<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
********************************************************************************
FORM 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
/ / 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 0-14992
SMITH ENVIRONMENTAL TECHNOLOGIES CORPORATION
--------------------------------------------
(exact name of registrant as specified in its charter)
DELAWARE 38-2294876
- -------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3501 JAMBOREE ROAD, SUITE 550, NEWPORT BEACH, CA 92660
-------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (714) 737-7900
---------------
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
--- ---
On January 30, 1996, the registrant had 5,857,015 shares of common stock
outstanding.
================================================================================
<PAGE> 2
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED DECEMBER 31, 1995
SMITH ENVIRONMENTAL TECHNOLOGIES CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Page
----
<S> <C> <C>
Item 1: Financial Statements
Consolidated Balance Sheets as of December 31, 1995
(unaudited) and September 30, 1995 3-4
Consolidated Statements of Operations (unaudited)
for the three months ended December 31, 1995 and 1994 5
Consolidated Statements of Cash Flows (unaudited)
for the three months ended December 31, 1995 and 1994 6-7
Notes to Consolidated Financial Statements (unaudited) 8
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-13
PART II. OTHER INFORMATION
Item 5: Other Information 14
Item 6: Exhibits and Reports on Form 8-K 14
Signature 15
Exhibit 11 Computation of per share earnings, for the
three months ended December 31, 1995 (unaudited) 16
Exhibit 27 Requirements for the format and input
of financial data schedules (EDGAR version only)
</TABLE>
2
<PAGE> 3
PART 1 FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SMITH ENVIRONMENTAL TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1995 1995
------------ -------------
(unaudited)
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash $ 594 $ 510
Accounts receivable, less allowance for doubtful
accounts of $1,649 and $1,502 49,855 53,379
Costs and estimated earnings on long-term
contracts in excess of billings 1,654 2,287
Prepaid expenses and other current assets 3,567 2,676
-------- ---------
Total current assets 55,670 58,852
Property and equipment:
Equipment 21,202 21,949
Land and buildings 4,007 4,007
Leasehold improvements 1,049 1,044
-------- ---------
Total property and equipment, at cost 26,258 27,000
Less accumulated depreciation and amortization 9,733 10,062
-------- ---------
Property and equipment, net 16,525 16,938
Other assets:
Intangible assets, net of accumulated amortization
of $1,003 and $712, respectively 16,047 16,338
Goodwill, net of accumulated amortization of
$423 and $322, respectively 15,244 15,345
Investment in unconsolidated affiliate 2,002 1,502
Other assets 4,554 5,033
-------- --------
TOTAL ASSETS $110,042 $114,008
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE> 4
SMITH ENVIRONMENTAL TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS (continued)
(In thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1995 1995
------------ -------------
(unaudited)
<S> <C> <C>
LIABILITIES, REDEEMABLE PREFERRED STOCK
- ---------------------------------------
AND COMMON STOCKHOLDERS' EQUITY
-------------------------------
Current liabilities:
Accounts and subcontracts payable $ 20,276 $ 24,147
Accrued expenses and other liabilities:
Compensation and related fringes 5,051 4,973
Severence and office closures 841 1,618
Other 7,878 9,343
Billings on long-term contracts in excess of
costs and estimated earnings 1,340 1,251
Current maturities of long-term debt and
short-term borrowings 2,861 2,110
-------- --------
Total current liabilities 38,247 43,442
Long-term debt 28,111 27,403
Other long-term liabilities 5,494 6,017
Convertible Senior Subordinated Note, 10% maturing
in 2004, convertible into 3,717,449 and 3,048,780
common shares, respectively at $3.28 per share 12,193 10,000
Commitments and contingencies:
Redeemable Preferred Stock, $0.01 par value; 78,000
shares authorized; 74,439 and 76,218
shares issued, respectively; 5% cumulative
dividend; $100 redemption value 6,722 6,857
Junior Convertible Preferred Stock; $0.01 par value;
371,500 shares authorized; none issued - -
Preference Stock; $0.01 par value; 1,000,000 shares
authorized; none issued - -
Preferred stock $0.01 par value; 550,500 shares
authorized; none issued - -
Common stockholders' equity:
Common stock; $0.01 par value; 20,000,000 shares
authorized; 5,857,015 and 5,850,015 shares
issued and outstanding, respectively 58 58
Additional paid in capital 17,169 17,149
Retained earnings 2,048 3,082
-------- --------
Total common stockholders' equity 19,275 20,289
-------- --------
TOTAL LIABILITIES, REDEEMABLE PREFERRED
STOCK AND COMMON STOCKHOLDERS EQUITY $110,042 $114,008
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE> 5
SMITH ENVIRONMENTAL TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
unaudited
<TABLE>
<CAPTION>
Three months
ended December 31,
-----------------------
1995 1994
--------- ----------
<S> <C> <C>
Revenues $ 46,758 $ 35,219
Cost of revenues 40,876 30,433
---------- ----------
Gross profit 5,882 4,786
Selling, general and administrative expenses 3,849 3,413
Amortization of intangible assets, goodwill and
deferred financing fees 488 145
Special items 393 -
---------- ----------
Income from operations 1,152 1,228
Interest expense (1,154) (554)
---------- ----------
(Loss) income before share in earnings of
unconsolidated affiliate, income taxes and
extraordinary item (2) 674
Share in earnings of unconsolidated affiliate 500 344
---------- ----------
Income before income taxes and
extraordinary item 498 1,018
Income tax expense (113) (106)
---------- ----------
Income before extraordinary item 385 912
Extraordinary item - loss on debt refinancing, net of
$ 113 tax benefit (1,282) -
---------- ----------
Net (loss) income (897) 912
Dividends and accretion on Redeemable Preferred Stock (137) (131)
---------- ----------
Net (loss) income applicable to common stock $ (1,034) $ 781
---------- ----------
Weighted average number of common and common
equivalent shares outstanding 5,882,823 5,950,363
========== ==========
Income (loss) per common and common equivalent share:
Income before extraordinary item $ 0.07 $ 0.15
Extraordinary item (0.22) 0.00
---------- ----------
Net (loss) income $ (0.15) $ 0.15
========== ==========
Net (loss) income applicable to common stock $ (0.18) $ 0.13
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE> 6
SMITH ENVIRONMENTAL TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
unaudited
<TABLE>
<CAPTION>
Three months
ended December 31,
------------------------
1995 1994
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
- --------------------
Income before extraordinary item $ 385 $ 912
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization 1,135 761
Gain on disposal of equipment (333) -
Share in earnings of affiliate (500) (344)
Changes in operating assets and liabilities, net of effects
from acquisitions:
Accounts receivable 3,524 (247)
Costs and estimated earnings on long-term
contracts in excess of billings 633 (313)
Prepaid expenses and other current assets (891) 774
Other assets 484 (460)
Accounts and subcontracts payable (3,871) 1,462
Accrued expenses and other liabilities (2,063) (3,679)
Billings on long-term contracts in excess of costs
and estimated earnings 89 (643)
Other long-term liabilities (523) (153)
Other, net (137) 42
---------- ---------
Net cash used in operating activities $ (2,068) $ (1,888)
========== =========
</TABLE>
See accompanying notes to consolidated financial statements
6
<PAGE> 7
SMITH ENVIRONMENTAL TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW (continued)
(In thousands)
unaudited
<TABLE>
<CAPTION>
Three months
ended December 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
INVESTING ACTIVITIES
- --------------------
Capital expenditures $ (453) $ (499)
Advances (to) from affiliates - 512
Proceeds from sale of fixed assets 553 -
Purchase of Riedel Environmental Services (net of cash
acquired) - (18,336)
-------- --------
Net cash provided by (used in) investing activities 100 (18,323)
-------- --------
FINANCING ACTIVITIES
- --------------------
Proceeds from revolving line of credit 20,649 5,053
Retirement of revolving line of credit (21,537) -
Borrowings on revolving line of credit, net 1,576 379
Proceeds from term loan 6,500 2,000
Retirement of term loan (3,400) -
Repayments on term loan (295) (155)
Proceeds from issuance of Convertible Senior
Subordinated Note - 10,000
Proceeds from issuance of Senior Note - 2,000
Borrowings from conversion of Senior Note 193 -
Payment of financing fees (1,096) -
Payment of early debt extinguishment penalty (287) -
Repayments of debt (34) (1,144)
Proceeds from exercise of stock options 14 -
Repurchase of Redeemable Preferred Stock (177) -
Dividends paid on Redeemable Preferred Stock (95) -
Other 41 33
-------- --------
Net cash provided by financing activities 2,052 18,166
-------- --------
Net increase (decrease) in cash 84 (2,045)
Cash at beginning of period 510 2,793
-------- --------
Cash at end of period $ 594 $ 748
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
7
<PAGE> 8
SMITH ENVIRONMENTAL TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared by Smith Environmental Technologies Corporation (the Company),
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. The Company believes the disclosures made herein are adequate to
make the information presented not misleading. The financial statements
reflect all material adjustments which are all of a normal, recurring nature
and, in the opinion of management, necessary for a fair presentation. These
financial statements should be read in conjunction with the Company's
Transition Report on Form 10-K for the seven months transition period ended
September 30, 1995. The results of operations for the quarter ended December
31, 1995 are not necessarily indicative of the results that may be expected
for the fiscal year ending September 30, 1996.
NOTE 2 - COMMITMENTS AND CONTINGENCIES
The Company is currently party to various legal actions arising in the
normal course of its business, some of which involve claims and substantial
sums. Such legal actions were previously described in the Company's transition
report on Form 10-K for the seven month transition period ended September 30,
1995. Additional legal actions and claims have been filed against the Company
in the period ended December 31, 1995. While such legal actions could result
in judgments against the Company, management believes, based on its experience
and after considering appropriate reserves that have been established at
December 31, 1995, that the outcome of such litigation will not have material
adverse effect on the future financial condition or results of the operations
of the Company.
NOTE 3 - INDUSTRY SEGMENT
The Company operates within a single industry segment. Revenues
generated outside the United States were approximately $1.2 million for the
quarter ended December 31, 1995.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the
percentages which certain items from the consolidated statements of operations
bear to the revenues of the Company. This table and the Management's
Discussion and Analysis of Financial Condition and Results of Operations should
be read in conjunction with the consolidated financial statements and the notes
to the consolidated financial statements of the Company included herein and the
Company's Transition Report on Form 10-K for the seven month transition period
ended September 30, 1995.
<TABLE>
<CAPTION>
Three months ended
December 31, 1995
-------------------
1995 1994
-------- --------
<S> <C> <C>
Revenues 100.0 % 100.0 %
Cost of revenues 87.4 86.4
----- -----
Gross profit (loss) 12.6 13.6
Selling, general and administrative expenses 8.2 9.7
Amortization of intangible assets, goodwill and
deferred financing fees 1.0 0.4
Special items 0.9 0.0
----- -----
Income from operations 2.5 3.5
Interest expense 2.5 1.6
----- -----
Income before share in earnings of
unconsolidated affiliate, income taxes
and extraordinary item 0.0 1.9
Share in earnings of unconsolidated affiliate 1.1 1.0
----- -----
Income before income taxes and
extraordinary item 1.1 2.9
Income tax expense 0.2 0.3
----- -----
Income before extraordinary item 0.9 2.6
Extraordinary item - loss on debt refinancing, net
of tax benefit (2.7) 0.0
----- -----
Net (loss) income (1.8)% 2.6 %
===== =====
</TABLE>
9
<PAGE> 10
GENERAL
The Company provides a broad range of comprehensive environmental
consulting, engineering, remediation and construction services principally to
clients throughout the United States including various federal, state and local
government agencies with sites contaminated with hazardous materials. The
timing of the Company's revenues is primarily dependent on its backlog,
contract awards and the performance requirements of each contract. The
Company's revenues are also affected by the timing of its clients' activities.
Due to these changes in demand, the Company's quarterly and annual revenues
fluctuate. Accordingly, quarterly or other interim results should not be
considered indicative of results to be expected for any other quarter or full
fiscal year.
The Company's consolidated financial statements at December 31, 1995
include the results of operations for BCM Engineers Inc. ("BCM"), Riedel
Environmental Technologies, Inc. ("RES") and RESNA Industries, Inc. ("RESNA").
The consolidated financial statements for the same quarter in 1994 include the
results of BCM for the full quarter, RES from November 21, 1994 and do not
include results from RESNA.
Certain amounts from prior periods have been reclassified to conform to
current period presentation.
COMPARISON OF QUARTER ENDED DECEMBER 31, 1995 AND 1994
Revenues for the quarter ended December 31, 1995 were $46.8 million
compared with $35.2 for the same quarter in 1994, an increase of $11.6 million
or 32.8 percent. The increase in revenues was primarily attributable to the
acquisition of RES in November, 1994. Revenues for the quarter ended December
31, 1995, exclusive of revenues attributable to RES, were approximately $27.0
million, 9.4 percent lower than the same quarter in 1994. The decrease in
revenues exclusive of RES is primarily attributable to lower construction
revenues.
Gross profit for the quarter ended December 31, 1995 was $5.9 million or
12.6 percent of revenues compared with $4.8 million or 13.6 percent of revenues
for the quarter ended December 31, 1994, an increase of approximately $1.1
million. The increase in gross profit was primarily attributable to the
acquisition of RES in November 1994 . Gross profit exclusive of operating
results attributable to RES was approximately $4.5 million during the quarter
ended December 31, 1995, compared with $4.6 million for the same quarter in
1994. The decrease in gross profit exclusive of RES is primarily attributable
to slightly lower margins on construction projects, partially offset by higher
engineering margins.
Selling, general and administrative expenses (SG&A) for the quarter ended
December 31, 1995 were $3.8 million compared with $3.4 million for the same
quarter last year, an increase of approximately $400,000. SG&A as a percentage
of revenues for the quarter ended December 31, 1995 was 8.2 percent compared
with 9.7 percent for the same quarter in 1994. The decrease in SG&A as a
percentage of revenues is primarily a result of cost control measures
implemented by the Company during 1995 in consolidating administrative costs
within the acquired companies. During the quarter, the Company recorded in
SG&A approximately $347,000 of costs in connection with its strategic plan to
acquire related companies. Additionally it recorded a gain of approximately
$333,000 on the sale of surplus field equipment.
Amortization of goodwill, intangible assets and deferred financing fees
for the quarter ended December 31, 1995 was $488,000, compared with $145,000 in
the same quarter in 1994. The
10
<PAGE> 11
increase is primarily a result of the finalization in September 1995 of the
allocation of the acquired companies' purchase prices.
Special items were $393,000 for the quarter ended December 31, 1995 and
included severance and relocation costs in connection with office closings and
consolidations.
Net interest expense for the quarter ended December 31, 1995 was $1.2
million compared with $600,000 for the same quarter in 1994. The increase in
interest expense is primarily due to increased bank borrowings and related debt
in connection with acquisitions of BCM, RES and RESNA.
In the quarter ended December 31, 1995, the Company provided for income
taxes of $113,000 at an effective tax rate of approximately 23 percent. The
effective tax rate differs from the federal statutory rate of 34 percent as a
result of state income taxes and the utilization of net operating loss
carryforwards. The Company has significant net operating loss carryforwards to
offset future federal tax liabilities. Due to a greater than 50 percent change
in ownership, use of carryforwards to reduce future taxable income will be
limited to approximately $900,000 annually.
The Company's share of earnings of an unconsolidated affiliate in the
quarter ended December 31, 1995 was $500,000 compared with $344,000 for the
same quarter in 1994. The increase in the Company's share in the affiliate's
earnings resulted primarily from the resolution of a contract dispute.
The Company recorded an extraordinary charge of approximately $1.3
million, net of tax benefit of $113,000 during the quarter ended December 31,
1995 as a result of refinancing its senior credit facility. The charge
includes unamortized financing fees and a prepayment penalty in connection with
the refinancing.
LIQUIDITY AND CAPITAL RESOURCES
On October 18, 1995 the Company executed a $35 million credit facility
with Chemical Bank and BOT Financial Corporation. The facility (the "Chemical
Facility"), which replaced the LaSalle Loan Agreement (the "LaSalle Loan
Agreement") consists of a $6.5 million term loan and a $28.5 million revolving
line of credit. Similar to the LaSalle Loan Agreement, the calculation of the
borrowing base for the Chemical Facility is based on eligible accounts
receivable, as defined in the credit agreement. The Chemical Facility provides
for a $5 million unbilled account subline whereby unbilled receivables, subject
to limitations, are included in the calculation of the borrowing base. Changes
in the borrowing base can occur due to the magnitude and timing of the
Company's billings for services, which in turn are impacted by, among other
things, contractual terms and seasonal considerations and the timing of
collection of billed receivables. On October 18, 1995, available borrowing
capacity under the Chemical Facility was approximately $30 million compared
with $23 million under the LaSalle Loan Agreement.
The principal sources of liquidity for the Company's business and
operating needs are internally generated funds from operations and available
revolving credit borrowings under the Chemical Facility. For the quarter ended
December 31, 1995, operating activities used net cash of approximately $2.1
million, primarily to reduce accounts payable and accrued expenses and other
liabilities with cash provided in part by accelerated client billings and
increased collections of accounts receivable. Investing activities provided
approximately $100,000 in net cash derived from sales of fixed assets offset by
capital expenditures. Financing activities provided approximately $2.1
million, principally from borrowings under the Chemical Facility.
11
<PAGE> 12
The Company incurred substantially all of its long term debt in
connection with the acquisitions of BCM, RES and RESNA. As of December 31,
1995, long term debt, including current maturities of $2.9 million, was
approximately $43.2 million, the components of which were borrowings of $22.7
million under the revolving credit facility and $ 6.3 million of the term loan
under the Chemical Facility, $12.2 million of Convertible Subordinated Notes
and $2 million of other notes and capital leases. The unused borrowing
capacity as of January 31, 1996, under the Chemical Facility was approximately
$1.0 million.
During the quarter ended December 31, 1995, management of the Company
continued its focus on consolidating the acquired companies by resolving
operational issues, taking actions to increase the efficiency of the Company's
operations and improving the management of its working capital by implementing
programs to accelerate the collection of its accounts receivable. As a result
of these programs, the Company was able to reduce its accounts receivable by
approximately $3.5 million, which in addition to increased borrowing capacity
under the Chemical Facility resulted in a $5.9 million reduction in accounts
payable and other liabilities. Management believes that these actions and the
expanded credit facility enhances the Company's ability to fund its obligations
in future periods. However, in the event the Company fails to continue to
improve the management of its working capital, its liquidity and financial
position could be materially adversely impacted.
In connection with the Chemical Facility, the Company was required to
meet certain financial covenants including a consolidated current ratio of 1.50
at December 31, 1995. The Company's current ratio at December 31, 1995 was
1.45. On February 1, 1996, the Company's senior lender waived the December 31,
1995 covenant requirement and amended the future covenant requirement to a
minimum current ratio of 1.25 for each successive quarter during fiscal year
1996 and 1.50 thereafter.
BACKLOG
As of December 31, 1995, the Company had a contract backlog of orders of
approximately $106 million compared with approximately $125 million and $75
million at September 30, 1995 and December 31, 1994, respectively. The value
of unfunded or indefinite delivery order contracts ("IDO") was approximately
$147 million as of December 31, 1995 compared with approximately $141 million
and $180 million at September 30, 1995 and December 31, 1994, respectively.
The combined contract backlog as of December 31, 1995 was approximately $253
million compared with approximately $266 million and $255 million at September
30, 1995 and December 31, 1994, respectively. The ultimate value of the
backlog is subject to change as the scope of work on projects change.
Customers often retain the right to change the scope of work with an
appropriate increase or decrease in contract price.
12
<PAGE> 13
OTHER ITEMS AFFECTING OPERATING RESULTS
The Company generates a substantial portion of revenues under its
Emergency Response Cleanup Services (ERCS) contracts for the Environmental
Protection Agency ("EPA"). The Company is the prime contractor for removal of
hazardous substances in ERCS Zone 4A, comprising 15 midwestern and southern
states, and ERCS Region 5, comprising 6 states bordering the Great Lakes. The
ERCS Zone 4A contract has been renewed through its final option year covering
the period through February 1996. The ERCS Region 5 contract is renewable for
one year periods through September 1997.
On February 1, 1996, the Company was notified by the EPA that it was
awarded a six month extension and a three month option on its ERCS Zone 4A
contract valued at approximately $17.2 million.
Revenues from EPA contracts for the three months ended December 31, 1995
were approximately $13.0 million. Annual revenues from EPA contracts for RES
in the years prior to the Company's acquisition averaged approximately $35
million. The Company anticipates that it will continue to receive similar
levels of revenues in fiscal 1996. The Company intends to actively seek the
award of future EPA remedial action contracts, particularly the replacement
contract for the ERCS Zone 4A.
13
<PAGE> 14
SMITH ENVIRONMENTAL TECHNOLOGIES CORPORATION
PART II
ITEM 5: OTHER INFORMATION
On December 29, 1995, the Company executed the First Amendment,
Waiver and Consent to the Chemical Loan and Security Agreement
dated October 18, 1995. The amendment, among other items,
provided for a change in the consolidated tangible net worth
covenant.
On February 1, 1996, the Company executed the Second Amendment and
Waiver to the Chemical Loan and Security Agreement dated October
18, 1995. The amendment provided for a change in the consolidated
current ratio covenant.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.22 First Amendment, Waiver and Consent to the Chemical
Loan and Security Agreement dated as of December 29,
1995, by and among the registrant, BCM Engineers Inc.
(a Pennsylvania Corporation), BCM Engineers Inc. (an
Alabama Corporation), Riedel Environmental Services,
Inc., and Chemical Bank, as agent for the lenders.
10.23 Second Amendment and Waiver to the Chemical Loan
and Security Agreement dated as of February 1, 1996,
by and among the registrant, BCM Engineers Inc. (a
Pennsylvania Corporation), BCM Engineers Inc.(an
Alabama Corporation), Riedel Environmental Services,
Inc., and Chemical Bank, as agent for the lenders.
11 Statement regarding computation of earnings per share
27 Requirements for the format and input of financial
data schedules (Edgar version only).
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
December 31, 1995.
14
<PAGE> 15
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.
Smith Environmental Technologies Corporation
(Registrant)
By: /s/ William T. Campbell
---------------------------------
William T. Campbell
Vice President - Finance
15
<PAGE> 1
EXHIBIT 10.22
EXECUTION COPY
FIRST AMENDMENT, WAIVER AND CONSENT dated as of December 29, 1995
("Amendment") to LOAN AND SECURITY AGREEMENT dated as of October 18, 1995 (the
"Loan Agreement") among SMITH ENVIRONMENTAL TECHNOLOGIES CORPORATION, BCM
ENGINEERS INC., a Pennsylvania corporation, BCM ENGINEERS INC., an Alabama
corporation, RIEDEL ENVIRONMENTAL SERVICES INC., each of the Lenders which are
or which may become parties to the Loan Agreement and CHEMICAL BANK, as Agent
for the Lenders. Terms which are capitalized herein and not otherwise defined
shall have the meanings ascribed to them in the Loan Agreement.
WHEREAS, pursuant to paragraph 14(l) of the Loan Agreement, Smith
Environmental may not pay dividends on its Junior Securities, including the
outstanding shares of non-voting preferred stock of Smith Environmental held by
the ESOP (the "ESOP Stock"), unless all of the conditions precedent to any such
payment, as set forth in sub-clause (I) following the proviso to clause (ii) of
such paragraph 14(l), shall have occurred (such conditions, the "Compliance
Conditions"); and
WHEREAS, Smith Environmental has advised the Agent, pursuant to a
letter dated December 28, 1995, a copy of which is annexed hereto, that (i)
Smith Environmental proposes to make dividend payments in cash to the ESOP, as
holder of the ESOP Stock (the "ESOP Dividend") for the fiscal quarter ending
December 31, 1995, notwithstanding the fact that the Compliance Conditions
shall not have occurred at the time of such proposed payment, (ii) the
Borrowers will be unable to install a management information system by January
1, 1996, as required under paragraph 14(a) of the Loan Agreement and (iii)
Smith Environmental and its Subsidiaries will be unable to maintain a
consolidated Tangible Net Worth of at least the minimum levels required under
paragraph 14(o)(ii) of the Loan Agreement for the measuring periods described
therein; and
WHEREAS, the Account Owners have failed to deliver to the Agent a
"flash" report for the month of November, 1995, as required under paragraph
11(b)(iii) of the Loan Agreement and the Borrowers have failed to deliver to
the Agent the internally prepared consolidated and consolidating balance sheet
of Smith Environmental and its Subsidiaries for the month of October, 1995 (the
"October Balance Sheet"), as required under Paragraph 14(b)(i) of the Loan
Agreement; and
WHEREAS, Smith Environmental has requested that the Agent and the
Lenders (i) waive as a Default the Account Owners' failure to deliver such
"flash" report, (ii) waive as an Event of Default the Borrowers' failure to
deliver the October Balance Sheet, (iii) waive the fulfillment of the
Compliance Conditions as a condition precedent to the payment of the ESOP
Dividend and (iv) amend the Loan Agreement so as to (A) modify the date upon
which such management information system must be installed and (B) revise the
minimum levels of Tangible
<PAGE> 2
Net Worth which must be maintained, and the Agent and each of the Lenders have
so agreed, upon the terms and subject to the conditions set forth in this
Amendment;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and the payment of the fee described in Section 5(g) hereof, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Borrowers, the Lenders and the Agent hereby agree as
follows:
1. Waiver of Failure to Deliver Flash Report and October Balance
Sheet. Upon the fulfillment of the conditions set forth in Section 5 hereof,
effective as of the date hereof, each of the Lenders and the Agent waive as a
Default the Account Owners' failure to deliver to the Agent by December 15,
1995 a "flash" report for the month of November, 1995, provided such "flash"
report is in fact delivered to the Agent within five (5) Business Days of the
date of this Amendment, and each of the Lenders and the Agent waive as an Event
of Default the Borrowers' failure to deliver the October Balance Sheet to the
Agent by November 30, 1995, provided the October Balance Sheet is in fact
delivered to the Agent within ten (10) Business Days of the date of this
Amendment.
2. Waiver of Compliance Conditions; Consent. Upon the
fulfillment of the conditions set forth in Section 5 hereof, effective as of
the date hereof, each of the Lenders and the Agent waive as a condition
precedent to the payment of the ESOP Dividend Smith Environmental's
fulfillment of the Compliance Conditions and each of the Lenders and the Agent
consent to the payment in cash to the ESOP of the ESOP Dividend for the fiscal
quarter ending December 31, 1995, provided (a) such payment occurs no later
than January 3, 1996, (b) such payment does not exceed an aggregate amount
greater than $97,500 and (c) the combined Excess Availability of the Borrowers,
after giving effect to such payment, when averaged under the combined average
Excess Availability of the Borrowers for the preceding period of twenty-nine
(29) consecutive days, is not less than $1,100,000.
3. Amendment. Upon the fulfillment of the conditions set forth
in Section 5 hereof, effective as of the date hereof, the Loan Agreement is
hereby amended as follows:
(a) Paragraph 14(a) of the Loan Agreement is amended by
deleting the date "January 1, 1996" and by substituting therefor the date
"March 31, 1996".
(b) Paragraph 14(o) of the Loan Agreement is amended by
deleting subparagraph (ii) thereof in its entirety and by substituting the
following in lieu thereof:
"(ii) Consolidated Tangible Net Worth. Smith Environmental
and its Subsidiaries, on a consolidated basis, shall
maintain at all times during each period set forth
below, a Tangible Net Worth
-2-
<PAGE> 3
of not less than the amount set forth below opposite
each such period:
<TABLE>
<CAPTION>
Minimum Consolidated
Measuring Period Tangible Net Worth
---------------- --------------------
<S> <C>
(A) from Closing Date through $ 5,350,000
December 30, 1995
(B) from December 31, 1995 $ 5,800,000
through March 30, 1996
(C) from March 31, 1996 $ 6,400,000
through June 29, 1996
(D) from June 30, 1996 $ 8,400,000
through September 29, 1996
(E) from September 30, 1996 $10,400,000
through September 29, 1997
(F) from September 30, 1997 $15,900,000
through September 29, 1998
(G) from September 30, 1998 $20,900,000
and all times thereafter
</TABLE>
4. Representations and Warranties. In order to induce
the Lenders and the Agent to enter into this Amendment, Smith Environmental and
each other Borrower makes the following representations and warranties in favor
of each of the Lenders and the Agent (which representations and warranties
shall survive the execution and delivery of this Amendment) as of the date
hereof:
(a) Smith Environmental and each other Borrower
has the corporate power, authority and legal right to execute, deliver and
perform this Amendment, and the instruments, agreements, documents and
transactions contemplated hereby, and has taken all actions necessary to
authorize the execution, delivery and performance of this Amendment, and the
instruments, agreements, documents and transactions contemplated hereby;
(b) No consent of any Person (including, without
limitation, shareholders or creditors of Smith Environmental, as the case may
be) other than the Lenders,
-3-
<PAGE> 4
and no consent, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority, is required in connection with the execution, delivery, performance,
validity or enforceability of this Amendment, and the instruments, agreements,
documents and transactions contemplated hereby;
(c) This Amendment has been duly executed and
delivered on behalf of Smith Environmental and each other Borrower by its duly
authorized officer, and constitutes the legal, valid and binding obligation of
Smith Environmental and each such Borrower, enforceable in accordance with its
terms;
(d) Neither Smith Environmental nor any other
Borrower is in default under any indenture, mortgage, deed of trust, agreement
or other instrument to which it is a party or by which it may be bound.
Neither the execution and delivery of this Amendment, nor the consummation of
the transactions herein contemplated, nor compliance with the provisions hereof
or thereof will (i) violate any law or regulation, (ii) result in or cause a
violation by Smith Environmental or by any other Borrower of any order or
decree of any court or government instrumentality, (iii) conflict with, or
result in the breach of, or constitute a default under, any indenture,
mortgage, deed of trust, agreement or other instrument to which Smith
Environmental or any other Borrower is a party or by which it may be bound,
(iv) result in the creation or imposition of any lien, charge, or encumbrance
upon any of the property of Smith Environmental or of any other Borrower,
except in favor of the Agent for the benefit of the Lenders, to secure the
Liabilities, or (v) violate any provision of the Articles or Certificate of
Incorporation, By-Laws or any capital stock provisions of Smith Environmental
or of any other Borrower;
(e) No Default or Event of Default has occurred
and is continuing, except for such Default and Event of Default as have been
waived pursuant to this Amendment;
(f) Since the date of the Agent's receipt of
Smith Environmental's consolidated and consolidating financial statements for
the period ended August 31, 1995, no change or event has occurred which has had
or is reasonably likely to have a Material Adverse Effect; and
(g) The recitals contained in this Amendment are
true and correct in all respects.
5. Conditions Precedent. This Amendment shall not
become effective until all of the following conditions, the fulfillment of each
of which is a condition precedent to the effectiveness of this Amendment, shall
have occurred or shall have been waived in writing by the Agent and the
Lenders.
-4-
<PAGE> 5
(a) The Agent and each of the Lenders shall have
received a fully executed counterpart or original of this Amendment, together
with all schedules and exhibits hereto appropriately completed to the extent
required.
(b) Upon the effectiveness of this Amendment, all
representations and warranties set forth in the Loan Agreement (except for such
inducing representations and warranties that were only required to be true and
correct as of a prior date) shall be true and correct in all material respects
on and as of the effective date hereof, and no Default or Event of Default
shall have occurred and be continuing.
(c) No event or development shall have occurred
since the date of delivery to the Lenders of the Borrowers' most recent
financial statements which event or development has had or is reasonably likely
to have a Material Adverse Effect.
(d) The Agent shall have received a certificate
from Smith Environmental, executed by its Chief Executive Officer or other
authorized officer, as to the accuracy and completeness of the representations
and warranties contained in Section 4 hereof.
(e) All corporate and legal proceedings and all
documents and instruments executed or delivered in connection with this
Amendment shall be satisfactory in form and substance satisfactory to the
Lenders and their counsel, and the Lenders and their counsel shall have
received all information and copies of all documents which the Lenders and
their counsel may have requested in connection herewith and the matters
contemplated hereunder, such documents, when requested by them, to be certified
by appropriate corporate authorities.
(f) The Lenders shall have received such further
agreements, consents, instruments and documents as may be necessary or proper
in the reasonable opinion of the Lenders, the Agent and their counsel to carry
out the provisions and purposes of this Amendment.
(g) Within fifteen (15) Business Days of the date
of this Amendment, the Agent shall have received financial projections of Smith
Environmental and its Subsidiaries, prepared by the chief financial officer of
Smith Environmental on a consolidated and consolidating basis, which financial
projections (i) shall be in substantially the same form as the financial
projections of Smith Environmental and its Subsidiaries previously delivered to
the Agent and the Lenders, dated October 12, 1995 (the "October Projections"),
(ii) shall cover the same fiscal periods and shall be prepared on the same
month-by-month, quarter-by-quarter, and year-by-year basis as the October
Projections and (iii) shall be based on the October Projections, as modified so
as to reflect, among other things, actual balance sheet adjustments made since
the Closing Date, actual earnings for the fiscal year most recently ended and
actual costs and expenses paid or incurred in connection with the closing of
the Loan Agreement and the transactions which have occurred thereunder.
-5-
<PAGE> 6
6. General Provisions.
(a) In consideration of the execution and delivery of
this Amendment by the Lenders, each of the Borrowers promises that the Agent
shall receive from Smith Environmental, on January 3, 1996, for the pro rata
benefit of the Lenders, a non-refundable fee, in cash, in the amount of
$25,000, which fee shall be paid by the Agent's debit of the loan account of
Smith Environmental, effective as of the opening of business on such date.
(b) Except as herein expressly amended, the Loan
Agreement and all other agreements, documents, instruments and certificates
executed in connection therewith, are ratified and confirmed in all respects
and shall remain in full force and effect in accordance with their respective
terms.
(c) All references in the Other Agreements to the Loan
Agreement shall mean the Loan Agreement as waived and amended as of the
effective date hereof, and as waived and amended hereby and as hereafter
amended, supplemented or modified from time to time. From and after the date
hereof, all references in the Loan Agreement to "this Agreement," "hereof,"
"herein," or similar terms, shall mean and refer to the Loan Agreement as
waived and amended by this Amendment.
(d) This Amendment may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which
shall be an original and all which shall constitute one and the same agreement.
(e) This Amendment shall be governed and controlled by
the laws of the State of New York without reference to its choice of law
principles.
[signature page follows]
-6-
<PAGE> 7
IN WITNESS WHEREOF, each of the Borrowers, BCM-Alabama, the
Lenders and the Agent have caused this Amendment to be duly executed by their
respective officers thereunto duly authorized as of the day and year first
above written.
<TABLE>
<S> <C>
SMITH ENVIRONMENTAL TECHNOLOGIES RIEDEL ENVIRONMENTAL SERVICES INC.
CORPORATION
By: /s/ J. POLING By: /s/ J. POLING
-------------------------------- --------------------------------
V.P. TREASURER EXECUTIVE V.P.
BCM ENGINEERS INC., CHEMICAL BANK, as a Lender and as
a Pennsylvania corporation Agent
By: /s/ J. POLING By: /s/ E. JOSEPH HESS
-------------------------------- --------------------------------
V.P. V.P.
BCM ENGINEERS INC., BOT FINANCIAL CORPORATION
an Alabama corporation
By: /s/ J. POLING By: /s/ WILLIAM R. YORK, JR.
-------------------------------- --------------------------------
V.P. SENIOR V.P.
</TABLE>
-7-
<PAGE> 1
EXHIBIT 10.23
EXECUTION COPY
SECOND AMENDMENT AND WAIVER dated as of February 1, 1996,
("Amendment") to LOAN AND SECURITY AGREEMENT dated as of October 18, 1995 (as
amended through the date hereof, the "Loan Agreement") among SMITH
ENVIRONMENTAL TECHNOLOGIES CORPORATION, BCM ENGINEERS INC., a Pennsylvania
corporation, BCM ENGINEERS INC., an Alabama corporation, RIEDEL ENVIRONMENTAL
SERVICES INC., each of the Lenders which are or which may become parties to the
Loan Agreement and CHEMICAL BANK, as Agent for the Lenders. Terms which are
capitalized herein and not otherwise defined shall have the meanings ascribed
to them in the Loan Agreement.
WHEREAS, Smith Environmental has advised the Agent, pursuant to a
letter dated January 5, 1996, a copy of which is annexed hereto, that Smith
Environmental and its Subsidiaries have failed to maintain a consolidated ratio
of current assets to current liabilities of at least 1.50 to 1.00 for the
fiscal quarter ending in December, 1995, as required under paragraph 14(o)(iv)
of the Loan Agreement; and
WHEREAS, Smith Environmental has requested that the Agent and the
Lenders (i) waive as an Event of Default such failure to maintain such ratio
and (ii) amend the Loan Agreement so as to revise the minimum consolidated
ratio of current assets to current liabilities to be maintained by Smith
Environmental and its Subsidiaries for the first three fiscal quarters of 1996,
and the Agent and each of the Lenders have so agreed, upon the terms and
subject to the conditions set forth in this Amendment;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the amendment of Paragraph 6(e) of the Loan Agreement, as described in
Section 2(a) hereof and the payment of the fee described in Section 4(g)
hereof, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers, the Lenders and
the Agent hereby agree as follows:
1. Waiver of Failure to Maintain Current Ratio. Upon the
fulfillment of the conditions set forth in Section 4 hereof, effective as of
the date hereof, each of the Lenders and the Agent waive as an Event of Default
the failure of Smith Environmental and its Subsidiaries to maintain a
consolidated ratio of current assets to current liabilities of at least 1.50 to
1.00 for the fiscal quarter ending in December, 1995, provided that the actual
consolidated ratio of current assets to current liabilities maintained by Smith
Environmental and its Subsidiaries for such fiscal quarter is not less than
1.44 to 1.00.
<PAGE> 2
2. Amendment. Upon the fulfillment of the conditions set forth
in Section 4 hereof, effective as of the date hereof, the Loan Agreement is
hereby amended as follows:
(a) Paragraph 6(e) of the Loan Agreement is amended by
deleting such paragraph in its entirety and by substituting the following in
lieu thereof:
"Limitation on Eurodollar Loans. Notwithstanding any thing to
the contrary contained herein, during the period from the
Closing Date until the date upon which the Agent shall have
notified Smith Environmental that each Lender shall have
completed the primary syndication of its Commitment, (x) each
Eurodollar Loan made during such period shall be for an
Interest Period consisting of one month only and (y) the
Interest Period with respect to all outstanding Eurodollar
Loans, as of any date of determination, shall end on the same
day."
(b) Paragraph 14(o) of the Loan Agreement is amended by
deleting subparagraph (iv) thereof in its entirety and by substituting the
following in lieu thereof:
"(iv) Consolidated Current Ratio. Smith Environmental and its
Subsidiaries, on a consolidated basis, shall maintain as of
the end of each period set forth below a ratio of (A)
consolidated current assets to (B) consolidated current
liabilities of not less than the ratio set forth below
opposite each such period, provided, however, that solely for
purposes of determining the Borrowers' compliance with this
covenant, (x) consolidated current assets shall exclude any
cash or its equivalent then on hand in excess of the aggregate
amount of $1,800,000 and (y) consolidated current liabilities
shall not include the outstanding principal balance of the
Revolving Loans:
-2-
<PAGE> 3
<TABLE>
<CAPTION>
Minimum Consolidated
Measuring Period Current Ratio
---------------- --------------------
<S> <C> <C>
(A) fiscal quarter ending in 1.50 to 1.00
December, 1995
(B) fiscal quarter ending in 1.25 to 1.00
March, 1996
(C) fiscal quarter ending in 1.25 to 1.00
June, 1996
(D) fiscal quarter ending in 1.25 to 1.00
September, 1996
(E) fiscal quarter ending in 1.50 to 1.00
December, 1996 and each
fiscal quarter thereafter
</TABLE>
3. Representations and Warranties. In order to induce
the Lenders and the Agent to enter into this Amendment, Smith Environmental and
each other Borrower makes the following representations and warranties in favor
of each of the Lenders and the Agent (which representations and warranties
shall survive the execution and delivery of this Amendment) as of the date
hereof:
(a) Smith Environmental and each other Borrower
has the corporate power, authority and legal right to execute, deliver and
perform this Amendment, and the instruments, agreements, documents and
transactions contemplated hereby, and has taken all actions necessary to
authorize the execution, delivery and performance of this Amendment, and the
instruments, agreements, documents and transactions contemplated hereby;
(b) No consent of any Person (including, without
limitation, shareholders or creditors of Smith Environmental, as the case may
be) other than the Lenders, and no consent, permit, approval or authorization
of, exemption by, notice or report to, or registration, filing or declaration
with, any governmental authority, is required in connection with the execution,
delivery, performance, validity or enforceability of this Amendment, and the
instruments, agreements, documents and transactions contemplated hereby;
(c) This Amendment has been duly executed and
delivered on behalf of Smith Environmental and each other Borrower by its duly
authorized officer, and constitutes the legal, valid and binding obligation of
Smith Environmental and each such Borrower, enforceable in accordance with its
terms;
-3-
<PAGE> 4
(d) Neither Smith Environmental nor any other
Borrower is in default under any indenture, mortgage, deed of trust, agreement
or other instrument to which it is a party or by which it may be bound.
Neither the execution and delivery of this Amendment, nor the consummation of
the transactions herein contemplated, nor compliance with the provisions hereof
or thereof will (i) violate any law or regulation, (ii) result in or cause a
violation by Smith Environmental or by any other Borrower of any order or
decree of any court or government instrumentality, (iii) conflict with, or
result in the breach of, or constitute a default under, any indenture,
mortgage, deed of trust, agreement or other instrument to which Smith
Environmental or any other Borrower is a party or by which it may be bound,
(iv) result in the creation or imposition of any lien, charge, or encumbrance
upon any of the property of Smith Environmental or of any other Borrower,
except in favor of the Agent for the benefit of the Lenders, to secure the
Liabilities, or (v) violate any provision of the Articles or Certificate of
Incorporation, By-Laws or any capital stock provisions of Smith Environmental
or of any other Borrower;
(e) No Default or Event of Default has occurred
and is continuing, except for such Default and Event of Default as have been
waived pursuant to this Amendment;
(f) Since the date of the Agent's receipt of
Smith Environmental's consolidated and consolidating financial statements for
the period ended November 30, 1995, no change or event has occurred which has
had or is reasonably likely to have a Material Adverse Effect; and
(g) The recitals contained in this Amendment are
true and correct in all respects.
4. Conditions Precedent. This Amendment shall not
become effective until all of the following conditions, the fulfillment of each
of which is a condition precedent to the effectiveness of this Amendment, shall
have occurred or shall have been waived in writing by the Agent and the
Lenders.
(a) The Agent and each of the Lenders shall have
received a fully executed counterpart or original of this Amendment, together
with all schedules and exhibits hereto appropriately completed to the extent
required.
(b) Upon the effectiveness of this Amendment, all
representations and warranties set forth in the Loan Agreement (except for such
inducing representations and warranties that were only required to be true and
correct as of a prior date) shall be true and correct in all material respects
on and as of the effective date hereof, and no Default or Event of Default
shall have occurred and be continuing.
-4-
<PAGE> 5
(c) No event or development shall have occurred
since the date of delivery to the Lenders of the Borrowers' most recent
financial statements which event or development has had or is reasonably likely
to have a Material Adverse Effect.
(d) The Agent shall have received a certificate
from Smith Environmental, executed by its Chief Executive Officer or other
authorized officer, as to the accuracy and completeness of the representations
and warranties contained in Section 3 hereof.
(e) All corporate and legal proceedings and all
documents and instruments executed or delivered in connection with this
Amendment shall be satisfactory in form and substance satisfactory to the
Lenders and their counsel, and the Lenders and their counsel shall have
received all information and copies of all documents which the Lenders and
their counsel may have requested in connection herewith and the matters
contemplated hereunder, such documents, when requested by them, to be certified
by appropriate corporate authorities.
(f) The Lenders shall have received such further
agreements, consents, instruments and documents as may be necessary or proper
in the reasonable opinion of the Lenders, the Agent and their counsel to carry
out the provisions and purposes of this Amendment.
(g) The Agent shall have received from Smith
Environmental, for the pro rata benefit of the Lenders, a non-refundable fee,
in cash, in the amount of $2,000, which fee shall be paid by the Agent's debit
of the loan account of Smith Environmental, effective as of the opening of
business on the date of execution of this Amendment.
5. General Provisions.
(a) Except as herein expressly amended, the Loan
Agreement and all other agreements, documents, instruments and certificates
executed in connection therewith, are ratified and confirmed in all respects
and shall remain in full force and effect in accordance with their respective
terms.
(b) All references in the Other Agreements to the
Loan Agreement shall mean the Loan Agreement as waived and amended as of the
effective date hereof, and as waived and amended hereby and as hereafter
amended, supplemented or modified from time to time. From and after the date
hereof, all references in the Loan Agreement to "this Agreement," "hereof,"
"herein," or similar terms, shall mean and refer to the Loan Agreement as
waived and amended by this Amendment.
(c) This Amendment may be executed by the parties
hereto individually or in combination, in one or more counterparts, each of
which shall be an original and all which shall constitute one and the same
agreement.
-5-
<PAGE> 6
(d) This Amendment shall be governed and
controlled by the laws of the State of New York without reference to its choice
of law principles.
IN WITNESS WHEREOF, each of the Borrowers, BCM-Alabama, the Lenders and
the Agent have caused this Amendment to be duly executed by their respective
officers thereunto duly authorized as of the day and year first above written.
<TABLE>
<S> <C>
SMITH ENVIRONMENTAL TECHNOLOGIES RIEDEL ENVIRONMENTAL SERVICES INC.
CORPORATION
By: /s/ J. POLING By: /s/ J. POLING
-------------------------------- --------------------------------
V.P. TREASURER EXECUTIVE V.P.
BCM ENGINEERS INC., CHEMICAL BANK, as a Lender and as
a Pennsylvania corporation Agent
By: /s/ J. POLING By: /s/ E. JOSEPH HESS
-------------------------------- --------------------------------
V.P. V.P.
BCM ENGINEERS INC., BOT FINANCIAL CORPORATION
an Alabama corporation
By: /s/ J. POLING By: /s/ WILLIAM R. YORK, JR.
-------------------------------- -------------------------------
V.P. SENIOR V.P.
</TABLE>
-6-
<PAGE> 1
Item 6A
Exhibit 11
SMITH ENVIRONMENTAL TECHNOLOGIES CORPORATION
COMPUTATION OF (LOSS) EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three months ended
December 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
PRIMARY
Weighted average shares of common
stock outstanding 5,852,004 5,751,127
Incremental shares applicable to assumed
exercise of stock options 30,819 199,236
----------- ----------
Weighted average number of common and
common equivalent shares outstanding 5,882,823 5,950,363
=========== ==========
Income before extraordinary item $385,000 $ 912,000
Extraordinary item (1,282,000) -
----------- ----------
Net (loss) income ($897,000) $ 912,000
=========== ==========
Net (loss) income applicable to common stock (1,034,000) $ 781,000
=========== ==========
Income (loss) per common and common
equivalent share:
Income before extraordinary item $ 0.07 $ 0.15
Extraordinary item (0.22) 0.00
----------- ----------
Net (loss) income $ (0.15) $ 0.15
=========== ==========
Net (loss) income applicable to common stock $ (0.18) $ 0.13
=========== ==========
</TABLE>
The computation of income (loss) per common equivalent share on a fully diluted
basis does not materially differ from the amounts calculated on a primary
basis.
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the Consolidated Financial Statements on the Company's Form 10-Q for the
quarterly period ended December 31, 1995 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 594
<SECURITIES> 0
<RECEIVABLES> 51504
<ALLOWANCES> 1649
<INVENTORY> 0
<CURRENT-ASSETS> 55670
<PP&E> 26258
<DEPRECIATION> 9733
<TOTAL-ASSETS> 110042
<CURRENT-LIABILITIES> 38247
<BONDS> 40304
6722
0
<COMMON> 58
<OTHER-SE> 19217
<TOTAL-LIABILITY-AND-EQUITY> 110042
<SALES> 0
<TOTAL-REVENUES> 46758
<CGS> 0
<TOTAL-COSTS> 40876
<OTHER-EXPENSES> 4730
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1154
<INCOME-PRETAX> (2)
<INCOME-TAX> 113
<INCOME-CONTINUING> 385
<DISCONTINUED> 0
<EXTRAORDINARY> (1282)
<CHANGES> 0
<NET-INCOME> (1034)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
