior six
month period due to the loss.
Income taxes paid by the Corporation for the six months ended July 31, 2000 and
1999 totaled approximately $63,000 and $38,000, respectively.
NOTE 3 - DEBT
On August 3, 2000, the Corporation closed on a new $4.7 million credit facility
with Sky Bank, an Ohio banking association, consisting of a 3-year $3 million
revolving line of credit, a 5-year $1 million equipment note, a 15-year $0.4
million mortgage and a 5-year $0.3 million commitment for future equipment
financing. The new financing repaid all of the Company's existing bank debt.
The line of credit, equipment note and commitment for future equipment financing
are at an interest rate of prime plus 1% with financial covenant incentives
which may reduce the interest rate to either prime plus 1/2% or prime. The
mortgage is at an interest rate of 9.15% fixed for three years and is then
adjusted to 2.75% above the 3-year Treasury Index every three years.
The new credit facility requires annual maintenance of a tangible net worth of
$4 million, a leverage ratio (total liabilities to tangible net worth) of no
greater than 2 to 1 and a debt service coverage ratio of at least 1.3 to 1.
Additionally, the Chief Executive Officer of the Corporation provided a limited
personal guarantee for the credit facility.
As the Company had the new credit facility available, borrowings ($1,456,000 at
July 31, 2000) on the line of credit were classified as long term.
The Corporation paid interest costs totaling approximately $85,000 and $63,000
during the six months ended July 31, 2000 and 1999, respectively.
7
<PAGE> 8
NOTE 4 - PREFERRED STOCK
Cumulative dividends in arrears on the Corporation's 2% Series A Preferred Stock
were approximately $8,000 at July 31, 2000. At July 31, 2000, 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).
At the Corporation's Annual Meeting of Stockholders held on July 23, 1993, the
following matters were approved by a majority of the Corporation's preferred and
common stockholders which affected the Corporation's Series A Preferred stock
and common stock: a reduction in the Series A Preferred Stock dividend rate from
9% to 2% and the cancellation of the accrued but unpaid dividends and the
special voting rights associated with such preferred stock in the event of a
certain accumulation of accrued but unpaid dividends thereon; and a
recapitalization of the Corporation in order to effect a one for two reverse
stock split (the "Recapitalization"). In exchange for the forfeiture of the
accrued but undeclared and unpaid dividends, the holders of the Series A
Preferred Stock were granted a common stock right which, if and when declared by
the Board of Directors, grant to the holders of such common stock rights shares
of the common stock of the Corporation. At the May 23, 1995 and March 6, 2000
Board of Directors meeting, the issuance of one third of the shares (280,071 and
259,696 common shares, respectively) covered by the aforementioned right was
approved. At July 31, 2000, there were 280,071 common stock rights outstanding.
The Recapitalization was contingent upon the Corporation's listing on the
American Stock Exchange. The Corporation made a decision not to pursue such a
listing; therefore, the Recapitalization was indefinitely postponed.
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 SIX MONTHS
ENDED JULY 31,
2000 1999
-----------------------------
<S> <C> <C>
NUMERATOR:
Income (loss) from continuing operations $ 293,000 $ (348,000)
Preferred stock dividends (1,000) --
---------- ----------
Numerator for basic earnings per share--income available
to common stockholders 292,000 (348,000)
Effect of dilutive securities:
Preferred stock dividends (1,000) --
---------- ----------
Numerator for diluted earnings per share--income available to
common stock after assumed conversions 293,000 (348,000)
---------- ----------
DENOMINATOR:
Denominator for basic earnings per share--weighted average
shares 8,678,000 8,394,000
Effect of dilutive securities:
Employee stock options 376,000 --
Warrants 5,000 --
Convertible preferred stock 27,000 --
---------- ----------
Dilutive potential common shares 408,000 --
---------- ----------
Denominator for diluted earnings per share--adjusted
weighted-average shares and assumed conversions 9,086,000 8,394,000
========== ==========
BASIC EARNINGS PER SHARE $ 0.03 $ (0.04)
========== ==========
DILUTED EARNINGS PER SHARE $ 0.03 $ (0.04)
========== ==========
</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 JULY 31,
2000 1999
-----------------------------
<S> <C> <C>
NUMERATOR:
Income (loss) from continuing operations $ 232,000 $ (130,000)
Preferred stock dividends -- --
---------- ----------
Numerator for basic earnings per share--income available
to common stockholders 232,000 (130,000)
Effect of dilutive securities:
Preferred stock dividends -- --
---------- ----------
Numerator for diluted earnings per share--income available to
common stock after assumed conversions 232,000 (130,000)
---------- ----------
DENOMINATOR:
Denominator for basic earnings per share--weighted average
shares 8,783,000 8,398,000
Effect of dilutive securities:
Employee stock options 237,000 --
Warrants 1,000 --
Convertible preferred stock 27,000 --
---------- ----------
Dilutive potential common shares 265,000 --
---------- ----------
Denominator for diluted earnings per share--adjusted
weighted-average shares and assumed conversions 9,048,000 8,398,000
========== ==========
BASIC EARNINGS PER SHARE $ 0.03 $ (0.02)
========== ==========
DILUTED EARNINGS PER SHARE $ 0.03 $ (0.02)
========== ==========
</TABLE>
NOTE 6 - ACQUISITION
Effective April 3, 2000, the Corporation entered into an agreement ("the
Agreement") with Lincoln Cristi, Inc. ("Lincoln") and the majority owners of
Lincoln for the purchase of selected assets and assumption of the contracts of
Lincoln. Lincoln owned and operated a business that conducted asbestos abatement
in the Northwestern United States. As consideration for the purchase, the
Corporation paid Lincoln and the owners of Lincoln a combination of cash and the
Corporation's Common Stock and entered into an employment agreement with the
former majority owners of Lincoln that provides for a performance bonus in
addition to annual salary. The performance bonus is for a minimum of one year
and a maximum of three years, depending upon the continued employment of the two
majority owners of Lincoln.
9
<PAGE> 10
The goodwill associated with the acquisition is being amortized on a
straight-line basis over 15 years, the covenant not to compete and customer
lists is being amortized on a straight-line basis over 5 years, and the
performance bonus is being amortized over the 3-year life of the bonus.
Additionally, in April 2000, the Corporation acquired the fixed assets of an
asbestos abatement company operating in the metropolitan Chicago area and an
insulation company operating in the Houston area.
10
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JULY 31, 2000 AND 1999
The Corporation's contract revenues increased to $8.8 million during the three
months ended July 31, 2000 ("Fiscal 2001") compared to $7.9 million in the three
months ended July 31, 1999 ("Fiscal 2000"). The increase in revenues is
primarily due to revenues contributed by the operations acquired earlier in
fiscal 2001.
The Corporation's gross margin increased to $1.3 million in the second quarter
of fiscal 2001 compared to $1.1 million in the second quarter of fiscal 2000.
The increase in gross margin was attributable to the aforementioned increase in
contract revenue. The gross margin as a percentage of revenue remained
relatively constant.
Selling, general and administrative expenses increased to $1.03 million in the
three months ended July 31, 2000 compared to $0.86 million in the three months
ended July 31, 1999. During the current fiscal quarter, the Corporation operated
two additional branch offices.
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, the
second payment of $100,000 was paid on December 28, 1999 and the final payment
of $200,000 on 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.
As a result of the factors described above, the Corporation reported net income
from operations of $0.3 million in the current three month period compared to
loss from operations of $0.1 million for the same three months of the prior
fiscal year.
The Corporation's interest expense increased to $63,000 for the three months
ended July 31, 2000 from $39,000 for the three months ended July 31, 1999 due to
increased borrowings to fund a higher level of operations and the aforementioned
acquisitions.
During the three months ended July 31, 2000 and 1999, the Corporation made no
provision for federal income taxes due to the utilization of net operating loss
carryforwards for financial reporting purposes. A state income tax provision of
$20,000 was made in the current fiscal quarter. No state income tax provision
was made in the prior quarter due to the loss.
SIX MONTHS ENDED JULY 31, 2000 AND 1999
The Corporation's contract revenues increased to $16.8 million for the six
months ended July 31, 2000 compared to $13.0 million for the six months ended
July 31, 1999.
The gross margin reported by the Corporation in the six months ended July 31,
2000 increased to $2.3 million compared to $1.9 million for the six months ended
July 31, 1999. The increase in gross margin related to the aforementioned
increase in contract revenue.
Selling, general and administrative expenses reported by the Corporation for the
six months ended July 31, 2000 increased to $2.0 million as compared to $1.8
million for the same six month period of the prior fiscal year. The increase is
primarily attributable to the addition of two new branch offices in Fiscal 2001.
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, the
second payment of $100,000 was paid on
11
<PAGE> 12
December 28, 1999 and the final payment of $200,000 on 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 $0.4 million in the six
months ended July 31, 2000 as a result of the factors discussed above compared
to a loss from operations of $0.3 million in the same six month period last
year.
Interest expense increased to $0.1 million in the current six month period
compared to $0.07 million in the six months ended July 31, 1999 due to increased
borrowings to fund a higher level of operations and the aforementioned
acquisitions.
No provisions for federal income taxes were made during the six months ended
July 31, 2000 and 1999 due to the utilization of net operating loss
carryforwards for financial reporting purposes. A state income tax provision of
$24,000 was made in the current six-month period. No state income tax provision
was made in the prior six month period due to the loss.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's liquidity decreased during the six months ended July 31, 2000
as cash and short-term investments decreased by $0.11 million to $0.17 million.
The decrease in fiscal 2000 was due to a $0.68 million cash outflow from
operating activities and a $0.8 million outflow related to investing activities,
which was partially offset by a $1.37 million inflow associated with financing
activities.
Cash outflows from operating activities of $0.68 million in the six months ended
July 31, 2000 included a $0.6 million increase in accounts receivable, a $1.0
million increase in costs and estimated earnings in excess of billings on
uncompleted contracts related to the timing of certain contract activity and a
$0.3 million decrease in accounts payable. The aforementioned cash outflows from
operating activities were offset, in part, by net income of $0.3 million
generated during the six month period, a $0.2 million decrease in other current
assets, a $0.2 million increase in accrued liabilities due to the timing of
payments and $0.5 million of depreciation and amortization.
The Corporation's cash outflows from investing activities of $0.8 million in the
six months ended July 31, 2000 was attributable to $0.24 million for the
purchase of property, plant and equipment and $0.56 million to purchase the
businesses acquired.
Cash inflows associated with financing activities during the six months included
$1.44 million of borrowings on the line of credit which was partially offset by
$0.08 million of principal payments on debt.
At July 31, 2000, the Corporation's backlog associated with its asbestos
abatement business totaled $15.0 million ($6.2 million on fixed fee contracts
and $8.8 million on time and materials or unit price contracts).
The Corporation's liquidity decreased during the six months ended July 31, 1999
as cash and short-term investments decreased by $0.07 million to $0.24 million
During the six months ended July 31, 1999, the $0.07 million decrease in the
Corporation's liquidity resulted from cash used by operating activities of $0.24
million and cash utilized by investing activities of $0.36 million. These cash
outflows were offset in part by cash provided by financing activities of $0.53
million.
Cash flows used by operations totaled $0.24 million in the six months ended July
31, 1999. Cash outflows included $0.35 million related to the net loss during
the current six months, a $1.6 million increase in receivables and a $0.37
million increase in costs and estimated earnings in excess of billings on
uncompleted contracts. These cash outflows were partially offset by cash inflows
which principally included $0.4 million of depreciation and amortization, a $0.9
million increase in accounts payable, a $0.17 million decrease in other current
assets and a $0.6 million increase in billings in excess of costs and estimated
earnings on uncompleted contracts.
During the six months ended July 31, 1999, cash outflows associated with
investing activities of $0.36 million were due to the purchase of property,
plant and equipment.
12
<PAGE> 13
The Corporation's cash inflows related to financing activities included $0.6
million in net borrowings on the line of credit and $0.02 million from the
exercise of employee stock options partially offset by $0.09 million of
principal repayments of debt and $0.01 million for the purchase of common stock
for the treasury.
13
<PAGE> 14
PART II-- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The registrant is subjected to disputes 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 July 31, 2000, the cumulative dividends in
arrears on the Series A Preferred Stock were approximately $8,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ANNUAL MEETING OF STOCKHOLDERS
On July 7, 2000 the Annual Meeting of the Stockholders of PDG Environmental,
Inc. was held in Pittsburgh, PA. At the meeting all of management's nominees
were elected directors of the Corporation with the following vote:
Votes For 7,604,467 to 7,604,727
Votes Against 52,542 to 52,802
Stokes Kelly & Hinds, LLC was ratified as the Corporation's auditors as follows:
Votes For 7,624,092
Votes Against 8,963
Abstained 24,214
The extension of the 1990 Stock Option Plan for Non-Employee Directors until
December 14, 2010 was ratified as follows:
Votes For 3,763,900
Votes Against 402,134
Abstained 40,221
The amendment to the PDG Environmental, Inc. Incentive Stock Option Plan
increasing the number of shares of Common Stock which may be granted by 500,000
to 2,300,000 and extending the Plan until December 14, 2010 was ratified as
follows:
Votes For 3,932,710
Votes Against 438,872
Abstained 34,713
The extension of the 1990 Stock Option Plan for Employee Directors until
December 14, 2010 was ratified as follows:
Votes For 3,732,459
Votes Against 432,604
Abstained 41,232
14
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT INDEX
EXHIBIT NO. AND DESCRIPTION
PAGES OF SEQUENTIAL
NUMBERING SYSTEM
10 Employee Agreement dated June 20, 2000 for John C. Regan
27 Financial Data Schedule
(b) The registrant did not file any current reports on Form 8-K during the
three months ended July 31, 2000.
15
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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
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John C. Regan
Chairman and Chief Executive Officer
Date: September 13, 2000
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