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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File Number: 0-14618
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[LOGO] VECTRA TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Washington 91-1160888
(State of incorporation) (I.R.S. Employer Identification No.)
5000 Executive Parkway, Suite 300
San Ramon, CA 94583
(Address of principal executive offices)
(510) 275-4500
(Registrant's telephone number)
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Indicate by checkmark 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 [ ]
THERE WERE 7,833,527 SHARES OF REGISTRANT'S COMMON STOCK OUTSTANDING AS OF
NOVEMBER 7, 1996.
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<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FINANCIAL STATEMENTS TABLE OF CONTENTS
Page
-----
Condensed Consolidated Balance Sheets as of September 30,
1996, and December 31, 1995 3 & 4
Condensed Consolidated Statements of Operations for the Three
Months Ended September 30, 1996, and October 1, 1995 5
Condensed Consolidated Statements of Operations for the Nine
Months Ended September 30, 1996, and October 1, 1995 6
Condensed Consolidated Statements of Cash Flow for the Nine
Months Ended September 30, 1996, and October 1, 1995 7
Notes to Condensed Consolidated Financial Statements 8 & 9
2
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VECTRA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
September 30,
1996 December 31,
(unaudited) 1995
------------- ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 3,192 $ 2,834
Securities available for sale 958 1,274
Accounts receivable, net of allowance ($204 in 1996 and $785 in 1995) 4,275 20,902
Receivable from sale of Engineering Businesses 2,199 --
Costs and estimated earnings in excess of billings on uncompleted contracts 2,623 1,665
Refundable income tax prepayments -- 600
Inventories 1,670 1,176
Prepaid expenses 123 720
-------- --------
Total Current Assets 15,040 29,171
-------- --------
Property, Plant and Equipment, at cost
Land 94 94
Buildings 181 359
Machinery and equipment 10,344 8,707
Construction in progress 8,080 9,011
Furniture and fixtures 579 2,587
-------- --------
Total Property, Plant and Equipment 19,278 20,758
Less accumulated depreciation 7,243 8,614
-------- --------
Net Property, Plant and Equipment 12,035 12,144
-------- --------
Costs in excess of net assets of acquired businesses, net of accumulated amortization -- 14,780
Licenses, patents and other intangibles, at cost, net of accumulated amortization 2,005 1,200
Investments and long-term prepaid costs 421 3,305
Other assets 49 66
-------- --------
Total Assets $ 29,550 $ 60,666
-------- --------
-------- --------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
VECTRA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(in thousands, except share data)
<TABLE>
<CAPTION>
September 30,
1996 December 31,
(unaudited) 1995
------------- ------------
<S> <C> <C>
LIABILITIES
Current Liabilities
Accounts payable $ 3,629 $ 10,762
Accrued payroll and related expenses 2,350 4,556
Other accrued liabilities 2,592 4,170
Accrued liabilities related to sale of subsidiaries 2,366 2,100
Billings in excess of costs and estimated earnings on uncompleted contracts 893 2,288
-------- --------
Total Current Liabilities 11,830 23,876
-------- --------
Long-term debt -- 17,216
Other long-term liabilities 1,778 1,764
Deferred lease incentive -- 424
-------- --------
Total Liabilities 13,608 43,280
-------- --------
SHAREHOLDERS' EQUITY
Class A Preferred Stock, 4,100,000 shares authorized, none issued or outstanding -- --
Common Stock, $0.01 par value, 30,000,000 shares authorized; 7,833,527 shares
issued and outstanding in 1996 and 1995 44,960 44,960
Accumulated deficit (29,018) (27,574)
-------- --------
Total Shareholders' Equity 15,942 17,386
-------- --------
Total Liabilities and Shareholders' Equity $ 29,550 $ 60,666
-------- --------
-------- --------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
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VECTRA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
September 30, October 1,
1996 1995
------------- ----------
<S> <C> <C>
Revenues $ 14,044 $ 24,047
Operating costs 9,808 17,649
--------- ---------
Gross profit 4,236 6,398
Research and development expenses 83 39
Selling, general and administrative expenses 3,609 8,170
--------- ---------
Operating income (loss) 544 (1,811)
Gain/(loss) on sale of subsidiary (1,993) --
Interest expense, net 219 639
--------- ---------
Loss before income taxes (1,668) (2,450)
Provision/(benefit) for income taxes (39) (532)
--------- ---------
Net loss $ (1,629) $ (1,918)
--------- ---------
--------- ---------
Net loss per share $ (.21) $ (0.24)
--------- ---------
--------- ---------
Number of shares used to calculate net loss per share 7,833,527 7,898,000
--------- ---------
--------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
VECTRA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
September 30, October 1,
1996 1995
------------- ----------
<S> <C> <C>
Revenues $ 61,450 $ 96,776
Operating costs 43,232 68,671
--------- ---------
Gross profit 18,218 28,105
Research and development expenses 398 94
Selling, general and administrative expenses 15,651 31,652
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Operating income (loss) 2,169 (3,641)
Gain (loss) on sale of subsidiaries (1,443) 10,752
Interest expense, net 2,156 2,198
--------- ---------
Income (loss) before income taxes (1,430) 4,913
Provision for income taxes 15 912
--------- ---------
Net income (loss) $ (1,445) $ 4,001
--------- ---------
--------- ---------
Net income (loss) per share $ (.18) $ 0.51
--------- ---------
--------- ---------
Number of shares used to calculate net income (loss) per share 7,833,527 7,898,000
--------- ---------
--------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
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VECTRA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
September 30, October 1,
1996 1995
------------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,445) $ 4,001
Adjustments to reconcile net income (loss) to net cash provided
(used) by operating activities:
Depreciation and amortization 1,021 4,096
Loss (Gain) on sale of subsidiaries 1,443 (10,752)
Loss on sale of investments -- 156
Writedown of fixed assets and intangibles -- 2,220
Changes in operating working capital:
(Increase) Decrease in accounts receivable and costs and
estimated earnings in excess of billings 689 (3,286)
(Increase) Decrease in inventories and prepaid expenses (883) 84
Increase (Decrease) in accounts payable and accrued expenses (9,037) 8,018
--------- ---------
Net cash provided/(used) by operating activities (8,212) 4,537
--------- ---------
Cash flows from investing activities:
Payments related to Impell acquisition -- 559
Proceeds from sale of subsidiaries 28,119 14,173
Proceeds from sale of investments -- 1,150
Purchases of securities available for sale (567) (516)
Sales and maturities of securities available for sale 884 366
Capital expenditures (1,894) (9,120)
(Increase) Decrease in other assets (756) 56
--------- ---------
Net cash provided by investing activities 25,786 6,668
--------- ---------
Cash flow from financing activities:
Borrowings under short-term loans -- --
Repayments under short-term loans (569) (3,311)
Borrowings under long-term debt -- 2,000
Repayment of long-term debt (16,647) (9,071)
--------- ---------
Net cash used in financing activities (17,216) (10,382)
--------- ---------
Net increase in cash and cash equivalents 358 823
Cash and cash equivalents at beginning of period 2,834 3,427
--------- ---------
Cash and cash equivalents at end of period $ 3,192 $ 4,250
--------- ---------
--------- ---------
Cash paid for interest $ 3,824 $ 1,790
Cash paid for income taxes $ 66 $ 712
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7
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VECTRA TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
VECTRA Technologies, Inc. ("VECTRA" or the "Company") have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments, consisting of only normal recurring adjustments, considered
necessary for a fair presentation of financial position and results of
operations, have been included. Previously reported amounts have been
reclassified to conform with the 1996 presentation. Operating results for
the three and nine month periods ended September 30, 1996, are not
necessarily indicative of the results that may be expected for the full
year. The unaudited condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and
footnotes thereto included in the Company's 1995 Annual Report on Form
10-K.
2. EARNINGS PER SHARE
Net income per share for the nine months ended October 1, 1995 is based
upon the weighted average number of common shares outstanding during the
period plus the dilutive effect of stock options and warrants. Net
income per share on a fully diluted basis was the same as the primary
income per share. Net loss per share is based upon the weighted average
number of common shares outstanding during the period.
3. INDEBTEDNESS TO BANKS
Concurrent with the sale of Company's nuclear engineering services
business, power services business, and government services business,
(collectively, the "Engineering Businesses") to Duke Engineering &
Services, Inc. on August 19, 1996, the Company paid approximately $16.6
million, which combined with payments earlier in the year, paid in full the
remaining balances of the Company's revolving credit agreement and term
debt. The revolving credit and term debt agreements have been terminated
and the Company has no indebtedness to banks at September 30, 1996.
As of September 30,1996, the Company has reserved 1,300,977 shares of
common stock for warrants previously earned by the banks.
4. CONTINGENCIES
The Company is self-insured for general liability risk for $1 million per
occurrence and $2 million in the aggregate. Coverage above the self-
insured limits is provided for under an umbrella policy with a commercial
insurance company. The Company's general liability risk insurance excludes
professional errors and omissions. Such insurance is purchased on a
contract specific basis as required by the customer.
8
<PAGE>
VECTRA TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
4. CONTINGENCIES (CONTINUED)
As of September 30, 1996, the Company has accrued approximately $0.6
million for unreported and/or potential losses. Actual self-insurance
losses may differ from such estimates and such differences could be
material to the financial statements.
The radioactive materials handled by the Company are the legal
responsibility of the Company's utility customers. The Company does not
take title to such materials. In the event of an accident or incident
involving such material, the Company is covered under insurance carried by
and provided to operators of nuclear plants or transporters of nuclear
materials.
5. SALE OF VECTRA TECHNOLOGIES, LTD.
Effective April 26, 1996, the Company sold all of the outstanding capital
stock of its wholly owned subsidiary, VECTRA Technologies Ltd. ("VECTRA
UK"), to Amey, plc and recorded a gain on the sale of $0.6 million. The
sale price was approximately $1.9 million. The net proceeds were
approximately $1.6 million after expenses associated with the transaction.
The net proceeds were used to reduce the Company's revolving credit
facility by $1.1 million and the balance was added to working capital.
VECTRA UK generated revenues of approximately $3.5 million for the nine
months ended September 30, 1996, and operating income of approximately $0.3
million for the same period.
6. SALE OF VECTRA ENGINEERING BUSINESSES TO DUKE ENGINEERING & SERVICES, INC.
On August 19, 1996, the Shareholders of the Company voted to approve, and
the Company then consummated, the sale of the Company's Engineering
Businesses to Duke Engineering & Services, Inc. (the "Buyer") and recorded
a loss on the sale of $2.0 million. The form of the transaction was a sale
of assets pursuant to an Asset Purchase Agreement dated May 23, 1996.
Based on an August 18, 1996, unaudited closing balance sheet, the total
purchase price was approximately $28.7 million, subject to audit by the
Buyer to be completed no later than ninety days after closing. The
Buyer paid a preliminary amount of $26.5 million, of which $18.3 million
was used to pay all of the Company's bank debt and associated fees and
the balance, $8.2 million, was added to the Company's working capital.
An additional amount was placed in escrow until, no later than ninety
days after closing, the closing balance sheet is agreed upon between the
Company and the Buyer The Company has recorded a receivable of $2.2
million corresponding to this escrow account. The Engineering
Businesses generated revenues of approximately $8.6 million and $42.7
million for the three and nine months ended September 30, 1996,
respectively, and operating income of approximately $0.4 million and
$2.2 million for the same periods.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
This Management's Discussion and Analysis of Financial Conditions and Results of
Operations contains forward-looking statements that involve risks and
uncertainties. VECTRA Technologies, Inc.'s ("VECTRA" or the "Company") actual
results may differ significantly from the results discussed in the forward
looking statements. Factors that might cause such a difference include, but are
not limited to, those discussed in ITEM 1. BUSINESS in the Company's 1995 Annual
Report on Form 10-K.
DIVESTITURES
On August 19, 1996, the Shareholders of the Company voted to approve, and the
Company then consummated, the sale of the Company's nuclear engineering services
business, power services business, and government services business,
(collectively, the "Engineering Businesses") to Duke Engineering & Services,
Inc. (the "Buyer") and recorded a loss on the sale of $2.0 million. The form of
the transaction was a sale of assets pursuant to an Asset Purchase Agreement
dated May 23, 1996.
The Company reported on August 19, 1996, a preliminary purchase price of
$30.0 million based upon a pre-closing July 30, 1996, balance sheet.
Based on an August 18, 1996, unaudited closing balance sheet, the total
purchase price was determined to be approximately $28.7 million, subject
to audit by the Buyer to be completed no later than ninety days after
closing. The differ between the pre-closing and closing balance sheets
was primarily the result of net account receivable collections in the
interim period. The Buyer paid a preliminary amount of $26.5 million, of
which $18.3 million was used to pay all of the Company's bank debt and
associated fees and the balance, $8.2 million, was added to the
Company's working capital. An additional amount was placed in escrow
until, no later than ninety days after closing, the closing balance
sheet is agreed upon between the Company and the Buyer. The Company has
recorded a receivable of $2.2 million corresponding to this escrow
account. The Engineering Businesses generated revenues of approximately
$8.6 million and $42.7 million for the three and nine months ended
September 30, 1996, respectively, and operating income of approximately
$0.4 million and $2.2 million for the same periods.
Effective April 26, 1996, the Company sold all of the outstanding capital stock
of its wholly owned subsidiary, VECTRA Technologies Ltd. ("VECTRA UK"), to Amey,
plc and recorded a gain on the sale of $0.6 million. The sale price was
approximately $1.9 million. The net proceeds were approximately $1.6 million
after expenses associated with the transaction. The net proceeds were used to
reduce the Company's revolving credit facility by $1.1 million and the balance
was added to working capital. VECTRA UK generated revenues of approximately
$3.5 million for the nine months ended September 30, 1996, and operating income
of approximately $0.3 million for the same period.
RESULTS OF OPERATIONS
THE THREE MONTHS ENDED SEPTEMBER 30, 1996, COMPARED TO THE THREE MONTHS
ENDED OCTOBER 1, 1995
REVENUES Total revenues decreased $10.0 million (41.6%) to $14.0 million in
the three month period ended September 30, 1996, from the comparable period
in 1995. Excluding the revenues of VECTRA UK and the Engineering Businesses,
the Company's revenues increased $0.3 million (5.4%) to $5.4 million from $5.1
million. Fuel Services operations' revenues increased $1.2 million as a result
of a higher level of activity and as a result of the timing of the revenue
recognition with respect to various long term contracts.
10
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
THE THREE MONTHS ENDED SEPTEMBER 30, 1996, COMPARED TO THE THREE MONTHS
ENDED OCTOBER 1, 1995 (CONTINUED)
Waste Services operations' revenues decreased $0.9 million primarily as a result
of the non-recurrence in 1996 of a 1995 $1.2 million equipment sale.
Especially with respect to the Company's Fuel Services operations, revenues may
significantly differ from period to period as a result of varying contractual
terms that relate to the specific services or materials provided and their
respective delivery schedules for the Company's multi-year, multi-million dollar
contracts. This variability is expected to continue in future periods and to be
more pronounced with the sale of the Company's Engineering Businesses.
GROSS PROFIT Total gross profit as a percent of revenue increased to 30.2%
in 1996 from 26.6% in 1995. Excluding the gross profit of VECTRA UK and
the Engineering Businesses, gross profit increased to 30.2% in the third
quarter of 1996 from 22.6% in the same period of 1995. This increase in gross
profit as a percent of revenue was primarily a result of the non-recurrence
in 1996 of both the above mentioned 1995 $1.2 million, low margin, equipment
sale and a 1995 $0.5 million charge associated with the development of the
transportable vitrification unit in the Company's Waste Services operations.
Each of the Company's contracts is negotiated independently and varies as to
profitability and, due to changes in the mix of contracts and the
deliverables under those contracts, the Company's gross profit may vary
significantly from quarter to quarter.
EXPENSES The Company's operating expenses decreased $4.5 million (55.8%) to
$3.7 million in the third quarter of 1996 from $8.2 million in the third
quarter of 1995. Excluding the operating expenses of VECTRA UK and the
Engineering Businesses, operating expenses decreased $3.3 million in the
third quarter of 1996, a 70.4% decrease from the third quarter of 1995.
This decrease was the result of amortization expense decreasing $0.5 million
primarily as a result of the Company's write off of intangible assets in
December 1995 and an approximate $2.6 million decrease in corporate costs as
a result of lower staff levels and other cost reduction measures.
NET LOSS Operating income increased $2.4 million to a $0.5 million profit in
the third quarter of 1996 from a loss of $1.8 million in the same period of
1995 (See Gross Profit and Expenses discussion, above). The Company reported
a loss on sale of subsidiary of $2.0 million relating to the sale of the
Engineering Businesses in August 1996. A decrease in interest expense of $0.4
million was offset by a similar increase related to income taxes. As a result
of the foregoing, net loss decreased $0.3 million to a $1.6 million loss in
the third quarter of 1996 from a $1.9 million loss in the third quarter of
1995.
11
<PAGE>
RESULTS OF OPERATIONS (CONTINUED)
THE NINE MONTHS ENDED SEPTEMBER 30, 1996, COMPARED TO THE NINE MONTHS ENDED
OCTOBER 1, 1995
REVENUE Total revenues decreased $35.3 million (36.5%) to $61.4 million in
the nine month period ended September 30, 1996, from the comparable period in
1995. Excluding the revenues of Plant Services operations that were sold in
June 1995, VECTRA UK and the Engineering Businesses, the Company's revenues
decreased $5.3 million (26.0%) to $15.2 million in the first nine months of
1996, from $20.5 million in the same period of 1995. This decrease was the
result of the non-recurrence in 1996 of $2.6 million equipment sales and $
0.6 million transportable vitrification unit related revenues in Waste
Services operations in 1995 and as a result of the timing of the revenue
recognition with respect to various long term contracts in Fuel Services
operations.
Especially with respect to the Company's Fuel Services operations, revenues may
significantly differ from period to period as a result of varying contractual
terms that relate to the specific services or materials provided and their
respective delivery schedules for the Company's multi-year, multi-million dollar
contracts. This variability is expected to continue in future periods and to be
more pronounced with the sale of the Company's Engineering Businesses.
GROSS PROFIT Total gross profit as a percent of revenue remained relatively
consistent in the 1996 and 1995 periods, 29.7% and 29.0%, respectively.
Excluding the gross profit of Plant Services operations, VECTRA UK and the
Engineering Businesses, gross profit increased to 32.6% in the first nine
months of 1996 from 20.4% in the same period of 1995. Each of the Company's
contracts is negotiated independently and varies as to profitability and, due
to changes in the mix of contracts, the Company's gross profit may vary
significantly from quarter to quarter. The timing and actual performance by
the Company in fulfilling its major contracts also affect the Company's gross
profit.
EXPENSES The Company's operating expenses decreased $15.7 million (49.5%) to
$16.0 million in the first nine months of 1996 from $31.7 million in the
first nine months of 1995. Excluding the operating expenses of Plant
Services, VECTRA UK and the Engineering Businesses, operating expenses
decreased $12.7 million in the third quarter of 1996, a 70.5% decrease from
the third quarter of 1995. This decrease was the result of amortization
expense decreasing $2.7 million primarily as a result of the Company's write
off of intangible assets in December 1995; non recurring asset write-offs of
$2.2 million; non recurrence of a $1.8 million charge related to severance
and an approximate $3.4 million decrease in corporate costs as a result of
lower staff levels and other cost reduction measures.
NET LOSS Operating income increased $5.8 million to a $2.2 million profit in
the first nine months of 1996 from a loss of $3.6 million in the same period
of 1995 (See Gross Profit and Expenses discussion, above). Gain(loss) on sale
of subsidiaries decreased $12.2 million as a result of the net $1.5 million
loss recorded on the sale of VECTRA UK and Engineering Businesses in 1996 as
compared to the $10.8 million gain recorded on the sale of Plant Service
operations in 1995. Income taxes decreased by $0.9 million. As a result of
the foregoing, net income decreased $5.4 million to a loss of $1.4 million in
the first nine months of 1996 from income of $4.0 million in the first nine
months of 1995.
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided/used by operating activities is comprised of two components,
net income adjusted for non-cash items and changes in operating assets and
liabilities.
Net income adjusted for non-cash items provided approximately $1.0 million in
the first nine months of 1996 and a negative $0.3 million in the same period of
1995. This reflects the improved operating profitability of the Company, as
detailed in the Results of Operations for the nine months ended September 30,
1996, above.
In the first nine months of 1996, excluding the $2.2 million receivable
recorded for the escrow amount for the sale of the Engineering
Businesses $2.4 million was used for work performed by the Company in
advance of various contracts' scheduled progress billings which resulted
in the increased levels of accounts receivable, primarily the result of
increased costs in excess of billings in Fuel Service operations, and
work-in-process inventory in Waste Service operations. Accounts
receivable and billings balances differ from period to period as a
result of varying contractual terms that relate to the timing and amount
of progress payments for some of the Company's multi-year, multi-million
dollar contracts. This variability is expected to continue in future
periods and become more pronounced as Fuel Services operations become a
larger part of the Company's operations.
Immediately following the sale of the Engineering Businesses in August 1996, the
Company used approximately $9.0 million primarily for: (i) the reduction of
accrued payroll, (ii) the payment of vacation, severance and other payroll
liabilities related to the Engineering Businesses employees; (iii) the
reduction of trade accounts payable to normal levels of commercial practice
from the high levels used in late 1995 to preserve operating capital; and (iv)
the payment of approximately $1.5 million deferred fees to the company's former
banks, upon liquidation of all of the Company's bank debt.
As a result of the foregoing, operating activities used $8.2 million in the
first nine months of 1996, an approximate $12.7 million greater usage
than cash expended in the same period of 1995.
Cash proceeds from disposition/acquisition activities in the first nine
months of 1996 were approximately $1.6 million from the sale of VECTRA UK
and $26.5 million from the sale of the Engineering Businesses as opposed to
$14.7 million in the same period of 1995 from the sale of Plant Services and
the liquidation of retention accounts related to the 1994 Impell acquisition.
Capital expenditures in the first nine months of 1996 of approximately $1.9
million related to the Company's building of reverse osmosis units for a
major Waste Services operations' projects. Capital expenditures in
1995 of approximately $9.1 million related primarily to the Company's
building of its transportable vitrification unit and its OS197 transportation
cask. The $0.7 million other asset acquired in 1996 relates primarily to the
cost of licensing of the Company's NUHOMS-Registered Trademark- storage and
transportation cask for spent nuclear fuel.
The Company's capital expenditures for the balance of 1996 are expected to be
incurred for the continuing licensing activity for the Company's Fuel
Services operations' NUHOMS-Registered Trademark- storage and transportation
cask for spent nuclear fuel and for equipment used for processing radioactive
waste volume reduction and dewatering systems in its Waste Services
operations. Additionally, the Company's administrative operations have modest
capital requirements for computer equipment and new systems installation.
The Company anticipates that it will need to devote significant capital
resources to technology development and licensing activities in the future in
order to remain competitive. The Company had contractual capital acquisition
commitments of approximately $0.1 million as of September 30, 1996.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company's transportable vitrification unit, whose development represented
a majority of the 1995 capital expenditure, continues to require additional
design expenditures to increase the variability of waste streams processed by
the system to make it more economically beneficial in the marketplace. The
project's construction and startup activities continue to be temporarily
suspended until a contract is procured to provide funding to rework the
system to increase its volume throughput and provide a revenue stream for its
deployment. The expected material cost to complete the unit is approximately
$1.0 million plus a significant additional amount for labor and
transportation charges.
Concurrent with the sale of the Engineering Businesses in August 1996, the
Company paid approximately $16.6 million, which combined with payments
earlier in the year, paid in full the remaining balances of the Company's
revolving credit agreement and term debt. The revolving credit and term debt
agreements have been terminated and the Company currently has no indebtedness
to banks.
Based on the Company's current level of operations and expected requirements,
management believes that the Company's cash and marketable securities,
internally generated funds and available financing opportunities will be
sufficient to meet the Company's cash requirements for the next twelve months.
14
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULT UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An annual meeting of the shareholders of VECTRA Technologies, Inc. was held
on Monday, August 19, 1996.
1. The following matters were voted upon at the meeting, with the results as
indicated:
A. Approval of a proposal to sell substantially all of the properties
of the Company and all of the properties of VECTRA Government Services, Inc.
Number of votes:
For: 6,150,689
Against: 29,818
Abstain: 13,063
Broker: 968,710
Nonvotes:
B. The following individuals were elected directors:
Name of Director Number of votes Number of
cast for Director votes withheld
J.B. (Ted) Ardell, III 7,093,701 68,579
E.Linn Draper, Jr. 7,127,312 34,968
Fruzsina M. Harasanyi 7,127,012 35,268
Edward J. Keith 7,127,212 35,068
Albert J. Baciocco, Jr. 7,122,882 39,398
Ray A. Fortney 7,124,612 37,688
Elwood D. Howse, Jr. 7,122,882 39,398
Roy Kirkorian 7,126,912 35,368
C. Ratification of Ernst & Young LLP as independent public accountants:
Number of votes:
For: 7,129,683
Against: 19,553
Abstain: 13,044
ITEM 5. OTHER INFORMATION
At September 30, 1996, reflecting the effects of the sale of the
Engineering Businesses, the Company's minimum tangible net worth was
approximately $15.9 million, substantially above NASDAQ Stock Market,
Inc.'s requirement of $4.0 million. On September 12, 1996, the Company
was notified by the NASDAQ Stock Market, Inc. that it had been found to
be in compliance with all requirements necessary for continued listing
on the Nasdaq National Market -Registered Trademark-. Therefore, the
Company was found to be in compliance with the terms of its April 1996
qualifications exception and the Company's common stock will continue to
be listed on the Nasdaq National Market under the symbol VCTR.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - none
(b) (i) The Company filed a current report on Form 8-K dated August 19,
1996 under Item 2. announcing the sale of the Engineering Businesses.
This report included a pro forma balance sheet as of June 30, 1996
and pro forma statements of operations for the six months ended
June 30, 1996 and the fiscal year ended December 31, 1995.
(ii) The Company filed a current report on Form 8-K dated August 20,
1996 under Item 2. related to the sale of the Engineering Businesses.
This report included a pro forma balance sheet as of July 31, 1996
and pro forma statements of operations for the seven months ended
July 31, 1996 and the fiscal year ended December 31, 1995.
15
<PAGE>
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.
VECTRA TECHNOLOGIES, INC.
November 14, 1996 By /s/ Ray A. Fortney
-----------------------------
Ray A. Fortney
President, Chief Executive Officer
November 14, 1996 By /s/ Thomas B. Pfeil
-----------------------------
Thomas B. Pfeil
Chief Financial Officer
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FORM 10-Q WHICH PRECEDES THIS EXHIBIT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 3,192
<SECURITIES> 958
<RECEIVABLES> 6,474
<ALLOWANCES> 204
<INVENTORY> 1,670
<CURRENT-ASSETS> 15,040
<PP&E> 19,278
<DEPRECIATION> 7,243
<TOTAL-ASSETS> 29,550
<CURRENT-LIABILITIES> 11,830
<BONDS> 0
0
0
<COMMON> 44,960
<OTHER-SE> (29,018)
<TOTAL-LIABILITY-AND-EQUITY> 29,550
<SALES> 61,450
<TOTAL-REVENUES> 61,450
<CGS> 43,232
<TOTAL-COSTS> 43,232
<OTHER-EXPENSES> 16,049
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,156
<INCOME-PRETAX> (1,430)
<INCOME-TAX> 15
<INCOME-CONTINUING> (1,445)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,445)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> 0
</TABLE>
